Anderson v. Bean

• Decision Date: 16 September 1930
• Parties: ANDERSON v. BEAN et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

272 Mass. 432

172 N.E. 647

ANDERSON

v.BEAN et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 16, 1930.

Appeal from Probate Court, Suffolk County; Arthur W. Dolan, Judge.

In the matter of the estate of Albert Anderson, deceased. From a decree of the probate court allowing accounts of the administration of a trust created by the will of said decedent, some of the beneficiaries appeal.

Decree modified and, as modified, affirmed.A. Lincoln and F. M. Carroll, both of Boston, for Olga J. bean.

W. H. Hitchcock and W. L. Allen, both of Boston, for Albert B. and Andreas Anderson.

A. W. Blakemore and T. H. Russell, both of Boston, for Alf E. Anderson, executor.

RUGG, C. J.

This case comes before us on appeals, by several beneficiaries, from a decree of a probate court allowing accounts of the administration of a trust created by the will of Albert Anderson. The propriety of certain acts of the trustee in the management of the estate is challenged.

Some of these acts relate to distributions already made to beneficiaries under the terms of the trust. Questions of that nature, when confined to the past and not seeking guidance for the future, rightly may be considered on a petition for the allowance of an account by a fiduciary. New England Trust Co. v. Eaton, 140 Mass. 532, 533, 535, 4 N. E. 69,54 Am. Rep. 493;Lincoln v. Aldrich, 141 Mass. 342, 5 N. E. 517. A probate court has ample power to grant relief to the beneficiaries of a trust upon an accounting by the trustee touching all matters here in issue. This is the appropriate proceeding in which to adjust such controversies. G. L. c. 206, § 4. Green v. Gaskill, 175 Mass. 265, 269, 56 N. E. 560;Burns v. Hovey, 242 Mass. 363, 366, 136 N. E. 246;State Street Trust Co. v. Walker, 259 Mass. 578, 157 N. E. 334.

The case was heard upon an agreed statement of facts and upon oral and documentary evidence. Salient facts are that the testator died and his will was allowed in 1908, and John M. Anderson, his brother and business associate for many years, if not throughout his active business career, was appointed trustee under his will. The testator left two sons, both of whom were residuary beneficiaries as to income and remainder of the trust established by his will. Another beneficiary was Olga M. Garllus, now deceased, whose married name was Bean. She had lived in the family of the testator from her early childhood and at his death a petition by him for her adoption was pending. Her daughter, Olga J. Bean, is an appellant. At the time of his death, the testator and the trustee under his will each owned one half of the capital stock in the Albert and J. M. Anderson Manufacturing Company, a Maine corporation, and each owned one undivided half interest in certain real estate in Boston occupied by the corporation as a part of its plant. The business of the corporation was manufacturing and selling electrical machinery, appliances and equipment. Prior to the death of Olga M. Bean, nee Garllus, the residuary income of the trust, after paying certain annuities, was divided equally between the two sons of the testator and said Olga, and since that time has been divided equally between the two sons, all in accordance with the decision in Anderson v. Bean, 220 Mass. 360, 107 N. E. 964. Olga J. Bean and each of the sons of the testator have a one third interest in the remainder of the trust. The trustee died in 1928.

After his qualification as trustee under the will, the trustee held one half of the shares of stock in the Maine corporation in his own right as an individual and the other half in his capacity as trustee. In 1922 the assets and business of the Maine corporation were transferred to a newly organized Massachusetts corporation of the same name. Without now stating the details, it is enough to say of that transaction that the Maine corporation, having accumulated a surplus equal to more than twice its capital stock, which was $200,000, divided into 2000 shares, received for the transfer of its assets and business 5997 out of a total of 6000 shares of the par value of $100 each in the Massachusetts corporation. The Massachusetts corporation received in return for this issue of its stock all the assets and business of the Maine corporation and agreed to pay all its debts. The Maine corporation distributed to its stockholders the shares of stock in the Massachusetts corporation received by it for the transfer of its assets and business. When the transaction was completed the capital stock of the new corporation was held in the same way as was that of the Maine corporation, one half by the trustee in his own right as an individual, and one half in his capacity as trustee. There was a restriction upon the transfer of stock in both corporations to the effect that a holder desiring to sell must first offer his shares to the directors for sale, the price under the by-law of the Maine corporation, to be fixed by agreement or by some third person to be selected, and, under the by-law of the Massachusetts corporation, to be fixed by appraisal to be made by the directors. The by-law of the Massachusetts corporation followed in substance that held valid in New England Trust Co. v. Abbott, 162 Mass. 148, 38 N. E. 432,27 L. R. A. 271, and in other later cases. Albert E. Touchet, Inc., v. Touchet, 264 Mass. 499, 506-507, 163 N. E. 184. The corporate reorganization appears to have been made for the purpose of lightening the burden of taxation. It was made under the advice of the trusted attorney of the testator and his trustee and of the corporation. The restrictions on transfer of stock in the by-law of the new Massachusetts corporation, so far as they differ from those of the Maine corporation, are not of special legal signification on issues here raised. It does not appear that any beneficiary has suffered loss by reason of this corporate reorganization. The trustee never took any compensation for his services as trustee, although express testamentary provision was made for reasonable compensation for him. The evidence also shows that the trustee as the managing head of the corporation received no more than a modest salary for the services performed by him.

The trial judge did not find that there had been any breach of trust by the trustee, and found that all the items of the account were correct and allowed them all save a single item concerning which now no controversy is made. The implication of the general finding in favor of the accounts is that the trustee was free from fault and has administered the estate in accordance with his duty under the will and the applicable principles of law. The final decree imports a finding of all facts necessary to that result, although not specified. These findings appear to be amply supported by the evidence. They must be accepted as true. Corkery v. Dorsey, 223 Mass. 97, 100, 111 N. E. 795. Only questions of law need to be discussed.

1. It is contended that the corporate reorganization of 1922 and the transfer of the business to the Massachusetts corporation terminated the trust. The settlement of that controversy depends upon the interpretation of these provisions of the will: ‘And whereas a large part of my property is now invested in the capital stock of the Albert & J. M. Anderson Manufacturing Company and in the land and building used by said corporation, I hereby empower my trustee or trustees hereunder to retain said investments and I direct that the judgment of the said John M. Anderson, who has been associated with me for many years in the building up and carrying on of said business, shall be final and conclusive as to the continuance of said investments and as to the management of said business, and he shall not be held answerable for any depreciation or loss which may come to my said property by reason of continuing the same in such investments as the same may be at the time of my decease. The trust established by this paragraph of my will shall continue so long as the said John M. Anderson shall live, or until he shall determine to retire from the management and control of the said business so carried on under the name of the Albert & J. M. Anderson Manufacturing Company. Upon the death of said John M. Anderson, or upon his retiring from business, the said trust shall be ended and determined as to all the property and estate placed in trust hereunder, except only such portion thereof as may be necessary to provide for the annuities hereinbefore established.’ In the solution of the problems here presented the intent of the testator must be ascertained, attributing due weight to all words used by him, and then effect must be given to that intent unless some positive rule of law prevents. Ware v. Minot, 202 Mass. 512, 516, 88 N. E. 1091;Temple v. Russell, 251 Mass. 231, 235, 146 N. E. 679, 49 A. L. R. 1. The meaning of the quoted provision of the will is that the testator had his mind fixed on the industrial enterprise rather than on the particular corporate entity, as the subject of investment of a large part of his estate. The word ‘business' occurs four times in this part of the will. The first reference is to its ‘building up and carrying on’ by the testator and his trustee. That embraces the beginning, which apparently was a partnership between these two brothers, and an earlier Massachusetts corporation as well as the Maine corporation existing at the time the will was executed and became operative. It is touching the continuance of those investments in and the management of ‘said business' thus established and developed that the ‘judgment’ of the trustee is to be ‘final and conclusive.’ The termination of the trust is fixed to be the death or retirement of the trustee ‘from the management and control of the business so carried on under the name of the Albert & J. M. Anderson Manufacturing Company.’ The termination is not made dependent upon his retirement from the particular corporation but from the ...