Anderson v. Bean
| Decision Date | 11 September 1930 |
| Citation | 272 Mass. 432 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | ALF E. ANDERSON, executor, v. OLGA J. BEAN & others. |
November 7, 1929.
Present: RUGG, C.
J., CROSBY, PIERCE CARROLL, & WAIT, JJ.
Trust Administration by trustee, Trustee's accounts Investments by trustee, Capital and income, Sale of property by trustee, Termination. Probate Court, Jurisdiction Accounts, Findings by judge. Devise and Legacy. Capital and Income. Corporation, Dividend, Reorganization. Words, "Business."
A probate court, at hearings upon accounts of a trustee under a will, has jurisdiction to consider and adjudicate, and power to grant relief respecting contentions by beneficiaries of the trust that distributions made by the trustee and shown in the accounts were improper; that under the provisions of the will the trust had terminated previous to the periods covered by the accounts; that a continuation of an investment of trust funds in stock of Massachusetts corporation organized to take over assets of a Maine corporation, stock of which had been held by the trust, was improper; that the trustee improperly had failed to distribute as income part of the stock of the Massachusetts corporation received from the Maine corporation; that the beneficiaries were entitled to dividends from surplus of the Massachusetts corporation; and that the trustee improperly had sold stock of the Massachusetts corporation in such a way as to affect the control in a stockholders meeting to the injury of the trust.
Where, upon an appeal by beneficiaries under a trust created by will from a decree which was entered after a hearing where the evidence was reported by a stenographer appointed under G.L.c. 215, Section 18, as amended, and which allowed accounts of the trustee, except as to an item not in controversy on the appeal, it appeared that the judge of probate made a general finding in favor of the accountant, the implication of such finding was that the trustee had been free from fault and had administered the estate in accordance with his duty under the will and the applicable principles of law.
In such circumstances, the final decree imported a finding of all facts necessary to the result stated in the decree, although not otherwise specified; and, where the findings appeared to be amply supported by the evidence reported, they must be accepted on the appeal as true, leaving only questions of law to be determined by this court.
A testator, who died in 1908, had owned one half of the capital stock of a Maine manufacturing corporation, the other half of which was owned by his brother, and with the brother had owned in moities the real estate upon which the corporation did business in this Commonwealth.
By his will be established a trust which included such stock and real estate interests, appointed the brother as trustee, empowered the trustee "to retain said investment" and directed "that the judgment of the said" brother "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 will further provided that the trust certain annuities; and with respect to investments and reinvestments the trustee was given wide discretion and was to be liable only for "willful defaults." In 1922 the capital stock of the
Maine corporation comprised two thousand shares of which the brother owned one half as an individual, and one half as such trustee. Its surplus was more than twice its capital stock. In that year, for purposes of lightening the burden of taxation, it transferred all its assets to a newly organized Massachusetts corporation of the same name, receiving therefor all but three of the entire issue of six thousand shares of the Massachusetts corporation, the Massachusetts corporation agreeing to pay all the Maine corporation's debts.
Restrictions in the by-laws of the two corporations upon sale and transfer of stock were essentially similar. It did not appear that any beneficiary of the trust had suffered by the reorganization. The trustee acted in good faith, and as a result of the reorganization held the stock of the Massachusetts corporation in the same proportions, as trustee and as an individual, as he previously had held that of the Maine corporation. Held, that
(1) The reorganization did not result in a retirement by the trustee from the "business" under the provisions of the will, and therefore did not effect a termination of the trust;
(2) There was no support for a contention that the continuation of the trust investment in stock of the new corporation was not authorized;
(3) A distribution as income of all dividends received on the stock of the new Massachusetts corporation was proper;
(4) The existence of the restrictions on the sale of stock in the Massachusetts corporation did not of itself make improper the investment of the trust fund in that stock;
(5) There being, in the corporate action in the process of the reorganization, no separation between the capital and the surplus of the Maine corporation in the transfer of its assets and business to the Massachusetts corporation in return for shares of its stock, the shares so received by the trustee as a stockholder of the Maine corporation became capital, and were not subject to distribution by him as income.
It appearing that the trustee in the circumstances above described had acted in good faith in not causing the Massachusetts corporation to declare cash dividends from surplus in sums substantially larger than those that had been declared, it was held, that the court would not go behind the acts of the corporate entity in an attempt to investigate the affairs of the corporation or the acts of the trustee in order to ascertain whether larger dividends should have been declared, although the trustee, through his holdings of the capital stock of the corporation as trustee and as an individual, was in absolute control of it.
A sale, by the trustee under the will above described to four different purchasers, of such a number of the shares of stock in the new corporation held in trust that the equality of ownership theretofore existing between him as an individual and him as trustee was broken and he as an individual in concert with any one of four purchasers might exercise control of the corporation, where it appeared that the trustee in so doing acted in good faith, that there was no direct dealing with the trust estate by him as trustee in the interest of himself as an individual, that no harm resulted to the trust or to any beneficiary, and that no profit resulted to him as an individual, did not, under the provisions of the will, make him accountable as for a breach of the trust.
PETITIONS, filed in the Probate Court for the county of Suffolk, respectively on July 13, 1928, by Johan M. Andersen and on February 18, 1929, by the executor of his will, for allowance of the fourth and fifth accounts of John M. Anderson as trustee under the will of Albert Anderson, later of Boston.
At the hearing on the accounts, a third account of the trustee, which had been filed on July 16, 1925, and allowed without objection on August 20, 1925, was reopened.
The petitions for allowance of the three accounts were heard by Dolan, J., upon an agreed statement of facts and other evidence, a stenographer having been appointed under G.L.c. 215, Section 18, as amended. Material evidence and findings and rulings by the judge of probate are stated in the opinion. By order of the judge, a final decree was entered allowing the accounts with an amendment not material to this appeal. Albert B. and Andreas Anderson and Olga J. Bean appealed.
A. Lincoln, (F.
M.Carroll with him), for Olga J. Bean.
W.H. Hitchcock, (W.L. Allen with him,) for Albert B. and Andreas Anderson.
A.W. Blakemore, (T.H. Russell with him,) for Alf E.
Anderson, executor of the will of Johan M. Andersen, trustee.
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, 534. Lincoln v. Aldrich, 141 Mass. 342 . 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, Section 4. Green v. Gaskill, 175 Mass. 265 , 269. Burns v. Hovey, 242 Mass. 363 , 366. State Street Trust Co. v. Walker, 259 Mass. 578 .
The case was heard upon an agreed statement of facts and upon oral and documentary evidence. Salient facts are...
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