Bartlett v. Slater

• Decision Date: 01 March 1912
• Citation: 211 Mass. 334,97 N.E. 991
• Parties: BARTLETT et al. v. SLATER et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

211 Mass. 334

97 N.E. 991

BARTLETT et al. v. SLATER et al.

Supreme Judicial Court of Massachusetts, Worcester.

March 1, 1912

COUNSEL

Herbert Parker and T. H. Gage, for petitioners.

Sherman L. Whipple, John R. Thayer, Francis T. Homer, and Alexander Lincoln, for respondents.

OPINION

HAMMOND J.

This is a petition by the trustees under the will of Horatio N Slater, late of Webster in this state, setting forth that as such trustees they hold certain securities and praying that the court will by its decree determine whether the petitioners 'may sell said securities and if so upon what terms and conditions.' It was heard by a single justice, who entered a decree in substance that the securities or a part of them should be sold. He was of opinion that this was a final decree so that it was ripe for entry and hearing in the full court, but being of opinion that the matters raised were of such importance that in the interest of all parties they ought to be decided before further proceedings, by agreement of the parties he has reported all questions which would be open on an appeal therefrom, and all exceptions so far as material to said decree, for the determination of this court; and the case is before us on this report.

1. The main question is whether the securities or any part of them shall be sold. Mr. Slater died August 12, 1899, leaving a widow, Mabel H. Slater, and as his heirs at law (in addition to his children by his first wife) four minor children, the respondents, the issue of his marriage with the said Mabel. He left an estate amounting to several millions of dollars. At the time of his death he was engaged extensively in the manufacture of cotton and woolen goods in Webster, and had been so engaged for many years. The mills for the manufacture of cotton goods were owned by him in his individual capacity, while the mills for the manufacture of woolen goods belonged to the Slater Woolen Company, a corporation organized under the laws of this state. He owned, however, all but 200 shares of the 5,000 shares into which its capital stock was divided. The business, both cotton and woolen, had long been conducted under one management, and all the manufactured goods were sold by a single agency under the name of S. Slater & Sons. The connection of the cotton and woolen business was such that the parties interested seem to have thought that the value of the business depended upon its continued operation as a whole, and that any dismemberment would be disastrous.

By his will, after various bequests, the testator devised in the fourteenth clause the residue of his estate to trustees to accumulate for 20 years and 11 months after his decease, and then to pay over and convey, share and share alike, 'to the children of his marriage with his wife Mabel' the trust fund so accumulated, one-half of each child's share on the arrival of such child at the age of 25 years, and the remainder on its arrival at the age of 30 years, with provisions for the various contingencies which might arise in the case of the death of any or all of the children with or without issue before arriving at the ages above named, and in case the period of 20 years [211 Mass. 338] and 11 months should expire before the children should reach such ages respectively. By the fifteenth clause he appointed the present petitioners executors and also trustees, and made provision for the investment, management and sale of the trust funds, which so far as material to this inquiry will be hereinafter considered. After giving his executors power to sell at public or private sale any part of his estate real or personal not specifically devised, upon such terms and conditions as they should think fit, he gives specific directions as to his manufacturing business in the following language:

'I also authorize and empower my executors to carry on, as executors, in the name of my estate, my manufacturing business, and other business outside of corporations, for the purpose of winding it up, so long as they find it advisable so to do, to close it up without serious loss; and to that end, and that there may be no misapprehension on the part of any person interested in the result of said business, either said executors, beneficiaries under this will, or creditors of said business so conducted after my decease, I hereby declare, and it is my will that my said executors are authorized to risk as capital for the purpose of carrying on said business only such part of my estate as may be invested in said business at the time of my decease, in the shape of stock raw, wrought and in process and all such creditors are hereby notified that my estate is to be liable to the extent above stated and no more. And when as executors they shall have wound up said business, they are to pay over the proceeds thereof to themselves as trustees, and as trustees hold the property derived from said business in trust, as herein before provided.'

Various provisions of the will were not satisfactory to some concerned and there was opposition to its allowance as it stood. Pursuant to a compromise agreement entered into by all parties interested and approved by the probate court, the terms of which are here immaterial, the will, as it was then supposed, was proved and allowed by a decree of that court on September 5, 1899, subject to the compromise, and the petitioners were appointed executors. Subsequently it was discovered that the probate court had no jurisdiction to make such a decree (see Abbott v. Gaskins, 181 Mass. 501, 63 N.E. 933), and by reason of that and other facts another compromise agreement, the terms of which are not here material, was entered into; and by a decree of a single justice of this court, dated June 17, 1902, the will was finally allowed in accordance therewith, and the petitioners were appointed executors and trustees. Previous to the decree of the probate court of September 5, 1899, the petitioners had been appointed special administrators, and up to September 5th as special administrators, and subsequently, nominally as executors but in reality, as it turned out, still as special administrators, they carried on the business until the decree of June 17, 1902. Subsequently they claimed compensation upon that footing, largely in excess of what the will would have allowed them either as executors or trustees.

In May, 1903, by authority of the probate court, the executors with the consent of all concerned, conveyed to a corporation organized for that purpose under the name of S. Slater & Sons, Incorporated, all the manufacturing properties and business including their controlling interest in the stock of the Slater Woolen Company and received in payment therefor and in lieu thereof the bonds, stocks and securities of the new corporation, to wit: Bonds, $1,500,000; preferred stock, $1,500,000; common stock, $3,000,000, and a note for surplus assets to the amount of $385,266.59. These are the securities to which the present petition relates.

From the allegations of the petition upon which the decree was made and the terms of the decree itself, it is manifest that this transfer was not a sale within the terms of the will for the purpose of a final winding up of the business, but was merely a change in the method of holding the property to the end that the sale contemplated in the will could be more easily and advantageously made. The testator's direction to the executors to sell was as applicable to these securities received from the corporation as it theretofore had been to the property conveyed to it. From the time of the sale to some time in 1906 the petitioners were the sole directors, but in 1906 the board was increased to five by the addition of Mr. Olney and Mrs. Slater, the guardian of the respondents.

There was more or less friction, however, between the executors and the guardian, and in June, 1906, another compromise agreement was entered into; but either because the parties or some of them were advised that no court had jurisdiction to validate the agreement, or for some other reason, it never was presented to any court for approval and never became operative. It was signed by the parties, however, and the statement contained in the preamble is illuminating as to the position of the respective parties at that time upon the matter of the sale of the securities in question. After reciting the sale of the manufacturing properties to S. Slater & Sons, Incorporated, the paper proceeds as follows:

'Whereas, the said manufacturing properties or the proceeds thereof whenever the securities representing the same shall be sold, will go to and be held by the said trustees as part of a residuary trust fund constituted by said will, the entire beneficial interest in which fund is vested in the four minor children of said testator of whom Mabel Hunt Slater, widow of said testator, is the guardian; and

'Whereas, a controversy has arisen between the said guardian and the said executors and trustees respecting their powers and duties as regards the securities of said S. Slater & Sons, Incorporated----

'The guardian claiming that said securities cannot under present conditions be sold without serious loss to said residuary trust fund, and that for the benefit of said fund and in the interest of her wards the executors should continue to hold said securities and as directors of said corporation should continue to manage its affairs and said manufacturing properties as going concerns; and

'The executors and trustees claiming that under said will it is or may be their duty as executors to make an immediate sale of said securities with a view to their receiving and holding the proceeds thereof as trustees of the said residuary trust fund, and that such immediate sale is...