Beach v. Beach

• Decision Date: 23 July 1954
• Court: Connecticut Supreme Court
• Parties: BEACH v. BEACH et al. Supreme Court of Errors of Connecticut

Page 629

107 A.2d 629

141 Conn. 583

BEACH v. BEACH et al.

Supreme Court of Errors of Connecticut.

July 23, 1954.

Everett F. Fink, Hartford, with whom was Joseph W. Ress, Hartford, for appellant (defendant Goodwin B. Beach).

Frederick U. Conard, Jr., Hartford, for appellants (defendants Joseph W. Beach et al., executors).

Reinhart L. Gideon, Hartford, with whom was Salvator D'Esopo, Hartford, for appellee (plaintiff).

Before INGLIS, C. J., and BALDWIN, O'SULLIVAN, WYNNE and DALY, JJ.

BALDWIN, Associate Justice.

The plaintiff brought this action to the Superior Court in Hartford County on December 19, 1951, against the defendants Joseph W. Beach and George H. Day, executors under the will of Mary Batterson Beach, and the defendant Goodwin B. Beach. She claimed certain deficiencies in the payments due under a separation agreement between her and the defendant Goodwin B. Beach, the performance of which had been guaranteed by the decedent. The defendants denied that there was any deficiency. They also, in special defenses, alleged that the claim of the plaintiff was barred in part by the Statute of Limitations. The defendant executors further alleged that the plaintiff was estopped from asserting her claim against them because of her failure to give notice of any default to, or make any demand upon, their decedent during her lifetime. The trial court rendered judgment for the plaintiff against all the defendants and they have appealed.

A summary of the finding, with such corrections as are warranted, follows: The defendant Goodwin B. Beach and the plaintiff, husband and wife, resided in Hartford. Mary B. Beach and Dr. Charles C. Beach were the mother and father of Goodwin. On May 14, 1920, and August 29, 1923, Goodwin and his brother, the defendant Joseph W. Beach, at the request of their mother created trusts from which the plaintiff was to receive the net income during her life. On September 15, 1925, the plaintiff and Goodwin entered into a separation agreement. In connection therewith Goodwin set up a third trust, the net income from which was to be paid to the plaintiff during her life. The separation agreement provided: 'The party of the first part [the defendant Goodwin B. Beach] hereby guarantees that the income under the trusts * * * shall for five years after the date of the execution of this agreement net the party of the second part [the plaintiff] not less than Four Thousand Dollars ($4,000) per annum, and for the succeeding seven years not less than Five Thousand Dollars ($5,000) per annum, and thereafter not less than Seventy-five Hundred Dollars ($7,500) per annum for her natural life; and the party of the first part hereby agrees to pay to the party of the second part, at the end of each year, the difference, if any, between the above respective sums and the income from said trusts.' The fiscal year of each of the trusts was October 1 to September 30.

The separation agreement contained a provision that 'the mother and father of the party of the first part during her or his respective lives will by writing duly executed and acknowledged unconditionally guarantee performance by the party of the first part of his obligations herein created, in consideration of a written general release to be executed and acknowledged by the party of the second part and delivered to the party of the first part for his mother and father, which release the party of the second part agrees hereby to deliver on tender of said guarantee.' This guarantee by Mary B. and Charles C. Beach was in the following terms: 'In consideration of the execution and delivery to us of a general release by the said Ethel G. C. Beach, the receipt whereof is hereby acknowledged, we do hereby unconditionally guarantee during our natural lives due performance of the obligations herein created by the said Goodwin B. Beach. It is understood, however, that the said guarantee does not bind our estates or either of them after death.' The separation agreement appears to have been executed by the plaintiff and the defendant Goodwin in New York on September 15, 1925. The guarantee executed by Mary B. and Charles C. Beach was on a separate sheet of paper and was attached to the separation agreement. It was executed by them in Hartford on September 12, 1925. In 1937 the plaintiff brought an action on the agreement and the guarantee against the defendant Goodwin and his mother and father. Beach v. Beach, Superior Court, Hartford County, No. 56822. Judgment for the plaintiff was entered on April 11, 1938, and was satisfied on May 2, 1938. On May 12, 1938, the parties modified the separation agreement by a supplemental agreement which reduced the payments called for under the former to $5000 per annum. The separation agreement of September 15, 1925, was executed under seal. The guarantee was not a sealed instrument. The modification of May 12, 1938, was not under seal, but was, by its terms, made a part of the original agreement.

Dr. Charles C. Beach died on February 11, 1948, and his estate has been settled. Mary B. Beach died on May 21, 1951. No written notice of default or demand for any deficiencies under the modified agreement was ever made upon Goodwin by the plaintiff. He was a trustee of the trusts created by him and knew or should have known of any deficiencies. On October 22, 1951, the plaintiff filed with the executors under the will of Mary B. Beach a notice of claim and a demand for $14,707.85, alleged to be due on the guarantee by reason of claimed deficiencies of income which had accrued each year, save one, commencing with 1939. The executors disallowed the claim. It does not appear that any notice of default or demand for payment by reason of Goodwin's default under the separation agreement was made upon Mary B. Beach in her lifetime, after the action which was disposed of in 1938.

The parties, in an agreed statement of facts, set up a schedule showing the total income from the three trusts, the income taxes paid thereon by the trustee in behalf of the plaintiff, and the trustees' commissions, each year, from October 1, 1939, to October 1, 1951. The trial court reached the following conclusions: (1) The separation agreement was to be construed so as to provide to the plaintiff an income of not less than $5000 each year, free of any income taxes, and Goodwin was not entitled to credit for the payment of such taxes by the trustees out of the income of the trusts. (2) The guarantee was absolute and unambiguous, and no notice to, or demand for payment upon, Mary B. Beach during her lifetime was required of the plaintiff. (3) The Statute of Limitations was no bar to the plaintiff's cause of action because the statute does not run against payments contemplated by a continuing trust or by an unconditional guarantee. Judgment was rendered for the plaintiff to recover from the defendants $13,090.88 with interest and costs.

The defendants claim, first, that the plaintiff, and not Goodwin, must pay the income taxes upon the income payable to her under the trust. The answer to this claim lies in finding the intent of the parties as expressed in their written agreement providing for the support of the plaintiff. Certain long established canons of construction are applicable. The intention of the parties is to be found in the language they used when read in the light of their situation and the circumstances connected with their agreement. Preston v. Verplex Co., 135 Conn. 187, 189, 62 A.2d 860; Colonial Discount Co. v. Avon Motors, Inc., 137 Conn. 196, 200, 75 A.2d 507. The words they employed must be accorded their common meaning and usage where they can be sensibly applied to the subject matter of the contract. Trumbell Electric Mfg. Co. v. John Cooke Co., 130 Conn. 12, 16, 31 A.2d 393; Perkins v. Eagle Lock Co., 118 Conn. 658, 663, 174 A. 77.

In the agreement as modified, the pertinent portion of the clause dealing directly with the payments to be made by Goodwin to the plaintiff was that he guaranteed that the income from the trusts 'shall * * * net [the plaintiff] not less than [$5000] per annum for her natural life' (italics supplied). The word 'net' is used as a verb. This use appears to have been deliberate and for a purpose. Under other provisions of the contract the plaintiff agreed to give up all her claims upon Goodwin for future support, for alimony in case of a divorce, and for dower rights, and Goodwin was relieved of all these liabilities. Further, Charles C. and Mary B. Beach were to receive from the plaintiff a general release, presumably of any claim against them whatsoever unless it was based on the agreement with Goodwin and on their guarantee. Henceforth, the plaintiff could look only to the agreement and the guarantee for her support for years to come. The trusts were a secondary consideration, from which income would be available. But the parties definitely contemplated that this income might not always be sufficient to supply the agreed amount, and therefore it was provided that any deficiency would be met by Goodwin personally.

The word 'net' as a verb means '[t]o produce or gain as clear profit.' Webster's New International Dictionary (2d Ed.). In Wehrhane v. Peyton, 133 Conn. 478, 486, 52 A.2d 711, 715, we said that the "net income' of a trust estate ordinarily means the amount of income remaining after the payment of the expenses of administration and the making of other expenditures properly chargeable against gross income.' The agreement in the case at bar was not, however, only to pay to the plaintiff the net income from the trusts. It went further and provided that the income from the trusts would 'net' her not less than the stated amount. If it did not, she was to receive from Goodwin or, in the event of his default, from his father and mother, enough to make up the difference. In short, she was to have $5000 net each year. Schneidau v. Manley, 131 Conn. 285, 291, 39 A.2d 885.

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