O'Brien v. Dwight
| Decision Date | 12 March 1973 |
| Citation | 363 Mass. 256,294 N.E.2d 363 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | Philip O'BRIEN, Jr., guardian ad litem, v. William DWIGHT & others. 1 |
Philip O'Brien, Jr., Holyoke, Thomas D. O'Brien, Boston, with him, for petitioner.
Louis F. Oldershaw, Holyoke, for Holyoke National Bank, trustee.
Joseph L. Cotter, Boston, Preston H. Saunders, Boston, with him, for William G. Dwight and others.
Before TAURO, C.J., and REARDON, QUIRICO, BRAUCHER, HENNESSEY, KAPLAN and WILKINS, JJ.
This matter is before us on a reservation and report of twenty questions of law by a judge of the Probate Court purporting to act under G.L. c. 215, § 13. 2 The questions, all interlocutory in nature, result from action taken by a guardian ad litem (guardian), appointed by the court to represent the interests of two named minors and of persons unborn or unascertained who are or may become interested as remaindermen of a testamentary trust after the death of the life beneficiary, 3 in connection with the allowance of the first account of the trustee. The guardian (a) objected to the allowance of the account, (b) filed a petition to revoke decrees allowing the accounts of the executrix under the will setting up the trust and the account of the administrator with the will annexed of the estate not already administered (administrator) under the same will (petition to revoke decrees), and (3) filed a petition in equity seeking to compel the individual respondents to turn over to the testamentary trustee certain property held by them which allegedly belongs to the trust and to account for and pay to the trustee their income and profits from said trust property.
The judge referred all three matters to a single lawyer (master-auditor) to hear the parties, receive their evidence, find the facts and report his findings to the court. The trustee's account was referred to him as an auditor whose findings of fact were to be final, and the other two petitions were referred to him as a master. The master-auditor filed a combined report on all three matters. Underlying all of the interlocutory questions reported by the judge to this court is the controlling question whether the facts found and reported by the master-auditor entitle the guardian to the relief which he seeks against the respondents. Our statement of the facts, or summary thereof sufficient for the purposes of this opinion, is based principally on the report of facts found by the master-auditor but also in part on (a) copies of records of the Probate Court which are reproduced in the judge's report, and (b) the guardian's allegations of apparently undisputed facts in his petition in equity and petition to revoke decrees which are admitted by the respondents in their answers. For reasons stated in the margin 4 the facts now before us are limited to those bearing on the guardian's right to relief or recovery, and we have no facts bearing on the nature or amount of such relief or recovery, if the guardian is entitled to prevail.
At his death on March 31, 1930, William G. Dwight (testator) was survived by the following heirs: his widow Minnie R. Dwight who was his second wife, his son Henry Dwight, the child by his first wife who died shortly after Henry's birth, his son William Dwight, and his daughters Helen Dwight Schoeffler and Laura Dwight Lewis, the last three being children of the testator and his second wife and widow, Minnie.
For many years prior to his death on March 31, 1930, the testator had been associated with the publication of a newspaper first called the 'Holyoke Transcript' which in 1926 was changed to the 'Holyoke Daily Transcript-Telegram.' Since nothing in this opinion turns on the precise name used, the newspaper will be referred to as the 'Transcript.' Formerly the testator was the sole proprietor of this newspaper business but about January 12, 1921, he transferred it to Holyoke Transcript, Inc., a Massachusetts corporation. The corporation was authorized to issue 800 shares of stock. It issued 798 shares to the testator, one share to his wife, Minnie R. Dwight (Mrs. Dwight), and one share to their daughter Helen (now Helen Dwight Schoeffler, a respondent). The testator never acquired the latter two shares. When he died his estate included the 798 shares and certain other assets, but the present litigation does not involve those other assets.
The will of the testator was drawn on June 28, 1926, naming Mrs. Dwight as executrix. It was allowed on April 23, 1930, and Mrs. Dwight was appointed executrix. She served in that capacity until her death on July 31, 1957. The will first gave all of the testator's property to Mrs. Dwight 'for and during the term of her natural life, she to have full control and management of the same and receive the income from the same during the term of her natural life,' and it gave her the power to sell assets without obtaining permission from the Probate Court. The will provided for the following distribution of the shares of stock of Holyoke Transcript, Inc., after the death of Mrs. Dwight: 401 shares to the testator's son William Dwight, 133 shares to the testator's daughter Laura Dwight Lewis, 133 shares to the testator's daughter Helen Dwight Schoeffler, and 133 shares to the Holyoke National Bank, 'as trustee and in trust for my son, Henry Dwight . . . he to have the use and income of the same during his life and . . . (a)fter the death of said Henry Dwight, any residue in the hands of said trustee from said trust fund herein referred to I direct shall be paid to said Henry Dwight's heirs or legal representatives.' 5
Although the will purported to dispose of 800 shares of stock in Holyoke Transcript, Inc., we have noted above that the testator held only 798 such shares, the corporation having issued one to Mrs. Dwight and one to their daughter Helen. Shortly after the testator's death Mrs. Dwight transferred her one share to her son William, and on advice of counsel she sold five more shares to him from the 798 held in the estate of which she was executrix. The sale was made at the appraised value of $333.53 a share. This left only 793 such shares for distribution when the life estate terminated at the death of Mrs. Dwight on July 31, 1957. The actual distribution made, instead of that provided in the will, was as follows: 397 shares to William, 132 shares each to Laura and Helen, and 132 shares to the Holyoke National Bank as trustee for Henry for life and then to his heirs or legal representatives. Since William and Helen previously held shares of the same corporation, this distribution increased their holdings to 403 shares for William and 133 for Helen.
After the death of the testator on March 31, 1930, his son William was made managing editor of the Transcript and he commenced to participate in managerial decisions. However, Mrs. Dwight, the testator's widow and executrix, who was an experienced newspaperwoman, and her brother, Arthur Ryan, who had been employed by the Transcript since 1908, were the principal officers and managers of the newspaper business. William's influence increased with the years.
On January 15, 1934, Mrs. Dwight, Arthur Ryan and William Dwight formed a Massachusetts business corporation under the name of Holyoke Transcript-Telegram Publishing Co., Inc. (Publishing Company). They caused the corporation to issue 198 shares of its stock to Mrs. Dwight individually and not in her capacity as executrix or life tenant, and one share to each of the other two incorporators. The corporate purposes of the new Publishing Company were almost identical to those of the Holyoke Transcript, Inc. In so far as the stated purposes were concerned, there was nothing which the new corporation could do which the prior corporation could not also do. Thus, both corporations were authorized to publish a newspaper. Mrs. Dwight in her capacity as executrix held the controlling shares in the Holyoke Transcript, Inc., and in her individual capacity held the controlling shares in the Publishing Company. She was president of both corporations, and she, her brother, Arthur Ryan, and her son William were the principal officers of both corporations.
While the corporate situation was as described above, the Holyoke Transcript, Inc., leased its entire physical plant, including its real estate, presses and other personal property, to the Publishing Company for a term of five years beginning March 1, 1934, at an annual rental of $75,000. That rental payment also covered a license given to the Publishing Company to publish the newspaper under the name of 'Holyoke Daily Transcript and Telegram,' and the right of the lessee to use that name as part of its corporate name. 6 As a result of this transaction Holyoke Transcript, Inc., was reduced to a real estate holding and property leasing corporation and the Publishing Company took over the entire business of publishing the newspaper. That business relationship of the two corporations was continuing on the date of the master-auditor's hearings. The three officers common to the two corporations caused the ownership of the plant and the business of publishing the newspaper to be placed in separate corporations on advice of counsel because they were 'concerned that the newspaper's publication might be stopped some day by attachments of the plant if someone sued the corporation for defamation or some other harassing purpose.'
The annual rental of $75,000 was originally fixed by the three persons who were the principal officers of both corporations. The annual rents actually paid by the Publishing Company for the years from the beginning of the lease were the following:
1934 $ 75,000 (prorated for part of
the year)
1935 75,000
1936 75,000
1937 70,000
1938 40,000
1939 through 1941 50,000 annually
1942
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