City of Boston v. Curley

• Decision Date: 14 September 1931
• Citation: 177 N.E. 557,276 Mass. 549
• Parties: CITY OF BOSTON et al. v. CURLEY et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

276 Mass. 549

177 N.E. 557

CITY OF BOSTON et al.

v.CURLEY et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 14, 1931.

Case reserved from Supreme Judicial Court, Suffolk County.

Petition by the City of Boston and another against James M. Curley and others. Case reserved for the Supreme Judicial Court on the bill and answers.

Decree in accordance with opinion.J. P. Lyons, Asst. Corp. Counsel, of Boston, for petitioners.

B. E. Eames, of Boston, for respondents.

RUGG, C. J.

This is a petition for instructions as to the proper custody, management and control of two funds held for public charitable purposes, one known as the Franklin fund and the other as the Carnegie donation. The plaintiffs are the city of Boston and the city treasurer of Boston. The defendants are the Franklin Foundation, a corporation created by St. 1908, c. 569, the individuals constituting the members of that corporation and the same individuals described as members of the board of managers of the Franklin fund. The commonwealth and the Attorney General have been joined as defendants. A public charity is in issue. By its answer the commonwealth disclaims interest.

The case has been reserved for the determination of this court upon the bill and answers. Therefore all allegations of fact well pleaded in the petition so far as not denied in the answers and all averments in the answers responsive to the petition must be taken to be true. Joslin v. Boston & Maine Railroad (Mass.) 175 N. E. 156, and cases cited.

The Franklin fund had its origin in the codicil to the will of Benjamin Franklin whereby one thousand pounds sterling were given to the town of Boston. Testamentary instructions were given for the investment of this fund. The testator directed that at the end of one hundred years, estimating that the original gift with its accretions of interest would then amount to one hundred thirty-one thousand pounds, one hundred thousand pounds should then be laid out in public works of the most general utility to the inhabitants of Boston and the remainder of the fund should constitute a fund to be invested and accumulated for another one hundred years. The testator also provided that the gift should be managed under the direction of the selectmen of the town and the ministers of the oldest Episcopalian, Congregational and Presbyterian churches in the town. Question was raised whether the legal title to the fund was in the town or in the managers, and in 1898 it was held in Higginson v. Turner, 171 Mass. 586, 51 N. E. 172, that that title was in the municipality in trust for the purposes specified and not in the managers. It was decided in Boston v. Doyle, 184 Mass. 373, 68 N. E. 851, that the selectmen of the town of Boston were abolished when Boston was incorporated as a city, that the aldermen of the city did not succeed the selectmen of the town as managers of the fund, that therefore the board of managers as constituted by the testator ceased to exist in 1822, that only the clerical members remained eligible to continuance in the administration of the trust, and that a court of general equity jurisdiction had power and ought to appoint nine managers from among the virtuous and benevolent citizens of Boston selected because of their intellectual and moral qualifications, of whom the mayor of Boston should be one, to serve, together with the three ministers specified in the codicil, as a board of managers. Pursuant to that decision a decree was entered in 1904, appointing twelve persons, including the three ministers, the mayor and eight citizens at large, as a board of managers to have the charge and management of the entire Franklin fund.

The estimate of the testator as to the size of the fund at the end of the first one hundred years was not realized. Therefore it was divided in the proportions indicated. The sum of $322,490.20 was set aside and devoted to the establishment of an industrial school known as the Franklin Union and the sum of $102,455.70 was held to accumulate for the second one hundred years.

By St. 1908, c. 569, those at that time constituting the board of managers were made a body corporate under the name the Franklin Foundation. It was provided that these and their successors in office should continue a body corporate, that the members of the corporation should be as specified in said decree of 1904, that vacancies in the class of eight virtuous and benevolent citizens of Boston should be filled by the court which made that decree and that any of those eight members might be removed for cause. It was further provided that the corporation be deemed a board or department of the city of Boston and on behalf of the city should have the custody, management and control of the Franklin Union and of the part of the fund accumulating for the second one hundred years. The powers of the corporation as set out in the several sections of the act were the same as the powers of the board of managers set forth in the codicil to the will and in the decree of 1904. It was specified that the legal title to the property ‘now constituting said Franklin Union,’ to that part of the Franklin gift already appropriated for the establishment of the Union and to any other fund or property already given to the city of Boston for the benefit of the Franklin Union should remain in the city of Boston, but the corporation was to hold the title to and invest and reinvest real or personal property thereafter given for the benefit of the Franklin Union. Other powers were conferred not relevant to the case at bar. By St. 1927, c. 40, the powers of the corporation as to gifts and funds other than the Franklin fund, given to it or its predecessor the board of managers of the Franklin fund, were much enlarged.

There was nothing illegal in the incorporation of the managers as the Franklin Foundation to manage the Franklin fund. The departure from the precise plan of management outlined by the testator was required by the incorporation of the town of Boston as a city. That departure was declared to be necessary and the new scheme for the selection of managers was framed all in accordance with a decision of this court. The board of managers as existing just prior to the enactment of said chapter 569, was legal and its powers were defined. The act of incorporation wrought no change in the membership of the board of managers. The succession in case of vacancies conformed to the terms of the testamentary gift as necessarily modified by our decision. The powers and responsibilities of the managers continued to be the same without extension or restriction save in nonessential particulars tending toward ease in execution of the duties arising under the trust. The corporation is simply a means to enable the trustees to execute the trust with less difficulty. The control of the funds has been always and still continues to be with designated individuals in their private capacities clothed with a corporate being. The title to the fund is continued in the city of Boston by explicit words. The beneficiaries and ultimate disposition of the fund are undisturbed. No change is attempted in the title, the management, or the uses of the trust. In Nelson v. Cushing, 2 Cush. 519, it appeared that a testator left a fund for the establishment of a free school to be paid over by his executors to trustees to be appointed to administer the trust by the selectmen of Newburyport. The selectment pursuant to the will appointed seven trustees to receive the fund and manage the trust. After the money was paid over a statute was enacted making the trustees a corporation with the usual powers, privileges and restrictions of charitable corporations, with liberty to hold property to be applied to the purposes of education in conformity to the will of the testator. It was said by Chief Justice Shaw at page 527 of 2 Cush.: ‘This act, in our judgment, does not vary the powers or the duties of the trustees, or change the character of the school placed under their management. It enables them to act in a corporate name, and to have a corporate seal; and it affords them the facility of taking conveyances, obligations and securities, in their corporate name, and avoids the necessity of changing such securities upon a change of individual members composing the board’ (as to this last clause see now G. L. c. 203, § 6; Glazier v. Everett, 224 Mass. 184, 187-188, 112 N. E. 1009); and at page 529 of 2 Cush.: ‘* * * The act of incorporation * * * did not constitute this charity. It did not enlarge or diminish the powers of the trustees, except as to the mode of acting in certain particulars, and it did not exempt them from the duties and responsibilities, which would have devolved upon them as trustees acting in their natural capacities.’

The case at bar appears to be covered in every essential particular by the grounds stated and the point decided in Nelson v. Cushing. This is one of the instances where the corporation, although a separate entity for all purposes to facilitate the administration and execution of the trust, does not afford a shield to the managers in any of their trust responsibilities to the court, or to the representatives of public authority rightly acting toward the enforcement of the trust. The court will look through the corporate form in order to hold the individual members to the responsibilities and duties resting on trustees in their natural capabilities.

There is nothing inconsistent with this conclusion in the reasoning or points decided in Stone v. Framingham, 109 Mass. 303;Winthrop v. Attorney General, 128 Mass. 258;Cary Library v. Bliss, 151 Mass. 364, 25 N. E. 92,7 L. R. A. 765; or Adams v. Plunkett (Mass.) 175 N. E. 60. Without reviewing those decisions in detail, it is enough to say that in each of them an attempt was made to change the legal title to the trust, the method of administering the trust or the uses to which the trust should be put,...