City of Boston v. Dolan

• Decision Date: 18 September 1937
• Citation: 298 Mass. 346,10 N.E.2d 275
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: CITY OF BOSTON v. EDMUND L. DOLAN & others.

298 Mass. 346

10 N.E.2d 275

CITY OF BOSTON v. EDMUND L. DOLAN & others.

Supreme Judicial Court of Massachusetts, Suffolk. May 14,

September 18, 1937

June 28, 1937.

Present: RUGG, C.

J., CROSBY DONAHUE, LUMMUS, & QUA, JJ.

Trust, Charitable Identity of trustee, Distinction between individual and trust capacities of trustee, What constitutes, Constructive. Municipal Corporations, Charitable trusts, Officers and agents. Boston. Fiduciary. Equity Jurisdiction, To enforce trust, Remedy at law. Constitutional Law, Trial by jury. Equity Pleading and Practice, Appeal, Findings by judge Requests and rulings, Parties, Bill, Jury issues, Waiver Brief before Supreme Judicial Court.

A judge hearing a suit in equity cannot be required to pass upon requests, filed at the trial, for findings of specific facts.

Neither requests for rulings of law nor action by the trial judge thereon have any technical standing on appeal in a suit in equity.

The city of Boston held the legal title to certain trust funds under the management of trustees or commissioners acting as its agents, and was entitled to maintain a suit in equity against its treasurer to compel him to account for secret and illicit profits made by him personally in dealing with such funds; but it could not maintain such a suit as to his dealings with the trust funds of the incorporated Trustees of the Public

Library of the City of Boston, or of the incorporated Trustees of the City Hospital of the City of Boston, those corporations and not the city having the legal title to their funds.

A trustee having legal title to a trust fund need not designate himself as trustee in bringing a suit in equity against his agent to require an accounting of illicit profits made by the agent in dealing with the fund.

A bill in equity, by a city as the holder of the legal title to sundry trust funds which were managed by different boards and commissions, to require its treasurer to account for secret and illicit profits made by him personally with respect thereto was not multifarious.

The treasurer of the city of Boston occupied a fiduciary relation with respect to its trust funds and, regardless of a possible remedy at law, could be compelled by it to account in equity for secret and illicit profits made by him personally in dealing with them.

The defendant in a suit to compel a fiduciary to account for secret and illicit profits made by him personally was not entitled to a trial by jury as of right; and a denial thereof where the issues related to a number of funds and numerous and complicated transactions showed a wise exercise of discretion.

A point was not argued and was treated by this court as waived where the only mention of it in the brief of the party raising it was a mere statement that the trial judge erred.

BILL IN EQUITY, filed in the Supreme Judicial Court for the county of Suffolk on December 14, 1935.

The suit was transferred to the Superior Court and heard by Hanify, J. From decrees entered by his order and by order of Walsh, J., the defendant Dolan appealed.

T. H. Mahony & M.

Wingersky, for the defendant Dolan, submitted a brief.

H. E. Foley, Corporation Counsel, (L.

H. Weinstein, Assistant Corporation Counsel, with him,) for the plaintiff.

LUMMUS, J. This is an appeal by the defendant Dolan, hereinafter called simply the defendant, from a final decree ordering him to pay to the plaintiff the sum of $131,161.90, consisting of money gained by him illegally and in breach of his official and fiduciary duties to the plaintiff, together with interest thereon from the dates of his several gains, amounting to $40,417.67 at the date of the final decree, September 23, 1936. The bill has been dismissed as to all other defendants. The case comes here on a report of all the evidence, accompanied by a voluntary report of the facts by the trial judge. There are also appeals from certain interlocutory decrees.

Since 1923 the defendant has been in the stock and bond brokerage business for himself in Boston under the name of E. L. Dolan Company. He was thoroughly experienced in the buying and selling of municipal bonds and other securities. He continued during the time of the transactions in question to be familiar with the market for municipal bonds and with its literature.

On October 24 1929, the defendant caused to be incorporated the Legal Securities Corporation, with an authorized capital stock of one thousand shares, for the purpose of conducting a general stock brokerage business. The defendant furnished all the capital, and owned and controlled the corporation at all times.

The defendant was appointed and qualified as acting treasurer of the plaintiff city of Boston on January 25, 1930, and became treasurer on March 26, 1930. He remained such until January 11, 1934. In these offices he was not only in charge of the current funds, receipts and expenditures of the plaintiff, but was also the custodian of many permanent and trust funds held by the plaintiff, and was charged with the duty of investing them.

The defendant bought from Legal Securities Corporation the bulk of the bonds purchased by him as city treasurer. In such purchases he grossly discriminated in its favor. He bought from it for the city at prices which he knew were excessive bonds which had been offered to him shortly before by other dealers at lower prices and bonds which he could have bought in the market or even on the stock exchange at lower prices. In some instances, in order to conceal the magnitude of the purchases from Legal Securities Corporation, he bought bonds for the city ostensibly from an impecunious broker named Dever, who was furnished the bonds by Legal Securities Corporation which took almost all the profit. Frequently the defendant as city treasurer paid Legal Securities Corporation for the bonds before it had to pay for them, so that the city furnished capital for its business. The profits made by Legal Securities Corporation, which was the defendant, in his transactions with himself as city treasurer, amounted to the sum stated in the final decree.

The foregoing summary of the facts has been derived from the findings of the judge. It is true that in equity findings of fact made by a judge are open to review in this court upon the reported evidence, subject to the familiar rule concerning the weight to be given findings upon contradictory evidence made by a judge who has actually seen and heard the witnesses. Trade Mutual Liability Ins. Co. v. Peters, 291 Mass. 79 , 83-84. Spiegel v. Beacon Participations, Inc. 297 Mass. 398 , 407, et seq. But in this case, though the evidence is reported, the defendant does not argue that the findings just summarized are wrong. We have no occasion, therefore, to review them upon the evidence, except with respect to the specific points discussed later in this opinion.

The defendant filed one hundred eighteen requests "for findings of fact and rulings of law." So far as these were requests for specific findings of fact, the judge was not required to consider them in an equity case any more than in an action at law. Ashapa v. Reed, 280 Mass. 514 , 516. Kohutynski v. Kohutynski, 296 Mass. 74, 77. In equity, a party entitled to appeal from a decree may require the judge to "report the material facts found by him." G.L. (Ter. Ed.) c. 214, Section 23. Plumer v. Houghton & Dutton Co. 277 Mass. 209 , 214, 215. But he has no right to catechize the judge as to specific facts. Merrill v. Everett, 293 Mass. 327 .

So far as the requests were for rulings of law, it is now settled that such requests are unnecessary and have no technical standing in an equity case brought up on appeal. Graustein v. Dolan, 282 Mass. 579 , 583, 584. Stoneham Five Cents Savings Bank v. Johnson, 295 Mass. 390 , 393. National Radiator Corp. v. Parad, 297 Mass. 314 , 319. The fact that the trial judge saw fit to deal with them specifically gives them no importance. All the evidence is reported, and it becomes the duty of this court on appeal to enter a correct decree on the findings and the evidence, with reference to every matter argued, regardless of the views of the law entertained by the court below. Estey v. Gardner, 291 Mass. 303 , 307. See also Howland v. Stowe, 290 Mass. 142 , 146. So far as the subject matter of these requests has been argued, it will be considered upon the appeal from the final decree.

The defendant contends that the city of Boston is not the proper plaintiff as to many of the trusts and funds in question, because it has not the legal title. Where money or other property is given to a municipal corporation upon a charitable trust, a provision that the management of the trust shall be in the hands of a board of trustees does not necessarily divest the municipal corporation of the legal title and vest it in the trustees. Often such a gift has been construed to make the municipal corporation the technical trustee, holding the legal title, and the so called trustees merely an agency entrusted with the duty of management. Ware v. Fitchburg, 200 Mass. 61 . See also Worcester City Missionary Society v. Memorial Church, 186 Mass. 531 , 538; Attorney General v. Lowell, 246 Mass. 312; Adams v. Plunkett, 274 Mass. 453 , 465; Emergency Fleet Corp. v.

Western Union Telegraph Co. 275 U.S. 415. This has heretofore been said to be the situation of the George Robert White fund (Stoneman v. Boston, 263 Mass. 255, 260), and held to be the situation of the Franklin fund (Higginson v Turner, 171 Mass. 586; Boston v. Doyle, 184 Mass. 373; Boston v. Curley, 276 Mass. 549), these being two of the funds involved in this case. In Attorney General v. Parker, 126 Mass. 216 , 220, a charitable bequest to a town was indeed held to vest title in trustees provided for by...