Colonial Trust Co. v. Brown

• Decision Date: 16 December 1926
• Citation: 135 A. 555,105 Conn. 261
• Court: Connecticut Supreme Court
• Parties: COLONIAL TRUST CO. v. BROWN ET AL.

135 A. 555

105 Conn. 261

COLONIAL TRUST CO. v. BROWN ET AL.

Supreme Court of Errors of Connecticut.

December 16, 1926

Case Reserved from Superior Court, New Haven County; Edwin C Dickenson, Judge.

Suit to determine construction of the will of Robert K. Brown deceased, late of Waterbury, brought by the Colonial Trust Company, trustee, against Lena M. Brown, executrix of the estate of Frederick J. Brown, deceased, and others. Reserved for the advice of the Supreme Court of Errors on an agreed statement of facts. Questions answered.

Robert K. Brown died in 1916, leaving a will made five months before, in which, after making a few small bequests, he gave all his property to the plaintiff in trust, directing it to pay certain annuities, and providing for the distribution of the residue among the heirs of the blood of his father per stirpes. The portions of the will material in answering the questions propounded are printed in the footnote.^[1]

His estate consisted principally of the two pieces of property referred to in the ninth paragraph of his will as the Exchange Place property and the Homestead.

The Exchange Place property was acquired by testator's father in 1848, and at his death, in 1881, by the testator. It is located in the heart of the financial and retail business district of Waterbury, is as valuable as any land in the city, and most favorably adapted for buildings containing stores and offices. There is and for a long time has been upon it a group of several old buildings. They are costly to maintain, expenditures for this purpose during the last seven years absorbing more than 50 per cent. of the gross rentals. Their condition, arrangement, and appearance are such that the lower floors are not desirable for use for retail stores and the upper floors are ill adapted to commercial or business purposes. So long as the height of buildings upon the property is restricted to three stories, it cannot be improved so as to get the best income return, and the restriction is likely to have a more serious effect in the future. Even if the properties were improved, the best income return cannot be secured, so long as leases can be given only for one year, and this restriction, too, is likely to have a more serious effect in the future; it, in fact, diminishes the ground floor rentals by at least 20 per cent., and about 70 per cent. of the gross income from the property is derived from these rentals. Tenants of the most desirable class cannot be secured for the property, and could not be, even if the properties were improved, unless leases for more than one year could be given. This reacts upon rental values and the character of the business done in the neighborhood and retards the normal development of the property in use and value. At the testator's death the property was assessed for taxation at $418,300, and in 1924, at $746,000, its fair market value being approximately $1,000,000. There is a mortgage upon it which amounted at his death to $181,500, but which has since been reduced by a payment of $6,000.

The homestead property was in part acquired by the testator from his father in 1876, and in part purchased by him in 1889. The land is occupied by several dwelling houses, which have been substantially unchanged since the testator acquired them, except that the use of one has had to be abandoned, and by a brick barn which, since the testator's death, has been converted into an automobile service station and salesroom. The property cannot be improved, so long as the height of buildings upon it is restricted to three stories, or, if improved, cannot be rented so long as leases upon it are restricted to one year, so as to secure the best income return from it, and the effect of these restrictions is likely to be more serious in the future. This property was assessed for taxation at the testator's death in 1914 at $50,000, and in 1924 at $80,400, its market value now being approximately $100,000.

The effect which would be caused by the restrictions as to height of buildings and length of leases to be given, inserted in the will, was apparent when the testator executed it and thereafter until his death, and was known to him. The net income received from the two properties for the three years before the date of the will averaged $20,000. Since then, although the annuities provided in the will have been paid, and $6,000 has been applied on the mortgage, there has been an accumulation of excess income to such an extent, that, with certain other funds added, the trustee on December 31, 1925, held personal property to the amount of $288,469.63.

At the time of the testator's death there were living of the descendants of his father one grandson of a sister of the testator of the full blood, the defendant Buckingham P. Merriman, who is unmarried, a half-brother of the testator, Frederick J. Brown, and several children and grandchildren of the latter. The testator's relations with Merriman and Brown and the latter's family were cordial and pleasant. Frederick J. Brown has since deceased, leaving a last will in which he named his wife, the defendant Lena M. Brown, as executrix, and made her sole devisee and legatee of his property. One grandchild of Frederick J. Brown has been born since the testator's death.

The questions we are asked to answer are as follows:

" (1) Who are the ‘ heirs of the blood of my father, William Brown,’ as that phrase is used in article twelfth of the will, and as of what date are they to be determined? Did the persons thus described take a vested interest under the will upon the death of the testator and, if so, what interest, and to what extent.

(2) Are the ‘ heirs of the blood of my father, William Brown,’ now entitled to any part of the corpus of the trust estate?

(3) Are the ‘ heirs of the blood of my father, William Brown,’ now entitled to the balance of the net income of the trust estate, after the payment of the annuities, or to any part thereof?

(4) Is the trustee required to accumulate income not needed for payment of annuities and, if so, to what extent?

(5) What are the duties and powers of the Colonial Trust Company, as trustee, with respect to the net income received by it?

(6) Has the trustee power to mortgage the ‘ Exchange Place’ and ‘ homestead’ properties for the purpose of erecting new buildings thereon?

(7) What interest, if any, did Frederick J. Brown have at the time of his death, under the will of Robert K. Brown, and in or to the trust estate?

(8) Is the restriction with reference to the ‘ Exchange Place’ and West Main and Meadow Streets properties contained in article eleventh; namely, ‘ Provided, however, that any new buildings placed upon said land shall not exceed three stories in height’ binding upon the trustee and, if so, what is meant by a building which shall not exceed ‘ three stories in height’ ?

(9) Are the provisions of article ninth intended to forbid the trustee to sell or dispose of the West Main and Meadow Streets property and the ‘ Exchange Place’ property, and, if so, are they absolutely binding upon the trustee, and what is the effect of the limitation upon the power of the trustee to sell the other real estate of the testator ‘ within five years'? May such of the other real estate as has not been sold be now sold by the trustee upon application and decree of the proper court?

(10) Under the provisions of article tenth whereby the trustee ‘ is forbidden to invest in any railroad bonds, or in any corporation not located in the city of Waterbury, state of Connecticut,’ may the trustee invest without restriction in state and municipal bonds?

(11) Does paragraph 4 of the will require that the trustee shall forever keep an office open, and if so, is it valid and binding on the trustee?

(12) Are the words used in paragraph 4, with reference to the employment of Blanche M. Pierce and Pedro Delgazo, precatory or obligatory, and if the latter, what duty will the trustee owe to them when the trust terminates?

(13) Is the provision restricting the leasing of the property to one year binding upon the trustee?

(14) Does the clause in paragraph 4 ‘ except as limited by and provided in the next clause of this my will,’ in any way restrict the power of the trustee to sell, when it appears that no such limitation is made in either the next clause or the next paragraph?"

Wheeler, C.J., dissenting in part.

Terrence F. Carmody and Walter E. Monagan, both of Waterbury, for plaintiff.

Leonard M. Daggett, of New Haven, for defendants Lena M. Brown, Leonie M. Brown Williams, and Hayden W. Brown.

Francis T. Reeves, of Waterbury, for defendants Pierce and Delgazo.

Carroll C. Hincks, of Waterbury, for defendant Merriman.

MALTBIE, J. (after stating the facts as above).

There is nothing in the terms of the will to suggest that the testator intended that the ascertainment of the " heirs of the blood of my father," to whom in the twelfth article of the will he gave the residue of the estate, should be postponed until the termination of the trust. That being so, the remainder interest in the trust estate vested at his death in those who then came within that description, and though their enjoyment would have to be postponed, they had an estate which they might alien or devise. Allen v. Almy, 87 Conn. 517, 523, 89 A. 205, Ann.Cas. 1917B, 112; Close v. Benham, 97 Conn. 102, 104, 115 A. 626, 20 A.L.R. 351; Stamford Trust Co. v. Lockwood, 98 Conn. 337, 348, 119 A. 218. The " heirs of the blood of my father" were then Buckingham P. Merriman and Frederick J. Brown. Nor are they to be regarded as impliedly excluded, under the doctrine of Gross v. Hartford-Connecticut Trust Co., 100 Conn. 332, 123 A. 907, because the will also provides annuities for them; for these...