Cramer v. Hartford-Connecticut Trust Co.

• Decision Date: 25 July 1929
• Citation: 110 Conn. 22,147 A. 139
• Court: Connecticut Supreme Court
• Parties: CRAMER v. HARTFORD-CONNECTICUT TRUST CO. ET AL.

147 A. 139

110 Conn. 22

CRAMER v. HARTFORD-CONNECTICUT TRUST CO. ET AL.

Supreme Court of Errors of Connecticut.

July 25, 1929

Appeal from Superior Court, Hartford County; Newell Jennings, Judge.

Action by Charles W. Cramer, administrator, against the Hartford-Connecticut Trust Company and others, for a judgment declaring void an alleged trust agreement between plaintiff's intestate and the named defendant, and for other relief. Judgment for defendants, and plaintiff appeals. No error.

Ufa E Guthrie, of Hartford, and Hamilton McInnes, of New York City for appellant.

Lawrence A. Howard and Cyril Coleman, both of Hartford, for appellees.

Argued before WHEELER, C.J., and MALTBIE, HAINES, HINMAN, and BANKS, JJ.

MALTBIE, J.

This action is brought by the administrator upon the estate of Grace D. Dodd against the Hartford-Connecticut Trust Company, named trustee in a certain instrument purporting to be a trust agreement, executed and delivered by her to it, and also against the administrator of the estate of one of the beneficiaries named in that instrument and against a living beneficiary, claiming that the instrument be declared null and void, and that the defendant trust company account for the property received under it and for damages. In the fourth count of the complaint it was alleged that the property transferred to the trust company was not within the term " securities" as used in the instrument, and that the trust company had taken and held it as agent and servant of Mrs. Dodd, and had refused to surrender it to the plaintiff on demand. A fifth count was added by amendment, in which it was alleged that the agreement was testamentary in character, and that, not having been executed in accordance with the provisions of the statute governing the execution of wills, it was invalid and void. By agreement of counsel and in accordance with the provisions of section 5636 of the General Statutes, the trial court heard and determined the issues arising under the fourth and fifth counts before the trial of certain issues raised by the other counts. From its decision, upholding the instrument as creating a valid trust of the property transferred to the trust company, the plaintiff has appealed.

On October 7, 1921, Mrs. Dodd's husband committed suicide, leaving a will in which the defendant trust company was named executor. Mrs. Dodd was at the time disabled by paralysis, so that she could only speak a few words at a time and could not write with her right hand. One of the trust officers of the trust company called upon her, and a power of attorney was executed by her to it. When Mr. Dodd's safe-deposit box was opened, most of Mrs. Dodd's property was found in it, and the trust company, under the power of attorney, took possession of it, gave Mrs. Dodd a receipt, and thereafter, until November, 1921, held it as her agent. Mrs. Dodd expressed a wish to make some provision with reference to her property, so that it would not go to her relatives. As a result, the instrument in question a copy of which is printed in the footnote ^[1] was drawn up by the officer of the trust Company and executed by her; she signing it with her left hand, which she had learned to use. Thereafter the Trust Company transferred all the property referred to in the schedule annexed to it from an account in which it had carried them as attorney to a trustee account, caused all the certificates of stock to be transferred into its name as trustee, and withdrew and invested the various savings accounts, except one; Mrs. Dodd signing the necessary papers to accomplish these changes. Thereafter the trust company held the property as a trust fund, at times changed the investments without consulting her, paid her bills, and from time to time sent her small sums of money. Within a month of the execution of the instrument, and at other times, Mrs. Dodd said that she had given her money to the trust company.

Whatever the natural or technical meaning of the word " securities," the instrument before us makes it perfectly certain that it was here used to include the property, including her savings bank accounts, transferred to the trust company; for the instrument recites the desire of Mrs. Dodd to transfer and the actual transfer of the " securities set forth" in the schedule which is annexed to it, and in that schedule the property is listed in detail. No question is made that there was a sufficient transfer of the property included in the instrument to the trust company to sustain the trust if one was validly created. By the terms of the instrument Mrs. Dodd divested herself of the legal title to the property referred to in it and the schedule vested that title in the trust company, with full power to manage and control it, reserving only to herself the net income for her life, a right to such part of the principal as the trustee might deem necessary for her maintenance, comfort and support, and a power to revoke the trust. She did not thereafter have such control over the use and management of the property that the trust company is to be deemed merely her agent. Lyle v. Burke, 40 Mich. 499; Warsco v. Oshkosh Savings & Trust Co., 183 Wis. 156, 196 N.W. 829. " A power of revocation is perfectly consistent with the creation of a valid trust." Stone v. Hackett, 12 Gray (Mass.) 227, 232. That she intended something more than a mere agency is apparent from the fact that the trust company was acting under a power of attorney for her in the management of her affairs when the instrument in question was executed.

The invalidity of the agreement, if it is invalid, must be because it was in fact a testamentary disposition of the property, not executed as required by our statute of wills. That there may be a valid trust where property is transferred to a trustee with a reservation of a life use to the settlor, and at his death upon a further trust for other beneficiaries or to pay over to designated persons, does not admit of doubt. Candee v. Connecticut Savings Bank, 81 Conn. 372, 71 A. 551, 22 L.R.A. (N. S.) 568; Blodgett v. Union & New Haven Trust Co., 97 Conn. 405, 116 A. 908; Burbank v. Stevens, 104 Conn. 17, 22, 131 A. 742; Bromley v. Mitchell, 155 Mass. 509, 511, 30 N.E. 83; Kelley v. Snow, 185 Mass. 288, 70 N.E. 89; Lewis v. Curnutt, 130 Iowa, 423, 106 N.W. 914; 1 Perry, Trusts (7th Ed.) p. 119. The essential difference between such a trust and a will is that the former acts at once to vest the interest in the beneficiaries, although enjoyment is postponed until the death of the settlor, while the latter does not take effect until death and until then no interest can vest. 1 Perry, Trusts (7th Ed.) p. 119.

" The essential characteristic of an instrument testamentary in its nature is that it operates only upon, and by reason of, the death of the maker. Up to that time it is ambulatory. By its execution the maker has parted with no rights, and divested himself of no modicum of his estate; and, per contra, no rights have accrued to, and no estate has vested in, any other person. The death of the maker establishes for the first time the character of the instrument. * * * Upon the other hand, to the creation of a valid express trust it is essential that some estate or interest should be conveyed to the trustee; and, when the instrument creating the trust is other than a will, that estate or interest must pass immediately. * * * But it is important to note the distinction between the interest transferred and the enjoyment of that interest. The enjoyment of the cestui may be made to commence in the future, and to depend for its commencement upon the termination of an existing life or lives, or of an intermediate estate." Nichols v. Emery, 109 Cal. 323, 329, 41 P. 1089, 1091, 50 Am.St.Rep. 43.

In such cases as the one before us there is also the further distinction that, under the trust the legal title to the property, with its incidents, and the control and management of it, pass to the trustee, whereas, in the case of a will, legal title and full control are in no way affected during the life of the testator. Lewis v. Curnutt, supra.

As substantiating his claim that the instrument before us was really testamentary in its nature, the plaintiff rests largely upon the provision in the trust agreement which gave to Mrs. Dodd the power to revoke the trust and resume possession of the property at any time by giving written notice to the trust company. He contends that the existence of this power prevented any vesting of an interest in those who were to receive a gift at the death of Mrs. Dodd, and claims that consequently no such interest existed until her death. He cites a number of cases where, in trusts of the general nature of the one before us, a right of revocation was held to exist in the settlor, although not expressly reserved. In several of these cases the instrument provided that at the death of the settlor the property should be distributed in accordance with the terms of his will, or in default thereof to his heirs at law or next of kin, and these cases were decided upon the theory that such provisions do not establish gifts to take effect at the death of the settlor, but are mere statements by way of further limitation of the trustee's estate, or, to put it another way, are merely a recognition of the disposition of the property which would follow the termination of the trust by the death of the settlor. Hoskin v. Long Island Loan & Trust Co., 139 A.D. 258, 260, 123 N.Y.S. 994, affirmed 203 N.Y. 588, 96 N.E. 1116; Sperry v. Farmers' Loan & Trust Co., 154 A.D. 447, 139 N.Y.S. 192; Stephens v. Moore, 298 Mo. 215, 227, 249 S.W. 601.

In a few of the cases cited by the plaintiff the trust was held revocable, despite a provision that some other person should...