Creed v. Connelly

• Decision Date: 02 July 1930
• Citation: 272 Mass. 241,172 N.E. 106
• Parties: CREED v. CONNELLY et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

272 Mass. 241

172 N.E. 106

CREED

v.CONNELLY et al.

Supreme Judicial Court of Massachusetts, Suffolk.

July 2, 1930.

Appeal from Probate Court, Suffolk County; Arthur W. Dolan, Judge.

Petition for instructions by James F. Creed, trustee under the will of C. James Connelly, deceased, in which Mary E. Connelly and others were named respondents. Decree for petitioner, and the respondents appeal.

Reversed with instructions.

O. Storer, of Boston, for appellant Mary E. Connelly.

J. L. Sheehan, of Boston, for appellant J. P. Bell.

J. J. Mansfield, of Boston, for appellee.

SANDERSON, J.

This is a petition filed in November, 1924, by trustees under the will of C. James Connelly for instructions as to whether they may apportion between capital and income the whole or such part of the expenses paid out of income of the trust estate for carrying certain lands, sold by them in June, 1924, as will reimburse the life tenant for the loss of income thereby caused.

The testator died July 10, 1914, without issue, leaving as his heirs his widow, a brother and two sisters. The personal estate was appraised in the trustee's inventory at $150,000, and the real estate at $41,300. The parcel of land with which this petition is concerned was owned by the testator at the time of his death and became a part of the trust estate subject to a mortgage for $26,000, the equity therein being appraised for $20,000. After bequests to various persons and objects the testator used the following language in disposing of the residue of his estate: ‘All the rest and residue of my property, real, personal and mixed, of which I die seized and possessed, or which I may be entitled at the time of my death, I give to my Trustees hereinafter named, but in trust, nevertheless, to pay the net income thereof to my beloved wife, Agnes G. Connelly, during her life, or while she remains unmarried, and on the death or re-marriage of my said wife, I direct that the said residue of my property be distributed as follows: One-half (1/2) each to my said sister, Mary E. Connelly, and to the children of my said sister, Annie E. Buckley, their heirs and assigns forever.’ He gave the trustees no power to sell, and made no special reference to the real estate in question and gave no directions concerning it. The testator's widow died August 22, 1929, testate, and without issue, leaving an estate of the estimated value of $75,000.

The land in question was a vacant lot situated on the Fenway, in Boston, and when sold by the trustees, in 1924, brought $60,000, leaving $34,000 as the net proceeds after the mortgage note was paid. The judge found that ‘the trustees made diligent efforts to sell the real estate after the death of the deceased, and that they used sound judgment in dealing with the same and in selling when they did.’ During the hearing he ruled that a finding substantially to the same effect made by the judge of probate for the period covered by the trustee's first account running to April 1, 1923, settled the issue of the trustee's diligence and fidelity in dealing with this land for the period covered by that account. From the date of the testator's death until the real estate was sold, the trustees paid out in taxes on this land and interest on the mortgage note $30,108.56, and received $2,063.56 as rent for the use of the vacant land for bill boards, and $2,500 deposited on proposed purchases of the land which were not consummated. This total sum of $4,563.56 was paid to the life beneficiary as income.

This petition for instructions was filed by the trustees on November 13, 1924, the remaindermen being named as respondents, but the life beneficiary by error not being so named. Her administrators with the will annexed have now been made parties by amendment. The finding was made that she knew of the pendency of the proceeding and that it was in fact started at her request. This petition was not set down for hearing until after the death of the life beneficiary in 1929, and since that time one of the trustees has died, leaving the petitioner Creed as sole surviving trustee. The judge of probate decided that the facts of this case brought it within the principles stated in Edwards v. Edwards, 183 Mass. 581, 67 N E. 658, and that there were no special circumstances to bring it within the principle of the cases of Jordan v. Jordan, 192 Mass. 337, 78 N. E. 459, and Parkhurst v. Ginn, 228 Mass. 159, 117 N. E. 202, Ann. Gas. 1918E, 982. He ordered that a decree be entered that the surviving trustee pay out of the net proceeds of the sale of the land in question to the representatives of the estate of the deceased life beneficiary the amount of the net carrying charges of the land before sale, after deducting the amount of income received and paid to the life beneficiary, and that the remaining sum be apportioned between capital and income. A decree was entered in accordance with this order, from which the residuary beneficiaries under the trust appealed.

The fact that the widow's rights became vested when the property was sold in her lifetime distinguishes this case from Ogden v. Allen, 225 Mass. 595, 114 N. E. 862, and justified the ruling of the judge that her death did not preclude her personal representatives from seeking to establish the rights which the life tenant had under the petition; and we also are of opinion that his ruling that laches was not a bar to the maintenance of the petition was right. See Patterson v. Pendexter, 259 Mass. 490, 493, 156 N. E. 687.

In deciding whether upon a sale of unproductive real estate by trustees who have paid carrying charges thereon out of income this loss to imcome shall be restored in whole or in part from the proceeds of sale, and whether there shall...