First Nat. Bank of Boston v. Truesdale Hosp.

• Decision Date: 22 September 1934
• Citation: 192 N.E. 150,288 Mass. 35
• Parties: FIRST NAT. BANK OF BOSTON v. TRUESDALE HOSPITAL et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

288 Mass. 35

192 N.E. 150

FIRST NAT. BANK OF BOSTON

v.TRUESDALE HOSPITAL et al.

Supreme Judicial Court of Massachusetts, Bristol.

Sept. 22, 1934.

Appeal from Probate Court, Bristol County; Hitch, Judge.

Proceedings by the First National Bank of Boston, as trustee under the will of Earle P. Charlton, deceased, for instructions and accounting. From decrees entered, the Truesdale Hospital and others appeal.

Affirmed.

J. G. Palfrey, B. Morton, and H. Morton, all of Boston, for Truesdale Hospital.

C. B. Rugg, C. J. Gilbert, and W. F. Farr, all of Boston, for First Nat. Bank of Boston.

R. P. Borden, of Fall River, for Union Hospital of Fall River and others.

E. C. Jenney and S. Robinson, both of Boston, for Trustees of Tufts College and others.

LUMMUS, Justice.

Article Seventhly of the will of Earle P. Charlton, dated January 2, 1926, declared that the testator had deposited with The First National Bank of Boston a large number of shares of common stock of F. W. Woolworth Company, and directed that at the death of the testator ‘it shall become a permanent trust fund to provide for the following charities and be set aside by said Bank and divided up in the following separate trusts, as follows-One-quarter of the total, but in no instance to be less than Five hundred thousand dollars ($500,000.00), to be put aside and invested, the income from same to be paid semi-annually to the Truesdale Hospital of Fall River, Massachusetts.’ The remaining three-quarters, or excess above $500,000, as the case might be, was divided into three other trust funds, the income of the first to go to Tufts College, of the second to go to the Union Hospital of Fall River, Massachusetts, and of the third to go to Johns Hopkins Hospital of Baltimore, Maryland, and the Fall River District Nursing Association in equal shares.

The testator died on November 20, 1930, the will was proved and allowed on January 2, 1931, and The First National Bank of Boston was appointed trustee under said Article Seventhly on February 9, 1931. By the decision of this court in First National Bank of Boston v. Union Hospital, 281 Mass. 64, 183 N. E. 247, 89 A. L. R. 1125. it was established that the corpus of the fund under said Article, before division, consisted of twenty-five thousand shares. On May 22, 1931, the executors, consisting of said Bank and two individuals, endorsed said shares to said Bank, which appropriated to the trust for the benefit of Truesdale Hospital seven thousand four hundred seventy-seven shares. These, at the market value on that day of $66 7/8 a share, made $500,024.37, a few dollars more than the minimum of $500,000 which Truesdale Hospital was entitled to have held in trust. On May 28, 1931, after transfer of the shares on the corporate books, said Bank obtained certificates for seven thousand four hundred seventy-seven shares in its name as trustee for Truesdale Hospital. One third of one share, however, is deemed to belong to the trusts for other beneficiaries, in order to reduce the trust for the Truesdale Hospital to $500,000.

This method of division is satisfactory to the beneficiaries under Article Seventhly, other than Truesdale Hospital. Truesdale Hospital, however, contends that a division was never lawfully made but remains to be made in the future. At the present time the low value of the shares, as compared with their value on May 22, 1931, would require the appropriation of many more shares to the trust fund for Truesdale Hospital in order to make up the $500,000 in value to which it is entitled, and the shares available for other trust funds under Article Seventhly would be correspondingly fewer.

The number of shares which Truesdale Hospital was entitled to have held for it in order to make up $500,000 in value, depended upon the value of shares at the time the trust should in fact be set up. Fisk v. Cushman, 6 Cush. 20, 28,52 Am. Dec. 761;Boston Safe Deposit & Trust Co. v. Reed, 229 Mass. 267, 272, 118 N. E. 333;In re Brown's Estate, 112 N. J. Eq. 499, 164 A. 692. If that trust was effectively set up on May 22, 1931, on the basis of the value of shares on that day, Truesdale Hospital has no right to have the trust re-established according to the value of shares at any other time. If that trust was not effectively set up on that day, but still remains to be set up, it is impossible at this time to foresee how many shares will be necessary in order to make up the minimum of $500,000 in value.

Truesdale Hospital contends that the establishment of the trust for it on May 22, 1931, was incomplete, tentative and provisional only. If that be so, what was done on that day served no purpose and was an elaborate and empty form. That was hardly the intention of the Bank, though some of its officers described the establishment as ‘tentative.’ True, the number of shares for division had not then been adjudicated by our earlier decision. But the division was based on principles subsequently decided to be correct. No party, in the earlier case before us, contended that there were fewer than twenty-five thousand shares to be divided. The Bank did think it possible that some party might contend that only ten thousand shares composed the corpus to be divided. If such a contention had been made and sustained, the trust funds set up on May 22, 1931, for beneficiaries other than Truesdale Hospital, might have had to be reduced. See Stevens v. Goodell, 3 Metc. 34;Marvel v. Babbitt, 143 Mass. 226, 9 N. E. 566. But the fund for Truesdale Hospital would still have been entitled to its seven thousand four hundred seventy-six and two-third shares of the approximate value of $500,000. Any possibility of a decision that there were no shares to be divided was deemed very remote. The fact that the set up of a trust fund may conceivably be affected by an unexpected turn of events does not make it ineffective. Henry v. United States, 251 U. S. 393, 40 S. Ct. 185, 64 L. Ed. 322;Simpson v. United States, 252 U. S. 547, 40 S. Ct. 367, 64 L. Ed. 709;Cochran v. United States, 254 U. S. 387, 392, 41 S. Ct. 166, 65 L. Ed. 319.

Truesdale Hospital contends, moreover, that whatever the intention of the trustee may have been, the set up of the trust fund on May 22, 1931, was ineffective as matter of law. It relies on the rule that when the same person is both executor and a legatee, whether as legatee he takes in trust or free from trust, he does not cease to hold as executor nor take as legatee, until he has qualified as trustee, if his legacy is in trust. (Newcomb v. Williams, 9 Metc. 525, 534, 535;White v. Ditson, 140 Mass. 351, 354, 4 N. E. 606, 54 Am. Rep. 473; Collins v. Collins, 140 Mass. 502, 507, 5 N. E. 632;Little v. Little, 161 Mass. 188, 202, 36 N. E. 795;Coates v. Lunt, 213 Mass. 401, 100 N. E. 829), and has shown by some authoritative and notorious act that he has elected to take title as legatee. Newcomb v. Williams, 9 Metc. 525, 534;Miller v. Congdon, 14 Gray, 114, 117;Hobbs v. Cunningham, 273 Mass. 529, 534, 174 N. E. 181;Sherman v. Jerome, 120 U. S. 319, 7 S. Ct. 577, 30 L. Ed. 680. The latter requirement has so hardened that ordinarily nothing short of a paying over of the legacy, shown by an account duly allowed by the probate court (Knowles v. Perkins, 274 Mass. 27, 174 N. E. 221), will suffice. Crocker v. Dillon, 133 Mass. 91, 98, 99;Welch v. Boston, 211 Mass. 178, 181-185, 97 N. E. 893;Williams v. Inhabitants of Acton, 219 Mass. 520, 524, 107 N. E. 362; Hines v. Levers & Sargent Co., 226 Mass. 214, 215, 115 N. E. 252;Mooers v. Greene, 274 Mass. 243, 252, 174 N. E. 340;Union Market National Bank of Watertown v. Gardiner, 276 Mass. 490, 496, 177 N. E. 682, 79 A. L. R. 1512. In the present case the executors have filed no account. The first account of the trustee was filed on February 25, 1933, and one of the appeals before us is from the allowance of that account.

This rule has been applied in settling the accounts of executors and trustees, and in actions upon their bonds (Brigham v. Morgan, 185 Mass. 27, 45, 69 N. E. 418, and cases cited; Lannin v. Buckley, 256 Mass. 78, 81, 152 N. E. 71;Mooers v. Greene, 274 Mass. 243, 252, 174 N. E. 340;Brackett v. Fuller, 279 Mass. 62, 180 N. E. 664; compare Cook v. Howe, 280 Mass. 325, 182 N. E. 581); in petitions for retention of assets for creditors, which must be brought before the estate is fully administered (Downer v. Squire, 186 Mass. 189, 198, 71 N. E. 534;Union Market National Bank of Watertown v. Gardiner, 276 Mass. 490, 495, 496, 177 N. E. 682, 79 A. L. R. 1512); in a case where the question was whether an automobile had passed from an executor, in whose hands it was insured, to himself as legatee (Hobbs v. Cunningham, 273 Mass. 529, 174 N. E. 181); in a case where a creditor of the sole legatee sought unsuccessfully to trustee royalties payable to her as executrix (Pierce Co. v. Fiske, 237 Mass. 39, 129 N. E. 609) and in cases in which executors contended that personalty should have been taxed locally to them as trustees. Welch v. Boston, 211 Mass. 178, 97 N. E. 893;Sears v. Inhabitants of Nahant, 221 Mass. 435, 109 N. E. 373;Sears v. Inhabitants of Nahant, 221 Mass. 437, 439, 109 N. E. 370.

In Crocker v. Dillon, 133 Mass. 91, 98, and Mooers v. Greene, 274 Mass. 243, 174 N. E. 340, one of the trustees was the executor, while in Newcomb v. Williams, 9 Metc. 525, as in the present case, one of the executors was the trustee. We need not consider whether such a want of complete identity of those filling the two offices takes the case out of the rule, for we think that the rule itself has no application to the question under discussion. If the number of shares to which the trust for Truesdale Hospital was entitled could not...