Garneau v. Garneau

• Decision Date: 09 November 1939
• Docket Number: No. 1436.,1436.
• Citation: 9 A.2d 15
• Parties: GARNEAU et al. v. GARNEAU et al.
• Court: Rhode Island Supreme Court

9 A.2d 15

GARNEAU et al.

v. GARNEAU et al.

No. 1436.

Supreme Court of Rhode Island.

Nov. 9, 1939.

Appeal from Superior Court, Providence and Bristol Counties; Charles A. Walsh, Judge.

Suit in equity by Edward Garneau and others, minors, by their mother, Camilia Garneau, as next friend, against Azarie Garneau and another, to enforce rights and interests under a trust instrument executed by Amanda Garneau. From the decree, the respondents appeal.

Appeal denied and decree affirmed and cause remanded.

Kennedy & Greene, of Woonsocket, for complainants.

Eugene L. Jalbert, of Woonsocket, for respondents.

MOSS, Justice.

The complainants, Edward, Marcel, Ernest and Robert Garneau, who are the four children of Edward Garneau, deceased, and all minors, brought this suit in equity, by their mother, Camilia Garneau, as next friend, against Azarie Garneau, their uncle, and Rosealma Peloquin, their father's sister. They seek to enforce their rights and interests under the second of two trust instruments which were executed by their paternal grandmother, Amanda Garneau, widow, and under which, they assert, the first respondent is trustee for the benefit of the complainants of certain property, consisting of a note and a real estate mortgage securing it, belonging to her at the time of the execution of the first instrument, and a certain savings bank account created by her and described in the second instrument.

In their prayer for relief the complainants seek an accounting from the first respondent as such trustee and his removal for the alleged violation by him of his duties as such; and from the second respondent they seek restitution to the trust estate of a sum of money which constituted nearly all of the abovementioned savings bank account, and which came into her possession by reason of an alleged violation by Amanda and Azarie Garneau of the trust set forth in the second trust instrument.

At the hearing in the superior court on bill, answer, replication and evidence there was no question as to the execution and validity of the two trust instruments, which were introduced as exhibits. Nor did the respondents seriously deny that after the second was executed there was thereunder a trust for the benefit of the complainants of the bank account, as well as of the note and mortgage. But the vital contentions seriously made by them were two.

The first of these was that under the second of these instruments, as actually drawn and executed, Amanda Garneau had the power to revoke the trust as to the bank account, which stood on the books of the bank as belonging to "Azarie Garneau or Amanda Garneau trustee for Marcel, Ernest, Robert and Edouard Garneau", the complainants, and nearly all of which was on March 28, 1938, paid out by the bank to the respondent Rosealma Peloquin on an order directing payment to her or her order and signed as follows:

"Azarie Garneau Amanda Garneau Trustee for Marcel, Ernest, Robert & Edouard Garneau"

The second of these vital contentions was whether, although no such power of revocation was reserved, expressly or by implication, to Amanda Garneau by that instrument as drawn and executed, she was equitably entitled to exercise such power, because it was omitted from that instrument by mistake of the parties thereto. No such defense was set forth in the respondents' answer, and they introduced no evidence in support of it.

However, in order to sustain this vital contention, their counsel made a very long offer of testimony, the statement of which in the transcript of testimony covered ten pages. The justice before whom the cause was being heard rejected this offer on the grounds that the two instruments clearly created a trust in the mortgage and bank account, for the benefit of the complainants; that these two instruments were not "explained or illuminated or made more clear in any way by the testimony sought to be introduced"; and that it was "in direct contradiction of the ordinary legal sense of these two documents."

He then decided that the complainants are entitled to the fund that had been on deposit in the savings bank. A final decree was entered that by the two instruments the entire beneficial interest in the note and mortgage and the bank account was vested irrevocably in the complainants; that the respondent Azarie Garneau be removed as trustee and Camilia Garneau be appointed trustee in his place; that he transfer to her the mortgage and the note secured thereby; that he be required to account as trustee; and that the respondent Rosealma Peloquin restore to the trust fund the sum of $3,837 received by her from the trust fund, with all accumulations and benefits therefrom.

The cause is now before us on the respondents' appeal from this decree, their reasons of appeal being, in substance, that it is contrary to the law; that it is against the evidence and the weight thereof; and that evidence offered by them in defense was erroneously rejected by the justice before whom the cause was heard.

The first of the two instruments was executed and acknowledged by Amanda Garneau on January 15, 1935, but was not filed for record until May 5, 1938, the day of her death, and meantime apparently remained in her possession, though the transferee, Azarie Garneau, knew about it. In it the mortgage and note were assigned and transferred to him as "trustee nevertheless for Edward, Ernest, Robert, and Marcel Garneau, minors, and sons of my deceased son, Edward Garneau * * *"; and by the habendum clause he was to have and to hold the mortgage and note "to them, the said Azarie Garneau, trustee" for these same minors, "their heirs, executors, administrators and assigns, to their own use, benefit and behoof forever * * *." (Italics ours)

The second of the two instruments, which was entitled "Trust Agreement", was executed in duplicate on July 23, 1937, by both Amanda Garneau and Azarie Garneau, who were described as the parties of the first and second parts respectively. In it they recited the above transfer by her to him, by the former instrument, of the mortgage and note as being in trust for the above-named minors; that that deed of transfer contained "no provisions defining the purposes of the trust and the powers and duties of the trustee thereunder"; that it appeared to the parties both desirable and necessary that there should be "a definite and clear expression of said purposes, powers and duties"; and that there was then on deposit in a certain bank, in the names of both parties "as trustees for the above named minor children, certain funds, which, together with all additions thereto and accretions thereof, the party of the first part desires to add to the trust intended to be created by the transfer deed above mentioned and to be more clearly defined in and by the present instrument." (italics ours)

After these recitals, the main body of the agreement followed with eleven numbered paragraphs. By the first the above transfer of the mortgage and note was reaffirmed, "subject, however, to the powers, duties and purposes herein expressed." The next five were as follows:

"2. The funds now on deposit in the names of, and payable to, the parties hereto or their survivor, as trustees for the above named minor children of Edward Garneau, deceased, together with all additions thereto and accretions thereof, are hereby made a part of the trust herein created, and are hereby assigned and transferred to the said party of the second part, subject also to the powers, duties, and purposes herein expressed.

"3. During the life of the party of the first part or so long as she is able mentally and physically to manage her own affairs, the party of the second part shall have the power and it shall be his duty, to collect any and all payments, whether of interest or on the principal, which may from time to time become due on said mortgage note, give his receipt or receipts therefor, and remit the moneys so collected or received by him to the party of the first part. Said party of the first part shall not be accountable to either the party of the second part or to the beneficiaries of the trust for the disposition of said moneys.

"4. Upon the death of the party of the first part or in the event that said party of the first part should become physically or mentally unable to manage her own affairs, the party of the second part shall become the sole trustee, and assume the sole and exclusive management of the trust herein created.

"5. Upon his assumption, as aforesaid, of the management of said trust, the party of the second part, in addition to the powers theretofore exercised by him hereunder, shall hold and manage all the funds of said trust for the use and benefit of the above named minor children of said Edward Garneau, deceased, or of their survivors or survivor, in the manner hereinafter expressed.

"6. On and after the assumption by the party of the second part of the sole and exclusive management of said trust, as aforesaid, all moneys collected by him on said mortgage note or which may otherwise come into his hands under or by virtue of said trust, shall during the life of said trust be deposited, kept, and held in his name as trustee for said minor children, in some savings bank or trust company of his own selection."

The next four paragraphs set forth the details of the trusts under which, after the death of Amanda Garneau, Azarie Garneau should use the trust res for the benefit of the minor children and their issue; the time and manner of the termination of the trust; the time and manner of accounting by him as trustee; and the amount and manner of payment of compensation to him for his services as such trustee. The last paragraph was as follows: "Said party of the second part hereby assumes the duties or trust hereby imposed, and covenants and agrees to faithfully and honestly discharge the same."

It is obvious that this agreement was intended to take effect at once and that it...