Greene v. Greene

• Decision Date: 10 November 1896
• Citation: 35 A. 1042,19 R.I. 619
• Parties: GREENE et al. v. GREENE et al.
• Court: Rhode Island Supreme Court

35 A. 1042

19 R.I. 619

GREENE et al.

v. GREENE et al.

Supreme Court of Rhode Island.

Nov. 10, 1896.

Bill by Isaac C. Greene and others against Ellen Maria Greene and others for instruction in regard to a trust.

Joseph C. Ely and Herbert Almy, for complainants.

John P. Lonsdale, for respondents.

MATTESON, C. J. This is a bill for instructions. Complainants are the trustees under the will of Rufus Greene, formerly of Providence, deceased, and the respondents are his widow, Ellen Maria Greene, a grandchild, Mary C. Greene, the only child of Rufus Greene, Jr., deceased, who was a son of the testator, and the testator's sons, Robert L. Greene, Archer Greene, and Howard Greene. A copy of the will may be found in Robinson v. Greene, 14 R. I. 182. The trusts created by the fourth, fifth, and sixth clauses of the will are terminated, and the respondents, with the complainant Isaac C. Greene, are all the persons in being beneficially interested in the remaining trusts of the will. By the seventh clause of the will the trustees were directed to retain that portion of the testator's personal estate invested in the business of Greene & Cranston, bankers, as it then was, so long as the testator's partner, in their judgment, should be physically able to manage the same, or until he should signify in writing to the trustees his unwillingness further to continue the business, or until, in the judgment of a majority of the trustees, the business should become hazardous and unprofitable. The bill sets forth that, at the making of the will, the larger part of the testator's personal estate, to wit, $100,000, was invested in the business of Greene & Cranston, which was retained in that business after the decease of the testator, agreeably to the direction of the will; that in 1875 the firm of Greene & Cranston became embarrassed, and on December 17th of that year made an assignment; that the affairs of the firm were settled in the latter part of 1878 and early part of 1879, the trustees then in office receiving, of the $100,000 invested by the testator in the business, $61,692.45, paid to them in two sums, the average date of payment of which was December 9, 1878. This sum they credited to the corpus of the estate. The life tenants claim that this was erroneous, and that an allowance should have been made to them from the sum received for the loss of income suffered by them between the date of the assignment, December 17, 1875, and the date when the sum was received, December 9, 1878. We are of the opinion that this claim is well founded. The authorities hold that when a fund is held in trust for the benefit of one person for life and another in remainder, and a part of the fund is lost because of the insecurity of the investment, the loss is to be apportioned between the life tenant and remainder-man. Cox v. Cox, L. R. 8 Eq. 343; Maclaren v. Stainton, L. R. 11 Eq. 382; Roosevelt v. Roosevelt, 5 Redf. 264; Veazie v. Forsaith, 76 Me. 190; Parsons v. Winslow, 16 Mass. 361; Turner v. Newport, 2 Phil. Ch. 14; In re Tinkler's Estate, L. R 20 Eq. 456; Moore v. Johnson, 54 Law J. Ch. 432, 52 Law T. (N. S.) 510; In re Ancketill's Estate, 27 L. R. Ir. 331; Hagan v. Piatt, 48 N. J. Eq. 206, 21 Atl. 860; Turtle's Case, 49 N. J. Eq. 259, 24 Atl. 1. The only case which has come to our notice denying the right of apportionment is that cited by Mr. Spink, representing contingent interests of remainder-men not in being, viz. In re Grabowski's Settlement, L. R. 6 Eq. 12. But this case was overruled by Cox v. Cox, L. R. 8 Eq. 343. 2 Lewin, Trusts, *914. We are of the opinion, therefore, that an apportionment of the amount received by the trustees should have been made between the life tenants and remainder-men.

The question is raised as to the method in which the apportionment should have been made. The life tenants suggest that, as the $100,000 invested in the firm of Greene & Cranston was intended by the testator to be a permanent investment, the proper mode of apportionment would have been to ascertain the average yearly profit earned by the investment prior to the assignment, multiply it by the 2357/365 years during which the affairs of the firm were in liquidation, and then to divide the sum received in liquidation between the life tenants and remainder-men, in the proportion which the $100,000 originally invested bears to the amount of income ascertained in the manner stated for the period specified. They have cited no authority which holds that such a method of apportionment in a similar case is proper. They have referred to Westcott v. Nickerson, 120 Mass. 410, in which the court passed on the relative rights of life tenants and remainder-men to a fund received on the winding up of a partnership. The testator had directed that the money which he had invested in the partnership should remain for a short term after his death, merely for the purpose of winding up the business and ascertaining the amount of the fund, and not as a permanent investment. Moreover, the amount received from the partnership, on the winding up of the business, was considerably in excess of the amount which would have been received if the business had been closed at the death of the testator; so that the court were called upon to apportion a surplus or profit on the fund invested, and not, as we are in the present instance, to apportion a loss of a part of the principal. Though the court referred to the consideration that the direction of the testator was that the fund should remain in the business only for a short period, for the purpose of winding up the partnership, and intimated that it might have affected the decision if the direction had been that it should remain as a permanent investment, the case is too radically different from the case at bar to control our decision. Besides, there is no reason to suppose, the firm of Greene & Cranston having become insolvent, that the fund invested would have earned any profit during the years that the business was in liquidation. The most that can be presumed is that the ordinary rates of interest might have been received upon the assets remaining. Different methods of apportionment have been followed in the cases. Sometimes the apportionment has been made by computing interest on the amount realized from the investment during the period that the life tenant has been deprived of the income, and, the interest so computed being deducted from the amount realized, and paid to the life tenant, the remainder is held to constitute the future capital. This was the method adopted in Parsons v. Winslow, 16 Mass. 361; Turner v. Newport, 2 Phil. Ch. 14; Re Tinkler's Estate, L. R. 20 Eq. 456; Re Hubbuck [1896] 1 Ch. 754. And in Hagan v. Piatt, 48 N. J. Eq. 206, 21 Atl. 860, and Turtle's Case, 49 N. J. Eq. 259, 24 Atl. 1, it was held that the loss should be apportioned between the life tenant and the remainder-men in the proportion which the principal sum involved in the insufficient security bears to the interest due upon it at the time when the security is realized upon and the amount of loss is determined. Cox v. Cox, L. R. 8 Eq. 343, was a case in which the testator had bound himself, in his lifetime that £6,000 should be paid to the trustees within three months after his decease, to be held by them for the benefit of his widow for life, with the remainder to the children of the marriage. At his decease his estate was so involved that nothing was realized from it for several years, and finally not enough to pay the principal sum. The vice chancellor stated the proper mode of apportionment to be to ascertain what sum of money at the death of the testator put at interest would produce the amount finally realized, and to invest this as the principal fund, and pay so much as represented the interest to the tenant for life. This was the rule followed in Roosevelt v. Roosevelt, 5...