Harvey v. Fiduciary Trust Co.

Decision Date18 February 1938
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court
PartiesL. E. HARVEY & others v. FIDUCIARY TRUST COMPANY & others.

October 5, 1937.

Present: RUGG, C.


Trust, Construction of instrument creating trust, Use of principal. Jurisdiction Over the cause, Nonresident defendant, Of trust. Judgment.

A judgment of a court of the State of residence of a beneficiary under a trust created by deed, where the trust property was situated in this

Commonwealth and the trustee, resident here, was neither served with process in the other State nor was a party to the action by voluntary appearance at the time the action was heard on the merits and the judgment was rendered, was not binding upon the trustee or the property of the trust.

The settlor of a trust has no power to confer upon a judicial tribunal a jurisdiction respecting the trust which is not conferred by law.

By a provision, in a deed of trust of property in this Commonwealth for the benefit of a minor beneficiary resident in another State and with a trustee resident here, in substance that if the best interests of the beneficiary should require payments from principal they should be made in such amounts, to such persons and at such times as a certain court of the other State should direct upon application made in that court, the settlor did not intend to subject the principal of the trust to a judgment in the other State in a proceeding in that court to which the trustee was not voluntarily a party.

A contention that a judgment of a court of another State conclusively adjudged that by virtue of the provisions of a trust deed it had jurisdiction over the trustee, resident here, of property here, in proceedings in which the trustee had appeared specially to plead to the court's jurisdiction over him was without merit because it did not appear that the court of the other State purported to rest its jurisdiction upon the trust deed rather than upon local statutes of its

State and it did appear that at the time of the judgment the trustee by leave of that court had ceased to be a party to the proceedings.

A suit in equity could not be maintained to enforce, by reaching and applying an interest of a minor in the principal of a trust, payment of a judgment against a guardian of the minor which the court entering the judgment had directed should be paid by the trustee from principal.

BILL IN EQUITY, filed in the Superior Court on September 21, 1935. After hearing by Baker, J., a final decree was entered dismissing the bill. The plaintiffs appealed.

D. Burstein, for the plaintiffs.

R. Wait, (B.

Aldrich with him,) for the defendant Fiduciary Trust Company.

M. B. Warner, for guardian ad litem.

LUMMUS, J. In December, 1927, Mildred Sampson, a resident of Tippecanoe City, Miami County, Ohio, was granted by the Common Pleas Court for Miami County, Ohio, a divorce from her husband Alden Sampson, 2d, and was awarded the care and custody of their two children, June Evelyn Sampson, born June 2, 1922 and Charles Dale Sampson, born August 29, 1923. During the pendency of the proceedings, on June 9, 1927, the husband and wife entered into an agreement under which the husband was to pay the wife $10,000 and other payments in full settlement of alimony and all other claims, but for the payment of which the wife had no security. So far as appears, he paid no part of those sums, but did make payments of $500 a month for the living expenses of the wife and the children, according to the agreement.

In 1931 it was discovered that Alden Sampson, 2d, had valuable interests in trust funds held in Massachusetts. He had become domiciled in California. Mildred Sampson employed the plaintiffs, members of the Ohio bar. They brought on her behalf a proceeding in the Common Pleas Court of Miami County, Ohio, entitled Mildred Sampson v. Alden Sampson, 2d, to set aside the agreement of June 9, 1927. Alden Sampson, 2d, appeared by counsel, and a compromise was reached by stipulation filed in the case by counsel for both parties. The agreement of June 9, 1927, was rescinded. Alden Sampson, 2d, conveyed to Mildred Sampson certain real estate and $14,400 in cash.

As a part of the compromise, Alden Sampson, 2d, by a trust deed dated November 23, 1932, established a trust fund of $100,000 for the children. The defendant Fiduciary Trust Company of Boston in this Commonwealth was made trustee. The two children were the sole present and probable beneficiaries, and they were to share alike. The trust was to end on September 1, 1958, when the balance of the trust fund then in the hands of the trustee was to be paid over to the beneficiaries. But there were contingent future interests in unborn or unascertained persons other than the two children, for by paragraph 3 of the trust deed it was provided: "(b) In the event of the death of either of said children before the payment of his or her entire share of principal, the share of said deceased child in the trust fund at the time of his or her death shall be paid over free of trust to the issue of such deceased child if any then living," with further provisions if no such issue should then be living.

Paragraph 7 of the trust deed was as follows: "7. This trust is established under the laws of the Commonwealth of Massachusetts and consists of property physically situated in Boston in the County of Suffolk in said Commonwealth and it shall be construed and administered under the law and procedure of said Commonwealth, so long as the legal residence of the trustee, or successor trustee, continues herein. Accounts shall be rendered to the guardian by the trustee annually in the form required by the Probate Court of said Commonwealth." The corpus of the fund was always in Boston. Alden Sampson, 2d, signed the trust deed in California and sent it to Boston, where it was signed by the trustee and then sent to Ohio, apparently to Mildred Sampson or her attorneys.

The trust deed further provided in paragraph 1: "Said trustee and its successors shall make payments from the income of said trust fund as follows: (a) During the minority of said minor children there shall be paid monthly to the guardian of the estate of said minor children to be appointed by the Probate Court of Miami County, Ohio, such amounts as shall be fixed and determined by order of said court upon application duly made. . . . (c) In event the net income from said trust fund is insufficient at any time during the minority of said children for the payment of the amounts above referred to, then, and in that event, the trustee shall pay to said guardian, during the time that such deficiency continues, the total net income and no more, excepting upon authority first had from the Probate Court of Miami County, Ohio, to make payments from principal, as hereinafter provided. . . ." In paragraph 2, after providing for payments from principal for the purpose just stated, the following provision is made: "(b) If for any cause, other than above specified, any part of the principal of said trust shall be necessary for the education or maintenance of either of said children, or should the best interests of either of said children require payments from principal otherwise than herein specified, then payments from the principal shall be made in such amounts, to such persons and at such times as the Probate Court of Miami County, Ohio, shall direct, upon application made and order entered in said court. . . ."

Mildred Sampson filed an application to the Probate Court of Miami County, Ohio, for appointment as guardian of the two children, alleging that she and they were residents of Tippecanoe City in that county. She took oath to her application on November 12, 1932, and the court assigned the matter for hearing on November 22, 1932. She was appointed guardian on December 2, 1932.

On February 21, 1933, the plaintiffs filed an "application" in the nature of a petition in the Probate Court of Miami County, Ohio, setting forth their services under their employment by Mildred Sampson in the proceedings which were compromised in 1932 by the provision for Mildred Sampson and the establishment of the trust fund for the children. They alleged that Mildred Sampson paid them for their services in her behalf but that "they have received no compensation for their services in procuring, creating and setting up the trust fund of One Hundred Thousand Dollars ($100,000) for the benefit of said minor children, and in securing to said minors the sole ownership of the corpus of said trust estate," and prayed "that the court may, upon notice to Mildred Sampson, guardian of said minors, or upon waiver of such notice by her, and upon a hearing, fix, determine and allow to said applicants such compensation as the court shall find to be just and reasonable in the premises, and to charge the same against said trust estate, and order and direct the payment thereof from said trust fund. . . ." No one was named as respondent, unless Mildred Sampson was made respondent by the words already quoted.

Nevertheless, in April, 1933, Alden Sampson, 2d, appeared by his attorneys and moved the dismissal of the application for want of jurisdiction in the court, and the Fiduciary Trust Company "for the purpose of this motion only, and without entering its appearance herein," filed by its attorneys a similar motion. See Faulkner v. Lowell Trust Co. 285 Mass. 375 , 377. Each motion was overruled on December 9, 1933, subject to the exception of the moving party. On that day the matter came on to be heard upon an answer filed by Alden Sampson, 2d, and upon the evidence, "Mildred Sampson, as guardian of said minor children, being in default for answer or demurrer." ...

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