Kerwin v. Donaghy
| Decision Date | 01 February 1945 |
| Citation | 317 Mass. 559,59 N.E.2d 299 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | LILLIAN A. KERWIN v. GLADYS M. DONAGHY & others (and a companion case [1]). |
October 23, 1944.
Present: FIELD, C.
J., LUMMUS, QUA RONAN, & SPALDING, JJ.
Trust, Express trust: what constitutes, validity; Parol trust. Gift. Personal Property, Ownership, Transfer of title. Evidence Extrinsic affecting writing. Husband and Wife. Will, Waiver. Equity Jurisdiction, Plaintiff's clean hands.
A daughter, without formal delivery of stocks, bonds and bank accounts of her father already in her possession and standing in her name acquired legal title thereto upon the execution by them of a trust document under seal formally stating that she would hold the property as trustee for his benefit during his life and as her own property upon his death.
That the settlor may have established an inter vivos trust of the bulk of his property in order to render the making of a will practically unnecessary and that he reserved the power to alter, amend or revoke the trust did not make the trust testamentary in nature.
Beneficiaries of the estate of a decedent who, with a definite purpose and not as a sham, by a formal and complete trust instrument and without fraud, duress or mistake, had made an actual and effective inter vivos transfer of the bulk of his personal property to his daughter to be held by her in trust for his benefit during his life and as her own property upon his death, were barred by the parol evidence rule from showing after his death that the transfer had not been made with the intent to give the property to the daughter at his death or to deprive the other beneficiaries of his estate of any share therein and that the property in fact formed part of his estate.
A transfer by a husband of the bulk of his personal property to his daughter to be held by her in trust for his benefit during his life and as her own property upon his death, with the power reserved to him to alter, amend or revoke the trust, could not properly be found to have been intended as a mere sham where he made it for the purpose of disinheriting his wife.
An oral promise made by a daughter to her father to do the "right thing" by her stepmother was insufficient to show that the daughter thereby became a trustee for the distributees of her father's estate of a remainder interest which the daughter then had under a trust of the bulk of her father's property previously established by him for the benefit of himself during his life and for the benefit of the daughter upon his death.
In this Commonwealth a husband, without the knowledge or consent of his wife, during his life may dispose of any or all of his personal property for the sole purpose of removing the property disposed of from his estate at his death and thereby preventing his wife from sharing therein as a beneficiary of his estate, where the disposition is not made to hinder and defeat her in enforcing her marital rights to support by him or in breach of an obligation to her under an antenuptial contract; and her rights resulting from a waiver of his will under G. L. (Ter. Ed.) c.
191, Section 15, do not extend to property so disposed of by him.
Fraud of a decedent in having stocks in the possession and name of his daughter for the purpose of evading taxation did not bar a petition by a beneficiary of his estate seeking to have the daughter ordered to turn over the stocks to the decedent's executor, where the petitioner did not participate in the fraud and was not obliged to rely thereon in making out a case on the ground that the stocks in fact had not belonged to the daughter but to the decedent at the time of his death.
TWO PETITIONS IN EQUITY, filed in the Probate Court for the county of Bristol on October 19, 1942, and May 15, 1942, respectively.
The cases were heard by Hitch, J.
T. M. Quinn, (A.
P. Doyle with him,) for the respondents in the first case and the petitioners in the second case.
C. A. Barnes, for the petitioner in the first case and the respondent in the second case.
T. F. O'Brien, for the intervener.
The widow of William J. Kerwin, late of New Bedford, brought this petition in equity in the Probate Court under G. L. (Ter Ed.) c. 230, Section 5, as amended (Walsh v. Mullen, 314 Mass. 241), against his daughter Gladys M. Donaghy and the executors of his will (the executors having refused to bring suit) to recover for the estate a large number of stocks, bonds and deposits in banks, standing in the name of or held by the respondent Gladys M. Donaghy, but owned, it was alleged, by the estate of William J. Kerwin. One of his two sons, Ernest W. Kerwin, intervened, and joined with the widow in seeking relief against Gladys M. Donaghy. The Probate Court, on May 28, 1943, entered a decree ordering the respondent Gladys
M. Donaghy to transfer and deliver the stocks, bonds and bank deposits in question to the executors of the will of William J.
Kerwin. She appealed. The case comes here upon a report of the evidence, with a finding of material facts.
William J. Kerwin died on April 20, 1941, leaving as his widow his second wife, Lillian A. Kerwin, whom he had married on February 15, 1926, when he was fifty-seven years old and she was thirty-nine. They had no children. She was a widow with a young son when they married. William J. Kerwin left three adult children by his first marriage, Harold E. Kerwin, Gladys M. Donaghy, and Ernest W. Kerwin. The eldest son, William J. Kerwin, Junior, had died about a year before his father, leaving a widow, Estelle C. Kerwin, but no issue. Gladys was unmarried when her father married the second time, and lived with her father and his second wife until she herself married one Paul A. Donaghy in July, 1926.
At that time William J. Kerwin was worth, according to his own judgment, half a million dollars. He had been superintendent of the Beacon Manufacturing Company for twenty-five years, and his annual income from that company alone amounted to $25,000. He retired from business in June, 1927, and thereafter had no regular occupation. Although his property evidently diminished in value afterwards, he always seemed to have plenty of money for his needs and those of his family, until his last illness.
On December 12, 1928, William J. Kerwin executed his will, [1] which after his death was duly proved and allowed. On November 12, 1941, his widow filed a waiver of the will, and claimed the interest in the estate that she would have taken had he died intestate.
The judge found in substance that from a time as early as 1923 William J. Kerwin was addicted to the folly of carrying most of his property in the names of some of his children, with the understanding that it should remain his and should be turned back to him at his request. His purpose was to defraud the Federal government by pretending to divide his income so as to avoid large surtaxes. The parts of his property held by his children other than Gladys were conveyed either to Gladys or back to him. In 1929 and thereafter the bulk of his property was held by and in the name of Gladys, and was kept in a safe deposit box of which she was the proprietor, although he had access to the box and kept the key to it in his desk. Many of the stock certificates, standing in her name, bore and still bear her indorsement in blank. In 1934, apparently with his consent, she cancelled his right of access, but that, the judge found, of his life, during his last illness. During 1940 she paid him at his request about $15,000. It is hard to see how the surtaxes could be lessened by holding the bulk of his property in the name of Gladys after he ceased in 1927 to earn money, unless upon the tax returns the income was divided between him and Gladys. Whether it was or not does not appear.
Nothing in the relations of William J. Kerwin with his children made it likely that he would wish at any time to give all his property to Gladys and cut the others off. The judge found that "Mr. Kerwin and his wife got along well excepting for occasional times when there were some disagreements, but not very serious, and towards the last of his life they were very close to each other and he was solicitous for her welfare." Nevertheless the judge found that "he told Harold that he had put stock in Gladys' name because Mrs. Kerwin made so many demands for money he was going to see when he passed on that his children were going to have the money." It was, the judge found, "as a result of a temporary disagreement between William J. Kerwin and his wife" that he executed two trust agreements in August, 1936.
At that time William J. Kerwin consulted John D. Kenney, Esquire, a lawyer in New Bedford. Kerwin came alone at the first visit to the lawyer, but on later occasions Gladys accompanied him. He told the lawyer that he wished to make sure that at his death Gladys would own the property that she was holding for him. The lawyer advised him that a will would be ineffective, for his wife could waive the will. The lawyer advised a trust and two formal trust agreements were drawn, and were executed by William J. Kerwin and by Gladys. One agreement dealt with the stocks and bonds, the other with the bank deposits. The agreements were substantially identical in their...
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