Kerwin v. Kerwin

• Court: United States State Supreme Judicial Court of Massachusetts
• Citation: 317 Mass. 559,59 N.E.2d 299
• Parties: KERWIN v. DONAGHY et al. DONAGHY et al. v. KERWIN.
• Decision Date: 01 February 1945

317 Mass. 559
59 N.E.2d 299

KERWIN
v.
DONAGHY et al.
DONAGHY et al.
v.
KERWIN.

Supreme Judicial Court of Massachusetts, Bristol.

Feb. 1, 1945.

Petition in equity by Lillian A. Kerwin against Gladys M. Donaghy and others to recover property for the estate of plaintiff's deceased husband. Petition in equity by Gladys M. Donaghy and others against Lillian A. Kerwin to recover property for the same estate. Decrees dismissing second petition, and ordering respondent in first petition to deliver promptly to deceased's executors were entered, and respondent in first petition appeals.

Decree dismissing second petition affirmed, and decree ordering respondent to transfer property modified and affirmed.

[59 N.E.2d 300]

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

Before FIELD, C. J., and LUMMUS, QUA, RONAN, and SPALDING, JJ.

T. M. Quinn and A. P. Doyle, both of New Bedford, for Donaghy and others.

C. A. Barnes, of Boston, for Kerwin.

T. F. O'Brien, of New Bedford, for Ernest W. Kerwin intervening petitioner.

LUMMUS, Justice.

The widow of William J. Kerwin, late of New Bedford, brought this petition in

[59 N.E.2d 301]

equity in the Probate Court under G.L.(Ter.Ed.) c. 230, § 5, as amended (Walsh v. Mullen, 314 Mass. 241, 50 N.E.2d 1), 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 jointed 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, ‘was entirely consistent with a desire on Mr. Kerwin's part to make it appear, in case it should be questioned, that Gladys and not he was the owner of the contents of the box. He would have no difficulty in having Gladys go to the box with him and he kept the key to the box in his desk. It was customary when Mr. Kerwin wanted money to telephone Gladys to put it in his bank account which she promptly did whenever he called, excepting towards the last’ of his life, during his last illness. During 1940 she paid him at his request about $15,000. It

[59 N.E.2d 302]

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 terms.

In these agreements Gladys declared herself trustee of a large number of specified stocks, bonds and bank deposits ‘to pay the net income therefrom to said William J. Kerwin, for and during the term of his natural life * * * and upon the decease of said William J. Kerwin to hold said fund, together with any undistributed income therefrom, to her own use and behoof absolutely forever.’ He reserved the right during his life ‘to alter, amend or revoke this agreement in whole or in part, by giving written notice thereof to said Gladys M. Donaghy.’ He covenanted, agreed and declared that he had no interest in the trust property except that set forth in the agreements. It was provided that ‘this trust agreement shall be binding upon the heirs, executors and administrators of the parties hereto.’ It was provided that the trustee ‘shall not be obligated to disclose the existence of this trust to any person, nor shall she be required to have said securities registered or recorded in her name as trustee, nor shall she be forbidden to mingle said securities or the income therefrom with her own funds * * *.’

The stocks, bonds and bank deposits to which the trust agreements related were in the main the same as those which the decree ordered Gladys M. Donaghy to transfer to the executors.²

The property covered by the two trust agreements comprised substantially all the property that William J. Kerwin had, except a comparatively small amount that he transferred to Lilliam A. Kerwin in 1940 and 1941, and that forms the subject matter of the companion case which is hereinafter dealt with. Late in 1940 he was disturbed about the condition of his affairs, and was trying to reach Gladys for the purpose of arranging his affairs so that what he considered his property would form part of his estate if he should die, to the end that his wife and all his children

[59 N.E.2d 303]

would be protected. Gladys apparently avoided any considerable talk with him. He was in bad health, and entirely dependent on Gladys for money. On October 9, 1940, he got Gladys and Harold together, and asked them whether they would do the ‘right thing’ by his wife. When they said they would, he fell on his knees and said ‘Thank God for that.’ He apparently rested content with that vague assurance, and did not then remember or appreciate the fact that under the trust agreements he had reserved a power of revocation of the trusts. Not unlikely he was then too ill to take decisive action, and still trusted Gladys, although he was beginning to doubt her. When he died there was little if anything remaining in his hands.

The judge had the task of discovering the truth in the tangled web of deceit that had been woven about the ownership of the property. As to the basic facts dependent upon the credibility of the witnesses, his findings are entitled to great weight, and we see no reason to disagree with them. But his inferences of fact from those basic facts, and his conclusions of law, are fully open to review by this court. Malone v. Walsh, 315 Mass. 484, 490, 53 N.E.2d 126;New England Trust Co. v. Commissioner of Corporations & Taxation, 315 Mass. 639, 644, 53 N.E.2d 1001;Swinford v. Welch, 316 Mass. 112, 117, 54 N.E.2d 932;MacLennan v. MacLennan, 316 Mass....