Mahoney v. Mahoney

• Citation: 5 Mass.App.Ct. 720,370 N.E.2d 1011
• Parties: Douglas S. MAHONEY v. Anne E. MAHONEY et al. 1
• Decision Date: 19 December 1977
• Court: Appeals Court of Massachusetts

Page 1011

370 N.E.2d 1011

5 Mass.App.Ct. 720

Douglas S. MAHONEY v. Anne E. MAHONEY et al. ¹

Appeals Court of Massachusetts, Hampden.

Argued Dec. 20, 1976 and Sept. 12, 1977.

Decided Dec. 19, 1977.

Burton S. Resnic, Holyoke, for Douglas S. Mahoney.

Henry A. Moran, Jr., Springfield, for Anne E. Mahoney.

Before HALE, C. J., and KEVILLE, GOODMAN, GRANT, ARMSTRONG and BROWN, JJ.

ARMSTRONG, Justice.

This case is before us on two appeals, which were argued at different sittings. The first, by the plaintiff, was taken from an order of a probate judge made on October 3, 1975, which modified a preliminary injunction so as to permit shares of the Park National Bank of Holyoke to be exchanged for shares of the Western Bank & Trust Company of West Springfield pursuant to a plan of exchange approved by the boards of directors of both banks. The second appeal was taken by the defendant Anne E. Mahoney from the final judgment, which declared that she did not own those shares outright but rather held them subject to a trust.

The controversy has its origins in an instrument drawn by one Stephen A. Mahoney of Holyoke, not a lawyer, which was executed on September 1, 1961. It was entitled "Stephen A. Mahoney Testamentary Trust." The opening paragraph states, "I . . . make this my last will and hereby revoke all testamentary dispositions heretofore made by me," and the first numbered clause nominates "my wife, Anne Elizabeth Mahoney, and my son Stephen Andrew Mahoney III to be executors of my will." The fourth numbered clause "give(s) (and) devise(s) . . . (a)ll of my estate . . . to my wife, Anne Elizabeth Mahoney, IN TRUST for the . . . purposes . . . (of) provid(ing) continued operation of the Park National Bank of Holyoke . . . of which I own the controlling interest, and to provide an income for my wife, Anne Elizabeth Mahoney, for her life as well as an income, if possible, for my sons, Douglas Mahoney . . . and Stephen A. Mahoney, III . . . ." The greater part of the instrument dealt with the trust thereby created, one clause of which provided that should Stephen A. Mahoney, III, wish to assume responsibility for the management of the bank, the voting power of the shares held in trust should be used to elect him to the board of directors and to the presidency of the bank; and if Stephen should not wish to assume that responsibility, "then the Trustee has the power and right to appoint Douglas Mahoney an officer and director of said bank; upon demonstration of his ability to assume a responsible position therein, the Trustee may then, in her sole discretion," employ the voting power of the shares so as to cause Douglas Mahoney to be made president of the bank. The trustee was given a broad power to sell both real and personal property in the trust fund, and "(t)o exchange property for other property on such terms as she deems advisable." The trustee was also given discretionary authority "to participate in any plan of reorganization or consolidation or merger involving any company . . . whose stock . . . shall be part of the fund . . . ."

Stephen A. Mahoney died on November 27, 1969. The instrument described was allowed as his will on December 30, 1969, and the defendant Anne E. Mahoney qualified as executrix of the will. She filed an inventory on November 30, 1970, which indicated that most of the estate's assets were held in the form of shares of corporate stock, with the shares of the Park National Bank accounting for approximately one third of the total value of the estate. Even before that date, however, she had embarked on a program of distributing all assets of the estate to herself, not as trustee, but as an individual, taking from the outset, apparently, a position pressed in this action in the Probate Court: namely, that the "trust" mentioned in the will was not such in legal contemplation, and that any obligation imposed on her by the will was moral rather than legal in nature.

This action was commenced by a bill in equity filed by Douglas S. Mahoney on July 25, 1972. The action sought to establish the existence of a trust, to compel Anne E. Mahoney to transfer the assets of the estate from herself to the trust, and to remove her as trustee. The plaintiff sought and obtained a preliminary injunction restraining her from transferring or disposing of any property described in the inventory. On April 18, 1973, after a hearing at which evidence was taken, the probate judge found and ruled that the defendant Anne E. Mahoney held the property described in the inventory as constructive trustee, and ordered that she "hold the same for the purpose of transferring all said property to a trustee under the express trust" established by the will. A further evidentiary hearing was held on September 24, 1974.

On June 6, 1975, Anne E. Mahoney filed a motion that the preliminary injunction be modified so as to permit the shares of Park National Bank to be exchanged for shares of the Western Bank & Trust Company, which shares, when acquired, were to be subject to the injunction. The motion was allowed on October 3, 1975. That action was apparently taken without any notice to the plaintiff and without a hearing. The plaintiff filed a notice of appeal from the order allowing the motion. He also filed in the Probate Court a motion for a stay of the order, but there is nothing in the record to indicate that that motion was ever pressed to a hearing or decision; nor does the record indicate that the plaintiff ever sought a stay in an appellate court under G.L. c. 215, § 9 or § 23; nor does the record indicate that the trial judge was asked to report his order for appellate review pursuant to the provisions of G.L. c. 215, § 13. Although the record before us does not reflect the fact, the parties agreed at oral argument that the exchange of shares and the merger of the two banks took place in the autumn of 1975.

On April 30, 1976, a final judgment was entered declaring that the testamentary disposition described above created a trust, appointing a person other than Anne E. Mahoney to act as trustee, and ordering her to convey all the trust property standing in her name to the trustee thus appointed. She appealed from the judgment; the plaintiff did not.

1. In her appeal from the final judgment Anne E. Mahoney argues that the trust created by the will was one in name only and that the terms of the so-called trust evidence an intention by the testator that she have full ownership and control of the trust property. The argument, spun around two provisions taken out of context, is without merit. The provision authorizing the trustee to invade principal "for the necessity of providing for (Anne's) comfort and happiness if the income proves to be insufficient" does not enable Anne to call down the principal at will. Any question in that regard has been settled by Nexon v. Boston Safe Deposit & Trust Co., --- Mass.App. --- ^a, 364 N.E.2d 1077 (1977), which was decided after the instant appeal was briefed. The words "without imposing any trust or obligation on my wife, Anne Elizabeth Mahoney, as a beneficiary hereunder", refer only to her power to pay trust income over to Douglas and Stephen, III, or either of them. In context the words mean that she is under no legal obligation to make such payments, and do not carry any suggestion that she is at liberty to disregard the language creating the trust. The instrument, read as a whole, unmistakably indicates an intention to create a trust.

There was no error in the judge's refusal to approve the appointment of Anne E. Mahoney as trustee. The judge found that she "cannot be relied upon to act fairly and dispassionately in the administration of said trust with regard to the interest" of Douglas, she "lacks the knowledge and competence to act as trustee, and she is unsuitable to properly administer said trust." These findings are not clearly erroneous and, coupled with her diversion of trust assets to herself without consideration and without petitioning for instructions (see 1 and 3 Newhall, Settlement of Estates §§ 30 & 431 (4th ed. 1958)), warranted the judge's decision to appoint another as trustee. Compare Billings v. Billings, 110 Mass. 225 (1872); Sparhawk v. Sparhawk, 114 Mass. 356 (1874); Gordon v. Gordon, 332 Mass. 210, 124 N.E.2d 236, cert. denied, 349 U.S. 947, 75 S.Ct. 875, 99 L.Ed. 1273 (1955), and cases cited. The matter lay wholly within the reasonable discretion of the judge. 3 Newhall, supra § 421. Nor was there error in the award of counsel fees to the attorney for Douglas for services which clearly had the effect of preserving the trust estate. G.L. c. 215, § 39A. Compare Brayton v. Stoughton, 335 Mass. 321, 326-327, 140 N.E.2d 161 (1957). Contrast Miller v. Stern, 326 Mass. 296, 93 N.E.2d 815 (1950); Lane v. Cronin, 345 Mass. 52, 185 N.E.2d 635 (1962).

2. The plaintiff's appeal from the order which modified the preliminary injunction presents a threshold procedural question. The defendant Anne E. Mahoney argues that the order was interlocutory in nature and that it must therefore be dismissed for the reasons stated in such cases as Giacobbe v. First Coolidge Corp., 367 Mass. 309, 312-313, 325 N.E.2d 922 (1975), Foreign Auto Import, Inc. v. Renault Northeast, Inc., 367 Mass. 464, 467-468, 326 N.E.2d 888 (1975), and Rollins Environmental Services, Inc. v. Superior Court, 368 Mass. 174, --- - --- ^b, 333 N.E.2d 400 (1975). The plaintiff contends that the case falls within an exception to the usual rule ² of nonappealability of interlocutory orders, namely, that decrees authorizing or confirming sales by fiduciaries are considered to be final for appellate purposes. See Weil v. Boston Elev. Ry., 216 Mass. 545, 548, 104 N.E. 343 (1914); Plumer v. Houghton & Dutton Co., 277 Mass. 209, 212-213, 178 N.E. 716 (1931); Vincent v. Plecker, 319 Mass. 560, 564 n. 2, 67 N.E.2d 145 (1946); Lynde v. Vose, 326 Mass. 621, 622-623, 96 N.E.2d 172 (1951); Zottu v. Electronic...