Malden Trust Co. v. Brooks (In re Ball's Estate)

• Decision Date: 14 September 1931
• Citation: 177 N.E. 629,276 Mass. 464
• Parties: MALDEN TRUST CO. v. BROOKS et al. In re BALL'S ESTATE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

276 Mass. 464

177 N.E. 629

MALDEN TRUST CO.

v. BROOKS et al.In re BALL'S ESTATE.

Supreme Judicial Court of Massachusetts, Middlesex.

Sept. 14, 1931.

Appeal and Report from Probate Court, Middlesex County; C. N. Harris, Judge.

Petition by the Malden Trust Company, trustee appointed under the will of Carlos E. Ball, deceased, against Charles C. Brooks and others. An interlocutory decree overruled two paragraphs of the answer in so far as they constituted pleas to the jurisdiction of the probate court. On appeals and on report of a judge of the probate court.

Decree affirmed.E. F. McClennen, of Boston, for Charles C. Brooks and another.

A. N. Hunt and F. M. Sawtell, both of Boston, for Malden Trust Co.

J. F. Neal, of Boston, for Edmund Ball Hopkins and another.

S. H. Wellman, of Boston, for Freelon Q. Ball.

PIERCE, J.

In accordance with G. L. c. 215, § 13, this case is before this court on the report of a judge of the probate court, which followed an interlocutory decree overruling paragraphs one and two of the respondents' answer in so far as they constitute pleas to the jurisdiction of the probate court.

The pertinent facts alleged in the petition are in substance as follows: Carlos E. Ball died testate on January 10, 1909. His widow, Elizabeth W. Ball, was appointed executrix February 16, 1909. She died on April 12, 1924. Edward C. Ball, Frederick H. Page and William Leavens were appointed trustees under his will, and thereafter served until Page died on June 5, 1924, Leavens died on December 4, 1924, and Ball resigned on March 4, 1926. The petitioner was appointed trustee under said will on March 4, 1926. Freelon Q. Ball was appointed executor of the executrix's will on June 25, 1924, and on December 9, 1925, Harry W. Conant was appointed administrator d. b. n. c. t. a. of the estate of said Carlos E. Ball. On October 14, 1924, Sarah F. Hopkins was appointed by the court guardian of Edmund Ball Hopkins, Jr., and Blanche E. Hopkins, minor children of Edmund Ball Hopkins. By the will of Carlos E. Ball the residue of his property was left to the trustees, above named, to pay the income to his widow during her life and after her death to divide one third of it among her heirs, and to hold the other two thirds for her grandson, Edmund Ball Hopkins, until he reached the age of twenty-five years and one third until he reached the age of forty years.

At the time of the death of Carlos E. Ball he and Edward C. Ball, both of Malden, Massachusetts, and Charles C. Brooks of Gardner, Massachusetts, were copartners, doing business in Boston and Gardner under written articles of copartnership. Carlos E. Ball held one-half interest in the partnership, Edward C. Ball owned one-third interest, and the respondent Charles C. Brooks one-sixth interest. The copartnership occupied for its business certain real estate in Gardner which was owned by the partners in the same proportion they shared in the partnership. Among the provisions of the copartnership articles was this: ‘If either partner shall die before the dissolution of this partnership the surviving partner or partners shall have the right to purchase the share of his deceased partner in the partnership effects. In order to exercise this right the surviving partner or partners shall within thirty days from the appointment of an executor or administrator over the estate of the deceased partner give to the said representative a written notice of his election so to purchase. If the surviving partner or partners and the representative of the deceased partner are unable to agree upon the price to be paid for the share of the deceased partner, then the value thereof shall be determined * * * by arbitration.’ The petition alleges ‘that the fair value of the net interest of said Carlos E. Ball in said co-partnership business, including the real estate used by said partnership in its business at the time of the death of said Carlos E. Ball, was considerably in excess of One hundred fifty-two thousand forty and 42/100 (152,040.42) dollars.’ The executrix and the surviving partners agreed that the testator's interest in the partnership was worth $152,040.42.

The surviving partners desired to purchase the interest of their deceased partner in said real estate and any personal property owned by the copartnership and used in said copartnership business. They accomplished their desire in the following way: They organized a corporation, known as the Conant Ball Company, to take over the partnership business as a going concern and to purchase and acquire the property of the copartnership and the real estate used in its business. The authorized capital stock to be issued was $150,000, consisting of twelve hundred shares of preferred stock and three hundred shares of common stock all of the par value of $100 per share. The preferred stock had no voting power and was limited to a dividend of five per cent. The common and preferred stocks were actually issued on or about June 7, 1909. The plan above stated involved the purchase from the estate of Carlos E. Ball of all his interest in the partnership business of Conant Ball & Company and in his said real estate at Gardner for the sum of $152,040.42, this amount to be paid as follows: $52,040.42 in cash and $100,000 in preferred stock of the respondent corporation. This plan, without any notice to the beneficiaries of the trust under the will of Carlos E. Ball, was afterwards changed, and for $32,000 of the preferred stock there was substituted a mortgage on the real estate in Gardner used in said business. It resulted that six hundred and eighty shares of preferred stock were given to the executrix, $52,040.42 in cash, and a note secured by a mortgage on the real estate used by the partnership and its successor, the respondent corporation.

Charles C. Brooks and Edward C. Ball had at all times a very large controlling interest in the common stock of the corporation. Both knew the contents of the will of Carlos E. Ball, knew the facts as to the trust and beneficiaries thereunder, the value of the testator's interest in the business and real estate used by the partnership, knew that there was a reasonable certainty of a steady increase in the value of the properties, that a greater proportional profit was reasonably to be expected therefrom, and they conceived the plan which was carried out to obtain the interest of the estate of Carlos E. Ball, keeping their own shares of the assets of said copartnership. The plan contemplated that Brooks and Edward C. Ball could pay for the interest of the estate from time to time as they chose out of the expected profits of the aforesaid business and ‘at the same time obtain large profits, emoluments, benefits and advantages for themselves while limiting the estate * * * and the beneficiaries of the trust’ under the will to a gross income of five per cent. perannum on what they should decide to pay for such interest.

The executrix transferred and conveyed to the respondent Conant Ball Company the aforesaid interests in the copartnership, the corporation, through its officers, having full knowledge that the said ‘transaction was brought about and accomplished by concealment of material facts concerning the...