Malden Trust Co. v. Brooks

• Decision Date: 02 July 1935
• Citation: 197 N.E. 100,291 Mass. 273
• Parties: MALDEN TRUST CO. v. BROOKS et al. In re BALL'S ESTATE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

291 Mass. 273

197 N.E. 100

MALDEN TRUST CO. v. BROOKS et al.

In re BALL'S ESTATE.

Supreme Judicial Court of Massachusetts, Middlesex.

July 2, 1935

Petition in equity by the Malden Trust Company, trustee under the will of Carlos E. Ball, deceased, against Charles C Brooks and others, wherein Edmund Ball Hopkins and others were joined as parties respondent. From a decree entered in the probate court for the county of Middlesex dismissing the petition, petitioner and some of respondents appeal.

Affirmed.

Appeal from Probate Court, Middlesex County; Leggat, Judge.

A. N. Hunt and F. M. Sawtelle, both of Boston, for petitioner.

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

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

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

FIELD Justice.

Carlos E. Ball died January 10, 1909. By his will he gave all his property to Edward C. Ball, William Leavens and Frederick H. Page in trust to ‘ hold, manage, control, invest and re-invest the same,’ to pay his wife Elizabeth W. Ball ‘ the income thereof for and during the term of her natural life,’ and under certain conditions, portions of the principal, to divide after her death one third of the principal of the trust fund among his heirs at law other than his grandson Edmund Ball Hopkins, to continue to hold the remaining two thirds of the trust fund and use income thereof for the care, maintenance and education of said grandson, to pay to him one half of said trust fund when he attained the age of twenty-five years and the other half when he attained the age of forty years and, if said grandson died before he had received the whole thereof, to distribute the property remaining in the trust fund to his issue or, in default of such issue, to the heirs at law of the testator.

Elizabeth W. Ball was named as executrix in the will and was appointed as such February 16, 1909. She died April 12, 1924, and an administrator with the will annexed has since been appointed. The trustees named in the will were duly appointed as such March 22, 1909. They ceased to be trustees by death or resignation and on March 4, 1926, the Malden Trust Company was appointed trustee.

From 1905 until his death the testator was a partner with Edward C. Ball and the respondent Charles C. Brooks in the firm of Connate Ball and Company, engaged in the business of manufacturing chairs at Gardner, Massachusetts. The partnership articles provided that ownership of the capital of the partnership and profits and losses should be divided among the partners in the proportion of one half to Carlos E. Ball, one third to Edward C. Ball and one sixth to Charles C. Brooks. Legal title to the real estate occupied by the partnership for its business-apparently recognized by the partners as partnership property, see Dyer v. Clark, 5 Metc. 562,39 Am.Dec. 567; Taber-Prang Art Co. v. Durant, 189 Mass. 173, 75 N.E. 221-stood in the names of the partners in the proportions in which they owned the capital of the partnership. The share of each partner in the profits was to be credited annually to such partner on the books of the company on a so called surplus account and it was provided that any partner might at any time withdraw the amount standing to his credit on such surplus account, but all sums so credited were to bear interest, at the rate of five per cent per annum, credited annually. The articles provided also that in ‘ case of the death of either partner the amount credited upon the books of the company to his surplus account shall remain in the business of the company upon the same terms as prior to his death until drawn out by his legal representatives, who may draw the sums one fourth in three months, one fourth in nine months, one fourth in fifteen months and one fourth in two years after the delivery to the other partners of a written notice requiring said payment,’ and that ‘ 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.’ There was also a provision for determining the price to be paid for the share of the deceased partner if the surviving partner or partners and the representative of the deceased partner were unable to agree upon such price which the partners should ‘ pay or secure’ to such representative.

At the death of the testator there stood to his credit on the books of the partnership on the so called surplus account the sum of $122,040,42, to the credit of Edward C. Ball on that account the sum of $58,040.08, and to the credit of the respondent Brooks the sum of $9,909.52. Thereafter an arrangement was made for the formation of a corporation-the Connate Ball Company-to take over the business of the partnership. In accordance with this arrangement the executrix of the will of Carlos E. Ball gave to the corporation a bill of sale of the testator's share in the personal property of the partnership and the trustees under the will gave to the corporation a deed of the testator's undivided interest in the real estate. The corporation issued preferred stock of the par value of $120,000 and common stock of the par value of $30,000. The executrix received in cash $22,040.42 from the partnership, $15,000 from Edward C. Ball, and $15,000 from the respondent Brooks. She also received preferred stock of the par value of $68,000 and a mortgage of all the corporation's real estate running to the trustees under the will in the amount of $32,000. Edward C. Ball received preferred stock of the par value of $52,000, on account of the amount credited to him on the so called surplus account. He withdrew the balance of the amount credited to him on this account, and the respondent Brooks withdrew the full amount so credited to him. In substance, therefore, as a result of the transaction the estate of the testator received for its interest in the capital of the partnership the sum of $30,000 in addition to the amount received on account of the indebtedness of the partnership to the estate (see Williams v. Inhabitants of Brookline, 194 Mass. 44, 79 N.E. 779) on the so called surplus account. The propriety of the transaction is attacked in this proceeding.

This proceeding is a petition in equity brought in the probate court, September 24, 1930, by the Malden Trust Company, trustee under the will of Carlos E. Ball, to recover from the respondents Brooks and Conant Ball Company property alleged to belong to the trust created by said will. Edward C. Ball (who died after the petition was brought, the executor of his will now appearing in his stead), the executor of the will of Elizabeth W. Ball, the administrator with the will annexed of the estate of Carlos E. Ball, Edmund Ball Hopkins and his minor children and their guardian were joined as parties respondent, but no relief is sought by the petitioner against any of them.

A hearing was had upon certain paragraphs in the answers of the respondents Brooks and Conant Ball Company in the nature of a plea to the jurisdiction of the court, the judge of probate overruled the answer, so far as it constituted such a plea, and reported the case for the determination of this court, and the decree was affirmed. Malden Trust Co. v. Brooks, 276 Mass. 464, 177 N.E. 629, 80 A.L.R. 1028. Thereafter the case was heard on the merits by a judge of probate on an agreed statement of facts, documents, oral testimony and statements of Edward C. Ball (who had died before the hearing) when testifying in a hearing on his account as trustee. The judge made findings of fact, granted and denied requests for rulings of law and ordered the petition dismissed. The petitioner and the respondents, the executor of the will of Elizabeth W. Ball, the administrator with the will annexed of the estate of Carlos E. Ball, Edmund Ball Hopkins and the guardian of his minor children appealed. The evidence is reported.

The probate judge made these findings: ‘ Upon all the evidence, I find no fraud on the part of Brooks and no breach of any fiduciary relationship on his part. He dealt with the executrix of the estate of Carlos E. Ball, who was ably represented by eminent counsel, Samuel K. Hamilton a leader of the Bar of this County and Commonwealth. There is not a scintilla of evidence to tax him with double dealing or any breach of his duty to his client, the executrix. Upon Mr. Hamilton's advice, the executrix set the price of her testator's share in the partnership business, exclusive of a credit balance due him at $6,000 more than it was carried on the books of the firm, and I find $30,000, the price paid, to have been fair and reasonable. The balance due her as executrix, from the partnership, was paid in cash, a first mortgage for $32,000 on real estate of the Corporation and 680 shares of preferred stock in the Corporation, a mortgage bearing interest at 5% and the preferred stock being on a 5% dividend basis. This rate had previously been allowed the partners on any money they allowed to remain in the business as loans to it. This method I also find to have been a fair and reasonable method of taking care of the debt due the testator from the partnership, and no fraud nor breach of any fiduciary relationship was exercised upon either the executrix or her counsel by Brooks, nor was Hamilton acting the part other than that of a careful and faithful attorney for his client, the executrix. ...