Massachusetts Inst. of Tech. v. Attorney Gen.

• Decision Date: 22 March 1920
• Citation: Massachusetts Inst. of Tech. v. Attorney Gen., 235 Mass. 288, 126 N.E. 521 (Mass. 1920)
• Parties: MASSACHUSETTS INSTITUTE OF TECHNOLOGY v. ATTORNEY GENERAL et al.
• Court: Supreme Judicial Court of Massachusetts

235 Mass. 288

126 N.E. 521

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

v.ATTORNEY GENERAL et al.

Supreme Judicial Court of Massachusetts, Suffolk.

March 22, 1920.

Report from Supreme Judicial Court, Suffolk County.

Petition by the Massachusetts Institute of Technology against the Attorney General and others. On report by a single justice, on the bill, answers, and a statement of agreed facts, to the Supreme Judicial Court. Decree directed in accordance with the opinion, authorizing petitioner to sell and convey realty described in the bill.Charles F. Choate, Jr., Carleton Hunneman, and Charles P. Curtis, Jr., all of Boston, for plaintiff,

William H. Brown, of Boston, for defendants Drown and others.

PIERCE, J.

This is a petition of the Massachusetts Institute of Technology to sell real estate, conveyed to it by trustees appointed under the will of Charles Herbert Pratt, who died May 7, 1912, testate. His will, on appeal from the probate court, after a trial to a jury was admitted to probate by a decree of the Supreme Judicial Court on January 8, 1915, and the decree was filed in the probate court on January 29, 1915. The trustees under the will were duly appointed February 18, 1915.

By his will the testator directed the payment of his debts and funeral expenses, the erection of a monument over his grave, and the care and maintenance of the monument and grave. He bequeathed an annuity of $400 to his stepmother. He gave his collection of postage stamps to a friend interested in philately. And he gave all the rest and residue of his property, ‘real, personal and mixed,’ to his trustees, who were the executors of his will.

The will disposed of real and personal property which came from three sources: First, that which belonged to the testator, immediately; second, that which came to him from his father, in which his stepmother, who survived him, was entitled to a life interest in one-third; third, that which came from his brother, in which his stepmother had a life interest in $10,000. At the time of the testator's death, on May 7, 1912, the inventory of the special administrator showed the value of the personal property, less the life interest of the stepmother, to be $243,805.49, and the value of the real estate, less the life interest of the stepmother, to be $455,199.96. The executor's inventory, filed July 29, 1915, showed the value of the personal property, less the life interest of the stepmother, to be $304,922.59, and the value of the real estate, less the life interest of the stepmother, to be $512,067.10; the total value of real and personal property being $816,989.69.

During September or October, 1916, the interest of the stepmother in the properties was released in consideration of a covenantof the Institute of Technology with Mrs. Pratt to pay her an annuity for her natural life, and the transfer to her of certain personal effects, the use of which was bequeathed to her for life by her late husband's will. The Institute of Technology also covenanted to pay certain relatives of the testator during the remainder of their joint lives and the life of the survivor of them the sum of $1,200 per annum. October 2, 1916, the trustees conveyed the real estate to the Institute of Technology. October 12, 1916, the executors filed their first and final account. This account, not yet allowed, showed a transfer of personal property of the value of $367,169.90 to themselves as trustees under the will. The trustees filed an account, not yet allowed, October 12, 1916, beginning September 27, 1916, and ending September 30, 1916, in which they charged themselves with $371,295.48, which is the sum, plus income, less an expense allowance of $582.39, the executors had transferred to themselves as trustees September 27, 1916. October 12, 1916, the trustees transferred the personal property to the Institute of Technology. The entire residue, real and personal property received from the trustees by the Institute of Technology, was entered on the books of the Institute of Technology as having a value of $935,000.

The defendants contend that the conveyance of the real estate and the transfer of the personal property by the trustees to the petitioner, were not such transactions of an ‘entire net accumulated fund’ as the testator, by the fifth clause of his will, intended should be formed by the trustees and paid over to the petitioner when the accumulated fund should amount to $750,000. They argue in support of this position that the value of the real estate alone was less than $750,000, and that the title to the personal property could not be transferred by the executors to themselves as trustees, nor the value of the personal property be added to the value of the real estate to make an aggregate fund of at least $750,000, until the allowance of the executors' account. Welch v. Boston, 211 Mass. 178, 97 N. E. 893, cited by the respondents, the earlier cases which that opinion affirms, and the later cases which follow it, establish beyond the peradventure of doubt that executors are liable to taxation as executors for the amounts given them as trustees until their account as executors showing a distributionto themselves as trustees has been allowed in the probate court. They also establish the rule that a surety on an executor's bond is liable on the bond for the acts of the executor until the final account of the executor is allowed in the probate court. These cases do not decide that a change in capacity from that of executor to trustee cannot result where, as here, executors and trustees duly appointed by the probate court, under a will that exempts ‘them each as executors and as trustees from giving surety or sureties upon their official bond’ have claimed a credit on their executorship account filed in the probate office for a sum held by them as trustees, and have also filed in that office an inventory or account charging themselves with the like amount as trustees. Newcomb v. Williams, 9 Metc. 525, decides that a change in capacity may result when the executor is not required to give a bond, and has shown by any authoritative and notorious act that he has elected to act in the capacity of trustee. See White v. Ditson, 140 Mass. 351, 354, 4 N. E. 606,54 Am. Rep. 473;Batchelder v. Cambridge, 176 Mass. 384, 57 N. E. 664;Henry v. United States, 251 U. S. 393, 40 S. Ct. 185, 64 L. Ed. 322;Rhines v. Wentworth, 209 Mass. 585, 588, 95 N. E. 951;Williams v. Acton, 219 Mass. 520, 107 N. E. 362.

While the probate of the will was in litigation the estate increased in value to a sum largely in excess of $750,000. The sole duty of the trustees, under the fifth clause of the will, was to invest and reinvest the rest and residue of the estate until the accumulated fund should amount to the net sum of $750,000, and to pay over the net accumulated fund to the Institute of Technology at the expiration of 21 years from the decease of the testator, or sooner should the accumulated net fund amount to $750,000; otherwise the fund was to revert to the estate of the testator. When the will was finally probated and the trustees appointed under the fifth clause, the value of the rest and residue of the estate exceeded $750,000. The trustees were consequently discharged of the duty of investment and reinvestment, and of...