Minot v. Paine

• Decision Date: 26 June 1918
• Citation: 120 N.E. 167,230 Mass. 514
• Parties: MINOT et al. v. PAINE et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

230 Mass. 514

120 N.E. 167

MINOT et al.

v.PAINE et al.

Supreme Judicial Court of Massachusetts, Suffolk.

June 26, 1918.

Case Reserved from Supreme Judicial Court, Suffolk County.

Bill for instructions by Laurence Minot and others, trustees under the will of Julia B. Paine, against John B. Paine and others. On reservation on the pleadings and agreed facts for the determination of the full court. Decree in accordance with the opinion.

G. M. Palmer, of Boston, for respondents John B., Chas. J., and Frank C. Paine.

Arthur P. Stone, of Boston, for respondent Louis O. Koopman.

Jos. Wiggin, of Boston, for respondents Mary A. Winsor and others.

Fletcher Ranney and Thos. Allen, Jr., both of Boston, for Margaret D. Osborn.

Lawrence Bond and Addison R. Pike, both of Boston, for Salome B. Fisher.

RUGG, C. J.

The main question in this case is whether in the case of a power to appoint property given by will, to be exercised solely by the will of the donee of the power, the period established by the rule against perpetuities is to be reckoned from the creation or from the exercise of the power. That precise question never has been decided in this commonwealth. It has arisen in England and in some of the other states.

In Re Powell's Trusts, 39 L. J. Ch. 188, it was held by Vice Chancellor James that a power vested in a daughter by the will of her father to appoint by will after the termination of a life estate, ‘being exercisable only on her death, was not equivalent to her having the absolute ownership of the fund which was tied up for the whole of her life. The interests in the fund purported to be conferred by Mrs. Hall's [the donee of the power] will on’ her appointees ‘must therefore be taken to be interests created by the will of James Powell [the father and donor of the power]. Hence the rule against perpetuities must apply to this case and the gift’ over by the donee was held void for remoteness. In D'Abbadie v. Bizoin, Irish Rep. 5 Eq. 205, at page 210, the same line of reasoning appears to be followed. It is said at page 210, in commenting upon the will of a donee in execution of a power created by will:

‘The limitations subsequent to the life estate * * * are given in language which does not render it necessary that, if they had been inserted in the will which had created the power, they should become vested within the limits which the law has prescribed. In my opinion they are therefore bad.’

The opposite view was taken, however, by Chitty, J., in Rous v. Jackson, 29 Ch. Div. 521, and he was followed by North, J., in Re Flower, 55 L. J. Ch. 200, and by Vice Chancellor Chatterton in Stuart v. Babbington, L. R. Ireland, 27 Ch. 551. All these decisions were made by single judges. There is no adjudication by the court of appeal or the House of Lords.

There are several cases in England which hold that, where power to appoint to children is conferred by marriage settlements, the appointments are referable for determination as to remoteness to the settlement and not to the will of the donee. Of this kind are Wollaston v. King, L. R. 8 Eq. 165; Trendennick v. Trendennick, L. R. Ireland 1900, 1 Ch. 354; Cooke v. Cooke, 38 Ch. D. 202. See, also, Morgan v. Gronow, L. R. 16 Eq. 1. We need not pause to consider whether by analogous reasoning resort should be had for the same purpose to the will of the donor of a power created by will. See in this connection Gray on the Rule Against Perpetuities (3d Ed.) § 520. In any event there appears to be some uncertainty as to the law of England.

In this country the current of authority is all in one direction, to the effect that the question, whether the rule against perpetuities has been violated, is referable to the time of the creation of the power. In Matter of Dows, 167 N. Y. 227, 231,60 N. E. 439, 441 (52 L. R. A. 433, 88 Am. St. Rep. 508), it is said:

‘For the purpose of determining whether the execution of a power is in contravention of the statute of perpetuities, the estate created under such power much be referred back to the instrument granting the power. This is settled law, and was so held in Genet v. Hunt, 113 N. Y. 158 . Any other rule would permit the evasion of the statute against perpetuities by the grant of powers.’

Althoughthere is a pertinent statute in New York, these cases contain a discussion of the common law as an essential part of the chain of reasoning. This is the law of Maryland as established by a line of decisions the last of which is Gambrill v. Gambrill, 122 Md. 563, 89 Atl. 1094, where earlier cases are collected and reviewed. To the same effect are Brown v. Columbia Finance & Trust Co., 123 Ky. 775, 97 S. W. 421, 30 Ky. Law Rep. 110, 114;Boyd's Estate, 199 Pa. 487, 493, 49 Atl. 297; Lawrence's Estate, 136 Pa. 354, 364, 20 Atl. 521,11 L. R. A. 85, 20 Am. St. Rep. 925; and Re Phillips, 28 Ont. L. 94.

So far as there are intimations in our decisions they support the same conclusion. It was said in Stone v. Forbes, 189 Mass. 163, 172, 75 N. E. 141, 144:

‘If the gifts are treated, as they must be, as made in effect by the will of John M. Forbes [the donor], they are not too remote.’

In Thompson v. Pew, 214 Mass. 520, 523, 102 N. E. 122, 123, are these words:

‘With the exception of a difference in the application of the rule against perpetuities founded upon the fact that the property to be given was to come from her husband and not from her except as the appointor, the testatrix had the same power of testamentary disposition over it as over her own.’

The view taken by Mr. Gray in his work on the Rule against Perpetuities (3d Ed.) §§ 514, 515, 521 to 526a, is in harmony with In re Powell's Trusts, 39 L. J. Ch. 188, and the American decisions, and adverse to Rous v. Jackson and the two other English cases following it hereinbefore cited. It is stated with clearness and the reasoning somewhat amplified in an article by him in 26 Harvard Law Review, 720. The opposite view is put forward with acuteness in 26 Harvard Law Review, 64, and 27 Harvard Law Review, 705.

The nature of the power created by will and conferred upon a donee to appoint property by will has been considered by this court in several different aspects. In Crawford v. Langmaid, 171 Mass. 309, 50 N. E. 606, the effort was made to treat the right to exercise such a power as property under the reach and apply statute. See R. L. c. 159, § 3, cl. 7. But it was held that although, if the power was exercised, the property appointed is deemed assets of the estate of the donee so as to be subject to his debts if needed (Clapp v. Ingraham, 126 Mass. 200), yet since the nature of the estate of the remaindermen, in case the property is given over in default of appointment, is not affected until the power is exercised, there was no property right in the donee of the power. The rights of creditors again were considered in Shattuck v. Burrage, 229 Mass. 448, 118 N. E. 889.There the donee of the power had made the appointment by his will and the question was whether such property could under the circumstances there disclosed be treated as ‘new assets' of his estate under R. L. c. 141, §§ 11, 18. It was said (229 Mass. at page 451, 118 N. E. at page 890):

‘When a donor gives to another power of appointment over property, the donee of the power does not thereby become the owner of the property. The donee has no title whatever to the property. The power is simply a delegation to the donee of authority to act for the donor in the disposition of the latter's property. The appointee named by exercise of this delegated authority takes as recipient of the bounty of the donor and not as legatee of the donee.’

It was held in Sewall v. Wilmer, 132 Mass. 131, that the effect and validity of the instrument whereby the appointment was exercised was to be determined according to the law of the domicile of the donor and not of the donee. It there was said (132 Mass. 136):

‘The property of which Mrs. Wilmer has a power of appointment is not her property, but the property of her father; and the instrument executed by her takes effect, not as a disposition of her own property, but as an appointment of property of her father under the power conferred upon her by his will. The domicile of the testator whose property is in question is therefore the domicile of her father.’

The question has arisen in reference to taxation. In Emmons v. Shaw, 171 Mass. 410, 50 N. E. 1033, the point presented was whether, under the collateral inheritance tax law, the appointed property was to be regarded as that of the testamentary donor or of the donee. After a review of the authorities it was held that it passed as under the will of the donor and not of the donee. It there was said (171 Mass. 412, 50 N. E. 1034):

‘Generally speaking, what is done under a power of appointment is to be referred to the instrument by which the power is created, and operates as a disposition of the estate of the donor [citing a large number of authorities]. This is the ancient and established rule.’

In Walker v. Treasurer and Receiver General, 221 Mass. 600, are these words at page 602, 109 N. E. 647, 648:

‘The power is a deputation of the donee to act for the donor in disposing of the donor's property. Personal property over which one has the power of appointment is not the property of the donee, but of the donor of the power.’

Again, in Hill v. Treasurer and Receiver General, 229 Mass. 474, 118 N. E. 891, the question arose whether, when the power of appointment had been exercised and the property was seized by equity and applied to the payment of the debts of the donee of the power because otherwise they would have gone unpaid, the property so seized was subject to the inheritance tax as property passing under the will of the donee. In holding that it did not so pass, it was said:

‘It is settled that, the donee having exercised the power, the property appointed becomes in equity assets of his estate, so far as needed to pay his debts, to the...