National Shawmut Bank of Boston v. Joy

• Decision Date: 02 February 1944
• Citation: 53 N.E.2d 113,315 Mass. 457
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: THE NATIONAL SHAWMUT BANK OF BOSTON & another, trustees, v. MINNIE B. JOY & others.

315 Mass. 457

53 N.E.2d 113

THE NATIONAL SHAWMUT BANK OF BOSTON & another, trustees, v. MINNIE B. JOY & others.

Supreme Judicial Court of Massachusetts, Suffolk.

February 2, 1944

December 8, 1943.

Present: FIELD, C.

J., DONAHUE LUMMUS, & QUA, JJ.

Power. Trust Express: construction, validity.

Wills, Statute of. Words, "Persons . . . entitled to take . . . under the laws of intestacy.

"

The validity and binding effect of a formal written declaration of trust was not affected even if the settlor did not understand the effect of the instrument upon his property and upon a will made by him ten years earlier.

Knowledge by a beneficiary of the existence of a trust established under a formal written declaration of trust in his favor is not essential to its validity.

The will of the settlor in a declaration of trust did not constitute a valid exercise of a power of appointment reserved to him by provisions of the trust requiring that the power be exercised only by an instrument under his seal, duly acknowledged by him and deposited with the trustee, where, although one witness to the will was a notary public, it did not appear that there was an acknowledgment before him, and, although the executor named in the will was also the trustee named in the trust instrument, it did not appear that in receiving custody of the will he had received it as trustee.

Under a declaration of trust providing benefits for the donor and another for life and that upon their deaths the principal and accumulated income should be paid as the donor should appoint or, in default of appointment, "to such person or persons as are entitled to take from the donor under the laws of intestacy of the" Commonwealth, the provision as to the statutory next of kin did not show that they were to take only by descent in the event of actual intestacy of the settlor but referred to them as purchasers and applied, upon default of appointment, although the donor died testate; the provision created an equitable future interest in the statutory next of kin contingent upon a default in appointment and, if there were no appointment, upon a determination at his death of the persons who should be such statutory next of kin.

The mere facts that a trust of personal property, established inter vivos under a formal declaration of trust, which upon stated contingencies disposed of the trust property after the death of the settlor, was not executed with the formalities required by the statute of wills, was established to avoid making a will, or to evade or circumvent those statutory requirements, or to make disposition of property which would make a will unnecessary and would be a substitute for a will, did not affect the validity of the trust.

The validity of interests to be determined at or after the death of the settlor under a declaration of trust of personal property was not affected by the facts that the settlor reserved to himself not only a life interest but also a general power to appoint the disposition of the trust property after his life interest and a life interest of another; that he also reserved to himself power to alter, amend, or revoke the trust; and that he directed that investments by the trustee should be made solely in accordance with written instructions of a certain dealer and broker in securities, who was to be entitled to receive any commissions and profits which might be realized by him in the investment transactions of the trustee. The decision and the reasoning of the opinion in McEvoy v. Boston Five

Cents Savings Bank, 201 Mass. 50 , overruled.

Upon the death, without making an appointment, of the donor of a declaration of trust which was for the benefit of the donor and another for life, and which directed that, after their deaths, in default of an appointment, principal and accumulated interest should be paid "to such person or persons as are entitled to take from the donor under the laws of intestacy of the" Commonwealth, the trustee was instructed that such payment should be made to those who were next of kin of the donor at his death, and not to the legatees in his will.

PETITION, filed in the Probate Court for the county of Suffolk on October 31, 1942, for instructions.

The case was heard by Dillon, J. J. C. Coughlin, stated the case.

C. C. Milton, (A.

H. Sheedy with him,) for John Anthony Bettencourt and another.

J. S. Allen, for Minnie B.

Joy and others.

H. Snyder, for Stephen H.

Wildman.

D. F. McCormack, for Albert E.

Wildman and another.

M. A. Shattuck, for The National Shawmut Bank of Boston and another, trustees.

LUMMUS, J. This petition, filed October 31, 1942, is brought by The National Shawmut Bank of Boston and Haven Parker as trustees under an indenture of trust under seal entered into by them as trustees with William W. Nicholls of Boston as settlor, dated March 12, 1936, for instructions as to the distribution of the trust property at the termination of the trust.

The evidence is reported, but the material facts are not in dispute. William W. Nicholls, who was born in England on October 24, 1860 migrated to Massachusetts with his mother and sister in 1872. He grew up in Boston, where he became a naturalized citizen on May 12, 1886. He never married. Apparently before 1890 he went to the Azores to live, and there became agent for a steamship line and for a time was American consul. He lived there at Brown's Hotel, kept by Miss Sophia Brown, at Ponta Delgada on the island of Sao Miguel. But he retained his domicil in Boston, and always described himself as of Boston. Rummel v. Peters, 314 Mass. 504 . Cassen v. Cassen, ante, 35.

After he went to the Azores, his mother and sister continued to live in Boston in a house maintained by him until they died about thirty years ago. Even after their deaths he continued to visit Boston every year or two, although he no longer maintained a house there.

He had friends of long standing in New England, some of whom he made legatees in his will. At some time he told one of them that his friends meant much more to him than his relatives in England. One of his friends was Louis G. Neville, a dealer and broker in securities in Boston, who from about 1920 was given a free hand in buying and selling securities for Nicholls.

On October 21, 1926, while on a visit to Boston, Nicholls made his will, which was under seal. He named the petitioning bank as executor, and devised and bequeathed to it as trustee all his property. The income was made payable to Sophia Brown during her life, and after her death to another person (who in fact died before Sophia Brown) for his life. At the death of the survivor of them, pecuniary legacies were made payable to the respondent Minnie B.

Joy and several other persons, and the residue was given to the respondents Bettencourt and DeCosta. The will when executed was put into the custody of the petitioning bank, and remained in its custody until after Nicholls died on October 7, 1937. The will was proved and allowed, and the bank was appointed executor, by the Probate Court in and for the county of Suffolk at Boston on June 5, 1939.

In 1936, while Nicholls was in the Azores, Neville, his son-in-law Haven Parker, an attorney at law, and the bank decided that it would be advisable for Nicholls to establish a voluntary trust. It does not appear that Nicholls had been consulted. An instrument of trust was drawn and sent to Nicholls, and he executed it in the Azores on March 12, 1936. It was in form an indenture, and when executed bore the signatures and seals of Nicholls as settlor and the bank and Mr. Parker as trustees. It was amended, under a power reserved by Nicholls, by another instrument similarly executed, dated May 29, 1936. The combined instruments will be described as though one. The property thereby conveyed by Nicholls to the trustees consisted entirely of corporate stocks and bonds. It was provided that the trust was established under the laws of Massachusetts, and was to be governed by those laws. Codman v. Krell, 152 Mass. 214 , 218. Proctor v. Clark, 154 Mass. 45 , 48. Harvey v. Fiduciary Trust Co. 299 Mass. 457 , 464. Loring, Trustee's Handbook (5th ed. 1940) Sections 118-120. Commonwealth v. Stewart, 338 Penn. St. 9, affirmed Stewart v. Commonwealth, 312 U.S. 649. There is nothing to show that Nicholls did not understand the effect of the trust instrument upon his property and upon his earlier will. But whether he did or not, the terms of the trust instrument, as far as they are valid, bound him and bind all who claim under him.

By those terms, Nicholls was to be paid $230 a month out of the income or, if necessary, out of the principal. ^[1] It was provided that "the trustees may make other payments from the principal of the trust fund as they in their absolute discretion may deem necessary for the benefit of William W. Nicholls." After his death, the income, and so much of the principal as the trustees in their absolute discretion might deem necessary, were to be paid to Sophia Brown during her life. After the deaths of both Nicholls and Sophia Brown, the principal and any accumulated income were to be paid over free from trust "to such person, persons or corporation as the donor [Nicholls] may appoint by an instrument duly acknowledged by him and under his seal and deposited with the trustees," and in default of such appointment "to such person or persons as are entitled to take from the donor [Nicholls] under the laws of intestacy of the Commonwealth of Massachusetts." It does not appear that Sophia Brown knew during the life of Nicholls of the existence of the trust, but such knowledge was not necessary to its validity. Aronian v. Asadoorian, ante, 274.

After Nicholls died on October 7, 1937, the trustees...