Old Colony Trust Co. v. Board of Governors of Belleville General Hospital

• Decision Date: 05 May 1969
• Parties: OLD COLONY TRUST COMPANY, Executor, v. The BOARD OF GOVERNORS OF the BELLEVILLE GENERAL HOSPITAL et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 583

247 N.E.2d 583

355 Mass. 776

OLD COLONY TRUST COMPANY, Executor, v. The BOARD OF GOVERNORS OF the BELLEVILLE GENERAL HOSPITAL et al.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued March 7, 1969.

Decided May 5, 1969.

Richard D. Leggat, Boston, stated the case.

William N. Swift, Boston (John H. Clymer, Concord, with him), for Old Colony Trust Company, trustee, and others.

John H. King, Boston, for the City of Belleville and another.

James J. Kelleher, Asst. Atty. Gen., for the Attorney General.

Blair L. Perry, Boston (A. Frederick Richard, Boston, with him), for The Board of Governors of the Belleville General Hospital.

Before WILKINS, C.J., and SPALDING, WHITTEMORE, CUTTER and KIRK, JJ.

WILKINS, Chief Justice.

This petition for instructions is brought by the executor under the will of Charlotte E. Sills, late of Newton, against Old Colony Trust Company, as trustee under the said will; Board of Governors of The Belleville General Hospital, Belleville, Ontario, Canada, a corporation organized under the laws of the Province of Ontario; City of Belleville, a municipal corporation of the said Province; County of Hastings, a governmental body of the said Province; the Attorney General of this Commonwealth; and all other persons interested in the residue of the said will. G.L. c. 231A.

The petition states that the will, after making provisions for annuities, directs that upon the death of the last annuitant, the fund is to be paid in specified fractions to designated charities, including 'Two-fifteenths thereof each to the Belleville General Hospital, Belleville, Ontario, and Newton-Wellesley Hospital, Newton, Massachusetts, and one-fifteenth thereof each to * * * Belleville General Hospital, Belleville, Ontario, the same to be used towards construction and maintenance of a convalescent home.' The petition further alleges that the United States Internal Revenue Service has refused to allow a deduction under § 2055 of the Internal Revenue Code of 1954 for the two-fifteenths remainder ¹ interest of The Belleville General Hospital (the hospital) on the grounds that the gift was made without restriction and that the hospital constituted an arm of and was indistinguishable from the city. This disallowance led to the payment of a deficiency of $831,608.31 in the Federal estate tax, and an action to recover the deficiency is now pending in the United States District Court for the District of Massachusetts. The burden of the deficiency would be borne by the other charitable remaindermen on a proportionate basis. The petition also alleges that the correctness of this action and the question as to who is entitled to notice of proceedings for the allowance of accounts both depend upon the decedent's intent as expressed in her will; and that the petitioner is in doubt as to the proper construction of the will.

The petition prays for instructions as to the appropriate distributee of the proportionate share in the remainder of the residuary trust bequeathed to the hospital; whether that share is to be deemed to be impressed with a trust limiting the purposes to which it can be applied; as to the trustee's duties with respect to a presently pending action to recover an assessed deficiency in the Federal estate tax heretofore paid by the petitioner; and as to the persons to whom notice should be given with respect to the interest bequeathed to the hospital in proceedings for allowance of the accounts of the petitioner.

The case is reported without decision upon the pleadings and the statement of agreed facts. G.L. c. 215, § 13.

The testatrix was born in Belleville, and became an American citizen by naturalization in 1914. At the time of the execution of the will she was aware of an entity known as The Belleville General Hospital, which had served the residents of the city for many years. Prior to 1948 it was operated by The Women's Christian Association of Belleville which presently appoints two of the Governors of the hospital. 'The City of Belleville Act, 1948' affirmed the purchase of the assets of the hospital by the city, vested all such assets in the city, and created a corporation for the management and control of the hospital acting by a Board of Governors of fifteen, ² who were authorized to receive gifts. 'The Belleville General Hospital Act, 1962--63' repealed the 1948 act, and provided that the hospital be managed and operated by a corporation under the name of 'The Board of Governors of the Belleville General Hospital.' The number of Governors is sixteen. ³ The board was given custody of all hospital property and all such property was 'vested' in the City of Belleville and County of Hastings in the proportion of sixty-five per cent city and thirty-five per cent county. Thereafter the corporation has at all times been operated as an entity distinct from any city, county, or other government or political body in the Province. It has its own staff of administrators and employees, none of whom is treated as a city or county employee for any purpose. It maintains its own bank accounts and records. It has sued and has been sued in its corporate name, and pays betterment assessments to the city. It is...