Porter v. Porter

• Decision Date: 19 May 1941
• Citation: 20 A.2d 465
• Parties: PORTER et al. v. PORTER et al.
• Court: Maine Supreme Court

20 A.2d 465

PORTER et al.

v. PORTER et al.

Supreme Judicial Court of Maine.

May 19, 1941.

Report from Supreme Judicial Court, Hancock County, in Equity.

Bill in equity for the construction of a declaration of trust by William D. Porter and Boston Safe Deposit & Trust Company against William D. Porter and another. On report.

Decree in accordance with opinion.'

Argued before STURGIS, C. J., and THAXTER, HUDSON, MANSER, WORSTER, and MURCHIE, JJ.

Verrill, Hale, Dana & Walker, of Portland (Robert Hale, of Portland, of counsel), for plaintiffs.

Hale & Hamlin, of Ellsworth, for William D. Porter and Mary G. Porter.

William B. Nulty, of Portland, guardian ad litem, pro se.

MANSER, Justice.

In September, 1912, William D. Porter by voluntary written assignment and declaration transferred to a trust company, predecessor of the present trustees, securities of the face value of $140,000, in irrevocable trust for his own benefit, to receive the net income during his life, reserving the right to dispose of the trust property by will, or in event of his intestacy, in accordance with provisions stated in the trust declaration. Mary G. Porter, named as a defendant, is a sister of the settlor, and, under certain circumstances, entitled to the trust estate upon his decease.

In 1933 the settlor himself, and the Boston Safe Deposit and Trust Company, by appointment of the Probate Court, became successor trustees.

The authority of the trustees as to investment of the trust funds was defined and limited as follows: "to invest and reinvest the same and the proceeds therefrom, or any part thereof, and the interest and profits thereon, or any part thereof, only in the bonds of the United States or of any of the States of the United States, or in notes or bonds secured by first mortgage or trust deed on improved real property in any state, or in the bonds of any County, City, School District or other municipality in any State, or in the first mortgage bonds of any corporation of any State upon which no default in payment of interest shall have occurred for a period of five years before the purchase thereof; and to sell, assign, transfer, collect, sue for, foreclose, alter and change the investments of said estate."

There is now presented a bill in equity brought by the trustees, seeking the aid of the Court, and as stated in the prayers of the bill, asking,

"That it construe and interpret the provisions of said trust indenture and give the plaintiffs such instructions as may be deemed advisable and necessary with respect thereto.

"That it permit a deviation from the terms of said trust indenture if the said trust indenture cannot be so construed as to permit of the purchase of new issues of corporate first mortgage bonds otherwise deemed by the plaintiffs to be suitable investments.

"That the plaintiffs be empowered to deviate from terms of the trust with respect to investments permitted, and that they be empowered to invest in such kind or type of security and in such manner as is permitted to trustees by the laws of this state and that they be empowered to invest in stocks both common and preferred."

All parties, including the guardian ad litem for possible remaindermen, join in the prayers of the bill. The case has been argued ex parte, no counsel appearing in opposition to the granting of the prayers of the plaintiffs. This imposes upon the Court the duty of particular vigilance, as it is without the benefit of presentation by counsel from a different viewpoint.

That the Court has authority to pass upon the questions involved is well established under our equity practice and is specifically granted by R.S, c. 91, § 36, subd. X.

Consideration will first be given to the prayer of the bill, asking for authority to deviate from the investment provisions to permit the trustees to have a wider scope of investment, and that corporation stocks in particular may be embraced therein.

The principles which must guide in determination are well settled.

They are tersely stated in Restatement of the Law of Trusts, Vol. 1, § 167:

"(1) The Court will direct or permit the trustee to deviate from a term of the trust if owing to circumstances not known to the settlor and not anticipated by him, compliance would defeat or substantially impair the accomplishment of the purposes of the trust; and in such case, if necessary to carry out the purposes of the trust, the court may direct or permit the trustee to do acts which are not authorized or are forbidden by the terms of the trust."

(12b) "The court will not permit or direct the trustee to deviate from the terms of the trust merely because such deviation would be more advantageous to the beneficiaries than a compliance with such direction."

"Illustration:

"13. A bequeaths money to B in trust and directs that the money shall be invested only in railroad bonds. Owing to developments in the electrical science and industry it appears that bonds of electric companies are as safe an investment as railroad bonds and yield a higher return. The court will not direct or permit B to invest in bonds of electric companies."

Elaboration of these statements is found in the recent works of Scott on Trusts and Bogert on Trusts, fortified with citation of many judicial decisions. Thus we find Scott quoting from Curtiss v. Brown, 29 Ill. 201, 230 as follows:

"Exigencies often arise not contemplated by the party creating the trust, and which, had they been anticipated, would undoubtedly have been provided for, where the aid of the court of chancery must be invoked to grant relief imperatively required; and in such cases the court must, as far as may be, occupy the place of the party creating the trust, and do with the fund what he would have dictated had he anticipated the emergency. * * * From very necessity, a power must exist somewhere in the community to grant relief in such cases of absolute necessity, and under our system of jurisprudence, that power is vested in the court of chancery."

This author also discusses the situation as to investment in corporate stocks as follows:

"A closer question arises where by the terms of the trust the trustee is forbidden to invest in shares of stock in jurisdictions in which the purchase of such shares would otherwise be a proper trust investment. In such a case the general principle as to permission to deviate from the terms of the trust seems to be applicable. If owing to circumstances not known to the settlor and not anticipated by him, compliance with the terms of the trust would defeat or substantially impair the accomplishment of the purposes of the trust, the court may permit a deviation from the terms of the trust."

See Scott on Trusts, pp. 838-841.

So Bogert on Trusts, under the subtitle "Alterations for Mere Convenience" in Vol. 3, § 561, pp. 1798, 1799, says:

"This power to alter is, however, an emergency power, used to prevent a serious failure in trust accomplishment. It is not usable to gain for the cestui slight advantages or to remake the trust into a provision which the court deems better than the gift provided by the settlor. Thus, if a settlor has directed that the funds shall be invested in United States government bonds exclusively, the fact that such investments bring a very low rate of income at a given time will not ordinarily lead the court, on the application of the cestui, to direct the trustee to disregard the settlor's investment clause and to buy other legal investments which yield a higher rate. To follow the settlor's direction will give the cestui some income and all the benefit that the settlor intended him to have. The court will not employ its power of alteration in order merely to increase the benefits for the cestui and to bring to him a gift which he thinks the settlor should have made him."

It is plain...