Russell v. Russell

• Decision Date: 17 April 1929
• Court: Connecticut Supreme Court
• Parties: RUSSELL ET AL. v. RUSSELL ET AL.

145 A. 648

109 Conn. 187

RUSSELL ET AL. v. RUSSELL ET AL.

Supreme Court of Errors of Connecticut.

April 17, 1929

Case Reserved from Superior Court, New Haven County; Edward M Yeomans, Judge.

Suit by James E. Russell and others, trustees under the will of James E. Russell, deceased, against Clara A. Russell and others for construction of deceased's last will and testament reserved by the superior court on an agreed statement of facts for the advice of the Supreme Court of Errors on certain questions propounded. Questions answered.

James E. Russell died at Waterbury, October 13, 1926, leaving a will and codicil in which he gave all his estate except for a few small gifts to the plaintiffs as trustees. By the terms of the trust they were to hold, manage, and invest the property, to pay to the testator's wife, until their youngest surviving child should reach the age of 21, $600 monthly and such additional sums as the trustees in their discretion might deem necessary for her comfortable support, to provide a suitable education for his children, and to pay $5,000 to each of them when he or she should reach the age of 25, if that should occur before the termination of the trust, as an advancement upon his or her share of the estate. When his youngest surviving child reached the age of 21, the trust was to terminate but, should his wife be alive, she was to have the use, income, and profits of the estate so long as she lived. At the termination of the trust, or at the death of the wife, should she outlive it, he gave the principal of the fund to his children or the survivors of them, with a provision that, if any child should have died before his wife, leaving issue who survived her, such issue should take the share their parent would have received.

In the eighth paragraph of the will he provided as follows: " I will and direct that none of my real estate be sold until my youngest surviving child shall have reached the age of twenty-one years, but that instead my real estate be mortgaged should it become necessary or advisable to raise money to pay any claims or indebtedness, mortgage or otherwise, against my estate." The fourth paragraph of the codicil is as follows: " I direct that any and all monies and income belonging to my estate and remaining in the hands of my executors and trustees after the payment of all legacies, bequests, unsecured indebtedness, and expenses of settling my estate, shall be used and expended by them in reducing and paying off my mortgage indebtedness, and should any remain after the payment of the latter, I direct that the same be invested as trust funds are allowed to be invested by trustees under the laws of this State."

The estate of the testator consisted principally of eight pieces of real estate in the city of Waterbury. One of these, Nos. 73 to 81 Bank street, had upon it a four-story brick building, with four stores upon the ground floor, and office space upon the other floors. This building is located in the heart of the business district, but the upper floors have been only partly rented, and the gross income from them has been only $1,560 a year, due to the fact that the building is now more than 75 years old, and is without modern conveniences; and the stores are in a dilapidated condition, the ability to rent them being due to their location. The net income from the building in the year 1927 was $2,610.35. On July 26, 1928, a fire destroyed the roof of the building, rendering the upper floors untenantable, and resulting in their being boarded up. No repairs have been made to the building except to construct a temporary roof to protect the stores on the ground floor. The rental reasonably to be anticipated from that floor will not be sufficient to " carry" the building. The market value of the land is about $200,000; the building represents a liability, and it would cost about $5,000 to remove it. When the testator died there was a mortgage of $104,000 on the property, which the trustees have reduced to $75,000, by paying $13,000 from the income of the estate and $16,000 from the proceeds of insurance upon the building. It would cost approximately $100,000 to build a modern three-story store and office building upon the premises, with suitable provision for a later increase in height to eight stories. The net annual income from such a building may be conservatively estimated at $20,000. The only way the trustees can secure the necessary funds to defray the cost of any permanent improvement is by mortgaging the real estate in the trust, and, while they could obtain sufficient funds to proceed with the building above described by mortgaging this piece of property alone, this could be done at a much smaller cost if all or several of the pieces of property were offered as security.

With the exception of the ground floor of the building upon one of the other lots, the condition of the other premises held by the trustees is substantially like that of those above described as they were before the fire. The trustees have made no improvements of an extensive, permanent nature. Rental cannot now be obtained from these premises reasonably commensurate with the intrinsic value of the real estate, nor can it be obtained unless improvements of a permanent and modern nature are made from time to time. As long as conditions remain unchanged the premises cannot be rented to the more desirable and stable class of tenants, or in some instances to any tenants, and, even if the buildings are improved, the more desirable and stable class of tenants cannot be secured unless leases for long terms of years are made. To properly and effectively administer their trust, the plaintiffs should improve and develop the properties, rather than permit the value of the corpus of the trust to be diminished as the buildings grow older, and the growth of the estate hindered, as well as that of the neghborhood in which the properties are located.

The testator was survived by his wife and seven children, all of whom are living. Three of the children are minors, and the youngest will arrive at the age of 21 in 1937.

The questions propounded to us in the stipulation are as follows:

" a. What is the meaning of ‘ hold, manage and care for’ in numbered paragraph 7, a, of decedent's will?

b. What is the meaning of ‘ all monies and income’ as used in numbered paragraph 4 of the codicil of decedent's will?

c. Whether or not the trustees may make, upon application to the Probate Court for the district of Waterbury, a valid and binding lease of any part of the trust real property?

d. If question ‘ c’ immediately above be answered in the affirmative, to what extent in time is the trustees' power to lease restricted, and what is the maximum period of time for which said trustees may make such a lease?

e. Whether or not the trustees may cause extensive and permanent improvements to be erected upon the trust real estate?

f. Whether or not the trustees may cause extensive and permanent improvements to be erected upon the premises known and described as numbers 73-81 Bank Street, replacing the present structure?

g. If the questions ‘ e’ and ‘ f’ , or either, be answered in the affirmative, in what manner should the trustees act in that regard, in order to protect the interests of the trust estate, the cestuis que trust and the trustees?

h. Whether or not the trustees, upon application to the Probate Court for the district of Waterbury, may mortgage the trust real property to obtain monies with which to effect permanent improvements in and upon said trust real property?"

James E. Russell and Patrick Healey, both of Waterbury, for plaintiffs.

Argued before WHEELER, C.J., and MALTBIE, HAINES, HINMAN, and BANKS, JJ.

MALTBIE, J. (after stating the facts as above).

The first question we propose to consider concerns the authority of the trustees to cause extensive and permanent improvements upon the premises in their charge. The plaintiffs in their brief quote from the note to 2 Perry, Trusts (6th Ed.) § 477, a statement to the effect that American decisions show a strong tendency to modify the rule which forbids permanent and extensive improvements unless clearly authorized in the will, or unless the expenditures are necessary to save the trust property from destruction or irreparable loss. This statement hardly seems borne out by the authorities. See Estate of Cole, 102 Wis. 1, 8, 78 N.W. 402, 72 Am.St.Rep. 854; Booth v. Bradford, 114 Iowa, 562, 87 N.W. 685; Maynard v. Columbus, 150 Ky. 817, 819, 150 S.W. 1019; In re Miller, 62 N.J. Eq. 764, 49 A. 149; Id., 67 N.J. Eq. 431, 58 A. 383. In England the matter is now largely governed by statute, but, where it is not, it still seems true that the trustees will not be authorized to make such improvements. Re Lord De Tabley, 75 Law Times Reports, 328; In re Tessiers Settled Estate, L. R. (1893) 1 Ch. 153. It should be borne in mind that the question is usually not so much one of authority in the trustees to make such improvements as of their authority to use the capital of the estate for such a purpose, and, so understood, the cases cited in the note in Perry to support its text are seen to be rather exceptions to than illustrations of a general rule; for in Stevens v. Melcher, 152 N.Y. 551, 567, 46 N.E. 965, authority in the trustees to invest the principal of the fund in real estate was found in the will; in Massachusetts, as pointed out in Warren v. Pazolt, 203 Mass. 328, 348, 89 N.E. 381, the general rule is that trustees have authority to invest the funds in their possession in real estate; and in both cases the making of permanent improvements was regarded as tantamount to an investment in lands. The limitations upon the authority of trustees to invest funds fixed by our st...