Shattuck v. Burrage

• Decision Date: 28 February 1918
• Parties: SHATTUCK v. BURRAGE et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

229 Mass. 448

118 N.E. 889

SHATTUCK

v.BURRAGE et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Feb. 28, 1918.

Case Reserved from Supreme Judicial Court.

Petition for instructions by Charles E. Shattuck, administrator de bonis non with the will annexed of the estate of Charles Howard Richardson, against George D. Burrage, trustee and others. On reservation for the determination of the full court. Decree ordered to be entered, directing petitioner.

Wm. G. Thompson and Geo. E. Mears, both of Boston, for Burrage.

Whipple, Sears & Ogden, of Boston, for Hayden, Stone, Emery & Tucker.

RUGG, C. J.

This is a petition by the administrator de bonis non with the will annexed of the estate of Charles Howard Richardson for instructions as to what he shall do with funds in his hands. The controversy arises between general creditors of the testator and the trustee appointed under his will to administer the trust created by its residuary clause. The general creditors of the testator contend that the funds in the petitioner's hands are ‘new assets' under R. L. c. 141, §§ 11, 18, which lifts the bar of the statute of limitations upon certain conditions. The trustee combats that contention on several grounds and asserts that he is entitled to receive the entire fund.

The material facts are these: The testator died, his will was allowed and one Harding was appointed executor and gave due notice thereof in 1899. Harding filed no inventory or account until 1916. He resigned in 1913, when the petitioner was appointed his successor, and gave due notice of his appointment. In his inventory filed in December, 1913, was included the item, under the designation ‘a claim’ of uncertain value, out of which by far the largest part of the funds involved in this petition have come. The petitioner succeeded in collecting a considerable sum on this claim in 1916. None of the funds received by the petitioner were assets or property of the testator during his life. It was property over which he simply had a power of appointment. His mother created a spendthrift trust for his benefit during his life and gave him a general power of appointment by will over the principal. The funds in question accordingly were held by a trustee during the testator's life. The testator exercised the power of appointment by a general residuary clause in his will. Stone v. Forbes, 189 Mass. 163, 75 N. E. 141;Howland v. Parker, 200 Mass. 204, 207, 86 N. E. 287,16 Ann. Cas. 201. The testator's estate never has been represented insolvent. By the first clause of his will be made a specific bequest of books, pictures, silverware and other articles of personal belongings, which were received by the legatee while Harding was executor, with his knowledge. Their value is not shown. That legatee is one of the respondent creditors, but the others had no knowledge of this property.

The proposition put forward in behalf of the creditors is that since property of a third person, not owned by the testator but over which he has exercised a general power of appointment, is deemed in equity to be assets of the estate of the person exercising the power so far as needed to make good a deficiency of his own property to pay his debts, it must likewise be regarded as ‘new assets' under the statute, when other necessary elements are present. 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, Walker v. Treas. & Recvr. Genl., 221 Mass. 600, 109 N. E. 647, where authorities are collected. Drake v. Atty. Genl., 10 Cl. & F. 257, 286. The right to exercise the power is not property and cannot be reached by creditors. Crawford v. Langmaid, 171 Mass. 309, 311, 50 N. E. 606. On no theory of hard fact is the property appointed the property of the donee of the power. But very early equity grafted onto these bald facts a principle of fair dealing. That principle was founded on the idea that a man ought to pay his debts if he could. Equity assumed as matter of good conscience and sound morals that a man in debt could not honestly have meant to give property to his friends or relatives to the exclusion of his creditors, when he could give it to anybody he chose. Regardless of his actual intention, equity said that creditors should not go unpaid and volunteers profit through the exercise of a power of appointment. It was held that a man of integrity in debt having the general power to give away the property of another would or ought to prefer to give it to his creditors, if they could be paid in no other way, rather than to give it to persons who had no legal claim upon him. It is a doctrine established in the interest of good faith. Various phrases have been used by eminent chancery judges to express this principle and the reason for it, such as, that ‘equity stops in transitu’ property on its way from the donor to the appointee, that ‘the court ought to intercept it for the benefit of a creditor,’ and that ‘it would be a strange thing if volunteers * * * should run away with the whole, and that creditors for a valuable consideration should sit down by the loss without any relief.’ See O'Grady v. Wilmot, [1916] 2 A. C. 231, at 270. This is another of numerous illustrations of the application by courts of ‘fundamental ethical rules of right and wrong’ to the complicated affairs of mankind....