Shirk v. Walker

• Decision Date: 17 September 1937
• Citation: 298 Mass. 251,10 N.E.2d 192
• Parties: SHIRK et al. v. WALKER.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

298 Mass. 251

10 N.E.2d 192

SHIRK et al.

v.WALKER.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 17, 1937.

Suit in equity by Ellen Walker Shirk and others against Joseph Walker. From the decree all parties appeal.

Decree modified and, as modified, affirmed.Appeals from Superior Court, Suffolk County; Broadhurst, Judge.

W. Powers and W. White, both of Boston, for plaintiffs.

J. Noble, of Boston, for defendant.

QUA, Justice.

This is suit in equity by the life beneficiaries against the trustee under a written instrument deted October 4, 1893, wherein Joseph Henry Walker in his lifetime conveyed to the defendant, who was one of his sons, certain real estate on Boylston Street in Boston upon which now stands what is known as the Walker Building, in trust on terms elaborately set forth in the instrument. The defendant has acted as such trustee for over forty years.

In general the purpose of the trust is to pay the income from the property to the grantor for his life and thereafter to his four children, who are the three plaintiffs and the defendant, or their issue, during the lives of the children and the survivors of them, and upon the decease of the last surviving child, to pay over the principal per capita to the then living grandchildren of the grantor and to the issue of any deceased grandchild by right of representation. The grantor deceased in 1907, since which time the defendant has been paying the income to the three plaintiffs and himself in equal shares.

From the final decree of the Superior Court the plaintiffs appeal on the grounds that the court wrongly refused to remove the defendant as trustee and wrongly refused to order the defendant to make a present distribution of accumulated income.

1. The main question in the case relates to the removal of the trustee. In view of the conclusion which we have reached on this branch of the case, it has become unnecessary to decide whether under G.L.(Ter.Ed.) c. 203, § 12 (compare Dexter v. Cotting, 149 Mass. 92, 21 N.E. 230;Chase v. Chase, 216 Mass. 394, 103 N.E. 857), or under general principles of equity jurisdiction the court has power to remove a trustee without making contingent remaindermen parties or without appointing a guardian ad litem for persons unascertained or not in being. Ciarmataro v. Adams, 275 Mass. 521, 528, 176 N.E. 610, 75 A.L.R. 1171;Weston v. Fuller (Mass.) 9 N.E.(2d) 538.

The plaintiffs call attention to the high standard of duty imposed by the law upon a trustee and to the requirements of absolute fidelity and singleness of purpose on his part, and urge that the defendant is no longer a suitable person to administer the trust, because he has by his management aroused the permanent and justifiable distrust and hostility of the income beneficiaries other than himself, and because he has not dealt impartially with the beneficiaries and has misused the trust funds to his own advantage. More specifically the grounds of grievance appear to be that the defendant in 1933 unnecessarily and without informing the life beneficiaries reemployed his own son as ‘agent’ for the Walker Building at a salary of $4,800 a year (later reduced to $3,600), although ten years before he had removed this same son from the payroll after protests had been made by the plaintiffs; that in 1933 he began charging to the estate one half of the salary of his secretary and bookkeeper, all of which he had previously paid from his own pocket; that, without informing the plaintiff, he entered into ‘dealings' with the bank which held the first mortgage on the Walker Building looking toward a possible arrangement by which payments might be made on the principal of the mortgage out of income from the property; that the trustee is partial to the remaindermen as against the life beneficiaries, although himself only a life beneficiary, because out of the eight grandchildren of the original settlor now living who are presumptive inheritors of the remainder, five are children of the defendant and only three are children of any of the plaintiffs; that the trustee has therefore habitually favored the capital of the estate at the expense of income by charging various expenditures, including some for ‘permanent improvements,’ to income which should have been charged to capital or assumed by the defendant personally; and that in certain instances he has taken for his own compensation commissions upon receipts which were not properly income on which trustee's fees ought to be allowed.

The judge has made careful and detailed findings of material facts. The evidence is also reported. It consists almost entirely of the testimony of the defendant himself, who appears to have been on the stand seven or eight days. The trial judge had this opportunity of observing the defendant and of judging as to his ability and fairness. The general rule should therefore prevail that although this court will examine the evidence and use its own judgment, it will not reverse findings of the trial judge unless it regards them as plainly wrong. Comstock v. Bowles (Mass.) 3 N.E.(2d) 817;Wasserman v. Hollidge, 267 Mass. 460, 469, 166 N.E. 843;Draper v. Draper, 267 Mass. 528, 531, 166 N.E. 874;Johnson v. O'Lalor, 279 Mass. 10, 193,180 N.E. 525;Masterson v. American Employers' Ins. Co., 288 Mass. 518, 521, 193 N.E. 59. After reading the evidence, we are convinced that the findings are not plainly wrong, but that they are amply supported by the evidence.

Findings pertinent to the issue of the trustee's removal in abbreviated form are these: During the past twenty years the defendant has given all his time, except vacations, to the administration of the trust. The building has a rentable floor space of about one hundred thousand square feet. The defendant maintains a staff of about thirty employees, including engineers and a superintendent. He operates a generating plant and sells electricity and steam to customers outside the building. From the death of the settlor in 1907 through the year 1932 each of the four income beneficiaries has received in all over $359,600. In March, 1923, the defendant employed his son George R. Walker at the building at a salary of $3,600 a year, paid by the trust. He had promised his son that the son should have an income at the rate of $6,000 a year, and the defendant therefore paid the balance from his personal funds. The plaintiff George Walker learned of his nephew's employment in the fall of 1923 and at once demanded his removal. He was supported in this demand by his two sisters, the other plaintiffs. After a series of letters between the parties in which the matter was argued on both sides the defendant removed his son from the payroll and reimbursed the trust for all that the son had been paid. The defendant, however, still insisted that an agent was necessary and notified his brother by letter that he would continue to employ his son, but would pay him out of his personal funds until he made other arrangements. The plaintiff George Walker replied that he would object to the hiring of an additional agent and requested that he and his sisters be consulted before that was done. From that time until February 8, 1933, the defendant continued to employ his son about the building and to pay him out of his own pocket. Before that date the trust had begun to be affected by the depression. In the year 1927 the sum of $100,000 had been distributed among the income beneficiaries. But thereafter the receipts dwindled to such an extent that in spite of salary reductions no income was distributed after March, 1933, and since 1934 the building has been operated at a loss. On February 8, 1933, the defendant added to the payroll one half the salary of his secretary and bookkeeper, which amounted to $900 a year. Before that he had been paying her entire salary of $1,800 a year from his personal funds, although she devoted at least three quarters of her working time to the service of the trust. It was reasonably necessary that the trustee have her assistance. It would have been reasonable and prudent for the trustee to have employed such assistance long before February, 1933. Her services have been worth all that the defendant as trustee has paid for them. On February 8, 1933, the defendant also restored his son to the payroll of the trust beginning at the rate of $4,800 a year. This was reduced later to $3,600. The depression had added to the cares and labors of the trustee and his staff, and it was helpful to the defendant to have his son share them. But in view of conditions then known and reasonably to be anticipated a prudent business man would not have employed such an assistant, but would have arranged to do the necessary work without him. The defendant had, however, been advised by his counsel that if it was reasonably necessary he could employ his son and his secretary at the expense of the trust without consulting the other beneficiaries. He did not mention these additions to the payroll in his communications to the beneficiaries or inform them of his action until January, 1934, when he sent out his annual report for 1933. Having the trust pay his son a salary and half of his secretary's salary was a financial relief to the defendant. ‘But on all the evidence I find that the trustee honestly believed that the circumstances warranted his employment of his son at the trust's expense from February 8, 1933, and so thought he was entitled to that relief. He was still under no legal obligation to consult the other beneficiaries before making these appointments.’ He knew that the other beneficiaries would object. His failure to tell them ‘was deliberate and reflected a lack of tact and candor,’ but it ‘did not amount to wilful refusal to disclose facts they had a right to know about, or show unfitness to hold his position as trustee. Nor does the employment itself of George R. Walker as agent of the building at the trust's expense in February 1933 constitute...