Springfield Safe Deposit & Trust Co. v. Wade

• Decision Date: 15 January 1940
• Citation: 24 N.E.2d 764,305 Mass. 36
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: SPRINGFIELD SAFE DEPOSIT & TRUST CO. v. WADE et al.

305 Mass. 36

24 N.E.2d 764

SPRINGFIELD SAFE DEPOSIT & TRUST CO.

v.WADE et al.

Supreme Judicial Court of Massachusetts, Hampden.

Jan. 15, 1940.

Report from Probate Court, Hampden County; Denison, Judge.

Petition for instruction by the Springfield Safe Deposit & Trust Company, as trustee under the will of Lillian Trask Williamson, deceased, wherein Eleanor A. Wade and others were parties. On report from Probate Court.

Order in accordance with opinion.D. M. Macauley, of Springfield, for Springfield Home for Aged Women and others.

M. J. Donovan, of Springfield, for Eleanor A. Wade.

DOLAN, Justice.

This is a petition in equity whereunder the petitioner, as it is trustee under the will of Lillian Trask Williamson, late of Springfield, deceased, seeks instruction as to the proper application of the proceeds of sale of certain real estate acquired by the petitioner by foreclosure proceedings, and of the sum of $500 received in satisfaction of the mortgagor's liability on the mortgage note. The case was heard upon the pleadings for final determination by the judge, who reserved and reported it, without decision, for the determination of this court.

The allegations of the petition, all of which are admitted in the answers, disclose the following facts: The testatrix died on April 12, 1930. Her will, which was admitted to probate on May 14, 1930, provided in part as follows: ‘(7) To the Springfield Safe Deposit and Trust Company, a corporation established in said Springfield, the residue of my estate, to hold in trust, manage, invest and pay the net income thereof to my said aunt Eleanor A. Wade so long as she shall live. At her death I devise and bequeath the principal of the trust estate in equal shares to the Springfield Home for Aged Women and the Springfield Home for Aged Men, both corporations established in said Springfield. I authorize and empower said trustee, its successor or successors in said trust to sell and convey, at public auction or private sale, any real estate which may form a part of the trust estate and no purchaser from it or them shall be bound to see to the application of the proceeds of such sale or conveyance.’

The trust fund administered by the petitioner ‘consists of cash, deposits in savings banks, stocks, bonds and real estate mortgages with an inventory value of approximately $36,300.’ ‘Included among the assets of said trust fund held by * * * [the] petitioner was the demand promissory note of Fred D. Griggs to Lillian Trask Williamson [the testatrix] for $2,800 dated November 22, 1928 with interest at the rate of six per cent per annum payable semiannually and secured by a mortgage of even date given by said Griggs covering real estate at No. 92 Barber Street, Springfield, Massachusetts, together with guarantee note of Arthur Vega dated May 27, 1930.’ ‘Interest payments made on said mortgage note and various irregular payments made on account of interest and applied thereon paid the interest due on said note up to December 22, 1931, from and after which date interest is now due on said note. By reason of said default said mortgage was foreclosed and said real estate sold at foreclosure sale on May 9, 1933. At the sale * * * [the] petitioner bid in the property for $1,000, there being no other bids. At the date of the foreclosure sale the principal due on said mortgage note was $2,800, expenses paid in connection with the foreclosure sale were $81.20 and the interest due on said mortgage note was $231.93.’ ‘Since the acquisition of said property by * * * [the] petitioner the rents therefrom have been insufficient to pay the carrying charges and the petitioner has paid out of the principal of the trust, in addition to the foreclosure expenses of $81.20 mentioned above, $174.37 for water, repairs, taxes and insurance on said property, or a total of $255.57, on account of such carrying charges. No income has been paid to the life tenant, Eleanor A. Wade, on account of said mortgage or real estate since April 4, 1933.’ ‘On April 9, 1938, * * * [the] petitioner sold said real estate and received therefor net proceeds of $2.395.05 and since that time has received $500. in settlement of the liability of said Fred D. Griggs on said mortgage note resulting in an aggregate of $2,895.05. In the opinion of * * * [the] petitioner the guarantee note of Arthur Vega is uncollectible.’

Since the investment in the note secured by the mortgage became unproductive after the death of the testatrix, and thereafter the mortgage was foreclosed and the real estate bought in by the petitioner, and the investment in this latter form was likewise unproductive, and there is nothing in the will of the testatrix to show that she anticipated these events, the expenses of foreclosure and the carrying charges in excess of the income from the real estate were properly paid out of principal, and it became the duty of the trustee to sell the real estate ‘as soon as a fair sale [could] be had.’ Harvard Trust Co. v. Duke, Mass., 24 N.E.2d 144, 146, and cases cited. Volume 1, Am.Law Inst. Restatement: Trusts, § 240. In the case just cited it is said at page 146 of 24 N.E.2d: ‘Questions of apportionment of the proceeds which may arise when [the] property is sold are not now before us.’ In that case the real estate was owned by the testator at the time of his death, and was then productive, but during the administration of the trust created by his will became unproductive.

By the great weight of authority it is held that where the property is not unproductive at the time of the establishment of the trust, but becomes...