Warren v. Pazolt

• Citation: 203 Mass. 328,89 N.E. 381
• Parties: WARREN et al. SAME v. PAZOLT et al. SAME v. RHODES.
• Decision Date: 22 June 1909
• Court: United States State Supreme Judicial Court of Massachusetts

203 Mass. 328

89 N.E. 381

WARREN et al. SAME v. PAZOLT et al. SAME v. RHODES.

Supreme Judicial Court of Massachusetts, Suffolk.

June 22, 1909

COUNSEL

Fredk. C. Allen and Rutherford E. Smith, for appellant Rhodes.

Chas C. Read, for Francis A. Peters, Exor.

Chas W. Bartlett and Elbridge R. Anderson, for appellants Gioppi and others.

John F Cusick, for appellees Reggio and others.

Moorfield Storey, Ezra R. Thayer, and Harold S. Davis, for appellee Warren.

OPINION

LORING, J.

These are two appeals from a decree of the probate court allowing amended accounts filed by the trustees under the will of Andrew Carney.

Andrew Carney died on April 3, 1864. By his last will and codicil he gave property, then appraised at $387,892.21, in trust for his adopted daughter, Mrs. Reggio, and her three children, Josephine Elizabeth, afterwards Mrs. Pazolt, Mary Frances, afterwards Mrs. Rhodes, and Andrew Carney Reggio, each to have one-quarter for life with remainders to their respective children, the issue of deceased children taking by right of representation.

There was a provision in the will that Andrew should have in fee one-half of the one-quarter given him for life, if he should so request in writing after he became of age. He made the request and one-half of that one-quarter was conveyed and transferred to him in 1888. Thereafter, until the death of Mrs. Pazolt on June 9, 1899, the trust property was held as follows: Two-sevenths for Mrs. Reggio, two-sevenths for Mrs. Pazolt, two-sevenths for Mrs. Rhodes, and one-seventh for Mr. Reggio. At the death of Mrs. Pazolt in June, 1899 (35 years after the trust was created), the trust estate was valued at $1,281,000, and on May 16, 1901, her two sons received two-sevenths thereof, amounting to $366,000. From that time until the death of Mrs. Reggio on April 2, 1902, the trust estate was held, two-fifths for Mrs. Reggio, two-fifths for Mrs. Rhodes and one-fifth for Mr. Reggio.

The period covered by the three accounts is for the four years beginning August 16, 1901, and ending August 16, 1905. These accounts were the thirtieth, thirty-first and thirty-second accounts of the trustees, and were filed on February 6, 1906. Mrs. Rhodes, one of the two remaining life tenants, appeared and objected to their allowance. Her six children also appeared in opposition. At first Mrs. Rhodes' children were represented by Mrs. Rhodes' attorney, but later Mrs. Rhodes was represented by one attorney and her children by another. Mr. Reggio, the other life tenant, is, and was during all the period covered by these accounts, one of the trustees, having been appointed a trustee in 1891. A guardian ad litem was appointed for Mr. Reggio's minor child, and for all persons not in being. He appeared before the probate court and took part in the hearings there, but he took no appeal from the decree of that court, and has not appeared in any hearings in this court, that is to say, in any hearings before a single justice nor in those before the full bench.

The accounts were referred to an auditor by the probate court on March 31, 1906. The hearings began on the 9th day of the following July and were concluded on December 22d of the same year. On March 12, 1907, the auditor filed an able and exhaustive report dealing with matters not now in contest, as well as those argued at the bar of this court. The accounts as amended in accordance with that report were allowed by a decree of the probate court on June 7, 1907. Appeals were taken from that decree to this court by Mrs. Rhodes and by her six children. At the hearing of these appeals the evidence was taken by a commissioner. The single justice who heard these appeals made special findings of fact and ordered the entry of a decree affirming the decree of the probate court, but at the request of the contestants reported the case on all the evidence to this court.

During the period covered by the thirtieth and thirty-first accounts, the trustees were Mr. Laforme, Mr. Warren, and Mr. Reggio. Mr. Laforme died in July, 1905 (a month before the end of the period covered by the thirty-second account), and that account is signed by the surviving trustees only. Mr. Laforme was one of the three trustees originally nominated by Mr. Carney. Mr. Warren was appointed in 1887 and Mr. Reggio, as we have said, in 1891.

1. The fifteenth objection to the decree filed by the children of Mrs. Rhodes and the eleventh objection filed by Mrs. Rhodes are identical. The objection there stated is (inter alia) that the decree 'confirms the sale or transfer of one-third interest in the so-called Dorchester avenue property from the trustees to Andrew C. Reggio, one of the trustees, and which was unlawful.'

The history of the transaction which resulted in the conveyance to Andrew C. Reggio of an undivided third of the Dorchester avenue property, is as follows:

In February, 1896, a store on Washington street, called the 'Blue Store,' belonging to the trust, was sold for $155,000, less a commission of $1,550, making the net amount received $153,450.

At that time Mr. Reggio was living in London, England. He had left Boston in 1876, and thereafter lived abroad until 1900, when he took up his residence again in the United States. To understand this transaction aright it should be stated that Mr. Laforme, the only one of the three who had been a trustee from the outset, was the managing trustee of this trust. Mr. Laforme had been the partner in business of Mrs. Reggio's husband, Nicolas Reggio, during his lifetime, and since Mr. Nicolas Reggio's death in 1867 he seems to have attended to the business affairs of the whole family, who resided abroad after 1876 or thereabouts, but who left their property in the United States. At the time here in question Mr. Laforme held a power of attorney from Andrew Reggio, and took care of property which he had outside the trust. All Mr. Andrew Reggio's property beyond a dwelling house in Homburg (where he lived at one time) seems to have been in Boston in Mr. Laforme's hands. Among other property belonging to Mr. Reggio was a building, No. 167 Tremont street, which apparently Mr. Reggio had been urging Mr. Laforme to sell for some time before the matters now to be stated. The news of the sale of the Blue Store was conveyed to Mr. Reggio in a postscript to a letter from Laforme to Reggio, dated February 18, 1896. In the beginning of that letter Mr. Laforme had suggested waiting to see whether the vacant chambers in 167 Tremont street would not be let, and, if they were, a sale of that estate would not be necessary. Mr. Laforme forwarded the deed of the Blue Store to Mr. Reggio on February 28th, and before he received it back from him he (Mr. Laforme) wrote to Mr. Reggio again on March 10th. In that letter, after discussing some suggestions made by Mr. Reggio as to the application of the purchase money of the Blue Store, he tells him that he and Mr. Warren are considering the Dorchester avenue property, held at $252,000, and adds that, if 167 Tremont street could be sold, 'I would advocate your taking an undivided interest in the wharf property for your $90,000,' the estimated net proceeds of the prospective sale of 167 Tremont street. On March 20, 1896, Mr. Laforme writes Mr. Reggio announcing the purchase of the Dorchester avenue property on March 16, 1896, for $252,500, with an agreement to lay out $12,000 in improvements for a tenant, making a total of $264,500, the papers to be passed on April 15, 1896. He then explains that they propose to put a mortgage of $115,000 on the property, leaving $149,500 of the purchase money to be provided for out of the funds of the trust. The trust was to receive from the sale of the Blue Store a net sum amounting to $153,450, leaving in the trust $4,000 which Mr. Laforme explains is needed to pay for improvements on Myrtle and Summer streets real estate. He then makes this proposition: 'Now, if I can find a buyer for 167 Tremont street at $150,000, leaving you $80,000 in cash, Mr. Warren and I would propose to transfer to you 30 per cent. of the South Boston estate at cost price of $79,350 by applying your money to pay off $80,000 of the proposed mortgage for $115,000, which privilege we will reserve. * * * It would be a great relief all round if we can sell. * * * Our object is to reduce the mortgage and give you a good investment if your 167 should be sold. We don't like mortgages for trustees.' Later in the same day he writes Reggio that the deed of the Blue Store has been delivered; that if it becomes necessary the vendor of the Dorchester avenue property will mortgage that property for $115,000 before it is conveyed; and he ends the letter with these words: 'If we find no buyer for '167' before the deed of the South Boston estate is transferred to us we will have to make a mortgage for $115,000 and if '167' should be sold later we must come to some arrangement with the mortgagee.'

On April 17th Mr. Laforme writes Reggio that the date for passing the papers in the Dorchester avenue purchase has been postponed until the 25th; that they propose borrowing $115,000, with the privilege of paying off $80,000 or less at any time before June 10th, on payment of $300 bonus for the privilege of so doing. The papers seem to have passed on that day, April 25th. On May 15, 1896, Mr. Laforme, who had been in communication with Mr. Reggio by way of cable messages as to the sale of 167 Tremont street, writes him that he has accepted an offer of $147,500, for 167 Tremont street, giving Mr. Reggio $76,000 cash. He then writes: 'Now, what Mr Warren and I propose is to sell you one-quarter undivided interest in the South Boston property, which will take about $66,000. The trustees will apply $65,000 to the reduction of...