Welch v. Hassett

• Decision Date: 01 June 1937
• Docket Number: No. 3235.,3235.
• Citation: 90 F.2d 833
• Parties: WELCH et al. v. HASSETT.
• Court: U.S. Court of Appeals — First Circuit

90 F.2d 833 (1937)

WELCH et al. v. HASSETT.

No. 3235.

Circuit Court of Appeals, First Circuit.

June 1, 1937.

John L. Hall and Claude R. Branch, both of Boston, Mass. (Charles Ryan, Choate, Hall & Stewart, Henry H. Meyer, and Edward C. Thayer, all of Boston, Mass., on the brief), for appellants.

Milford S. Zimmerman, Sp. Asst. to Atty. Gen. (James W. Morris, Asst. Atty. Gen., and Sewall Key, Sp. Asst. to Atty. Gen., on the brief), for appellee.

Before WILSON and MORTON, Circuit Judges, and MORRIS, District Judge.

WILSON, Circuit Judge.

This is an appeal from a judgment of the District Court of Massachusetts in an action by the executors of the will of Frank H. Beebe to recover federal estate taxes to the amount of $553,818.94 paid to the defendant as former acting Collector of Internal Revenue.

The issues arise out of the construction of a trust instrument executed by the decedent in 1924 and affirmed in 1926. It was contended by the Government and sustained by the Commissioner that the transfer and trust in question was entered into in contemplation of death, was testamentary in character, and was intended to take effect in possession and enjoyment at or after the death of the decedent.

The case before the District Court was tried without a jury, a jury being waived. The plaintiffs requested certain special findings of fact and rulings of law during the course of the trial.

Owing to language of the sections of the statute, section 700, R.S. as amended (28 U.S.C.A. § 875), authorizing the trial of a law action without the intervention of a jury according to section 649, R.S., as amended (28 U.S.C.A. § 773), and its construction by the courts, an appellate court cannot have recourse to the opinion of the trial court for findings of fact, and to general conclusions of law to supplement any rulings of law by the court at the trial. A general finding in an opinion has the effect of a jury verdict and an exception thereto does not bring up the evidence. Fleischmann Construction Co. v. United States, 270 U.S. 349, 46 S.Ct. 284, 70 L.Ed. 624; Arthur C. Harvey Co. v. Malley, 288 U.S. 415, 53 S.Ct. 426, 77 L. Ed. 866; United States v. Smith, (C.C.A.) 39 F.(2d) 851; Wilson v. Merchants' Loan & Trust Co., 183 U.S. 121, 22 S.Ct. 55, 46 L.Ed. 113.

In the instant case, however, the District Court in its opinion under a heading, "Findings of Fact," made certain findings of fact and refused the plaintiffs' request for special findings, except as the findings are made a part of the opinion. While making special findings of fact a part of the opinion may be a questionable practice (see United States v. Esnault-Pelterie, 299 U.S. 201, 206, 57 S.Ct. 159, 162, 81 L.Ed. ___; Crocker v. United States, 240 U.S. 74, 78, 36 S.Ct. 245, 60 L.Ed. 533; United States v. Wells, 283 U.S. 102, 120, 51 S.Ct. 446, 452, 75 L.Ed. 867), there appear to be no issues of consequence between the parties as to the facts set forth under the "Findings of Fact" in the opinion, which are substantially as follows:

On April 8, 1919, Frank H. Beebe and E. Sohier Welch were appointed guardians of the person and estate of E. Pierson Beebe, a brother of the decedent, and continued as such until his death on August 8, 1926. At the time of the appointment of guardians the estate of E. Pierson Beebe was worth between six and seven million dollars.

As a coguardian of E. Pierson Beebe, the decedent had the custody of a will which had been drawn by E. Pierson Beebe prior to his having been declared incompetent. Under this will the decedent was to receive one-half of the E. Pierson Beebe estate.

Upon assuming the coguardianship of the estate of E. Pierson Beebe, and the cotrusteeship of the estate of the decedent's father, James M. Beebe, the decedent retained the old offices and clerks of E. Pierson Beebe at No. 6 Beacon street, Boston. At first he became active in the management of the two trusts, frequently consulting Welch with regard to management and investment. The decedent was enjoying excellent health and was a man of wealth in his own right. Up to this time his interests had not been those of a business man. He loved art, music, flowers, and pictures; was a regular patron of the opera and concerts; spent much of his time in the woods among the trees and flowers, and annually planned the flower garden for his huge summer estate at Falmouth. He was not interested in the business world and many times expressed a distaste for it.

After a short time he became dissatisfied with the burdens he had assumed, and in April of 1921, desiring to be relieved of them, and at the suggestion of the plaintiff Welch, secured the services of Sylvester Brown, who became the office manager of the decedent. Brown's activities were principally in connection with the estate of James M. Beebe, and the coguardianship of the estate of E. Pierson Beebe. Gradually he took over nearly all of the decedent's work as cotrustee and coguardian.

The decedent was fond of travel. In the summer of 1923, while visiting in England, he had some bladder trouble, consulted a physician, and was catheterized by him. During the last week of February, 1924, the decedent consulted his family physician, told him of his experience in London, and of the fact that the English physician had advised him that an operation would be necessary. He was referred by his physician to a specialist. After consultation with the specialist, and about February 29, 1924, he entered a hospital for an operation, and after a period of pre-operative rest, a prostatectomy was performed on March 5th. At that time the decedent was nearing his seventy-first birthday. A short time later a secondary operation was performed. After a normal convalescence, the decedent was discharged from the hospital on April 15, 1924, and, after regaining his strength, continued in good health until shortly before his death on November 29, 1932. Death was due to myocarditis and arteriosclerosis, which had their inception about two months before his death.

Prior to the 1st of January, 1924, the decedent had made modest financial contributions to relatives and persons close to him. Sometime between the 1st and the 15th of January the decedent first discussed with E. Sohier Welch the possibility of creating certain trusts in order that he might be relieved of the importunities of these relatives and friends, and in order that the beneficiaries of his generosity would receive regular payments from the trust rather than the hit or miss gifts that he had previously made to them.

Later the decedent executed four trusts which are referred to as trusts A, B, C, and D. On the same day he also attempted to create a fifth trust, which will hereinafter be referred to as the Frank H. Beebe trust, and which will be separately discussed.

Trusts A, B, C, and D are not concerned in this case, as they were held by the District Court not to have been made in contemplation of death.

On February 13, 1924, the same date on which trusts A, B, C, and D were carved out of his own estate, the decedent attempted to create a fifth trust, previously referred to as the Frank H. Beebe trust. This trust fund was to be derived from a legacy contained in the will of E. Pierson Beebe, who was then living, but then under guardianship as an incompetent. Under the will made before he was declared insane he had left about one-half of his estate to the decedent, who attempted to create a trust to include the expectant legacies, reserving to himself the income for life. After his death the income was to be divided one-third to a nephew, George Stanley Fiske, during his lifetime, and thereafter to his issue; one-third to his niece, Esther Fiske Hammond, during her lifetime, and thereafter to her issue; and one-third part to the issue of Esther Fiske Hammond, and on default of any such issue the income was to be added ratably among the other beneficiaries.

He made further provision on the death of these beneficiaries. This instrument contained no warranty or covenant, nor any statutory language operating as a warranty or covenant, and no consideration was paid by the grantees or the beneficiaries to the decedent. Whether or not this instrument was a valid trust by reason of the fact that the corpus disposed of in the trust instrument could not accrue to the decedent until after the death of E. Pierson Beebe is not now important, as after the death of E. Pierson Beebe, acting on the advice of an attorney, a confirmation and ratification of this instrument was made, the decedent ratified and confirmed the original trust instrument, making no change whatsoever in its provisions, as to the disposal of the corpus.

At the time this was done the decedent caused the number of trustees to be changed from two, as written in the original instrument, to three, and caused himself to be elected one of the trustees. Among the findings of fact by the District Court is the following: His purposes in having himself appointed a trustee were (1) to have the name of Beebe connected with the trust, and (2) because he wanted part of the commissions. His purposes in establishing the trust itself were (1) to relieve himself of the burdens of management of this legacy, and (2) to avoid the importunities of his family and his friends." (Italics supplied). All of the beneficiaries named in it were either those, or their issue, who on his death would become his heirs.

After the opinion of the District Court was rendered, the defendant by his attorney, Francis J. W. Ford, United States Attorney for the District of Massachusetts, moved that the court amend its findings of fact as follows:

"To eliminate from the findings of fact announced by the court the following sentence in the next to the last paragraph of the findings of fact on page 7 of the typewritten opinion, that sentence reading as follows:

"`His purposes in establishing the trust itself were (1) to relieve himself of the burdens of...