Bridgeport-City Trust Co. v. Beach

174 A. 308, 119 Conn. 131, 1934 Conn. LEXIS 131

• Court: Supreme Court of Connecticut
• Decided: July 27, 1934
• Status: Published

Opinions

Hinman, J.

The stipulated facts include the following: On September 23d, 1921, Margaret A. Beach of Stratford executed a will by which she gave to each of her grandchildren surviving her $1000, to Helen B. Beach, wife of her son Stanley Y. Beach, $5000, and to Ethel Beach Wales, her daughter, the homestead property; then, in Paragraph Fifth, she directed that all the rest, residue, and remainder of her property be divided into equal parts, one of which she gave (a) to her daughter, Ethel Beach Wales, absolutely; (b) “The other one of said parts I give, devise and bequeath to The Bridgeport Trust Company of Bridgeport, Connecticut, in trust nevertheless, for the following uses and purposes, to wit: To invest and reinvest, with full power of purchase and sale for such investment and reinvestment and to pay over the net income therefrom to my son, Stanley Y. Beach, in weekly installments as nearly equal as possible. I further authorize the said The Bridgeport Trust Company to withhold from the said Stanley Y. Beach any or all of the said income, should it not be necessary for his comfortable support and maintenance or should it appear that the said net income is not being used for his comfortable support and maintenance. I further authorize the said The Bridgeport Trust Company, if it shall be necessary for the comfortable support and maintenance of my said son, to use such portion of the principal as may be necessary. My desire is that my said son shall at all times have a sufficient amount of money from my estate to insure his comfortable support and maintenance, but that the money shall be held for that purpose and not for any other. At the death of my said son, I direct that the principal sum that may remain at that time be paid to the children of the said Stanley Y. Beach and Helen B. Beach, his wife, and to the said Helen B. Beach share and share alike. If any of the said children shall have died, leaving children, the share of such deceased children shall go to his children. If any such children of the said Stanley Y. Beach and Helen B. Beach shall have died without leaving children, the share of such child shall be given to the survivor or survivors of the children of the said Stanley Y. Beach and Helen B. Beach, his wife.” At the time the will was executed Stanley Y. Beach was married to Helen B. Beach, but she divorced him on June 1st, 1928. Frederick, Alfred, and Margaret Beach are their children. On June 4th, 1928, Stanley Y. Beach married a second wife with whom he is now living and whom by law he is obligated to support. On August 8th, 1928, Margaret A. Beach executed a codicil to her will declaring an intention that the $1000 given in the will to each of her grandchildren “shall be given to each of my grandchildren who are, or may be, the issue of the marriages of James A. Wales and Ethel B. Wales, on the one part, and of Stanley Y. Beach and Helen B. Beach, on the other part.” On September 3d, 1925, upon the petition of the testatrix, the First National Bank and Trust Company of Bridgeport was appointed conservator of the estate of Stanley Y. Beach, qualified as such and has not been discharged. See Beach v. First National Bank, 107 Conn. 1, 138 Atl. 905.

Margaret A. Beach died on December 18th, 1932, the will and codicil were admitted to probate, and the plaintiff Trust Company as executor has since administered the affairs of the estate and has accumulated certain funds as income under the trust set forth in section (b) of Paragraph Fifth of the will, which upon the settlement of the estate will be turned over to it as the trustee under the will. No payments have been made under this trust to Stanley Y. Beach or to any party, having been withheld pending interpretation of the provisions of the will governing the trust. Stanley Y. Beach is now domiciled and is residing in New York City and was and had been on the date of the execution of the codicil. He is not employed and receives nothing by way of salary or wages but is a beneficiary under two other trusts, one under the will of an aunt, the other an inter vivos trust established for him by his father, and is receiving income from the latter trust. On May 12th, 1933, Stanley Y. Beach executed in New York an assignment to Joseph H. Sand in the sum of $7500, for legal services rendered in New York, in which he authorized the plaintiff to pay over the income upon the trust here in question until that sum should be fully paid.

The questions reserved will be stated in connection with the discussion of each, respectively.

(1) “Whether payments under this trust shall be made to the First National Bank and Trust Company as conservator, or to Stanley Y. Beach?” The direction in the will that the income be paid over to the beneficiary, Stanley Y. Beach, as modified by the authorization to the trustee to withhold so much of it as is not necessary for the support and maintenance of the beneficiary, is virtually the equivalent of a direction to pay over only such portion of the income as the trustee deems to be necessary for the declared purpose, and is somewhat analogous to the situation in Hewitt v. Hicock, 96 Conn, 176, 113 Atl. 172, in which it was held (p. 181) that the trustees, instead of the guardian of an infant, should expend such sums as they deemed necessary for her support and education. There is also force in the suggestion that as discretion as to the amount of payments is reposed in the trustee, payment through a conservator would be a useless formality. Be that as it may, as Stanley Y. Beach is now and long has been domiciled in New York, he is sui juris there and “if incapable of managing his own affairs the only mode of securing a legal supervision for him was by proceeding under the laws of that State in the same manner as in the case of any other of its inhabitants.” Gates v. Bingham, 49 Conn. 275, 278. Such right as he has to receive the income has its situs at the place of his residence. Beach v. First National Bank, supra, p. 4. At least so long as he is free of conservatorship at his domicil, payments may be made directly to him.

(2) “Whether the entire income from the trust for Stanley Y. Beach shall be paid, or whether the trustee shall use its discretion as to the amounts it shall pay?” If it stood alone, the testamentary direction to “pay over the net income ... in weekly installments as nearly equal as possible” would require payment of the entire income. Clearly, however, there must be considered with it the succeeding provisions authorizing the trustee “to withhold from the said Stanley Y. Beach any or all the said income, should it not be necessary for his comfortable support and maintenance or should it appear that the said net income is not being used for his comfortable support and maintenance,” and “if it shall be necessary for the comfortable support and maintenance of my said son, to use such portion of the principal as may be necessary;” also the expressed desire “that my said son shall at all times have a sufficient amount of money from my estate to insure his comfortable support and maintenance, but that the money shall be held for that purpose and not for any other.” Taken together these provisions, as already stated, amount to a direction that the trustee shall pay to him so much, and only so much, of the income as it finds to be necessary for the specified purposes, and shall not so pay over the entire income unless it finds all of it to be necessary for those purposes. Cromwell v. Converse, 108 Conn. 412, 415, 143 Atl. 416. The reason and justification for these restrictions upon the allowances to be made to the beneficiary are sufficiently indicated by unavoidable inferences from the ultimate appointment of a conservator for him, at the behest of the testatrix herself, and the chronic speculative and improvident tendencies and state of financial embarrassment disclosed in that proceeding. Beach v. First National Bank, supra, p. 7. The intention, plainly, is to insure him comfortable and suitable support to the extent of the entire income, if necessary, and if that should prove insufficient, by withdrawals from principal, but at the same time to guard against use of any of the fund or its income for any other than the purposes specifically designated. It follows that the trustee should determine, by a continuing exercise of its discretion, the amount required for those purposes, only, and pay the amount so determined, whether it be the entire income or less, as the case may be.

(3) “Whether the trustee shall make payments under this trust regardless of income or money that Stanley Y. Beach receives from money other than this trust?” The paramount intent of the testatrix in making testamentary provision for her son, as well as in the conservatorship proceedings which she later instituted, was to protect him, as far as possible, from the consequences of habits of improvident speculation and wasteful expenditures. The trust established for him by his father, from which he now receives income, was created long before her will was made and she must have been cognizant of it. Her purpose would be defeated if he were to receive his entire support from the trust which she provided, leaving him at liberty to improvidently disperse the income received from other sources. Moreover, the amount he is entitled to receive from this trust is limited to that which is “necessary for his comfortable support.” This imports an actual need, a situation in which the contribution prescribed is required in order that such support may be obtained. If he had other income adequate to that end, no such contribution would be necessary; if such other income is only partially sufficient, the need which the trust contemplates is only such amount as will supply the deficiency. Hull v. Holloway, 58 Conn. 210, 217, 20 Atl. 445. The payments are to be proportionate to the extent of the necessity. Hull v. Culver, 34 Conn. 403. In determining the amounts of the successive payments, the trustee should consider and reasonably take into account the income of the beneficiary from other sources.

(4) “Whether the trustee in exercising its discretion as to payments to be made under this trust shall consider that Stanley Y. Beach is living with and supporting his wife?” When the will was made, Stanley Y. Beach was married to Helen B. Beach, and as they were not divorced until seven years afterward it is to' be assumed that he was living with her and their children and under both a legal and a moral obligation to support them. The relatively small specific bequests to them cannot be construed fairly as having any effect upon the situation as to their support. Had the family situation remained the same when the will took effect there could be no debatable question that the provision for support was intended to include the wife and children. After the divorce and the remarriage of Beach the testatrix made a codicil by which she limited her bequests to grandchildren to issue of his marriage to his first wife, Helen B. Beach. If she entertained an intent also to exclude the second wife, and children by that marriage, if any, from the provision for support made in the original will she could have as easily and clearly evidenced such intent as she did that to limit the specific bequests. The needs of a married man pertaining to support and maintenance may fairly be construed as including those of his family. In the absence of indication to the contrary, it is hardly to be deemed probable that a testator who provides for the support of a son intends at the same time to let his wife or children suffer for the necessities of life. Eaton v. Eaton, 81 N. H. 275, 125 Atl. 433; Rhode Island Hospital Trust Co. v. Egan, 52 R. I. 384, 161 Atl. 124; Gardner v. O’Loughlin, 76 N. H. 481, 84 Atl. 935. The trustee should consider the fact that Beach is living with and supporting a wife.

(5) “Whether the trustee shall accumulate with the principal trust fund the part of the net income, if any, which it withholds, or whether this income shall accumulate in a separate fund and become part of the estate of Stanley Y. Beach?” The intent disclosed by the will and the scheme of the testator as therein indicated determines whether there shall be accumulation of excess income. New Haven Bank v. Hubinger, 117 Conn. 417, 423, 167 Atl. 914, and cases cited. These considerations are equally significant as to the manner in which accumulation, if contemplated, shall be made. The question correctly assumes that accumulation is called for, the inquiry being whether it shall be added to the principal of the trust or so accumulated in a separate fund that upon the death of Stanley Y. Beach it will become part of his estate. The clearly manifested scheme of this will is that Stanley shall in no way receive anything under the trust except such sums as the trustee finds to be necessary for his support. It can pay the income to him or give him the benefit of it only to the extent that the necessities of his support require. Demeritt v. Young, 72 N. H. 202, 55 Atl. 1047. No title in the income passes to him unless and until it is appropriated to him by the trustee, and then only to the amount determined by it. Cromwell v. Converse, supra, p. 431; Carter v. Brownell, 95 Conn. 216, 222, 111 Atl. 182. The discretionary power to withhold so much of the income as is not required for the specified purposes contemplates that there may be excess income, not appropriated to the beneficiary. It is equally plain that the testatrix intended that all that remained in the trust at the death of Stanley should pass to the designated residuary legatees, and that there should be no distribution until his death. Also, as this is indubitably a spendthrift trust, any construction which would expose unexpended income to creditors of Stanley, either now or upon his decease, would be foreign to the intent and plan of the will, as would also a construction which would pass it, as part of his estate, to parties other than the designated recipients of the testatrix’s bounty—the remainder-men. Withheld income should be accumulated with the principal fund.

(6) “Whether it is incumbent upon Stanley Y. Beach to show to the trustee, when it demands, that he is using the money paid under this trust for his comfortable support and maintenance?” As to this it suffices to say that it is incumbent upon Beach to give to the trustee such information as it may reasonably require in the process of exercising the discretion as to the amounts to be paid and withheld, which in- eludes reasonable steps to ascertain the amount required to satisfy his necessities, and that the sums paid are being used for the stipulated purposes. Hull v. Holloway, 58 Conn. 210, 217, 20 Atl. 445.

(7) “Whether the trustee shall make any payments to Joseph H. Sand under the assignment set forth in the stipulated facts?” (8) “Whether the income and or principal or any part thereof may be assigned by Stanley Y. Beach or order made thereon by him, and whether the income and or principal or any part thereof is subject to attachment, garnishment or execution for any claims against Stanley Y. Beach arising either out of debts contracted for his comfortable support and maintenance or out of debts of any other nature?” As the income is expressly given for the support of the beneficiary, and there is express authorization to the trustee to withhold income, this is clearly a spendthrift trust, within the provisions of § 5723 of the General Statutes, and the income is not liable to attachment or execution by creditors of the beneficiary, and may not be alienated or assigned by him. Cromwell v. Converse, supra, p. 425; Foley v. Hastings, 107 Conn. 9, 16, 139 Atl. 305; Carter v. Brownell, 95 Conn. 216, 111 Atl. 182. The defendant Sand virtually concedes that the assignment to him is ineffective as such, but suggests that it be regarded as an order or contract, in futuro, to pay the debt out of accumulated income. This is disposed of adversely by our holding, under question five, that Stanley has no rights in that accumulation. The further suggestion that Sand is entitled to claim an attorney’s lien on the income, for services in connection with his client’s interest in the trust, is outside of the scope of the reserved questions; also, the stipulated facts do not show that his services were of that nature.

(9) “Whether the trustee shall pay all or any part of the net income that has accumulated during the settlement of the estate, to the First National Bank and Trust Company as conservator, or to Stanley Y. Beach, or to Joseph H. Sand under said assignment, or whether it shall become part of the principal of said trust fund?” The trustee has the right and duty to deal with income accumulated during the settlement of the estate in the same way as with current income, but in view of present conditions and circumstances, “including, of course, any condition which may have had its cause in the past.” Hewitt v. Hicock, 96 Conn. 176, 181, 113 Atl. 172. Therefore if the trustee finds that the accumulated income, or any part of it, is required for the support of Stanley Y. Beach it may pay it over to him for that purpose.

Summary answers to the questions are: (1) To Stanley Y. Beach. (2) The trustee should use its discretion as to the amounts it shall pay. (3) No. (4) Yes. (5) Withheld income should be accumulated with the principal. (6) Yes, to the extent above indicated. (7) No. (8) No. (9) The trustee may pay to Stanley Y. Beach so much of income, accumulated during settlement of the estate, as it finds necessary for his support.

No costs will be taxed in this court.

In this opinion Banks and Avery, Js., concurred.