Corkery v. Dorsey

223 Mass. 97

Opinion

Rugg. C. J.

This is a suit in equity, whereby the plaintiffs, interested in a trust fund, seek in substance for a revision of the discretion exercised by the trustee in paying over the entire corpus to one beneficiary. The decision turns upon the meaning of this clause in the trust instrument: “ First. To pay over to Mary Louise Fay of said Boston when in the judgment of said O’Callaghan the said Fay is deserving and in need of aid, whatever part of said two thousand dollars ($2000.) or its earnings that said O’Callaghan may deem for the best interests of said Mary Louise Fay, in such sums and at such times as he may deem expedient or necessary, but said sum of two thousand dollars ($2000.) or any part thereof or its earnings shall not be subject to the control or interference of the creditors of said Fay, nor alienable by her save that she shall have the right to dispose at her death by any testamentary document, of whatever part of said two thousand dollars ($2000.) and its earnings as may be left at the time of her death.” Other clauses provide for further trusts on the death of Mary Louise Fay and for the ultimate distribution of the fund. The case was heard by a single justice, who made this finding: “ The trustee had known the beneficiary well for twenty years, and was familiar with her habits and her wants; and he made the last payment without being solicited to do so by her or by Mr. Dorsey. On all the evidence I find that, acting in good faith and in the exercise of his honest judgment, Mr. O’Callaghan thought, at the time of the payment, that Miss Fay was ‘deserving and in need of aid,’ in view of the condition of her health, her unemployment, and her approaching marriage.” A decree was entered dismissing the bill, and the plaintiffs’ appeal brings the case before us with a full report of the evidence.

This finding of fact, although filed without request, is a part of the record and is entitled to all the weight of a finding made under R. L. c. 159, § 23. Cohen v. Nagle, 190 Mass. 4. The familiar rule in such cases is that it is the duty of this court to examine the evidence with care and to decide the case according to its judgment, giving due weight to the finding of the judge. His decision will not be reversed unless plainly wrong, when it depends upon oral evidence of witnesses who testified in person before him. Goodell v. Goodell, 173 Mass. 140, 146. Lindsey v. Bird, 193 Mass. 200. Sawyer v. Clark, 214 Mass. 124, 126.

A careful study of the evidence does not convince us that the finding of fact was erroneous. The trustee doubtless exercised his honest judgment in good faith in reaching the conclusion in his own mind that Miss Fay was “deserving and in need of aid.”

That fact, however, is not decisive. The power conferred upon the trustee was the exercise of reasonably sound judgment. No arbitrary or capricious power was conferred even though honestly exercised. A trustee vested with discretionary power to distribute a fund in whole or in part is bound to use reasonable prudence. The possession of full power or wide discretion by a trustee means the kind of power and discretion which inheres in a fiduciary relation and not that illimitable potentiality which an unrestrained individual possesses respecting his own property. There is an implication, when even broad powers are conferred, that they are to be exercised with that soundness of judgment which follows from a due appreciation of trust responsibility. Prudence and reasonableness, not caprice or careless good nature, much less a desire on the part of the trustée to be relieved from trouble or from the possibility of making a foolish investment, furnish the standard of conduct. Davis, appellant, 183 Mass. 499. Amory v. Green, 13 Allen, 413, 416. Garvey v. Garvey, 150 Mass. 185, 187. Wilson v. Wilson, 145 Mass. 490, 492. Colton v. Colton, 127 U. S. 300, 320, 321. Doubtless a trust might be created which by its terms would make the judgment of the trustee, however unwise it might be, the final test. Leverett v. Barnwell, 214 Mass. 105. Gisborne v. Gisborne, 2 App. Cas. 300. But the present instrument does not confer an uncontrolled and absolute discretion.

The conduct of the trustee must be tested by these principles. In view of the finding of the single justice, the real question is whether the trustee failed to exercise sound discretion. Taft v. Smith, 186 Mass. 31. The money which formed the corpus of this trust was accumulated by the savings from a small store by the sister of the plaintiffs. In her family for some fifteen years had lived Miss Fay, for whose benefit this spendthrift trust was established. She was a worthy and industrious young woman, without substantial financial resources, who supported herself by work in a store. The amount of the fund was $2,000. It was established in December, 1908. Small amounts had been paid to her when ill or for other purposes, about which no question rightly can be made. Then she became engaged to be married, although the time for the wedding was not set and she was not married for nearly a year after the money was paid. The man to whom she was engaged and later married, appears to have been an estimable man in every way. Under these circumstances and without any request from her, the trustee, in June, 1911, less than three years after the trust was established, paid the entire balance of the trust fund, amounting to about $1,939, to Miss Fay. The trustee testified that she asked him for some money and he replied: “Now you better take it all. ... I thought she was conducting herself like a good girl and I could give it to her. . . . She could take better care of it than I could, and it was not bringing any interest in the Commonwealth Trust . . .; that if she put it in a savings bank, she could get more interest; and I was intending to go to Ireland, and I did not know what might happen, and I thought it was in safe hands to give it to herself. ... I thought I gave it to the sole owner.” Other testimony shows that the trustee thought highly of the man to whom she was to be married, and was influenced by-the fact that she had the power of testamentary disposition. But giving full weight to all these factors, it was not within the scope of the trust to terminate it in this way. The trustee was authorized to pay money to her when she “is deserving and in need of aid.” ■ These words must be read and interpreted in connection with the whole frame of the trust. Here was a sum of money sufficient to help a young woman over many a rough place if carefully conserved, but not enough to do much toward relieving her from work if she was in health. A spendthrift trust was created so that she would be protected from her own improvidence. The manifest purpose of the settlors was that it should be held as a protection against her necessities, and administered thus for her benefit as a wise father might hold and pay it .to her in comparatively small amounts at least for a considerable time. It was not a due execution of the trust to pay it all over within less than three years after the trust was established. At the time of payment to her, the young woman was “ deserving.” But that was only one-.of the conditions on which it could be paid to her. She was required to be also “in need of aid.” In view of her impending marriage, she was doubtless in need of some money to procure whatever was appropriate for that event in the way of furniture and otherwise. But she did not need the whole. That is shown, if other proof were needed, by the circumstance that over $1,300 was left a considerable time after the marriage. No pretence is made by the honest family friend who was trustee that she did need the money in the sense of requiring it then for her necessities or comforts. He simply acted under a mistake as to his duty, which was to invest it safely and conservatively, in a savings bank or other equally well recognized way, and hold it not necessarily forever, but for a reasonable period of time, as against her rational needs.

It' follows that, upon the facts found, a true interpretation of the declaration of trust did not warrant paying the entire body of the fund to Miss Fay. Such payment to her was a perversion of the trust.

The defendants make no question as to the right of the plaintiffs to maintain the bill. Their right in the fund as remaindermen was vested. Clarke v. Fay, 205 Mass. 228. They have done nothing to prevent themselves from exercising their rights. There is therefore no room for the exercise of discretion in granting some relief, and their motives in instituting the bill are immaterial. Dickerman v. Northern Trust Co. 176 U. S. 181, 190. Bloxam v. Metropolitan Railway, L. R. 3 Ch. 337, 353. Seaton v. Grant, L. R. 2 Ch. 459, 464. Davis v. Flagg, 8 Stew. 491. Clinton v. Myers, 46 N. Y. 511, 520. See Randall v. Hazelton, 12 Allen, 412, 418. But on this account the plaintiffs are not to be awarded costs.

According to the agreement of the parties, the amount for which the defendants are to account is $1,000. The decree dismissing the bill is reversed. A new decree is to be entered, directing that $1,000 to be repaid by Mrs. Dorsey, formerly Miss Fay, to the trustee, to be held by him in accordance with the terms of the trust, without costs to the plaintiffs.

So ordered.