Bellows Free Academy v. Sowles

76 Vt. 412 | Vt. | 1904

Stafford, J.

This is a bill for an injunction, and the questions are raised by a demurrer to the bill which was incorporated in the answers and brought forward for hearing. It is claimed that the bill is insufficient for want of equity .and for want of parties. It will be necessary to- state the allegations rather fully.

When Hiram Bellows, late of St. Albans, died (Oct. 18, 1876) he left a will, made a few months before in part as follows: He gave in trust ho his native town of Fairfax two "hundred and fifty shares in the Chicago, Rock Island & Pacific Railroad Company of the par value of $100 each, the ■dividends upon which, as far as practicable, were to be invested in the same stock until the fund should amount to $250,000, for the purpose of establishing a free school in that town to. be located on land thereinafter devised, and to be •called The Bellows Free Academy of Fairfax, Vermont. The primary and higher branches of learning were to be taught therein and the children of indigent parents were to- be preferred. Then followed a devise to the town, in trust, of a ■tract of land in Fairfax. Within one year from- the time when notice of the bequest should be given by the executor To the selectmen of Fairfax, the town was to- choose five competent and responsible men to serve as trustees of the funds .and to control the land, the trustees ho be chosen for terms of from one to- five years respectively, and thereafter at each annual March meeting one trustee ho be chosen for five years and all vacancies filled. The trustees were to give bonds to the treasurer of the town with ample sureties for the faithful •discharge of their duties, upon failure to- do which their places were to be vacant and others appointed in their stead. Said trustees were to take charge of the fund, which was to' be called The Bellows Free Academy Fund, and make i;eport of' the same at each annual .March meeting. They were to prevent the erection of any building on the premises until the funds should have accumulated to the sum of $250,000, but were to prepare the land as far as practicable by fencing and grading and setting out ornamental trees. When the funds should reach the sum named the trustees were directed to erect on the premises suitable buildings for the purpose aforesaid, expending in buildings, apparatus and library not to exceed $50,000, leaving $200,000 as a permanent fund, the interest of which was to' be expended in procuring teachers and paying other expenses of the Academy. The bequest was made on condition that the town, at a legally warned meeting, within one year after receiving notice of this provision, should vote to accept the bequest upon the condition named and should appoint the trustees to take charge of the same. There was a further provision that if the town should neglect or refuse to perform the various conditions and stipulations, or directly or indirectly divert any part of the railroad shares or real estate or dividends, interest or avails thereof, “from the purposes and objects named in the will in the manner therein provided,” said stocks, real estate, dividends, interest and avails should go to> Margaret B. Sowles and her heirs forever.

The Margaret B. Sowles just named is the daughter of the testator. Her husband, Edward A. Sowles, is the executor of the will, and both are defendants hereto. The other defendant is their daughter.

Notice of the bequest was given to the town, and within one year thereafter, on the 6th day of March, 1877, at a legally warned meeting, the town “voted to accept the bequest of Hiram Bellows * * * to the town of Fairfax and appointed” five mien for the specified terms “as trustees to receive the property and carry out the purposes as named in the testator’s will.” At each annual March meeting since, a new trustee has been chosen and all vacancies have been filled and bonds have been duly furnished. The trustees now holding office under the town’s election are the individuals named in the bill as the trustees of the academy. The original trustees so elected, acting under the executor’s advice, met, organized and received from him the stock, appointed him attorney to receive the dividends and left the certificates with him as such attorney. The executor had the land surveyed and put the trustees in possession and control, and it has remained in their possession and control or that of their successors ever since. They took charge of the funds and they and their successors have as far as practicable invested the ■ dividends in shares of the same company. They have prevented the erection of any building on said land and have prepared it as directed.

At the session of the General Assembly of the State of Vermont for 1878, a private law was enacted (No. 164), entitled “An Act to Incorporate the Bellows Free Academy of Fairfax and the Trustees thereof.” By that act such persons as might thereafter associate themselves together as trustees of the Bellows Free Academy of Fairfax or might have been or should thereafter be chosen or appointed as such trustees by that towD in pursuance of said will, and their associates and successors in office, were constituted a body politic and corporate by the name of The Bellows Free Academy of Fair-fax, Vermont, with all the rights, privileges and powers belonging to similar corporations for the purpose of instructing pupils as provided in said will, and with power to sue and be sued under the name aforesaid, and have a common seal. The corporation, or the trustees chosen by the town as required by the will, were empowered to make such by-laws, rules and regulations as were required by the terms of the will for the government of the corporation or said trustees, and their associates and successors, and for the establishment, control, endowment and government of the institution^ and to take and hold by gift, grant, bequest, devise, purchase or otherwise property to any amount, the net annual income .of which should not exceed $40,000, and to manage, control, use and dispose of the same for the benefit of the academy in a.manner not inconsistent with, but in conformity to and in furtherance of, the provisions of said will. The corporation, or the trustees chosen by the town in accordance with the provisions of the will, or the town of Fairfax, were empowered to perpetuate the existence of the corporation or of the trustees and their associates and successors in office by the election of new trustees under the provisions of the will or otherwise, and the acts of the town done under or in pursuance of the provisions of the will were ratified and approved, and the town was empowered to carry out the provisions of the will.

This enactment was procured by Edward A. Sowles. The trustees elected by the town organized under the act and they and their successors in office elected by the town have maintained the organization, and the present trustees thus elected now constitute the same. They have made reports at each annual March meeting. The fund now consists of 1,348 shares of the capital stock of said railroad company, standing in the name of the town of Fairfax as trustee, and cash and other securities to about $18,000. The market value of the stock has fluctuated, but is now about $173 per share. It is probable that it will soon reach a point when a sale of it will make the fund to amount to $250,000. Believing which, the academy and the trustees thereof at a meeting duly called for that purpose, unanimously instructed one of their number to sell the stock at not less than $175 per share, a price which would make the fund of the required amount. The agent went to New York to execute his commission, when he was prevented by a telegram from Mr. Sowles to1 the transfer agent of the company requesting the latter to decline the transfer until after a vote of the town. The agent returned to Vermont and waited upon Mr. Sowles to' learn the reason for his action, and was informed of various objections and claims which are not recounted here, as for the most part they are not now insisted upon. To obviate the objection suggested in the telegram a town meeting was warned for the purpose of authorizing or confirming a sale of the stock, and electing an agent to carry it out; but the date for the meeting had not arrived when the bill was filed. If the sale is delayed the stock is likely to depreciate in market value, and it may be a long time before the fund will again reach the required amount.

The orators believe upon good reason that if not restrained by injunction the defendants will hinder and impede the sale, and therefore ask that they be temporarily enjoined from so doing, and that upon final hearing the injunction be made perpetual. A temporary injunction was granted.

In the Court of Chancery there was a pro forma decree overruling the demurrer and adjudging the bill sufficient, and the appeal is from that decree.

The substantial objections made under the demurrer are:

(1) That the trust was not accepted by the town.

(2) That the gift over to Margaret B. Sowles has become operative by reason of the act of incorporation and the proceedings of the trustees thereunder.

(3) That there was no right to sell the stock.

(4) That the bill is not in the name of the proper parties.

(1) As to- the first point it is enough to say that we regard the vote already recited as a sufficient acceptance of the bequest upon the conditions contained in the will.

(2) Has the gift over become operative? The will vests the title to the land and the stock in the town of Fairfax. The town is the real trustee. The trust is to be administered through five officers or agents, called trustees, to be elected and qualified as the will prescribes, whose course of dealing is also to some extent laid down by the testator. If the will had been silent as to. the persons through whom the trust was to be administered, the case would apparently have fallen under V. S. 3034-3037, which provides for the management of such property by the Trustees of Public Funds. As already stated, the stock has been kept in the name of the town and has been managed by the trustees in the town’s name, just as the statute requires shall be done in the case of property in the hands of the Trustees of Public Funds. V. S. 3035.

What has the town done or permitted that constitutes a diversion of the property from its true use and legal control ? It does not appear that the town, had the act passed nor that anything has been done with the fund by the trustees except what they ought to have done by the terms of the will. No outsider has meddled with the trust property or interfered with its management. The trustees have given bonds and made reports as required by the will. It may be said that they have attempted to- make use of the act of incorporation which the defendant, Edward A. Sowles, procured, as he now says, unlawfully and against the right of his wife. But the title to the property has never been transferred to- the corporation, nor has any attempt been made to transfer it. It is only the trustees elected by the town and duly qualified according to1 the will who have been associated together as the members of the corporation, and their decisions are alleged to have been unanimous. It may not be easy to' point out any advantage in the act of incorporation, and we do1 not decide that it can be used at all in the administration of the trust. But neither is it easy to see what harm has yet been done or why the act should be treated as an attempt to divert the trust property until by reason of it, or in the name of it something has been done, or attempted, or left undone contrary to' the provisions of the will.

(3) Neither do' we see any merit in the claim' that the trustees were attempting to divert the fund from the purposes of the trust in proceeding as they were to sell it at a price that would raise the fund to' the amount it was required to reach before it could be used. The will does not mean that the fund shall be kept forever in the stock of the same railroad. To impute such an intention to' the testator would be unreasonable and inconsistent with the language of the bequest. The requirement is that it shall be kept in that stock, as far as practicable, until it has reached $250,000. Thereafter, the intention evidently is that it shall be invested under the law pertaining to' trust funds in general. The trustees were proceeding in strict performance of the testator’s directions when they were obstructed by the defendants. It is the defendants, not the trustees, who are attempting to thwart his purpose.

(4) As to parties. The town is here seeking to carry out through its agents, selected as the will required, the trust reposed in it by the testator. As before remarked, the town is the real trustee. It is to the town’s treasurer tfiat the bonds are to be taken, and it is to' the town the reports are to' be made, and it is the duty of the town to* oversee to1 some extent the administration of the trust by its agents. We entertain no doubt that it was a proper party to a bill brought as this was to insure the execution of the trust according to. the testator’s purpose. The trustees, so' called, elected by the town, have made oath to the bill one by one. It is true that they also name themselves as the trustees of the academy corporation, and that the corporation itself is joined as a party, but the bill itself clearly shows that the town is behind the proceedings with the concurrent action of the officers who are to administer the trust, as well as the selectmen and the agent for prosecuting and defending suits, who have also signed and sworn to the bill in behalf of the town. Whether the academy, or the trustees thereof under the act of incorporation, are proper parties to the bill, and whether the trustees have signed in proper form to make themselves orators in their capacity as trustees by the election of the town under the provisions of the will — these are questions which we do not consider important under this demurrer, for we have in the person of the town, acting through the officers aforesaid, a proper and sufficient party to the bill as an injunction bill to prevent threatened interference with- the administration of the trust.

Decree affirmed and catase remanded.