*1 346 1
Augustus Loring others, P. & trustees, vs. Anne others, & trustees2 Karri-Davies (and companion case3). . 5, 16,
Suffolk. March 1976 November 1976. C.J., Present: Hennessey, Reardon, Quirico, Braucher, Kaplan, Wilkins, JJ.
Trust, appointment. Legacy, appoint- Power of Devise and Power of ment. appear special powers appoint- Where it did not that the donor of powers by appoint- ment intended the donee thereof to exercise such trust, attempt ments in further the donee’s to exercise the to the trustees of new trusts created the donee was Kap- J., dissenting, Braucher, without effect. with whom [349-353] lan, J., joined. apply special powers appoint- This court declared its intention to in ment instruments executed donors after the date of possession sell vehicles that have come into its which it deems to be stolen, lost, abandoned, persons arrest); or taken from G. L. under 255, (authorizes police place storage c. § 39A members of the force to permits garage subsequently vehicles involved accidents and owners storage given period to sell unclaimed vehicles and recover costs after time). plaintiffs Augustus Loring, The in the first action are P. Lawrence Coolidge Karri-Davies, Walter trustees under article Fifth of will of Ruth Foster. G. Karri-Davies, The defendants in the first action are Anne Jean G. Wadsworth, Howard, Patricia H. Pittore and John all of the children Karri-Davies, Foster, Augustus Loring P. Ruth G. and Walter surviving trustees under article Seventeenth of the will of William A. Gaston. plaintiffs Augustus Loring, Lawrence the second action are P. Coolidge Karri-Davies, and Walter trustees under article Sixth of four will of Ruth G. Foster. The defendants this action are the same footnote, preceding children of G. who are named in the Ruth Foster Boston, N.A., formerly Bank of The National Shawmut Shawmut Boston, of trust as trustee under an irrevocable indenture Bank Ruth A. on June for the benefit of created William Gaston Foster, Gaston, by marriage G. and others. later Ruth Mass. 346
Loring v. *2 opinion Restatement rule of contained in the this construction only if, (e) (1940) “[i]f, Property, but to the effect that § 358 contrary intent, donee of a donor not manifest a does effectively ...(e) for the interests to trustees can objects.” benefit of [353-355] for the commenced in the Probate Court Civil action county 6,1975. of Suffolk on June Fitzpatrick, J., Appeals
The reported by case was for request Court granted Court. The Judicial Supreme direct review. Loring others, for Augustus
Samuel B. Potter P. trustees.
William (John him) N. C. Thomson with for Swift Jean G. Wadsworth & others. J. brought each these two cases
Quirico, Probate Court pursuant 231A, plaintiffs to G. L. c. as trustees under the will (the of Ruth G. Foster donee), seek a declaration that exercise, by donee’s attempted separate provisions of her will, appoint- two granted ment by to her father, her late William A. Gaston (the donor), was valid. The first case involves a granted by the donor to by will, the donee his and the second a by donor to the donee an indenture of trust. Named as defendants in each of the two cases are the four of the donee, children and the sur- viving trustees of each of the two trusts.4
A judge of the Probate Court reported reserved and each case without decision Appeals Court on the pleadings and a statement agreed facts L. c. (G. 13), and we then plaintiffs’ allowed the application for direct appellate review of 211A, both cases. G. c.L. 10§ (A). We hold that there has no been valid exercise donee of the two of appointment granted to her the donor and that the property subject such powers (Wadsworth, Three Howard) of the donee’s children Pittore and complaints. remaining filed an answer to each of the defendants failed to file answers.
Loring v. the donor passed persons to those whom therefore has appointment. to take in default of designated of the two state- portions summarize the pertinent We plaintiffs counsel for the agreed signed ments of facts filed defendants who answers the three to this all relevant The donor times complaints. “[a]t Massachusetts, Boston, an proceeding attorney ... was Gaston, Snow, Saltonstall and a senior member of law, Hunt, many practice firm areas of the active similar instruments including drafting of wills and Mr. practice, his relating thereto. In addition to matters example, president (for was a businessman Gaston *3 (president a banker Railway 1897-1901), Elevated Boston politician.” and a 1907-1918), National Shawmut Bank irrevocable 16, 1915, donor executed an On June for benefit (inter trust) indenture of trust vivos the trustees part donee which in provided pertinent net income the whole of the pay thereunder were “[t]o the said to payments of the Trust Estate in semi-annual said upon the decease life...; her and during [donee] of the said Trust upon pay trust to over [donee], further trust, among to and and discharged Estate ... free from and testa- by her last will may her children or issue as she equal in appoint, appointment in default of ment and deceased any issue of shares to her children and to the supplied). by (emphasis of ...” right representation child article Seven- July 17, The donor died on 1927. Under 2, on December will, teenth of his was executed which for 1926, trust) trust up (testamentary he set another follows: donee, part of providing pertinent benefit “I trustees hereinafter named give bequeath my to (250,000) Thousand Fifty of Two Hundred and sum nevertheless, hold, manage, invest dollars, but in trust to or quarterly to the income pay the same and and reinvest her life, upon death oftener to... [the donee] property the trust pay convey principal over and of may appoint, will by her issue as she among to and surviving, equal issue then of her default (emphasis supplied). by right representation” of shares Loring v. a will dated August 22, 1974, leaving
The donee died on her will 8, December Fifth and By 1969. articles Sixth attempted she to exercise the two the donor as above granted by which had been to her trust described the trust in further by appointing property Both to the trustees of two new trusts created her will. be paid the two new trusts the net income provide to her Each children or the issue of her deceased children. these new until the happening trusts is to continue particular prescribed therein, event which time it is at terminate and distributed to her the trust is to be children or in her particularly prescribed issue as more will. testamentary
The trust property held under the donor’s $3,700,199.55 had a value of on September and that held under the inter vivos trust had a value $200,895.71 on August 22, 1974, when the died. presented issue thus for decision court by this the present cases is special powers whether the two donee, one the donor’s trust, inter testamentary vivos trust and the other his validly were exercised of articles Fifth provisions and Sixth of the purporting donee’s will property in question in further trusts.
The resolution of
determining
this issue “is a matter of
*4
the intention of
donor,
the
for it is
the
he who creates
power and he who can broaden or narrow the manner of
its exercise.” 5 American Law of Property
(A.J.
23.48
Casner ed. 1952). Hooper
Hooper,
v.
203 Mass.
(1909).
determining
intention,
such
regard
we
as par-
ticularly significant
language
the
used by the donor viewed
light
in
of
rule
of law in effect in these circumstances
at the time
question
in
were created. We be-
plaintiffs’
In the
“May
special
brief the issue is stated as follows:
a
testamentary power
by
of
created
a direction to trustees
pay
convey...
among
‘to
over and
to and
her
issue
[the donee’s]
may
by
she
will’ be exercised in further trust?” In the defend
“May
special testamentary
ants’
it
power
brief
is stated as follows:
language
be exercised in further trust in the absence of
creating
clearly permitting
in the
instrument
such exercise?”
lieve that “it is fair to that the [donor] language appears [powers appoint- which in the in and interpretation had mind the of similar words ment] Proctor in clauses cases decided in this Commonwealth.” Hannam, Lacy, Davis 1, 8 (1928). v. 263 Mass. v. Cape Co. (1975). Cape Cod Bank Trust Hosp., Cod 279, 282 App. (1975). Ct. was in these cases very presented
The
issue now
us
Hooper,
Hooper
considered and decided
this court
by
involved two
That case
(1909).
language
was in
appointment,
one of which
used
language
virtually
part
identical
in pertinent
in the
power
creating
the donor in these cases
used
to that
testamentary
substantially
trust
similar
inter vivos trust.
him in
creating
power
gave
power
donor in the
case
on the death
provided
her
which
that
granddaughter
“
age
at the
granddaughter
arriving
£...
her
after ...
trust
fund
twenty-five years,...
of said
portion
her
paid over
its accumulations
is to be
said Trustee
children,
any, and in such
conveyed to such of...
her
if
in the na
proportions
may, by any
she
instrument
as...
or more
will,
ture
of two
presence
of a
executed in the
”
Id. at 53-54.
witnesses,
supplied).
(emphasis
direct...’
exercise
subsequently
attempted
The granddaughter
in ques
in her will
appointing
that
children. We
benefit of her
tion in further
trust
case
of the
held
the circumstances
(at 59)
“is
special power,
of the
as the donee
granddaughter,
designated,
class
persons among
simply
select
take.
one shall
each
proportion
and is to determine
of the
evidently
á termination
implies
This
no hint
There is
in the distributees.
and an absolute estate
indication,
of a
estate,
any
nor
kind of
any
other
trusts____In
general
new
view
donee to create
appoint
deed, the fact
nature of the
*5
[of
in
stating
proportions
limited to
the
donee is
in the
ment]
conveyed,
paid
be
over and
should
this
which
of the donee
create
attempt
opinion
we are of
While the the obvious similarity Hooper they present cases, case to the urge nevertheless in effect that we decline to follow adopt decision and that we instead the law of as provisions Commonwealth these circumstances the Property (e) (1940), §358 of the Restatement of which parties apparently all appointments concede would authorize the donee’s present
in further cases. Section provides: only “If, if, but the donor does not manifest contrary special power a tively intent, the donee of a can effec- (e) appoint
...
interests
trustees for the benefit
objects.”
adopt
We decline to
the rule stated in Restatement of
Property
(e)
(1940)
applicable
present
Rather,
cases.
we elect to adhere to our decision in the
give
presume
case and thus to
effect to what we
creating
to have been the intention of the donor in
the two
special in the manner which he did.
unwilling,
We are
cases,
circumstances
these
plaintiffs
attribute to the donor the intention which the
presume
persuaded
would have us
and which we are not
possessed by
was
powers.
the donor himself when he
The cases decided
this court since our decision in
Hooper Hooper,
(1909),
and relied on
plaintiffs
way
in their brief
in no
have
detracted from
authority
they
require
case,
of that
do not
a result
different from that which we reach in the circumstances
of the
cases. In North Adams Nat’l Bank v. Com-
Corps.
(1929),
missioner
& Taxation,
Greenough Osgood,
special power
at issue
*6
352
Moreover,
jurisdictions
from other
are split
cases
on the
an
question
special power
when the exercise of a
little
appointment
they provide
further trust is valid and
guidance
jurisdictions
hold,
on
would
point.
this
Some
in Hooper
Hooper,
we did
v.
ating (1972). contention that plaintiffs’ We have considered Hooper, from rule stated above *7 not for decision that “was needed (1909), [in case] now,” but we are not therefore need not be adhered to persuaded by plaintiffs’ it. have also considered the We result argument large saving might about tax which of these cases on the basis of the rule from decision Property (e) (1940) stated in Restatement rather § Hooper than the rule stated in the case and conclude that not large saving in these cases even such a taxes does contrary or to reach a conclusion to require warrant us Hooper hold, that in the therefore in accord case. We with Hooper decision, that in the circumstances of these cases there has been no valid exercise the donee of special powers two in question. already
While
reasons
stated above we have decided
Hooper
these cases on the basis of the rule stated in
Hooper,
If practitioners of instru- engaged draftsmanship granting ments either or exercising powers scholars, could be relied on to heed the cautions learned might provide “present potential case not trap for the unwary planner” Massachusetts estate which Mr. Newhall referred in his treatise cited above. should 1950 Professor Casner wrote: “The draftsman spell out with considerable care the donor’s intentions with respect any appointment. exercise re- clearly more be in this important things expressed gard ap- creatable in following: are ... 2. Interests — pointees. May power appoint prop- the donee of the erty in be appointments trust or on condition or must all — *8 outright?” Casner, Appoint- Powers of Planning Estate ment, Professors 64 Harv. (1950). L. Rev. It the is power. Callahan and Leach wrote: “The limits of clear, course, appointment of that the of of power donee a may the only it prescribed exercise within the limits donor. way, power Stated in another donee has no the except that given Accordingly which the donor has him. proposed against exercise must be checked the instrument creating the power____If special ques- is other power interests, tions May arise: ... limited appoint such as estates, life members of the some or all of the May class? he appoint interests in trust?” 5 American Law of Property (A.J. 23.7 Casner ed. 1952). §
Acknowledging these and other cautions and comments by legal scholars various court decisions on the importance of having powers of of special appointment specify whether the is intended to in- clude trust, the donee to we believe it would be if helpful the law of this corre- Commonwealth sponded with the provision Property of the Restatement of 358 (e) only if, § to the effect (1940) “[i]f, that but donor does not contrary intent, manifest donee of a special power effectively... can interests to (e) appoint trustees for the objects.” benefit of Accordingly we declare con- rule of apply it that to be our intention in- of special powers appointment struction to of this date struments executed the donors after the Common- opinion. proposed change This in the law of this with wealth would not thwart or otherwise interfere presumed intention of donors of date before the contained in instruments executed them opinion. this for The two are to the Probate Court cases remanded that entry of a final in each case to the effect judgment not involved therein has special power validly pay- been exercised therefore after the expenses proceeding, including ment of the of this reason- fees, be attorneys’ able in each case the defendant trustees equal funds in pay ordered to balance of the trust four (Gaston) shares to the children of late Ruth Foster, from free trust.
So ordered. J., joins). Kaplan, with whom (dissenting, J. Braucher, rule, I better fully agree with court’s view be created applied exercise hereafter, Property rule is the in Restatement stated manifested a (e) (1940) that, unless the donor has effec- intent, can contrary donee of a ob- trustees the benefit tively appoint interests to *9 jects the expresses think that rule power. the But I also both of probable intention of with to respect the donor cases, present the the involved is not Hooper Mass. 50 Hooper, to contrary. I hold that both the would therefore were validly exercised. two powers, by
The cases involve two created instruments. inter trust instrument distinct The 1915 vivos trustees, donee, pay “to directed the on the death the trust,” to from over” the and free property, “discharged appoint. the may” by donee’s “children or issue as she will took 1926 and will, donor’s executed in which was effect in death, directed trustees, the on the donee’s pay “to over convey” the to as she “her issue may by donor, will appoint.” The court the supposes a member of bar, may the on decision of have relied this court Hooper case, since that case involved language “virtually identical” to the of the 1926 language will and “substantially in the 1915 similar” that used trust. But trust is language both the will and the significantly different from the language case, by 1926 the rely donor was entitled to on our statement 235, 242 Greenough Osgood, (1920): “It is a settled that a fund in favor of children by appoint- is well exercised an children____” ment to trustees in favor of The first trust considered in cre case was ated a providing payment deed for to “such of” the “children, any, donee’s if and in proportions such as” may donee by will direct. 203 court Mass. at 53. The treated this language particularly restrictive: is “She simply to select persons among designated, class and is to determine the each one proportion shall take.” Id. at 59. Hence no further trust was indicated. This con clusion was reinforced contrasting provision same for sentence equitable of an estate the donee’s surviving husband. particular case the appointment was in for the donee’s children and issue, their only and the surviving member of the class was the donee’s daughter. “the attempt Since of the donee create equitable life estates was not warranted power,” daughter the donee’s took the entire estate in default of appointment. Ibid.
The second trust considered in the Hooper case was created providing will payment the donee’s children “in such manner and in proportions such as” the may by will direct. Id. at 54. “Here the creating is different from deed,” that in the said, court “and perhaps the scope is to a certain extent less circumscribed quality as to the estate which may be created under it.” Id. at But 59. *10 same, result was the on the ground different that “there
Loring v. only “being daughter, why” the donee’s is no reason not receive estate, should in the interested person trust.” Id. at 62. for the is no reason whole. There more are cases present in the opinion In my than Hooper case in the considered power like the second to be paid is property In the cases the present the first. broader This is even may appoint. issue “as” the choice since her may appoint, than “in such manner as” she are far present powers is not limited to “manner.” chil- to “such of her than a less limited may appoint, as” she dren, any, proportions if and in such choice of read as limited to if the latter formulation is persons proportions. restrictions, have held
In we particular the absence was well in favor of children that a to trustees for the children. exercised an 235, (1920). Greenough Osgood, 235 Mass. 241-242 case, “wherein distinguished that case we have was held to special power donee of a among of selection her children and deter a mere principal mine each one should take proportion held trustees for the life use of the of a trust fund Accord, Adams Nat’l Bank v. donee.” North Commissioner Taxation, Love (1929). 268 Mass. See Corps. Bucknam, 451-455 and cases joy v. 299 Mass. has been to the exercise principle applied cited. The same Home, Inc., 293 Mass. general Slayton of a v. Fitch power. Co., 320 574, 578 v. State St. Trust (1936). Cf. Garfield no 646, 654-657 In such cases it makes (1947). “convey” difference that the donor his trustees to directs trusts.” appointees, “discharged of all Bartlett, 243, 244 I find (1889). See Cumston v. cases as particular no such restriction Greenough of the “settled” rule of prevent application Osgood, supra.