274 Mass. 243 | Mass. | 1931
This is an appeal by the widow, personally and as guardian of her minor son, from a decree of the Probate,Court on April 28, 19.30, allowing the second ac
From the report of the auditor and the voluntary report of material facts found by the judge, it appears that Frederick H. Greene, who for many years had conducted a business of building and repairing wagons and truck bodies on encumbered real estate in Roxbury and Charles-town, Massachusetts, died on March 11, 1926, leaving a widow, Margaret L. Greene, and a son, Frederick H. Greene, Jr. By his will he appointed William F. Mooers executor, and trustee with the testator’s nephew James Russell Greene. Mooers qualified as executor on April 1, 1926, but neither he nor James Russell Greene ever qualified as trustee. Meanwhile, on March 12, 1926, Mooers was appointed special administrator to effectuate that paragraph of the will which reads: “ In order to keep my business intact so far as possibléy I request my executor, immediately after my death, to apply for special admin- ‘ istration so that he may continue the business until the allowance of this my will and the expiration of the time of appeal therefrom.” The widow assented to the petition for special administration.
The business property consisted of real estate, machinery, furniture and fixtures, stock on hand and in process, cash on hand and in the bank, and accounts receivable. In addition a branch of the business was conducted on leased premises on Rutherford Avenue, Charlestown, Massachusetts. As appurtenant to the business as- a going concern there was the item of good will which was not included as a separate item in the inventory of the estate. At the time of the death of the testator there were three mortgages on the entire plant including real and personal property and equipment, totalling $50,000.
The testator gave, devised and bequeathed the business in which he was engaged at the time of his death, meaning thereby all the property, real, personal, or mixed which is used in the business, together with the good will thereof and subject to business debts and encumbrances upon the property, to his nephew James Russell Greene and to Wil
Upon petition, and after due hearings thereon, no person objecting thereto, the executor was authorized by the Probate Court 'to continue the business of the testator until February 5, 1927; and, on a similar petition, objection being made thereto, he was authorized to carry on said business until April 1, 1927. He conducted the business in the manner in which it had been previously conducted by the testator, and there was evidence that no new money was invested in the business but that the business was transacted upon the executor’s personal credit. The year in which Greene had the right to purchase expired March 12, 1927. On March 2, 1927, through his attorney he wrote the executor, in substance, that he had definitely abandoned all thought of purchasing the business; that “he . . . [did] not intend at . . . [that] time to make any proposition for the purchase of the business. And . . . [had] decided that in event a petition for trusteeship . . . [was] presented he . . . [would] decline to accept the appointment.”
On March 17, 1927,' the executor, having no definite offer, petitioned the Probate Court for license to sell the property at public auction. This petition was opposed by Mrs. Greene. It was agreed at the hearing on this petition that the business could be disposed of to advantage only as a going concern. On April 7, 1927, the judge declined to allow the petition and instructed the executor to see what he could do in the way of procuring an offer for the business at private sale. The executor had, however, been negotiatiñg with several persons who showed some interest to purchase the business at from $50,000 to $55,000 including the mortgages totalling $50,000, and, acting on the judge’s advice, he secured an offer of $72,000, that is $22,000 above the mortgages. On May 13, 1927, he presented a petition to sell for $72,000 at private salé. This petition was opposed by Mrs. Greene and because
The offer of the purchaser stated “ that in the meantime the executor may continue the business as it was then being conducted for the purchaser’s benefit. Before this hearing nine appearances by attorneys representing fifteen different creditors holding a large majority in amount of the indebtedness of the estate had entered their appearances, and at the hearing on July 6, 1927, these attorneys were present in court and several of them took -part in the hearing. The petition was allowed and a decree entered authorizing the sale. The court stated at the end of the hearing that on all the evidence it would be a fatal thing not to keep the business going even if the court could not authorize the executor to carry on the business for more than one year from the date of his appointment. At that hearing and as a result of the hearing it was understood by everybody in open court including the creditors and Mrs. Greene, who was represented by counsel, that the executor was to continue to conduct the business as he had before.”
The executor continued to conduct the business and on or about January 1, 1928, secured an offer of $70,000, or $20,000 above the mortgages. This offer was reduced to writing and on January 28 the executor filed a petition for license to sell in accordance with the offer, attaching
On April 15, 1927, Mrs. Greene by her attorney wrote a letter to the executor which,reads: “ On behalf of Mrs. Greene, I beg to notify you that we object to the payment of any creditors, either of the estate or of yourself as Executor, who have not thus brought suit against you, as all such, debts are. now outlawed, and are not proper liabilities of the estate. Mrs. Greene also considers that you are now continuing the business without authority, and are personally liable for such transaction. You have no right to pay for any liabilities incurred by you in this conduct of the business since April 1, 1927, out of the assets of the estate, or out of the proceeds of any of its property, .and we shall hold you personally therefor and the surety on your bond, for any such expenditures.”
The items in schedule B of the second account, to which objection is made, relate to the expense of operating the business, and amount in round figures to $130,208; of this amount at least $100,000 was expense incurred during the time that elapsed between April 1, 1927, and March 1, 1928. The executor’s claim of $7,589.17 is objected to on the ground that it includes services, rendered by him in operating the business after April 1, 1927. The charge of the executor for services was credited with an offsetting item in schedule A of $1,173.52 which represents money which the executor returned or put into the business. He .was also allowed the sum of $2,190 as a balance due him. for services rendered between • April 1, 1926, and April 1, 1927. The amount therefore actually claimed for
To the contention of Mrs. Greene that the executor improperly added to the running of the business the amount of rent received from the building on Rutherford Avenue, Charlestown, which the testator held under a lease of the entire building, a part of which was occupied as a branch of the business conducted at Southampton Street, Roxbury, the Probate Court found that the lease of the building was taken by the testator in order to reduce the amount of rental he would have to pay for the portion of the premises used in the business, and when the property was sold on March 1, 1928, this branch was still being conducted by the executor as a part of the business; that this lease was not included as a separate item in the inventory of the estate; and he found as matter of law that the amount of rent received from the subtenants was properly and fairly chargeable against the business.
“ Under the will the contestant received a devise of the residence on Monadnock Street inventoried at $10,000, on which there was a mortgage of $7,000. The special administrator paid the contestant the sum of $150 out of the proceeds- of the business. On July 20, 1926, the court allowed the contestant as an advancement the sum of $1,436.13; on July 27, 1926, the court gave her as a widow’s allowance the sum of $1,450; on November 22, 1926, the court allowed another advancement to her of
Four questions in connection with the objections to' the allowance of the second account were formulated by the auditor and considered by the Probate Court in the allowance of the account. They are as follows: (1) “Was Mr. Mooers after April 1, 1927, as executor under the terms of the will and under the circumstances which then existed, warranted to continue the business as he did? ” (2) “ Was Mr. Mooers after April 1, 1927, conducting the business as executor or as trustee although he had received no appointment from the Probate Court to act as trustee? ” (3) “ If Mr. Mooers was conducting the business after April 1, 1927, in the capacity of trustee, was he authorized by the terms of the will or otherwise to act in that capacity alone or should there have been two trustees? ” (4) “ Mr. Mooers having been designated in the will, both as executor and as one of two trustees, and said trustees having authority under the will to carry on the business for an indefinite period, are the items in the account, to which objection is made, to be disallowed to Mr. Mooers because he failed to secure an appointment from this court to act as trustee under the will? ” These four questions when consolidated aré stated by the executor as really one question, namely, "whether after the expiration of one year from his appointment . . . [¡Mopers] was justified in continuing the business as executor and if not as executor, then was he in the capacity of trustee and .chargeable for any losses which might have occurred, or in view of the fact that he was named as both executor and trustee without giving surety on his bond, was his conduct of the business war
Upon the facts above stated the executor, who with another under the will of the testator was given as trustee the business of the testator upon the termination of the administration of the estate, could not in law be held to have conducted that business in the double capacity of executor and trustee from the fact that he was not required either as executor or as trustee to give an official bond with surety or sureties or because he has shown by any authoritative and notorious act that he has elected to act in the capacity of trustee. Newcomb v. Williams, 9 Met. 525. Coates v. Lunt, 213 Mass. 401. Massachusetts Institute of Technology v. Attorney General, 235 Mass. 288, 294. Indeed, until the declination of the trust by his cotrustee, he could not alone execute the power to carry on the business which was given to him and another as cotrustees, and after such refusal to act it is at least doubtful whether the power given does not rest upon the personal confidence which the testator had in his “friend” William F. Mooers and in his “wife,” Margaret L. Greene. If the power given so rests it is plain the exercise of it was confined in the individuals to whom it was given and could not be exercised by one of them or by the survivor of them. Tainter v. Clark, 13 Met. 220. Treadwell v. Cordis, 5 Gray, 341, 360. Sells v. Delgado, 186 Mass. 25, 27.
Here there can be no estoppel because the minor son had no guardian from April, 1927,. down to and including the time of the sale of the business — March 1, 1928.
The case falls within the general rule that' an executor who is also a trustee under a will cannot be considered as acting under the power given by the trust until he has settled his account as executor in the Probate Court. Crocker v. Dillon, 133 Mass. 91, 98. Hines v. Levers & Sargent Co. 226 Mass. 214, 215, 216. Lannin v. Buckley, 256 Mass. 78. The executor was not authorized and
At the end of twelve months from the testator’s death there were many debts of the testator payable before his death, and there were three mortgages on the real estate and personal property amounting to $50,000. These debts on the refusal of Greene on March 2, 1927, to purchase the business for $50,000 and to assume the obligations described in paragraphs F and G of the will were required to be paid -by the executor, under the provisions of the will, as a part of the testator’s “ just debts ” before the trust could become legally operative. It is to be noted that the executor filed a petition on March 17, 1927, to sell the business, that the petition was opposed and disallowed, and that it was agreed at the hearing on this petition that the business could be disposed of to advantage only as a - going concern. It is obvious that it was the duty of the executor, after the refusal of Greene to purchase, to administer the estate to its best advantage, and that he should not be charged with the expense of conducting the business and disallowed his charges for services rendered after April 1, 1927, if such items were properly paid out by him in the operation of the business and were not unreasonable. Here the executor continued the business from April 1, 1927, to March 1,1928,
Decree affirmed.