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12/19/77 DOUGLAS S. MAHONEY v. ANNE E. MAHONEY &

December 19, 1977

DOUGLAS S. MAHONEY
v.
ANNE E. MAHONEY & OTHERS *FN1



Hale, C.j., Keville, Goodman, Grant, Armstrong, & Brown, JJ. Keville, J., Concurring.

SYLLABUS BY THE COURT

Trust, Creation, Removal of trustee, Counsel fees. Practice, Civil, Review of interlocutory action.

The opinion of the court was delivered by: Armstrong

A testamentary instrument, read as a whole, clearly evinced an intention by the testator to create a trust despite provisions which authorized the trustee, who was also the income beneficiary, to invade principal if the income were insufficient to provide for her comfort and happiness and which authorized her to pay income over to two others "without imposing any trust or obligation on . . . as a beneficiary hereunder." [723-724]

Findings that a trustee of a testamentary trust could not be relied upon to administer the trust fairly and dispassionately and that she lacked the knowledge and competence to act as trustee were not clearly erroneous and warranted the Judge's decision to appoint another as trustee. [724-725]

An order of a Probate Court modifying a preliminary injunction restraining a trustee from transferring or disposing of trust assets to allow the trustee to exchange shares of one bank for shares of another under a plan of exchange approved by the boards of directors of both banks was interlocutory and not subject to appellate review. [725-727] Keville, J., Concurring.

Bill in equity filed in the Probate Court for the county of Hampden on July 25, 1972.

The case was heard by Placzek, J.

These cases were initially heard by two panels composed of Hale, C.J., Keville, Armstrong, and Brown, JJ., and was thereafter submitted on the record and briefs to the other Justices, all of whom took part in this decision in accordance with the provisions of Mass.R.A.P. 24(a), 365 Mass. 872 (1974).

This case is before us on two appeals, which were argued at different sittings. The first, by the plaintiff, was taken from an order of a probate Judge made on October 3, 1975, which modified a preliminary injunction so as to permit shares of the Park National Bank of Holyoke to be exchanged for shares of the Western Bank & Trust Company of West Springfield pursuant to a plan of exchange approved by the boards of directors of both banks. The second appeal was taken by the defendant Anne E. Mahoney from the final judgment, which declared that she did not own those shares outright but rather held them subject to a trust.

The controversy has its origins in an instrument drawn by one Stephen A. Mahoney of Holyoke, not a lawyer, which was executed on September 1, 1961. It was entitled "Stephen A. Mahoney Testamentary Trust." The opening paragraph states, "I . . . make this my last will and hereby revoke all testamentary Dispositions heretofore made by me," and the first numbered clause nominates "my wife, Anne Elizabeth Mahoney, and my son Stephen Andrew Mahoney III to be executors of my will." The fourth numbered clause "give devise . . . ll of my estate . . . to my wife, Anne Elizabeth Mahoney, IN TRUST for the . . . purposes . . . provid continued operation of the Park National Bank of Holyoke . . . of which I own the controlling interest, and to provide an income for my wife, Anne Elizabeth Mahoney, for her life as well as an income, if possible, for my sons, Douglas Mahoney . . . and Stephen A. Mahoney, III . . . ." The greater part of the instrument dealt with the trust thereby created, one clause of which provided that should Stephen A. Mahoney, III, wish to assume responsibility for the management of the bank, the voting power of the shares held in trust should be used to elect him to the board of directors and to the presidency of the bank; and if Stephen should not wish to assume that responsibility, "then the Trustee has the power and right to appoint Douglas Mahoney an officer and director of said bank; upon demonstration of his ability to assume a responsible position therein, the Trustee may then, in her sole discretion," employ the voting power of the shares so as to cause Douglas Mahoney to be made president of the bank. The trustee was given a broad power to sell both real and personal property in the trust fund, and "o exchange property for other property on such terms as she deems advisable." The trustee was also given discretionary authority "to participate in any plan of reorganization or consolidation or merger involving any company . . . whose stock . . . shall be part of the fund . . . ."

Stephen A. Mahoney died on November 27, 1969. The instrument described was allowed as his will on December 30, 1969, and the defendant Anne E. Mahoney qualified as executrix of the will. She filed an inventory on November 30, 1970, which indicated that most of the estate's assets were held in the form of shares of corporate stock, with the shares of the Park National Bank accounting for approximately one third of the total value of the estate. Even before that date, however, she had embarked on a program of distributing all assets of the estate to herself, not as trustee, but as an individual, taking from the outset, apparently, a position pressed in this action in the Probate Court: namely, that the "trust" mentioned in the will was not such in legal contemplation, and that any obligation imposed on her by the will was moral rather than legal in nature.

This action was commenced by a bill in equity filed by Douglas S. Mahoney on July 25, 1972. The action sought to establish the existence of a trust, to compel Anne E. Mahoney to transfer the assets of the estate from herself to the trust, and to remove her as trustee. The plaintiff sought and obtained a preliminary injunction restraining her from transferring or disposing of any property described in the inventory. On April 18, 1973, after a hearing at which evidence was taken, the probate Judge found and ruled that the defendant Anne E. Mahoney held the property described in the inventory as constructive trustee, and ordered that she "hold the same for the purpose of transferring all said property to a trustee under the express trust" established by the will. A further evidentiary hearing was held on September 24, 1974.

On June 6, 1975, Anne E. Mahoney filed a motion that the preliminary injunction be modified so as to permit the shares of Park National Bank to be exchanged for shares of the Western Bank & Trust Company, which shares, when acquired, were to be subject to the injunction. The motion was allowed on October 3, 1975. That action was apparently taken without any notice to the plaintiff and without a hearing. The plaintiff filed a notice of appeal from the order allowing the motion. He also filed in the Probate Court a motion for a stay of the order, but there is nothing in the record to indicate that that motion was ever pressed to a hearing or decision; nor does the record indicate that the plaintiff ever sought a stay in an appellate court under G. L. c. 215, § 9 or § 23; nor does the record indicate that the trial Judge was asked to report his order for appellate review pursuant to ...


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