Opinion
No. 4846.
Argued September 8, 1960.
Decided October 28, 1960.
1. The discretionary powers of a named trustee under a testamentary trust for the benefit of the testator's daughter "during her natural life" which contained no provision for a successor trustee but failed to disclose that the personal confidence of the testator in the named trustee was so paramount as to constitute a condition upon which the daughter's right depended were held properly to be exercised by a successor trustee appointed upon the former's death.
2. The discretionary trust provision in such case that the income or principal may be expended "for the pleasure, comfort and support of my said daughter," who was under guardianship as an insane person, indicated an intent that the trustee should exercise broad discretionary powers in favor of the daughter with respect to the distribution of either income or principal to insure her pleasure, comfort and support.
3. Since confidence in a trustee is a feature of all trusts, a court should not assume that the settlor intended a personal trust unless that intent clearly appears from the will or trust instrument.
PETITION, for advice and instructions, brought by the plaintiff, successor trustee under the will of Imogene F. Cooke. The petition seeks construction of the twelfth clause of the will which reads as follows: "To Geo. P. Munsey of Laconia, N.H. I give all the rest, residue and remainder of my estate wherever found and of whatever nature, the same to be held in trust for the benefit of my daughter Alberta during her natural life, the said trustee having the right to invest, reinvest, buy, sell or exchange such portions of said estate as may seem best to him and to hold, use, employ and expend the same for the benefit of my said daughter in such manner and at such times as he shall deem proper, using either income or principal for the pleasure, comfort and support of my said daughter."
There was an agreed statement of facts. The named trustee in the twelfth clause of the will, George P. Munsey, was not related to the testatrix or the beneficiary Alberta F. Folsom. He was appointed trustee in 1927 and continued in that capacity until his death in 1954, when the successor trustee was appointed. Alberta is approximately 73 years of age and has an estate of approximately $118,000. The market value of the principal of the trust under the will was approximately $125,000 of which $2,000 was accumulated income.
The Court (Sullivan, J.) reserved and transferred without ruling the following questions:
"1. Does your petitioner, as successor trustee, have the discretionary powers given by Clause 12th to George P. Munsey?
"2. Does your petitioner have discretionary powers with respect to the payment of income to the life beneficiary?
"3. Does your petitioner, as successor trustee, have discretionary powers with respect to payment or distribution of principal to the life beneficiary?
"4. What are the duties of your petitioner, as successor trustee, to distribute income or any portion of the principal to the life beneficiary, Alberta F. Folsom?"
Nighswander, Lord Bownes and William T. Krasnow (Mr. Krasnow orally), for the plaintiff.
Normandin Normandin and Thomas P. Cheney (Mr. Cheney orally), for the defendant.
Harold E. Wescott and Peter V. Millham (Mr. Millham orally), for the defendant Charles C. Rogers, guardian of Alberta F. Folsom.
Ernest R. D'Amours, Director, Register of Charitable Trusts, pro se.
The core of the questions reserved without ruling is whether the discretionary powers of the named trustee passed to the successor trustee under a will which neither provided for nor prohibited the appointment of a successor trustee. One "provision that should be routine in every trust" but is "absent in most" is presenting some method of filling the office if a vacancy occurs. Sargent, Sins of Oversight in Wills and Trusts, 30 B.U.L. Rev. 301, 310 (1950). In such cases the proper construction of a will is difficult and in a limited sense "the court is looking for a black hat in a dark room," but the duty of decision still remains for the court to effectuate the testator's purposes so far as possible within the confines of the record before it and the consideration of the will as a whole. Roberts v. Tamworth, 96 N.H. 223, 225; II Scott, Trusts (2d ed. 1956) s. 164.1, p. 1160; Gray, The Nature and Sources of the Law (2d ed. 1921) 174-176.
There is no single and definitive test to determine whether the trustee's powers are personal to the designated trustee or attach to the office of the successor trustee. In re Smith [1904] 1 Ch. 139, 142; anno. 2 A.L.R. 2d 1383. However the "strong tendency of recent decisions is to narrow the scope of these `personal trusts', and to permit trusts involving broad discretionary powers to continue under the supervision of a substituted fiduciary." 4 Powell, Real Property, s. 561, p. 395 (1954). There is general agreement with this view. Thus in the Reporter's notes to Restatement (Second), Trusts, s. 196 (vol. 3, p. 335) appears the following: "The Courts have with increasing liberality held that powers can be exercised by successor trustees, not only powers relating to the administration of the trust but powers relating to the disposition of trust property." To the same effect see II Scott, Trusts (2d ed. 1956), s. 196, p. 1484; 1 Nossaman, Trust Administration and Taxation (2d ed. 1959), s. 26.07.
In the earlier cases emphasis was placed on the fact that there was a personal relationship or a personal confidence reposed in the designated trustee and concluded generally that this confidence could not be exercised by a successor trustee. See Hall v. Harvey, 77 N.H. 82; Carlton v. Henderson, 79 N.H. 416. Later cases have laid emphasis on the necessity for the continuation of the trust and the desirability of continuing to carry out the testator's purposes even after the death of the designated trustee. Duncan v. Elkins, 94 N.H. 13; Upton v. White, 92 N.H. 221. "The statement, frequently to be found in the earlier cases, that where it is left to the discretion of the trustee whether or not to exercise a power the power does not survive unless the settlor indicates a contrary intention, is certainly not a correct statement of the modern law." II Scott, Trusts (2d ed. 1956), s. 196, p. 1484.
Sometimes it is assumed that the powers of the designated trustee are personal because the testatrix placed confidence in the trustee. But as Bogert has so sagely observed this is apt to be erroneous "because no man is selected for that position in whom the settlor does not have a high degree of confidence." Bogert, Trusts Trustees (2d ed. 1960), s. 553, p. 26. Since confidence in a trustee is a feature of all trusts, a court should not assume that the settlor intended a personal trust unless that clearly appears from the will or trust instrument. Booth v. Krug, 368 Ill. 487. "Since the normal type of power is one attached to the trusteeship, and since in ordinary experience it is rare that a settlor desires to make the usability of a power dependent upon the life and continuance in office of a particular trustee or group of trustees, it would seem that a tendency to treat all powers as impersonal, either on the basis of judicial attitude or statutory regulation, until clear proof to the contrary is produced, is a desirable trend." Bogert, Trusts Trustees (2d ed. 1960), s. 553, pp. 40, 41. This approach is exemplified by Fowler v. Hancock, 89 N.H. 301, which is similar on its facts to the present case and in which it was held that the discretionary power to apply principal for the benefit of the life beneficiary could be exercised by a successor trustee. In that case, as in the present case, the personal confidence of the testator in the named trustee was not so paramount as to constitute a condition upon which the beneficiary's right depended. Fowler v. Hancock, supra, 303.
It is reasonable to conclude that the discretionary trust in this case for the benefit of the testatrix's daughter "during her natural life" was not to be impaired in any of its features as long as the daughter lived. Neither does the will disclose any purpose to restrict or differentiate the discretionary powers of the named trustee with respect to principal, income or investments. We conclude that the successor trustee has all the powers of the designated trustee and the answer to the first three questions transferred without ruling is in the affirmative. Anno. 126 A.L.R. 931; 15 U. Chi. L. Rev. 435; Will of Doe, 232 Wis. 34.
The fourth question transferred without ruling relates to the duties of the successor trustee to distribute income and principal to the life beneficiary, Alberta F. Folsom. The successor trustee is under no absolute duty with respect to the distribution of either income or principal. The argument of the guardian of the life beneficiary that all income must be turned over to the life beneficiary cannot be accepted in view of the broad discretion given to the named trustee which passes to the successor trustee. The standard set up in the will that the principal and income of the trust fund may be expended "for the pleasure, comfort and support of my said daughter" is not mathematically precise but is sufficiently definite to enable the trustee in his discretion to determine what is reasonably required for the daughter's pleasure, comfort and support. Amoskeag Trust Co. v. Wentworth, 99 N.H. 346; Orr v. Moses, 94 N.H. 309. The trustee is not required to pay all of the income to the beneficiary if this is unnecessary because of her other resources and the probability that she will continue under guardianship as an incompetent until her death. Amoskeag Trust Co. v. Wentworth, supra, 348. However, the trustee in case of doubt should exercise his discretion in favor of the daughter by not retaining accumulated income which will ultimately go to the remaindermen. See Restatement (Second), Trusts, s. 196, comment e.
The trustee should give a broad interpretation to his discretionary powers in order that the pleasure, comfort and support of the life beneficiary will be assured. See the companion case Rogers v. Munsey, 103 N.H. 37, decided this day.
Remanded.
All concurred.