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BEALS v. STATE STREET BANK & TRUST CO. Supreme Judicial Court of Massachusetts, 1975, 367 Mass. 318, 326 N.E.2d 896
WILKINS, J.
Fact:
Arthur Hunnewell died, leaving his wife and four daughters. His will placed the residue in the trust, income of trust to be paid to his wife while she was alive. At the death of the wife, the trust was to be divided in portions one for each then surviving daughter and then surviving children of any deceased daughter. At the point of Mrs. Hunnewell’s death, one of the four daughter predeceased her mother without having children. Therefore, the trust was divided into three portions. The will directed that the income of each portion should be paid to her during her life and on her death, the principal of such portion should be paid and disposed of as she may direct and appoint by her last Will and Testament duly probated. In default of appointment, a daughter’s share should be distributed by the laws then governing the distribution of interstate estates. Following the death of her mother, Isabella H. Hunnewell, later Isabella H. Dexter received her share and transferred cash and securities to her account at the Dexter office. Afterward, she partially released her general power of appointment under the father’s will, restricting such power to the descendent of her father. Isabella H. Dexter died without children and her share in the trust was valued at approximately $88,000. Isabella did not expressly exercise her power of appointment under her father’s will. The residuary clause of Isabella’s will direct that the residue of her property be distributed to the child of her sister, Margaret Blake. The plaintiff, Isabella’s sister Jane, who could otherwise receive the trust share filed a suit, seeking a determination of the proper distribution to be made of a portion of the trust created under the father’s will. A judge of the Probate Court reserved decision and reported the case to the Appeals Court. The court transferred the case.
Issue:
Whether Isabella’s will expresses or implies intention to exercise the power and should be treated as effectively exercising her power of appointment under her father’s will
Whether Isabella’s will should be constructed according to the law of this Commonwealth or the law of New York
Rule:
Restatement 2d: Conflict of Laws, § 275, comment c (1971)
Lane v. Lane, 4 Pennewill 368, 378 (Del. 1903)
Fiduciary Trust Co. v. First Natl. Bank, supra, at 10.
Application:
Before dealing with the issue that Isabella's will did not exercise the power of appointment under her father's will, the court consider whether Isabella's will should be construed according to the law of this Commonwealth or the law of New York. According to Restatement 2d, there are strong, logical reasons for turning to the law of the donee's domicil at the time of death to determine whether a donee's will has exercised a testamentary power of appointment over movables. Also, most courts in this country in terms of the question, interpret the donee's will under the law governing the administration of the trust, which is usually the law of the donor's domicile. However, the court also point out that if they had faced the issue for the first time, they might adopt a law that relies on the substantive law of the domicile of the donee to determine whether the will of the done exercised a power of appointment. But in the field where much depends on certainty and consistency as to the applicable rules of law, they should adhere to our well-established rule. Thus, the court applies the substantive law of the jurisdiction whose law governs the administration of the trust in interpreting the will of a donee.
Considering the arguments of the parties whether Isabella's will expresses or implies intention to exercise the power therefore which rules should be applied, the court conclude that there is no indication in Isabella's will of an intention to exercise or not to exercise the power of appointment given to her under her father's will. The court held that the residuary provisions of Isabella's will should be presumed to have exercised the power of appointment based on the consideration of the reasons underlying the canons of construction applicable to general and special testamentary powers of appointment. Considering the power of appointment given to Isabella and her treatment of that power during her life, the rationale for the canon of construction applicable to general powers of appointment should be applied in this case. Throughout her life, Isabella spent major portion of the trust shares initially distributed to her as if it were her own. Prior use and enjoyment of the appointive property is a sufficient factor to indicate the exercise of a power of appointment by a will (Fiduciary Trust Co. v. First Natl. Bank). Moreover, the gift under her residuary clause was consistent with the terms of the reduced power which she retained. In these circumstances, the partial release of a general power does not obviate the application of that rule of construction which presumes that a general residuary clause exercises a general power of appointment.
Conclusion:
Order. Isabelle did exercise the power of appointment
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