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liabilityappealhearingtrustwill
settlementhearingprobatetrustrespondentappellant

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New England Trust Co. v. Paine, 317 Mass. 542, 59 N.E.2d 263, 158 A.L.R. 262

Facts

The New England Trust Company was appointed as trustee for a trust created by the will of James A. Woolson, with the administration beginning on May 4, 1904. The first six accounts were allowed between 1910 and 1911, covering the period until then. The seventh to thirty-fifth accounts, covering from May 16, 1910, to July 8, 1939, were presented for approval, but the judge ruled that the earlier accounts could not be reopened for review due to a legislative change, leading to the beneficiaries' appeal.

The administration of this trust began May 4, 1904. The first six accounts covered the period to May 16, 1910, and were allowed at different times down to January 16, 1911, when the sixth account was allowed.

Issue

The main legal issues were whether the judge erred in refusing to reopen the earlier accounts during the hearing on the later accounts and whether the trustee could be surcharged for alleged breaches of trust during the period covered by the later accounts.

The appellants contend that there was error in the judge's refusal to reopen the earlier accounts at the hearing on the later accounts and in entering the decree upon the later accounts without prejudice as hereinbefore stated.

Rule

The court applied the principle that earlier accounts could be reopened for correction of mistakes or errors unless they had been previously heard and determined by the court. The court also considered the implications of the exculpatory clause in the trust regarding the trustee's liability.

While the Revised Laws, c. 150, §§ 17 and 22, and the corresponding provisions of the General Laws and of the Tercentenary Edition, c. 206, §§ 19 and 24, were in force before the enactment of St.1938, c. 154, upon the settlement of an account, ‘all former accounts of the same accountant * * * [might] be so far opened as to correct a mistake or error therein’, except as to matters in dispute previously heard and determined by the court, which matters could be again brought in question only by leave of the court.

Analysis

The court found that the judge's refusal to reopen the earlier accounts was erroneous, as the earlier accounts were not final decisions and could be reviewed during the hearings on later accounts. The court emphasized that the legislative changes did not retroactively convert the earlier decrees into final decrees, thus allowing for a full investigation of the earlier accounts.

The subsequent enactment of St.1938, c. 154, repealing G.L. (Ter.Ed.) c. 206, § 19 (the successor to R.L. c. 150, § 17), completely redrafting G.L.(Ter.Ed.) c. 206, § 24 (the successor to R.L. c. 150, § 22), and inserting therein a provision that ‘after final decree has been entered on [an account filed in a Probate Court] it shall not be impeached except for fraud or manifest error,’ did not have the effect of converting the decrees on the earlier accounts, which were subject as of right to reopening generally by any interested party, into fully effective final decrees.

Conclusion

The court reversed the decree allowing the seventh to thirty-fifth accounts and mandated a further hearing that would include a reconsideration of the earlier accounts, ultimately aiming to settle the entire account of the trust.

We conclude for the reasons hereinbefore stated that the decree allowing the seventh to thirty-fifth accounts, inclusive, without consideration of the previous accounts and without prejudice in respect to the respondents' petition to vacate the decrees allowing those accounts must be reversed and there must be a further hearing upon the seventh to thirty-fifth accounts, inclusive, at which the earlier accounts are to be reconsidered.

Who won?

The beneficiaries of the trust prevailed in the case because the court agreed that the earlier accounts should have been reopened for review, allowing them to contest the trustee's actions more thoroughly.

The court found that the judge's refusal to reopen the earlier accounts was erroneous, as the earlier accounts were not final decisions and could be reviewed during the hearings on later accounts.

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