Frank B. Kendrick, administrator, vs. Lucinda J. Ray

Massachusetts Supreme Judicial Court1899-05-18

173 Mass. 305

Summary · law.co

Holding. The judgment in favor of Ray was affirmed. The court held that Ray was the valid beneficiary of the trust created by the insurance policy, as the evidence sufficiently demonstrated the trust was clearly declared and executed by the policyholder in her favor, communicated to her, and accepted by her.

A man purchased an insurance policy naming E. A. Taft as trustee, intending to create a trust for someone's benefit, though the policy itself did not identify the beneficiary or trust terms. After the policyholder's death, a woman named Ray claimed to be the beneficiary of the trust. The court allowed evidence of the policyholder's oral and written statements to establish who the beneficiary was and what the trust required. A sealed letter found among the policyholder's papers identified Ray as the beneficiary, and the policyholder had spoken with Ray about the arrangement before his death. The court determined this evidence was sufficient to prove the trust was clearly declared, properly executed, made known to Ray, and accepted by her.

The plaintiff, as administrator of the policyholder's estate, argued the trust was invalid, but the court rejected this challenge. The insurance company had already admitted liability and paid the money into court. The court found no legal defect that would invalidate the trust on public policy grounds or treat it as an invalid testamentary disposition. The policyholder retained the right to revoke the trust during his lifetime but never exercised it, and such a power of revocation does not prevent a trust from being valid.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether oral and written declarations of the insurance policyholder were admissible to identify the trust beneficiary and terms
Whether a trust for an unnamed beneficiary could be established through evidence outside the policy document
Whether non-delivery of the policy and the trust letter to the beneficiary defeated the validity of the trust
Whether the trust constituted an impermissible testamentary disposition

Procedural posture

The exceptions to the trial court's judgment in favor of the claimant Ray were considered on appeal.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Morton, J.

The evidence which was admitted against the plaintiff’s objection was clearly competent. The policy was not made payable to the plaintiff’s testator whose life was insured, but “to and for the sole and separate use and benefit of E. A. Taft, trustee.” The intention on the part of the plaintiff’s testator to create a trust of some sort was thus clearly manifested. But neither the terms of the trust nor the name of the beneficiary was disclosed in the policy. For the purpose of showing who was the beneficiary, and what the terms of the trust were, evidence of the declarations oral and written of the donor were admissible. Barrell v. Joy, 16 Mass. 221. Gerrish v. New Bedford Institution for Savings, 128 Mass. 159. Catland v. Hoyt, 78 Maine, 355. It is true that a voluntary trust once clearly established cannot be modified or controlled by subsequent declarations on the part of the donor, (Chase v. Perley, 148 Mass. 289,) and the plaintiff contends that the direction in the application, that the policy be made payable to “ E. A. Taft, trustee for self,” shows that the insured was himself the beneficiary. But it was competent for the court to find that the letter to the general agent of the insurance company, which referred to the policy as something still in futuro, was sent and received before the policy was issued, and contained a later direction than the application and the one which was followed in writing the policy.

The question then remains whether there was evidence tending to show who the beneficiary was, and what were the terms of the trust, which warranted the finding in favor of the claimant. We think that there was.

The sealed letter addressed to Taft, which was found amongst the testator’s papers after his death, clearly pointed out the claimant Ray as the beneficiary or cestui que trust, and directed the proceeds of the policy to be paid to her on his, the testator’s death. Of itself it would not have been enough. But it was competent for the court to find that what was said by the testator to the claimant in the conversations between them, the last one shortly before his death, which, as she testified, were to the same effect, though the word “ trust ” or “ trustee ” was not mentioned, constituted a notice by him to the claimant of the existence of the trust in her favor. See Gerrish v. New Bedford Institution for Savings, 128 Mass. 159. The fact that the policy never was delivered to her or to Taft, and that the letter to Taft also remained in the testator’s possession and itscontents were unknown to the claimant and to Taft till after the testator’s death, is not controlling or decisive against the claimant. Gerrish v. New Bedford Institution for Savings, ubi supra.

It is sufficient if it appears that the trust was clearly and unequivocally declared and executed by the donor in favor of the claimant, and was made known by him to her, and was assented to by her. Welch v. Henshaw, 170 Mass. 409. Gerrish v. New Bedford Institution for Savings, ubi supra. Urann v. Coates, 109 Mass. 581. Brabrook v. Boston Five Cents Savings Bank, 104 Mass. 228.

We think that there was evidence which warranted a finding in favor of the claimant on all of these points. See Scrivens v. North Easton Savings Bank, 166 Mass. 255; Eastman v. Woronoco Savings Bank, 136 Mass. 208; Alger v. North End Savings Bank, 146 Mass. 418.

If we assume that the donor might have revoked the trust at any time during his life, he did not do so, and a power of revocation is not inconsistent with the existence of a valid trust. Stone v. Hackett, 12 Gray, 227, 232.

The insurance company might have availed itself of any defences afforded by its by-laws in an action by the plaintiff against it on the policy, but it admitted its liability, and paid the money into court. We do not see how the plaintiff can set up against the claimant matters arising out of the by-laws of the insurance company. She does not rely upon the contract contained in the policy, but upon a trust perfected in her favor by the insured in regard to the proceeds of the policy. Brabrook v. Boston Five Cents Savings Bank, 128 Mass. 159, 233.

We discover nothing which rendered the trust invalid on grounds of public policy, or inoperative as an attempted testamentary disposition of property. It is not necessary to consider in detail the rulings that were asked for, as we think that they are disposed of by what has been said.

Exceptions overruled.