Opinion
No. 3958
Decided January 2, 1951
A bequest of income, unlimited as to time and without any disposition of the corpus of the fund, is a bequest of such corpus. In determining the value of a business included in the residue of an estate, all property of the business is to be taken into account including working capital and accounts receivable, less accounts payable. A request in the will that a legatee continue the testator's "coal business" does not establish a specific legacy where the testator intended that it should pass as a part of the residue of the estate. Where there was no evidence of intention on the part of the testator that any part of the residue of his estate was to pass to his trustee in kind the testator's representative has the implied power to convert it into cash.
PETITION for instructions by the administrator d.b.n. of the will of Edward H. Clough, late of Manchester, and by Marion J. Boulton, trustee under the same will. After certain charitable bequests, and pecuniary legacies to grandchildren, the will devised life estates in certain real estate, to the testator's widow and a daughter, Marion, remainder to the daughter's children. By clause six of the will, the residue of the estate, "real and personal," was left to the widow for life "with the privilege of using so much of the principal in addition to the income . . . as may be necessary, in her discretion, for her support and comfort." The same clause contained a "request" to the widow "to continue the coal business situated at 141 Maple Street, Manchester . . . under the management of my son-in-law, R.I. Boulton, the income of said business to go to my wife during her lifetime, and after her decease, to go to my daughter Marion, as part of her share of my estate." The clause concluded with the provision that after the decease of the widow and payment of her funeral expenses, "the remainder is to go" five hundred dollars to a daughter Elsie, and "one-half of the remainder to my daughter Marion . . . and her heirs;and the other half to . . . Marion . . . in trust for my son, Frank E. Clough" for specified purposes. At the death of Frank, the "trust fund" is bequeathed "to his children, if there be any surviving him," otherwise to Marion and her heirs.
According to the petition, the testator died on April 22, 1932, and his widow on July 6, 1948. The defendant Frank Clough is 63 years of age and childless. His wife has been confined to the State Hospital for three years. The petition also alleges that the coal business at the testator's death was known as the E.H. Clough Coal Company; that personal property incidental to its operation, consisting of furniture, fixtures, stock in trade, motor equipment, cash and checking account in the company name, book accounts and receivables, was inventoried in the probate proceedings at $13,157.11. There were also inventoried certain government bonds standing in the name of the company valued at $5,018.75. Other property, consisting of real estate which would pass by the residuary clause, was inventoried at $16,000.
The petitioners seek advice "as to what the said Marion J. Boulton takes from said estate in her individual right and as to what she takes as trustee." The reserved case indicates that the inquiry is directed to a determination of "how and to whom the corpus of the estate shall go under clause 6 . . . and specifically . . . with regard to the disposition of [the] coal business with incidents thereto."
Reserved and transferred without ruling by Leahy, J.
J. Morton Rosenblum, for the petitioners, filed no brief.
Nicholas J. Costakis and Osgood Osgood, for Frank E. Clough, filed no brief.
Maurice P. Bois, guardian ad litem for unborn children of Frank Clough, pro se, filed no brief.
The residue of the testator's estate was bequeathed and devised to his widow for life, with certain powers to invade the principal. Cf. Belford v. Olson, 94 N.H. 278; In re Gile Estate, 95 N.H. 270. The "remainder" at her decease, after certain minor payments, was plainly left one-half to the plaintiff Marion individually, and one-half to her as trustee for the defendant Frank. Our attention is directed primarily to the provisions of the will which relate to the coal business.
A life estate in the entire corpus of the residue was left to the widow. This included the assets of the coal business, which she was requested to continue in the management of the testator's son-in-law, R.I. Boulton, who presumably is the plaintiff administrator and husband of Marion, although the case does not so indicate. Whether the coal business was "continued" by the widow does not appear. If it was, there are no allegations or findings with respect to the value of the assets used in the business at the time of the decease of the widow in 1948.
If the business was carried on by the widow during her lifetime, under the provisions of clause six of the will, the income of the business was to go to the widow during her lifetime, "and after her decease, to go to my daughter Marion, as part of her share of my estate." Since the widow took a life interest in the entire residue, she would have been entitled to the income of the business without specific provision therefor. Literally construed, the will provides that "the income" shall thereafter go to Marion "as part of her share of my estate." It seems plain that this provision refers to the "share" of the residue which Marion takes individually, since there is no suggestion that the share which she is to hold in trust was intended, or that the trustee is authorized to conduct the business. The share which she takes individually, Marion holds in fee. No specific disposition was made of the corpus of the business, as distinguished from the income, after the decease of the widow. "A bequest of the income, unlimited as to time and without any disposition of the corpus of the fund, is a bequest of such corpus." Wilkins v. Miltimore, 95 N.H. 17, 18. In this case the corpus of the "business," being part of the residue, the widow's decease to the daughter Marion, either individually or as trustee. The specification of the will that she should have the income "as part of her share" is in our opinion an indication of intent that the corpus should pass to her as a part of her share of the corpus of the residue. See Goodwin v. New England Trust Co., 321 Mass. 502, 505. The other half, left to her as trustee, was "to be kept invested by her." The absence of any reference to the business in the trust provisions confirms the view that the corpus of the coal business was intended by the testator to pass to Marion individually.
As previously stated, the case does not disclose the value of the "remainder" of the residue at the widow's death. It was the remainder at her death which was to be divided, and not the residue as inventoried at the testator's death. The assets of the coal business have undoubtedly changed since their value was determined in 1932. If their value at the widow's death was less than half of the total value of the remainder, no difficulty is presented in transfer of the business to Marion as "part of her share." In determining their value, all property of the business is to be taken into account, including working capital and receivables, less payables. Coyle v. Donaldson, 91 N.J. Eq. 138; Murphy v. Murphy, 118 N.J. Eq. 108; Matter of Lowe, 206 N.Y. 671; Chavis v. Myrick, 190 Va. 875. See also, Hooper v. Hightower, (Ind.App.), 81 N.E.2d 707; In re Estate of Zents, 148 Neb. 104; McGowan v. Griffin, 69 Vt. 168; annotation, L.R.A. 1917 D 435.
The legacy of the coal business is not however to be regarded as a specific legacy payable in full at the expense of the residue. Cf. Petition of Cain, 87 N.H. 318; Malcolm v. Malcolm, 90 N.H. 399. The intent of the testator that it should pass as a part of the residue is reasonably plain, and his expression of this intent should be given no different effect than are residuary clauses by which a general gift is intended, although specific items are enumerated therein. Le Rougetel v. Mann, 63 N.H. 472; annotation 128 A.L.R. 822, 835; 4 Page, Wills (Lifetime ed.) pp. 111, 112.
The will contains no evidence of an intention that any part of the residue should pass to the trustee in kind. A power on the part of the administrator to convert the residue, except for the business, into cash is to be implied. Romprey v. Brothers, 95 N.H. 258, 261, and cases cited.
If the value of the assets of the coal business proves to be greater than half the value of the total "remainder," some division of these assets between the halves must be effected. Presumably liquid assets, such as the bonds described in the inventory, may be divided equitably to effect a satisfactory adjustment. If not the administrator may be licensed to sell the assets of the business as well. In view of the absence of any findings concerning values, no more specific advice can be given in response to the inquiry made.
Case discharged.
All concurred.