OPINION [May 20, 1983]
BOYLE, Francis J., Chief Judge.
Plaintiffs, Robert B. Dennis and William A. Dennis, III, current income beneficiaries and remaindermen if they survive to October 29, 1991, brought this action for an accounting and to surcharge Defendant as Trustee of the Trust under the will of Alice M. Sullivan, deceased. Additionally, claims have been pursued on behalf of the Estate of Alice M. (Sullivan) Dennis, deceased, and Theresa Dennis.
Alice M. Sullivan deceased on September 28, 1909, survived by her husband and four children, Robert J. B., Edmond, William B. and James B. By her will dated January 28, 1905, the decedent devised her real estate to her husband for life, and thereafter, in trust for the benefit of her issue until 21 years after the decease of all her children. Defendant, hereinafter referred to as Trustee, was nominated as sole Trustee.
Decedent's personal estate was placed in trust and ultimately distributed to her children as each attained the age of 25.
Decedent's husband deceased on October 8, 1920. The last survivor of decedent's children deceased on October 29, 1970, and the Trust will terminate on October 29, 1991.
Decedent was the daughter of Joseph Banigan. Although not perfectly clear from the evidence, it appears that Joseph Banigan was the owner of a number of commercial buildings located in downtown Providence. Decedent's real estate interests appear to be a portion of her father's real estate which was apparently divided among his children in shares.
At the time of her death decedent owned a one-eighth (1/8) interest in the Wheaton-Anthony Building, a one-fourth (1/4) interest in the Jones Building and a one-fourth (1/4) interest in the Alice Building and four (4) undivided one-fourth (1/4) interests in residential real estate. The Wheaton-Anthony, Jones and Alice buildings were multi-story commercial buildings located in the commercial districts of the City of Providence. Decedent's husband, who had a power of sale, retained all of the assets of her estate during his lifetime.
The Trustee sold the undivided interest in residential real estate in 1921, and invested the proceeds in accord with the provisions of the will.
In 1936, a parcel of residential property was added to the Trust by Opinion of the Supreme Court of the State of Rhode Island. Sullivan v. R.I. Hospital Trust Co., 56 R.I. 253, 262, 185 A. 148, 152 (1936). This parcel was sold by the Trustee in 1942 and the proceeds reinvested.
In 1945, the Jones Building was sold in a sale joined in by the Trustee for a total purchase price of $175,000.
In 1953, with the approval of the Superior Court, State of Rhode Island, an additional 1/32d interest in the Alice Building was acquired by the Trust for a purchase price of $30,000, bringing the Trust's interest to 9/32d. This purchase was made with the consent of the court acting upon the recommendation of the then income beneficiaries, and the participation of a guardian ad litem appointed to represent the interests of Plaintiffs in this action who were then minors. The decree entered March 17, 1953 provides that it is binding on all persons designated and described in the bill of complaint, including all persons not ascertained or not in being.
In 1970, the Wheaton-Anthony Building was sold in settlement of a partition proceeding for a total purchase price of $325,000. Deeds were delivered from 26 owners, including the Trustee.
The Alice Building was sold in 1979 for a total purchase price of $386,000.
The decedent's will, as it related to disposition of real estate provides:
To my beloved husband, James E. Sullivan for his own use and benefit, I bequeath and devise all the real estate of which I may be seized at the time of my decease for and during the term of his natural life; and from and after his decease to the Rhode Island Hospital Trust Company as in trust as follows: -- to pay over the net income of said real estate to my children then living, in equal shares, and to the issue of any deceased child the share of such child, and, in the event of the decease of any of my said children leaving no issue, then to pay the share of said deceased to my surviving child, or children, and, upon the the death of all of my said children to hold said real estate for a period of twenty-one years from the decease of the last surviving child, when the said real estate is to be divided between the heirs of my children, said heirs taking by right of representation and not per Capita. . . .
. . . In the event of the death of all my children leaving no issue and after the death of my husband, James E. Sullivan, I devise said real estate to the heirs of my late father, Joseph Banigan.
The evidence of the rental history of the Jones Building is vague. The decedent's one-eighth (1/8) interest was retained in trust 25 years from 1920 to 1945.
The Trustee entered into a lease dated September 1, 1924 of the Wheaton-Anthony Building to Exchange Realty Co. for a term of ninety-nine (99) years to August 31, 2023. This lease was approved by the Superior Court of the State of Rhode Island in an action entitled R.I. Hospital Trust Co. v. R. J. B. Sullivan, Eq. 6913, August 29, 1924.
The first year annual net rental under the lease was $30,000, the following four years annual net rental was $32,000; the following five years net annual rental was $35,000, and, the net annual rental for the period from September 1, 1954 to August 31, 2023, was not less than $37,500, subject to increase in accord with the formula stated in the lease agreement. The rental was reduced by agreements in 1933, 1936, and 1941, and adjusted by agreements in 1938 and 1947. The rental was set by arbiters for the period 1951 to October, 1971, yielding at all times from 1951 to 1971 less than the minimum annual rental of $37,500 required by the lease.
With the consent of the Trustee, the lease was assigned to Club Realty Co. as lessee on April 29, 1965. The assignees as owners of a fractional undivided interest later brought a partition proceeding and the Trust's interest in Wheaton-Anthony Building was sold in 1970.
So far as can be ascertained from the evidence introduced, the modifications of the lease of September, 1924, were neither submitted to nor given court approval.
On December 30, 1936, the Trustee, in its capacity as a bank loaned $58,900 to Exchange Realty Co. evidenced by a promissory note secured by a second mortgage of Exchange Realty Co.'s interest in its lease of the Wheaton-Anthony Building.
From 1920 to 1927, the Alice Building was leased to a number of tenants. In 1927, the Trustee together with all of the other owners entered into a lease of the Alice Building to Alice Building, Incorporated, for a period of forty (40) years beginning November 1, 1934, and granted two options to renew for successive twenty (20) year periods. This lease was approved by the Superior Court of the State of Rhode Island in an action entitled R.I. Hospital Trust Co., Eq. No. 8688, November 22, 1927. The Trustee, in its capacity as a bank was designated as agent for all of the owners.
The annual rental was $75,000 for the first ten (10) year period, $77,500 for the second ten (10) year period, and, for the remaining twenty (20) years the rent was to be fixed by agreement or arbitration. The rentals were adjusted by nine separate agreements during the period of November 1, 1934 to July 1, 1960, as follows: Nov. 1, 1934 -- Oct. 31, 1935 $55,000Nov. 1, 1935 -- Oct. 31, 1936 65,000Nov. 1, 1936 -- Oct. 31, 1942 70,000Nov. 1, 1942 -- Oct. 31, 1944 72,500Nov. 1, 1944 -- Oct. 31, 1949 75,000Nov. 1, 1949 -- Oct. 31, 1954 77,500Nov. 1, 1954 -- Dec. 31, 1957 75,000Jan. 1, 1958 -- June 30, 1960 69,000July 1, 1960 -- 59,000