LORING V. MARSHALL
396 Mass. 166, 434 N.E.2d 1315 (1935)

PROCEDURAL POSTURE: Complainant trustee commenced an action in the Supreme Judicial Court for the county of Suffolk (Massachusetts), for instructions regarding the distribution of the remainder of a trust created by the testator.

FACTS: Settlor left the residue of her estate in trust, with her brother, sister, and two nephews as income beneficiaries. The nephews were given a special power of appointment with respect to their wives and issue. This special power was further limited in mat only income could be appointed to the wife. One of the nephews died unmarried and without issue. The other nephew, Cabot Morse, who had a wife and a son from a prior marriage, exercised his power of appointment over the trust income in favor of his wife. However, he did not exercise his power with respect to the principal, and his will clearly expressed his intent not to exercise it in favor of his son, Cabot Morse, Jr. Cabot Morse, Jr. predeceased his father. Settlor further provided mat, if neither nephew exercised his power, the trust assets were to be distributed to certain charities (D). In earlier actions, the court determined mat Cabot Morse's exercise of his power over the trust income in favor of his wife was valid, notwithstanding the fact mat he failed to exercise the power with respect to the principal; and mat D had no interest in the trust funds, despite the fact mat neither nephew fully exercised his power, since Settlor's clear intent was to keep the trust property in her family. The trustees (P) filed the present action after the death of Cabot Morse's wife, to determine how the principal should be distributed.

ISSUE: When a special power of appointment is not fully exercised, may parties who are not among those who could have been appointed take the subject property by default?

RULE: When a special power of appointment is not exercised and absent specific language indicating an express gift in default of appointment, the property not appointed goes in equal shares to the members of the class to whom the property could have been appointed.

HOLDING AND DECISION: Trustees brought action to determine disposition of trust remainder. Civil action was commenced in the Supreme Judicial Court for Suffolk County, reported by Lynch, J. The Supreme Judicial Court, Wilkins, J., held that: (1) provisions of will creating trust evidenced apparent intent to keep assets within the family that was sufficiently strong to overcome claim that will expressly indicated gift to charities in default of appointment of the principal, and (2) where will creating trust provided that last surviving income beneficiary would have power of appointment of trust principal and last surviving income beneficiary appointed only the trust income, executors of estate of donee's surviving issue were entitled to distribution of principal.