## Facts

- Leonard T. Troland’s will (1931) created a trust with Cambridge Trust Company as trustee.
- The trustee was to pay net trust income to Troland’s widow, Florence R. Troland, for life “so long as she remained unmarried.”
- Upon Florence’s death or remarriage, the will directed transfer of trusteeship to the National Research Council to establish the Troland Foundation for Research in Psychophysics; the National Academy of Sciences asserted the remainder interest through that agency relationship.
- Florence remarried in 1945 but did not notify the trustee.
- The trustee continued paying Florence trust income until her death in 1967 and, in annual probate accounts, stated she had not remarried.
- In 1971, the Academy petitioned to revoke decrees allowing the trustee’s accounts, correct the accounts’ marital-status representations, surcharge the trustee for post-remarriage payments with interest, and award counsel fees and costs.
- The Probate Court reopened the accounts, surcharged the trustee with interest, awarded the Academy fees and costs, and allowed the trustee to charge the trust certain expenses incurred pursuing recovery from third parties.
- The Appeals Court largely affirmed but limited certain expense shifting; further appellate review was allowed.

## Issues

1. Whether a trustee’s repeated account representations about a beneficiary’s unmarried status, made without reasonable verification, constitute “fraud” under Mass. Gen. Laws ch. 206, § 24 permitting reopening of allowed accounts.
2. Whether the trustee must restore to the remainder beneficiary trust income erroneously paid to the life beneficiary after a remarriage that terminated the life interest.
3. Whether, and to what extent, litigation expenses and counsel fees may be shifted (a) to the trustee for the beneficiary’s restoration action and (b) to the trust for the trustee’s recovery efforts.

## Decision

- The Supreme Judicial Court held the trustee’s conduct constituted “fraud” under Mass. Gen. Laws ch. 206, § 24 and permitted reopening the allowed accounts.
- The Court held the trustee liable to make restitution of amounts paid to Florence after her remarriage, with interest, to the proper beneficiary.
- The Court upheld the award requiring the trustee to pay the Academy’s counsel fees and costs incurred to obtain restoration.
- The Court disallowed charging the trust estate for the trustee’s legal costs incurred to recover funds wrongfully disbursed due to the trustee’s negligent administration.
- A dissent would have treated the trustee’s conduct as negligence rather than statutory fraud and would have denied reopening on that ground.

## Legal Principles

- Under Mass. Gen. Laws ch. 206, § 24, “fraud” permitting reopening of fiduciary accounts includes constructive (technical) fraud, not only intentional deception.
- A fiduciary’s factual account representation on a matter susceptible of knowledge, made without reasonable efforts to ascertain the truth and relied on in allowance of accounts, can constitute statutory fraud.
- A trustee that distributes trust funds to a person not then entitled is liable to the rightful beneficiary to restore the improper distributions, notwithstanding the trustee’s good faith.
- Courts may award counsel fees and costs against a trustee where the trustee’s administration necessitates litigation to restore trust property.
- A trustee generally may not shift to the trust estate the trustee’s own litigation expenses incurred to remedy losses caused by the trustee’s negligent administration.

## Conclusion

The court reopened the trustee’s previously allowed accounts based on constructive fraud arising from unverified marital-status representations, surcharged the trustee to restore post-remarriage income payments with interest to the remainder beneficiary, permitted fee shifting to the trustee for the restoration litigation, and barred the trustee from charging the trust for recovery litigation costs attributable to its negligent administration.


Nat’l Acad. of Scis. v. Cambridge Tr. Co., 370 Mass. 303 (1976)