Synopsis: Massachusetts courts have recently decided several cases involving an educational trust that former President John Adams created a few years before his death almost two centuries ago. This Article analyzes those cases and suggests that this long-running dispute has lessons for lawyers and others about how to avoid, or at least reduce the risk of, litigation in situations involving continuing relationships.
John Adams was an extraordinary historical figure. He helped to draft the Declaration of Independence. During the American Revolution, he undertook important diplomatic missions for the new nation. He wrote the Massachusetts Constitution, the oldest written constitution still in effect anywhere in the world. He served as the first Vice President of the United States and the second President. And until recently, he was the only chief executive whose child also held that office.
Some aspects of Adams’s public record generated controversy. He represented the British soldiers who were tried in the wake of the Boston Massacre. His presidency was deeply unpopular, and he lost his bid for reelection to archrival Thomas Jefferson in the first crisis of succession under the Constitution, a contentious affair that led to the adoption of the Twelfth Amendment. A particular source of contention was the Sedition Act of 1798, which criminalized many criticisms of the government. That law expired in 1801, but more than a century and a half later, the Supreme Court denounced it as incompatible with the First Amendment.
All of this is well known. But another aspect of John Adams’s legacy has come into focus only in the twenty-first century. Before he died, Adams made arrangements to support an educational institution in his hometown of Quincy, Massachusetts. The funding for the Adams Academy has provoked intense controversy and multiple recent lawsuits. In Woodward School for Girls, Inc. v. City of Quincy, the Massachusetts Supreme Judicial Court held in 2014 that the city had breached its fiduciary duty as trustee of the Adams Fund. Two years later, in DeGiacomo v. City of Quincy, the court declined to disturb the city’s long-term lease of the Adams Academy building to the Quincy Historical Society at a nominal rent. And last year, in Jalkut v. City of Quincy, the Massachusetts Appeals Court rejected the city’s claim of ownership of the land on which the Adams Academy building sits. This Article will explore the Adams Academy dispute. Part I provides some historical background, Part II explores the litigation, and Part III considers some general lessons that lawyers might learn from these events.
In 1822, John Adams conveyed some of his real estate to a trust called the Adams Temple and School Fund (the Adams Fund). He instructed his hometown of Quincy, as trustee of the trust, to invest the earnings from the property for a school that would provide a classical education to its students. In a second transaction shortly thereafter, he further directed that the school be constructed on the site of the birthplace of John Hancock, which had been destroyed in a 1759 fire but which Adams subsequently acquired and conveyed to the city as part of the 1822 transaction.
Due to lack of sufficient funds, the Adams Academy did not open until 1872, half a century after the Adams Fund was established. The Academy occupied an elegant gothic revival building that was designated as a national historic landmark in 1994. Although the Academy thrived for a time, it closed in 1907 due to insufficient enrollment.
The building has remained in use since the Academy’s demise. Various organizations, including the Red Cross, the Boy Scouts, and the Girl Scouts rented space there for many years, and the local draft board had its offices in the building during the period encompassing the Korean and Vietnam Wars. Since 1972, the Quincy Historical Society has occupied the Academy building.
Meanwhile, the Adams Academy’s closure left the Adams Fund without a named beneficiary. Quincy obtained judicial approval, under the cy pres doctrine, to use the income from the fund initially for the benefit of its high schools and public library, and since 1953 for the benefit of the Woodward School for Girls, which was founded in 1894 by a cousin of John Adams. Dr. Ebenezer Woodward established that school to complement the educational opportunities that the Adams Academy offered boys under its male-only admissions policy and designated the city as trustee of the endowment fund that he left to establish the school. Unlike the Adams Academy, the Woodward School remains in operation. The city’s administration of the Adams Fund has generated ongoing controversy.
The Woodward School became the income beneficiary of the Adams Fund in 1953 when the city concluded that the income from the fund had limited value to the public schools, but Woodward was encountering financial challenges. The relationship between Woodward and the city deteriorated significantly shortly after the turn of the twenty-first century when, for two consecutive years, Woodward received a smaller distribution from the Adams Fund than it expected. After receiving a less than full response to its request for an accounting, Woodward filed suit against the city in 2007. A probate judge concluded that Quincy had breached its fiduciary duties, awarded Woodward damages of approximately $3 million, removed the city as trustee, and appointed a Boston lawyer as the successor trustee.
The Supreme Judicial Court substantially affirmed the probate judge’s ruling, although it set aside the damages award because it was improperly based in part on unrealized gains that the Adams Fund would have received had it followed investment advice that the city had solicited from a local bank. The court upheld the ruling that the city had breached its fiduciary duties by investing all of the Adams Fund’s assets in fixed-income instruments rather than following a mixed investment strategy that would have grown the principal while providing for reliable income for Woodward, the institutional beneficiary. Moreover, although the city was not required to follow the investment advice that it had solicited, it never heeded “the most significant, and seemingly prudent, advice” it had received. The city’s overall stewardship of the Adams Fund left Woodward at risk of lost future income because reliance on fixed-income investments rendered the principal vulnerable to devaluation because of inflation.
The successor trustee decided to increase the income generated by the Adams Fund. In one of his first moves, James R. DeGiacomo filed a lawsuit challenging the validity of the city’s long-term lease of the Adams Academy building to the Quincy Historical Society at a nominal rate. In 1972, the city, after receiving approval from a single justice of the Supreme Judicial Court, executed a fifty-year lease to the historical society for a monthly rent of $100, which was far below market value. Relying on the Woodward School ruling that the city had breached its fiduciary duties in its management of the Adams Fund, DeGiacomo sought to rescind the historical society’s sweetheart deal with the city. That effort foundered on the shoals of issue preclusion: the Supreme Judicial Court in DeGiacomo concluded that the single justice’s 1972 ruling resolved the validity of the bargain lease.
The Supreme Judicial Court ruled that all three elements of issue preclusion were satisfied. Two preclusion elements were clearly satisfied: the 1972 decision was a final judgment about the lease’s validity, and the earlier case involved the same question as to whether the city’s entering into the lease breached its fiduciary duty to Woodward School, the beneficiary of the Adams Fund. The crucial element of preclusion that had to be resolved concerned whether the successor trustee and Woodward, the beneficiary, were parties to or in privity with a party to the 1972 litigation. This privity determination was important because neither the successor trustee nor Woodward were parties to the 1972 litigation. But the court concluded that they were in privity with a party to that action.
The court concluded the successor trustee was bound by the 1972 decision because the city, the original trustee, had sought and obtained judicial approval of the lease based on the notion that executing the lease would not constitute a breach of the city’s fiduciary duty as trustee. Woodward also was bound, even though it had not been a party to the 1972 proceeding; only the attorney general was on the other side then. No matter. The attorney general presumably represented Woodward’s interest adequately because of his legal duty to protect the public interest in charitable trusts. And neither due process nor common law required the attorney general to give notice to Woodward in 1972.
Even if Quincy had named Woodward as a defendant in the 1972 action, the school might have acquiesced to the lease to the historical society. At the time, the city and the school had an amicable relationship. Although the Woodward School court emphasized that the city’s fixed-income investment strategy constituted a breach of Quincy’s fiduciary duty because it could subject the school to the ravages of inflation, the rupture in the relationship between Quincy and Woodward did not occur until more than three decades later. Woodward never contested the city’s strategy at the time the lease was entered or suggested that reliance on fixed-income investments might have diminished the value of the distributions that the school was receiving from the Adams Fund. This was so even though persistent inflation had prompted President Richard M. Nixon to impose wage and price controls in 1971.
We cannot know with confidence what Woodward would have done had it participated in the 1972 proceedings about the historical society lease. We do know that the DeGiacomo ruling was far from the last word in this saga. In fact, the successor trustee’s effort to rescind the below-market lease to the historical society was just the first step in his effort to enhance the Adams Fund’s income. And that step, had it succeeded, could have allowed the successor trustee to sell the Adams Academy property free and clear.
Because his opening gambit failed, Mr. DeGiacomo next proposed to sell the Adams Academy, subject to the lease. He sought judicial approval for the sale. The city tried to intervene in the judicial proceeding on the basis that it owned the land on which the Academy building stood while conceding that the Adams Fund owned the building itself. Quincy contended that differences in the wording of the two deeds supported its position. The first deed contained explicit language relating to a trust, whereas the second deed lacked such language and simply conveyed the land on which the Adams Academy building is located “to the inhabitants of the town of Quincy . . . in their corporate capacit[y].” Meanwhile, the city took the property by eminent domain, along with two adjoining properties, for the stated purpose of converting the building into a presidential center honoring John Adams and to prevent construction of several dozen residential units nearby that would detract from the proposed use of the building.
Affirming the Superior Court, the Appeals Court held that under the doctrine of issue preclusion, Quincy could not assert ownership of the land under the Adams Academy building. The only element of the doctrine in question here was whether the same issue was essential to and actually litigated in the earlier litigation. The probate judge in Woodward School had concluded that the land on which the building stands was an asset of the Adams Fund, and the city did not contest that conclusion on appeal in that case. It was simply too late to raise the issue. Quincy’s claim that it owned the land while the Adams Fund owned the building “would not be without some force” had the city raised it in a “timely” manner, although that interpretation of John Adams’s conveyances “lacks some degree of doctrinal coherence.”
So far, so good. But this analysis raises questions. The Appeals Court observed that the probate court in the Woodward School litigation “unquestionably viewed the Adams Academy property as an asset of the Adams Fund” by finding that the second deed, which does not contain trust language, represented “a further conveyance into the trust.” But saying that the probate judge “viewed” the land as part of the trust does not necessarily establish that the parties actually litigated the issue. Perhaps everyone simply assumed that the building and the land were part of the “property,” so they never specifically addressed the point. And the probate judge might have had no reason to question the assumption. Although dividing ownership of the land from ownership of any physical structure on the land is not unheard of, the phenomenon is not common.
This last point leads to a further consideration. If the question of separate ownership of the land and the building was not actually litigated in Woodward School, then perhaps the Appeals Court mistakenly applied issue preclusion. That hypothesis might not be accurate, though. Although the probate judge in Woodward School might not have had to determine whether the land under the Adams Academy building was an Adams Fund asset at the liability stage of the litigation, the judge necessarily had to resolve that question in assessing damages. Quincy successfully appealed a different aspect of the original damages award. The city’s failure to raise the status of the land on appeal in Woodward School might well have prevented it from litigating the issue in Jalkut. The Restatement (Second) of Judgments suggests this conclusion in an analogous situation.
But assume, for the sake of discussion, that the probate judge in Woodward School did not determine the status of the land. That assumption does not necessarily mean that Quincy should have prevailed in Jalkut. The city understandably emphasized that the second deed, in which John Adams conveyed the land on which the Academy was built, did not contain trust-related language. But this detail might not resolve the question. The first deed, in which Adams conveyed other real estate in trust to Quincy to fund the construction and operation of the Academy, did contain trust-related language.
The absence of trust language from the second deed does not ineluctably support an inference that Adams conveyed the land on which the Academy was built outside of the trust created by the first deed. Although the language of the conveyance has great weight in interpreting the instrument, the goal is to determine the conveyor’s intent from the words of the conveyance construed “in . . . light of the circumstances of [the instrument’s] formulation.” The second conveyance specified the location of the Academy and the historical significance of that place as well as a detailed discussion of the Academy’s curriculum. Moreover, the second conveyance could be read in light of the first deed, which did contain trust language and called for the creation of the Academy. On this view, the surrounding circumstances suggest that the second conveyance was inextricably intertwined with the first. Although Quincy might have a colorable argument that Adams conveyed the land to the city rather than to the Adams Fund in trust, that is not the only possible interpretation and may not be ultimately persuasive in light of the surrounding circumstances. The Appeals Court chose not to resolve the interpretive debate, but the city might well have come out on the short end if the court did reach the merits of the argument.
The Appeals Court decision in Jalkut will not end the Adams Academy dispute. At a minimum, the parties have to resolve the amount of compensation that Quincy owes the Adams Fund for taking both the building and the land. There also might be collateral questions about the city’s good faith in litigating some of these issues, although the Jalkut court declined to find the appeal to be frivolous.
The Appeals Court correctly observed that John Adams “would, most assuredly, not be pleased” with this long-running saga. To be sure, the court tactfully suggested that Adams might have contributed to the ongoing controversy by using seemingly inconsistent language in the instruments that created the Adams Fund, noting that his preeminent reputation as a legal drafter “was principally forged in areas outside of conveyancing practice.” But we should not lightly assume that Adams lacked reasons for the drafting choices he made. And even if the language of those instruments left something to be desired, contemporary lawyers still must make sense of what Adams wrote.
Sorting out the Adams Fund arrangement entails appreciation of the connection between the City of Quincy and the Woodward School. Starting in 1953, they had a long-term (and presumably permanent) arrangement: the city as trustee of the Adams Fund and the school as beneficiary. This was a continuing relationship. It might not have been the prototypical relational contract, in that it entailed periodic distributions from the city to the school, but it also was more than a one-time commercial transaction. The continuing relationship can affect the way those involved deal with each other and how they try to resolve disagreements. It might also dissuade them from resorting to litigation and instead encourage reliance on less formal methods of dispute resolution.
But relationships can affect the dispute-resolution process more generally. Some of the cases in Brown v. Board of Education might not have gone to court at all had white officials responded constructively to the concerns of Black parents and children. The South Carolina case was filed only after the school board in a rural community refused to provide bus transportation for Black students when it was providing bus service to white children. And the Virginia case was filed only after the school board’s intransigent refusal talk with parents seeking to improve the overcrowded Black high school building prompted a student-led strike. Similarly, the leaders of the Montgomery bus boycott initially prioritized courteous treatment of Black passengers over integrated seating and filed their successful suit challenging the constitutionality of the city’s segregation ordinance only when local officials adamantly refused to negotiate. It also appears that many libel suits are filed against the media by plaintiffs who cannot obtain correction, retraction, or apology for what they regard as objectionable or erroneous statements.
As noted above, Quincy, as trustee, and the school, as beneficiary, were institutions that necessarily had a long-term relationship. While the city might not have been legally obligated to name the school as a party to the 1972 proceeding that approved the below-market lease to the historical society, for instance, it would have been easy to do that or simply to notify the school about the proposed lease. Both parties are located about a quarter mile apart on Quincy’s main north-south thoroughfare. As noted earlier, the school might not have objected to the lease at the time. More to the point, naming Woodward as a party or notifying school officials would have finessed any later questions about notice or the adequacy of the attorney general’s representation of the beneficiary’s interests.
By the same token, the Woodward School lawsuit was filed only after Quincy failed for nearly two years to provide the full accounting that the school requested because of the disappointingly small distributions it had received in two consecutive prior years. We cannot know whether a timely and more complete response would have deterred Woodward from filing suit, but the city’s stonewalling must have persuaded the school to take more drastic action than it otherwise might have. At a minimum, Woodward might not have pressed to remove the city as trustee of the Adams Fund. In any event, had the relationship remained more harmonious, city officials might not have publicly denounced the school as engaging in a “money grab.”
Whenever the legal dispute ends, the city will have to resolve both the details of, and the funding source for, the proposed Adams presidential center. The saga is far from over.
