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Quincy sued over bequest; school says it’s owed $10m

By David Abel
Globe Staff / November 17, 2010

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A 116-year-old private school that has long benefited from the largesse of President John Adams has sued the city of Quincy, asserting officials mismanaged income from a trust set up after the nation’s second commander in chief donated land to the city.

Officials from the Woodward School for Girls say the city owes it as much as $10 million.

While city officials have offered to settle the case, school lawyers declined to discuss settlement negotiations and said they planned to continue arguing their case in court.

The dispute, which went to trial this week in Brockton District Court, began in 2005, when school officials say the city failed to send the school its annual payment from the trust.

The payments have varied since the school began receiving the aid 57 years ago, but amounted to as much as $40,000 in the city’s last payment in 2008. The trust dates to an 1822 bequest from Adams that required the city to use income from the land to build a temple and support a school.

“No adequate accounting had ever been provided by the city to Woodward,’’ said Claire Papanastasiou, a spokeswoman for Bingham McCutchen, a law firm representing the school.

“As a result, the community and Woodward have no understanding of how the city has managed these valuable charitable trusts during the course of the past 50 years.’’

Lawyers representing Quincy deny the city mismanaged the account. They argue that the school lacks standing to make its claims and say that the city has been released from claims by previous legal settlements.

They also suggest the school waited too long to file its lawsuit, making it impossible for the city to properly defend itself.

“It’s unfortunate that trusts set up for the benefit of the people of Quincy are now being used as weapons against the city,’’ said Paul J. Hines, assistant city solicitor. “I think the president could be doing a cartwheel in his grave.’’

The income from the trust, as well as an additional bequest by the president’s grandson, was originally designated for the Adams Academy, a boys school, which opened in 1872 on land left by the president.

But the academy closed in 1907 after the income proved insufficient to support the school.

Over next five decades, the money from the trust was used to support the Quincy High School library and the president’s crypt in the temple built on the property.

Then, in 1953, at the city’s behest, the Supreme Judicial Court ruled the money could be used to support the Woodward School, the academy’s sister school, which opened in 1894 on land left by Adams.

At the time, the city valued the 22,000 square feet of property in downtown Quincy at more than $100,000 and said funds in the trust included nearly $5,000 in cash and more than $250,000 in investments, according to court records.

But over the next two decades, the city sold 15 parcels of the land. School officials argue the land was not sold at fair market value, resulting in a loss of millions of dollars in income. Several of the parcels were sold in the 1950s for $100 or less.

Three years ago, after years of seeking an accounting from the city, the school filed a complaint with the Supreme Judicial Court, seeking a full accounting of what happened to the money in the trust.

The case was referred to the Norfolk Probate and Family Court, where a judge ordered a special master to search for all records to document what happened to the trust funds, which are now overseen by the city treasurer, mayor, and three city councilors.

In his 31-page report to the court, James McLaughlin, a Natick lawyer who was appointed as the special master, said the city “has not maintained adequate books and records.’’

The report also cites a sworn statement by former city treasurer Warren Sproul, who said that by 2008, prior city treasurers “had not prepared even rudimentary accountings for the funds for several years.’’

In the conclusion of the report, which he filed in January, McLaughlin said that because of the city’s poor management of the records, it “must compensate the [school] for any unexplained income or expense and that said trust reimbursement amount should bear interest.’’

In interviews during a break in the trial this week, lawyers representing the school said they calculate lost income and interest to be as much as $10 million.

“The nub of this case is to determine how the city managed this historic trust,’’ said Sarah Kim, one of the attorneys representing the school.

School officials declined to comment.

Hines said the city has offered to settle the case.

But neither Kim nor other lawyers would discuss settlement discussions, and Hines declined to say how much the city has offered the school.

David Abel can be reached at dabel@globe.com.