Fidelity Union Trust Co. v. Potter, 158

• Decision Date: 19 May 1950
• Docket Number: No. 158,158
• Citation: 8 N.J.Super. 533,73 A.2d 625
• Parties: FIDELITY UNION TRUST CO. v. POTTER et al. /686.
• Court: New Jersey Superior Court

Page 533

8 N.J.Super. 533

73 A.2d 625

FIDELITY UNION TRUST CO. v. POTTER et al.

No. 158/686.

Superior Court of New Jersey

Chancery Division.

May 19, 1950.

Riker, Emery & Danzig, Newark (Clark Crane Vogel, Newark) for plaintiff.

Harry J. Stevens, Jr., Newark, for defendant, Edward Staley, guardian ad litem for Marilyn Potter Staley.

Harry Schaffer, Newark, for defendant, Edward Staley, guardian ad litem for Alan Andrews Staley and Paul Robert Staley.

FREUND, J.S.C.

The plaintiff, trustee under a trust agreement, filed the complaint herein for construction of certain provisions of the agreement and for instructions regarding the disposition of the trust property. The facts are these:

On April 23, 1926, Wilfrid C. Potter executed the trust agreement under which he allocated certain securities for the benefit of his two daughters, Doreen and Dorothy, who were then respectively fifteen and eleven years of age. The agreement was made irrevocable on November 20, 1931. The pertinent provisions of the agreement are as follows:

'1. To collect the dividends, interest, issue and profits therefrom and to invest and reinvest the same and to add such investments to the principal of the trust during the life of the Donor.

'2. After the death of the Donor to pay the net income from said trust in equal shares to Doreen Annette Potter and Dorothy Eleanor Potter, daughters of the Donor until they respectively attain the age of thirty years. If either or both of the daughters of the Donor shall be minors at the time of his death, the income of such minor or minors shall be expended by the Trustee for her or their education, maintenance and support during her or their minority.

'3. When the said Doreen Annette Potter reaches the age of thirty years to divide the principal of the trust into two equal parts and to pay to the said Doreen Annette Potter one-half of one of said parts for her own use and benefit and to pay the income from the remaining one-half of one of said parts to her until she reaches the age of thirty-five years, at which time the remaining one-half of one part shall be paid to her for her own use and benefit.

'When the said Dorothy Eleanor Potter reaches the age of thirty years to pay to her one-half of the other of said parts for her own use and benefit and to pay the income from the remaining one-half of one of said parts to her until she reaches the age of thirty-five years, at which time the remaining one-half of one part shall be paid to her for her own use and benefit.

'4. After the death of the Donor, if either of the said daughters shall die before receiving all of the principal of the trust to which such daughter is entitled, the principal still remaining in said trust shall be paid over to and distributed among her issue, per stirpes; and if there shall be no issue, the entire principal of the then remaining trust shall be held for the surviving daughter on the same terms and conditions herein set forth.

'5. After the death of the Donor and after both of his said daughters shall have died and there shall be no issue of either of them, the entire principal of the trust then remaining shall then be paid over to and distributed among the other children of the Donor. The issue of any deceased child to take the share the parent would have taken if living.'

Mr. Potter died on June 12, 1947, leaving a will under which his widow, Minnie Gill Potter, a defendant in this action, is the sole beneficiary and executrix. His elder daughter, Doreen, had married Edward Staley in 1940. Shortly thereafter she formally adopted her husband's two sons, Alan Andrews Staley and Paul Robert Staley, and he formally adopted her daughter by a prior marriage, Marilyn Potter Cross Staley. Mrs. Staley died on May 13, 1943, at the age of thirty-one, predeceasing her father. She was survived by her natural daughter, Marilyn, and her adopted sons, Alan and Paul.

Two questions arise: first, the right or interest of Doreen in the one-quarter share of the corpus of the trust which became payable upon her attaining the age of thirty years and the death of the donor, and, second, whether the adopted children have any interest in the fund.

In construing the trust agreement, of paramount importance is the ascertainment of the intention of the donor. It is clear from the agreement that the donor's object was to provide financial security for his daughters after his death and that it was his intention that no payments either of income or principal be made until after his death. The income earned from the investment of principal was, during his lifetime, to be invested and reinvested and added to the principal of the trust.

The trust property constituted a gift. The attorneys for the plaintiff trustee argue that the gift was vested, subject to divestment and gift over, while the attorney for the natural child contends that it was a gift on condition which failed. Here, the result would be the same under either contention. The attorney for the adopted children contends that the fund under consideration vested unconditionally in the donee, Doreen, when she attained the age of thirty years and that the sum is, therefore, payable to her estate. The donor thrice expressed his intention that only after his death was payment of interest or distribution of principal to be made, Paragraph 2, 4 and 5 of the trust instrument. Income was to be paid to each daughter on the whole of her share until the attainment of age thirty, when one-half on her share was to be paid to her and the trustee was to retain the remaining one-half, paying the income therefrom to her until she attained the age of thirty-five, when the remaining principal was to be paid. The trust agreement provided for gift over in the event of the death of the donee prior to the receipt of her share, which feature will be hereinafter referred to.

Obviously, the intention of the donor was to make a gift to each daughter of an equal portion of the trust corpus with the time of payment postponed until after his death and the attainment of the specified ages. The time of payment of principal...