First Nat. Bank of Toms River v. Levy

• Decision Date: 19 September 1941
• Docket Number: No. 201.,201.
• Parties: FIRST NAT. BANK OF TOMS RIVER v. LEVY et al.
• Court: New Jersey Supreme Court

21 A.2d 788

130 N.J.Eq. 220

FIRST NAT. BANK OF TOMS RIVER

v. LEVY et al.

No. 201.

Court of Errors and Appeals of New Jersey.

Sept. 19, 1941.

Syllabus by the Court.

1. Two of the three questions raised on the appeal examined and held to be res adjudicata by reason of First National Bank of Toms River v. Levy, 123 N.J.Eq. 21, 195 A. 820.

2. The remaining question, whether, on an abatement of legacies, the expense of administering a life annuity fund should be visited pro rata upon cash legacies, decided in the negative.

PARKER, Justice, dissenting.

Appeal from Court of Chancery.

Suit by the First National Bank of Toms River, New Jersey, as trustee under the last will and testament of Harriet Levy, deceased, against Saul Levy and Joseph Levy, executors of the last will and testament of Samuel Levy, deceased, and others and Birdie L. Jennings for a construction of the will of Harriet Levy, deceased. The vice chancellor, 123 N.J.Eq. 21, 195 A. 820, advised a decree. An application was thereafter made by Birdie L. Jennings to the vice chancellor to amend the decree. The vice chancellor, 126 N.J.Eq. 493, 9 A.2d 789, denied the application. From an order overruling exceptions of Birdie L. Jennings and confirming the master's report, Birdie L. Jennings appeals.

Order affirmed.

David A. Veeder, of Toms River, for appellant.

Robert A. Lederer, of Toms River, for Samuel L. Cohen and another.

CASE, Justice.

The issue arises out of the method pursued by the Court of Chancery in determining what rate of abatement should be applied to an annuity bequest to Birdie L. Jennings and to general bequests of cash sums to other legatees. Harriet Levy provided in her will (for the pertinent provisions of which see First National Bank of Toms River v. Levy, 123 N.J.Eq. 21, 195 A. 820) for an annuity to be paid to her husband, Samuel Levy, during his lifetime and an annuity to be paid to Birdie L. Jennings during the same lifetime. She also provided for the payment, after Mr. Levy's death (and it is upon this situation that the litigation rests), of "the sum of $2,000 annually, to be paid to her (Birdie L. Jennings) in equal monthly payments during the term of her natural life" and for the payment of the sum of $5,000 each to Rosa Cohen, Samuel L. Cohen and Milton M. Cohen. Other bequests were to take effect upon the death of Mrs. Jennings. A final decree was entered pursuant to the Chancery opinion, supra. The opinion held that the gifts to Mrs. Jennings and to the Cohens were general legacies which, in view of the deficiency of the assets, must abate proportionately and that reference should be made to a master to determine the value of the annuity and the amount of the abatement. The matter was referred to a master who, on May 17, 1939, reported that the bequest of $2,000 per annum to Mrs. Jennings, computed in the manner directed, was of the value of $30, 886.20, that that amount and each of the three legacies to the Cohens should abate at the rate of 7.65%, resulting in the reduction of each of the Cohen legacies to $4,617.50 and of the cash value of Mrs. Jennings' gift of income to $28,523.41; and that the last named amount of $28,523.41 must be kept intact for distribution at Mrs. Jennings' death in accordance with the provisions of the will. Application was then made on behalf of Mrs. Jennings to amend the final decree. The opinion of the Vice Chancellor denying that application is reported in 126 N.J.Eq. 493, 9 A.2d 789. Mrs. Jennings then filed exceptions to the report. The exceptions went to the same points as did the application to amend the final decree, wherefore the opinion, supra, reported in 126 N.J.Eq. 493, 9 A.2d 789, may be taken as the reasoning by the Vice Chancellor for overruling the exceptions and confirming the report. We find no separate memorandum with respect to the last mentioned order.

The exceptions taken to the report went to these propositions: first, that the master had computed the cash value of the annuity on the combined 4% annuity table in effect on that date whereas that rate of interest was in excess of any that could reasonably be expected and that a rate not in excess of 2 1/2% should have been used; second, that the abatement of 7.65% against the annuity to Jennings and the gifts to the Cohens resulted in a disproportionately large reduction of the Jennings gift for the reason that what was calculated as the present cash value of the annuity was not in fact to be paid to Jennings but was to be invested and the income therefrom paid to her; third, that the master failed to take into consideration the expense of the continued operation and administration of the Jennings trust fund.

The appeal is from the order overruling the exceptions and confirming the master's report.

The holding in the original Chancery decision upon which the final decree in the cause rested, 123 N.J.Eq. 21, 195 A. 820, was clearly that the gift to Mrs. Jennings was not of an annuity to be paid absolutely, to the exhaustion of the principal, but was of the net income of a fund and that in view of the...