Greenwich Trust Co. v. Converse

• Decision Date: 17 November 1923
• Citation: 122 A. 916,100 Conn. 15
• Court: Connecticut Supreme Court
• Parties: GREENWICH TRUST CO. v. CONVERSE ET AL.

122 A. 916

100 Conn. 15

GREENWICH TRUST CO. v. CONVERSE ET AL.

Supreme Court of Errors of Connecticut.

November 17, 1923

Case Reserved from Superior Court, Fairfield County; William M Maltbie, Judge.

Suit by the Greenwich Trust Company, trustee, against Edmund C Converse and others. Case reserved for advice of Supreme Court of Errors. Questions answered.

On September 3, 1912, Jessie M. Converse of Greenwich died leaving a will, of which the fifth paragraph provided in part as follows:

" I give and bequeath unto my executor hereinafter named whom I constitute as trustee for the purpose, the sum of one hundred thousand dollars ($100,000) in trust to hold during the lifetime of my son Edmund C Converse, Jr. and to manage, invest and reinvest the same in such manner as my said executor shall deem best, with full power to my executor to continue any investments that I may leave in the form in which I may leave the same, and to change or vary the same from time to time, and to make any investments that he may deem proper, whether the same be authorized by law or not, and to receive the income and revenue thereof, and to pay over the net income thereof during the lifetime of my said son to and for the support and maintenance of himself and of his wife and child or children, in such proportion and in such manner as my said executor may deem for the best interest of my son and his said family, with full power to my executor in his absolute discretion, to pay over and advance from time to time any part, or to pay over at any time all of the principal of said trust fund to or for the benefit of my said son or his wife and children, and upon the death of my said son, if he leave a wife surviving, to continue to hold such part of the principal of said trust fund as may be then in his hands, and to invest and reinvest the same and to receive the income and revenue thereof, and to pay over the said income unto the wife of my said son during her lifetime or until she remarry; and upon her death, or upon her remarriage or if she do not survive my son then upon his death, to distribute such part of the principal of said trust fund as may be then in his hands to and among the issue of my said son in equal shares per stirpes and not per capita."

Wheeler C.J., dissenting.

Under will creating trust for benefit of testatrix's son, directing trustee to pay income to son for the support of the son and wife and children, and empowering him in his discretion to make payments out of principal for the benefit of the " son or his wife and children," the trustee was not empowered to make payments out of principal to the son's divorced wife, married to other man, but the right to exercise such power as to son's " wife" could be exercised only as to his present wife, to whom he had been married following the divorce.

The executor thereafter named in the will was Edmund C. Converse, the husband of the testatrix. He acted as executor and trustee until his death, April 4, 1921, when the plaintiff was appointed as successor trustee. During his lifetime Mr. Converse expended the entire income from the trust fund for the support of Edmund and his family, and at the request of Edmund he advanced $10,000 of the principal in connection with a cattle ranch conducted by Edmund in California.

The plaintiff since its appointment and qualification as successor trustee has continued to pay the entire net income of the trust fund to or for the support of Edmund and his family, but has made no advances out of the principal. Edmund has requested the plaintiff to make further advances out of the principal in connection with the same cattle ranch, and the trustee has investigated the facts, and is satisfied to make advances for that purpose, but has been advised by counsel that a question may exist as to whether the discretion to make such advances survives to a successor trustee appointed by a court of probate.

All parties interested have appeared and answered, and the questions reserved for the advice of this court are as follows:

" I. Whether the discretion vested in the original trustee relative to the payment of principal and/or income from said trust survived his death, and can now be exercised, by the plaintiff as substituted trustee.

II. Can the plaintiff make payments of principal and/or income to the defendants, Judith A. Salisbury and Estelle Converse, and if so, under what circumstances.

III. What rights, privileges, powers, and duties with reference to the payment of the principal and income of said trust has the plaintiff as substituted trustee?"

At the time of Mrs. Converse's death, her son's family comprised himself, his wife, Judith A. Converse, and two children, Edmund C. Converse, III, and Rogers Converse. Since then Judith A. Converse has been divorced from Edmund and has remarried, her present name being Judith A. Salisbury. Edmund has also remarried, his present wife being Estelle Converse.

Charles F. Maguire, of Stamford, for plaintiff.

Walter M. Anderson, of Greenwich, for defendants Edmund C. Converse, III, Rogers Converse, and Judith A. Salisbury.

Ralph Royall, of New York City, for defendants Edmund C. Converse and Estelle Converse.

BEACH, J. (after stating the facts as above).

The answers to be given to all of the questions reserved depend upon whether, and to what extent, the discretionary powers conferred on the executor and original trustee survive to the successor trustee appointed by the court of probate.

It is not to be expected that the authorities on the subject of the survival of discretionary powers conferred on testamentary trustees should furnish an inflexible rule as to what powers will or will not survive to a successor trustee in the absence of an express grant of the original power to the successors in trust; even though a uniform rule of interpretation had been applied in all cases. This has not been done. While it has been generally agreed that when the power is a matter of personal confidence in the trustee, it will not survive, unless the testator so direct; no single test for determining whether or not the power is a matter of personal confidence has been universally accepted and adhered to. The older and more rigid test apparently followed the distinction between the general and special powers of trustees, and assumed that every grant of discretionary power was a matter of personal confidence. 2 Perry on Trusts and Trustees (6th Ed.) § 496 et seq.

But most of the later cases, cited by Perry in the note to section 503, are inclined to give effect, when possible, to discretionary powers plainly intended by the testator for the benefit and protection of the beneficiaries of the trust.

Thus in Sells v. Delgado, 186 Mass. 25, 70 N.E. 1036, the trust was to pay income to children, and further that, as each child attained the age of twenty-five years, the two trustees named or the survivor of them--

" may, if in their or his discretion they or he deem it prudent and advantageous, pay over and convey to the one reaching that age or her respective share, to vest in him or her absolutely and forever, and my said trustees or the survivor of them shall be the sole judges, and I leave it entirely to their or his discretion to decide whether or not it will be prudent and advantageous for any of my children on his or her reaching that age to receive the principal of his or her share."

Neither of the two trustees named qualified, and the question was whether the power to decide whether or not any child reaching the age of 25 years should receive the principal of his or her share could be exercised by a substitute trustee appointed by a court. Although the words conferring the discretion would apparently, if taken alone, import that the original appointees or the survivor of them were the sole judges authorized to decide the question, the court, looking at the general intent of the testatrix, construed the entire trust provision as warranting the inference that she did not intend to restrict the exercise of the power to the named trustees; observing that a different construction would cause a serious impairment of the full design of the testatrix, and leave it imperfectly executed.

As applied to a discretionary power to make payments out of principal, the doctrine now in force in this state and the course of its development may best be understood by a short review of the cases. In Security Co. v. Snow, 70 Conn. 288, 39 A. 153, 66 Am.St.Rep. 107, the testator left the fund to his wife " in trust, however, to be invested and managed by my said wife, and to be paid and delivered and conveyed by my said wife to my said daughter from time to time during her natural life as my said wife may deem for the interest and welfare of my said daughter," and any part " thereof which shall not be paid, delivered and conveyed as aforesaid to my said daughter during her natural life shall at her decease be paid, delivered and conveyed to her lawful heirs."

The appointee died before turning over any considerable portion of the trust fund to the cestui que trust, and the plaintiff, having been appointed trustee in her stead by the court of probate, asked the superior court whether it could exercise the discretionary power conferred on the original trustee. Upon a reservation for the advice of this court, we held that the discretionary powers accorded to the wife were purely personal and terminated at her death; also that the gift over to the daughter's heirs was void under the statute in force at the testator's death. The result was that the entire trust provision became incapable of execution. It happened, however, that the trust thus defeated was established by a codicil revoking an absolute gift of the same...