Hepburn v. Winthrop

• Decision Date: 16 March 1936
• Docket Number: No. 6528.,6528.
• Citation: 65 App. DC 309,83 F.2d 566
• Parties: HEPBURN et al. v. WINTHROP et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

65 App. DC 309, 83 F.2d 566 (1936)

HEPBURN et al. v. WINTHROP et al.

No. 6528.

United States Court of Appeals for the District of Columbia.

Argued February 4, 1936.

Decided March 16, 1936.

Swagar Sherley, F. DeC. Faust, and Francis L. Neubeck, all of Washington, D. C., for appellants.

Edward Stafford, Arthur Hellen, Charles H. Bradley, Morgan H. Beach, and John S. Flannery, all of Washington, D. C., for appellees.

Before MARTIN, C. J., and ROBB, GRONER, and STEPHENS, JJ.

GRONER, Associate Justice.

The appeal involves the interpretation of the will of Levi P. Morton, formerly Governor of New York and Vice President of the United States. Two questions are involved:

First, to what portion of the property held in trust for the benefit of Mary Morton, a daughter of Governor Morton, did the power of appointment conferred upon her by the will extend?

Second, should the federal estate tax paid by the executors of Governor Morton be apportioned between the realty and the personalty?

The will of Governor Morton was executed June 29, 1910, while he was a resident of the state of New York. Subsequently he became a resident of the District of Columbia and executed three codicils to his will; the second codicil, hereinafter set out in full, being executed on June 14, 1911. He died a resident of the District of Columbia on May 16, 1920.

At the time of making his will, his family consisted of his wife, Anna, and four daughters, Edith Eustis, Alice Rutherfurd, Helen Morton, and Mary Morton. Alice Rutherfurd died June 19, 1917, leaving surviving her six children, one of whom died without issue in the lifetime of Governor Morton. Mrs. Morton died August 14, 1918, so that upon Governor Morton's death there were surviving him three daughters, Mrs. Eustis, Helen Morton, and Mary Morton, and five children of his deceased daughter, Alice Rutherfurd. The gross estate consisted of personalty of a value of $8,000,000 and of realty, chiefly in New York, of a value of something under $3,000,000. All administration and other expenses incurred by the executors, and the federal estate tax of $1,736,886.47, were by them paid out of the personalty.

In 1922 the executors filed a bill in the Supreme Court of the District of Columbia for a construction of certain parts of the will and codicils. One of the questions submitted to the court was whether the portion of the residuary estate going to the Rutherfurd heirs should be paid over by the executors to the trustees and by them paid over to the guardian of the heirs, or whether it should be paid directly by the executors to the guardian of the heirs. Judge Hitz, then sitting in the Supreme Court of the District, decreed that the residuary estate be divided into four shares, and that one of the shares should be delivered to the trustees of Governor Morton's estate for the Rutherfurd children.

The question involved here, namely, whether the four shares into which the residuary estate was directed to be divided were "original shares," or original shares plus accretions, was not raised or passed upon at that time. The executors then turned over to the trustees all of the residuary estate in their hands, and the trustees divided it into four equal shares and set up four separate trusts bearing the names of the three daughters, Edith Eustis, Helen Morton, and Mary Morton, and delivered the fourth share, designated "the Alice Rutherfurd share" to the guardian of Mrs. Rutherfurd's children.

Mary Morton died on April 20, 1932, unmarried, but leaving two adopted minor children, Lewis Peter Morton and Miriam Morton, aged 9 and 3 years, respectively. She left a will disposing of her own estate, and by item 8 thereof exercised in part the power of appointment given her under her father's will for the benefit of her two adopted children.

Thereafter this suit was brought in part to determine whether the several trusts established by Governor Morton's will constituted the whole original shares of the daughters or whether four-fifths of each trust should be considered the original share and one-fifth of each trust considered an accretion arising from the distribution of the share that Governor Morton's widow would have taken for life had she survived her husband.

The first four paragraphs of Governor Morton's will concern bequests to his wife and to others, and have no relation to the question under consideration. The fifth, or residuary clause, and the second codicil are set out in full as follows:

"Fifth. All the rest, residue and remainder of my estate, real, personal and mixed, of whatsoever sort or kind the same may be and wheresoever the same may be situated, of which at the time of my decease I may be seized or possessed, or in or to which I may then have any right, title, estate or interest, I give, devise and bequeath to my said executor and trustee hereinbefore named; to have and to hold the same in trust, nevertheless, and for and upon the several uses and purposes hereinafter declared. To enter upon and take possession of the same, and to divide the same into as many equal parts or shares as will be equal in number to my wife and children whom I may leave me surviving, and children of mine deceased at the time of my death who shall have left lawful issue me surviving and to designate one of the said parts or shares by the name of my wife, and one other of said parts or shares by the name of each of my said children then surviving, and one other of said parts or shares by the name of each child of mine then deceased leaving issue then surviving, and to have and to hold that one of the said equal parts or shares that is designated by the name of my wife during the lifetime of my wife, and to receive the rents, income and profits thereof, and to pay and apply the net rents, income and profits of the same to the sole and separate use of my wife for and during her life, and upon her death to divide and distribute the capital of said part or share in equal proportions, but per stirpes and not per capita, among my children then surviving and the lawful issue her surviving of any of my children who may then be deceased leaving such issue then surviving, such issue taking collectively the same share as a surviving child, the portion so coming to my children then surviving to be added to and form part of the shares designated by the names of said children respectively under the foregoing provisions of this my will, and to be held by my said trustee as part of said several shares during the lifetime of said children respectively, and upon their deaths respectively divided among their issue, or in default of issue among my surviving children and the lawful issue of deceased children as hereinafter provided in respect to the shares set aside for them respectively, the portion of the said share designated by the name of my said wife which would go to the descendants of any child of mine who may have died before or after my death leaving issue her surviving, to be transferred, conveyed and paid in equal shares to such issue respectively, per stirpes and not per capita; and to have and to hold the other said equal parts or shares respectively which are designated by the name of my said children whom I may leave me surviving each during the lifetime of the child whose name it bears, and to receive the rents, income and profits thereof, and to apply the net rents, income and profits of said equal parts or shares respectively to the sole and separate use of the respective child whose name it bears, for and during the lifetime of said child, and thereafter during the lifetime of my said wife if she shall survive said child to hold in trust two-thirds of said share and subject to the payment of a proportionate part of the payments to and for my wife hereinafter provided for to apply the net income thereof to the use of the lawful issue of such child, if any, in equal portions, per stirpes and not per capita, and upon the death of any such child or upon the death of my said wife, if she shall survive such child, to convey, transfer and pay over such equal part or share theretofore held in trust for such child, or said two-thirds thereof, as the case may be, in equal portions to and among the lawful issue of said child then living per stirpes and not per capita, and in default of such issue then living, then upon the death of such child or upon the death of my said wife, if she shall survive such child, to pay over, transfer and convey the said equal part or share or said two-thirds thereof in equal portions to and among my children then surviving, and the lawful issue of deceased children who may have died leaving such issue then surviving per stirpes and not per capita, to have and to hold the same to my said children or their issue, as the case may be, their heirs and assigns forever, provided, however, that I authorize either of my said children who shall survive me, by her last will and testament to direct and appoint that the remaining one-third part of the share of such child in my residuary estate or any part of said third shall remain in trust in the hands of my executor during the life or until the remarriage of any husband who may survive such child as her husband, and that the net income thereof shall be paid or applied to the use of such husband during the residue of his life or until his remarriage, and subject to such provision, if any, for her said husband, and subject to two-thirds of said share being held in trust as aforesaid during my wife's life, I authorize each of my said children who may survive me by her last will and testament to give, dispose of and distribute one-half of her share of said residue, of which half the amount, if any, so disposed of for the benefit of her husband shall be deemed a part, to and among such person or persons, including such husband, and in such proportions as she shall by her said last will and testament designate and appoint, but the power hereby...