Indus. Trust Co. v. Harrison, 1556.

• Decision Date: 10 July 1941
• Docket Number: No. 1556.,1556.
• Citation: 21 A.2d 254
• Parties: INDUSTRIAL TRUST CO. et al. v. HARRISON et al.
• Court: Rhode Island Supreme Court

21 A.2d 254

INDUSTRIAL TRUST CO. et al.

v. HARRISON et al.

No. 1556.

Supreme Court of Rhode Island.

July 10, 1941.

Case certified from Superior Court, Newport County.

Suit by the Industrial Trust Company and James T. Kaull, executors and trustees against Irene Dorothy Harrison and others for construction of a will and instructions. When the cause was ready for hearing, for final decree, it was certified to the Supreme Court for decision.

Decree in accordance with opinion.

Huddy & Moulton, F. Harlan Flint, and Edward Winslow Lincoln, all of Providence, for complainants.

Burdick, Corcoran & Peckham, William A. Peckham, and Alexander G. Teitz, all of Newport, for respondent Irene Dorothy Harrison.

Henry M. Boss, of Providence, guardian ad litem, pro se.

Harvey S. Reynolds, of Providence, guardian ad litem, pro se.

BAKER, Justice.

This is a bill in equity brought in the superior court for the construction of a will and instructions to trustees. When the cause was ready for hearing for final decree it was certified to this court for decision in accordance with General Laws 1938, chapter 545, § 7.

All necessary parties are before the court and have filed answers. A guardian ad litem was appointed by the superior court for minor respondents, and also a representative for persons not in being and for unascertained and contingent interests. Testimony was taken in the superior court. From the evidence it appeared that Herbert P. Harrison, late of Newport, died on April 4, 1938, leaving surviving him his widow, Irene Dorothy Harrison, and their two minor children, one eleven years of age and the other about five years of age at this time. His will, portions of which are before us for construction, was dated December 20, 1934. A codicil thereto, which is not involved in these proceedings, was executed by the testator on November 23, 1937. An error in numbering the paragraphs in the will is obviously merely typographical, and no question has been raised concerning it. This will and codicil were duly admitted to probate in Newport on May 16, 1938. Letters testamentary were thereupon issued to the complainants as executors of said will and they are now acting in that capacity. In that instrument the complainants were also named as trustees of certain trusts. On January 2, 1940, the testator's widow was duly appointed by the probate court of Newport as guardian of the persons and estates of the abovementioned two minor children.

By the fifth paragraph of his will the testator devised and bequeathed all the residue of his estate to the complainants in trust, giving them broad powers in connection with the management of the trust estate. The fifth paragraph then continued as follows:

"(e) (1) I direct my Trustees to pay over to my wife, Irene Dorothy Harrison, immediately after the probate of my will and the settlement of my estate, but in any event not later than one year after my decease, for and during the period of the next succeeding fifteen years, or until she remarries, the net income accruing from that portion of this trust estate which shall provide for my said wife an annual income of Twenty-Seven Hundred Dollars, provided that the policies referred to in clause Third hereof are in full force and effect, otherwise an annual income of Thirty-Six Hundred Dollars, from this trust estate payable in monthly or quarter-annual installments for and during the said period of fifteen years.

"(e) (2) Thereafter during the remainder of her natural life or until she remarries, I direct my Trustees, in like manner, to pay to my said wife the net income accruing from that portion of this trust estate which shall provide for my said wife an annual income of Thirty-Six Hundred Dollars payable monthly or quarter-annually as aforesaid.

"(e) (3) In the event that my said wife shall remarry then I direct my said Trustees, in like manner, to pay to my said wife, Irene Dorothy Harrison, only the net income accruing from that portion of this trust estate which shall provide for my said wife an annual income of Twelve Hundred Dollars, payable monthly or quarter-annually as aforesaid during the remainder of her natural life or until my said wife shall become unmarried or a widow. In the event that she does become unmarried or a widow before any one of my children shall have attained his twenty-second birthday, then the provisions of this sub-section (e) (3) shall no longer be operative and in full force and effect, but shall become void and of no effect. I direct my said Trustees to pay to my said wife in the event of her becoming unmarried or a widow on or before the twenty-second birthday of the first of our children to have attained this age, the income and/or principal as provided in (e) (1) or (e) (2) hereof in the same manner as if my said wife had never remarried.

"(c) (4) I further empower my Trustees to transfer and to pay over to my said wife such portion of the trust estate necessary to produce her annual income as provided in section (e) hereof, as, within their discretion, may be required from time to time to provide for any emergency of health (either of my said wife or of our children) or the expense of the education, including collegiate education, of our said children.

"(f) If at any time during the existence of this trust, there shall be any income from any portion of the principal of my trust estate not required for the benefit of my said wife in accordance with Section (e) of this Will, then I direct my said Trustees to apply such income for the benefit of the children of our marriage share and share alike, or to their lawful issue by representation. Upon the arrival of any child of our marriage at his or her twenty-second birthday I direct my said Trustees to divide the portion of my trust estate which is not required to provide for my said wife in accordance with Section (e) of this Will into equal shares among our children or their lawful issue by representation and thereafter to hold, transfer or pay over to each child upon his or her arrival at the age of twenty-two years an amount equal to one-third of his or her share thus created; to transfer and pay over to each child upon his or her arrival at the age of twenty-eight years, an amount equal to one-half of his or her remaining share, and to pay the balance of such share to him or her upon arrival at the age of thirty-two years unless, in the sole discretion of my said Trustees, but not before one of my said children shall have attained the age of twenty-two years, any child shall require an earlier distribution because of illness or unforeseen misfortune, or shall have exhibited ability to personally manage his or her business affairs to advantage or because of the marriage of any daughter, then my said Trustees may (if in their sound and uncontrolled discretion they deem it wise so to do) transfer and pay over all or any part of the share of such child to him or her before attaining any of the specified ages, provided, nevertheless, however, that one of our said children has attained his or her twenty-second birthday. In the event of the decease or remarriage of my said wife after any of my children shall have attained the age of twenty-two years, then I direct my said Trustees to distribute that portion of the corpus of this trust estate which had been required to provide for my said wife her income as set out in Section (e) equally among my children or their issue by representation, share and share alike in the same manner as provided in this Section (f), or forthwith upon attaining the age of thirty-two."

Because of certain demands formally made upon the complainants by the testator's widow in connection with his estate and with said trusts, and because of certain doubts which said complainants had concerning the proper construction to be placed upon portions of the will now before us, we are asked by the bill of complaint to answer twelve questions to which we shall refer more fully hereinafter.

In considering these questions, it is necessary for us to set out certain facts appearing in evidence. The testator's estate was appraised at $80,865.07, of which $14,000 was realty and $60,000 was a 40% interest held by him in a partnership of two members, of which he was one, located in Newport and known as the Sanitube Company, which manufactured and marketed a venereal prophylactic from a so-called secret formula. The other partner held the remaining interest of 60%. In accordance with the provisions of the partnership agreement, which provided for incorporation of the business upon the death of either partner, such business was incorporated in this state on September 12, 1938, under the same name, and all the assets of the partnership were transferred to the new corporation, which is now conducting the business in question.

The complainants, as executors of the testator's will, in exchange for his partnership interest, received 200 shares or 40% of the capital stock of said new corporation. According to a provision of its bylaws, the salaries of the officers of the corporation were fixed so as not to exceed certain reasonable amounts. These amounts could be increased only if the net income of the corporation for a calendar year exceeded $31,500, in which case the board of directors could then declare a dividend authorizing the payment of salary bonuses within certain limits. This portion of the by-laws could be amended only by an affirmative vote of two-thirds of the stock issued, outstanding, and entitled to vote.

All of the known debts of the estate have been paid. However, certain charges, including appraisers', executors' and attorneys' fees, which amounted altogether to approximately $10,000, have not been paid, and are now due. The realty above referred to was sold and, after the payment of expenses incident to that sale, miscellaneous administrative charges, the testator's debts, and the distribution of specific legacies, there...