Industrial Nat. Bank of R. I. v. Barrett

• Decision Date: 23 June 1966
• Docket Number: No. 1-78,1-78
• Citation: 101 R.I. 89,220 A.2d 517
• Parties: INDUSTRIAL NATIONAL BANK OF RHODE ISLAND et al., Executors, v. Evelyn M. BARRETT et al. C. Q.
• Court: Rhode Island Supreme Court

Page 517

220 A.2d 517

101 R.I. 89

INDUSTRIAL NATIONAL BANK OF RHODE ISLAND et al., Executors, v. Evelyn M. BARRETT et al.

C. Q. No. 1-78.

Supreme Court of Rhode Island.

June 23, 1966.

Sheffield & Harvey, W. Ward Harvey, Richard B. Sheffield, Newport, for complainants

Moore, Virgadamo, Boyle & Lynch, Jeremiah C. Lynch, Jr., Newport, for respondents Evelyn M. Barrett and Aline C. Lathan.

Corcoran, Peckham & Hayes, Edward B. Corcoran, Newport, for guardian ad litem.

OPINION

PAOLINO, Justice.

This is a bill in equity brought by the Industrial National Bank of Rhode Island, executor and trustee, and Aline C. Lathan, co-executor, under the will of Mary M. Tilley, deceased, for construction of the latter's will and for instructions to the executors and trustee thereunder. The adult respondents have filed an answer to the bill and all minor and contingent interests and those of persons unascertainable or not in being are represented by a guardian ad litem appointed for that purpose by the court. The guardian has filed an answer neither admitting nor denying the bill's allegations and submitting the interests of his respective wards to the court's care and protection.

After the cause was heard in superior court and was ready for hearing on the final decree it was certified to this court for our determination under G.L.1956, § 9-24-28.

There are no factual issues in dispute, all the allegations of fact contained in the bill in equity and the answers of respondents having been admitted by the parties either in the pleadings or at the certification hearing. In addition the parties have filed an agreed statement of facts concerning the value of stock given by the testatrix to respondents Lathan and Barrett and includible in her gross estate for federal estate tax purposes, the value of the marital trust created under Arthur H. Tilley's will, and the value of Mrs. Tilley's gross estate and her taxable estate.

It appears that Arthur H. Tilley, husband of the deceased, died January 28, 1959. Under the eighth clause of his will, admitted to probate February 5, 1959, he devised the property, which qualified for the full marital deduction, to the Industrial National Bank, in trust, with directions to pay the net income at least quarterly to his wife for life and such amounts of the corpus annually or at more frequent intervals as she should in writing request, for her comfort and support, and without being accountable to any court or remainderman therefor. He also conferred upon her a general testamentary power of appointment over the corpus remaining at her death.

Mary M. Tilley died October 28, 1963. Under the fourth clause of her will, admitted to probate November 7, 1963, she exercised her general testamentary power of appointment to the Industrial National Bank, in trust 'to pay over the net income thereof to and for the use and benefit of my granddaughters, Aline C. Lathan and Evelyn M. Barrett * * * equally for and during the term of their natural lives, and upon the death of either of them, to pay over said net income to her issue, per stirpes and not per capita.' The trustee was also given uncontrolled discretion to pay over to either of said grandchildren, or the issue of any deceased grandchild, for specific purposes, portions of the principal. Finally, the testatrix provided the trust would terminate 'twenty one (21) years after the death of the last survivor of the younger grandchild or issue of either grandchild of mine living at my death * * *.'

On the date of Arthur H. Tilley's death, Aline C. Lathan and Evelyn M. Barrett and one great-grandchild were in being. On the date of Mary M. Tilley's death the aforesaid respondents plus six additional great-grandchildren were in being. One great-grandchild was born subsequent to her death.

At various times within the three-year period preceding her death, Mrs. Tilley made gifts of stock to her respondent granddaughters which were included in her estate for federal estate tax purposes at a gross valuation of $92,995.50. The corpus of the marital trust created under clause eighth of Arthur H. Tilley's will was reported at a value of $65,610.51. The total valuation of her probate estate exclusive of the trust which she appointed was $25,666.18 and the total charges against her estate, including debts, administration expenses, state and federal inheritance and estate taxes total $28,188.44.

The guardian ad litem has filed a brief substantially in accord with that of complainants. Consequently, we shall consider it as part of same when referring to the arguments of the parties.

Under the certification decree we are presented with two principal issues for our determination. The first, raised by the bill in equity, concerns the apportionment of taxes and expenses of administration between the testatrix' estate and the trust created under the fourth clause of her will. The second, raised by the answer of respondents Barrett and Lathan, questions whether the testatrix' exercise of the power of appointment under her husband's will violates the rule against perpetuities and, if so, what persons, and to what extent, are now entitled to share the property.

Since a solution to the first issue is necessarily dependent on a determination of the second, we shall consider the perpetuity problem at the outset.

The complainants contend that Mrs. Tilley's exercise of the power of appointment created under her husband's will does not violate the rule against perpetuities on two alternative grounds.

First, they say, in clause eighth of his will, Arthur H. Tilley manifested a clear intent to bestow upon his wife an unlimited power to consume the trust principal giving her in effect a general power of appointment exercisable during her lifetime. In support of this contention, complainants point to the broad discretionary power bestowed on Mrs. Tilley to invade the principal for her comfort and support which, coupled with her general testamentary power of appointment, they argue, created an absolute interest although not actually designated as such. In this connection complainants cite cases which hold, in construing language similar to that in clause eighth, that actual 'need' of a beneficiary is not a measure of 'comfort' and 'support'-see In the Matter of Woollard's Will, 295 N.Y. 390, 68 N.E.2d 181; In re Walsh's Will, 193 Misc. 785, 85 N.Y.S.2d 207, and New Jersey Title Guarantee & Trust Co. v. Dailey, 123 N.J.Eq. 205, 196 A. 703-and distinguish those which require the beneficiary to show 'reasonableness,' 'good faith,' or that the beneficiary's other assets are factors to be considered as being premised solely on the principle that a life tenant owes other beneficiaries of the trust or other remaindermen, neither present here, a duty not to consume the principal unnecessarily. See 33 Am.Jur., Life Estates, Remainders, etc., §§ 242, 243, pp. 728, 729.

Consequently complainants urge the perpetuities period should be computed from the date of Mrs. Tilley's death when she exercised the power.

The cardinal principle in the construction of wills is that the intention of the testator if definitely ascertainable and lawful must govern. Rhode Island Hospital Trust Co. v. Bateman, 93 R.I. 116, 172 A.2d 84; Industrial Trust Co. v. Saunders, 71 R.I. 94, 42 A.2d 492.

Clause eighth directs the Industrial National Bank to hold certain property qualifying for the marital deduction:

'* * * in trust, nevertheless, * * * to pay over the net income thereof, at least quarterly, to my wife, Mary M. Tilley, for and during her life, and I authorize and direct my said Trustee, annually or at more frequent intervals, whenever my said wife shall in writing so direct, to pay over to her, for her own comfort and support, such part of the principal as she shall direct, and without being accountable to any court or remainderman therefor. Upon the death of my said wife, I confer upon her the power by her Will to appoint the entire corpus of the trust remaining at her death, free of trust, which power is exercisable in favor of the estate of my said wife, or in favor of such other distributees, and in such amounts and upon such terms, trusts, powers and limitations as she shall appoint in her Will.' (Italics ours.)

The problem before us is to ascertain the extent of the gift the testator intended to bestow upon his wife. In cases such as these the extent and nature of a restriction depends upon the intent of the testator and accordingly, since different combinations of language and circumstances are endless, each will must be construed separately, rules of construction being guides only in a general sense.

We note first that instead of giving the property outright to his widow, the decedent chose to impress it with a trust. The provisions of that trust reflect his intent to make available to her something more than a life estate but something less than a fee. As we read clause eighth with reference to the provision for principal payments we find no language to indicate the trustee was invested with discretion to make them in consideration of the widow's actual needs or other assets, but rather that the discretion to determine the dollar amount payable rested solely in Mrs. Tilley.

Nevertheless the power must be read in reference to the matter for which it was given. In this context Mrs. Tilley did not have a general disposing power over the corpus because, in good-faith compliance with the settlor's plan of disposition, she could withdraw only those sums which she needed for her comfort and support.

However, complainants argue, since neither the beneficiary nor the trustee was accountable to any court or remainderman in regard to these payments, there was no review for her withdrawals, which, in reality, left her in complete control of the fund.

We do not agree. The pertinent language directs the trustee 'annually or at more frequent intervals, whenever my said wife shall in writing...