Lembeck v. Lembeck

• Decision Date: 19 March 1929
• Citation: 145 A. 327
• Parties: LEMBECK et al. v. LEMBECK et al.
• Court: New Jersey Court of Chancery

145 A. 327

LEMBECK et al.

v. LEMBECK et al.

Court of Chancery of New Jersey.

March 19, 1929.

Bill by Kate I. Lembeck and others against Gustav W. Lembeck and others for dissolution of a trust and distribution of assets. Bill dismissed.

Hudspeth & Demarest, of Jersey City, for complainants.

Merritt Lane, of Newark, for Gustav W. Lembeck.

Eugene Blankenhorn, of Newark, for Albert B. Lembeck and Rose Lembeck, administrators of estate of Victor Lembeck.

Albert C. Wall and J. F. Anderson, both of Jersey City, for Otto A. Lembeck and Ida L. Bowen.

CHURCH, Vice Chancellor. In this case complainant filed a bill for the dissolution of a trust created under the will of Henry Lembeck, and a distribution of the assets. The clauses of the will in dispute are the third and the eighteenth. The third clause reads as follows:

"It is my will and I do order that unless my executors hereinafter named shall consider it advisable, they need not sell or divide my stock in the Lembeck & Betz Eagle Brewing Company until twenty five (25) years have elapsed after my decease. And in the meanwhile such stock shall be held by my executors, the survivors or survivor of them hereinafter named or those appointed in pursuance of the direction of my will, and the dividends which may accrue thereon shall be divided among the same persons in the same manner and proportion and for the same purpose as my residuary estate is directed to be divided under my said will, and when sold or disposed of all the proceeds thereof or after twenty five (25) years, said stock or the proceeds thereof shall become and constitute a part of my residuary estate and be disposed of as such is directed to be disposed of under my will."

The eighteenth clause is as follows:

"I give, devise and bequeath all the rest, residue and remainder of my estate both real personal whatsoever and wheresoever, of which I may die seized, possessed of or in any way entitled, to my executors hereinafter named, the survivors or survivor of them in trust for division among my children as follows: To my daughter, Mary E. Harms, one share; to my executors in trust for my daughter, Katie Lembeck, one share to pay the income thereof at their discretion to my daughter, Katie Lembeck, during the term of her natural life, and after her death same to revert to my residuary estate. To the children of my son, Harry F. Lembeck, one share.

"To my executors in trust for my son Albert B. Lembeck one share to pay the income thereof at their discretion to my son, Albert B. Lembeck, during the term of his natural life, and after his death I bequeath the same to his child or children now living, share and share alike.

"To my executors in trust for my son, Victor H. Lembeck, one share to pay at their discretion the income thereof to him during the term of his natural life, and after his death I give and devise the said share, so devised to his brothers and sisters, also brothers and sister of the half blood in equal parts the issue of any one of them who may die leaving issue, them surviving to take the parents' share per stirpes.

"To my son, Gustav W. Lembeck, one share.

"To my daughter, Ida Bowen, nee Lembeck, one share.

"To my son, Otto A. Lembeck, one share, making in all a division of eight shares."

It thus appears that complainant, Katherine Lembeck has a life interest under the eighteenth clause above quoted.

Testator died July 26. 1904. He owned at the time 2,636 shares of Lembeck & Betz Eagle Brewing Company which are affected by the clauses of the will above quoted. The total stock outstanding was 6,400 shares; so that the estate owned less than one-half.

After the National Prohibition Amendment went into effect in 1919, the company abandoned the brewing business and became the New Jersey Refrigerating Company. It is now in process of dissolution by receivers appointed by me.

Complainant challenges the management of the company by the directors for a period of twenty years; that it retained profits for the purpose of expanding its business and enlarging its plant; it purchased saloon fixtures for customers and took chattel mortgages as security; it loaned money to customers on real estate, and paid customers' license fees; it purchased real estate and rented it to customers; it assisted customers to purchase realty and took back mortgages for advances to secure desirable saloon sites. It is not shown that any of these acts were improper or outside the usual course of procedure in such a business.

Counsel for complainant asserts that the bill alleges fraud. If it does, the allegations were not sustained at the hearing, and I shall find as a fact that there was no fraud.

In substance, this bill seeks to have the court review the entire business of a corporation during the past twenty years and to find that more dividends might have been paid than were paid. It is apparent that Lembeck, the testator, meant to give the life tenants dividends and only dividends. If the stock were sold or...