McGill v. Trust Co. of N.J.

• Decision Date: 15 May 1923
• Citation: 121 A. 760
• Parties: McGILL et al. v. TRUST CO. OF NEW JERSEY et al.
• Court: New Jersey Court of Chancery

121 A. 760

McGILL et al.

v. TRUST CO. OF NEW JERSEY et al.

Court of Chancery of New Jersey.

May 15, 1923.

(Syllabus by the Court.)

Where provisions in a will for the disposition of a certain part of testator's estate are replaced by substitutionary provisions in a codicil, the invalidity of some or all of the codicil's provisions will not revive the provisions in the will, in the absence of direction by testator.

Where a will is amended by a codicil, the provisions of the will remain effective, except to the extent necessary for them to give way in order to give effect to the provisions of the codicil.

Where testator gives the income of a trust fund to his son for life, thereafter to any children the son leaves him surviving, and the corpus to such of those children as and when they attain 25 years of age, and in case none attains 25 then to testator's "heirs of blood," both of the alternate gifts of corpus contravene the rule against perpetuities and are void.

Where testator gives successive interests in a trust fund to several beneficiaries, and the ultimate gift of corpus is void under the rule against perpetuities, the prior gifts will not be invalid, if they do not themselves contravene the rule against perpetuities, unless they are so inseparably interwoven with the invalid gift as necessarily to fall with it, or unless merely incidental to and in aid of the main invalid gift.

Testator gave his residuary estate to a trustee to pay the income from one share to testator's son for life, and thereafter to use such income for the support and education of any children left by the son, exclusively, until they attained 25 years of age and then to give them the principal, but if none attained 25 to give the principal to testator's heirs of blood. The son and three infant children of the son survived testator. Held: (1) The alternate gifts of corpus are both void under the rule against perpetuities; (2) the equitable life estate to the son is good; (3) the son's children take a vested life estate, subject to their father's life estate, and subject to being divested in whole or in part by predeceasing their father or by the birth of other children; (4) the corpus passes by resulting trust to testator's heirs at law and next of kin, subject to the preceding life estates.

Contingent beneficiaries under a testamentary trust are entitled to the aid of equity to protect their contingent interests, if the contingency be not too remote.

(Additional Syllabus by Editorial Staff.)

Suit by John Dale McGill and others against the Trust Company of New Jersey and others. On bill to remove trustee and for an accounting. Decree rendered.

Smith, Mabon & Herr, of Hoboken, for complainants.

Besson, Alexander & Stevens, of Hoboken, and Fisk & Fisk, of Jersey City, for defendant Trust Co. of New Jersey.

Merritt Lane, of Newark, for counterclaimant Alexander T. McGill.

Osborne, Cornish & Scheck, of Newark, and Thomas Fleming Walsh, of New York City, for counterclaimant Eleanor A. Mayer.

BUCHANAN, V. C. Dr. John Dale McGill died November 28, 1912, leaving a will and a codicil thereto, both duly probated in Hudson county, under the provisions of which the Trust Company of New Jersey was made executor and also trustee. It assumed the duties of executor and trustee and has since been acting as such.

The testamentary design, as expressed by the codicil, was, broadly, that the income from the estate should be paid to his two children, Alexander and Eleanor (now Mrs. Mayer), during their lives, and at their deaths to their children, the corpus to go to such children of Alexander and Eleanor as should attain 25 years of age, upon their reaching that age. Eleanor has so far had no children; her brother has three, John, Alexander, and Charles, all infants of tender years. The last-mentioned was in esse at testator's death, though actually born subsequent thereto.

The original bill of complaint was filed by these three grandchildren of testator (by their mother, as next friend), alleging divers improper acts and omissions by the trustee resulting in loss to complainants, and praying the removal of the trustee and an accounting from it, together with reimbursement of the alleged losses. Generally speaking, the misconduct alleged consists of disbursements out of, or charges against, corpus, which complainants assert should not have been made at all, or should have been charged against income instead of corpus.

The trustee's answer denies some of the acts alleged, denies the impropriety of the charges against corpus, sets up matter in confession and avoidance, and pleads res adjudicata.

The trustee concedes, and, indeed, desires, that which all the other parties ask—that jurisdiction of the whole matter of the trust estate and its administration be taken over by this court from the orphans' court (where one or two accountings have been previously had). I am satisfied that this is a case where that should be done. Issues are raised which can, of course, be determined only in this court, and a consideration of the divers matters involved makes it evident that equity will best be served by taking over jurisdiction in toto.

Testator's daughter, Eleanor, one of the life tenants, by her answer, admits most of the allegations of fact, but denies that any charges were made against corpus which should have been made against income, and denies that complainants have any interest in the estate. She proceeds with a counterclaim setting up that her father's attempted testamentary disposition, so far as concerns those provisions dealing with the gifts subsequent to the life estates to his own two children (Alexander and Eleanor), is void; that neither her own possible children, nor Alexander's present or possible future children, nor any one else, has any valid interest under the will and codicil; that she and Alexander have vested estates in remainder in the corpus, subject only to their own respective life estates; and that hence they are entitled to have the whole estate paid over to them immediately; and prays an interpretation of the will and a decree accordingly. She also makes allegations against the trustee as to its conduct and prays relief in that behalf, somewhat similarly to complainants. These should have been set up, in form, as a separate cause of action or counterclaim, since clearly the cause of action against the trustee in this behalf is entirely separate and distinct from the cause of action to establish her right to a remainder in one-half the corpus. Chancery rule 59 (100 Atl. xi). Of. Steerman v. Snow (N. J. Ch.) 118 Atl. 696. The parties have all answered, however, and amendments in that behalf, if necessary, may be made, and will, for present purposes, be deemed to have been made.

Testator's son, Alexander, the other life tenant (and the father of complainants) filed an answer similar to that of his sister. He also filed a counterclaim against the trustee, Including in his allegations a charge that the trustee wrongfully refuses to pay him any income since the commencement of this suit. To the counterclaim of his sister he files an answer submitting to the jurisdiction and determination of the court.

The trustee, by its answer to the counterclaim of Alexander, admits the refusal to pay income to Alexander since the commencement of this suit, and claims in justification thereof the right so to do in order to be able to reimburse itself in the event that it be finally determined that it has made disbursements out of corpus which should have been made out of income.

I. Have complainants any interest in the trust esta

Testator was domiciled at his death (and for many years prior thereto) in New Jersey, and it is not controverted that the validity and effect if his testamentary provisions are to be determined by the law of this state.

There are only four ways in which complainants could have acquired an interest in testator's estate: (1) By direct testamentary gift; (2) by intestacy; (3) by resulting trust; (4) by assignment or transmission from some one taking under one of the three prior ways. No proof or claim is made that complainants have acquired any interest in this last manner; and they cannot have acquired anything by intestacy or resulting trust, since Alexander and Eleanor are and were at testator's death his only heirs at law and next of kin.

Examination of the will and codicil shows that there are no provisions under which gifts can be deemed to have been made to complainants, except that part of the will which disposes of the equitable interests in the residuary estate given to the trustee, and that part of the codicil which does likewise.

The provisions of the will purport to make a general and complete disposition of the equitable interests in the residuary estate to and among testator's descendants according to varying circumstances. The codicil purports to make such a general and complete disposition among testator's descendants; but the plan or scheme of the will in this behalf is entirely different from the plan or scheme of the codicil. The latter does not contain mere amendments to the former; it is an entire substitute therefor.

Where provisions of the codicil "conflict or differ from the provisions of said will, the said provisions of the codicil shall be effective and the provisions of the will which they change and abrogate shall be null and void and of no effect whatever"—this by testator's express direction in the codicil, and as well also by operation of law. It is entirely clear, upon examination and comparison, that the dispositions in the will were intended to be, and are, revoked by the dispositions in the codicil of the same subject-matter and among the same beneficiaries.

Being thus revoked, they are definitely and finally nonexistent as operative testamentary provisions, just as much so as if testator had physically destroyed them, no matter whether or not the codicil's...