Moskowitz v. Federman
| Decision Date | 21 April 1943 |
| Citation | 72 Ohio App. 149,51 N.E.2d 48 |
| Parties | MOSKOWITZ et al. v. FEDERMAN et al. (two cases). |
| Court | Ohio Court of Appeals |
Syllabus by the Court.
1. A will in which the testator bequeaths the residue of his estate to trustees with 'full, sole and uncontrolled discretion as to the distribution and disposition' thereof, with power to 'determine the persons, charitable organizations, to whom distributions shall be made, the times for distribution, and the amounts to be distributed to them or any of them,' and in the same item but under another paragraph declares his desire to be that 'distributions of the residue may be made among my next of kin, meaning thereby, my brothers and sisters, their children and grandchildren,' but that such desire shall not 'control the discretion' of the trustees, creates a definite class so far as the 'persons' are concerned--i. e., brothers, sisters, their children and grandchildren, and as such they may be the beneficiaries of a testamentary trust.
2. A trust may be created for the benefit of members of a definite class of persons although by the terms of the trust the trustees in their discretion may exclude some or all members of the class altogether, and may select which members of the class shall take and in what amounts.
3. The term 'charitable organizations' denotes a definite, ascertainable class; and where such words are used without further description, an intended trust does not fail as to such organizations for lack of a definite ascertainable beneficiary.
4. An intended trust fails as to members of a definite class of persons not ascertainable within the rule against perpetuities.
5. A testamentary trust, created for the distribution of the assets of an estate to members of a definite class of persons, or to charitable organizations, or to both, some or none--all within the uncontrolled discretion of trustees--and which provides for a complete distribution of the entire trust estate at the end of twenty years from the time of the testator's death, may be enforced by any member of a class named as possible beneficiaries, and even though he, she or it has not been specifically designated to take.
6. A condition in a will which provides that 'In the event that any beneficiary named herein, or any one of my next of kin, shall begin or maintain any proceeding to challenge or deny any of the provisions of this will, the legacy herein made to him or her shall lapse,' does not preclude a beneficiary or next of kin from taking who, by a pleading and argument, creates an issue by denying the validity of the trust provisions in an action for a declaratory judgment construing the will.
Horwitz, Kiefer & Harmel and Aaron J. Frank, all of Cleveland, and Buckingham, Doolittle & Thomas, of Akron, for appellants.
William F. Marsteller, of Akron, for appellees Bertha F. Moskowitz and Sanford Schwartz.
Smoyer, Kennedy, Smoyer & Vogel, of Akron, for appellee Charles E. Federman, as an individual.
Slabaugh, Seiberling, Guinther & Pflueger, of Akron, for appellees Charles E. Federman and Clarence Rausch as executors and trustees.
Leo G. Federman, a resident of Akron, Ohio, executed an instrument purporting to be his last will and testament. Several months later--on the 8th day of August, 1941--he, a widower and without children, died. His estate approximated one-half million dollars. It consisted in great part of assets the character of which would in the interests of economy require years to liquidate. The instrument directs that specific bequests be made to a number of nephews, nieces, relatives by marriage, religious institutions, etc., in the total amount of $70,700. Item IV of the instrument disposes of the residue of the estate through two named trustees after payment of the specific legacies. Item V is termed by counsel an 'in terrorem' clause, which will hereinafter be discussed.
One Bertha Federman Moskowitz, a sister, commenced an action in the Court of Common Pleas of Summit county, asking for a declaratory judgment in which inter alia she sought a construction of item IV of the will, to have determined whether it was sufficiently definite as to beneficiaries to be valid. She likewise at about the same time and within the statutory period, started an independent action to contest the will.
In the first proceeding (for declaratory judgment), among the many defendants, were the two named trustees, and Benjamin R. Federman (a brother of the whole blood) and Feiga Federman (a sister of the half blood). The two trustees and Benjamin R. Federman and Feiga Federman each filed answers asking for a construction of the will, and the latter two prayed that their rights be protected. The trustees also filed a cross-petition setting forth the judgment which they thought would be a proper construction of the controversial items.
On these pleadings the cause came on for trial. Evidence was offered and admitted and argument had, during which it developed that the petitioner Bertha Federman Moskowitz entered into complete agreement with the construction given the will by the trustees and did not challenge the validity of any of its provisions.
The defendants Benjamin R. and Feiga Federman had not suggested any construction of the controversial items, either in their pleadings or in court, and had assumed that the petitioner Bertha Federman Moskowitz would prosecute the challenge in her pleadings. Taken by surprise by the change of position of the said petitioner, they asked the right to file amended pleadings. This was granted. Thereupon they plead that item IV did not create a valid and enforcible trust and 'that the attempted trust provided for in said item is void and of no effect for the reason that there are no definitely ascertained beneficiaries, nor any definite class of beneficiaries from which to select beneficiaries who shall take the beneficial interests, and that the residue of said estate so devised and bequeathed to the trustees passes to said trustees to be held by them upon a resulting trust for this cross-petitioner and said other heirs at law of the said Leo G. Federman, who are entitled to participate therein in the proportions in which they would have participated in the estate of Leo G. Federman under the statutes of descent and distribution of the State of Ohio, had the said Leo G. Federman died intestate.'
Judgment was subsequently rendered pronouncing the validity of item IV, and that it created an express testamentary trust with the power in the trustees to select from two classes of beneficiaries--viz., next of kin and charitable organizations, in any proportion and in any amount, and to the exclusion of one class or the other, if so desired by them. It was further found that the so-called 'in terrorem' clause (item V) operated to bar all legatees and potential beneficiaries of the trust who have started will contest proceedings or who have challenged the validity of the provisions of the will in the instant case, and the decree specifically excluded these appellants, Benjamin R. and Feiga Federman, from participation in the estate either as legatees or as members of a class.
From this judgment, each of the said defendants prosecuted a separate appeal on questions of law to this court.
The primary errors of the trial court of which complaint is made are:
1. Error of the court in holding that an enforceable testamentary trust was created by the will.
2. Error in holding that the so-called 'in terrorem' clause 'applies to those who seek legal construction of the will by petition or by cross-petition' in this action.
Item IV provides:
'All the rest and residue of my property (after the payment of my debts and the specific legacies herein made) whether real or personal, and wheresoever situate, I give, devise and bequeath to Charles E. Federman, of Lansing, Michigan, my brother, and to Clarence Rausch of Akron, Ohio, as cotrustees, however, upon the following uses and trusts, to wit:
'Distribution of payment of any sum by them shall not be taken to entitle the distributee to other or further distributions or payments, but the discretion of said trustees as to further distributions shall be absolute and uncontrolled.
'The said trustees may, in their discretion, make distributions to Charles E. Federman, my brother,...
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