Presbyterian Church Of Fleminington v. Plainfield Trust Co.

• Decision Date: 03 April 1947
• Docket Number: 147/528.
• Citation: 52 A.2d 400
• Parties: PRESBYTERIAN CHURCH OF FLEMININGTON v. PLAINFIELD TRUST CO. et al.
• Court: New Jersey Court of Chancery

52 A.2d 400

PRESBYTERIAN CHURCH OF FLEMININGTON

v.PLAINFIELD TRUST CO. et al.

147/528.

Court of Chancery of New Jersey.

April 3, 1947.

Suit for an accounting by the Presbyterian Church of Flemington, New Jersey, against the Plainfield Trust Company and another, executors-trustees of the estate of George Webster, deceased, and others. On complainant's motion to strike out answers.

Order advised striking out the answers.

Syllabus by the Court.

One clothed in a fiduciary character cannot either directly or indirectly purchase the trust property at his own sale and retain it against the dissent of the cestui que trust. This rule envelops in principle the attorney of the fiduciary notwithstanding the transaction was conducted in good faith and the purchase price was reasonably adequate.

George K. Large and Sidney Kirschen, both of Flemington, for complainant.

George F. Hetfield, of Plainfield, for executors-trustees.

Herr & Fisher, of Flemington (William A. Moore, of Trenton, of counsel), for defendant Fisher.

Wesley L. Lance, of Glen Gardner, for Southwestern Presbyterian Sanitarium.

JAYNE, Vice Chancellor.

All of the significant factual occurrences and events narrated by the bill of complaint, it regarded solely in their substantive character and denuded of all implications of guile or bad faith, are acknowledged to be true by the executors-trustees and by Mr. Fisher in their respective answers.

Recognizing for immediate purposes the facts in that aspect, the complainant asserts that the answers filed by those defendants fail as a matter of law to aver any adequate and effectual defenses to the prayers of the bill. In pursuit of that contention the complainant seeks the allowance of orders striking out the answers of those defendants.

The consideration of the motion to strike the answers necessitates initially a circumspect comprehension of all of the undenied factual allegations of the bill and of the answers here impugned. It will be serviceable to summarize and assemble the occurrences in a chronological order.

On February 5, 1944, one George Webster, a resident of Flemington, Hunterdon County, New Jersey, died testate. Mr. Fisher, of the law firm of Herr & Fisher with offices at Flemington, had prepared at his direction his last will and testament in which he nominated the Plainfield Trust Company of Plainfield, New Jersey, and his nephew Lester Smith to serve as executors and trustees of his estate. The representatives of the estate retained Messrs. Herr & Fisher to represent them as proctors in probating the will and in the ensuing administration of the decedent's estate. On March 18, 1944, the will was admitted to probate by the surrogate of Hunterdon County and the designated representatives duly qualified.

The will of the decedent embraced the following article:

‘Seventh: All the rest, residue and remainder of my estate I leave to my executors and trustees hereinafter named in trust nevertheless, they to invest same in some good legal securities, the income therefrom to be paid in annual payments to the Presbyterian Church of Flemington, New Jersey, so long as the said Presbyterian Church meets certain requirements hereinafter specified.

‘This legacy shall be effective so far as the Presbyterian Church of Flemington, New Jersey, is concerned only so long as the said Presbyterian Church continues to operate in such manner as I feel is to the good of the Church and to the members of the Church congregation. This legacy shall be effective, in respect to the provision that the income of the residue of my estate annually shall be paid to the Church annually, only in those years in which there has been held in said Church regular church services each and every Sunday morning of the year, and that there shall be held regular evening services at least forty Sundays during the said year. Information that these conditions have been fully met shall be accepted by my executors and trustees and payment made of the income as herein provided to said church only when a written statement indicating compliance with the terms hereof shall have been delivered to my said executors and trustees, signed by the pastor of the church and the Clerk of said church. In event there shall be a year in which the church does not comply with the terms, hereof, then it shall not receive the benefit herein provided, but the income for that calendar year shall be paid to the Southwestern Presbyterian Sanitarium of Albuquerque, New Mexico.

‘If the said Church shall fail to comply with the terms of this my last will and testament for tne calendar years, then and in such event, I direct that the entire principal herein provided for shall be paid in full to the Southwestern Presbyterian Sanitarium. It is understood that the failure does not have to be ten consecutive years, but if the time arrives when there has been ten years from the date of my death that the church has not complied with the terms of this will, then the legacy to them shall be void, and the proceeds of the trust herein provided shall descend to the Southwestern Presbyterian Sanitarium of Albuquerque, New Mexico, as herein provided.’

The corpus of the residuary trust included certain real estate designated as Nos. 24-26 Main Street at Flemington, which for convenient distinction will be hereafter identified as the ‘George Webster property.’ On or about February 19, 1944 (prior to probate of the will), Mr. Fisher at the request of the executors procured appraisals of the real estate and caused them to be dispatched to one of the executors. Appraisals were also obtained by him of an adjoining parcel owned by the estate of Sarah Webster, the deceased wife of George Webster, in which premises the mother of Mr. Fisher resided. The appraisals of the George Webster property so elicited ranged from $7,000 to $7,200; those of the Sarah Webster property were in the amount of $7,200. An appraisal independently obtained by the Trust Company entimated the value of the George Webster property to be $8,000.

Summarily stated, the succeeding eventualities were that on April 27, 1944, Mr. Herr of the firm of Herr & Fisher submitted to the executors-trustees an offer on behalf of Mr. Fisher to purchase the Main Street property of the George Webster estate for the sum of $8,000. The offer was evidently regarded as acceptable by the representatives of the estate. Mr. Fisher is said to have been in New York State at that time and, accordingly, Mr. Herr prepared and forwarded to the executors-trustees a contract, together with a deposit of $800, for the conveyance of the property to one Laura Apgar. On May 3, 1944, Laura Apgar acquired for Mr. Fisher the title to the Sarah Webster property for the price of $8,000 and on May 8, 1944, the executors-trustees conveyed the premises of the decedent's estate to her for a consideration of $8,000 subject, however, to a mortgage of the nominal value of $2,500 which she as grantee agreed to assume and pay.

Upon the acquisition of the last-mentioned property, Laura Apgar conveyed both properties to Mr. Fisher for the sum of $16,000. The deeds were recorded on May 19, 1944. On that day Mr. Fisher and his wife executed two mortgages (covering not all of the George Webster property) securing loans in the aggregate amount of $12,000.

On June 28, 1944, Mr. Fisher conveyed the portion of the George Webster property to one Dora Wexler, subject to the two mortgages upon which there was then due $11,850, which the grantee assumed, and subject to the continued maintenance of the party wall and other easements essential or advantageous to the Sarah Webster property then owned by him. The purchase price is said to have approximated $13,200.

Two years later the executors presented to the surrogate an account to which the complainant in this cause interposed exceptions criticizing, inter alia, the payment by the executors of a broker's commission for the sale of the George Webster property and their failure to account for and restore to the estate the alleged monetary profit achieved by their proctor, Mr. Fisher, and also the value of the portion of the property with the associated easements which he has retained.

Before the Hunterdon County Orphans' Court undertook the consideration of the exceptions to the account, this court upon the application of the complainant resolved to assume supervision and jurisdiction of the further administration of the decedent's estate and the testamentary trust, and accordingly to entertain the complainant's bill of complaint. Brown v. Fidelity Union Trust Co., 128 N.J.Eq. 197, 15 A.2d 788.

The answers of Mr. Fisher and of the executors-trustees collectively project three cardinal points entirely legalistic in character. They will be identified and adjudicated in rotation.

I. Is the interest of the complainant too contingent and uncertain to enable it equitably to prosecute this cause?

It is observed that under the seventh article of the testator's will, the complainant is entitled annually to the income of the residuary trust only in a year in which ‘there has been held in said Church regular church services each and every Sunday morning of the year and * * * regular evening services at least forty Sundays during the said year.’ The averment that the complainant society has not in any year since the death of the testator held in its church the requisite number of religious services must at the moment be regarded as true. From this factual experience of the past springs the insistence on behalf of the defendant Fisher that it is now extremely improbable that the society will even in the future conduct in its church the prescribed number of morning and evening sessions.

The testator, however, obviously contemplated the possibility of intermissions. He declared: ‘If the said Church shall fail to comply with the terms of this my last will and testament for ten calendar years, then and in such event, I direct that the...