Reynolds v. Safe Deposit & Trust Co. of Baltimore

• Decision Date: 02 July 1931
• Docket Number: 361.
• Citation: 159 S.E. 416,201 N.C. 267
• Parties: REYNOLDS v. SAFE DEPOSIT & TRUST CO. OF BALTIMORE et al.
• Court: North Carolina Supreme Court

159 S.E. 416

201 N.C. 267

REYNOLDS v. SAFE DEPOSIT & TRUST CO. OF BALTIMORE et al.

No. 361.

Supreme Court of North Carolina

July 2, 1931

Appeal from Superior Court, Forsyth County; Clement, Judge.

Action by Richard J. Reynolds against the Safe Deposit & Trust Company of Baltimore, as trustee under the will of Richard Joshua Reynolds, Mary Reynolds Babcock, and others. From the judgment, plaintiff and defendant last named appeal.

Affirmed.

Provision of will for payment to children of $2 for every dollar earned or saved held applicable only to net earnings made by individual effort in legitimate business or investment and income from property owned.

The following judgment was rendered by the court below:

"This cause coming on to be heard and it appearing to the Court that summons was issued herein on the 9th day of June 1930, and that service of the summons and a copy of the complaint was accepted by all of the defendants except the defendants, Anne Cannon Reynolds, Louise Reynolds, William N. Reynolds (minor), Nancy Reynolds Bagley (minor), J Edward Johnston, Jr. (minor), and Zachary Smith Reynolds (minor), but that said defendants have been served with summons by publication or personally as required by law and that all of the infant defendants are represented by general guardians and by a guardian ad litem and it further appearing to the Court that none of the defendants have filed answers except the Safe Deposit and Trust Company of Baltimore, as Trustee, under the Will of Richard Joshua Reynolds, and Forrest G. Miles as Guardian ad litem for Anne Cannon Reynolds and William N. Reynolds, and it further appearing to the Court that all necessary parties to this action have been served with summons, or have accepted service of summons:

"Upon a consideration thereof and of the complaint and the answers of the Safe Deposit and Trust Company of Baltimore as Trustee under the Will of Richard Joshua Reynolds and Forrest G. Miles, Guardian ad Litem, and the Will of Richard Joshua Reynolds referred to in the complaint, which said will is filed in the office of the Clerk of this Court and is recorded in Book No. 8 of Wills on page 91, the Court finds from the admissions in the pleadings and the evidence offered the following facts:

"The plaintiff is the son and eldest child of Richard Joshua Reynolds, who died, a resident of Forsyth County, North Carolina, on July 29, 1918, leaving surviving him a widow, Katherine Smith Reynolds (subsequently Katherine Smith Johnston) and four minor children.

"At the time of the death of said testator his total estate aggregated about $11,000,000.00 in value, and the approximate then value of the share to be held in trust for each child, was one million eight hundred thousand dollars ($1.800,000.00).

"The plaintiff, Richard J. Reynolds, attained the age of 21 on April 4, 1927; his mother the widow of said testator, died prior to his attaining said age; and by decree of this Court passed in a cause instituted for the purpose of determining the amount of income which should be paid him by the trustee, it was determined that the Trustee shall pay him fifty thousand dollars ($50,000.00) per annum out of the income, until he should attain the age of 28, and the Trustee has accordingly so done.

"On or about April 17, 1929, the plaintiff filed with the Trustee a statement of his affairs for the year April 4, 1928, to April 4, 1929, as the basis for his claim to receive payment out of said trust estate or share, of a sum equal to twice the amount of savings claimed to be shown by said statement, in pursuance of the provisions of Item Fourth, sub-section 6, of said Will; and elected to have any such payment or allowance made in stock of the R. J. Reynolds Tobacco Company at par, out of the shares of such stock held in said trust; the items of said statement as filed being set forth in paragraph 7 of the plaintiff's complaint.

"The defendant, Trustee, has admitted the correctness of said statement, except with respect to the disputed items hereinafter mentioned; and recognized net savings shown by the statement for the period in question in the amount of nineteen thousand eight hundred and eighty-five dollars and twenty-two cents ($19,885.22), for which it transferred and delivered to the plaintiff Class B Stock of the R. J. Reynolds Tobacco Company out of the shares held by it as such Trustee aggregating thirty-nine thousand and seven hundred and seventy-seven dollars and forty-four cents ($39,777.44) in par value being twice the said amount of savings so recognized); said payment and delivery having been made, however, without prejudice to the right of the plaintiff to claim a further amount or amounts, in such stock, upon the basis of his said statement.

"That the items in said statement which were not recognized, but were disallowed by said Trustee upon the ground that they were not properly included under the terms of said will in fixing the basis of the plaintiff's claim, consist of and comprise the following items in said statement, viz.:

Income received from the Estate of Katherine S. Johnston ........	$54,473.71
Income received from the Estate of Richard J. Reynolds ..........	50,000.00
Amount received from the Estate of Williams R. Reynolds .........	783.70
Amount received from Safe Deposit & Trust Company of Baltimore ..	5,121.74
	-----------
	$110,379.15

"That of said items so rejected or disputed by the trustee, the item of fifty-four thousand four hundred and seventy-three dollars and seventy-one cents ($54,473.71) is the amount of income received by the plaintiff during said year from the trust estate of his mother, Katherine S. Johnston, the widow of said testator, and was paid out of the income from the trust created by her will, of which will a copy is filed in the evidence in this case.

"The item of fifty thousand dollars ($50,000) is the amount paid by the defendant Trustee to the plaintiff during the said year from the income of the trust estate under his father's will, as hereinbefore mentioned.

"The amount of seven hundred and eighty-three dollars and seventy cents ($783.70) was the distributive share of the plaintiff, being principal which he received from the estate of his Uncle, W. R. Reynolds, in said year.

"The item of five thousand one hundred and twenty-one dollars and seventy-four cents ($5,121.74) was a gift to the plaintiff from the Safe Deposit and Trust Company of Baltimore of a portion of its commissions as Trustee of said estate, received by the plaintiff during said year.

"The item of twelve hundred dollars ($1,200) appearing in said application or statement should be deducted from the personal expenses shown by said application or statement, and was put on the first side of said application or statement to balance this non-deduction, and has been allowed for by the trustees in the payment already made to the plaintiff, as aforesaid.

"The income from the trust share of the plaintiff under his father's will has been more than sufficient since his father's death to pay him the sum of $50,000 a year, the 203,543 shares of R. J. Reynolds Tobacco Company Class B Stock held in said trust share alone paying at present dividends at the rate of $3.00 per share per annum.

"At the time of the death of said testator the stock of the R. J. Reynolds Tobacco Company had a par value of $100.00 a share; and the Class A Stock was worth $250.00 per share, and the Class B Stock $205.00 per share, the only difference between said two classes of stock being that Class A Stock had the sole voting power, and entitled an employee owner to share in the bonus plan of said company. On April 4, 1929, being the date as of which the plaintiff filed his application with the defendant, Trustee, the value of the share of the estate held in trust for him under his father's will, which then included 207,520 shares of Class B Stock of the said R. J. Reynolds Tobacco Company (but no Class A Stock) was about $21,000,000.00; and at said time the par value of said Class B Stock was $10.00, and the market value thereof was $55.00 per share. On November 18, 1930, the date of the hearing of this cause, the Class B Stock of the R. J. Reynolds Tobacco Company had a market value of $45.00 per share.

"That the statements as to the family and relatives of said testator, Richard Joshua Reynolds, as set forth in paragraphs 12 and 13 of the plaintiff's complaint are true and correct.

"Upon the record before it, the Court orders, adjudges and decrees that by true construction of the will of said testator Richard Joshua Reynolds, the items to be included in the statement furnished to the Trustee in any year, as the basis for showing the amount made or saved by any of his children between 21 and 28 years of age, over and above all living expenses during such year, and from the total of which items the entire living expenses are to be deducted, should include only net earnings made by individual efforts in any legitimate business or investment, and income saved from money, stocks or bonds or other productive property owned by such child, including the earnings and savings, as aforesaid, of the husband of any married daughter; and should not include amounts received by such child during such year, as either income or principal, from the share held in trust for such child during such year, as either income or principal, from the share held in trust for such child under said will, or income or principal so received by such child from the trust created by the will of the mother of said children, or received during such year as next of kin or devisee or legatee of any other relative or other person, or gifts received from any...