Sav. Inv. & Trust Co. v. Little

• Decision Date: 11 October 1944
• Docket Number: 149/646.
• Citation: 39 A.2d 392
• Parties: SAVINGS INVESTMENT & TRUST CO. v. LITTLE et al.
• Court: New Jersey Court of Chancery

39 A.2d 392

SAVINGS INVESTMENT & TRUST CO.

v.LITTLE et al.

149/646.

Court of Chancery of New Jersey.

Oct. 11, 1944.

Proceedings between Savings Investment & Trust Company, as executor and trustee of the will of Frank H. Little, deceased and Tacey May Little and others, seeking instructions of the court.

Decision in accordance with opinion.

1. While a sole trustee cannot be the sole beneficiary, since the equitable title would merge in the legal title, one of several beneficiaries may be the trustee.

2. The reservation by the settlor of the power during his life to revoke the trust does not invalidate the trust.

3. A declaration of a trust ‘for the benefit of J’ for life ‘and on his death in trust for the benefit of the then heirs at law of the said J,’ is sufficiently certain, and gives the entire equitable title to J for life, remainder to those persons who, at his death, are his heirs, excepting such beneficial interests as are expressly or by proper implication given to others.

4. If the settlor reserves the power to control the so-called trustee in the administration of the property, then the latter is really not a trustee but is an agent of the settlor. But this rule does not apply when the settlor is one of the trustees and the power resides in him as trustee and not as settlor.

5. A life tenant may not commit actual or permissive waste. To that extent only he is bound to repair. He must make such ordinary repairs as are necessary to preserve the property from decay, but not to expend extraordinary sums, such as the cost of installing a new furnace in place of one which, at testator's death, was already beyond repair.

6. Where extraordinary repairs are necessary to preserve the property and the tenant is not obligated to make them, the trustee for the remaindermen may be directed to repair.

7. Misnomer will not defeat a legacy where there is no doubt as to the legatee intended.

Arthur T. Vanderbilt and H. Edward Toner, both of Newark, for complainant.

Riker, Marsh & Shipman and Jehiel G. Shipman, all of Newark, for defendants Tacy May Little and others.

Dolan & Dolan, of Newton, for defendants Clarence J. Little and others.

Sanderson & Engel and Frederick W. Engel, of Newark, for defendant Trustees of Princeton University.

Hommell & Hommell, and Adrien B. Hommell, all of Sussex, for defendants Agnes J. Dunn and others.

BIGELOW, Vice Chancellor.

Complainant, as executor and trustee of the will of Frank H. Little, late of South Orange, seeks the instructions of the Court. Mr. Little owned a farm at Vernon, Sussex County, the Little homestead, which had been in his family since 1830. By deed dated May 24, 1937, he and his wife conveyed the property to himself and his nephew, Clarence J. Little, as trustees under a trust agreement of even date. The trust is questioned on several grounds; if it be invalid, the res is part of the estate of which testator died seized.

The trust agreement recites that ‘the said Frank Hoyt Little is desirous of maintaining said Homestead for the benefit of succeeding generations and that it may be improved and added to, and carried forward in honor of the name and family traditions.’ He had no children himself but his nephew, Clarence, had a son Joseph, a baby two years old, and the only male Little of his generation. The agreement declares the trust, or the principal trust in these words: ‘This property is granted in trust for the benefit of Joseph Frank Little, son of the said Clarence J. Little and Mary Little, for and during the term of his natural life and on his death in trust for the benefit of the then heirs-at-law of the said Joseph Frank Little. This trust shall continue for the lifetime or until the resignation of Frank Hoyt Little, Clarence J. Little and Mary Little, and the survivors and survivor thereof, and upon the death or resignation of the last survivor shall cease and terminate, and said proceeds and title thereto shall rest in Joseph Frank Little for and during the term of his natural life and upon his death, the remainder to his heirs-at-law.’

The estate or interest of the child Joseph is subject to certain other interests. Mr. Little reserved or granted to himself and wife, and the survivor, and to Clarence and his wife, and the survivor, with the members of Clarence's immediate family, the right to live on the homestead and to enjoy for their personal use, without charge, ‘the produce and facilities of said farms (other than the cash income therefrom).’ The agreement stipulated that the income from the farm should be banked and that any excess above $500 in the bank account at any time should be divided three-quarters to Clarence personally, and one-quarter to Frank. But if Clarence should so elect, all the excess income ‘may remain in said trust account or be used in the maintenance or improvement of the said property, buildings, fences, machinery, equipment and stock.’

The provisions for the personal benefit of Frank and Clarence Little and their families may be construed as creating equitable life estates or easements in gross. While a sole trustee cannot be the sole beneficiary, since the equitable title would merge in the legal title, one of several beneficiaries may be the trustee. Restatement-Trusts, sec. 99; In re Vreeland's Estate, 66 N.J.Eq. 297, 57 A. 903; In re Thurston, 104 N.J.Eq. 395, 145 A. 110; Morgan v. Murton, 131 N.J.Eq. 481, 26 A.2d 45.

The settlor, Mr. Little, reserved the right at any time during his life to revoke the trust and resume title to the property. The reservation does not invalidate the trust. Restatement-Trusts, sec. 37; Mayer v. Tucker, 102 N.J.Eq. 524, 141 A. 799.

It is argued that the trust in favor of Joseph and the persons described as his heirs is too vague to be enforceable and hence that the trust fails. A declaration that certain property is held in trust for the benefit of a named person, is a complete and specific declaration of an inactive or passive trust. Eagles Building & Loan v. Fiducia, 135 N.J.Eq. 7, 37 A.2d 116. The trust under consideration is not a passive trust, however, since the trustees are charged with the duties of managing, farming and caring for the property. The entire equitable title is given to Joseph for life, remainder to those persons who, at his death, are his heirs, excepting, however, such beneficial interests as are expressly, or by prior implication, given to others. It may be that questions will arise concerning these excepted interests, but the problems will not be unsurmountable. The terms of the agreement are sufficiently certain.

It is said that the trust is testamentary in character and void because the requirements of our statute of wills were not met in its execution. This argument is based upon the rule that if the donor reserves the power to control the so-called trustee in the administration of the property, then the latter is really not a trustee but is an agent of the donor. Restatement-Trusts, sec. 57. The donor himself became one of the trustees and as such trustee was given a large share in the power...