Sigmund Sternberger Foundation, Inc. v. Tannenbaum

• Decision Date: 22 May 1968
• Docket Number: No. 687,687
• Citation: 161 S.E.2d 116,273 N.C. 658
• Parties: SIGMUND STERNBERGER FOUNDATION, INC. v. Leah Louise B. TANNENBAUM, Jeanne Louise Tannenbaum, Susan Merle Tannenbaum, Sidney J. Stern, Jr., Guardian of the Estate of Nancy Baach Tannenbaum, aminor, Sidney J. Stern, Jr., Guardian of the Estate of Isgmund Ian Tannenbaum,a minor, NormanBlock, Executor of the Estate of Sigmund Sternberger, Deceased, Wade Bruton,Attorney General of the State of North Carolina, the Chase Manhattan Bank, NewYork, New York, Trustee, and the University of North Carolina.
• Court: North Carolina Supreme Court

Page 116

161 S.E.2d 116

273 N.C. 658

SIGMUND STERNBERGER FOUNDATION, INC. v. Leah Louise B. TANNENBAUM, Jeanne Louise Tannenbaum, Susan Merle Tannenbaum, Sidney J. Stern, Jr., Guardian of the Estate of Nancy Baach Tannenbaum, aminor, Sidney J. Stern Jr., Guardian of the Estate of Isgmund Ian Tannenbaum,a minor, NormanBlock, Executor of the Estate of Sigmund Sternberger, Deceased, Wade Bruton,Attorney General of the State of North Carolina, the Chase Manhattan Bank, NewYork New York, Trustee, and the University of North Carolina.

No. 687.

Supreme Court of North Carolina.

May 22, 1968.

Atty. Gen. T. Wade Bruton and Staff Atty. Christine Y. Denson, defendant appellant, pro se.

Stern, Rendleman & Clark, by, Sidney J. Stern, Jr. and David M. Clark, Greensboro, for defendant appellant Sidney J. Stern, Jr., Guardian.

Cooke & Cooke, by, Arthur O. Cooke and William Owen Cooke, Greensboro, for plaintiff appellee Sigmund Sternberger Foundation, Inc.

Jordan, Wright, Henson & Nichols, by, Welch Jordan, Greensboro, for defendant appellee Norman Block, Executor of the Estate of Sigmund Sternberger, Deceased.

McLENDON, BRIM, BROOKS, PIERCE & DANIELS by HUBERT HUMPHREY, Greensboro, for defendant appellees Leah Louise Tannenbaum, Jeanne Louise Tannenbaum, and Susan Merle Tannenbaum.

PARKER, Chief Justice.

Judge Lupton entered judgment in this proceeding in which, after reciting that all parties to this proceeding are present in court with their respective counsel of record, and after further reciting that he had heard all the evidence offered by the parties, and had examined all the various stipulations and exhibits introduced into evidence by the parties and had heard argument of counsel, he made the following findings of fact, which we summarize: (1) The nature of the proceeding; (2) all parties are properly before the court; (3) Sigmund Sternberger Foundation, Inc., is a nonprofit charitable corporation, incorporated pursuant to the provisions of Chapter 55A of the General Statutes, and that the said corporation was organized for broad charitable purposes, including the funding of scholarship grants, and the making of pecuniary contributions to churches, educational institutions, community funds, and other charitable organizations, as set forth in its charter; (4) subsequent to its organization, the Sigmund Sternberger Foundation, Inc., was duly approved by the United States Internal Revenue Service as a taxexempt charitable foundation; (5) Leah Louise B. Tannenbaum is a niece of the late Sigmund Sternberger and is a resident of Guilford County, and that Jeanne Louise Tannenbaum, Susan Merle Tannenbaum, Nancy Baach Tannenbaum, and Sigmund Ian Tannenbaum are all the children of Leah Louis B. Tannenbaum, and are citizens and residents of Guilford County, and that Jeanne Louise Tannenbaum and Susan Merle Tannenbaum are over 21 years of age, and Nancy Baach Tannenbaum is 18 years of age, and Sigmund Ian Tannenbaum is 16 years of age, and that said minors are represented by their duly appointed, qualified, and acting guardian, Sidney J. Stern, Jr.; (6) Norman Block is the duly appointed, qualified, and acting executor of the last will and testament, including the codicil thereto, of Sigmund Sternberger, deceased, and that said Norman Block is a citizen of Guilford County and a licensed attorney; (7) that Wade Bruton is the duly elected, qualified, and acting Attorney General of the State of North Carolina; (8) The Chase Manhattan Bank is a banking corporation organized and existing under the laws of the State of New York, and that said bank is vested with fiduciary powers and is trustee under an Inter vivos trust agreement executed by and between Sigmund Sternberger and said bank; and (9) the University of North Carolina is a body politic and corporate established by the General Assembly of the State of North Carolina.

After these preliminary findings of fact, Judge Lupton found in substance as follows (the numbering of the paragraphs being ours):

(1) Sigmund Sternberger died on 19 July 1964 at the age of 77 years, a resident of Guilford County, North Carolina, leaving a last will and testament including a codicil thereto, both dated 26 December 1963. The said will and codicil were admitted to probate in the office of the clerk of the Superior Court of Guilford County, North Carolina, on 22 July 1964.

(2) The gross estate of Sigmund Sternberger valued for Federal estate tax purposes as of one year from the date of his death amounted to $5,617,252.76, and consisted of real estate $ $85,000 (A stipulation executed by all counsel in the case states that the value of the real estate was $185,000. The recital in the judgment of $85,000 is manifestly a typographical error.); stocks and bonds $ $4,525,485.71; mortgages, notes, and cash $ $358,494.57; insurance $ $517,850.75; and miscellaneous property $ $30,421.73.

(3) The corporate charter of Sigmund Sternberger Foundation, Inc., granted on 29 April 1955 designated Sigmund Sternberger, Rosa Sternberger Williams (his sister), Jeannette Sternberger Baach (his sister--now deceased); Louis Baach (his brother-in-law--now deceased); and Leah Louise B. Tannenbaum (his niece) as incorporators and members, and said persons also constituted the initial Board of Directors. Between 29 April 1955 and 26 November 1963 Sigmund Sternberger made contributions to the Foundation of approximately $80,000. Said corporation was active in carrying out the purposes for which it was formed.

(4) From early 1955 until his death on 19 July 1964 Sigmund Sternberger employed Norman Block as his personal attorney.

(5) On 3 November 1962 Sigmund Sternberger executed two revocable Inter vivos trust agreements, prepared for him by Norman Block as his attorney, between Sternberger, The Chase Manhattan Bank, as trustee, and the members of a Trust Advisory Committee created by each of said trust agreements. One of these two agreements created a trust for the benefit of Leah Louise B. Tannenbaum, and the other created four separate trusts, one for the benefit of each of the four children of Leah Louise B. Tannenbaum. Said beneficiaries were also beneficiaries of the corpus of each of their respective trusts. The terms and provisions of said Inter vivos trusts are set forth in Exhibits 1 and 2 which were introduced into evidence at the trial.

(6) On 7 November 1962 Sigmund Sternberger executed a last will and testament together with codicil thereto, bearing the same date, both of which were prepared for him by Norman Block as his attorney. Under the provisions of said will and codicil, Sigmund Sternberger bequeathed substantially his entire estate to the Inter vivos trusts created by him on 3 November 1962, and designated Jeannette S. Baach, Rosa Williams, Leah Louise B. Tannenbaum, Dr. A. J. Tannenbaum, and Norman Block as co-executors of said will. The terms and provisions of said will and codicil are as set forth in Exhibits 3 and 4 which were received in evidence at the trial.

(7) On 26 November 1963 a corporate meeting of the members of Sigmund Sternberger Foundation, Inc., was held. Sigmund Sternberger, designated in the minutes of said meeting as the only member of the corporation, elected a new Board of Directors of the corporation, the same being: Sigmund Sternberger, Rosa S. Williams, Norman Block, A. L. Meyland, and Robert B. Lloyd, Jr. Messrs. Block, Meyland, and Lloyd each contributed the sum of one dollar ($1.00) to the Foundation and, thereupon, each became a member thereof. Leah Louise B. Tannenbaum, Rosa S. Williams, and Jeannette S. Baach were not aware of this meeting until after the death of Sigmund Sternberger.

(8) On 14 December 1963 Sigmund Sternberger executed a revocable Inter vivos trust agreement, prepared for him by Norman Block as his attorney, with The Chase Manhattan Bank as trustee. Thereafter, Sigmund Sternberger revoked the two revocable Inter vivos trusts created by him on 3 November 1962. The trust agreement of 14 December 1963 created six separate trusts with life income beneficiaries for each trust being: Leah Louise B. Tannenbaum, Jeanne Louise Tannenbaum, Susan Merle Tannenbaum, Nancy Baach Tannenbaum, Sigmund Ian Tannenbaum, and Sula B. Davis. The remainder interest in each of these trusts was given to Sigmund Sternberger Foundation, Inc., to hold the same in trust and to use the income therefrom for purposes for which the Foundation was created. Said gifts of the remainder of each trust were made subject to a contingent gift thereof to the University of North Carolina at Chapel Hill, North Carolina, in the event the Sigmund Sternberger Foundation, Inc., should not be a tax-exempt organization so as to make its receipt of said remainder tax deductible. The terms and provisions of said Inter vivos trust agreement are set forth in Exhibit 8 which was received in evidence at the trial.

(9) On 26 December 1963 Sigmund Sternberger executed a last will and testament, together with a codicil thereto, bearing the same date, both of which were prepared for him by Norman Block as his attorney. Said will and codicil of 26 December 1963 revoked the will and codicil of 7 November 1962. Said will and codicil of 26 December 1963 bequeathed legacies of two hundred thousand dollars ($200,000) to each of the six Inter vivos trusts created by Sigmund Sternberger on 14 December 1963, and after providing for certain specific legacies, bequeathed his entire residuary estate, now having a value in excess of $2,750,000, to Sigmund Sternberger Foundation, Inc., to hold the same in trust and use the income therefrom for its corporate purposes. Said legacy of the residuary estate was made subject to a contingent legacy thereof to the University of North Carolina at Chapel Hill, North Carolina, in the event Sigmund Sternberger Foundation, Inc., should not be a tax-exempt organization so as to make its receipt of said residuary estate tax deductible. Norman Block was designated as...