Simon v. Reilly

• Decision Date: 17 January 1940
• Citation: 10 A.2d 474,126 N.J.Eq. 546
• Parties: SIMON v. REILLY, Com'r of Banking, et al.
• Court: New Jersey Court of Chancery

10 A.2d 474

126 N.J.Eq. 546

SIMON

v. REILLY, Com'r of Banking, et al.

Court of Chancery of New Jersey.

Jan. 17, 1940.

Syllabus by the Court.

A voluntary trust wherein no right of revocation is reserved, created for the benefit of third parties among whom are infants and beneficiaries who cannot be ascertained until the time for distribution of corpus arrives, cannot be revoked or annulled at the instance of the trustor although all adult beneficiaries in being consent, where it does not appear that the trust was created under inequitable circumstances.

Where a trust agreement provides for a particular form of investment of trust corpus no longer practicable or possible, a court of equity in the interest of the beneficiaries of the trust may authorize a different form of investment.

Suit by Catherine Simon against Louis A. Reilly, Commissioner of Banking, who had taken over for liquidation the New Jersey Title Guarantee & Trust Company, and others to have a trust dissolved and the assets of the trust delivered to the complainant, or in the alternative if that relief could not be granted, that a new trustee or trustees be appointed to administer the trust.

Decree in accordance with opinion.

Melosh, Morten & Melosh, of Jersey City, for complainant,

Milton, McNulty & Augelli, of Jersey City, for defendants New Jersey Title Guarantee & Trust Co. and others.

Philip F. Sauer, of Jersey City, for guardian ad litem.

FIELDER, Vice Chancellor.

Under a trust agreement dated October 20, 1930 entered into by Catherine Simon with New Jersey Title Guarantee and Trust Co. (hereinafter called Title Co.), she delivered to the Title Co. as trustee, $10,000 to invest in first mortgages on improved real property in this state, payment of principal and interest to be guaranteed by the Title Co. or some other responsible company, and to pay the interest thereon to Anna G. Ewald, the trustor's daughter, for life and upon her death to pay such interest to the then living children of Mrs. Ewald until her youngest child arrives at the age of twenty-one, when the principal is to be divided equally among said children. The agreement further provides that if Mrs. Ewald should die without children surviving, or all her children should die before the youngest arrives at the age of twenty-one, the corpus of the trust is to be divided among the trustor's then living children, or if no such children be then living, among the trustor's next of kin. The agreement is silent as to whether or not it is revocable.

The entire principal of the trust was invested immediately in a bond running to the Title Co. as trustee, secured by first mortgage on improved real property in Jersey City, payment of principal and interest being guaranteed by the Title Co. which bond and mortgage the Title Co. still holds, the principal having been reduced to $9925 and the interest thereon paid to date. The Title Co. suspended business February 14, 1939 and was taken over by the commissioner of banking and insurance for liquidation.

The bill of complaint herein was filed by the trustor praying that the trust be dissolved and the assets of the trust be delivered to her, or in the alternative if that relief cannot be granted, that a new trustee or trustees be appointed to administer the trust. The defendants named in the bill beside the Title Co. and the commissioner of banking and insurance are Mrs. Ewald (the life beneficiary named in the trust agreement), her two children both minors who are the present probable beneficiaries in remainder, and the trustor's three other children who are designated by the agreement as remaindermen after Mrs. Ewald's death, in the event she leaves no child who lives to the age of twenty-one.

The sole ground for dissolution of the trust alleged in the bill as originally filed is that the corpus of the fund cannot be invested in guaranteed mortgages as directed by the trustor, the inference being that the Title Co. can no longer guarantee payment of principal and interest of mortgages and that its existing guarantee is valueless. Some time after this cause was heard and testimony had been taken and the case closed, the complainant, to meet the testimony, obtained an order on consent of all defendants, amending her bill to charge as additional grounds for dissolution of the trust, that when she executed the agreement she did not understand the nature of the trust as provided therein; that it is not in accordance with her intention at the time she executed it and that had she known its legal effect, she would have directed that a power of revocation be included therein.

All beneficiary defendants consent to the dissolution of the trust and the return of the trust assets to the trustor, except the two infants who do not and cannot consent. The Title Co. and the commissioner of banking and insurance have no interest in complainant's prayer for cancellation of her agreement and Mrs. Ewald, mother and guardian ad litem in this suit of the infants, expresses for them consent to the...