Stempel v. Middletown Trust Co.

• Decision Date: 25 July 1940
• Citation: 15 A.2d 305,127 Conn. 206
• Court: Connecticut Supreme Court
• Parties: STEMPEL et al. v. MIDDLETOWN TRUST CO. et al

15 A.2d 305

127 Conn. 206

STEMPEL et al. v. MIDDLETOWN TRUST CO. et al

Supreme Court of Errors of Connecticut.

July 25, 1940

As Corrected Oct. 3, 1940.

Appeal from Superior Court, Hartford County; John A. Cornell, Judge.

Action by Olive D. Stempel and others against the Middletown Trust Company, John Gager, Jr., and others, for reformation of a certain agreement, the determination of various questions concerning the surplus income of a trust created by will, and other relief. From judgment determining the various claims all parties except the named plaintiff and defendant John Gager, Jr., appeal.

Remanded with direction to enter judgment in accordance with opinion.

Ernest McCormick and Lucius F. Robinson, both of Hartford, for appellee (named plaintiff).

Carlos B. Ellis, Jr., and Russell Back, both of Middletown, for appellants (defendant trustees and executor).

Bertrand E. Spencer, of Middletown, for appellant (defendant Thompson, conservator).

Aaron Nassau and Francis P. Rohrmayer, both of Hartford, for appellants (plaintiffs Wanda E. S. Gager et al.).

Allan K. Smith, of Hartford, pro se, as guardian ad litem for appellees (defendant John Gager et al.).

Argued before MALTBIE, C.J., and AVERY, BROWN, JENNINGS, and ELLS JJ.

BROWN Judge.

Mary Donovan, of Middletown, referred to herein as the testatrix, died December 11, 1920, leaving as her only heirs two daughters, Mary B. Donovan herein referred to as Mary, born November 12, 1890, and Olive D. Stempel, born November 27, 1894. Mary since birth has been mentally deficient and will be so long as she lives. Olive married October 29, 1915, and the issue of this marriage are two daughters, Wanda, born July 26, 1916, and Audrey, born February 2, 1921. Wanda married February 6, 1937, and the issue of this marriage is John G. Gager, Jr.

By her will executed December 30, 1919, the testatrix named the defendants Abigail Thompson, Joseph Seiferman and the Middletown Trust Company executors, and gave the residue of her estate to them in trust, with power in the surviving individual trustee upon the death of the other to appoint his successor. The will provided: ‘ So much of both of the income and principal of such trust fund as is necessary in the discretion of said Abigail Thompson and Joseph Seiferman or their successors to provide for the comfortable support of my daughter, Mary B. Donovan during the term of her natural life shall be expended or paid over by said trustees for said purpose and further when and if my sister, Mrs. John Hoar shall have expended all of her own property said trustees shall use and expend so much of the income and principal of said trust estate as is necessary for her comfortable support during the term of her natural life. Upon the death of the last of said Mary B. Donovan and said Mrs. John Hoar to survive, said trustees shall pay over to my daughter, Olive D. Stempel all of the income of said trust fund then remaining during the term of her natural life and upon her death or in the event that she predecease either said Mary B. Donovan or said Mrs. John Hoar, then upon the death of the last survivor of them, all of the principal of my estate then remaining shall be divided by said trustees equally among the issue of the body of her the said Olive D. Stempel who then survive, equally as nearly as may be per stirpes, provided however, that if no issue of her body then survive, then all of the principal of said estate then remaining shall be divided among my heirs-at-law in proportion to their heirship and upon the principal of said fund being distributed in accordance with the directions of this clause, then said trust shall cease and determine.’

The will was admitted to probate December 27, 1920, and the three executors qualified February 15, 1921. The defendant trust company qualified as the duly appointed conservator of Mary. Olive appealed to the Superior Court from the allowance of the will on the ground that it was the result of undue influence, and also brought suit against the estate to recover $3452.28 upon a claim disallowed by the executors. On October 30, 1922, the defendants Thompson, Seiferman and the Middletown Trust Company, as executors and trustees, executed an agreement with Olive to become effective upon its approval by the Court of Probate, providing that: Her claim for $3,452.28 should be paid in full; in each calendar year from and after January 1, 1923, and until the death of the survivor of Mary and Mrs. Hoar, or until the death of Olive, whichever happened first, surplus income of the trust, viz., net income in excess of the amount required for the support of Mary and Mrs. Hoar, up to $600, and if the surplus income should equal or exceed $2,000, an additional $400 thereof, should be paid to Olive; the remaining surplus income should be accumulated and added to the principal; the two proceedings brought by Olive should be withdrawn; and she should release the estate ‘ from all claims and demands which she shall have or claim against said estate except by virtue of this contract and except by virtue of said will of Mary Donovan.’ At the time, the parties assumed the will required surplus income to be accumulated and added to principal. On November 16, 1922, the agreement was approved by the Court of Probate and the actions were withdrawn, On February 9, 1923, Mrs. Hoar died without having become eligible to receive any payments under the will. On March 23, 1923, the executors filed their final account and qualified as trustees.

At the death of the testatrix the value of the residue of her estate subject to the trust was $76,781.84. Of the annual payments mentioned in the 1922 agreement, the trustees paid Olive $600 each year in 1923, 1924 and 1925, and $1,000 in 1926, although the aggregate of these payments exceeded the surplus income received by $5,228. From 1927 on the surplus income year by year exceeded the payments, all of which the trustees made to Olive therefrom pursuant to the agreement, and largely in consequence of a fortuitous sale of real estate by the trustees during 1927, in each of the succeeding years, after payment under the agreement had been made to Olive, there remained a very substantial balance of surplus income for that year. This balance for the years 1928, 1929 and 1930 aggregated $16,739.01. From January 1, 1923, to November 9, 1930, the plaintiffs Olive and her children were without even some of the necessities of life and largely dependent for their support, maintenance and education, upon the income received by Olive under the 1922 agreement.

On September 22, 1930, this action was brought by Olive, individually, and Wanda and Audrey by her as parent and next friend, against the trustees and conservator. The gist of the complaint is that: The will either failed to dispose of surplus income or gave it to Olive; the October 30, 1922, agreement was based upon the mistaken assumption that the will required surplus income to be accumulated and added to principal; in recent years net income had greatly exceeded the amount necessary for Mary's support; the income of Olive's husband was totally inadequate to support his family; and in equity the surplus income should be available for the support of the plaintiffs. The complaint prayed for reformation of the agreement by cancellation of the provision limiting the amount of surplus income payable to Olive in any one year to $1,000, and of the provision for the accumulation and addition to principal of the remaining surplus income; for declaratory judgments determining the status of surplus income, the rights of Olive and Mary thereto as beneficiaries under the will or as the heirs of the testatrix, and the duties of the trustees with respect to the disposition thereof; and that they be ordered to pay over a portion of the surplus income to Olive for the support of the plaintiffs. On November 22, 1930, the pleadings were closed putting the plaintiffs to the proof of their complaint. On November 4, 1930, Olive was appointed guardian of the estate of the minors Wanda and Audrey. She is still guardian of the latter, but on December 1, 1936, Francis P. Rohrmayer became the guardian of the former.

On November 9, 1930, Olive individually and as ‘ legal guardian’ of Wanda and Audrey, the trustees and the conservator made a written agreement which pursuant to stipulation of the then parties to this suit was incorporated and approved by an ‘ interlocutory judgment’ in this action entered December 27, 1930. This agreement provided that: It should become effective upon its approval by the Court of Probate; it should remain in effect for a period of two years ending November 9, 1932, or should the circumstances of Wanda and Audrey remain unchanged, for a further period of two years ending November 9, 1934; each year while it remained in effect the trustee would pay over to Olive as legal guardian of Wanda and Audrey for their support one-half of the surplus income, which as defined constituted the balance of income for that year after certain sums including payments to Olive under the 1922 agreement had been deducted; in the interim the suit should remain on the docket without further proceedings therein; and the agreement should be conclusive of the rights of the parties under the will ‘ or otherwise’ up to its termination and should be construed as a waiver of any right on the part of the plaintiffs to question ‘ the application of surplus income heretofore accounted for in the annual accounts of the trustees.’ On the trustees' application at a hearing January 14, 1931, following notice by publication the Court of Probate approved the agreement. It was extended for two years by agreement of the same parties. It was again extended by...