Waterbury Nat. Bank v. Waterbury Nat. Bank

Decision Date04 January 1972
Citation291 A.2d 737,162 Conn. 129
CourtConnecticut Supreme Court
PartiesWATERBURY NATIONAL BANK et al., Trustees (ESTATE of John S. DYE, Sr.) v. WATERBURY NATIONAL BANK, Executor (Estate of John S. Dye, Sr.), et al.

J. Warren Upson, Waterbury, for plaintiffs.

James T. Healey, Hartford, with whom, on the brief, was Frank T. Healey, Jr., Waterbury, for named defendant et al., trustees under inter vivos trust of John S. Dye, Jr.

Meylert M. Armstrong III, Waterbury, with whom was Walter F. Torrance, Jr., Waterbury, for named defendant et al., executors (Estate of Lucy W. Dye).

Jonathan F. Ells, Winsted, for defendant Robert C. Dye et al.

Michael J. Falker, for defendant Carl A. Peterson, guardian ad litem for indeterminate heirs under trust of John S. Dye, Jr.

Miles F. McNiff, Jr., Waterbury, pro se, guardian an litem for defendant John S. Dye, Jr.

Before HOUSE, C.J., and COTTER, THIM, SHAPIRO and LOISELLE, JJ.

HOUSE, Chief Justice.

This case has been presented on a reservation for the advice of this court. The relevant facts are contained in a stipulation of fact agreed on by all the parties.

John S. Dye, Sr., hereinafter referred to as the testator, died August 9, 1944, leaving a will dated February 27, 1939. Article fourth of the will provided for a trust, the corpus of which was the residue of the testator's estate. The will was duly probated and the estate settled and closed, the final account being accepted by the Probate Court on November 24, 1945. The plaintiffs, trustees of the trust created under article fourth of the will, duly qualified, received the residue of the estate and have administered the trust since November 24, 1945.

The testator was survived by his wife, Lucy, and by three children, John S. Dye, Jr., Robert C. Dye and Martha S. Diener. The three children are living and are over twenty-one years of age.

Prior to the execution of the testator's will in 1939 his son John Jr., on December 24, 1936, had created a trust by agreement with the Waterbury National Bank and the testator. Although the stipulation does not state the value of the corpus of this trust at the time of its creation, the schedule of assets transferred to the trustees by the terms of the trust agreement included common stocks in nine corporations. The corpus included 60 shares of stock of Standard Oil Company of New Jersey, 200 shares of stock of Scovill Manufacturing Company, 106 shares of stock of Radio Corporation of America, and 640 shares of stock of General Electric Company. The trust is of the type known as a spendthrift trust and provides that the trustees are to use so much of the income and if necessary, principal, as they in their discretion deem wise and expedient for the reasonable support and maintenance of the donor, John, Jr. On the death of John, Jr., if he leaves issue the corpus of the trust is to be paid over to his issue in equal shares and if he leaves no issue then the corpus is to be paid over to his mother, Lucy Dye, if living, and, if not, then to John, Jr.'s brother Robert and sister Martha, with provision for alternative distributions in the event that they also do not survive the donor. The trust is by its terms irrevocable and contains no provision for amendment or modification. Subsequent to the creation of this trust, John, Jr., was admitted as a patient to the Fairfield Hills Hospital in Newtown, where he is still a patient. Although no conservator has been appointed for him, he is incapable of managing his affairs, and he is represented in these proceedings by a guardian ad litem. He has no issue.

Article fourth of the testator's will, which created the trust consisting of the residue of his estate, provided that the corpus should be held in trust by the Waterbury National Bank and the testator's widow Lucy and that the income and, in case of need, any principal should be paid to Lucy during her lifetime. Thereafter followed clauses (c) and (d) of article fourth of the testator's will which have given rise to the questions presented in this case: '(c) Upon the death of said Lucy Wade Dye, or if she should die before me, or at the time of my death, I direct that the principal of said Trust Fund, or the rest and residue of my Estate, as the case may be shall be divided into three equal parts. (d) One of said three equal parts shall be added to and become a part of the Trust Fund established under an 'Agreement made the 24th day of December, 1936 between John Sinclair Dye, Jr. of Waterbury, Connecticut, hereinafter referred to as the Donor, and The Waterbury National Bank a corporation incorporated under the laws of the United States, and John Sinclair Dye, Sr. of Waterbury, Connecticut hereinafter referred to as the Trustees."

One of the three equal parts was to be held in trust for the testator's daughter Martha for life with remainder to her issue. The third equal part was to be held in trust for the testator's other son, Robert, and his issue were also remaindermen. No question has been raised concerning these latter two distributions.

The foregoing brief summary of the facts recited in the stipulation submitted by the parties omits many details, contingency provisions, changes in the identity of successor fiduciaries and recitals establishing that all parties in interest are represented in the present proceedings. It suffices, however, for an understanding of the purport of the reserved questions which have arisen on the death of Lucy Dye on June 27, 1970, at which time the one-third portion on hand for distribution under clause (d) of article fourth of the testator's will had a market value of $367,345. 1 As indicated by the questions reserved for the advice of this court, the parties are at issue as to the validity, construction and effect of that clause.

At the state, it is pertinent to note that the validity of the disposition prescribed by clause (d) of article fourth of the will is not governed by the provisions of § 45-173 or § 45-173a of the General Statutes. Section 45-173, entitled 'Reference to Document Creating Trusts,' first enacted in 1953 (Public Acts 1953, No. 442; Cum.Sup.1955, § 2929d) was apparently the first so-called 'pour-over' act in the United States. As amended by Public Act No. 575 of the 1957 session of the General Assembly, this statute now expressly permits in certain circumstances, a bequest or devise to a trustee or trustees of an existing trust created by the testator, his spouse or a parent or child of the testator, where the trust was in existence at the time of the execution of the will and is identified in the will. It does not appear, however, that this statute has any retroactive effect. It contains no provision for retroactivity, and '(s)tatutes should be construed retrospectively only when the mandate of the legislature is imperative.' Michaud v. Fitzryk, 148 Conn. 447, 449, 171 A.2d 397, 398; McAdams v. Barbieri, 143 Conn. 405, 414, 123 A.2d 182; Lane's Appeal, 57 Conn. 182, 17 A. 926. Section 45-173a is entitled the 'uniform Testamentary Additions to Trusts Act.' It was first adopted in 1961 (Public Acts 1961, No. 470) and is broader in scope than § 45-173. This statute by its terms has some retroactive effect but that effect is expressly limited to devises and bequests to trustees made by a will executed on or after October 1, 1961, and to any devise or bequest made by a will executed prior to October 1, 1961, 'provided the testator was living on said date.' Thus, neither of these statutory provisions for so-called 'pour-over' trusts is controlling, since the will in question was executed in 1939 and the testator died in 1944. It is pertinent, however to note as an indication of legislative policy that § 45-173a expressly provides that a devise or bequest to a trust 'shall not be invalid because the trust is amendable or revocable, or both, or because the trust was amended after the execution of the will or after the death of the testator.'

The parties who argue against the validity of the provision of the will directing the distribution of a portion of the testator's trust estate to the trust previously created by his son John, Jr., claim that the attempted disposition is invalid as an impermissible testamentary disposition, since the ultimate beneficiaries can be determined only by reference to another document not a part of the testator's will. It is their claim that in the past this court has fully rejected the doctrine of incorporation by reference and, hence, the attempted disposition is invalid.

This court has had frequent occasion to discuss the doctrine of incorporation by reference. While adhering to the cardinal rule in the settlement of estates that where possible the testator's expressed intention should be carried out, it has traditionally viewed with disfavor any device which attempts to defeat the obvious purpose of the Statute of Wills. That statute was enacted with the basic purpose of making certain that a testator's intentions as to the disposition of his property should be carried out after his death. It was enacted to obviate the danger of permitting the devolution of property to depend on oral testimony and to reduce the risk of false or fraudulent documents being substituted for those which expressed the testator's true intent. Fasano v. Meliso, 146 Conn. 496, 501, 152 A.2d 512.

In Phelps v. Robbins, 40 Conn. 250, 271, decided in 1873, this court discussed the doctrine of incorporation by reference for the first time. It expressly declined to decide '(w)hether under any circumstances a paper disposing of property, and which is not actually embraced in the will itself, can, under our statute, be regarded as a part of the will,' but held that even if it did, the separate papers in the testator's handwriting left with the will in that case did not comply with the requirements established by English common law. It did not appear that the papers were in existence at the time of the...

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