Wilmington Trust Co. v. Wilmington Trust Co.

• Decision Date: 06 August 1940
• Citation: 15 A.2d 153,25 Del.Ch. 121
• Parties: WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Guardian for Joseph W. Donner, Jr., and Carroll E. Donner, Jr., by appointment of the Orphans' Court of the State of Delaware, in and for New Castle County, Complainant, THE MARINE TRUST COMPANY OF BUFFALO, a corporation of the State of New York, and CARROLL E. DONNER, now Lady Carroll Tennyson, Executors, and THE MARINE TRUST COMPANY OF BUFFALO, Trustee under the last Will and Testament of Joseph W. Donner, deceased, Intervening Complainants, v. WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Succeeding Trustee under a certain Trust Agreement, dated November 20th, 1920, Defendant
• Court: Court of Chancery of Delaware

15 A.2d 153

25 Del.Ch. 121

WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Guardian for Joseph W. Donner, Jr., and Carroll E. Donner, Jr., by appointment of the Orphans' Court of the State of Delaware, in and for New Castle County, Complainant, THE MARINE TRUST COMPANY OF BUFFALO, a corporation of the State of New York, and CARROLL E. DONNER, now Lady Carroll Tennyson, Executors, and THE MARINE TRUST COMPANY OF BUFFALO, Trustee under the last Will and Testament of Joseph W. Donner, deceased, Intervening Complainants, v. WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Succeeding Trustee under a certain Trust Agreement, dated November 20th, 1920, Defendant

Court of Chancery of Delaware, New Castle

August 6, 1940

BILL IN EQUITY FOR AN ACCOUNTING, filed by the Wilmington Trust Company, as Guardian for Joseph W. Donner, Jr., and Carroll E. Donner, Jr., minor children of Joseph W. Donner, deceased against the Wilmington Trust Company, as succeeding trustee under a deed of trust executed by William H. Donner, November 20th, 1920. The Marine Trust Company of Buffalo, New York and Carroll E. Donner, widow of Joseph W. Donner, deceased, now Lady Carroll Tennyson, executors, and The Marine Trust Company, trustee under the last will and testament of Joseph W. Donner, deceased, intervened in the proceedings as complainants.

The Wilmington Trust Company, as trustee, filed an answer to the complainants' bill. That corporation, also, filed a cross-bill, and answers were likewise filed thereto by both the original complainants and the intervenors in the proceeding.

The case was heard on bill, cross-bill, the answers thereto, on stipulations filed by the parties, particularly with respect to certain court decisions of the State of New York, and on certain testimony taken before an examiner on behalf of the Wilmington Trust Company, as successor trustee.

Two previous opinions were filed by the late Chancellor, which are reported in 21 Del.Ch. 102, 180 A. 597, and in 21 Del.Ch 188, 186 A. 903. The latter opinion was filed after the original bill had been amended, so as to include appropriate allegations, with respect to the law of the State of New York governing trusts of personal property, but no decree had been signed by the Chancellor at the time of his death. After the second opinion had been filed, some of the pleadings were again reframed by amendment, and certain additional facts claimed to be material, were produced by the Wilmington Trust Company, as trustee. These facts will appear in the opinion of the court.

The question before the court grew out of the interpretation of a deed of gift in trust, dated November 20th, 1920, executed by William H. Donner, who was then a resident of the City of Buffalo, in the State of New York. Dora Browning Donner, the grantee in trust, was the wife of the donor, and was, also, a resident of that city and state. All of the beneficiaries in the trust deed, including Joseph W. Donner, were likewise residents of the State of New York. The property originally granted and conveyed in trust merely consisted of two hundred and fifty (250) shares of Penn Pitt Coal & Coke Company. Other corporate securities were, however, added to the corpus of the trust by William H. Donner prior to January of 1924 at which time the Wilmington Trust Company succeeded Dora Browning Donner as trustee. The appointment of that corporation, as successor trustee, was pursuant to a general provision of the trust deed, and all of the property then held by Mrs. Donner, as trustee, was transferred and delivered to that corporation, pursuant to the provisions of that deed. The place of business of the Wilmington Trust Company was located in the City of Wilmington in this State and the fair inference from the evidence was that the transfer took place there. At any rate, after the appointment of the successor trustee, the trust fund was intended to be administered in this State.

The "First" paragraph of the trust deed, executed by William H. Donner on November 20th, 1920, directed the trustee to pay one-fourth of the net income arising from the corpus of the trust to the donor's wife, Dora Browning Donner, each and every year during the term of her natural life; and the remainder thereof, and after the death of his wife the total amount of such income, to his five children, Robert Newsom Donner, Joseph W. Donner, William Henry Donner, Elizabeth Browning Donner and Dora Browning Donner, and to any child or children that might thereafter be born, share and share alike, during the full term of their respective natural lives. Three of the donor's children were minors.

The same paragraph of the trust deed, also, provided that any income not necessary for "the proper care, maintenance and education" of minor children should be invested and "accumulated for the benefit of such child and if it is lawful to do so shall be held by the trustee hereunder as a separate trust fund for the benefit of said child, under the same trusts and conditions affecting his or her individual interest in the trust estate; * * *."

Other provisions of the trust deed were:

"Sixth: The trustee may hold the securities and properties now and at any time hereafter transferred and delivered to her hereunder by the donor, or by any beneficiary, and shall not be required to convert the same into investments or securities designated under the laws of New York, or any other State, as trust investments. And the Trustees in making investments and reinvestments in the future shall not be limited in such investments to such securities as are designated as trust investments, or required by law to be made by trustees.

"Seventh: The donor, or any beneficiary hereunder, may convey and deliver, or cause to be conveyed and delivered, to the Trustee, additional moneys, stocks, securities or properties for the purpose of adding to the principal of this Trust and all moneys, stocks, securities or properties so delivered or conveyed to the Trustee with written direction to add same to the Trust Fund, shall thereupon be included in the trust and held by the Trustee from then on, subject to all conditions and provisions hereof, as fully as though originally included as a part of the trust property; and additional moneys, stocks, securities or properties may in the same manner be conveyed or delivered to the Trustee by the Donor or any beneficiary to be added to any separate trust fund created or accumulating hereunder."

The "Eighth" paragraph, in substance, provided that a majority of the adult beneficiaries should have the right to direct or approve the sale, exchange or dispose of securities in the trust fund, or to select and approve investments and reinvestments, subject to the approval of the donor, or such person or persons as he might designate. In the absence of such action, the trustee had authority to act in her discretion.

"Ninth: The Donor reserves to himself, or, in the event of his death, to a majority of the adult beneficiaries hereunder, the right, from time to time, to subdivide this trust into equal shares for the purpose of segregating into a separate trust or trusts, under and subject to the same terms and conditions as in this instrument set forth, the interests of any one or more of said beneficiaries in the trust estate.

"Tenth: A majority of the adult beneficiaries hereunder shall have the right, subject to the approval of the Donor during his lifetime, to subdivide this trust, for the purpose of segregating into separate trusts, under and subject to the same terms and conditions as in this instrument set forth, the interests of any one or more of said beneficiaries in the trust estate * * * *.

"Eleventh: The Donor may at any time, or from time to time, terminate in whole or in part any trust or trusts hereby created."

The pertinent provisions of the "Second" paragraph of that deed, and other pertinent provisions of the "Tenth" paragraph will appear in the opinion of the court.

After the Wilmington Trust Company had become the successor trustee, material additions were made to the trust fund in both cash and corporate securities, which were sent by mail and delivered in this State. These additions were not only made by the original donor but by several of the beneficiaries under the trust deed, including Joseph W. Donner. In each case the securities so delivered were accompanied by explanatory letters.

On November 13th, 1924, William H. Donner sent to the Wilmington Trust Company, trustee, five certificates, each being for 550 shares of the common stock of Bartholomew Investment Corporation. The letter accompanying these securities stated that that stock was "to be held by you under agreement of trust between the writer and Dora Browning Donner, trustee, dated November 20th, 1920, (under which trust the Wilmington Trust Company is now the successor trustee) in accordance with paragraph "Seventh" of said trust agreement, as follows:

"* * * 550 shares as part of separate trust fund thereunder for the benefit of Joseph W. Donner."

The four remaining certificates were likewise to be put to the separate trust funds for the benefit of Robert Newsom Donner, William Henry Donner, Elizabeth Browning Donner and Dora Browning Donner, respectively.

By letter to the assistant secretary of the Wilmington Trust Company, dated December 29th, 1924, Robert Newsom Donner sent a certificate for 2,000 shares of 7% stock of the Bartholomew Investment Corporation

"* * * to be held under the W. H. Donner Trust, dated November 20th, 1920, under the separate trust fund for the benefit of Robert Newsom Donner."

By letter dated March 20th, 1925, Joseph W. Donner sent to the Wilmington Trust Company a certificate for 1,000 shares of ...