Wilmington Trust Co. v. Wilmington Society of Fine Arts

• Decision Date: 30 October 1943
• Citation: 34 A.2d 308,27 Del.Ch. 243
• Court: Court of Chancery of Delaware
• Parties: WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Trustee under Items, or Paragraphs 10, 11, and 12 of the Last Will and Testament of Joseph Bancroft, Deceased, v. THE WILMINGTON SOCIETY OF THE FINE ARTS, a corporation of the State of Delaware, and SAMUEL B. BIRD

34 A.2d 308

27 Del.Ch. 243

WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Trustee under Items, or Paragraphs 10, 11, and 12 of the Last Will and Testament of Joseph Bancroft, Deceased, v. THE WILMINGTON SOCIETY OF THE FINE ARTS, a corporation of the State of Delaware, and SAMUEL B. BIRD

Court of Chancery of Delaware, New Castle

October 30, 1943

AMENDED BILL to construe the last will and testament of Joseph Bancroft, late of the City of Wilmington, deceased.

The case was before the court on final hearing on bill, answer exhibits and oral testimony. The claims of Samuel B. Bird and the Wilmington Society of the Fine Arts were antagonistic and separate answers were filed by them.

Joseph Bancroft died May 6th, 1936, leaving a will dated May 4th 1931, which was duly proved after his death.

The provisions of that instrument, and other facts and circumstances alleged to be material in ascertaining its intended meaning, will appear in the opinion of the court.

Charles F. Richards, for complainant.

Robert H. Richards and Aaron Finger, of the firm of Richards, Layton & Finger, for Samuel B. Bird.

Hugh M. Morris, Edwin D. Steel, Jr., and S. Samuel Arsht, of the firm of Morris, Steel and Nichols, for The Wilmington Society of the Fine Arts.

OPINION

HARRINGTON, Chancellor.

By Item 10 of his last will and testament, Joseph Bancroft devised and bequeathed all of the rest, residue and remainder of his estate and property to the Wilmington Trust Company, a corporation of the State of Delaware, the complainant, in trust, to pay the net income therefrom to his wife, Elizabeth H. Bancroft, for and during the term of her natural life. In the same Item he also provided:

"Upon the death of my said wife, in further trust, to transfer and convey unto my nephew, Samuel B. Bird, if he is then living, all the stock which I may own in Joseph Bancroft and Sons Company, a corporation existing under the laws of the State of Delaware. In further trust, upon the death of my said wife, all the rest, residue and remainder of said trust property and estate, to assign, transfer and convey unto Wilmington Society of Fine Arts, a corporation existing under the laws of the State of Delaware, to use to establish and maintain a suitable memorial in memory of my father and mother."

In Item 12, the testator authorized and empowered his trustee, in its discretion,

"* * * to sell or dispose of any real or personal property forming a part of the said trust, either at public or private sale * * * the proceeds received from such sale or sales to be held subject to the trusts aforesaid; provided, however, that the said trustee shall not sell or dispose of my stock in the Joseph Bancroft and Sons Company without the consent of my nephew, the said Samuel B. Bird, and if such stock shall be so sold, the proceeds received therefrom shall upon the death of my said wife be paid unto my said nephew."

The intended scope of the bequest to Samuel B. Bird in Item 10 is the important question. At the death of Joseph Bancroft, on May 6th, 1936, his estate consisted of numerous corporate stocks and bonds, bank accounts, notes and various other assets, all of which had a net value in excess of $ 850,000. Among them were 300 shares of preferred stock and 5000 shares of common stock of the "Joseph Bancroft and Sons Company", a corporation of the State of Delaware, and 4 shares of the capital stock of the "Estate of Samuel Bancroft, Jr., Incorporated", likewise a corporation of this State. All of these shares stood in the name of Joseph Bancroft on the corporate records. As a legatee under the will of his mother, Mary R. Bancroft, who had died December 4th, 1933, he was also entitled to a proportionate part of her estate, though it had not been settled at the time of his death. Some time thereafter, her surviving executrix assigned and transferred to the executors of Joseph Bancroft, as a part of his said legacy, 859 shares of the preferred stock of the Bancroft Company, 100 shares of its common stock and two shares of the Estate Corporation. The acquisition of the latter shares made his estate a one-half owner of all of the stock issued by the Estate Corporation. Upon the settlement of the estate of Joseph Bancroft, his executors delivered to the complainant, as trustee: (1) The 300 shares of preferred stock and the 5000 shares of common stock of the Bancroft Company, of which he was the legal owner at the time of his death; (2) the 859 shares of preferred stock and 100 shares of common stock of that company, acquired from the estate of his mother, Mary R. Bancroft, deceased; and (3) the 2 shares of stock of the Estate Corporation, which had also been acquired from the same source.

Pursuant to the direction of the will of Mary R. Bancroft, the two remaining shares of the Estate Corporation, owned by her, were transferred to the Wilmington Trust Company and Daniel M. Bates, Trustees for the benefit of her daughter, Elizabeth R. B. Bird, during her lifetime.

The Bancroft Estate Corporation was dissolved by the appropriate action of its directors and stockholders July 1st, 1940, and one-half of its assets were assigned and transferred in kind to the complainant, as trustee of the residue of Joseph Bancroft's estate. The Wilmington Trust Company, as trustee, therefore acquired from that source 886 shares of preferred stock and 11,650 shares of common stock of the "Joseph Bancroft and Sons Company".

Elizabeth H. Bancroft, the wife of Joseph Bancroft, died October 28th, 1941, or a little more than a year after that stock had been acquired by the trustee. Samuel B. Bird survived her, and the trustee subsequently assigned and transferred to him all of the stock in the "Joseph Bancroft and Sons Company", which had stood in the name of Joseph Bancroft at the time of his death, and all of the stock in the same company, the legal title to which was subsequently acquired from the executors of his mother, Mary R. Bancroft. The validity of these assignments is not denied; but Samuel B. Bird claims that he is, also, entitled to the shares of the Bancroft Company acquired on the dissolution of the Bancroft Estate Corporation, and so avers in his answer. On the other hand, the Wilmington Fine Arts Society denies his right to that stock, and claims that it composes a part of the legacy bequeathed to it under the will of Joseph Bancroft.

Shortly after the death of Elizabeth H. Bancroft, with the consent of the defendants, and without prejudice to the rights of either of them, the complainant trustee sold 665 of the 886 shares of preferred stock, acquired on the dissolution of the Estate Corporation, for $ 75 per share, and realized therefrom the net sum of $ 45,769.56. When the amended bill was filed, the trustee still held for distribution, pursuant to the direction of this court, the remaining 221 shares of preferred stock and the 11,650 shares of common stock of the "Joseph Bancroft and Sons Company", acquired from the same source. All of these facts appear from the pleadings. On a subsequent date, with the consent of the defendants, and, also, without prejudice to the rights of either of them, the remaining 221 shares of the preferred stock of the "Joseph Bancroft and Sons Company", acquired on the dissolution of the Estate Corporation, were, also, sold for $ 75.00 per share, and the net sum of $ 16,561.74 was realized therefrom. The trustee, therefore, holds for distribution, pursuant to the direction of this court, $ 62,331.30 in cash and 11,650 shares of the common stock of the Bancroft Company.

The following evidence was also produced at the hearing. Samuel Bancroft, Jr., the testator's father, died in 1916, leaving a net estate of upwards of $ 2,000,000, which passed to his widow, Mary R. Bancroft, and two children, Joseph Bancroft and Elizabeth R. B. Bird. Shortly thereafter, they organized a corporation, known as "Estate of Samuel Bancroft, Jr., Incorporated", to take over, hold, manage and dispose of all of the property late of Samuel Bancroft, Jr., both real and personal; and no other assets ever came into its possession except on the reinvestment of funds arising from the sale of property or securities. That corporation had an authorized single stock issue of 3,000 shares of the par value of $ 100 per share, but only 12 shares were ever issued: 4 to Joseph Bancroft, 4 to Elizabeth R. B. Bird, and 4 to Mary R. Bancroft. The minutes of the first meeting of the board of directors, held March 16th, 1916, indicate that the corporation was to acquire all of the property late of Samuel Bancroft, Jr., deceased, for $ 300,000; of this sum, $ 298,800 was to be paid to the Bancroft family in stock and $ 1200 in cash. The reasonable inference is that the latter sum was to be paid into the corporate treasury by the original subscribers for stock; but, while there is some conflict, the evidence indicates that that sum was never actually paid. Moreover, as already indicated, no stock, other than the twelve shares originally subscribed for, was ever issued to the Bancroft family; nor was the $ 1200 ever paid to them.

The testator had no children. He took great pride in the Bancroft Company, and, for a considerable time prior to his death, had planned to secure control of it, with the idea that his nephew, Samuel B. Bird, might ultimately have a position of importance in its management. To that end, he had from time to time started negotiations with English and other relatives for the purchase of their material stock-holdings. He was the president and one of the directors of the Estate Corporation from the time of its organization, and, until his death, dominated and controlled its management, as though he were the sole owner. His mother, prior to her death,...