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Marx v. Rice

Decided: June 10, 1949.

ABRAM D. MARX ET AL., PLAINTIFFS,
v.
ALEXANDER S. RICE, INDIVIDUALLY AND AS SURVIVING ADMINISTRATOR C. T. A. OF THE ESTATE OF BERNARD STRAUSS, ETC., ET AL., DEFENDANTS



Freund, J.s.c.

Freund

[3 NJSuper Page 583] The defendants, Alexander S. Rice, individually and in his representative capacity on behalf of the estates of Bernard Strauss and Florence R. Strauss, and others moved for summary judgment in their favor on the counterclaim

filed by the defendants-counterclaimants, Robert Herzog et al. With the exception of the question of perpetuities, the counterclaim sets up the same allegations and seeks the same relief as did the complaint filed by the plaintiffs. The complaint was stricken by orders of the Court of Chancery, Marx v. Rice , 142 N.J. Eq. 315 (Ch. 1948); affirmed on appeal by the Supreme Court, 1 N.J. 574 (Sup. Ct. 1949). On the appeal, the defendants-counterclaimants petitioned and were granted leave to intervene, argue and file a brief. The present motion to strike the counterclaim was initiated while the appeal was pending, and because of the identity of issues I deferred decision until after the Supreme Court had made its determination. The defendants have renewed their motion to strike and the counterclaimants have moved to amend in particulars hereafter to be discussed.

I.

The remaining issue raised by the counterclaim to be determined on this motion concerns the rule against perpetuities. The facts are detailed in the opinion of the Supreme Court. For the purposes of this decision, the following are pertinent: Bernard Strauss died July 5, 1906, survived by his widow Florence, who died January 31, 1918, and their son, Irving, who died October 9, 1947, without issue. By his will, Bernard bequeathed and devised one-half of his estate to his widow absolutely and the other one-half to his son, Irving, for life. He provided that if Florence should predecease their son and if he died without issue, which happened, then he bequeathed and devised the remainder "to such person or persons as my said wife, Florence, shall by her last will and testament appoint and, in case she shall fail to make such appointment," then to his heirs and next-of-kin. By her will, Florence Strauss exercised the power of appointment, by appointing her executors upon certain trusts. The Supreme Court declared her power of appointment to be general and that, although exercised by placing the property in trust, it was, nevertheless, valid, because "unless the donor manifests a

contrary intent, the donee of a general power of appointment may make appointments in trust. * * * We perceive no manifestation of a contrary intent in the will presently before us."

The counterclaimants argue, however, that the exercise of the power by Florence R. Strauss was in violation of the rule against perpetuities because the life in being specified in the will of Bernard Strauss was that of his son, Irving; that all interests must vest within twenty-one years after his death and that Florence Strauss extended the vesting of the estate beyond the life of Irving and twenty-one years thereafter. The defendants argue that Irving's is not the sole life to be considered in measuring the period under the rule; and that all the interests in Bernard's estate will necessarily vest before the expiration of the period interdicted by the rule against perpetuities.

The familiar rule against perpetuities is that all future interests, legal or equitable, must vest, if at all, within the term measured by the life or lives of a person or persons in being at the time of the creation of the interest and twenty-one years thereafter. It is the possibility that the period may be exceeded, and "not the certainty or even probability that it will be exceeded, in a given trust, which calls for the application of the rule." Graves v. Graves , 94 N.J. Eq. 268 (Ch. 1922); McGill v. Trust Company of New Jersey , 94 N.J. Eq. 657 (Ch. 1923); affirmed, 96 N.J. Eq. 331 (E. & A. 1924); First Camden, etc., Trust Co. v. Collins , 114 N.J. Eq. 59 (E. & A. 1933); Camden Safe Deposit, etc., Co. v. Scott , 121 N.J. Eq. 366 (E. & A. 1936).

The nature of a power of appointment is thus described in Restatement, Property, Introductory Note, Topic 2, c. 27, p. 2294:

"The power of appointment is a hybrid between concepts of agency and concepts of property. To the extent that a power of appointment has been thought of as a mere authority to act for the donor in the completion of a disposition initiated by the donor, the agency factor has dominated and the doctrine of 'relation-back' has been applied. To the extent, however, that a power of appointment has been thought of as giving to the donee a control over the appointive assets which

is the substantial equivalent of ownership, the property factor has dominated, and the validity of an attempted exercise of a power has been determined as if it had been a ...


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