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National State Bank of Newark v. Morrison

Decided: September 29, 1950.

THE NATIONAL STATE BANK OF NEWARK, TRUSTEE UNDER AN AGREEMENT DATED DECEMBER 23, 1941, FOR THE BENEFIT OF WALTER L. CONWELL AND OTHERS, PLAINTIFF,
v.
MARGARET CONWELL MORRISON, ET AL., DEFENDANTS



Freund, J.s.c.

Freund

This proceeding is for the further construction of a trust agreement and the will of Walter L. Conwell, deceased, and instructions with respect thereto. This opinion is in conjunction with a previous determination in this matter, reported in 7 N.J. Super. 333. Following that opinion, it was urged that further questions require determination. The attorney for the defendants, Margaret Conwell Morrison et al. , argues that the issues formulated at the pretrial conference preclude further argument and that under Jenkins v. Devine Foods, Inc. , 3 N.J. 450 (1950), the parties should be held to have waived questions not there presented. Previously, the parties argued two main points, namely, whether the power of appointment contained in the trust agreement was an exclusive or a non-exclusive power, and whether it was effectively exercised. A determination that the power was non-exclusive or that it had not been effectively exercised would have completely disposed of the matter. However, since the court decided that the power was exclusive, the plaintiff urges that the questions now presented have arisen.

It is my impression, as well as that of the attorneys for the plaintiff and for the defendant, Lillian Pantall Conwell, that at the pretrial conference the issues were narrowed to avoid the determination of technical questions which might be moot. Under the special circumstances of this case, I do not consider that the parties have waived their right to present the additional issues herein discussed.

Walter L. Conwell, president and director of The Safety Car Heating and Lighting Company, Inc., entered into a contract of employment with the corporation, under which the company agreed, in addition to paying his annual salary, to create a retirement fund for his benefit. Pursuant to its contract, the company entered into a trust agreement with the plaintiff as trustee, which provided in part as follows:

"(e). If all the property constituting the Retirement Fund shall not have been paid to C during his lifetime, the balance remaining in the hands of the Trustee shall, on the decease of C, be paid to his

widow and/or nephews and nieces or their descendants, as C may provide by his Last Will and Testament; and if C shall fail to make such appointment in his said Will, the said property shall be paid and delivered to the person or persons who would have been entitled to his estate under the laws of the state of his residence, on his decease, if he had died intestate."

The above power of appointment I considered to be exclusive, for the reasons expressed in the former opinion. Conwell died on May 27, 1948. Under the terms of his will and codicils, he exercised the power of appointment with reference to the retirement fund, making it part of his residuary estate, which he bequeathed to his executor in trust. He directed that the income be paid to his widow, Lillian Pantall Conwell, for life. Upon her death, he bequeathed the sum of $5,000 to his nephew, Lewis Anthony Conwell, and the balance he divided into three equal parts, each in trust. The income from one part he directed to be paid to his nephew, Joseph Danby Conwell, and from another to his niece, Margaret Conwell Morrison, during their respective lives, and he gave each of them a general testamentary power of disposition of the principal and, in the event of their failure to dispose of the same, then to their next-of-kin. The will provided as follows with respect to Joseph Danby Conwell: "the power to dispose of the principal thereof on his decease in and by his last will and testament; and in the event that he fails so to dispose of the same, I direct that it shall be given to his next-of-kin as may be determined by the laws of the state where this will is probated." The same provision was made with regard to the part bequeathed to Margaret Conwell Morrison. The income from the third part he directed to be paid to his niece, Luella E. Conwell, during her life; but he did not vest her with any power of disposition of the principal as he did his nephew Joseph and his niece Margaret. Luella E. Conwell died on June 2, 1949, survived by the testator's widow, Lillian Pantall Conwell, and by her brother, Joseph, and her sister, Margaret.

The main question now raised is whether Conwell validly exercised the power conferred upon him by the trust agreement.

The general inquiry involves several intermediate questions.

In substance, the following contentions are made: (1) that the power required appointment to the specific legatees and that the appointment to a trustee was not a compliance therewith, (2) that the trust agreement conferred the power upon Conwell to dispose of the balance of the retirement fund in fee, whereas he bequeathed a life estate, with a general power of disposition to the life tenants, (3) that such exercise of his power of appointment was in violation of the rule against perpetuities. And, by reason of the failure of Conwell to make disposition of the one-third of the corpus , the income of which he directed to be paid to Luella E. Conwell, and by reason of her death, conflicting claims are made with respect to such portion of the retirement fund.

In my earlier opinion, I concluded that the retirement fund was compensation for Mr. Conwell's services to the corporation and the implication was clear that he was to have control over the fund. In construing the power to be an exclusive power, I was guided by the familiar rule of construction that the intention of the donor is the great principle governing the construction of powers. In the determination of the questions now raised, the same rule applies. The intent is "not to be thwarted by refinements and distinctions resting upon subtlety and ingenuity or by lack of technical accuracy in the use of words or by unduly stressing the literal meaning of a few words or by attaching ...


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