Decided: November 5, 1951.
GUARANTY TRUST COMPANY OF NEW YORK, EXECUTOR AND TRUSTEE UNDER LAST WILL AND TESTAMENT OF MAX GOEBEL, DECEASED, PLAINTIFF-RESPONDENT,
THE FIRST NATIONAL IRON BANK OF MORRISTOWN, EXECUTOR UNDER LAST WILL AND TESTAMENT OF CARRIE HAMMANN, DECEASED, ET ALS., DEFENDANTS-APPELLANTS, AND J. HOWARD MCGRATH, ATTORNEY-GENERAL OF THE UNITED STATES, ET ALS., DEFENDANTS-RESPONDENTS
On appeal from a judgment of the Superior Court, Chancery Division, entered on order of Judge Stanton who filed the following opinion.
For affirmance -- Chief Justice Vanderbilt and Justices Oliphant, Wachenfeld and Ackerson. For reversal -- Justices Case and Burling.
[8 NJ Page 113] "Max Goebel, then 81 years old, made his last will on July 2, 1929. On the same day he entered into a written agreement
[8 NJ Page 114]
with North American Iron Works, Inc., which will be referred to as the company, and all the other stockholders therein, Nathan Michelman, Matthew J. Moroney and Carl Fiedler. At that time testator held 35 per centum of the common stock, 100 per centum of the first preferred stock and about 93 per centum of the second preferred stock of the company. It was also indebted to him in the approximate amount of $140,000, part of which was past due. The primary design of the contract was, in its own language, to bestow leniency upon the company in meeting its obligations after his death; and in return the company was to pay his estate by way of interest and dividends at least $6,000 per annum; and the contract was to continue as long as it was performed by the company and the stockholders and as long as Moroney and Fiedler or the survivor of them were actively engaged in the business of the company.
"Testator died on April 8, 1930, and plaintiff qualified as his executor and trustee. The business of the company, apparently not very prosperous at the time of the contract, suffered as a consequence of the great depression which began soon after his death; but at the time he made his will he evidently considered that his interest in the company was valuable and substantial.
"In the fall of 1931 testator's interest in the company was sold to Michelman for $40,000, of which $10,000 was paid in cash and the balance was to be paid in monthly installments of $500 each. Only $2,000 was paid on the balance and the company was adjudged bankrupt in September, 1933, and Michelman the following February; no dividend was paid by the estate of either. The gross inventory value of decedent's estate, in which the stock and credit interest in the company was set at $40,000, was approximately $100,000. After the deduction of debts and administration expenses the balance was slightly more than $65,000. Following the bankruptcies this latter amount was reduced by loss of $28,000 on the Michelman notes. Annually during the period between 1934 and 1950, the trustee placed an approximate valuation on
[8 NJ Page 115]
decedent's net estate, and it varied between the high figure of $39,602 and the low of $32,600.
"Caroline A. Petty and Carrie Hammann, the life tenants named in paragraph seventh (a) of the will, died on December 17, 1936 and April 7, 1947, respectively. Moroney and Fiedler severed their active connection with the business of the company between August 1 and August 7, 1933, and the trust described in paragraph seventh (b) of the will, if it had come into being, would have terminated at that time.
"Paragraph seventh of testator's will is as follows:
'Seventh: All the rest, residue and remainder of my estate, both real and personal, wheresoever the same may be situated, I give and bequeath to my executor and trustee, in trust nevertheless to hold the same and invest and keep the same invested and collect the income thereon and distribute the same as follows:
(a) As a first charge on said income, I give to my daughter-in-law, CARRIE HAMMANN and to her mother, CAROLINE A. PETTY, and the survivor, the sum of two hundred dollars ($200) per month, payable monthly on the first of each and every month from the date of my death, for the term of the natural lives of my said daughter-in-law and her said mother and the survivor. To insure these monthly payments, I further direct my executor and trustee to accumulate the balance of the income from my estate, and use said income together with such of the principal of my estate as may be available through liquidation of assets to set up a trust fund of forty-eight thousand dollars ($48,000), and thereupon to hold said fund as a separate fund in trust to invest and reinvest and to pay the income thereon to my said daughter-in-law, Carrie Hammann and to her mother, Caroline A. Petty, and the survivor, so long as they or the survivor shall live. Upon the establishment of said fund the income thereon is to be substituted for the said $200 monthly payments aforesaid and not be in addition thereto. Upon the death of the survivor of my said daughter-in-law and her mother, said principal sum of Forty-eight thousand dollars ($48,000) shall be added to the residue of my estate.
(b) After setting up said trust fund of forty-eight thousand ($48,000) as provided aforesaid, I direct my executor and trustee to collect the income on the balance of principal of my estate, and to pay over all of the net income to the following named persons, and the survivors or survivor of them, if any shall die before the termination of this trust, in the shares set opposite their respective names, the share of income of any deceased person to be divided among the survivors according to their proportionate interests. (Where joint tenants take, the joint tenants or survivor are to be
[8 NJ Page 116]
regarded as one person in taking the share set opposite their names): --
Mrs. Caroline A. Petty, now residing at No. 6 Whippany
Road, Morristown, New Jersey 3 shares
Mrs. Minnie E. Tapken, now residing at No. 141 Welton
Street, New Brunswick, New Jersey 3 shares
Mrs. Else Marsteller and her daughter, and the survivor,
as joint tenants, now residing at Wettingerstr. 10, Leip-
zig, Germany 3 shares
Miss Gretchen Goebel, and her father, Hugo Goebel, and
the survivor, as joint tenants, now residing at Oester-
deich 21, Bremen, Germany 4 shares
Mrs. Hanni Goebel, now residing at Parstr. 3, Oetzsch bei
Leipzig, Germany 3 shares
Mrs. Anna Waldeck and her daughter, residing with her,
and the survivor as joint tenants, residing at Krappgar-
tenstr. 13, Arnstadt, Thuringen, Germany 2 shares
Edward Hammann and his son, Edward Jr., and the sur-
vivor, as joint tenants, now residing at 468 Riverside
Ave., Trenton, N.J. 15 shares
Oscar Hammann and Carrie, his wife, and the survivor, as
joint tenants, now residing at No. 6 Whippany Road,
Morristown, New Jersey 15 shares
Mrs. Martha Krech 8 shares
Mrs. Else Krech 8 shares
(Said Martha Krech and Else Krech being children of my
late brother William Goebel, all of whom are now re-
siding at Oeslau bei Coburg, Germany).
Mrs. Marie Wiegand and her husband Carl Wiegand, and
the survivor as joint tenants, now at Blumenstr 2, Ru-
dolstadt, Thuringen, Germany 21 shares
Max Marsteller and his wife, and the survivor, as joint
tenants, of Regierungsbaurat, Invaliden Str. 24, Berlin,
S.L. 36, Germany 15 shares
(Said Marie Wiegand and said Max Marsteller being chil-
dren of my late sister, Mrs. Hedwig Marsteller).
This trust shall continue so long as my friend Matthew J. Moroney and Carl Fiedler or the survivor of them shall live, or in case both of them, or the survivor of them shall cease to be connected with the North American Iron Works, Inc., then so long as they or either of them or the survivor of them shall be actively engaged in or connected with the business of the said North American Iron Works, Inc.; and upon the death of the survivor of my said two friends, or the severing of the active connection with said business of both of my said two friends or the survivor, this trust shall terminate, and I then give and bequeath the principal thereof to such of said above named persons as shall be living at the time of the termination of said trust in the proportions above stated.
[8 NJ Page 117]
In the event that all of said persons die before the termination of said trust, I direct that the income be accumulated and, upon the termination thereof, the principal and all accumulations of income be divided into two parts, one of said parts I give to the persons who are, at that time, the heirs of Marie Wiegand, per stirpes, and the other of said parts to the persons who are, at that time, the heirs of Max Marsteller, per stirpes, said heirs to be determined by the laws of New Jersey in force at that time.'
"The plaintiff gave the entire residue of his estate to plaintiff in trust and directed that the payment of $200 monthly from the date of his death to Mrs. Hammann and Mrs. Petty, and the survivor of them, for the term of their lives to be a first charge on the income thereof. He further directed the trustee to use any accumulated interest, beyond what was required for the life tenants, and 'such of the principal of my estate as may be available through liquidation of assets' to set up a fund of $48,000 from which the life tenants would receive the income in lieu of the stipulated sum of $200 monthly. He then provided that upon the death of the surviving life tenant the said principal sum of $48,000 'shall be added to the residue of my estate.' The fact is that the monthly income of the entire residuary estate never amounted to $200 and consequently there was never any accumulation of income. There was never available 'through liquidation of assets' the sum of $48,000 with which to set up a separate fund to provide income for the life tenant. It could not be considered that the Michelman notes for $30,000 were principal 'available through liquidation of assets.' When the testator used the latter phrase he unquestionably had in mind cash or the equivalent of it. Thus the trust fund of $48,000 never came into existence. The life tenants received the income on the corpus during their lives.
"In paragraph seventh (b) testator directed that the balance of principal of his estate above and beyond the sum of $48,000 required as above, be held in trust to pay the income to certain named persons and the survivors of them, and upon the happening of the contingency specified therein,
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the trust should terminate and the principal thereof should pass to such of the persons named therein as were living at the termination of the trust. If this trust had come into existence it would have terminated early in August, 1933. And it may be noted here that all the named persons survived that date.
"Considering paragraph seventh and the contract together it is obvious that testator believed his net estate would exceed $48,000, but that a substantial part of it would consist of his stock in and his claims against the company, and he did not want his executor and trustee to call upon the company for the payment of its indebtedness as long as his friends Moroney and Fiedler were alive and actively connected with it. He was concerned about the job security of these men with the company. In other words, the corpus of the trust to be set up under paragraph seventh (b) would be payable to those receiving the income of it just as soon as the matter of job security for these two friends was out of the way. There can hardly be any doubt that the payment of the balance of the principal of testator's estate, above and beyond the sum of $48,000, was to be delayed only out of consideration for Moroney and Fiedler and only for such time as they were actively connected with the company. But the unfortunate fact is that funds were never available to set up the trust pursuant to paragraph seventh (b).
"The primary question is whether the fund in the hands of the trustee at the death of Carrie Hammann passed to the persons named in paragraph seventh (b) who were living in August, 1933, and the representatives of those of them who died thereafter.
"The contention that testator in paragraph seventh (b) by the use of the words 'balance of principal of my estate' gave his entire residuary estate to the persons named therein is not sound. To assert that as the residuary legatees those persons or their representatives received all that remained at the death of the surviving life tenant is to beg the question. As stated above, the trust under paragraph seventh (b) was
[8 NJ Page 119]
to be set up with the 'balance of principal of my estate' after the $48,000 trust had been set up under paragraph seventh (a). There was no such balance and the trust was never set up. And the contingency which was to terminate the trust under paragraph seventh (b) occurred in August, 1933, 14 years prior to the death of the surviving life tenant. In plain language, in paragraph seventh (b) testator provided that on the termination of the trust, 'I then give and bequeath the principal thereof to such of said above named persons as shall be living at the time of the termination of said trust.' This language would be effective only to dispose of what was in the trust at that time. And the fact is there was no trust and no principal thereof. It follows that nothing passed under paragraph seventh (b).
"In the concluding lines of paragraph seventh (a) testator directed that after the death of the surviving life tenant, 'said principal sum of Forty-eight thousand dollars ($48,000) shall be added to the residue of my estate.' But it is to be observed that while paragraph seventh dealt with the residuary estate and gave it to plaintiff in trust, it fails to make any provision for the disposition of what remained after the death of the life tenants. It was to be 'added to the residue of my estate' but the will does not state to whom the residue should go. And there is no provision in the will with respect to the disposition of the corpus in the event that the $48,000 fund was never set up. The difficulty which confronts us is due to the fact that testator did not provide for distribution in the contingencies which in fact occurred, namely, if his residuary estate was less than $48,000, and if the trust under paragraph seventh (b) never came into existence and if the contingency specified in paragraph seventh (b) occurred before that in paragraph seventh (a).
"It is to be observed that the life tenants Mrs. Petty and Mrs. Carrie Hammann are among the beneficiaries named in paragraph seventh (b). This would indicate that testator had in mind the possibility that the trust under paragraph seventh (b) might terminate prior to that under paragraph
[8 NJ Page 120]
seventh (a). Also it would seem to militate against the contention that the remainder of the trust under paragraph seventh (a) was to pass to the persons named in paragraph seventh (b).
"Conjecture might reasonably move one to believe that testator desired that the residue should go to the persons named in paragraph seventh (b), but it would be only conjecture and therefore insufficient. We cannot draw an intention from conjecture and then rewrite the will in part to conform to such presumed intention. We must find the intention in the language of the will when read in the light of surrounding circumstances in evidence. 2 Page on Wills, sec. 919; Fass v. Blatz, 141 N.J. Eq. 32 (Ch. 1947); Leyendecker v. Leyendecker, 142 N.J. Eq. 449 (E. & A. 1948).
"Mindful of the presumption against partial intestacy, the rule nevertheless is that where there is a deficiency in a will the court may not amplify or enlarge it to supply a provision to express the supposed intention of the testator. 2 Page on Wills, sec. 927; Rippel v. King, 126 N.J. Eq. 297 (Ch. 1939), affirmed 128 N.J. Eq. 179 (E. & A.); Glover v. Reynolds, 135 N.J. Eq. 113, affirmed 136 N.J. Eq. 116 (E. & A. 1945).
"It follows that testator died intestate as to the funds now in the hands of the plaintiff. There are in evidence exhibits setting forth the next of kin of testator which are not in any manner questioned. The shares of the respective next of kin will be fixed in accordance therewith and the statute of distribution. Inasmuch as all the next of kin are German nationals, their interest in decedent's estate will be distributed to the Attorney-General of the United States pursuant to Vesting Order No. 12475 entered on December 3, 1948."
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The judgment is affirmed for the reasons expressed in the opinion of Judge Stanton.