This suit seeks the construction of certain provisions of the last will and testament of Gustavus C. Seidel, deceased.
Said Gustavus C. Seidel died a resident of Atlantic City, New Jersey, on September 23, 1922, leaving a last will and testament, which was probated by the Surrogate of Atlantic County. The said last will provided, in part, as follows:
"Third. I give and bequeath to the Liberty Title and Trust Company, its successors and assigns the sum of Two Hundred and Fifty Thousand Dollars in trust nevertheless for the following uses and purposes, namely; to invest and reinvest the same, changing said securities according to their best judgment and to collect the rents, issues and profits thereof and after the payment of necessary charges and expenses to pay the net income thereof quarterly to my wife Lillian W. Seidel, in quarterly instalments, for and during all the term of her natural life. At and immediately upon the decease of my said wife Lillian W. Seidel I direct that the sum of One Hundred and Fifty Thousand Dollars shall be paid by my said Trustee to such person or persons and for such trusts as my said wife shall by her last will and testament direct and provide, and the remaining One Hundred Thousand Dollars I direct shall go to and become a part of my residuary estate to be paid to and distributed among the same persons as are entitled to my said residuary estate under the provisions of this will."
"Twentieth. All the rest, residue and remainder of my estate, of whatsoever the same may consist and wheresoever situate, whether real, personal or mixed, I give, devise and bequeath unto my nieces, Louise Plews, Lilliam Welzel and Vera Welzel in equal shares absolutely, their heirs and assigns."
The executors of the estate of Gustavus C. Seidel filed a final account on July 3, 1923. Thereafter, the trust as provided for in paragraph Third of the will was actually set up with assets of $250,000, less a deduction in the sum of
$2,968.68 for the payment of inheritance taxes. On May 27, 1932, the trustee filed an account showing a net corpus balance in said trust in the amount of $432,373.81.
At the time of the filing of its second and final account the trustee charged itself with corpus in the amount of $224,799.75. Exceptions were filed to said account, which resulted in a number of surcharges, causing an increase in the corpus of said trust to over $338,000 on May 14, 1951. In addition, the trustee was surcharged for income, which was for the amount thereof actually received by it on investments, but in no event at a rate of simple interest less than four per cent per annum on each of the investments. The trustee was so liable not only for the period during which it held said investments, but also until restoration of the principal was made on each surcharged investment. This resulted in a substantial income fund. See Liberty Title & Trust Co. v. Plews , 142 N.J. Eq. 493 (Ch. 1948), modified, 6 N.J. Super. 196 (App. Div. 1950), further modified, 6 N.J. 28 (1950).
Lillian W. Seidel, the above named life tenant, died a resident of Atlantic City, New Jersey, on May 14, 1944, leaving a last will and testament. Said Lillian W. Seidel, by her last will and testament and codicil, provided, in part, as follows:
"Second: In accordance with the power given by the Third Clause of the Will of my late husband, Gustavus C. Seidel, dated August 3, 1920, I direct and provide that the portion of said trust which comes under my power of appointment shall be distributed as follows:
(a) I direct said Trustee to pay unto my nephews Frank P. Wells, Joseph W. Wells and Harry L. Wells, their heirs and assigns, the sum of Five Thousand Dollars each."
There follows 12 separate items making provision for various legacies under the power of appointment.
"SIXTH: All the rest, residue and remainder of my estate, both real and personal and wheresoever situate, I give, devise and bequeath unto my sister Mary A. McCauley and my neice Iona M. Busch, in equal shares. In the event that my said sister Mary A. McCauley is
not living at the time of my death, I direct that my entire residuary estate shall go as herein provided to my niece Iona M. Busch."
"Codicil to Will of Lillian W. Seidel.
I, Lillian W. Seidel, the within named testatrix, do hereby make and publish this codicil to my last will and testament bearing date the 22nd day of September A.D. 1938, in the manner following, to wit:
ITEM: I do hereby revoke the bequest of Five Thousand Dollars ($5,000.00) in item (a) of the SECOND PARAGRAPH of my will to Frank P. Wells, and direct the said sum shall become part of my residuary estate."
As stipulated, the questions which are propounded for the court's determination are as follows:
1. Are those designated remaindermen in Paragraph Third restricted to a participation in the corpus of the trust fund to the extent of $250,000 only, or may they participate in the increase or accretion to the trust fund arising by way ...