[21 NJSuper Page 72] This action is the outgrowth of Ajax Electrothermic Corporation v. First National Bank of
Princeton , docket C-2342-49, in which Edith Northrup and Ajax Electrothermic Corporation, beneficiaries of a trust set up under the last will and testament of Edwin Fitch Northrup sought to accelerate and terminate the trust. The Chancery Division having dismissed the complaint in that action because it failed to state a claim against the defendant upon which relief could be granted, plaintiffs appealed and the Supreme Court, upon certification of the appeal on its own motion, affirmed. 7 N.J. 82 (1951). The pertinent sections of the will relating to the trust are set out in that opinion.
The complaint in Ajax Electrothermic Corporation v. First National Bank of Princeton was filed August 11, 1950. After reciting the terms of the trust, it alleged that Ajax had purchased a life annuity policy from the Prudential Life Insurance Company of America, upon application of Edith Northrup, under which she was to receive $200 a month for life. The policy was purchased because Ajax felt that the $150 monthly income which Edith Northrup received under paragraph Tenth of the will was inadequate. The complaint further alleged that Edith Northrup renounced her interest of $150 per month for life under the will and in lieu thereof accepted the life annuity policy paying $200 a month.
At the time that complaint was filed Edith Northrup had not, in fact, actually renounced in writing her beneficial interest in the trust. The First National Bank of Princeton, executor and trustee under the will, filed its answer on September 22, 1950, setting forth eight separate defenses which indicated that it opposed the acceleration and termination of the trust because the intent of the testator and settlor would thereby be frustrated. Counsel for the plaintiffs then realized that the mere allegation that Edith Northrup had renounced her interest in the trust was not sufficient. Examination of the Bennett v. Fidelity Union Trust Company cases, 122 N.J. Eq. 455 (Ch. 1937) and 123 N.J. Eq. 198 (Ch. 1938) led counsel to the conclusion that our courts would not consider the question of acceleration and termination of a trust
unless the release was absolute and immediately effective, and unless it had been delivered to the trustee.
Thereupon, on October 30, 1950, Edith Northrup executed a release, duly acknowledged, which recited:
"* * * I, EDITH NORTHRUP, desiring to terminate said life estate and trust, do therefore as life tenant of aforesaid, in consideration of one ($1.00) Dollar and other good and valuable consideration paid to me by the remaindermen and said Executor and Trustee, do hereby for myself, my heirs, executors and administrators, remise and release my respective life estate to which I have or may become entitled by virtue of the said last Will and Testament of Edwin Fitch Northrup, my brother, so as to terminate said life estate, and I do hereby relieve, release and forever discharge the said First National Bank of Princeton, New Jersey, Executor and Trustee of aforesaid, from all further duties and obligations of their said office concerning my right, title, and interest in my respective life estate in said trust property.
This release to take effect immediately and unconditionally."
On the same date a memorandum of agreement was entered into between Ajax Electrothermic Corporation and Miss Northrup reading, in part, as follows:
"The party of the first part has purchased for the party of the second part, Edith Northrup a life annuity paying Two Hundred $200.00) Dollars monthly to Edith Northrup, with no payments after death of the life annuitant, nonassignable, for the sum of Thirty-three Thousand Four Hundred and Ninety ($33,490.00) Dollars, from the Prudential Insurance Company of America, home office in Newark, New Jersey. The consideration for the purpose of this above annuity for Edith Northrup, party of the second part, is a unconditional release, executed and delivered to The First National Bank of Princeton, New Jersey, Executor and Trustee under the last Will and Testament of Edwin Fitch Northrup, brother of Edith Northrup, by the party of the second part releasing her life interest of $150.00 monthly under paragraph ten (10) of the aforesaid Will."
These two instruments were filed with the court on November 3, 1950. Counsel for the trustee raised no objection that the release and agreement were executed more than a month and a half after the complaint in the Ajax Electrothermic Corporation case was filed, but was willing that the ...