On appeal from the Superior Court, Chancery Division.
For affirmance -- Chief Justice Vanderbilt, and Justices Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For modification -- Justice Heher. The opinion of the court was delivered by Wachenfeld, J. Heher, J. (dissenting in part).
[12 NJ Page 91] This appeal, certified by our own motion, is from two judgments entered in the Superior Court, Chancery Division. The first adjudges the defendant Fry had a right to purchase the stock in question under the will. The second determines the plaintiff Mrs. Rosencrans, the testator's widow, was not entitled to receive the dividends declared between January 20, 1949 and the date of Fry's deposit with the clerk of the court, and that Fry was not, by reason of an alleged breach of duty as trustee, liable to account to Mrs. Rosencrans for the portion of the earnings of the company allocated to 3,025 shares of stock, the subject of this dispute, accruing between the date of the testator's death in 1944 and the date of Fry's exercise of his option to buy in 1949. Mrs. Rosencrans will be referred to herein as the appellant, the rights of the other plaintiffs being governed by our decision as to her.
The facts, intelligently and logically set forth in the opinion below, will be repeated briefly so their relationship to the issues raised will be apparent.
The Monmouth Plumbing Supply Company, Inc., was incorporated in the State of Florida and engaged there in the plumbing and supply business. It was organized by the testator, Charles Rosencrans, who died a resident of Monmouth County on December 7, 1944. At the time of his death he owned 3,045 shares of its stock out of a total of 6,661 shares outstanding.
Of these, he made a gift in his will of 20 shares outright to Fry, who also held 375 shares in his own right. The testator's wife owned 181 shares, and his nephews, the plaintiffs Arthur and Harry Rosencrans, had 500 shares between them. Approximately 50 other investors were stockholders. The principal query is whether or not Fry, under the terms of the will, was given the right to purchase the remaining 3,025 shares possessed by the testator at the time of his death.
The testator was survived by his widow and they apparently had a happy and harmonious marriage. There were no children born of the union.
Fry was employed by the Monmouth Plumbing Supply Company in 1924 as an "extra man." He became manager in 1934. During the absence of Mr. Rosencrans from Florida during six months of the year, Fry managed the affairs of the company in Miami. At the time of the testator's death Fry was secretary-vice-president of the company.
The will, dated July 10, 1944, provided by its 19th clause:
"I devise and bequeath the remaining one-half of my Estate, consisting of both real and personal property, wherever the same may be situated or located, and which is not specifically disposed of herein, including all stock owned by me in the Monmouth Plumbing Supply Co. Inc., a Florida Corporation, other than the twenty (20) shares, herein bequeathed outright unto my good-friend, WILLIAM M. FRY, unto LEE ROSENCRANS and WILLIAM M. FRY, in Trust, nevertheless, on the following conditions, to wit:
That the income therefrom shall be paid to my beloved wife, LEE ROSENCRANS, until her death, at which time the said Trust shall terminate and cease and the principal of the trust estate created by this paragraph Number Nineteenth, shall be paid over, transferred and delivered absolutely and free from further trust, unto my beloved nephews, Arthur Rosencrans and Harry Rosencrans, share and share alike; provided, however, that my said nephews Arthur and Harry Rosencrans, shall not sell, hypothecate or otherwise dispose or encumber such stock of the Monmouth Plumbing Supply Co. Inc., a Florida Corporation, for a period of Five (5) years after the death of my wife, Lee, during which said period of Five (5) years, and also during the existence of said Trust, I do hereby give unto my friend, William M. Fry, the right to purchase any or all of said stock at its par value of $25.00 per share, and further, that my said nephews, Arthur and Harry Rosencrans, shall at no time after said period of Five years after the death of my said wife, Lee, sell any portion of said stock, without first offering the same for sale to the said William M. Fry, at its par value of $25.00 per share."
The decedent's widow was named executrix of the will and qualified as such on April 3, 1945, and Fry and the widow qualified on the same day as trustees of the trust created by the 19th paragraph of the will.
Fry qualified as ancillary executor in Florida. The disputed shares of stock were transferred to him in that capacity and were so held by him until, upon request made during the pendency of this litigation, they were re-transferred to the executrix.
In 1946 Fry expressed to Mrs. Rosencrans his intention to buy the shares of stock but refrained from exercising the option because of circumstances hereinafter referred to.
In January 1949 Mrs. Rosencrans, having definitely denied his right to purchase during her lifetime, Fry instituted a suit in Florida praying that he, as ancillary executor, be permitted to sell the shares to himself individually for $25 per share as provided in the will. Mrs. Rosencrans, individually and as trustee, countered by filing a complaint here in the Superior Court on February 7, 1949 alleging the situs of the trust was in New Jersey and the trust and its assets were not within the jurisdiction of Florida, and asked a restraint forbidding Fry from prosecuting the Florida suit,
Fry consented to the restraint and entered an appearance in our jurisdiction by filing an answer and counterclaim seeking a construction of the will and a judgment determining his right to buy the shares at the figure mentioned in the will. Mrs. Rosencrans moved to add herself in the capacity of executrix and to include a second count requiring Fry to make discovery and to turn over the shares of stock to the executrix. This was the time that Fry transferred the 3,025 shares over to the executrix as above stated.
At the same time Arthur and Harry Rosencrans were admitted as parties plaintiff. They had been elected to the board of directors on February 16, 1950 at Mrs. Rosencrans' request. After the testator's death the board had consisted of Mrs. Rosencrans, Fry and a Mr. Wherry, an employee of the company. However, with the election of the nephews to the board, control was given to the Rosencranses.
Pursuant to order of the court, a partial hearing was had on the sole question of whether the defendant Fry had a present right to buy the shares in question. On May 9, 1950 the court found he had such a right, but the entering of judgment was delayed to May 18, 1951 because of the judge's illness. Prior thereto, on May 29, 1950, Fry filed an answer and counterclaim setting forth the court's conclusion as to his right to buy and praying that it be adjudged he was also entitled to all dividends declared upon the shares since January 20, 1949, the date of the commencement of the action in Florida.
On January 18, 1951 a $4 cash dividend was voted. Arthur and Harry Rosencrans were not given notice of this meeting, nor did they attend. On February 15, 1951, still prior to the entry of judgment giving Fry the right to purchase the stock but after the decision thereon, another meeting of the board was held with all directors attending. It was resolved: (1) that a dividend of $10 per share be paid to the holders of record as of February 15, 1951; (2) that a stock dividend of 50% be paid to holders as of the same date; (3) that the authorized capital stock of the company be increased from $250,000 to $1,000,000 and a further stock
dividend of 300% be declared, issuable to the holders of record as of the same date. Fry and Wherry voted against the resolution.
Fry obtained a temporary restraining order from the Florida court enjoining the payment of the dividend, and the plaintiffs in this jurisdiction amended the second count of the complaint to charge Fry with a breach of his duty as trustee.
Fry then also applied in our jurisdiction for a restraining order paralleling the Florida restraint, which was granted. This restraint was subsequently dissolved upon condition that Mrs. Rosencrans deliver to the clerk of our court the 3,025 shares of stock and all cash and stock dividends thereon after February 14, 1951, to be held by the clerk until the further order of the court. This condition was complied with. Fry obtained an order permitting him to deposit $75,625, representing the purchase price of the 3,025 shares at $25 per share, the deposit being made on July 31, 1951. The subsequent trial of the case resulted in the second of the two judgments from which the plaintiffs appeal.
The appellant contends the will is ambiguous and the trust is not yet in existence within the intent of paragraph 19 of the decedent's will, as the assets comprising the intended trust res have not been transferred to the trustees, and the testator's death did not automatically mark the commencement of the term of the trust's existence.
In considering doubtful provisions in a will, the courts favor an interpretation benefiting kindred as against strangers. 69 C.J. 102 expresses it thusly:
"In the absence of an express intention to the contrary, in construing a will favor will be accorded to those beneficiaries who appear to be the natural or special objects of the testator's bounty."
In In re Woods' Estate, 321 Pa. 164, 184 A. 113, 116 (Sup. Ct. 1936), designating the rule to be of universal ...