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Busch v. Plews

Decided: May 18, 1953.

IONA M. BUSCH, INDIVIDUALLY AND AS EXECUTRIX UNDER THE LAST WILL AND TESTAMENT OF LILLIAN W. SEIDEL, ET ALS., PLAINTIFFS-RESPONDENTS,
v.
LOUISE PLEWS, DEFENDANT-APPELLANT, AND LIBERTY TITLE AND TRUST COMPANY, ET ALS., DEFENDANTS-RESPONDENTS



For affirmance -- Chief Justice Vanderbilt, and Justices Heher, Wachenfeld, Jacobs and Brennan. For reversal -- Justice Burling. The opinion of the court was delivered by Jacobs, J.

Jacobs

The defendant Louise Plews appeals, pursuant to certification granted by this court, from an adverse construction of the will of Gustavus C. Seidel, deceased. See Busch v. Plews, 19 N.J. Super. 195 (Ch. Div. 1952), affirmed 21 N.J. Super. 588 (App. Div. 1952).

Mr. Seidel died on September 23, 1922 leaving a last will and testament which was duly probated. The will directed that his debts be paid, devised and bequeathed his Atlantic City and St. Lucia, Florida, houses, their contents and other articles, to his wife Lillian W. Seidel, and in its third paragraph provided 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."

In the fourth paragraph the testator bequeathed $20,000 to the Liberty Title and Trust Company in trust to pay the income to his brother Robert for life and upon Robert's death to distribute to five named beneficiaries specified sums aggregating $20,000 "and to distribute the interest which may be on hand at the time of the death of my said brother to each of the above named beneficiaries in proportion to their bequest." Various bequests which need not be detailed here were contained in ensuing paragraphs, a residuary

clause was embodied in the twentieth paragraph, and Lillian W. Seidel and the Liberty Title and Trust Company were named as executors in the twenty-first paragraph.

In 1923 the executors filed their final account, the trust provided for in the third paragraph was actually set up, and the general assets of the estate were distributed. The securities in the trust increased in value and a 1932 accounting disclosed a net corpus of $432,373.81. Thereafter the corpus lessened, the trustee was surcharged (see Liberty Title & Trust Company v. Plews, 6 N.J. 28 (1950)), and by order dated May 14, 1951 the Chancery Division adjudged that at least $348,446.70 was due the trust estate. During her lifetime Mrs. Seidel received the income on the entire trust fund. In 1944 she died leaving a will which exercised the power conferred upon her in the third paragraph of her deceased husband's will. She disposed of $57,200 to various designatees and the balance over which she had "the power of direction" to her niece plaintiff-respondent Iona M. Busch, as the surviving co-appointee. The plaintiff contends that under a proper construction of the power conferred in the third paragraph of Mr. Seidel's will she is entitled to three-fifths of the trust corpus and accrued income, and that the residuary legatees are entitled to two fifths of the corpus and accrued income. On the other hand the defendant Louise Plews, a residuary legatee, contends that plaintiff's interest is confined to $150,000 corpus plus interest from the death of Mrs. Seidel, and that the entire balance of the corpus and accrued income is payable to the residuary legatees. On this issue Judge Haneman sitting in the Chancery Division accepted the plaintiff's contention, and his opinion was adopted in the Appellate Division. See 19 N.J. Super. 195, 206; 21 N.J. Super. 588.

Judge Haneman discussed the nature of general, demonstrative and specific legacies, expressed the view that insofar as the remaindermen in the third paragraph were concerned there was "a specific bequest referring to a particular fund out of which their legacies must be satisfied" and concluded that they were entitled to increments to the trust

fund in the same proportion as their stated legacies. A general legacy is defined as a bequest of personal property payable out of the general assets of the testator's estate rather than from specific property included therein. In re Low, 103 N.J. Eq. 435, 437 (Prerog. 1928); Clapp, Wills and Administration (1950), § 157; 4 Page, Wills (3 d ed. 1941), § 1393. A specific legacy is defined as a bequest of personal property in specie and not payable from other assets of the estate. Camden Trust Co. v. Cramer, 136 N.J. Eq. 261, 270 (E. & A. 1945). It may be all or part of the specified property or fund. Clapp, supra, § 156; Page, supra, § 1394. In the absence of provision to the contrary, specific legacies of property carry with them all accessions and accretions thereto after the testator's death. Page, supra, § 1599. However, since they are subject to ademption with consequent frustration of the testator's donative purpose, courts lean against construing legacies as specific. Camden Trust Co. v. Cramer, supra. A demonstrative legacy is defined as a bequest payable primarily out of specified property but chargeable against other assets of the estate if that property is insufficient; here again, for fear of defeating the testator's intention, courts lean towards construing legacies as demonstrative rather than specific. Camden Trust Co. v. Cramer, supra; Page, supra, § 1399.

It is clear that the $250,000 bequeathed under the third paragraph was payable from the general assets of the estate. But it is equally clear that the testator contemplated that that sum would be withdrawn from the general estate for investment by the trustee and that the trustee would set up and maintain a separate trust for the exclusive benefit of the life tenant and remaindermen cestuis. There are decisions which suggest that once such separate trust is properly set up it may be considered in the nature of a specific legacy within applicable rules relating to accessions and accretions. See Re Boyer's Estate, 174 Pa. 16, 34 A. 239 (Sup. Ct. 1896); ...


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