No recital of facts will be made at the outset. They will be referred to in the course of the discussion.
For convenience, Honor Barr Douglas will be referred to as the wife, and her trust created by agreement dated July 5, 1935 as the wife's trust; and her husband, John Sheafe Douglas, will be referred to as the husband, and his trust, which is similar to that of his wife and created on the same day, as the husband's trust.
After the wife's death on August 12, 1956, William R. Bailey, one of her three executors and the recipient of a one-sixth interest in her residuary estate, seemingly acting also for the other executors and residuary legatees, wrote to the plaintiff on August 22, 1956 and raised the question as to whether the wife in her will had exercised the power of appointment which she had in her trust. Early in January 1957 the plaintiff took the position that the residuary clause in the wife's will did not constitute an exercise of the power, unless there were extrinsic circumstances of which it was not aware indicating that she intended to exercise it; doubt was indicated as to whether or not New Jersey law governed the determination of the question; that it would file an accounting and ask this court's instruction as to the distribution of her trust estate.
At the oral argument counsel agreed that New Jersey law controls on the question of the exercise of the power of appointment.
It is the settled law of this State that a general residuary clause, in which the testator refers to the property devised or bequeathed as his property, will not be considered to be an exercise of the power of appointment. Farnum v. Pennsylvania Co. for Ins., etc. , 87 N.J. Eq. 108 (Ch. 1916), affirmed 87 N.J. Eq. 652 (E. & A. 1916); Lippincott v. Haviland , 93 N.J. Eq. 585 (Ch. 1922). In Bank of New York v. Black , 26 N.J. 276 (1958), decided after the plaintiff took its position on this question, the
court stated the above mentioned general rule, and at page 282 Justice Wachenfeld added:
"The testator must in some way express or indicate a conscious intention to execute it. In many instances the intention exists and, although imperfectly expressed, is aided and supported by surrounding circumstances and their reasonable and logical implications, while in other cases the intention is not expressed at all. Our responsibility, within the recognized rules of construction, is to distinguish between the classifications, keeping in mind the basic principle hereinafter alluded to."
In the Black case it was held that the residuary clause did in fact exercise the power of appointment; however, the old general principles were reaffirmed and the case was decided on the particular language of the residuary clause, viewed in the light of the circumstances surrounding the appointee at the time of the execution of her will. Here the wife in her will made no mention of her trust, nor of her right to exercise any power of appointment. There is no expression of intention to exercise any power of appointment. The residuary clause contains only a disposition of her own property in these words: "The rest, residue and remainder of my estate, of every kind, nature and description, real, personal and mixed, and wheresoever the same may be located, I give, devise and bequeath * * *."
There is no need to review all the surrounding circumstances urged by the contending parties. There is nothing really significant advanced on the part of the wife's executors and her testamentary beneficiaries except that her last will and testament, executed on February 20, 1956, was drawn while she was domiciled in California by a California attorney, and that under the law of that state a general residuary clause is held to express a sufficient and valid exercise of the power of appointment. Among the circumstances urged by the husband's kin is the fact that in two earlier wills the wife expressly exercised this power of appointment. The first of these was drawn shortly after the creation of the trust by her New Jersey attorney while
she was still resident here. The second will, dated June 19, 1943, was executed while she was domiciled in California and was drawn by a California attorney. In her 1943 will she expressly declared that it was not her intention to exercise the power of appointment given her in the husband's trust. Her action in the two earlier wills with respect to the exercise of the power of appointment not only resists any inference of an intention to exercise the power in her last will but on the contrary indicates an intention not to exercise it. This action and the declaration of her intention in her 1943 will not to exercise the power given in her husband's trust indicate a feeling on her part that her will should speak expressly and explicitly with respect to the exercise or not of a power of appointment which by its terms was to be exercised in her last will and testament.
Reference might be made here to a letter which William R. Bailey wrote to the husband's brother, Fred W. Douglas, on May 24, 1957, wherein he proposed a settlement between what he called the Bailey side and the Douglas side. In it he said the wife did not specifically dispose of the principal of her trust; that Mr. Noon, the California attorney who drew her last will and testament, stated that she never mentioned the trust to him; that her failure to specifically exercise the power of appointment was an oversight and what appears to be a lapse of memory on her part. This lack of consistency speaks for itself.
It is my conclusion that there has been a failure to sustain the burden of proving that there had been an exercise of the ...