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Board of Directors of Ajax Electrothermic Corp. v. First National Bank of Princeton

Decided: November 21, 1960.

BOARD OF DIRECTORS OF AJAX ELECTROTHERMIC CORPORATION, PLAINTIFF-RESPONDENT,
v.
THE FIRST NATIONAL BANK OF PRINCETON, ET AL., DEFENDANTS-RESPONDENTS, AND DAVID D. FURMAN, ATTORNEY GENERAL OF NEW JERSEY, DEFENDANT-APPELLANT



For affirmance -- Chief Justice Weintraub, and Justices Francis, Proctor, Hall and Schettino. For reversal -- None. The opinion of the court was delivered by Proctor, J. Hall, J., concurring in result.

Proctor

This is an appeal from a judgment of the Superior Court, Chancery Division, permitting acceleration and termination of a testamentary trust. The Attorney General took an appeal which this court certified on its own motion before hearing in the Appellate Division.

On April 29, 1940 Edwin Fitch Northrup died, leaving a will, dated January 31, 1939, which established a trust with net income to go to his wife for life. She died on May 8, 1945. The remainder of the will provides in pertinent part:

"TENTH: I direct that upon the death of my wife, Margaret J. S. Northrup, that an amount not exceeding One Hundred and Fifty ($150.00) monthly be paid to my sister, Edith Northrup, during her natural life, out of the net income from the aforesaid trust and not otherwise, and that the balance of the net income from the trust herein created be paid over to the Ajax Electrothermic Corporation, to be used directly and not indirectly for the sole benefit of the officials and employees of the Ajax Electrothermic Corporation, such determination and distribution to be made by the Board of Directors of said Corporation.

ELEVENTH: I direct that upon the deaths of my wife, Margaret J. S. Northrup, and my sister, Edith Northrup, that the trust herein

created shall terminate and the balance of the interest and the principal remaining be paid over to the Ajax Electrothermic Corporation, absolutely, to be used directly and not indirectly for the sole benefit of the officials and employees of the Ajax Electrothermic Corporation, such determination and distribution to be made by the Board of Directors of said Corporation.

TWELFTH: In the event the Ajax Electrothermic Corporation is merged, amalgamated, reorganized, sold, or combined with some other corporation or institution, then, upon the occasion of any of the aforesaid events of this paragraph, I direct that my trustee shall determine to the best of its ability if the personnel of the aforesaid Ajax Electrothermic Corporation remains intact, substantially as a whole, either independently, or in connection with others; and upon such determination pay over to such organization, institution, or otherwise, funds and property as herein provided in substitution to the said Ajax Electrothermic Corporation. It is definitely understood that any action of my executor and trustee under the provision of this paragraph shall be final without liability or responsibility to any party or parties whatsoever.

THIRTEENTH: I direct, in the event the said Ajax Electrothermic Corporation, or such other parties as determined by my executor and trustee entitled to benefits hereunder in accordance with item tenth hereof cannot be assembled or ascertained, refuses or is prohibited to accept any or all of the benefits hereby created, that my estate shall be disposed of as follows; namely: That my executor and trustee is hereby authorized to give and bequeath the rest, residue and remainder of my estate to some worthy charity, or charities, at the discretion of my executor and trustee, except that the term charity, or charities, as used herein shall not be construed to include any Church, or religious organization of any kind whatever. It is definitely understood that any action of my executor and trustee under the provision of this paragraph shall be final, without liability or responsibility to any party, or parties, whatever."

The testator's sister, Edith Northrup, is still alive.

In 1950, the Ajax Electrothermic Corporation (Ajax) and Edith Northrup brought an action against the trustee, First National Bank of Princeton, seeking acceleration and termination of the trust. It was alleged that Ajax had purchased for Edith Northrup an annuity contract paying $200 per month, in return for which she gave to the trustee a release of her $150 per month life interest in the trust. The Chancery Division dismissed the action for failure to join Ajax employees and the Attorney General as representative of the unnamed charities. This court affirmed the judgment

of the Chancery Division on the alternative grounds that (1) future Ajax employees and the Attorney General were indispensable parties, and (2) acceleration at that time would be contrary to the testator's intent. Ajax ...


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