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In re Armour

Decided: December 5, 1960.

IN THE MATTER OF THE TRUST ESTABLISHED UNDER ARTICLE SEVENTH OF THE LAST WILL AND TESTAMENT OF BERNARD R. ARMOUR, DECEASED, FOR THE BENEFIT OF TOBY ARMOUR SCHNEIDER (FORMERLY TOBY ARMOUR) AND OTHERS. CHASE MANHATTAN BANK, GEORGE L. ARMOUR AND GEORGE F. LEWIS, JR., AS TRUSTEES, ETC., PLAINTIFFS-RESPONDENTS,
v.
TOBY ARMOUR SCHNEIDER, DEFENDANT-APPELLANT, AND RUTH ARMOUR KAMEN AND HARRY L. TOWE, GUARDIAN AD LITEM, DEFENDANTS-RESPONDENTS



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

Francis

The issue to be decided in this cause is whether plaintiffs, who are executors and trustees of decedent's estate, are entitled to double commissions on income which came into their hands as executors and was then transferred to themselves as trustees. The trial court denied the request but the Appellate Division concluded that such a grant was mandatory under N.J.S. 3 A:10-2. 61 N.J. Super. 50 (1960). We granted certification on application of one of the trust beneficiaries. 33 N.J. 114 (1960).

Bernard R. Armour died leaving a will under which the residuary estate was divided into three equal trusts. One such trust was established for appellant, Toby Armour Schneider (then Toby Armour), a daughter. The trustees were directed to hold, manage and invest that one-third part of the residuary estate, to collect and receive the income therefrom and apply so much of the net income as in their sole discretion was necessary for the support, maintenance and education of the beneficiary. The excess income was to be accumulated and paid to her when she became 21 years of age. Thereafter, the trustees were directed to pay the total net income to her for life. Upon her marriage, they were to turn over to her one-third of the principal of the trust. Provision was then made for distribution of the remainder at her death.

Plaintiffs were named both executors and trustees in the will. (One of the nominees resigned and was replaced by one of the present plaintiffs, a matter of no significance in this proceeding.) The testator died on December 1, 1949. The estate was a very large one and the executors found its administration complex and lengthy. Federal and state inheritance problems, as well as some litigation, are still unresolved.

On or about December 29, 1950 (according to the complaint herein) the executors established the trust in question by transferring to themselves as trustees principal cash in the amount of $168,387.41. At intervals thereafter as the

assets of the estate were liquidated additional cash was added in the same fashion by the executors, thus increasing the fund to $1,368,387.41. The record before us does not show when and in what amounts the additional sums which made up that total were transferred to the trust account. At the hearing on this limited accounting, it appeared that the principal of the trust is now practically complete; further distribution to it is expected to be small either before or on the final accounting of plaintiffs as executors.

It seems to be undisputed that the estate consisted largely of security interests in 15 corporations which were either wholly owned or controlled by Armour in his lifetime. During administration these securities produced substantial income which the executors received, accumulated and at intervals turned over to themselves as trustees of Mrs. Schneider's and other trusts. The parties are in agreement that the following are distributions of such income to Mrs. Schneider's trust:

December 29, 1950 $121,000.00

November 5, 1951 40,000.00

May 8, 1952 92,000.00

April 14, 1953 20,000.00

May 28, 1953 2,000.00

June 26, 1953 42,000.00

April 16, 1954 30,000.00

December 28, 1954 ...


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