On complaint for instructions and for allowance of first intermediate account.
[69 NJSuper Page 547] Frank Flynn, a resident of East Orange, died on April 17, 1959. He left a will dated January 27, 1959. His executor has now completed to a
large extent the administration of the estate and seeks the instructions of the court on a number of problems which must be resolved before distribution of the residue can be made. There being no disputed questions of fact, the matter has been submitted for decision upon the verified complaint, without the taking of any testimony, and thorough briefs on the questions involved have been filed.
Mr. Flynn had only personal property at the time of his death. It had a total inventory value of $290,020.21. He left specified amounts of money to 14 individuals and to three churches, as well as certain legacies of rugs, furniture, other household equipment and books. Following this long list of legacies -- about which there are no questions -- he provided for the residue of his estate as follows:
"TWENTY-FOURTH: All the rest, residue and remainder of my estate, of whatsoever kind and wheresoever situate, of which I may be seized or possessed or to which I may be entitled at the time of my decease, shall be distributed as follows:
(A) I hereby give and bequeath the remaining cash assets of my estate, including securities, to the beneficiaries named in paragraphs 'Fifth' to 'Eighteenth,' inclusive, in proportionate shares, the ratio of each proportionate share to the total residuary cash including securities to be in the same ratio that each specific bequest in said paragraphs 'Fifth' to 'Eighteenth,' inclusive, bears to the total amount of such specific bequests in said paragraphs contained. If the specific bequests contained in paragraphs 'Seventh' and/or 'Ninth,' above, should lapse because of the happening of the contingency therein referred to, then, and in such event, the beneficiaries entitled to share in my residuary estate under this subparagraph shall be those survivors named under paragraphs 'Fifth' to "Eighteenth', inclusive, above and their respective proportionate shares in such residue shall be determined upon the basis of their respective specific bequests in relation to the total thereof in said paragraphs contained.
(B) I hereby give and bequeath all remaining property in my residuary estate to such surviving person or persons named above as my Executor may select in the exercise of his or its best judgment, and such action in this respect shall be final and binding upon all the persons concerned."
It is this residuary clause which presents most of the questions.
1. What is the meaning of the phrase "remaining cash assets of my estate, including securities" which limits the subject matter of subparagraph (A) of paragraph Twenty-fourth of the will? At his death Mr. Flynn had several thousand dollars on deposit in New York savings banks. Each of these banks, except one, might have insisted upon 60 days' notice before permitting a withdrawal. He also owned a lady's diamond ring which he had delivered to a jeweler with instructions for sale, but the sale did not take place until ten days after the date of death. Another questioned item is a claim by Mr. Flynn for personal injuries which was the subject of settlement negotiations when he died, actual settlement having been made about six months later.
Three life insurance policies payable to the estate, an unsecured loan made to the Reverend Donald J. Nobel (collected after death) and a small lot of miscellaneous chattels are also placed among the questioned items, not by the executor, but by a group of defendants who are first cousins of Mr. Flynn.
It may be noted that the words "remaining cash assets of my estate, including securities" are followed at a later point in the same sentence by the phrase "total residuary cash including securities," and the two expressions are apparently used in the same sense. There is some conflict between the testator's use of the quoted words and the common understanding of the "residue" of an estate. If, on the day a will is probated, the sole beneficiary of the residuary clause asks what his share is or will be, counsel for the estate will almost surely tell him that no specific answer can be given until debts, taxes and general administration expenses have been paid and the residue thus determined. By the time the residue is defined in that way at least some property owned at death probably will have been turned into cash. I am satisfied that Mr. Flynn meant "cash assets" owned by him at the time of death, and did not mean to include assets turned into cash by the executor
while administering the estate up to the point where it would become possible to state accurately how much of the gross estate would pass under the entire residuary clause. To hold otherwise would allow the speed of the executor in converting assets into cash to determine the meaning of the will; and would, in the case of a quick-acting executor, leave little or no significance to be attached to the words "all remaining property in my residuary estate" which appear in subparagraph (B) of paragraph Twenty-fourth. I have, therefore, considered that subparagraph (A) with its "cash assets" and subparagraph (B) with its "all remaining property" must be taken together so as to include, as of the time of death, all that portion of the estate not bequeathed by earlier clauses of the will.
Savings bank accounts: I conclude that they are all "cash assets," and are to be disposed of under subparagraph (A) of paragraph Twenty-fourth of the will. It is true that six of the seven banks might have insisted upon 60 days' prior notice as a condition of withdrawal, yet actual use of such a requirement has been so rare among banks that no informed person would think of a savings account as anything but a cash asset. I am satisfied that Mr. Flynn would have thought of his savings accounts as immediately available in his lifetime for payment of bills, emergency use, or any purpose at all, and, subject to the necessary routine of probate and tax waivers, immediately available for use by his executor. Brearley, ex'r. v. Lalor , 15 N.J. Eq. 108 (Ch. 1862), which held that a savings bank deposit was not covered by the testamentary designation "moneys which I have at the time of my decease," would hardly reflect the thinking of any testator today. And in any event, Mr. Flynn used "cash assets" rather than the narrower "cash" or "moneys."
Life insurance policies: Counsel for cousins of the testator and for the guardian ad litem of two incompetent cousins have assembled a number of authorities which make it clear that life insurance policies have often been considered
by the courts as far more than simple obligations to pay a sum of money. It is argued from these authorities that the policies on Mr. Flynn's life were not "cash assets. " I cannot agree. The testator's intent, of course, controls. When making his will he would think of these policies as matured obligations to pay sums of money into his estate. Other contract features would be pushed into the background when thinking of death and the effect of a will. One type of sales effort of the life insurance companies is to urge that a policy payable to an executor will supply ready money to pay death taxes ...