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Matter of Estate of Stanhope Wood Nixon

Decided: January 19, 1962.

IN THE MATTER OF THE ESTATE OF STANHOPE WOOD NIXON, DECEASED


Conford, Freund and Labrecque. The opinion of the court was delivered by Conford, S.j.a.d.

Conford

[71 NJSuper Page 452] This is an appeal from a judgment of the Chancery Division passing on a request for instructions by the executor of the last will and testament of Stanhope Wood Nixon, who died in January 1958. The court denied a request for sequestration, submitted by the remaindermen of the decedent's estate, of a life interest in a portion of the estate bequeathed to decedent's son, Lewis Nixon, which was renounced by the latter. The renunciation was in partial performance of a court-approved agreement of compromise of a claim against the estate by the administrator c.t.a. of the estate of Lewis' mother, decedent's first wife, for enforcement of an inter vivos agreement between the decedent and her that he would leave Lewis by will not less than a specified portion of his estate. The agreement had been breached by the subsequent making of the will here involved, which gave Lewis a lesser interest than that called for by the agreement.

The takers of the remainder after life trusts (hereinafter called "the Hospitals") contended below that the compromise payment out of the estate to Lewis (which was in the sum of $1,000,000) would have such an inequitable effect upon their interests, if coupled with an acceleration of the succeeding life interest given by the will to Lewis' son, Michael, as to warrant sequestering the renounced life interest and accumulating the proceeds thereof for a sufficient period of time to enable restoration to the corpus of the estate of the $1,000,000 paid out to Lewis (unless Lewis should sooner die). Judge Kingfield, sitting in the Chancery Division, held to the contrary and directed the acceleration of Michael's interest. Hence this appeal by the Hospitals.

The litigation derives from the following background. The testator and his first wife, Doris Ryer Nixon, who were married in 1917, had two children, Lewis and Blanche. In 1945 they entered into a written agreement concerning property matters in contemplation of a divorce which ensued shortly thereafter. Therein Nixon agreed that he would not thereafter reduce the interests of the children in his estate from the quantum of the provision made for them in a contemporaneously executed will which would have given each of them 30% of the estate outright. If one predeceased the testator without issue the other was to succeed to his or her share. In 1948 Doris Ryer Nixon died testate in California. In 1951 the testator made a new will, that now before us for construction, wherein, in violation of his agreement, he revoked the 1945 will and transmuted the children's bequests into 30% life estates, successive life interests going to their children, with remainder in fee (as well as the balance of the estate) to the Hospitals. These and other provisions of the will are more fully described hereinafter. The daughter, Blanche, predeceased testator without leaving children, a contingency which vested her testamentary interest in Lewis under the terms of the will. Testator was survived by his son, Lewis,

and by Lewis' only child, a son, Michael, aged 14 when decedent died.

After probate of the instant will in Middlesex County in January 1958 an action was instituted by John Drewen as administrator c.t.a. of the estate of Mrs. Nixon to enforce the property agreement on behalf of Lewis. The Supreme Court held the administrator to be entitled to bring the action. Drewen v. Bank of Manhattan Co. of City of N.Y. , 31 N.J. 110 (1959). Thereafter, on notice to and with the consent of all parties in interest, the Middlesex County Court entered an order by which the claim against the estate was settled by the payment of $1,000,000 to Lewis in exchange for his renunciation of all interest in his father's estate. Then followed the present contested proceeding for instructions.

The will provides that the testator's entire residuary estate be held in trust for the lives of his second wife, Elizabeth Mulcahy Nixon, his children, Lewis and Blanche, and the last survivor of the lawful issue of his children living at the time of testator's death ("lawful issue" later defined to include only children and not other descendants of Lewis and Blanche), and 21 years thereafter, for the following uses: 30% of the net income each to Lewis and Blanche for life, payable quarterly, and upon the death of either to his or her children in equal shares, and if either Lewis or Blanche died without leaving issue or leaving issue all of whom died during the lifetime of the other, such share or shares to go to the other or his or her surviving issue; out of the remaining 40% of net income $5,000 annually to testator's wife for her life, the excess of such 40% of net income in equal shares to Middlesex General Hospital and St. Peter's General Hospital, both of New Brunswick, until the death of the wife, the entire $5,000 of net income to go to the Hospitals in equal shares after the death of the wife (apparently the rest of the 40% of net income was not distributable after the death of the wife, but this is not an issue here). At

the termination of the trust the entire trust corpus , together with any undistributed income, was to be paid over in fee to the Hospitals in equal shares.

The will provided that if any legatee, devisee or beneficiary of the trust should directly or indirectly contest or dispute the probate of the will or litigate any provision thereof, the legacy, etc., in his favor was to be revoked and given to the remaining beneficiaries, share and share alike. It was also provided that during the lifetime of Lewis, if it became a "matter of necessity to provide funds for the education or a start in life" of Michael, the executor and trustee was authorized in its sole discretion to apply out of income due Lewis any funds needed for such purpose.

The amount of the net estate is said not to be presently determinable with accuracy because federal estate taxes have not yet been fixed. The brief of the Hospitals estimates the probable net estate at about $4,000,000, producing net income at the annual rate of 3%. The appellate argument projected is that whereas the necessity of satisfying the claim of Lewis reduced the corpus , all of which will eventually go to the Hospitals, by $1,000,000, an immediate investiture of Michael into Lewis' 60% share of the trust income by the process of acceleration of his testamentary interest would give Michael $72,000 per year over the period of Lewis' life expectancy, a total of $2,244,240, or a net gain of $1,830,060 allowing for Michael's prospective loss of income attributable to the diminution of the trust corpus , because of the settlement payment, for the period after Lewis' death when Michael would have been entitled to the income had the testamentary plan not been disturbed. Further swelling Michael's prospective benefit from an acceleration, argue the Hospitals, would be the ...


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