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Fidelity Union Trust Co. v. Berenblum

Decided: August 4, 1966.

FIDELITY UNION TRUST COMPANY, ETC., ET AL., PLAINTIFFS-APPELLANTS,
v.
MARGARET BERENBLUM, INDIVIDUALLY, DEFENDANT-APPELLANT, AND HARRY POTOLSKY, ET AL., DEFENDANTS-RESPONDENTS



Goldmann, Foley and Collester. The opinion of the court was delivered by Collester, J.A.D.

Collester

This is an appeal from a judgment of the Chancery Division in a will construction case. The four executors and trustees of the estate of Harry Berenblum, deceased, brought an action seeking instructions, inter alia, concerning the proper distribution of assets of decedent's estate. Margaret Berenblum (hereafter referred to as defendant-appellant), widow of the decedent, is one of the executors. Defendants are the descendants of testator's sister Rachel Potolsky and his brother Isaac Berenblum. Both Rachel and Isaac predeceased the testator. Defendants filed a counterclaim for a judgment, alleging that negotiable bonds having a face value of $168,000, which Margaret Berenblum had claimed as her own, were part of the assets of decedent's estate. They sought an order directing the executors to take appropriate legal action to recover the same. At the pretrial conference all parties agreed that one of the issues to be tried was whether the decedent made an inter vivos gift of the bonds to his widow.

The findings and conclusions of the trial judge in the proceedings below are fully set forth in his opinion reported at 83 N.J. Super. 65 (Ch. Div. 1964). A brief recital of the facts necessary for consideration of this appeal will suffice.

Harry Berenblum died on May 26, 1960 leaving a will dated April 30, 1936. The will created a trust of his residuary estate. It directed that the trust income be paid during the lifetime of his widow, as follows: one-half to the widow, one-fourth to testator's sister Chamka Levenson, one-eighth to another sister Rachel Potolsky, and one-eighth to his brother Isaac Berenblum. The will further provided that upon the widow's death the corpus of the trust should be distributed, 40% to Chamka, 30% to Rachel and 30% to Isaac.

As stated above, both Rachel and Isaac predeceased the testator. However, each left descendants who have survived. The parties do not dispute the finding of the trial judge that Chamka also predeceased the testator, leaving no issue.

The case involves the construction of the anti-lapse statutes, N.J.S. 3A:3-13 and 14. Section 13 provides that when a named devisee or legatee within a specified class dies and leaves descendants who survive the testator, the gift to the named devisee or legatee shall not lapse but shall vest in the descendants. Section 14 provides as follows:

"When a residuary devise or bequest shall be made to 2 or more persons by the will of any testator dying after July 3, 1947, unless a contrary intention shall appear by the will, the share of any such residuary devisees or legatees dying before the testator and not saved from lapse by section 3A:3-13 of this title, or not capable of taking effect because of any other circumstance or cause, shall go to and be vested in the remaining residuary devisee or legatee, if any there be, and if more than 1, then to the remaining residuary devisees or legatees in proportion to their respective shares in said residue."

The widow claimed that the gift of 40% of the corpus to Chamka lapsed upon Chamka's death without issue, and that it passed to her as intestate property because she is decedent's sole heir at law and next of kin. She asserted that no descendant of Rachel or Isaac could be regarded as a "remaining residuary devisee" in whom Chamka's interest would vest under section 14. She also claimed that she is entitled to

all the income provided for Chamka in the will because she is the sole surviving residuary legatee.

The trial judge held that section 13 applied to the gifts provided in the will for Rachel and Isaac; that such gifts did not lapse, but vested in the descendants of the named donees. He further held that the gift of income and corpus to Chamka in the residuary trust did not pass as intestate property, but was saved from lapse under section 14. He ruled that the issue of Rachel and Isaac would take the entire corpus of the trust property per stirpes upon the death of testator's widow, and that the income Chamka would have received if living should be distributed under the terms of the statute "in proportion to their respective shares in said residue," to wit: two-thirds of Chamka's 25% interest in the income would be added to the widow's share, one-sixth of said interest would be added to the share to be paid to Rachel's issue, and one-sixth of said interest would go to Isaac's issue.

The trial judge further found that the negotiable bonds claimed by the widow were part of decedent's estate. He allowed counsel fees to the parties involved in the litigation, including an additional fee of $10,000 for defendants-respondents' counsel for their services in producing the fund in court of ...


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