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Matter of Estate of Clarence A. Munger

Decided: September 5, 1973.

IN THE MATTER OF THE ESTATE OF CLARENCE A. MUNGER, DECEASED


For affirmance -- Chief Justice Garven, Justices Jacobs and Hall, and Judges Conford and Lewis. For reversal -- None. The opinion of the Court was delivered by Hall, J.

Hall

The sole issue on this appeal is whether the trustee under the will of the decedent was empowered to invest in real estate by reason of a will clause authorizing investment of the trust corpus "in such securities as may, in the judgment and discretion of my said Trustee, seem proper, whether or not such securities shall be of the type prescribed by law for the investment of trust funds * * *." (Emphasis supplied). The Camden County Court, Probate Division, held that he was not and the Appellate Division affirmed in an unreported opinion. We granted the fiduciary's motion for leave to appeal, the order below being interlocutory. R. 2:2-2(b).

The issue arose by reason of exceptions taken by respondents to the accounts of appellant, the substituted executor and trustee, which related to a considerable degree to a substantial investment of trust funds in real estate. All parties agree that if "securities" cannot be said, under the particular circumstances, to have probably been intended by the testator to encompass real property, the investment was improper. The trial judge, believing that considerable time might be saved by first determining this question, bifurcated the trial of the exceptions and held a plenary hearing on this underlying issue. The extrinsic situation and circumstances

surrounding the testator and the execution of the will within the guidelines laid down in Wilson v. Flowers, 58 N.J. 250, 260-263 (1971), as well as the language used in other provisions of the will, were fully explored in order to ascertain that intent.*fn1 The following picture fairly emerges.

The testator died in 1959. The will was executed in 1955. The scrivener was his personal counsel of many years, the late Walter S. Keown, a well known lawyer in Camden. The instrument was essentially only an updating of his last prior will made in 1944 and drawn by the same attorney. In both instances the entire net estate was left in trust. In 1944 there were two life income beneficiaries -- a long time family nurse to a very limited extent and the testator's son Edwin. (The power to invade corpus was given as to the latter.) The nurse had since died and the testator desired the provisions for her to be deleted. In the earlier will, Mr. Keown and a Camden bank were named executors and trustees, with a nephew, George Munger, designated as executor in the event Mr. Keown predeceased the testator. The change desired here was to delete the corporate fiduciary and name Mr. Keown as sole executor and trustee, with his son, the appellant William S. Keown, also an attorney, to succeed him in both capacities if the senior Keown predeceased or died or

failed to act during the administration. (Mr. Walter Keown died a few months after the testator).

These were the only significant changes in the 1955 instrument. Other than to adapt the various paragraphs to the changes, it is essentially a copy of the earlier document. The quoted investment clause is identical, as are the other provisions granting or defining other powers of the fiduciary. Generally speaking, these latter comprise those customarily found in wills providing for testamentary trusts. Viewing the will as a whole, as well as close consideration of individual provisions, does not convince us that, on the face of the instrument, the term "securities" in the investment clause is intended to include real property. In this connection it is significant that wherever the term is otherwise used in the will, as in provisions prescribing the treatment of dividends, rights and plans for reorganization and the like, the connotation is definitely limited to that of its usual meaning -- stocks, bonds and similar obligations.

Conversely, when reference to a broader species of property was appropriate, the terms "investment," "assets" or "property" are used. Thus, the exoneration clause, authorizing the retention of property held at death without liability, refers broadly to "particular assets, both real and personal," "investment" and "property." And the power of sale, including the right to mortgage, repair, lease and so forth, specifically encompasses "all parts of my estate, real, personal and mixed, including any real estate acquired by my said Executor or my said Trustee at and after my death * * *." Appellant puts great stock in the last portion of the quoted clause, but we cannot find it sufficient to broaden the facial meaning of "securities" in the investment clause in the light of the use of that term elsewhere in the instrument. Rather we regard it -- a frequently used testamentary expression -- as referring to real estate involuntarily acquired by a fiduciary, such as in the case of the foreclosure of a mortgage held by the estate or of realizing upon an otherwise uncollectible obligation.

Turning to the extrinsic evidence introduced below, it is first to be noted that the testator was not a real estate investor in the usual sense. While the greater portion of his estate in 1955 and at death comprised one commercial property in downtown Camden, that property had come to him by inheritance and not by purchase. He and his family before him had operated a department store on the site, but the store had gone out of business and the premises were at these dates under a percentage lease to a chain store.*fn2 The only other real estate he owned in 1955 or thereafter was his home in Merchantville, which was sold before his death.

The principal testimony offered on behalf of the appellant in attempting to establish that the testator probably intended that "securities" in the investment clause included real property was that of the appellant himself and of Phillip C. Daniels, both of whom were young lawyers associated in practice with the senior Mr. Keown when the 1955 will was drawn and executed. Both participated in conferences with the testator when he asked to have his will updated and appellant was present at its execution. At the senior Mr. Keown's request, they ...


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