On appeal from Superior Court of New Jersey, Chancery Division, Essex County.
Fritz, Polow and Joelson. The opinion of the court was delivered by Joelson, J.A.D.
The question in this case is whether an express inter vivos trust of real property can be revoked orally. It is an issue which apparently has not been decided in this State. The trial judge ruled that such an inter vivos trust cannot be revoked orally. We disagree and reverse.
Joseph Manetto executed a trust agreement on March 7, 1964 relating to rental property owned by him in Bloomfield. On the same day he executed a bargain and sale deed conveying the same property to his son, Peter Manetto, as trustee. Both the trust agreement and the deed were recorded several weeks later in the Essex County Register's Office. The trust agreement, which was specifically referred to in the deed, provided that the settlor and his wife were each to be paid one-half of the net income from the property during their joint lives, and that all of the net income should be paid to the surviving spouse in the event of the death of either of them. After the death of both spouses, the property was to be sold and the proceeds to be distributed equally to the settlor's four children: Peter Manetto, Anna Puppo, Eleanor Gianetti and Gloria Gabel. (Gloria Gabel was settlor's child by a second marriage.)
Paragraph 8 of the trust agreement provided as follows:
Settlor may amend, alter or revoke this Trust in whole or in part during his lifetime. Upon the death of Settlor, this Trust shall become irrevocable. The power to amend, alter or revoke herein retained by Settlor may be released by an instrument in writing executed by Settlor for such purpose and delivered to Trustee. Upon delivery of such instrument, this Trust shall become irrevocable.
The settlor died in November, 1976, his spouse having died in 1974 at a time when the husband and wife were estranged. This action was instituted by Gloria and her husband after her father's death. It sought either partition of the property or that
the property be sold and the proceeds be divided pursuant to the trust.*fn1 All defendants other than the judgment creditors filed a joint answer, alleging that the trust had been revoked. They also counterclaimed, seeking an order that each child except Gloria should be declared to have a one-third interest in the property pursuant to a will made by their father on September 23, 1975. This will left testator's property, real and personal, in equal shares to the children of his first marriage, but only $2,000 in cash to Gloria. At the time he made the will and at the time of his death, he owned no other real property.
Legal authorities have stated generally that where no method of revocation is specified in the instrument creating an inter vivos trust, it may be revoked by any method which sufficiently proves the intention of the settlor to revoke it. Restatement, Trusts 2d, § 330, comment i at 138 (1959); 4 Scott on Trusts (3 ed. 1967), § 330.7 at 2605; Bogert, Trusts and Trustees (2 ed. 1962), § 1001 at 494; 76 Am.Jur. 2d, Trusts , § 78 at 327; 89 C.J.S., Trusts , § 91a at 917. However, plaintiffs contend that since the res of the trust was real property, any revocation of the trust was required to be in writing. In this respect, plaintiffs rely on the Statute of Frauds, particularly N.J.S.A. 25:1-2 and N.J.S.A. 25:1-3. We find these statutes inapplicable.
N.J.S.A. 25:1-3 provides that "all declarations and creations of trust . . . in real estate shall be manifested or proved by some writing. . . ." Since we are dealing with the revocation of a trust rather than its declaration and creation, the statute does not apply. N.J.S.A. 25:1-2 provides that no estate or
interest in real estate "shall be assigned, granted or surrendered unless it be by deed or note in writing. . . ." We do not regard the revocation of a trust interest in real estate as an assignment, grant or surrender of that interest. We are dealing with an alleged extinguishment of an interest by the original grantor of that interest. The case relied upon by plaintiffs, Moses v. Moses , 140 N.J. Eq. 575 (E. & A. 1947), is inapposite. It dealt with an unenforceable oral express trust of land and a consequent constructive trust. The court held that in those circumstances the purported oral surrender by a ...