21 A.2d 788 | N.J. Super. Ct. App. Div. | 1941
The issue arises out of the method pursued by the Court of Chancery in determining what rate of abatement should be applied to an annuity bequest to Birdie L. Jennings and to general bequests of cash sums to other legatees. Harriet Levy provided in her will (for the pertinent provisions of which see FirstNational Bank of Toms River v. Levy,
The exceptions taken to the report went to these propositions: first, that the master had computed the cash value of the annuity on the combined 4% annuity table in effect on that date whereas that rate of interest was in excess of any that could reasonably be expected and that a rate not in excess of 2 1/2% should have been used; second, that the *222 abatement of 7.65% against the annuity to Jennings and the gifts to the Cohens resulted in a disproportionately large reduction of the Jennings gift for the reason that what was calculated as the present cash value of the annuity was not in fact to be paid to Jennings but was to be invested and the income therefrom paid to her; third, that the master failed to take into consideration the expense of the continued operation and administration of the Jennings trust fund.
The appeal is from the order overruling the exceptions and confirming the master's report.
The holding in the original Chancery decision upon which the final decree in the cause rested,
"By the language of paragraph 2 (of the will), these annual payments (of the $2,000 annuity) are definitely limited to the net income and it is that income alone which may be applied to their payment. * * * However, these four legacies, vesting at the same time and payable out of the same fund, i.e., the residue, are in the same class and may be considered as general legacies — demonstrative in the sense that they are payable out of the same fund — and all are subject to abatement proportionately. Titus'Adm'r v. Titus, supra; Rowe v. Rowe, supra; Chemical Bank andTrust Co. v. Barnett,
The reference to the Chemical Bank and Trust Company decision must be taken to mean that the practice suggested by Vice-Chancellor Backes in the Chemical Bank and Trust Co. Case was to be followed in so far as the same was applicable. In that case Vice-Chancellor Backes adopted the statement that "In all these cases arising upon the construction of wills, the real question is, whether that which is given is given as an annuity, or is given as the interest of a fund * * *;" and he determined that the legacy with which he was dealing was of an annuity and not of the interest of a fund and that consequently not only could it properly be paid to the exhaustion of the fund but the fund could be, and he directed that it should be, paid over forthwith to the annuitant; whereas the contrary result was reached by Vice-Chancellor Berry in his construction of the will in the present case. Plainly, therefore, that precedent *224 could not be followed to the point of exhausting the fund or transferring it to the annuitant; but it could be, and was, followed in computing the value of the Jennings life estate. The direction in the Chemical Bank Case was this:
"The American four per cent. table is adopted by Chancery rule 246 for calculating the gross value of dower, and, in common practice, is standard for computing life interests generally. It is also used by insurance companies in calculating life insurance premiums. The value of the annuities will be computed according to the combined annuity four per cent. tables now in general use by insurance companies for calculating the cost of annuities; it is based on modern actuarial experience, and it is common knowledge that the average life has been extended ten years in the past seventy. The annuitants are entitled to present values and the formula suited to present conditions is to be applied as the measure; a test of value is the cost."
The method of computation adopted by the master was that which the court had directed.
We conclude, therefore, that the disposition of the first and second exceptions is controlled by the original determination in the cause, supra.
The third exception goes to the cost of the administration of the Jennings fund. No convincing reason is given why the expense of the administration of that fund should be charged against the Cohen legacies.
The order appealed from will be affirmed.
For affirmance — THE CHIEF-JUSTICE, CASE, BODINE, DONGES, HEHER, PERSKIE, PORTER, COLIE, DEAR, WELLS, WOLFSKEIL, RAFFERTY, HAGUE, THOMPSON, JJ. 14.
For reversal — PARKER, J. 1. *225