RICHARD D. HAYNES AND CHARLES E. HAYNES, PLAINTIFFS-APPELLANTS, v. FIRST NATIONAL STATE BANK OF NEW JERSEY, TRUSTEE UNDER AN IRREVOCABLE TRUST AGREEMENT DATED JANUARY 16, 1974 AND FIRST NATIONAL STATE BANK OF NEW JERSEY AND DORCAS D. COTSWORTH, TRUSTEES UNDER A REVOCABLE TRUST AGREEMENT DATED JANUARY 15, 1974, DORCAS D. COTSWORTH, INDIVIDUALLY, GAINES BERRY, DORCAS ANN BEATTY, BRUCE BERRY, HOLLY BERRY, DOROTHY WASBERS, PAULINE W. ZINN AND ELIZABETH Z. COMBS, DEFENDANTS-RESPONDENTS, AND TRINITY REFORMED CHURCH, YORK, PENNSYLVANIA, AMERICAN HEART ASSOCIATION, INC., NEW JERSEY ASSOCIATION FOR RETARDED CHILDREN, INC., UNION COUNTY UNIT, YORK COUNTY BLIND CENTER, DEFENDANTS.
Supreme Court of New Jersey
July 22, 1981
Argued February 23, 1981
Elmer J. Bennett argued the cause for respondents (Carpenter, Bennett & Morrissey, attorneys; Elmer J. Bennett and Joel R. Glucksman, on the brief).
The opinion of the Court was delivered by
HANDLER, J.
This is a will contest in which the plaintiffs, two of the decedent‘s six grandchildren, seek to set aside the probate of their grandmother‘s will and two related trust agreements. The major issue presented is whether the will is invalid on the grounds of “undue influence” attributable to the fact that the attorney, who advised the testatrix and prepared the testamentary instruments, was also the attorney for the principal beneficiary, the testatrix‘s daughter, in whom the testatrix had reposed trust, confidence and dependency. A second question concerns the enforceability of a “non-contestability” or in terrorem clause in the testamentary documents under New Jersey common law since the decedent died before the effective date of the new probate code,
In an unreported opinion upholding the probate of the will and related trusts, the trial court held that the circumstances created a presumption of undue influence but that this presumption had been rebutted by defendants. It ruled further that the in terrorem clause was unenforceable. The case was appealed to the Appellate Division, which affirmed the trial court as to the lack of undue influence, sustaining the probate of the will and its judgment upholding the related trust agreements, but disagreed with the trial court‘s ruling that the in terrorem clause
I
The issues raised by this appeal, particularly whether the contested will was invalid as a result of “undue influence,” require a full exposition of the facts.
Mrs. Isabel Dutrow, the testatrix, was the widow of Charles E. Dutrow, an employee of Ralston Purina Co. who had acquired substantial stock in that corporation. Upon his death the stock, aggregating almost eight million dollars, was distributed to his widow and their two daughters, both outright and in trust.
Betty Haynes, one of the daughters of Charles and Isabel Dutrow, came with her two sons to live with her parents in the Dutrow family home in York, Pennsylvania in 1941 while Betty‘s husband was in military service during World War II. Following Charles Dutrow‘s death in 1945 and her own divorce, Betty and her sons continued to live with Mrs. Dutrow in York. The relationships between mother and daughter were extremely close, Mrs. Dutrow having deep affection for Betty, as well as her grandsons whom she practically raised. The two boys, however, left the York home sometime around 1968 to the considerable aggravation and disappointment of their grandmother.1 But Betty remained with her mother until Betty‘s death in June 1973.
At the time of Betty‘s death, she had been living with her mother for more than 30 years. Mrs. Dutrow was then 84 years old and suffered from a number of ailments including glaucoma, cataracts and diverticulitis, and had recently broken her hip. Mrs. Dutrow, distraught over the death of her closest daughter
During her lifetime, Mrs. Dutrow executed a great many wills and trust agreements. All of these instruments, as well as those her husband had executed prior to his death, were prepared by the longstanding family attorney, Richard Stevens, of Philadelphia. By June 1967 Stevens had prepared five wills and several codicils for Mrs. Dutrow.
As of the time she moved in with the Cotsworths, Mrs. Dutrow‘s estate plan reflected a basic disposition to treat the Haynes and the Cotsworth family branches equally. During the last four years of her life, however, while living with daughter Dorcas, Mrs. Dutrow‘s will went through a series of changes which drastically favored Dorcas and her children while diminishing and excluding the interests of the Haynes brothers. These changes, and their surrounding circumstances, bear most weightily upon the issue of undue influence.
Shortly after moving in with Dorcas, following a conference between her daughter and Stevens, the first of many will and trust changes was made by Mrs. Dutrow on July 25, 1973. Under the new provisions of the will, Mrs. Dutrow‘s residuary estate was to be divided into two equal trusts, one for Dorcas, the principal of which Dorcas could invade up to certain limits and the other a trust with income to each of the Haynes boys without a power of invasion. A new will and an inter vivos trust with almost identical provisions, including approximately 60,000 shares of Ralston Purina stock, were later executed on November 24, 1973 and December 4, 1973, respectively. Mrs. Dutrow also gave Dorcas 5,000 shares of stock outright to compensate her for the expense of having Mrs. Dutrow live with her.
[o]ur joint obligation—you and the family—is to accomplish these objectives with minimum tax effects upon the total estate. Obviously you are in a far better position to work out the details than I am, but you appear reluctant to go as fast or as far as I have suggested for reasons that are not clear to us.
Then, on November 26, 1973, Cotsworth proceeded to consult Grant Buttermore, his own lawyer, regarding Mrs. Dutrow‘s estate plans. Buttermore had been the attorney for the Cotsworth family and the Cotsworth family business, the Berry Steel Corporation, for six to seven years and had provided substantial legal advice concerning the corporation. He had also prepared wills for both Mr. and Mrs. Cotsworth and some of their children. For all intents and purposes, Buttermore can be viewed as having been the family attorney for the Cotsworths.
On November 29, 1973, following the initial contact by her husband, Dorcas Cotsworth went to Buttermore concerning the trust agreement of November 24 that Stevens had prepared for
We are in the process of reviewing Mrs. Dutrow‘s estate with her and Mr. and Mrs. Cotsworth along the lines suggested by Mr. Cotsworth in his outline heretofore submitted to you.
Buttermore concluded this letter by relaying Mrs. Dutrow‘s request to Stevens to provide “a complete list of all [her] assets in order that we may make a proper analysis.”
Stevens immediately responded, writing separate letters to Buttermore and Mrs. Dutrow on November 30. He gave Buttermore a skeletal list of Mrs. Dutrow‘s assets with no detail. At the same time he also undertook to make some technical corrections of Mrs. Dutrow‘s will, which was executed, as noted, on December 4. In the letter accompanying the will, he mentioned his conversation with Buttermore and his “assumption” that Mrs. Dutrow wanted him to give Buttermore the information he was requesting.
The response to this communication was a letter written to Stevens on December 3, 1973 in Dorcas Cotsworth‘s handwriting on her personal stationary, and signed by Dorcas and Mrs. Dutrow, which contained the following:
These are my mother‘s observations as she sits here besides me—and she insists she is not being pressured....
Mother and I have discussed this so often—now she says get it over and let me forget it—as it worries her with everything undone
. . . .
Her desire and intent is to have Dorcas rewarded while alive—to have an Irrevocable Trust set up to let Dorcas have income and right to sprinkle money to Grandchildren when necessary....
When Dorcas dies then the per stirpes takes over....
Mother approves of Mr. Grant Buttermore knowing all details and keeping in this estate.
A meeting of Buttermore and John Cotsworth with Stevens was scheduled for December 13, 1973. Prior to this meeting Buttermore met with Mrs. Dutrow alone, as he testified was his customary practice, “so that I could get the intent directly from ... the testatrix.” During this two hour conference, according to Buttermore, he explained various legal and tax aspects of estate planning to Mrs. Dutrow. He also told her “that intent was much more important and controlled over the other two items, meaning taxation and liquidity.” Buttermore also reviewed at length Mrs. Dutrow‘s assets and her present will and trusts. Among other things, Mrs. Dutrow, according to Buttermore‘s testimony, said that “her first priority was to make sure she had enough to last during her lifetime,” for which purpose Mrs. Dutrow said she would need $26,000 per year. Buttermore also explained to Mrs. Dutrow that the practical effect of the per stirpes disposition of the November 24 trust agreement would be to enable the two plaintiffs, the Haynes brothers, ultimately to “receive twice as much as each of the other grandchildren,” to which Mrs. Dutrow responded, according to Buttermore, “I didn‘t realize that.”
Buttermore testified that he told Stevens at the December 13 meeting that Mrs. Dutrow “wanted to go to the per capita basis equally among the grandchildren.” Stevens, according to Buttermore, was very skeptical that Mrs. Dutrow wanted to do this and asked Buttermore to doublecheck it with her. Buttermore replied that “[i]n my mind she‘d already made that decision after our talk on December the eleventh.”
On December 17 and 18, a concerned Stevens wrote Buttermore letters confirming the discussion of December 13, and on December 18, specifically adverted to the possibility of “undue influence.” There is no indication in the record that Buttermore responded to Stevens on this matter.
Buttermore, in response to a call from Dorcas Cotsworth, again met alone with Mrs. Dutrow in Short Hills on January 11
Significantly, at this juncture, drastic changes in Mrs. Dutrow‘s estate planning materialized. According to Buttermore, he and Mrs. Dutrow then proceeded to discuss in detail her wishes for a new will and trust agreements. Mrs. Dutrow assertedly indicated that she wanted “to leave [her estate] equally ... between the grandchildren,” and did not care about the adverse tax consequence which Buttermore claimed he had explained to her. Buttermore also seemed to minimize the effect of the proposed change allegedly requested by Mrs. Dutrow by pointing out to her that altering the particular trust in question would not accomplish her goals; although all six grandchildren would inherit equally under the particular trust in question, the consequence of other trusts already in existence would be that the two Haynes grandchildren would “still be getting greater in the end” than Mrs. Cotsworth‘s children. During that meeting, Buttermore also apparently showed Stevens’ letter of December 18 concerning undue influence to Mrs. Dutrow.
These discussions resulted in the near total severance of the Haynes children from their grandmother‘s estate. Assertedly, at Mrs. Dutrow‘s request, Buttermore promptly prepared two new trust agreements, which provided for the payment of
On January 19 Buttermore sent Stevens copies of the new instruments along with a letter in which he explained that after going over everything “meticulously with Mrs. Dutrow,” the new instruments had been prepared “along the lines we have discussed” and that, in Stevens’ absence, Mrs. Dutrow had become “quite upset with the Fidelity Bank and decided that she wanted to immediately revoke” the existing trust agreements and will. Stevens testified to astonishment at the proposed distribution. He also expressed surprise about the provision in both trust agreements, which permitted Dorcas Cotsworth to withdraw the principal each year so that, if exercised, there might be nothing left when she died.
In early May 1974 Buttermore again met with Mrs. Dutrow to make some changes in the trust agreements. The most important change allowed the corporate trustee First National State Bank of New Jersey to distribute principal, “in its sole discretion,” to Dorcas Cotsworth and any of Mrs. Dutrow‘s grandchildren (i. e., plaintiffs as well as Dorcas’ children). This was in contrast to the original terms of this trust agreement, as executed by Mrs. Dutrow in January 1974, which allowed for such discretionary distribution by the bank only to Mrs. Cotsworth and her children, not to plaintiffs. According to Buttermore‘s testimony, this change was clearly Mrs. Dutrow‘s idea.
On April 24, 1975, Mrs. Dutrow amended the revocable trust agreement and added a codicil to her will in order to add in terrorem clauses to each instrument. Both the amendment and the codicil were prepared by Buttermore. At trial, Buttermore
Buttermore next met with Mrs. Dutrow to discuss her estate on December 11, 1975. At this meeting, according to Buttermore‘s testimony, Mrs. Dutrow told him that she had decided to give her estate, other than special bequests or amounts, to Dorcas Cotsworth, to enable Dorcas to enjoy it during Dorcas’ lifetime. Buttermore testified that he was “taken by surprise” by this proposal and tried to explain to Mrs. Dutrow that this change would result in additional taxes of between $700,000 and $800,000 when Dorcas died. But, according to Buttermore, Mrs. Dutrow insisted on making the change. The necessary amendments to the revocable trust agreement were prepared by Buttermore and executed by Mrs. Dutrow on January 9, 1976, providing for distribution of the principal to Dorcas upon Mrs. Dutrow‘s death, or, if Dorcas was not then living, equally among Mrs. Dutrow‘s grandchildren. A new will executed the same day provided, as had previous wills, that Dorcas would inherit all of Mrs. Dutrow‘s tangible personal property. The final change made by Mrs. Dutrow in her estate plans before she died in September 1977, was to amend the revocable trust to give $10,000 to each of her grandchildren at her death, apparently realizing that otherwise the Haynes children would likely not inherit anything.
The last testamentary document executed by the testatrix was a will dated April 8, 1976. It contained no further major changes in her dispositions. Mrs. Dutrow died on September 27, 1977 and her final will was admitted to probate by the Surrogate of Ocean County on October 12, 1977, with the First National State Bank of New Jersey as executor.
II
In any attack upon the validity of a will, it is generally presumed that “the testator was of sound mind and competent
the burden of proving undue influence lies upon the contestant unless the will benefits one who stood in a confidential relationship to the testatrix and there are additional circumstances of a suspicious character present which require explanation. In such case the law raises a presumption of undue influence and the burden of proof is shifted to the proponent. [In re Rittenhouse‘s Will, 19 N.J. 376, 378-379 (1955)]
Accord, In re Blake‘s Will, 21 N.J. 50, 55-56 (1956); In re Davis, 14 N.J. 166, 169 (1953); In re Hopper, 9 N.J. 280, 282 (1952), 5 N.J. Practice (Clapp, Wills and Administration) § 62 (3rd ed. 1962).
The first element necessary to raise a presumption of undue influence, a “confidential relationship” between the testator and a beneficiary, arises
where trust is reposed by reason of the testator‘s weakness or dependence or where the parties occupied relations in which reliance is naturally inspired or in fact exists... [In re Hopper, supra, 9 N.J. at 282]
Here, the aged Mrs. Dutrow, afflicted by the debilitations of advanced years, was dependent upon her sole surviving child with whom she lived and upon whom she relied for companionship, care and support. This was a relationship sustained by confidence and trust. The determination of the trial court, in this case, that there was a confidential relationship between the testatrix and the chief beneficiary of her will is unassailable.
The second element necessary to create the presumption of undue influence is the presence of suspicious circumstances which, in combination with such a confidential relationship, will shift the burden of proof to the proponent. Such circumstances need be no more than “slight.” In re Blake‘s Will, supra, 21 N.J.
In this case there were suspicious circumstances attendant upon the execution of the will. There was a confidential relationship between the testatrix and her attorney, who was also the attorney for the daughter and the daughter‘s immediate family. Furthermore, following the establishment of the confidential relationship of the daughter‘s attorney with the testatrix, there was a drastic change in the testamentary dispositions of the testatrix, which favored the daughter. These factors collectively triggered the presumption that there was undue influence in the execution of the will.
On this record, the trial court correctly posited a presumption of undue influence that shifted the burden of proof on this issue to the proponents of the will. The court concluded ultimately on this issue, however, that the proponents, the defendants, had overcome the presumption of undue influence. The trial judge determined that Mrs. Dutrow was of firm mind and resolve, that the final testamentary disposition, though markedly different from previous plans, was not unnatural or instinctively unsound and it represented her actual intent. Further, the court found the explanation for Mrs. Dutrow‘s final testamentary disposition to be candid and satisfactory.
The plaintiffs argue vigorously that the trial court‘s findings of fact and conclusions are not supported by sufficient evidence. They contend that in view of the strength of the presumption of undue influence created by the confidential relationships and the peculiarly suspicious circumstances of this case, there is an unusually heavy burden of proof required to disprove undue influence, which defendants failed to meet.
In this jurisdiction, once a presumption of undue influence has been established the burden of proof shifts to the proponent of the will, who must, under normal circumstances,
In the case of a presumption of undue influence, apparently because the presumption is fortified by policy, the proponent must, according to the language of the cases, prove, to the satisfaction of the trier of fact, that there was no undue influence. In connection with this presumption, unlike other presumptions, the courts do not speak as to the burden of going forward with the evidence. However, we conclude, the moment this presumption is erected, both the burden of proof and the burden of going forward with proof, shift to the proponent and are identical and coincident. To meet each of these assignments, the proponent must establish by the same quantum of proof—that is, by a preponderance of the proof—that there is no undue influence. [29 N.J.Super. at 538-539 (citations omitted)]
In re Week‘s Estate, supra, recognized, however, that there were situations calling for a stronger presumption of undue influence and a commensurately heavier burden of proof to rebut the presumption. While in that case the presumption of undue influence was deemed to be rebuttable by a preponderance of evidence, the court acknowledged other
cases where the presumption of undue influence is so heavily weighted with policy that the courts have demanded a sterner measure of proof than that usually obtaining upon civil issues. That is the situation, for instance, where an attorney benefits by the will of his client and especially where he draws it himself. [29 N.J.Super. at 539.]
It has been often recognized that a conflict on the part of an attorney in a testimonial situation is fraught with a high potential for undue influence, generating a strong presumption that there was such improper influence and warranting a greater quantum of proof to dispel the presumption. Thus, where the attorney who drew the will was the sole beneficiary, the Court required “substantial and trustworthy evidence of explanatory facts” and “candid and full disclosure” to dispel the presumption
In imposing the higher burden of proof in this genre of cases, our courts have continually emphasized the need for a lawyer of independence and undivided loyalty, owing professional allegiance to no one but the testator. In In re Rittenhouse‘s Will, supra, 19 N.J. at 380-382, the Court questioned the attorney‘s independence and loyalty in view of the attorney-beneficiary‘s role in bringing the draftsman and the testatrix together, noting that the beneficiary had been “unable to give a satisfactory explanation of the relationship” between himself, the draftsman and the testatrix, viz:
[I]t would appear the testatrix did not independently choose [the draftsman] as the scrivener of her will. It is fair to assume from the record that she was influenced to do so by [the beneficiary].
Similarly, in In re Davis, supra, 14 N.J. at 171, the Court observed:
We wish to reiterate what has been said repeatedly by our courts as to the proprieties of a situation where the testatrix wishes to make her attorney or a member of his immediate family a beneficiary under a will. Ordinary prudence requires that such a will be drawn by some other lawyer of the testatrix’ own choosing, so that any suspicion of undue influence is thereby avoided. Such
steps are in conformance with the spirit of Canons 6, 11, of the Canons of Professional Ethics promulgated by this court.2
See also In re Hopper, supra, 9 N.J. at 282.
It is not difficult to appreciate the policy reasons for creating an especially strong presumption of undue influence in cases of attorney misconduct. Such professional delinquency is encompassed by our official rules governing the professional ethics of attorneys. Our disciplinary rules cover all gradations of professional departures from ethical norms, and, the existence of an ethical conflict exemplified in this case is squarely posited under
should be practically self-demonstrative to any conscientious attorney. There is nothing novel about the ethical dilemma dealt with by DR 5-105. A lawyer
cannot serve two masters in the same subject matter if their interests are or may become actually or potentially in conflict. [In re Chase, 68 N.J. 392, 396 (1975)]
So pervasive and fundamental is the ethical reach of
Accordingly, it is our determination that there must be imposed a significant burden of proof upon the advocates of a will where a presumption of undue influence has arisen because the testator‘s attorney has placed himself in a conflict of interest and professional loyalty between the testator and the beneficiary.5 In view of the gravity of the presumption in such cases, the appropriate burden of proof must be heavier than that which normally obtains in civil litigation. The cited decisions which have dealt with the quantum of evidence needed to dispel the presumption of influence in this context have essayed various descriptions of this greater burden, viz: “convincing,” “impeccable,” “substantial,” “trustworthy,” “candid,” and “full.” Our present rules of evidence, however, do not employ such terminology. The need for clarity impels us to be more definitive in the designation of the appropriate burden of proof and to select one which most suitably measures the issue to be determined. See, e. g., In re Week‘s Estate, supra. Only three burdens of proof are provided by the evidence rules, namely, a preponderance, clear and convincing, and beyond a reasonable doubt.
The presumption is “overborne by substantial and trustworthy evidence of explanatory facts to the contrary.” In re Blake‘s Will, supra, 21 N.J. at 58 ... [T]he proponent‘s testimony “did not have the convincing or impeccable quality required by our decisions to remove the aura of suspicion.” In re Rittenhouse‘s Will, supra, 19 N.J. at 382. [142 N.J.Super. 56, 66-67 (1975).]
In reversing the Appellate Division, this Court disagreed with its conclusion that the presumption of undue influence had not been overcome. Nevertheless, the Court did not directly or by implication reject the authorities relied upon by the Appellate Division which indicated that the proper burden of overcoming the presumption of undue influence in such circumstances was greater than a preponderance of the evidence.
the evidence need be proven. See supra at 178-179. Thus, for example, Judge Clapp would impose the higher burden “where the finger of suspicion points strongly at the proponent, implicating him with the alleged undue influence and where the rebuttal of the presumption must come from him.” 5 N.J. Practice (Clapp, Wills and Administration) § 62 (3d ed. 1962, Supp.1980).
Accordingly, the attorney‘s conduct here, together with all of the other factors contributing to the likelihood of wrongful influence exerted upon the testatrix, has engendered a heavy presumption of undue influence which the proponents of the will must overcome by clear and convincing evidence.
This determination that clear and convincing evidence must be marshalled to overcome the presumption of undue influence appropriately requires that the matter be remanded to the trial court for new findings of fact and legal conclusions based upon application of this burden of proof. We remand, recognizing that there is considerable evidence in the record as to Mrs. Dutrow‘s intelligence, independence and persistence, of her alienation, to some extent, from the Haynes children, and as to her natural intent primarily to benefit her children, rather than her grandchildren. Moreover, all of this evidence is based upon the credibility of witnesses, which we cannot independently evaluate. We are also mindful that the trial court found that the explanation for Mrs. Dutrow‘s testamentary disposition was candid and satisfactory.
Nevertheless, the trial court does not appear to have given full weight to the additional significant factor generating the heightened presumption of undue influence in this case, namely, that occasioned by the conflict of interest on the part of the attorney drafting the will, whose testimony was crucial to the outcome of this case. Most importantly, the court‘s conclusion was premised upon an application of the conventional standard of proof entailing only a preponderance of the evidence. We therefore cannot with any certitude predict that the trial court‘s findings of fact and resultant conclusions would be the same were he to reassess the evidence, imposing upon the proponents
retroactively in this case for such conduct, since there are no additional aggravating circumstances. See In re Smock, 86 N.J. 426 (1981).
III
The second issue involves the enforceability of the in terrorem clauses challenged by the plaintiffs. The trial court noted that under the State‘s common law, in terrorem clauses are enforceable when the contest is based upon an allegation of undue influence, even if probable cause and good faith are present. The trial judge nonetheless declared the clauses unenforceable because the new probate code,
On this latter issue, the Appellate Division found that there was no basis in law for the trial court‘s decision, and that although the new probate code,
As noted earlier, on April 24, 1975, Mrs. Dutrow amended the revocable trust agreement and added a codicil to her will in order to add in terrorem clauses to each instrument. The clause in the amendment to the revocable trust agreement, almost identical to that in the will, provided:
If any beneficiary under this trust shall contest the validity of, or object to this instrument, or attempt to vacate the same, or to alter or change any of the provisions hereof, such person shall be thereby deprived of all beneficial interest thereunder and of any share in this Trust and the share of such person shall become part of the residue of the trust, and such person shall be excluded from taking any part of such residue and the same shall be divided among the other persons entitled to take such residue.8
In 1977 the Legislature enacted
A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings.
In Alper v. Alper, 2 N.J. 105 (1949), the Court said that the existence of probable cause to bring the challenge to the will should result in nonenforcement of an in terrorem clause “where the contest of the will is waged on the ground of forgery or subsequent revocation by a later will or codicil.” However, where typical grounds of challenge were advanced—“fraud, undue influence, improper execution or lack of testamentary capacity“—the clause was deemed to be enforceable, notwithstanding probable cause, as a safeguard against deleterious, acrimonious and wasteful family litigation. Id. at 112-113. Accord, Provident Trust Co. v. Osborne, 133 N.J.Eq. 518, 521 (Ch.1943). See also In re Estate of Badenhop, 61 N.J.Super. 526, 535 (Cty.Ct.1960).
The new statute,
There are public policy considerations both favoring and disfavoring the enforcement of in terrorem clauses. On the one hand, such provisions seek to reduce vexatious litigation, avoid expenses that debilitate estates and give effect to a testator‘s clearly expressed intentions. E. g., Alper v. Alper, supra; Smithsonian Institution v. Meech, 169 U.S. 398, 413-415 (1898); In re Hite‘s Estate, 155 Cal. 436, 101 P. 443 (1909); Rudd v. Searles, 262 Mass. 490, 160 N.E. 882 (1928); Commerce Trust Co. v. Weed, 318 S.W.2d 289 (Mo.Sup.Ct.1958); Elder v. Elder, 84 R.I. 13, 120 A.2d 815 (1956).
On the other hand, a majority of jurisdictions have declined to enforce in terrorem clauses where challenges to testamentary instruments are brought in good faith and with probable cause. E. g., South Norwalk Trust Co. v. St. John, 92 Conn. 168, 101 A. 961 (1917); In re Cocklin‘s Estate, 236 Iowa 98, 17 N.W.2d 129 (1945); In re Foster‘s Estate, 190 Kan. 498, 376 P.2d 784 (1963); In re Hartz‘s Estate, 247 Minn. 362, 77 N.W.2d 169 (1956); Ryan v. Wachovia Bank & Trust Co., 235 N.C. 585, 70 S.E.2d 853 (1952); Wadsworth v. Brigham, 125 Or. 428, 259 P. 299 (1927); In re Friend‘s Estate, 209 Pa. 442, 58 A. 853 (1904); Rouse v. Branch, 91 S.C. 111, 74 S.E. 133 (1912); Tate v. Camp, 147 Tenn. 137, 245 S.W. 839 (1922); In re Chappell‘s Estate, 127 Wash. 638, 221 P. 336 (1923); Dutterer v. Logan, 103 W.Va. 216, 137 S.E. 1 (1927); In re Keenan‘s Will, 188 Wis. 163, 205 N.W. 1001 (1925).
Given this relative equipoise of considerations, it is entirely appropriate for the courts to be sensitive and responsive
We therefore decline to enforce an in terrorem clause in a will or trust agreement where there is probable cause to challenge the instrument. The trial court concluded that the plaintiffs in this case “proceeded in good faith and on probable cause.” That finding is amply supported by evidence of record.
IV
We have determined that in terrorem clauses in the will and trust instruments are not enforceable. We have also directed, for reasons set forth in this opinion, that the case be remanded for new findings of fact and legal conclusions with respect to the major issue of undue influence in the execution of the will.
Accordingly, the judgment below is reversed and the matter remanded. Jurisdiction is not retained.
CLIFFORD, J., dissenting in part.
I am in full accord with the majority‘s meticulous treatment of the “undue influence” issue, but I part company on its decision concerning the in terrorem clauses.
On April 24, 1975, when Mrs. Dutrow added the challenged clauses to the testamentary instruments, enforcement of in terrorem clauses was perfectly in keeping with the public policy
a reasonable safeguard against attempted overthrow of the testamentary dispositions by a disappointed heir, striving for an undue advantage, and a device to lessen the wastage of the estate in litigation and the chance of increasing family animosities by besmirching the reputation of the testator when he is no longer alive to defend himself and to discourage the contesting of wills as a means of coercing a settlement. [2 N.J. at 112.]
Mrs. Dutrow‘s intentions in insisting on such a provision comported entirely with the judicially-declared public policy as of the time she made her testamentary dispositions and as of the time of her death.
Instead of honoring the testator‘s manifest wishes, however, the court looks for guidance to a statute not effective until a year after her death.
A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings. [
N.J.S.A. 3A:2A-32 (Supp.1981).]1
The majority bows to this “legislative handling” of the subject as an aid in the “judicial quest for the important societal values that are the constituent elements of the common law * * * ” Quite apart from the tardy surfacing of this newly recognized public policy is the shaky foundation upon which it rests. The Legislature, clearly in error (as forthrightly conceded by plaintiffs), believed that
We may view an in terrorem clause in a less charitable fashion than did the Alper court, perhaps as a device to wreak revenge on a disgruntled object of one‘s testamentary disposition. We may see such clauses as representing the most disagreeable impulses of a testator. They may lay bare one‘s mean, uncharitable, impervious, suspicious, hostile, downright churlish nature—and then some. I do not suggest that Mrs. Dutrow manifested any of those characteristics, but I do suggest that testators are allowed to exhibit all of them, and worse, without fear that a court will disregard their final wishes.
In keeping with both the testator‘s unambiguously-declared intent and the public policy of this state at the time of her death, I would give effect to the in terrorem clauses.
For reversal—Justices SULLIVAN, PASHMAN, CLIFFORD, SCHREIBER and HANDLER—5.
For affirmance—None.
Notes
(A) A lawyer shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, except to the extent permitted under DR 5-105(C).
(B) A lawyer shall not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, except to the extent permitted under DR 5-105(C).
(C) In situations covered by DR 5-105(A) and (B) except as prohibited by rule, opinion, directive or statute, a lawyer may represent multiple clients if he believes that he can adequately represent the interests of each and if each consents to the representation after full disclosure of the facts and of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each.
(D) If a lawyer is required to decline employment or to withdraw from employment under DR 5-105, no partner or associate of his or his firm may accept or continue such employment.
Likewise, in other contexts, where the evidence is potentially unreliable, a high burden is imposed. State v. Hurd, 86 N.J. 525 (1981). Similarly, where the available and usual testimonial evidence is almost exclusively within the possession of one party and is intrinsically subjective, often unverifiable and usually self-serving, courts have felt impelled to impose a higher burden of proof. E. g., Sarte v. Pidoto, 129 N.J.Super. 405 (App.Div. 1974).
Accordingly, although we need not decide the issue today, there may be situations other than those raised in this case, which require that the presumption of undue influence be overcome by clear and convincing evidence rather than the normal requirement that only a preponderance of