*1 ROSENCRANS, ROSENCRANS, LEE ARTHUR AND HARRY ROSENCRANS, PLAINTIFFS-APPELLANTS, v. WILLIAM FRY, M. DEFENDANT-RESPONDENT.
Argued February 24, 1953 Decided March 1953. *3 Mr. Jеrome Eisenberg G. the cause for argued appellants Israel (Mr. Spicer and York George Rosling, Mr. New Bar, brief; on the Messrs. Spicer, & Eisenberg attorneys).
Mr. Ernest E. Bar, Roberts, of Florida the cause argued for respondent Abbotts, William (Mr. attorney). opinion court delivered J. appeal, motion, This certified our
Wachenfeld, own is from two entered Court, judgments Superior Division. The first Chancery Fry defendant adjudges had a under the will. question The second the plaintiff determines Mrs. Rosencrans, widow, was not entitled receive the dividends *4 declared betwеen the January and date of Fry’s the court, with clerk of the deposit not, Fry was an reason of of by trustee, breach to alleged liable Mrs. account to Rosencrans for the of the portion earnings 3,025 of the allocated stock, to shares company of the subject of this between the date of the dispute, accruing death in 1944 and date the of exercise of Fry’s his option in 1949. Mrs. buy Rosencrans will be referred-to herein as the the of the other appellant, rights plaintiffs being our to her. decision as governed by the forth in facts, The set logically intelligently below, briefly relationship will so their opinion repeated be the issues raised will be apparent. Inc., was
The Company, Monmouth Supply Plumbing there Florida and incorporated engaged State of the by It was and supply organized business. plumbing Mon- died a resident of testator, Rosencrans, Charles who time 1944. At the of mouth on December County of its out of a total 3,045 death he owned shares of shares 6,661 outstanding. shares these, made a in his will outright
Of he gift The who held 375 his own right. also shares Fry, shares, nеphews, and his testator’s wife owned 181 Rosencrans, had 500 shares Arthur and plaintiffs Harry investors were stock- 50 other between them. Approximately under is whether or not Fry, The query holders. principal will, was the terms given at the time 3,025 the testator possessed by shares remaining his death. survived his widow and they appar- The testator was There were had a and harmonious marriage. ently happy the union. children born of no Monmouth Supply was Plumbing Fry employed an man.” He in 1924 as “extra became manager Company of Mr. Rosencrans from thе absence in 1934. During year, Fry six months of the managed Florida during in Miami. At time of the tes- company affairs of com- secretary-vice-president death Fry tator’s pany. 19th 10, 1944, by its will, July provided dated
clause: my remaining Estate, bequeath one-half con- “I devise may personal property, sisting wherever same of both real located, specifically disposed is not or and which be situated Plumbing herein, including me in the Monmouth all stock owned twenty (20) Corporation, Inc., Supply other than a Florida Oo. my good-friend, outright shares, bequeathed unto WILLIAM herein FRY, FRY, M. unto LEE WILLIAM M. ROSENCRANS conditions, following nevertheless, Trust, wit: on the
93 wife, my paid shall beloved That therefrom be the income ROSENCRANS, death, Trust until which time the said LEE her at principal created and of the trust estate terminate and cease shall by over, paid Nineteenth, paragraph trans- shall be Number this my absolutely trust, unto from further and free ferred and delivered Rosencrans, Harry nephews, share Arthur Rosencrans beloved nephews however, my alike; provided, Arthur that said and share Harry Rosencrans, sell, hypothecate otherwise dis- or shall not Plumbing Supply pose Co. Monmouth encumber such stock of the or years Corporation, period (5) Inc., after a of Five a Florida for years, (5) my Lee, during period wife, Five said death of which hereby give Trust, during unto I of said do and also the existence any Fry, right purchase my friend, or all of William M. my share, further, per par $25.00 said stock at its value of Rosencrans, Harry nephews, at no time after shall Arthur and said Lee, my wife, period years sell after death of said said of Five offering any stock, portion the same fоr sale without first of said per Fry, par share.” at its value of $25.00 the said William M. the will and was named executrix of The decedent’s widow widow and the and Ery as such on April qualified created of the trust the same as trustees day qualified the will. 19th paragraph dis- executor in Florida. as Fry ancillary qualified him in that capacity were transferred to of stock shares puted made until, during request held himby upon and were so re-transferred to were they of this litigation, pendency the executrix. his intention to Mrs. Rosencrans Fry expressed
In but refrained frоm exercising the shares of stock to buy referred to. because of circumstances hereinafter option denied Rosencrans, In 1949 Mrs. having definitely January lifetime, instituted Fry during executor, be he, as ancillary suit Florida praying $25 himself for individually to sell shares to permitted Rosencrans, indi- share as the will. Mrs. provided per trustee, here countered complaint vidually filing I, situs February alleging Court on Superior trust and its assets trust was in New and the Jersey asked a Florida, were not within jurisdiction suit. from the Florida Fry restraint prosecuting forbidding *6 Fry consented to restraint and entered an appearance in onr jurisdiction an answer and counterclaim filing seeking construction of the will and deter- a judgment mining to right buy at the mentioned figure shares in the will. Mrs. Rosencrans moved add herself in the to capacity executrix and to include a second count requiring Fry to make discovery and to turn over shares of stock to the executrix. This was the time that transferred Fry 3,025 shares over to the executrix as above stated.
At the same time Arthur and Rosencrans were Harry admitted as partiеs had plaintiff. They been elected to the board of directors on February 16, 1950 at Mrs. Rosencrans’ After request. the testator’s death the had board consisted Rosencrans, of Mrs. Fry and a Mr. an Wherry, employee the company. However, with the election of to nephews the board, control was to the given Rosencranses.
Pursuant to order of the court, was had partial hearing on the sole question of whether the defendant had a Fry present to in right buy shares question. 9, On May the court found he had such a but the right, entering judgmеnt delayed 18, 1951 because May judge’s illness. thereto, Prior 29, 1950, an May filed answer Fry and counterclaim forth the court’s setting conclusion as to his right buy it be he was also praying adjudged entitled to all dividends declared the shares upon since Janu- 20, ary 1949, the date of the commencement of the action Florida. 18,
On January $4a cash dividend was voted1. Arthur and Rosencrans were Harry not notice given of this nor did attend. meeting, they On February 1951, still to the prior entry of Fry the judgment giving pur chase the stock but after the thereon, decision another mеet of the board was held with all ing directors It attending. was resolved: that a (1) dividend of share $10 be per paid holders of record as of 1951; February (2) a stock dividend of paid be to holders as of the same 50% date; that the authorized (3) stock of the capital company $250,000 $1,000,000 be increased from and a further stock dividend of declared, be issuable to holders of 300% record as the same date. and Wherry voted Pry against the resolution. obtained a
Pry order from the temporary restraining Plorida court dividend, enjoining paymеnt plaintiffs this amended the jurisdiction second count of the complaint to with a breach of his Pry charge trustee. then
Pry also our for a applied jurisdiction restraining order restraint, Plorida which was paralleling granted. This restraint was dissolved condition subsequently upon that Mrs. Rosencrans deliver to the clerk of our court the 3,025 shares of stock and thereon all cash and stock dividends *7 14, 1951, after the clerk until February to be held by further order court. This condition complied with. obtained an order him Pry permitting deposit $75,625, 3,025 shares reprеsenting purchase price share, 31, at made 1951. per $25 deposit being July The trial of the case resulted in the subsequent second of the two from which the judgments plaintiffs appeal. contends the will is and the trust appellant ambiguous in
is not existence within the intent of 19 of yet paragraph will, the intended the decedent’s as assets comprising trustees, trust res have not been transferred to death did mark the automatically not commence- the trust’s ment of the term of existence. will,
In doubtful in a the courts considering provisions kindred аs favor an interpretation benefiting against 69 102 O. J. it expresses thusly: strangers. express contrary, of an intention “In the absence to the in con-
struing ap- a will favor will be accorded to those beneficiaries who objects special bounty.” pear to be the natural or of the testator’s Estate, 164, 113, In In re Woods’ 321 Pa. 184 A. the rule be of 1936), Ct. universal (Sup. designating the court said: application, contradictory ambiguous expressions appear will, “Where or in a closely possible general the law adheres as tо the rule of inheri- preference strangers.” kin in
tance and favors the heir or next of
While in
Banks,
Lavin v.
338 Ill.
Applying enunciated, so con- principle appellant tends that under will, 25 of the the widow paragraph giving the discretion “as to what shall be sold personal property to realize a sufficient sum with which to pay legacies for,” executrix, hereinabove provided she, as solе had the to sell the right stock in the Monmouth Plumbing Supply Company order to have and thus pay legacies might received in excess of a share $25 for it.
In 18 of the will the testator paragraph bequeathed estate, one-half of his therefrom, how- residuary excluding ever, the shares of the Monmouth stock which he included of the trust corpus created for her benefit under 19. But there was a paragraph specific provision shares of stock which went into the trust were to the subject to be Mr. at $25 bought Pry price share. pеr
If the of the will is not and “the language ambiguous intention is words and signified apt there phraseology, is no room for construction. It is not for the court to proper first determine what the will to be and then exercise ought its ingenuity such a result.” producing Brearley v. 9 N. J. Brearley, Eq. 1852). (Ch.
The court will intervene when the will is ambiguous and its language but in the misleading con confusing, struction of wills the of the court is to endeavor to ascertain the intent of the testator and not endeavor to rewrite the will or make a new will adverse intention. It is bound to ascertain and effect to the give intention testator as in his expressed will. Guaranty Trust Co. v. N. Trust, Y. Community 141 N. J. 238 Eq. 1948). (Ch.
Likewise, the intention be is not that which sought existed in the mind of the testator but that which is expressed in the will, March language v. Morristown Pennsyl- vania Co., Trust 123 N. J. & A. Eq. while (E. 1938); in In re Fisler, 133 N. J. & A. Eq. (E. it was 1942), said the judicial interpretative function is to find the meaning of the testator as in expressed used and con language sidered in the light circumstances and attending effectu ate it.
If the testator’s is revealed purpose by clear terms, unequivocal there is room for no construction. The funсtion the court is to construe'the will the only testator has made and not to'make newa will for him. v. Stryker Sands, 4 N. J. 182 (1950).
We believe the of the testator here testamentary purpose was clear and and the intention unambiguous expressed the will contained no uncertainties or vagaries requiring ' application of the canons of construction.
Outside of specific friends, bequests charity testator left a very substantial of his estate part to his wife. He her protected and devises providing for legacies her had оver other priority and then insured legacies, an absolute interest in one-half of the residue. It is signifi- cant also that 18 he paragraph specifically excluded the him owned the Monmouth Supply Plumbing Company included it in specifically 19, show- paragraph think, we he ing, intended his interest company to remain intact so that had him Pry, who worked for over the many years, have the might wished, if he opportunity, the stock at its value. par of Pry with'the is further corporation indi- identity cated by will, 27 of the paragraph the trustees directing shall, as hold the him long they stock, elect president. intended, It was think, we he should succeed to the clearly stock interest which the testator held in the corporation. The time of his so for in doing expressly provided the will. He had the for a of five after the period years death of the wife “and also the existence of the trust” during to make the purchase.
We are in accord with the conclusions of the court below in this respect our view is not altered fact
that the the of the trust property intended to become corpus was never transferred the trustees. actually to fact, did not have
Appellant, Ery to this alluding urges stock, the the will to the shares of inasmuch as right buy him that the trust and the the existence of gave right during trust did testamentary trust, not exist. being Although will, created cannot take effect until the death of the by testator, hand the time on other it must take effect at Wills, intent of death. 486. The obvious Page p. of the testator would defeated to the words of by be giving will so strict a actual transfer construction as to require to names of the trustеes before the property trust are intended existed. We not persuaded by argument. reason
Eurthermore, was never transferred property Rosencrans, executrix. default of the Mrs. as appellant, it not hers, The to make the transfer was does her in of a situation become a court of equity complain there- created her own failure or to seek an advantage from. Ery below with to the respect judgment concluded, we affirmed, the stock is so having
are now confronted with the remaining aspеcts litiga- tion. is contended the of tender of the actual cash
It formality to exercise necessary perfect attempt option in the will. Tender, Jur., sec. true,
It as set forth in 52 Am. is not a valid 7, that “a mere offer to does constitute pay have the tender; money the law the tenderer requires it offer actually ready produce present text, sec. 4: Nevertheless, the same party.” other require a vain law does not one to do “The familiar rule that thing making would excuses the of a formal tender which or usеless that, reasonably plain required, and clear be where it otherwise ceremony avail, made, an idle no if such tender would be made, refused, tender, appears for be some if will where it sufficiency.” its the tender or reason unrelated to *10 We think unmis- the defendant’s intention was clear and He the takable. wanted to his under will exercise right the tender did not or its purchase sufficiency price cause the The issue was created controversy. unequivo- cal stand make the of that had no to appellаnt Ery right him from evidenced her effort to so purchase, enjoin doing. a tender be waived formality may of Ruland,
conduct of the Kastens v. 94 N. J. parties. Eq. & Cut Fabric Co. v. U. (E. 1923); Hy-Grade A. S. Stores 105 N. J. L. 324 & A. We think there was Corp., 1929). (E. evidence of such conduct on the of Mrs. Rosencrans part tender, to a waiver the formal and the trial amounting “a court’s that a formal tender would have been finding useless seems justified. gesture”
It is next insisted under the facts and circumstances of to the case the defendant trustee should not be permitted the cestuis advance interests at personal expense and that was not trust the widow’s conduct que equivalent to acquiescence. died, 1945, after the
At the close of the fiscal decedent year $244,366.40. amounted to In 1949 the corporate surplus $562,133.15, $317,766.75. an increase corporate surplus 3,025 this, $144,309.32 Of was allocable to shares decreed to sum, and an on this defendant, adjustment be sold to It is asserted said, Ery, it is should have made. also been trustee, have caused the to declare should corporation he buy dividends before exercised option .to larger failure do constituted a breach and his so January of his as co-trustee. said about the lack of part
Much is knowledge the decedent’s as to Ery’s purchase the appellant legal share, at $25 shares in the Monmouth Plumbing Company she did not know until early the contention being buy. defendant claimed a legal right that the was the sole executrix under will The appellant mandates, with its directions and which obliga and to comply assumed, she would have to be its cognizant tions she circumstances, contents. there Under is presumption she was in this when she executrix. qualified acted as respect But be that as it she “in admits she read the will may, 1944,” fall of her it not disputed Fry spoke about which she purchasing following counsel, Stein, Mr. consulted about it. Part of her as to what he had advised is as follows: testimony deny “Q. You would not that Mr. Stein made the statement . any any Fry part, Mr. could or all of that stock when he deny No, A. I $25 wanted at a share. wouldn’t it.” *11 Stein, counsel, Mr. her arose as to declaring question testified: Fry’s right, right gave “I a said that he had to ask for or demand it but I no
opinion right to his to have the stock. had I said that No sooner Rosencrans, wont, got than Mrs. as she was sometimes excited and no, any circumstances, said couldn’t under he have it she was only going interested in what her Charlie wanted and wasn’t to he have the stock.” version the same is: Fry’s of incident you happened tell “Q. Will the court what on that occasion Well, what was said? A. purpose I visited Mrs. Rosencrans with the sole proposition purchasing of I her at the stock and made to purchasing agree about to it. She time stock. She didn’t attorney morning. her him to read asked over the next She asked thought I that section of the will and did. him if he had he She asked right buy thought right X had the to the stock. He said that he buy any the stock time.” at the failure Inferences are asked to be drawn of because Mr. He volunteered Roberts of the Florida bar to testify. if called to do so so but not appellant requested, being her, he with the of Professional Ethics by conformed Canons 1:7-6, Bule and, the American Association adopted by by Bar this made to the conduct of members bar of аpplicable State. Gill,
In J. 312 Callen v. N. (1951), referring client, said: in court in behalf of his we a lawyer testifying “Taken in the abstract, under practice emphatic condemnation.”
The defendant was under no to advise or inform the executrix of the will. import pur- chase inwas plain, simple readily understandable language, or layman lawyer. Mrs. Rosencrans was keen presumably the confidence her intelligent, husband in her having business as evidenced ability, her sole appointing executrix of his estate. think
We the record shows she was fully conscious of the of the will which provisions caused the dissatisfaction she exhibited subsequently reluctance to abide terms she disliked. was aware fully
She financial status and develop- ment of the full corporation its business operations. received monthly She statements and either moved or sec- onded motion for dividends every which she now concerning Neither as complains. majority stockholder or as trustee did she object dividends; ever amount of she appar- realized ently was large working capitаl required testified felt the she expansion program properly correctly financed. $400,000 sales rose
Gross from in the year $2,000,000 death in 1951, and net profits same *12 $46,000 $215,000. went'from period Dividends increased from share in 1944 in 1948. per $1 $4 Mrs. Rosencrans received, in addition a bonus of salary, 1944, $750 $1,202.02 in These sums were and 1945. increased con- in 1946 $6,875 for she received as a siderably, bonus and $5,000 in $7,750, $4,750 in 1947 and in 1949.
It fundamental is that a trustee owes a of duty trust, undivided to his cestuis and the loyalty doctrine que the rule has often maintaining expressed.. been good fiduciary may not, both sound law and “It is morals that a conflict, in case of subordinate the cestui’s interest to his own. Un- loyalty very relationship. divided is of the of the essence The trus- duty loyalty peremptory complete fidelity a of tee is under the cestui. Self-interest can never be the determinative. cannot He 102 involving divergent in an serve two masters area of service Eq. discrepant Cramer, Trust v. 136 N. J. interests.” Camden Co. (E. 1944).
261 & A. 1939); & Westhall, 125 N. 551 A. See also In re J. Eq. (E. affirmed Errion, 1945), 137 N. 221 Taylor v. J. Eq. (Ch. Title & Trust N. & A. 1947); Liberty J. Eq. (E. Bacot, Trust Co. v. Plews, Co. v. N. J. 28 Bankers (1950); 6 N. J. 426 (1951). Cardozo, in the ease of Meinhard v. often
Judgе quoted 545, 546, 62 A. L. R. 1 Salmon, 249 N. Y. 164 N. E. said: 1928), (Ct. App. something mar- “A is held to stricter than the morals trustee honesty alone, punctilio place. of an honor ket Not but this sensitive, there béhavior. As to this most is then the standard unbending developed inveterate.
has a tradition Un- equity compromising rigidity been attitude of the courts of has by loyalty petitioned when undermine the rule of undivided * * * Only ‘disintegrating particular exceptions. thus erosion’ higher kept at a level has level for fiduciaries been of conduct * * *” than crowd. trodden trustee must Ms duties as Here, too, Pry’s performance of his per- with the conjunction propriety be appraised The conflict of company. formance director of .the as a duties was created not interest, if out of these any, arising wish with whose testator, accordance by Pry but and whose will elected of the corporation Pry president must be evaluated in His conduct he was named co-trustee. so given. light trust, may the trustee be per the terms of By what, provision in the absence of such mitted to do instrument, loyalty. a violation of his would bе trust Trusts, 170.9, 871. p. sec. Scott of the business prosperity from Pry benefited primarily but this was because the expansion program, the will him under to purchase the option granted share, much less than the price being $25 at will was and at at the time the executed value both book the difference even death, being greater
103 We cannot declare option. at the time the exercise the of of him, the will expressly gave should have which Pry not acted if, circumstances, fairly the trustee under the faith, he is to be penalized. and in not good granted powers expressly him and all such “A trustee has the necessarily implied powers execution as for the due and faithful are where, hy trust; a testator for selected method of accomplishment object purpose trust cannot be of the of by individually, adopted dealing it with himself a trustee without by contemplated may fairly dealing be assumed such Deposit Lewis, v. 317 Mass. Trust Co. testator.” Boston Safe 1944). (Sup. N. 2d E. 640 Jud. Ct. trustee, Not of interest will duality disqualify every Y., Co. N. Guaranty Trust Fidelity Union Trust Co. v. fall we within J. & A. nor do 1947), N. Eq. (E. Koretzky’s Estate, 8 N. J. 506 the rule in In enunciated re (1951). Pry the business. expand
It was desire operations by establishing pursued expansion program This met policy Palm Lauderdale. West Beach Port stockholders, Mrs. Rosen- including with the approval assets were the cash and liquid crans. The record indicates the business and needs of not excessive in the actual light the growth experienced. at a time when option his electing exercise
Pry’s of the he reason increase purchase, stood to gain shares, conclusive of breach of in valuе is not in 1946 them before attempted trust. He had success of the their enhanced increasing value was business. Pry’s had no about complaint
Mrs. testified she Rosencrans an director of the Monmouth com- officer or performance her regarding he facts from any never concealed pany; affairs the estate' either his administration of or Pry anything “never found Mr. dishonest she company; aware and did,” “fully cognizant and she was he ever estate it he her husband’s manner” in which handled her.” was “satisfactory
104
The court belоw a difficult Ery found role played occasioned the by responsibilities and business fiduciary placed upon him the but find that he testator could not acted “with such unfairness as to a court of con prompt him science with We have charge breach of trust.” reached like conclusion.
The are judgments affirmed. Heher, J. in died (dissenting part). testator on 7, December 1944. did Defendant not exercise the testa mentary the until option buy corporate January 20, Meanwhile, 1949. the defendant was under a fiduciary fidelity to the income loyalty beneficiary which precluded the subordination of interest to his own. True, the interest fiduciary’s duality of was of testamentary creation; but that did modify circumstance not the duty so as sanction loyalty conduct to serve designed the fiduciary’s own interest at the life sacrifice of the income provided by the testator for his widow. The fiduciary also the dominant force in corporate management, and the income beneficiary him treat may require cor porate as were they trustee, transactions though own with keeping the standard of fairness .and impartiality - inherent in the Where there relationship. is manifest un fairness to the life beneficiary distribution of earn ings for increase of corporate surplus to ultimate benefit advantage of the has a fiduciary who working control of the corporation, fiduciary accountable in the probate for the jurisdiction administration corporate Will, re affairs. In Hubb ell's Compare 302 N. Y. See, N. App. also, Trusts, E. 2d (Ct. 1951). Scott on section 236.11. This on the plainest principles justice, to serve the testatorial also intention.
The case is within this factually principle.
I do not find conclusive acquiescence the life bene- fiduciary this, ini' conduct ficiary regard. In fiduciary when the evinced an intention to exercise the testamentary option, objected widow ground such a course her life violate the testator’s during would intention, R., defendant if that “Mrs. whereupon replied: is the way you it, want is the it is be.” way going Stein, Mr. a New retained widow Jersey attorney will, connection with the defend- probate quoted ant thus: “Let’s not discussing excited. We are gеt just this am thing. Anything you want will be done. I content you whatever will say There was no contradiction of go.” *15 this testimony. widow’s the terms misapprehension of iswill significance no on this circum- inquiry; stance major importance that defendant indicated he would not It against wish. suffices to add that defendant’s own testimony demonstrates he set the dividend policy.
I would for remand cause further proceedings to de- termine defendant’s accountability under foregoing prin- otherwise, ciple; I would affirm the judgment. For Vanderbilt, Justice and Justices affirmance —Chief
Oliphant, Wachenfeld, Burling, Jacobs and Brennan —6.
For Heher —1. modification—Justice NEWARK, PLAINTIFF-RESPONDENT, CITY OF v. ELIZA- PULVERMAN, BETH L. EXECUTRIX UNDER THE LAST MARTIN, WILL AND OF TESTAMENT JOHN V. DE- CEASED, DEFENDANT-APPELLANT. Argued February 16, 1953 Decided March 1953.