Wilmington Trust Co. v. Jacobs

9 Del. Ch. 77 | New York Court of Chancery | 1910

The Chancellor :

The present trustee, appointed by the Chancellor, under the will of William Holland Jacobs, has filed a bill for instructions, and the.defendant in the bill, the sole beneficiary of the trust, has filed an answer admitting the. allegations of the bill. The will is clumsily drawn and contains some inconsistencies, but it reasonably appears to indicate the intentions of the testator to be briefly as follows:

All his estate, after the payment of his debts, he gives to his executor, as trustee, upon an active trust for the benefit of his-wife and child. He directs that the estate be invested and the income paid to his wife, to be by her expended for herself and child until and unless his wife should remarry, and then for the child alone, with certain provisions allowing the trustee to exceed income in case during the life of his wife the income should be less than $500 per annum. Upon the remarriage of his wife her interest in the estate ceased. In case the wife should die before the daughter, the duty to expend the income for the child devolved upon the trustee; he being then limited to the expenditure of the income until the daughter should attain thirty years of age, whether she be married or not. If at thirty years of age she be unmarried, the whole of the principal should then be paid over to her; but if then married, and her husband should be a man whose moral character and busidess ability be approved by the trustee, then the trustee should pay over to her such part of the principal of the trust estate as his judgment should approve, and in any event, after her marriage and attaining thirty years of age, to pay to her part of the principal to meet the necessities for which the income was inadequate.

By the bill and answer it appears that the wife and child survived the testator; that the widow remarried about a year after the death of the testator; that the child has attained twenty-one years of age and is still unmarried. It was agreed by the solicitors that she had not attained the age of thirty years, a fact which was not alleged in the pleadings. The executor settled the estate and was allowed to resign as trustee, and the testator’s widow was appointed trustee in his place. Thereafter she was removed, and the present trustee was appointed to her place by the predecessor of the present Chancellor. The only child of the testator, Elizabeth Vaughan Jacobs, the defendant, now claims that the whole of the trust estate should be transferred to her, urging that it belongs to her, and can be withheld from her under the will only by the exercise of a discretionary power given personalty to the original trustee, and'which would not survive to his successor in office, and, as there was no on.e authorized to exercise the discretion to withhold from her the principal, she was entitled to have it transferred to her absolutely and free of the trust. By its bill the trastee asks for instructions as to this demand on the part of the beneficiary.

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The questions now raised are, first, whether Elizabeth Vaughan Jacobs is now entitled to the trust estate, principal as well as income; and, secondly, whether the powers and duties presently to be exercised by the trustee named in the will, Vaughan Smith Collins, survived to his successors after he relinquished administration of the trust. The rule seems to be that such discretionary powers as are annexed to the office of trustee and are intended to form an integral part of it will survive to a trustee succeeding the original trustee; but it is otherwise where the powers are arbitrary and independent of the trust, and not an integral part of it, such as where a trustee has power to divert property into a different channel, for then the discretion would be personal and not annexed to the office or estate. 2 Perry on Trusts, § 505, and cases there cited.

In this State no direct application of the rule seems to have been made in any reported decision, but in case of Collins v. Serverson, 2 Del. Ch. 324, where the trustee was directed by the will to pay money to the testator’s daughter from time to time, to secure or advance her comfort, and had neither invested nor paid over any part of the fund, Chancellor Harrington said: “It is true that the time and amount of the payments are in the discretion of the trustee, subject to the order of this Court; but to refuse or neglect altogether to pay her is practically to annul the trust. The Court will not permit that. The defendant (the trustee) must do what the will directs, or there must be another trustee. ” The facts in this reported case do not appear fully; but it is evidently a case with full discretionary power given to the trustee as such, and the Chancellor evidently regarded it to be within his power and a proper case to appoint a new trustee to execute this discretion in case the testamentary trustee neglected or refused to exercise it. To this extent this case supports the role in this State.

A careful examination of the will of William Holland Jacobs shows with great clearness that the discretion now to be exercised by the trustee was attached to the office of trustee, and was not personal to Vaughn Smith Collins. His name is mentioned only twice in the will; once when the testator expresses a wish that his daughter consult him (Vaughan Smith Collins) “in all matters of importance, and especially in regard to investments and matrimony, ” and again when he is named as “executor of my estate and administrator of my will.” It is perfectly clear that the testator used the word “executor” to mean “trustee, ” for he prescribed duties to his executor which can only be discharged after the estate is settled by him as executor, and further provides for his compensation for the “after service. ”

It is very clear, also, that if Vaughan Smith Collins had continued to be trustee until now, he would have no power to transfer the principal of the trust estate to the beneficiary, Elizabeth Vaughan Jacobs, solely for the reason that she has not yet attained the age of thirty ;rears. It follows necessarily that the present trustee cannot do so, and this Court has no power to so order. This, also, would seem to be decisive of the particular demand now made by this beneficiary; but it is still insisted by the solicitor for the defendant that the present powers and duties given to the trustee were personal to Vaughan Smith Collins and did not survive to the present trustee. This claim, however, cannot be sustained. At present the duties and powers are those common and incident to many trusteeships. They are to invest and pay over to and for the use of the beneficiary the whole or such part of the income as in the judgment of the trustee her education, health, or welfare demands. All the powers conferred and duties imposed were placed upon his executor, meaning his trustee, and none upon Vaughan Smith Collins by name. Indeed, there can be no clearer case of a vesting of discretionary power in the office of trustee and not in the individual appointed trustee than there is in this case. There is no power to divert the trust estate to any other person or in any other channel than to the testator’s daughter. There is no arbitrary power given, and no powers or duties given or imposed independent of the trust, and the administration of it. ■ Such powers, though discretionary, survive with the trust estate and vest in the person who receives the trust estate. Even if it be admitted that the power to be exercised by the trustee when Elizabeth Vaughan Jacobs reaches thirty years of age were given to Vaughan Smith Collins personally and did not survive to any succeeding trustee, still that does not prove or tend to prove that the powers presently to be exercised by the present trustee while Elizabeth Vaughan Jacobs is less than thirty years of age were personal to Vaughan Smith Collins and did not survive him, so as to be exercised by the present trustee.

It is very clear, therefore, that the beneficiary, Elizabeth Vaughan Jacobs, is not now entitled to have transferred to her the principal of the trust estate, and that at this time all the powers and duties, including the discretionary powers and duties, have devolved upon the present trustee, and can be by it exercised and discharged, and were not personal to Vaughan Smith Collins. The trustee will be instructed, therefore, to hold the trust estate and property and to administer it according to the provisions of the will of the testator, at least until Elizabeth Vaughan Jacobs attains thirty years of age. This particular instruction meets the present requirements of the case.

An order will be entered accordingly.

Affirmed by Supreme Court on appeal. See post p. 400.