Maltbie, J.
¶1
(dissenting). With most of the reasoning of the majority opinion I am in entire accord, but I cannot accept the result it reaches. The trustees did not have to come to a new decision each time a payment was to be made as to the amount to be paid to Edmund C. Converse, Jr., but once having determined that the whole income should be paid to him, payments might thereafter be made in pursuance of that decision as a matter of course. Still that did not vest title to any of the income in him, but their decision might be changed at any time and the matter only became settled, title only vested in him, when the payments were actually made. It was of the very essence of the situation that the trustees retain control of the income, and he had no right to any of it until it was actually paid to him. How then can his estate, after his death, have such a right? Those who gave him credit could only rely upon an expectation that the money would be forthcoming, not upon a right to its payment; if the bills which he contracted were such that they did not properly pertain to his reasonable support and maintenance the trustees had power to withhold the payment; but if after his death the estate is entitled to the money as of right, creditors
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holding such claims, if there be such, cannot be prevented from receiving their proportionate share of it —a result which would hardly accord with the purpose of the provisions in question. I would agree that, despite his death, the trustees may still in their discretion pay to his estate the income which had accrued at that time; but that, by reason of his death, they lost their control over it, and it forthwith became an asset of his estate, I cannot agree.
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Case posture Posture SUIT for the construction of the will of Edmund C. Converse, late of Greenwich, deceased, brought to the Superior Court in Fairfield County and reserved by the court ( Brown, J. ) upon an agreed statement of facts, for the advice of this court.
Edmund C. Converse of Greenwich died leaving a will bearing date January 27th, 1920, and a codicil thereto bearing date March 29th, 1921, confirming the will. The will was duly admitted to probate and the plaintiff The Bankers Trust Company has duly qualified as executor and trustee. Alfred Jaretzki, named in the will as executor and trustee, having died, the plaintiff William Nelson Cromwell was duly appointed as successor trustee and is now acting as such. The defendants A. L. Shively and Estella Converse are the duly appointed executors of Edmund C. Converse, Jr., who died November 2d 1926, in the State of California, Estella Converse is the widow and sole legatee of Edmund C. Converse, Jr., to whom she was married in 1920, and Edmund C. Converse had knowledge of and approved of the marriage. Edmund C. Converse, 3d, and Roger Converse, a minor, are sons of Edmund C. Converse, Jr., and Judith A. Salisbury, the former wife of Edmund C. Converse, Jr., who has been divorced from him and is now remarried and is the general guardian of Roger Converse. The defendant
Edmund C. Converse, 3d, is now of age and made default of appearance, filing a statement in the Superior Court that since his interests were identical with those of his brother Roger, there was no occasion for his employing counsel.
Article Seventeenth of the will, so far as is involved in this reservation, is set forth in the footnote. [fn*] The
gross annual income of the trusts of the residuary estate under this article has been in excess of $200,000. The trustees acting under this article, during the period of the trust in the lifetime of Edmund C. Converse, Jr., have regularly credited on the account books of the estate one sixth of the income of the residuary estate to Edmund C. Converse, Jr., as it accrued, and another one sixth to Edmund C. Converse, 3d, and Roger Converse. The trustees have regularly paid to Edmund C. Converse, Jr., the one sixth credited to him, reserving only income for contingencies and for the adjustment of any share of the expenses in the administration of the trust under this article due from him. On November 2d 1926, the date of death of Edmund C. Converse, Jr., there remained to his credit in the hands of the trustees an amount, collected upon his one sixth of this income, of $22,024.11, subject to deductions for trustees' compensation, legal expenses, accountants' fees and probate fees to be fixed at the end of the calendar year, and which, prorated as at November 2d 1926, were $3,034, leaving the net amount of income to his credit $18,990.11.
Article Second of the codicil is set forth in the footnote. [fn**]
The trustees acting under the provisions of this article, during the period of the trust, in the lifetime of Edmund C. Converse, Jr., have regularly credited upon the account books of the trustees the whole of the income of the trust of $1,000,000 under this article to Edmund C. Converse, Jr., reserving only income for contingencies and the adjustment of the expenses of the administration of the trust. On November 2d
1926, the date of death of Edmund C. Converse, Jr., there remained to his credit in the hands of the trustees the income collected upon this trust amounting to $20,216.67, subject to deductions for trustees' compensation, legal expenses, accountants' fees and probate fees to be fixed at the end of the calendar year, and which, prorated as at November 2d 1926, were $3,117.05, leaving the net amount of income $17,099.62.
Edmund C. Converse, Jr., deceased, was a man of education and refinement and of good character; and was held in affectionate regard by his father, Edmund C. Converse, the decedent. He was reared in an atmosphere of great wealth and influence. He attended a college preparatory school and entered college but did not graduate. Upon leaving college he made a business connection in New York but failed to develop an interest in or aptitude for a business career. In 1908 he moved to California, where he engaged in the occupation of cattle ranching, in which occupation he continued during the remainder of his life. The operations of the ranch which he conducted produced little or no profit, and during the lifetime of his father, Edmund C. Converse, he frequently received from him financial assistance. Edmund C. Converse, Jr., at his decease, left a comparatively small estate.
Since November 2d 1926, the trustees have paid out of the income in their hands resulting from these trusts $2,500 to Estella Converse as an emergency payment made to her at the time of the sudden death of her husband, Edmund C. Converse, Jr., while they were temporarily sojourning in British Columbia, and $3,056.80 on account of expenses incurred for his funeral. The receipts of income of the executors for 1926, as appear in the administration account filed in the Court of Probate, were $118,307.12, and the expenses chargeable against the income $50,053.05, leaving
a net income of $68,254.07. In the receipts of income was included $99,960 received on December 29th, 1926. This was an annual dividend declared on December 28th, 1926, upon the stock of The Stanwich Corporation; all the capital stock of the company being owned by the estate of Edmund C. Converse except qualifying shares. It also appears from the account that the receipts of income which came into the hands of the executors prior to November 2d 1926, were less than the payments made for expenses chargeable to income prior to that date.
The executors and trustees, shortly after the death of Edmund C. Converse, caused books to be opened for the several trusts. Among others, an account was opened for the specific trust of $1,000,000, under Article Second of the codicil, and an income account set up for Edmund C. Converse, Jr., under that article. All of the income under this trust has been regularly credited as it accrued on the books of the trustees to Edmund C. Converse, Jr. The trustees decided at the beginning of the administration of the trust to pay to Edmund C. Converse, Jr., all of the net income from this trust for his maintenance and support. They never altered the exercise of this discretion, and the accounts have been regularly kept in accordance with that state of facts.
At the end of each calendar year after the $1,000,000 trust under Article Second had been established, the balance to the credit of said Edmund C. Converse, Jr., on the books of the trustees was as follows:
December 31, 1923................... $6,193.37
December 31, 1924................... 4,654.45
December 31, 1925................... 4,744.18
November 2, 1926, collected......... 8,551.92
accrued........... 11,664.75
The executors and trustees, shortly after the death of Edmund C. Converse, caused books to be opened for the residuary trust under Article Seventeenth of the will, and separate income accounts set up for all of the several beneficiaries under that article. The income of the trust of one third of the income of the residuary estate for the benefit of Edmund C. Converse, Jr., and his children, has been distributed upon the books of the trustees as it accrued in three parts: One half of the one-third share of the income under the residuary article has been regularly credited as it accrued on the books of the trustees to Edmund C. Converse, Jr., and the other one half of one-third has been regularly credited in equal shares to Edmund C. Converse, 3d, and Roger Converse. The trustees decided at the beginning of the administration of this trust to pay to Edmund C. Converse, Jr., one half of the net income of this one third of the residuary estate for his maintenance and support, and they never altered the exercise of this discretion, and the accounts have been regularly kept in accordance with that state of facts.
At the end of each calendar year after the establishment of the residuary trust, the balances on the books of the trustees to the credit of Edmund C. Converse, Jr., under that trust, were as follows:
January 1, 1923..................... $59,250.00 December 31, 1923................... 9,067.42 December 31, 1924................... 2,591.68 December 31, 1925................... 13,654.52 November 2, 1926, collected......... 11,898.01 accrued........... 10,126.10
The decedent, Edmund C. Converse, was one of the organizers of The Bankers Trust Company, had served as a director and member of the executive committee
of that company from 1903 to the date of his death, and was president of that company from 1903 to 1913. Alfred Jaretzki was a member of the firm of Sullivan and Cromwell, attorneys for Edmund C. Converse, the decedent, and was a business associate and friend of the decedent. William Nelson Cromwell is a member of the firm of Sullivan and Cromwell, and was a business associate and friend of the decedent.
The Stanwich Corporation is a corporation with a capital stock of twenty-five thousand shares, organized by the decedent, Edmund C. Converse, during his lifetime, for the purpose of holding certain of his securities. During his lifetime the shares of its stock belonged to him except for a few shares belonging to his wife. The directors were: Edmund C. Converse, Edith D. Converse (his wife) and H.S. Miller (his secretary). At the time of the decedent's death the corporation held numerous securities of considerable value. The estate of Edmund C. Converse acquired from Edith D. Converse at their book value all of the shares belonging to her with the exception of ten shares which were acquired from her at their book value and taken as follows: Alfred Jaretzki, eight shares; A. A. Tilney, one share, and J. L. Ashley, one share. Alfred Jaretzki was one of the executors of the estate, A. A. Tilney is president of The Bankers Trust Company, the other executor, and J. L. Ashley was a close personal friend and business associate of the decedent. Options were given by the above mentioned three owners of the ten shares of stock to the estate to sell the stock to the estate at its book value. Upon the death of Alfred Jaretzki, William Nelson Cromwell became substituted trustee and acquired from the estate of Alfred Jaretzki the eight shares of stock and in turn granted an option to the estate of Edmund C. Converse to purchase these eight shares at book value. After the death of
Edmund C. Converse the directors of the corporation became Alfred Jaretzki, A. A. Tilney, Alfred Jaretzki, Jr., H.S. Miller and J. L. Ashley and they all remain directors except that upon the death of Alfred Jaretzki, William Nelson Cromwell became a director in his stead. The officers of the corporation are William Nelson Cromwell, president; A. A. Tilney, vice-president; Alfred Jaretzki, Jr., vice-president, secretary and assistant treasurer; H.S. Miller, treasurer and assistant secretary.
Assets of the estate, which could be more conveniently administered or liquidated in corporation ownership rather than in direct ownership of the executors, have from time to time been sold by the executors to the corporation. The sale prices of the assets so sold have been, in the case of assets of which the market values were not readily determinable, inventory values, and, in the case of the assets having readily determinable market values, market values at the time of sale.
The practice of the board of directors of The Stanwich Corporation for the past several years has been to declare a dividend of $100,000, amounting to $4 a share, such dividends being usually declared at or prior to the close of the calendar year, and cash dividends so declared representing a portion of the earnings of the corporation during the year in which declared.
By virtue of their stock ownership of the corporation, the executors of the will of Edmund C. Converse have at all times exercised a control of the policy of this corporation and the income has been at all times subject to distribution in accordance with the determination of the executors of said will.
The questions upon which the advice of the Supreme Court of Errors is desired are as follows:
1. Should the net amount of $18,990.11 of the undistributed and accrued income as at November 2, 1926, in the trust for Edmund C. Converse, Jr., under the said Seventeenth Article of the will remaining after charging thereto its proportionate share of the emergency expenses set out in paragraph 11 of the complaint be paid by the trustees to the defendants, A. L. Shively and Estella Converse, as executors of the last will and testament of said Edmund C. Converse, Jr., or should it be added to the shares of the defendants, Edmund C. Converse, 3d, otherwise known as Edmund C. Converse, Jr., and Roger Converse, in the income of the said trusts under the said Seventeenth Article of the will?
2. Should the net amount of $17,099.62 of the undistributed income as at November 2, 1926, in the trust for Edmund C. Converse, Jr., under the said Second Article of the codicil remaining after charging thereto its proportionate share of the emergency expenses set out in paragraph 11 of the complaint be paid by the trustees to the defendants A. L. Shively and Estella Converse, as executors of the last will and testament of said Edmund C. Converse, Jr., or should it be applied to the maintenance, education and support of or accumulated for the defendants Edmund C. Converse, 3d, otherwise known as Edmund C. Converse, Jr., and Roger Converse, by the trustees as they may in their discretion see fit?
3. How should the income referred to in paragraph 12 of the complaint be disposed of by the executors and by the trustees? Source: CourtListener
