Opinion
05-25-1903
TRENTON TRUST & SAFE DEPOSIT CO. v. DONNELLY et al.
James Buchanan, for complainant William M. Lanning, for defendants Florence Blackwell and Emily Blackwell. Alfred M. Lafetra, for defendant Bessie Blackwell Donnelly. Dungan & Reger, for defendant Jacob Kline, Jr. Frederic M. Pierce, for defendant Morgan.
Bill by the Trenton Trust & Safe Deposit Company, trustee under Theodore Blackwell's will, against Bessie Black well Donnelly and others, for construction of the will. Will construed.
James Buchanan, for complainant William M. Lanning, for defendants Florence Blackwell and Emily Blackwell.
Alfred M. Lafetra, for defendant Bessie Blackwell Donnelly. Dungan & Reger, for defendant Jacob Kline, Jr. Frederic M. Pierce, for defendant Morgan.
REED, V. C. Theodore Blackwell made a will on October 12, 1872. The fourth, fifth, and sixth clauses are as follows:
"Fourth. I give, devise and bequeath to my said Executors and the survivor of them the sum of Twenty Thousand dollars, in Trust, nevertheless, to invest and keep the same invested, and the Interest which shall accrue thereon less taxes and necessary expenses to pay semi-annually to my beloved wife Sarah I. Blackwell for and during the term of her natural life, or during the term she remains my widow which shall be in lieu of her right of dower in my estate.
"Fifth. All the rest and residue of my estate I give devise and bequeath as follows to wit, one third thereof to each one of my two sisters Rebecca Weart and Elizabeth Rockwell share and share alike and to their heirs forever, and the remaining one third thereof to the heirs of my deceased brother Philemon Blackwell.
"Sixth. At the decease of my said wife or at her marriage, the said sum of Twenty Thousand dollars invested for her use as hereinbefore directed I also give, devise and bequeath as follows, to wit, one third thereof to each of my said sisters Rebecca Weart and Elizabeth Rockwell, share and share alike, and if either one or both of my said sisters should died before receiving the share or shares to them given in this my will, then the lawful heir or heirs of such deceased sister shall have and take the share of such deceased ancestor, and the remaining one third thereof I give, devise and bequeath to the heirs of my deceased brother Philemon Blackwell."
Testator died without issue November 4, 1872. He left, surviving him, his widow, Sarah I. Blackwell, a sister Rebecca Weart, a sister Elizabeth Rockwell, and two children Jacob Blackwell and Ephraim W. Blackwell, the children of a deceased brother, Philemon Blackwell. Sarah I. Blackwell, the widow, died July 21, 1902.
The questions propounded are in respect to the course which the remainder of the legacy of $20,000 shall take, the life tenant being dead. Rebecca, one of the sisters, married John A. Weart. She died July 13, 1888, leaving a child, John A. Weart, Jr. By her will she left her property to John A. Weart, Jr., and her granddaughter, Bessie B. Weart The wife of John A. Weart, Jr., died intestate, leaving Bessie B. Donnelly (nee Weart) her only next of kin. Elizabeth Rockwell, having married one Charles Morgan, who predeceased her, died intestate in February, 1885, leaving a number of children by this marriage surviving, three of whom are now dead. Philemon Blackwell died intestate August 2, 1844, leaving two children, one of whom (Jacob) died April 1, 1803, before the death of the testator. The other son (Ephraim) died August 10, 1888, after the death of the testator.
The first question arises between the personal representative of the life tenant and the remaindermen, and it arises because of the fact that the corpus of the estate of $20,000, devised in the clauses already displayed, has become diminished by unfortunate investments, so that the trustees, instead of having in hand the sum of $20,000, have only the sum of $14,232.51. The corpus of the estate was secured by a mortgage, which was foreclosed, and the mortgaged property was bought in by the trustees, who afterwards sold the same for the sum of $16,000, which sum, after paying the expenses of reducing the same to money, the taxes, and commissions, was, as already remarked, reduced to the sum of $14,232.51. 'The property was bought in by the trustees at foreclosure sale on October 4, 1899, and was sold by them 15 days later. The life tenant was paid interest in full upon the $20,000, less expenses, down to October 1, 1898. Thereafter the trustees paid interest upon the reduced amount that came to their hands down to the death of the widow, with the exception of $225.06.
The question propounded is whether the executors of the widow are entitled not only to this sum of $225.06, but also to the amount of interest which should have been paid had the corpus of the estate remained unimpaired down to the date when the security held by the trustees was turned into money. The amount of this unpaid interest is admitted to have been $1,144.03. The rule which has been laid down in a number of cases respecting the apportionment of a loss occurring under conditions like the present is that the loss shall be apportioned between the life tenant and the remaindermen in the proportion that the debt due the first bears to the amount which should come to the second, namely, the amount of the corpus of the estate; or, conversely, the amount realized shall be set apart to the remaindermen and the life tenant in the proportion that the corpus bears to the unpaid interest due the life tenant. By force of this rule the $14,232.51 should be divided in the proportion that $20,000 bears to $1,144.03.
But it is insisted that the taxes paid by the complainant should be deducted from the life tenant's share thus ascertained. In my judgment this position is not tenable. I am aware that Chancellor Magill, sitting as ordinary,did so order in Turtle's Case, 49 N. J. Eq. 260, 24 Atl. 1, where the trustee had paid taxes which had been assessed upon real estate intervening the time of the trustee's acquisition of the land and the time of the sale made of the same by the trustees. Under the conditions presented in that case, the ordinary thought it equitable to deduct these taxes from the life tenant's share after it had been apportioned according to the rule already mentioned. In the present case the tax paid, so far as appears, was not assessed upon the property during the time it was held by the trustees under the title got by them at the foreclosure sale. The taxes were paid as a lien upon the property when it came to the hands of the trustees. The property could have been sold subject to this lien, but the trustees thought it advisable to discharge this lien so as to give an unincumbered title. The payment of the tax was therefore in reality one of the expenses incurred in transmuting the realty into cash to the best advantage.
Nor was the tenant for life bound to pay taxes upou this property specifically, either before or after the right of the trustees to enter for breach of condition in the mortgage accrued. The life tenant was obliged to pay the tax upon the corpus, and she was entitled, not to the income of this real estate, but to the income which $20,000, less the taxes, would produce. Now, if the 5 per cent. upon this amount, upon the basis of which the debt due the life tenant is computed, is more than the $20,000 would produce, less taxes, it would follow that the debt of $1,144.03 is too much. This follows because she was only entitled to the production of the corpus, less the taxes which she was bound to pay. By the provision in the mortgage, these taxes were so paid by fixing the interest to be paid by the borrower at a lower rate and binding him to pay the taxes. There is nothing to show that the corpus would not have produced the 5 per cent. as well as the amount of the tax up to the time the security was realized. By reducing the annual income to 5 per cent. the taxes were in fact deducted from the income of the life tenant. In my judgment, the representatives of the life tenant are entitled to share in the corpus in the proportion already indicated, and her share is not to be diminished by any reduction on account of these taxes.
Another question propounded is whether the testator, in the use of the word "heirs" in the fifth and sixth clauses of his will. Is to be regarded as intending by that term "the next of kin of the legatees." The testator was dealing with property which he had peremptorily directed to be transmuted by his executors from realty into personalty. It may be regarded as settled in this state that the word "heirs" is interpreted in reference to the kind of property, whether real or personal, which is the subject of testamentary disposition; and, when those words are used In respect to personal property, they will be construed to mean "next of kin." Scudder v. Vanarsdale, 13 N. J. Eq. 109; Leavitt v. Dunn, 56 N. J. Law, 311, 28 Atl. 590, 44 Am. St Rep. 402.
In respect to the time when the next of kin are to be ascertained, I am of the opinion that the gift to Mrs. Rockwell, or in the event of her dying before receiving the share given to her, she having died before receiving her share, this share goes to her next of kin ascertained as of the date of her death, in February, 1885. Gundry v. Pinniger, 14 Beav. 94, 98; Jacobs v. Jacobs, 16 Beav. 557.
In respect to the gift to the "heirs of my deceased brother Philemon Blackwell," his next of kin is to be ascertained as of the date of the death of the testator, October 12, 1872. Wharton v. Barker, K. & J. 483-488; Thelps v. Evans, 4 De G. & S. 188.
These answers dispose of all the mooted queries propounded in the bill.