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Carlisle v. Delaware Trust Co.

Supreme Court of Delaware

October 24, 1953

CARLISLE et al.
v.
DELAWARE TRUST CO. et al. DELAWARE TRUST CO.
v.
DELAWARE TRUST CO. et al.

Action by an executor and testamentary trustee for instructions upon questions arising out of the administration of the estate of plaintiff's decedent. The Court of Chancery in and for New Castle County entered a judgment from which an appeal and cross-appeal was taken. The Supreme Court, Southerland, C. J., held that a will which did not mention inter vivos trust previously executed by testatrix under which testatrix reserved power of appointment of trust fund, and which set forth certain specific request and legacies and devised and bequeathed residue of testatrix's estate in trust for specified purposes, did not under record constitute an exercise of power of appointment.

Reversed and cause remanded.

Page 765

[34 Del.Ch. 135] Howard Duane, Wilmington, and Houston Wilson, Georgetown, for appellants.

David F. Anderson (of Berl, Potter & Anderson), Wilmington, for appellee and cross appellant Delaware Trust Co.

W. Reese Hitchens and H. James Conaway, Jr. (of Hering, Morris, James & Hitchens), Wilmington, for appellees Agnes Hubbard, Richard Hubbard, Eva Virginia Lofland, William Carney, Nell A. Beardsley, Edward Stewart, Linda Elizabeth Stewart, Linda Stewart Eklof and Agnes Hubbard Tisch.

Houston Wilson, Georgetown, for cross appellee Elizabeth Vaules Carlisle.

SOUTHERLAND, C. J., and WOLCOTT and TUNNELL, JJ., sitting.

Page 766

SOUTHERLAND, Chief Justice.

The principal question before us is whether a power of appointment reserved to herself by the settlor of an inter vivos trust was duly exercised by her last will and testament. Two other questions concern the validity of a bequest for the care of cemetery lots, and the apportionment of federal estate taxes.

[34 Del.Ch. 136] I. The question of the exercise of the power.

On December 21, 1940 Mrs. Hirsch, a resident of Milford, Delaware, established an inter vivos trust of certain property of her own. She conveyed securities and cash to Delaware Trust Company, a trust company of the State of Delaware, in trust to manage and invest the trust fund, collect the income, and after the payment of charges and expenses to pay the income to her during her lifetime. The agreement provided that--

‘ upon her death the Trustee shall assign, transfer and deliver the trust fund as then constituted, as directed and appointed by the Last Will and Testament of the Trustor or in the absence of such direction and appointment unto the next of kin of the Trustor according to the intestate law of the State of Delaware.’

The settlor reserved to herself full power to place additional property in the trust, to withdraw any property from it, and to modify or revoke the agreement in whole or in part.

At the date of the trust agreement Mrs. Hirsch was a widow with no children, well advanced in years. Her next of kin were--

(1) Carlisle L. Hubbard, Agnes Hubbard and Linda Elizabeth Stewart, children of a deceased sister.

(2) Paris T. Carlisle, III, a brother.

(3) Lester L. Carlisle, a brother.

It does not appear whether a will of Mrs. Hirsch was in existence at the time of the execution of the trust agreement.

On August 2, 1950 Mrs. Hirsch made the will which is before us for construction. By that time her two brothers had died and her next of kin were--

(1) Carlisle L. Hubbard, Agnes Hubbard and Linda Elizabeth Stewart, children of a deceased sister.

(2) Elizabeth Vaules Carlisle, daughter of her deceased brother, Paris T. Carlisle, III.

[34 Del.Ch. 137] (3) Lester L. Carlisle, Jr., son of her deceased brother, Lester L. carlisle.

Mrs. Hirsch's will contains no reference whatever to the power of appointment reserved by her in the trust agreement of 1940. Nor does it mention the trust agreement or the trust property. After setting forth certain specific bequests and cash legacies to relatives and others the will devises and bequeaths ‘ All the rest, residue and remainder of my estate’ to Delaware Trust Company in trust for certain purposes. The will prescribes the general duties and powers of the Trustee, including power to sell real estate, and then provides as follows:

‘ The net income arising from the trust fund shall be paid in equal shares to Agnes Hubbard and to Elizabeth Vaules Carlisle [nieces of the testatrix] in monthly payments so long as they both shall live, and upon the death of either of them, then the full income shall be paid in monthly installments to the survivor of them during the life of such survivor.’

Upon the death of the surivivor of the two life beneficiaries the trust corpus is to be disposed of as follows:

To Christian Science Society, Milford, Delaware, $5,000.

Three-fourths of the remainder to the two children of Linda Elizabeth Stewart, a niece of the testatrix.

One-fourth of the remainder to the two children of Carlisle L. Hubbard, a nephew of the testatrix.

Page 767

A codicil of May 22, 1951 is not here important.

Mrs. Hirsch died June 18, 1951. Delaware Trust Company duly qualified as executor. Thereafter it filed a complaint in the court below seeking instructions upon certain questions arising out of the administration of the estate. The most important of these is the question first above stated, viz.: Did Mrs. Hirsch intend by her last will and testament to exercise the power of appointment reserved in the trust agreement of 1940?

[34 Del.Ch. 138] The case was heard by the Chancellor upon oral testimony and exhibits. Certain of the beneficiaries and next of kin, whom for the sake of brevity we shall call ‘ the Hubbard-Stewart heirs', asserted that the power had been duly exercised. Certain others of the next of kin, whom for like reason we shall call ‘ the Carlisle heirs', asserted the contrary. The Chancellor resolved the question in favor of the exercise of the power, holding that notwithstanding the absence of any language in the will referring to the power or to the property in the trust fund, there was sufficient proof from surrounding circumstances to justify the conclusion that Mrs. Hirsch intended by her will to exercise the power. The Carlisle heirs have appealed.

The requirements of the law with respect to the exercise by will of powers of appointment held by a testator have been settled by our own decisions. We begin with the rule that a general bequest or devise of all the testator's property, or the remainder of his property, is not in itself a valid exercise of a power of appointment. Lane v. Lane's Adm'x, 4 Pennewill 368,55 A. 184,64 L.R.A. 849. In that case the Supreme Court also considered the rules formulated to determine whether a power has been exercised by a will, and approved and adopted the tests set forth by Justice Story in Blagge v. Miles, 3 Fed.Cas. No. 1, 479, pages 559, 566, 1 Story 426. They are as follows:

‘ It is now admitted to be established, as the general rule, that the intention of the testator is the pole star to direct the court in the interpretation of wills, * * *. Similar doctrines now generally prevail in regard to the execution of powers, and especially in regard to their execution by last will and testaments. * * * the intention to execute the power must be apparent and clear, so that the transaction is not fairly susceptible of any other interpretation. If it be ...


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