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02/08/66 Annette G. Grabois, As v. Frances K. Grosner and

February 8, 1966

OF MARIAN GROSNER, AN INSANE PERSON, APPELLANT

v.

FRANCES K. GROSNER AND AMERICAN SECURITY AND TRUST COMPANY, APPELLEES 1966.CDC.26 DATE DECIDED: FEBRUARY 8, 1966



UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

Annette G. GRABOIS, as Committee of the Person and Property

Petition for Rehearing before the Division and for Rehearing En Banc Denied March 31, 1966.

APPELLATE PANEL:

Edgerton and Prettyman, Senior Circuit Judges, and Fahy, Circuit Judge.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE PRETTYMAN

This is a will case. The committee for an incompetent person, beneficiary under a testamentary trust, filed a civil action seeking a judgment against the trustees. The District Court granted summary judgment for the defendant trustees. This appeal followed.

Our appellant (the committee) and the beneficiary are sisters. Their father by will, after providing for his wife, created a trust and directed the trustee to divide the trust property into shares, of which one share was set apart for his daughter Annette, one share for his daughter Marian, and, the will said, one share for the then-surviving issue collectively of either of the daughters who might then be dead. The testator treated the shares of the two sisters separately, the share of Annette in Article Sixth (1) and the share of Marian in Article Sixth (2). But the two paragraphs are identical, and thus the directions to the trustees, although separately stated, were identical as to the two sisters. The daughter Marian had been in a mental institution for about two years prior to the execution of the will; she entered the institution in 1946, the will was executed in 1948, and the father died in 1952.

The problem arises because of certain provisions in Article Sixth (2), relating to the daughter Marian, and provisions in a subsequent article (Article Eleventh), which is a paragraph applicable generally to the trusts created by the will. The pertinent sentence in Article Sixth is:

"In the case of the part or share so set apart for the benefit of my daughter, MARIAN GROSNER, if she shall survive me, my Trustees shall hold, manage, control, sell, invest and reinvest the same and collect the income therefrom, and after making all proper deductions for taxes, Federal, State or Municipal, upon said trust share, or the income therefrom, and after deducting all other proper and necessary administrative expenses, shall pay over the net income arising therefrom to my said daughter for the term of her natural life."

The pertinent part of Article Eleventh is:

"I hereby authorize and empower my Trustees, in the exercise of their absolute and uncontrolled discretion, to apply to the use of any beneficiary hereunder the whole or any part of the income or principal of the separate trust share set apart for such beneficiary as my said Trustees may deem to be proper and necessary in the event of any serious illness, or other calamity, or because of the necessity of such beneficiary to have additional funds for her living expenses. My said Trustees, in their uncontrolled discretion, are authorized to determine the necessity or emergency for using the income or principal, or any part thereof, and their decision shall be final and conclusive upon all beneficiaries hereunder."

After the testator died, the trustees assumed their duties, and through the year 1957 they applied directly for Marian's use and benefit such portions of the net income of the trust as they deemed necessary for her support and maintenance. They accumulated the excess of the trust income over the amounts thus applied. A dispute arose between the trustees and Marian's sister, Annette, concerning certain expenditures, and she initiated proceedings in the Supreme Court of New York, which led to her appointment as committee of the person and property of her sister, Marian. Upon her appointment the trustees paid over to her the entire income accumulated in their hands. Thereafter they paid over to her virtually all of the current income of the trust quarterly, until June, 1961. At the latter date, and continuing to the present time, the trustees refused either to pay any of the trust income to the committee or to apply any of it to the benefit of the beneficiary, Marian.

In the complaint the committee prayed that the court declare the duties of the trustees and her rights under the testamentary trust, and that the court enter judgment against the trustees for such amounts of the net income as were not either paid for the maintenance and support of the beneficiary, Marian, or distributed to the committee. The question is whether the trustees may accumulate the income of this trust or whether they are required either to devote it to the maintenance and support of Marian or distribute it to the committee.

The trustees' position is built upon the premise that Article Sixth is inoperative and that the alternative, Article Eleventh, gives them absolute discretion in respect to the disposition of the income allocable to the ...


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