The petition herein prays for the judicial settlement of the accounts of the trustees and for a construction of the validity and effect of the last will and testament of testator and the appointment thereunder of Eugene Reynal and for the issuance of letters of trusteeship to Katherine B. Reynal and for the setting of compensation of the attorneys and the matter having duly come on before this court after the service of citations and the court having appointed Edward V. K. Cunningham, Jr., an attorney at law of 54 Market Street, Poughkeepsie, New York, as guardian ad litem for William Andrew Reynal, Carmen Luz Reynal and Michael Louis Reynal, infants herein and a memorandum having been submitted on behalf of petitioners and a report of the guardian ad litem having been filed herein and the court having reviewed the will and the papers filed and after due deliberation thereon, decides and finds as follows:
The instant proceeding was brought by the petition of United States Trust Company from New York as the surviving trustee of the trust created by the will of Eugene S. Reynal for his son Eugene Reynal for (1) an instruction to the trustees as to the validity of the purported exercise by the will of Eugene Reynal of a testamentary power of appointment pursuant to the testator's will, (2) a judicial settlement of the accounts of the trustees, and (3) a determination of the commissions payable to the petitioner as surviving trustee.
It appears that the infants who are represented by the guardian ad litem are interested in the instant proceeding by reason of the following circumstances:
(a) The testator herein is Eugene S. Reynal, who died on December 31, 1939, a resident of Dutchess County, New York, and whose will was admitted to probate in this court on January 15, 1940.
(b) The infant wards herein are the three grandchildren of the testator's son, Eugene Reynal, who died on March 20, 1968, a resident of New York County, New York, and whose will was admitted to probate on March 26, 1968, by the Surrogate's Court of New York County. Eugene Reynal left him surviving his wife, Katherine B. Reynal, a natural son, Anthony Reynal (from whom there has been no issue), and an adopted son, Eric Y. Reynal, who is the father of the three infants constituting the infants herein.
(c) Eugene Reynal was a beneficiary, as well as a trustee, under a trust created by the will of his father, Eugene S. Reynal, the testator herein. Pursuant to that trust, Eugene Reynal was entitled to the net income from that portion of the trust corpus which had been set aside for his benefit and, in addition, was entitled to appoint such corpus, "in such estates, interests and proportions" as he "shall in and by his last will and testament in that behalf direct, limit and appoint," to a class of persons consisting of the testator's issue and the spouses of such issue. In default of such an exercise of the power of appointment, Eugene S. Reynal's will provided that the property subject to the power would be given absolutely to the issue of the child possessing the power or, if the child were not survived by such issue, then absolutely to the testator's issue then surviving.
(d) By his will, which was admitted to probate as mentioned above, Eugene Reynal purported to exercise the power of appointment given him pursuant to his father's will, as set forth above. Eugene Reynal's will provided, in pertinent part, that "in exercise of said power of appointment I provide as follows: Section I
"If my wife Katherine B. Reynal or my son Anthony Reynal shall survive me I direct that upon my death the trustee or trustees then in office of said trust shall continue to hold all property then belonging to the principal of said trust in further trust, during a trust term to be measured by the lives of such of my wife and said son as shall survive me, to collect and receive the income thereof and pay the net income to my wife during her life and after her death, or after my death if she does not survive me, to such of my issue as shall from time to time be living during the trust term; and upon the death of the survivor of the persons whose lives shall measure the trust term the trustee or trustees then in office of said trust shall convey and deliver and I give and bequeath all property then belonging to the principal of said trust absolutely to my issue then living, or in default of such issue to such of my nephews Louis Reynal Norris and Alfred Norris as shall then be living and to the issue then living of such of my said nephews as shall have theretofore died leaving issue then living.
"In case it shall be determined by the final judgment or decree of a court of competent jurisdiction that I have no power to direct that said property be held in further trust for my wife, I hereby appoint the said property to my wife to be held and enjoyed by her during her life, and upon her death I appoint the same to my issue then living, or in default of such issue to such of my said nephews as shall then be living and to the issue then living of such of my said nephews as shall have theretofore died leaving issue then living.
"I direct that this will shall not operate as an exercise by me of said power of appointment except to the extent and in the manner in this article expressly set forth." Eugene Reynal's will further provided that his adopted son, Eric Y. Reynal, would be deemed his child and issue for all purposes of his will.
The questions presented by the trustee's request for instructions cover the validity of the purported exercise by the will of Eugene Reynal of the testamentary power of ...