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In re petition of Construction and Reformation of Matthews Trust No. 1

April 16, 2009

IN RE PETITION OF CONSTRUCTION AND REFORMATION OF MATTHEWS TRUST NO. 1, ETC.,
WILLIAM MORRISON MATTHEWS, ET AL., PETITIONERS-RESPONDENTS,
v.
CADWALADER, WICKERSHAM & TAFT, LLP, RESPONDENT-APPELLANT,
BANK OF NEW YORK, RESPONDENT.
IN RE PETITION FOR APPOINTMENT OF PAUL W. MOURNING, AS SUCCESSOR TRUSTEE OF MATTHEWS TRUST NO. 1, ETC.,
PAUL W. MOURNING, PETITIONER-APPELLANT,
v.
WILLIAM MORRISON MATTHEWS, ET AL., RESPONDENTS-RESPONDENTS.



Order, Surrogate's Court, New York County (Renee R. Roth, S.), entered June 25, 2008, which denied petitioner Mourning's motion for summary judgment to compel respondent Bank of New York to appoint him as individual trustee for the subject trusts, and which granted the motions of petitioner beneficiaries of the trust to dismiss Mourning's petition, unanimously reversed, on the law, the dismissal motions denied, and the petition reinstated and granted.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Gonzalez, P.J., Mazzarelli, Friedman, Catterson, Renwick, JJ.

402801/06, 402800/06, 402802/06 & 402799/06

This is an appeal from the Surrogate's denial of petitioner Mourning's motion to compel the appointment of a member of the Cadwalader Wickersham & Taft law firm (Cadwalader) as the individual trustee of certain trusts. There are four trusts at issue. Three were established for the benefit of the grantor's two sons in 1957, and one for her nephew in 1964. These are inter vivos trusts, continuing until the beneficiaries pass away, and are irrevocable. At the time the trusts were created, the sons were 19 and 8 years old respectively, and at the time the nephew's trust was created, he was 33 years old.

The corporate trustee of all four trusts from the time of their creation to the present is the Bank of New York (BNY). The initial individual trustee of two of the trusts was Robert E. Lee, a member of the Cadwalader law firm; the initial individual trustee of a third trust was Andrew Oliver, who was not associated with Cadwalader. When Oliver resigned in 1961, Lee was appointed successor trustee in accordance with a provision (article Tenth) of that trust specifically naming him and Cadwalader. The individual trustee of the fourth trust, created in 1964, after Lee's death, was William Moss, a Cadwalader partner who was also appointed trustee of the other three trusts upon Lee's death in 1963 in accordance with article Tenth of the trust instruments.

Each of the four trusts included a substantially identical article Tenth providing that, in the event of death or resignation of an individual trustee, BNY was to direct the appointment of a successor trustee. Such successor trustee was to be a member of the Cadwalader law firm and designated by the law firm "as most familiar with the affairs of the Grantor." Under the instruments, in the event of a dispute between the trustees, the decision of the individual trustee would control.

The grantor died in 1979. William Moss continued to serve as trustee until his death in 2005. At that time, Cadwalader again proposed a member of the firm as successor trustee, Paul Mourning. However, because of objections by the beneficiaries, corporate trustee BNY refused to appoint Mourning.

Mourning then commenced a proceeding in Supreme Court, Dutchess County, seeking to compel his appointment. The beneficiaries commenced a proceeding in New York County Surrogate's Court seeking to block the appointment. Eventually, the actions were consolidated before the Surrogate in New York County.

The Surrogate found that the plain language of article Tenth conditioned Cadwalader's power to designate a trustee on its continuing to perform other, unspecified legal work for the grantor. Because the firm had not done so for decades, the Surrogate determined that Cadwalader had no right to name the successor trustee. The Surrogate denied Mourning's motion for summary judgment and granted the beneficiaries' motions to dismiss.

For the reasons set forth below, we disagree, and reverse.

It is well established that, unless ambiguous, the plain language of the trust document must be given full force and effect (see Matter of Chase Manhattan Bank, 6 NY3d 456 [2006] [" trust instrument is to be construed as written and the settlor's intention determined solely from the unambiguous language of the instrument itself'"] [internal quotation marks and citation omitted]). Article Tenth of the trust instruments provides in relevant portion:

"If at any time and from time to time due to death, resignation or other cause there shall be only one Trustee acting hereunder, such sole acting Trustee is directed to appoint such member of the firm of Cadwalader, Wickersham & Taft (or any successor firm) as may be designated by said firm as most familiar with the affairs of the Grantor, successor Trustee by an instrument in writing . . ."

The Surrogate interpreted article Tenth to require that any member of Cadwalader designated as trustee must be "familiar" with the grantor's personal affairs, and that this, in turn, meant that the person had to be familiar with more than just the trust instruments. From this the Surrogate then reasoned that familiarity with personal affairs could only be achieved if the grantor remained a client of Cadwalader's, and in this way "grantor was at least able to make sure ...


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