Opinion ID: 2336142
Heading Depth: 1
Heading Rank: 3

Heading: the barr trust

Text: By a trust indenture dated April 30, 1935, Thomas T. Barr, Jr., created a trust of which he and the Fidelity Union Trust Company were the trustees. Barr died on April 14, 1949, and since then the Fidelity Union Trust Company has been acting as the sole trustee. Article Third II of the trust indenture gave the trustees virtually unlimited investment powers so long as the settlor acted as a trustee thereunder and then provided as follows: After the Settlor ceases to act as Individual Trustee hereunder the corporate or surviving Trustee may retain and continue to hold, for so long as it considers such holding advisable and in the best interests of the trust estate, any property or investments then held by it, but shall be limited in making new investments to such as shall then be legal for the investment of trust funds under the laws of the State of New Jersey and of the State of New York. With respect to the investment powers of the surviving trustee under this indenture the trial court held: Under the proper construction of the trust indenture, dated April 30, 1935, executed between Thomas T. Barr, Jr., as settlor, and said Thomas T. Barr, Jr., and Fidelity Union Trust Company, as Trustees, plaintiff, Fidelity Union Trust Company, as surviving trustee of said trust, in investing the assets of said trust, is confined to such securities as were classified as legal for the investment of trust funds by the terms of the statutes of New Jersey in effect April 14, 1949. The trustees of Rutgers College in New Jersey representing Rutgers University, the beneficiary of this trust, on their cross-appeal urge that the construction adopted by the trial court is in error, and in this we agree. By the terms of the trust indenture the surviving trustee is limited in making new investments to such as shall then be legal for the investment of trust funds under the laws of the State of New Jersey and of the State of New York. The trial court concluded that the words such as shall then be legal referred back to the time when the settlor ceased to act as a trustee, but such a construction erroneously lifts the words from their own clause and carries them back to a prior clause complete in itself. In our opinion the words such as shall then be legal must be read in conjunction with the preceding words in the same clause, namely, to the time of making new investments. Grammar and logic would seem to indicate that this is the preferred construction, and a reading of the entire paragraph evidences a plain intent to permit the surviving trustee to invest in such securities as may from time to time be legally authorized by statute. For the reasons previously expressed herein, it follows that the Fidelity Union Trust Company as surviving trustee is authorized by the terms of the trust indenture to invest in such securities as are legal under the laws of this State, which includes investments authorized by the Prudent Man Investment Statute to the extent of 40% of the trust estate. In this regard we note that as of December 6, 1951 some 58% of the corpus was invested in common stocks, and accordingly no funds may be re-invested under the terms of the Prudent Man Investment Statute unless and until that percentage falls below the 40% limitation.