Matthews v. Cadwalader, Wickersham & Taft, LLP

61 A.D.3d 511, 878 N.Y.S.2d 8
CourtAppellate Division of the Supreme Court of the State of New York
DecidedApril 16, 2009
StatusPublished
Cited by5 cases

This text of 61 A.D.3d 511 (Matthews v. Cadwalader, Wickersham & Taft, LLP) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Matthews v. Cadwalader, Wickersham & Taft, LLP, 61 A.D.3d 511, 878 N.Y.S.2d 8 (N.Y. Ct. App. 2009).

Opinion

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.

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 [512]*512initial 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, 460 [2006] [“ ‘trust instrument is to be construed as written and the settlor’s intention determined solely from the unambiguous language of the instrument itself ” (citations omitted)]). Article Tenth of the [513]*513trust 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 that any such authority [the power of appointment] could be wielded only by those who retained her confidence over time.”

The Surrogate concluded that the grantor “was apparently determined that (to the extent practicable) Cadwalader’s considerable power to influence the administration of the trusts would not outlast her confidence in the firm.” Given the Surrogate’s finding that in the mid-1970s, the grantor took her legal business to another law firm in the city (Sullivan and Cromwell) and that neither Cadwalader nor Moss had any further dealings in her personal matters, the Surrogate ruled against petitioners Mourning and Cadwalader.

We find that in so construing article Tenth, the Surrogate impermissibly excised a word from the clause (see Matter of Buechner, 226 NY 440, 443 [1919] [error to excise word “living” from clause in will describing class of heirs]). As Mourning correctly asserts, the Surrogate excised the word “most” out of article Tenth. This necessarily resulted in a tortuous interpretation of what is, essentially, clear language. The requirements for appointing a successor trustee according to the plain language of the provisions are (1) that the trustee is a member of the Cadwalader law firm and (2) the Cadwalader member appointed will be the one most familiar with the grantor’s affairs as compared to other members of the firm. This provision makes plain that the group from which a successor trustee is to be picked is the membership of Cadwalader. The criteria for choosing which member is the one who has the most familiarity with the grantor’s affairs.

On appeal, the beneficiaries argue that the purpose of the trusts supports their reading that “affairs” cannot include the trusts, but must exclude them and refer only to other matters. [514]*514Specifically, they point to the Surrogate’s finding that the grantor must have wanted Cadwalader to have the power to appoint only so long as the firm held her confidence generally. The problem with this argument is that the document simply does not say this.

The Surrogate may have been correct that the term “affairs of the [gjrantor” is broader than the instant trusts. However, as Mourning notes, the phrase may not be fairly read to exclude the trusts (see e.g. Teets v United States, 29 Fed Cl 697, 710 [1993] [using term “affairs” to include certain trusts]). The grantor invested a considerable sum (now worth some $250 million) in the trusts, dictated their terms, chose the tmstees and the beneficiaries. Under the plain meaning of the words, the trusts must be included in her “affairs.”

In any event, as Mourning correctly counters, the “purpose” of the trust cuts the other way.

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Cite This Page — Counsel Stack

Bluebook (online)
61 A.D.3d 511, 878 N.Y.S.2d 8, Counsel Stack Legal Research, https://law.counselstack.com/opinion/matthews-v-cadwalader-wickersham-taft-llp-nyappdiv-2009.