Appendix — Ewing v. Citytrust

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IN THE a icocntc

Supreme Court of the United States

OctToBer TERM, 1989

MICHAEL EWING,

Petitioner.

CITYTRUST.

Respondent

APPENDIX TO PETITION FOR WRIT OF

CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE SECOND CIRCUIT

WILLIAM R. Horner, Esq.

Counsel of Record

HORNER & Isaacs, P.C.

489 Fifth Avenue

New York, New York 10017

(212) 953-2288

Attorneys for Petitioner

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Nos. 17, 47—August Term, 1989

(Argued September 21, 1989

Decided December 13, 1989)

Docket Nos. 89-7246, 89-7258

MICHAEL EWING,

Plaintiff-Appellant,

Cross-A ppellee,

—Y —

ALVIN RUML and LYNDA EWING

as Executors of the Estate of Alexander Ewing,

Defendants-Appellees,

CITYTRUST,

Defendant-A ppellee,

Cross-A ppellant.

Before:

VAN GRAAFEILAND, MESKILL and KEARSE,

Circuit Judges.

Appeal from dismissal of claims alleging mishandling of

two estates and two trusts and cross-appeal from an award

of $81,769.58 for mishandling of a third trust. Dismissals

affirmed. Award vacated and matter remanded for further

consideration.

WILLIAM R. HORNER, New York, New York

(Horner & Isaacs, P.C., New York,

New York, of counsel), for Plaintiff-

A ppellant-Cross-A ppellee.

DION W. MOORE, Bridgeport, Connecticut

(Williams, Cooney & Sheehy, Bridgeport,

Connecticut, of counsel) for Defendant-

A ppellee-Cross-A ppellant.

VAN GRAAFEILAND, Circuit Judge:

On June 19, 1986, Michael Ewing (‘‘Michael’’) brought

the instant action against Citytrust alone in the United

States District Court for the Southern District of New

York, alleging that the Bank breached its fiduciary duty to

him in the administration of two estates and three trusts.

The estates in question were those of Michael’s grand-

mother, Myra, and his grandfather, George. Citytrust and

Michael’s father, Alexander, were co-executors of both

estates. The trusts in question were a testamentary trust

created by Myra, of which Citytrust was the sole trustee, a

testamentary trust created by George, of which Citytrust

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was co-trustee with Alexander, and an inter vivos trust cre-

ted by George, of which Citytrust was the sole trustee.

When Citytrust moved to join Alexander’s Estate as an

additional defendant, Alvin Rum! and Lynda Ewing, as

Executors of the Estate of Alexander Ewing, were

ncluded as defendants pursuant to stipulation. The action

ce tancg was transferred to the United States District

Court for the District of Connecticut. Michael now

appeals from Chief Judge Daly’s dismissal of Michael's

claims involving Myra’s estate and trust and George’s

inter vivos trust. Citytrust cross-appeals from an

ing the George Bolan testamentary trust. Although

Michael’s notice of appeal is general in scope, the relief he

seeks is limited to his claim against Citytrust. Alvin Ruml

and Lynda Ewing, as Executors of the Estate of Alexander

Ewing, have not appeared in this appeal. The sole issue

before us then is the conduct of the Bank.

ie)

Myra died on January 22, 1967. George died on June 3,

1967, leaving an only son, Alexander. Myra’s trust name

Alexander as the income beneficiary, with the remainder

upon his death going to Alexander’s issue [Michael] if he

survived. Citytrust, as co-executor with Alexander and as

sole trustee, was given the power ‘‘[t]o invest and reinvest

without restriction or limitation’’ and to hold and retain

stocks, bonds or other securities ‘‘whether or not the same

shall be an investment of the character deemed to be legai

and proper for Trust investments under the laws of the

State of Connecticut.’’ Myra’s estate was made up largely

of common stocks. Because they produced only modest

income, the Bank sold them and invested the proceeds in

tax-exempt bonds which produced substantially higher

income. The original trust corpus consisted of approxi-

mately $400,000 of these bonds.

George Ewing’s inter vivos trust also consisted largely

of common stocks. These stocks, having an approximate

value of $1.5 million, were sold, and the proceeds.invested

mainly in bonds providing a higher rate of return. The

income from this trust and so much of the principal ‘‘as

may in the judgment of the Trustee be desirable to or for

the benefit of [Alexander or Michael]’’ was to be paid to

them ‘‘in such amounts and proportions as my said corpo-

rate Trustee in its sole and absolute discretion shall deem

advisable from time to time without regard to equality of

distribution.’’ The Trustee also was empowered ‘‘to invest

and reinvest in any property or security’’ and ‘“‘to make,

retain or change any investment without liability on

account thereof.”’

George Ewing’s will named Citytrust and Alexander as

co-executors and as co-trustees of a trust, the corpus of

which was approximately $283,497. However, Alexander

delegated his responsibilities as co-trustee to Alvin Ruml,

a New York City stockbroker, and Ruml thereafter

offered his investment counsel and advice to Citytrust.

The will empowered the corporate Trustee to pay so much

of the net income to Alexander and Michael ‘‘in such

amounts and proportions as my said corporate Trustee in

its sole and absolute discretion shall deem advisable from

time to time without regard to equality of distribution.’’ It

also authorized the corporate Trustee ‘‘to invade the prin-

cipal for any reason in its discretion for the benefit of

[Alexander or Michael]’’.

Michael argued in the district court that the defendants

breached their fiduciary duties to him by (1) engaging in

an investment policy favoring income production over

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Principal appreciation; (2) delegating investment strategy

decisions to Alvin Ruml; and (3) ) distributing $111,000, the

balance remaining in.George’s testamentary trust, to Alex-

ander without Michael’s knowledge or consent. Both sides

moved for summary judgment. The district court granted

summary judgment in favor of the defendants on the first

two claims and in favor of Michael and against Citytrust

on the third.

Before we can address the merits of the two appeals, we

must determine whether the case comes to us in proper

posture tor review. The district court’s disposition of the

summary judgment motions is entitled ‘“RULING ON

CROSS-MOTIONS FOR SUMMARY JUDGMENT.”

The decretal portion of this ‘“‘RULING”’ provides that

‘‘partial summary judgment shall enter for the plaintiff

only on the question of liability with regard to [the inva-

sion of principal in the George Ewing testamentary

trust].’” With regard to Michael’s remaining claims, the

RULING provides that ‘‘partial Summary judgment shall

enter in favor of defendants Citytrust and the Estate of

Alexander Ewing.”’

Citytrust moved for reconsideration of the portion of

the district court’s ruling that was in favor of Michael, and

Michael moved for entry of final judgment and damages.

On January 25, 1989, the district court denied Citytrust’s

motion for reconsideration and granted Michael’s ‘*appli-

cation for damages. . . to the extent of $55,500 plus pre-

judgment interest. . . .’’ The order stated in conclusion

that ‘‘upon the entry of final judgment, this matter is

hereby closed of record.’’ The judgment, entered on Feb-

ruary 10, 1989, referred simply to the court’s January 25th

‘“‘Ruling’’ on plaintiff’s motion for final judgment and

then stated, it is ““ORDERED and ADJU[D]GED that

judgment be and is hereby entered for the plaintiff in the

amount of $81,769.58.’’ This abbreviated judgment was

signed and entered by the district court clerk.

Where a separate judgment thus is entered as required

by Fed. R. Civ. P. 58, the preferred procedure is to make

it. self-sufficient and complete. 11 C. Wright and A.

Miller, Federal Practice and Procedure § 2785 at 15-16.

Revtblatt v. Denton, 812 F.2d 1042, 1043-44 (7th Cir.

1987). If this is done, it is readily apparent to all what

relief has been granted and what has been denied and the

date when this has occurred for purposes of appeal. See

Cardillo v. United States, 767 F.2d 33 (2d Cir. 1985),

However, where, as here, the appeals are timely and the

district court’s disposition of the case is undisputed, we

may accept the appeal and interpret the judgment in the

light of the district court’s opinions, findings and conclu-

sions of law. See Great Lakes Dredge & Dock Co. y. Huff-

man, 319 U.S. 293, 295 (1943); National Railroad

Passenger Corp. v. City of New York, 882 F.2d 710, 713

(2d Cir. 1989); Security Mutual Casualty Co. vy. Century

Casualty Co., 621 F.2d 1062, 1066 (10th Cir. 1980). Any

other disposition would result in a spinning of wheels for

no practical purpose. See Bankers Trust Co. v. Mallis, 435

U.S. 381, 385 (1978). Upon dismissal by this Court, the

district court simply would enter a new judgment incorpo-

rating all the dispositive provisions of its summary judg-

ment order, and review would be sought once again. /d.

Accordingly, we treat the district court’s disposition of the

issues before it as a final dismissal of all claims made by

Michael against the defendants, except that Michael was

awarded judgment against Citytrust alone in the amount

of $81,769.58 because of the distribution of principal to

Alexander Ewing from the George Ewing testamentary

trust. We affirm the district court’s dismissal of the several

claims that it found to be without basis. We vacate the

$81,769.58 award against Citytrust and remand for fur-

ther proceedings with respect to this claim.

THE DISMISSED CLAIMS

In dismissing Michael Ewing’s claims based on alleged

improper investment policies, the district court correctly

noted that the issue of the defendants’ breach of fiduciary

duty was a matter of state law. Erie R.R. v. Tompkins,

304 U.S. 64 (1938). Where, as here, the interpretation of

state law is made by a district judge sitting in that state, it

is entitled to great weight and should not be reversed

unless it is clearly wrong. Lomartira v. American Automo-

bile Ins. Co., 371 F.2d 550, 554 (2d Cir. 1967). Michael

has not convinced this Court that the district court’s rea-

soning is so flawed as to fail under this standard. Quite to

the contrary, the lower court’s decision on this issue is well

reasoned and correct.

Both in its capacity as executor and trustee, Citytrust

owed Michael a fiduciary obligation. See Satti v. Rago,

186 Conn. 360, 367 (1982); O’Connor v. Chiascione, 130

Conn. 304, 307-08 (1943); 45 Conn. Gen. Stat. Ann. § 45-

100d(a) (West Supp. 1989). Connecticut law generally

requires that a fiduciary such as Citytrust act with the care

of a prudent investor in managing estate assets. United

States Trust Co. v. Bohart, 197 Conn. 34, 48 (1985): see

also Jackson v. Conland, 178 Conn. 52, 55 & n.3 (1979):

Conn. Gen. Stat. Ann. § 45-88 (West Supp. 1989). Lan-

guage in a will or trust agreement, however, may excuse

such a fiduciary from the strictures of this rule and allow it

a broader range of investment discretion than the rule

otherwise would permit. United States Trust Co. y.

Bohart, supra, 197 Conn. at 48; see also Jackson vy. Con-

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land, supra, 178 Conn. at 55 & n.3 (1979); Reed v. Reed,

80 Conn. 401, 409-10 (1908); Conn. Gen. Stat. Ann. § 45-

88 (West Supp. 1989). In such circumstances, courts may

hold the fiduciary liable only where it abuses that discre-

tion. United States Trust Co. v. Bohart, supra, 197 Conn.

at 48. Courts will not find such abuse unless the fiduciary

has acted dishonestly or with improper motive, has failed

‘‘to use his judgment,’’ or has ‘‘acted beyond the bounds

of a reasonable judgment.’’ Restatement (Second) of

Trusts § 187, comment e (1959); see also Gimbel vy.

Bernard F. & Alva B. Gimbel Foundation, Inc., 166

Conn. 21, 37 (1974).

Michael has not shown that Citytrust abused its discre-

tion under any of these criteria. Although Michael argues

that Citytrust should have followed a different investment

Strategy to better serve his interests as the remainderman

of various trust assets, the district court correctly held that

George’s will did not require it to do so. Moreover,

Michael has made no showing that Citytrust acted dishon-

estly, in bad faith, with improper motives, or in a grossly

negligent manner in following a conservative investment

policy emphasizing income over capital gains. We accord-

ingly find, as did the court below, that Citytrust did not

abuse its discretion in following the investment strategy of

which Michael now comolains.

The district court correctly rejected Michael’s argument

that Citytrust breached its fiduciary duty by delegating to

Alvin Ruml its authority to control the investment policy

of the Ewing trusts. The court found that, although Rum!

and Citytrust had a relationship and a variety of contacts,

their interaction did not indicate a delegation of trust

responsibilities. Michael does not seriously dispute that

finding in this Court, and we see nothing in the record that

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warrants a contrary conclusion. Citytrust, as trustee, was

entitled to consult advisors in making investment deci-

sions. See Restatement (Second) of Trusts § 171 comment

f (1959); McClure v. Middletown Trust Co., 95 Conn.

148, 153-54 (1920). Its dealings with Ruml were nothing

more than such consultation.

THE MONETARY AWARD

As above stated, the George Ewing testamentary trust

authorized Citytrust as trustee ‘‘to invade the principal for

any reason in its discretion for the benefit of [Alexander]

or [Michael].’’ The district court construed this clause to

mean that principal could be invaded only for the persona!

needs of Alexander and Michael:

The primary intent of the settlor in this instance

appears to have been to provide the two income bene-

ficiaries with a fund upon which they could draw

income and invade principal as the need arose.

Proceeding from this premise, the district court held

that payment of principal to Alexander was improper

where Alexander’s admitted intent was to use the money

to help him provide support for his stepchildren. This

interpretation of the trust provisions gave to the word

‘“‘benefit’’ a meaning that is contrary to the overwhelming

weight of legal authority.

In Ferrigino v. Keasbey, 93 Conn. 445 (1919), the Con-

necticut Supreme Court, contrasting the words ‘‘support’’

and ‘‘benefit’’, as used in Conn. Gen. Stat. § §275, now in

substance section 46b-37, said, quoting Webster’s New

International Dictionary, that ‘‘the word ‘benefit’ is

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defined to be ‘whatever promotes prosperity and personal

happiness; advantage; profit; good.’ ’’ Jd. at 451.

This definition accords with that given the word ‘‘bene-

fit’’ in most other states; /.e., that it is more comprehen-

sive than the word ‘‘support’’ and means anything that

works to the advantage, gain or happiness of the recipient.

See, e.g., In re Emmons Will, 165 Misc. 192, 195 (1937);

In re Rachlin’s Will, 133 N.Y.S.2d 181 (1954); Matter of

Estate of Hixon, 715 P.2d 1087, 1090 (Okla. 1985); Matter

of Conrad, 97 Ill. App. 3d 202, 203 (1981); Bird v. New-

comb, 170 Va. 208, 216 (1938); Matter of Estate of

Krause, 173 Wash. 1, 7-8 (1933); Winthrop Co. v. Clin-

ton, 196 Pa. 472, 474 (1900). See also Black’s Law Dictio-

nary 200 (4th ed. 1968).

indeed the word ‘‘benefit’’ is sufficiently broad that a

bequest of all the property of a testator to his wife ‘‘for

her own proper use and benefit, forever’’ has been con-

strued to convey an estate in fee simple absolute. Dei Cas

v. Mayfield, 199 Conn. 569, 573 (1986). ‘‘A gift to a per-

son for his benefit means an absolute gift, and excludes

the idea of a qualified or limited estate.’’ Crain v. Wright,

114 N.Y. 307, 310 (1889). See also Warren v. Webb, 68

Me. 133, 135 (1878); Stowell v. Hastings, 59 Vt. 494, 497

(1887).

The word ‘‘benefit’’ has received a good deal of atten-

tion in tax litigation, where the extent of the power to

invade principal on behalf of a trust beneficiary may

determine who pays an estate tax. A power to invade prin-

cipal that is limited by an ascertainable or measurable

standard, i.e., for support, maintenance, health, etc., is

held not to be a general power of appointment for tax pur-

poses. See Henslee v. Union Planters National Bank &

Trust Co., 335 U.S. 595, 597-600 (1949); 26 U.S.C.

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§ 2041(b)(1)(A). The cases uniformly hold, however, that

a power to invade principal for the ‘‘benefit’’ of a trust

beneficiary does not limit the beneficiary’s power of inva-

sion. See De Oliveira v. United States, 767 F.2d 1344, 1348.

(9th Cir. 1985); Old Colony Trust Co. v. United States,

423 F.2d 601, 604 (Ist Cir. 1970); National Bank of Com-

merce v. United States, 369 F. Supp. 990, 992 (W.D. Tex.

1973), aff’d, 491 F.2d 1271 (Sth Cir. 1974); Newton Trust

Co. v. Comm’r, 160 F.2d 175, 179 (1st Cir. 1947);

Helvering v. Evans, 126 F.2d 270, 272 (3d Cir.), cert.

denied, 317 U.S. 638 (1942). The following language from

National Bank, supra, 369 F. Supp. at 992, is illustrative:

Considering plaintiff’s contentions in order, the

Court begins the search for an ascertainable standard

with the trust instrument. It provides only one express

standard, i.e. ‘“‘benefit [of decedent’s wife].’’ This

standard ‘‘is so loose that the trustee is in effect

uncontrolled.’’

(Quoting Old Colony Trust Co., supra, 423 F.2d at 604).

Alexander Ewing was spending about $5,000 per month

to support his stepchildren, who were remaindermen

under the George Ewing testamentary trust. Alexander

requested that the $111,000 be withdrawn for him because

it would take care of two years of these ‘‘expenses’’. The

Bank determined that it would be to Alexander’s benefit

to take the money for this purpose out of the testamentary

trust rather than the inter vivos one, because it would give

Alexander about a $51,000 tax loss which he could use on

liquidation. We hold that, under the foregoing circum-

stances, the challenged withdrawal was for Alexander’s

benefit. The issue of Alexander’s ‘‘need’’ for the money

therefore was irrelevant. Indeed, because Alexander was a

multi-millionaire, having inherited more than $2 million

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from his parents alone, a limitation of trust payments to

him based solely on need hardly could have been within

the contemplation of his parents when they adopted the

trust language permitting withdrawals for his ‘‘benefit’’.

The $81,769.58 award is vacated, and the issue of liabil-

ity on this claim is remanded to the district court for fur-

ther consideration. Since the several ‘‘irregularities’’ that

the district court found to support this award were prem-

ised upon its erroneous legal finding of unlawfulness, we

believe that the district court should go back to square one

with regard to these alleged irregularities and reconsider

them on a full record interpreted in the light of proper

legal principles. In other words, before determining

whether Citytrust is liable on this claim, the district court

should permit a full development of all the pertinent facts.

CONCLUSION

The district court’s dismissal of all of Michael Ewing’s

claims against Citytrust except that of invasion of princi-

pal in the George Ewing testamentary trust is affirmed.

The award of $81,769.58 against Citytrust in connection

with the invasion of principal in the George Ewing testa-

mentary trust is vacated, and this issue is remanded to the

district court for further proceedings consistent with this

Opinion.

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United States District Court

District of Connecticut

EGr Sunmtar

OMS

cross-morc

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Citytrust's motion for summary judgment

and its opposition to Michael Ewing's

request for the same. None of the parties

has complied with Local Rule 9(c)(2)'S

requirement that "(t]he papers opposing a

motion for summary judgment shall include

a separate, short and concise statement of

material facts as to which it is contended

that there exists a genuine issue to be

tried." However, because it finds no

dispute of material fact, the Court will

rule on these motions.

BACKGROUND

Ewing. Alexander died on October, 1984

and was the only son of Myra and George

Ewing.

Myra Ewing died on January 22, 1967, and

in her will bequeathed to plaintiff ten

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thousand dollars, and to Alexander Ewing

one-half of her residuary estate. The

remaining one-half of her residuary estate

became the principal of a testamentary

trust ("Myra Ewing's Testamentary Trust").

The net income of this trust was to go to

Alexander. The principal, upon Alex-

ander's death, was to go to Alexander's

lawful issue, namely the plaintiff,

Michael Ewing.

Defendant Citytrust, together with

Alexander Ewing, was named co-executor

Myra Ewing's estate. Defendant Citytrust

was also named sole trustee of Myra's

trust. The will conferred a variety of

discretionary powers on the executors and

trustee, including the power to “hold and

retain" shares of stocks, bonds, or other

securities and the power to “invest and

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reinvest without restriction or

limitation. *

Soon after Myra's death, her estate's

executors sold all the stocks of which she

died seized, and purchased municipal

bonds. Myra Ewing's Testamentary Trust,

consequently, was funded by bonds with a

market value of $388,188.00. Fifteen years

later, upon the death of Alexander and the

termination of this trust, the principal

‘©

funds invested in tax-exempt bonds which

appreciated by only 19% from the trust's

1 In a non-material dispute of fact,

plaintiff's complaint alleges that the

value of the princip of the trust upon

termination was $471,259.16.

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inception in 1970 to its distribution to

plaintiff in 1985, amounting to a gain of

1.2% per year.

George Ewing died on June 3, 1967. In

his will, George Ewing bequeathed ten

thousand dollars to plaintiff, and one-

half of his residuary estate to Alexander

Ewing. Thus, Alexander inherited outright

from his parents' estates approximately

$2,169,198.00 (including the gift of IBM

and Singer stock worth $1,486,997.75 that

George made to Alexander shortly before

his death). The remaining one-half of

George Ewing's residuary estate was placed

in a testamentary trust (the "George Ewing

“Testamentary Trust"). The net income of

this trust was to go to Alexander and his

lawful issue, "in such amounts”) and

proportions as my said corporate Trustee

in its sole and absolute discretion shall

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deem advisable from time to time without

regard to equality of distribution."

Both Alexander and Citytrust were named

as executors and trustees of George's

Testamentary Trust, which at its creation

had a market value of $283,492.00. Among

the enumerated powers granted them in

George Ewing's will were the power to hold

and retain stocks and other holdings, and

the power to invest and reinvest without

restriction or limitation. Additionally,

Citytrust was empowered to invade the

principal “for any reason" for the benefit

of Alexander or his lawful issue.

Shortly after George's death, his

estate's executors liquidated his stock

holdings and purchased municipal bonds.

The parties agree that the George Ewing

Testamentary Trust operated primarily as

an income producer for Alexander, as

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opposed to a source of capital expansion.

In light of this fact, the trust principal

was also invaded for the benefit of both

Alexander and Michael Ewing, in the

approximate amounts (Of $40,000.00 and

$60,000.00 respectively.

In February 1984, at the request of

Alexander, Citytrust invaded the trust for

the purpose of enabling Alexander to

continue supporting the four children of

his third wife, Lynda, from her previous

marriage, who were at the time Je, 34, 36,

and 38 years old, respectively, thus

terminating the trust. No portion of this

remaining $111,000 in trust was

distributed to the plaintiff despite his

Status as income and principal

beneficiary.

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required by Citytrust's own policy

guidelines. Furthermore, in applying to

the Probate Court for the District of

Norwalk for permission to distribute all

of the remaining principal to Alexander,

Citytrust failed to advise the court that

the Testamentary Trust was also for the

benefit of Michael Ewing.

In the administration of the George

Ewing Testamentary Trust, Citytrust

mermitted Alexander Ewing to delegate his

authority as trustee to Mr. Alvin Ruml, a

stockbroker affiliated with Hallgarten &

Co. in New York City. Mr. Ruml acted as an

investment adviser on the Ewing trusts and

was in contact with Mr. Kenneth Park, a

trust officer with Citytrust, as early as

December 12, 1967 in this regard. This was

done without the knowledge or consent of

the plaintiff.

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George Ewing also created an inter vivos

trust on May 2, 1967 (the "George Ewing

Inter Vivos Trust"), funded solely by

shares of Singer and IBM stock. The trust,

which had a market value of $1,487,715.00

named both Alexander Ewing and plaintiff

as income beneficiaries and defendant

Citytrust as sole trustee.

This trust empowered Citytrust to invest

and reinvest, and to invade the principal

for the benefit of either or both

Alexander or Michael Ewing without regard

to equality of distribution. Plaintiff was

named remainderman of one-half of the

rt)

remaining principal upon the death c

Alexander Ewing. This trust was

administered at all times to maximize

income without regard to preservation of

the buying power of the corpus of the

trust. Yet, all requests made by plaintiff

for additional allowance, or monies, from

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defendant during his father's lifetime

were acceded to and were sufficient to

meet his living expenses and other needs.

Plaintiff has agreed that his father's

income needs were far greater than his own

and that his father had a greater interest

in the income distribution. Furthermore,

the plaintiff is not contesting the income

allocations from either of the George

Ewing Trusts between plaintiff and his

father or the invasions of principal for

his father under the George Ewing Inter

Vivos Trust. Irivestments in the trust were

made in tax-exempt and corporate bonds to

provide an income in the range of

$100,000.00. In 1973, yearly income was in

the amount of $38,592.00. By 1982, as

Citytrust strove to diversify the high

concentration of Singer and IBM stock in

this trust by selling stock and purchasing

bonds, income had been increased to

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approximately $120,000.00. Having con-

cluded there are no disputed material

facts,* the Court will determine whether

the plaintiff or defendants are entitled

to summary judgment as a matter of law.

QUESTIONS PRESENTED

In the pending cross-motions for Summary

judgment, the questions at issue concern

whether the defendants, in their

respective capacities as executors and

Crustees described above, breached. their

fiduciary duties to Michael Ewing, a

beneficiary, by: 1) engaging in an

¢ There is a non-material factual dispute

as to when Michael Ewing began receiving

information on the three trusts at issue

which the Court need not address.

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investment policy favoring income

production over capital appreciation; 2)

delegating to an individual who was not an

employee of the trustee a role in the

investment strategy of the trusts at

issue; and 3) invading and terminating,

for the exclusive benefit of one

beneficiary without notice to or consent

of another beneficiary, a ceatanentary

trust set up for their mutual benefit.

Neither plaintiff nor defendants put forth

any argument concerning the "THIRD CLAIM"

of the complaint relating to an alleged

improper distribution of principal from

Myra Ewing's Testamentary Trust. Nor do

they address the issue of what damages, if

any, should enter as a result of the

Court's ruling. For these reasons, the

Court treats these motions as only motions

for partial summary judgment and reserves

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the right to require additional briefing

on damages if such is required.

DECISION

To prevail on a summary judgment motion,

the movant must show ‘that there is no

genuine issue as to any material fact and

that the moving party is entitled to

judgment as a matter of law." Fed. R. Civ.

P. 56(c). Any and all ambiguities and

inferences arising out of or to be drawn

from the undisputed facts must be resolved

against the moving party. American Int'l]

/ ae a

G pase 004

F.2d 348, 351 (2d Cir. 1981). The moving

party bears the burden of production as

well as the burden of persuasicn with

respect to establishing the non-existence

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before a court, this burden remains the

same and each motion is to be judged on

its own merits. Schwabenbauer v, Board of

Education, 667 F.2d 305, 314 (2d cir.

1981); Knowles v,. Postmaster General, 656

F. Supp. 593, 597 (D. Conn.-1987) .

A) THE INVESTMENT IN BONDS

In this diversity action, the question

of whether the defendants breached their

fiduciary duties to the plaintiff is a

matter of state law. See Erie R.R. Co. y.

Tompkins, 208 3. 64 (1938) In

Connecticut, when a trustee is granted

discretionary powers with respect to a

trust, a court will not attempt to control

such discretion unless it is abused.3

3 Plaintiff argues that the court should

review defendants' actions in light of the

prudent investor rule. It provides that a

(Footnote continued)

A-27

Gimbel_ v. Bernard FF, ¢ Alva B. Gimbel

Foundation, Inc,., 166 Conn. wae 36, 347

A.2d 81 (1974).

Plaintiff's contentions notwithstanding,

the defendants' actions must be judged in

accordance with the abuse of discretion

Standard. The language of the various

trusts dictate this result. Myra Ewing's

trustee is under a duty to act with the

care of a prudent investor Siu. s to

exercise the Skill and care in

administering a trust normally shown by a

person of ordinary prudence in managing

his own property, Restatement (Second)

Trusts § 174). By virtue of the grants of

discretion in the trust instruments

issue, the prudent investor rule does fr

apply and defendants need Only have act

in accordance with and not abused ¢

discretion Granted them to avoi

liability. See United States Trust Co. Vv,

Bohart, 197 Conn. 34, 48, 495 A.2da 1034

(1985); Jackson vy. Conlard, 178 Conn. 52

95-57, 420 A.2d 898 (1979).

yTOoOorRrok

er cv

a0)

A-28

Testamentary Trust gives its trustee and

executors, inter alia, the discretionary

power to invest and reinvest without

restriction or limitation and to hold and

retain in the trust any stocks or bonds of

"which [the] estate or any part thereof

may be invested at the time of [the

settlor's] death, whether or not the same

shall be an investment of the character

deemed to be legal and proper for the

Trust Instruments under [Connecticut

law]." George Ewing's Testamentary Trust

contained a similar grant of discretionary

powers to its trustees and executors.

George Ewing's Inter Vivos Trust granted

the trustee, Citytrust, the power to

"hold, manage, invest and reinvest said

fund and pay the income therefrom and so

much of the principal as may in the

judgment of the Trustee be desirable

in such amounts and proportions [as a

A-29

deems advisable in its sole and absolute

discretion] without regard to equality of

distribution." Furthermore, it granted

Citytrust the discretionary power "[t]lo

invest and reinvest in property or

security which it shall select" and "to

make, retain or change any investment

without liability on account thereof."

These broad grants of discretionary power

are in material respects similar to those

granted in Bohart and Gimbel. Therefore,

the Court will apply the abuse of

discretion standard discussed therein.

The question of whether the deflendants

abused their discretion in adopting an

investment strategy favoring the interest

of the income beneficiary depends upon the

language of and the Court's interpretation

of the pertinent trusts. In examining

these trusts, "[t]he expressed intent must

A-30

trom reading the instrument as a whole in

light of the circumstances surrounding the

testator or settlor when the instrument

was executed, including the condition of

his estate, his relations to his family

and the beneficiaries, and their situation

and condition." Connecticut Bank & Trust

Co, v,. Lyman, 148 Conn. 273, 278-79 170

A.2@ 130 (296283. Though a court should

put itself as far as possible in the shoes

of the settlor in an effort to give effect

to his or her intentions, it should not

speculate as to the same.? Jd.

4 Furthermore, when the meaning of a term

Or word in a will iS unambiguous and

unequivocal, a court will not allow parol

evidence to be offered which purports to

supplement or change the expressed

intention of the will. Trav Bank

Trust Co, v.Birge, 136 Conn, 21, 26-27,

68 A.2d 138 (1949). For this reason, the

Court will not consider the recollections

of Mr. McKendry, scrivener of the three

(Footnote continued)

A-31

The plaintiff makes two arguments that

the defendants in their roles as executors

and trustees abused their discretion by

adopting an investment policy geared more

toward generating income than effecting

capital appreciation. The plaintiff first

attacks the executors of the Estates of

Myra & George Ewing - defendants Citytrust

and Alexander Ewing's Estate - for selling

equity issues and purchasing corporate and

municipal bonds with the proceeds.

Specifically, in the case of Myra Ewing's

Estate, two months after her death her

stock holdings of General Electric,

EFastman Kodak Co, IBM, Singer, Standard

Oil, etc., were sold and the proceeds were

trusts at issue, as to the intent of

George and Myra Ewing in the creation of

these trusts.

A-32

invested in a portfolio of municipal

bonds. Nine months later in December

1967, these same executors sold these

municipal bonds at a loss of $103,577.00

and the proceeds were again used to

purchase municipal bonds. Similarly,

after George Ewing's death, his executors

sold his lue-chip stock holdings and

purchased a portfolio of corporate and

municipal bonds. These actions, Michael

Ewing argues, were not in accord with the

intentions stated in George and Myra's

wills and therefore constituted an abuse

of discretion.

The Court disagrees. Myra Ewing's will

clearly empowers defendants to "invest and

reinvest without restriction or

limitation." Nowhere does it indicate

that the testamentary provision

authorizing defendants to "hold and

A-33

retain" stocks of which Myra Ewing died

seized, overrides or otherwise limits or

controls the discretionary power cited

above. Aliso, it is not at all clear from

the will that Myra Ewing intended that her

Stocks be retained if in the judgment of

her executors it was wiser to invest in

bonds. The same is true with respect to

George Ewing's (Will and) Testamentary

Trust, the funds of which were Similarly

converted from stocks into bonds. Quite

frankly, the Court is not persuaded that

the language of Myra's (Will and)

Testamentary arUst, including that

Provision that directed the net income of

the trust to be paid to Alexander "for and

during the term of his natural life," must

be authoritatively read to favor either

the life tenant or the remainderman.

However, to the extent that there are no

restrictions or limitations on the income

A-34

to be paid to Alexander, the Court is not

prepared to override the judgment of

Myra's executors to provide for such

income by the sale of stocks and the

purchase of bonds. See Bohart, 197 Conn.

at 49 (mere errors of judgment are not a

basis for liability). As a practical

matter, it may have been more efficient to

use Myra's trust as the main income

producing source for Alexander Ewing since

this trust was the only one of the three

to name Alexander as the sole income

beneficiary.

The designation, in George Ewing's

Testamentary Trust, of Alexander and

Michael Ewing as co-income beneficiaries

also supports the decision to sell

George's stock portfolio and exchange it

for a bond portfolio that would support,

if necessary, two income beneficiaries who

A-35

were also granted principal invasion

powers. For all these reasons, the Court

holds that the executors' actions in

liquidating the stock holdings of Myra and

George Ewing's Estates and exchanging them

for bond holdings, were not an abuse of

discretion.

The second half of the plaintiff's

argument relates to the investment policy

of the same defendants as trustees

subsequent to the time that these trusts

came into being. Citytrust was a trustee

of all three trusts. Alexander Ewing was

a co-trustee in the administration of the

George Ewing Testamentary Trust. The

defendants argue that investing to

maximize income return, as opposed to

long-term corpus value, was within the

trustees' discretion because the trust

instruments indicated an intent to favor

A-36

the life tenant by virtue of the

designation of the same and the power of

invasion authorized in two of the three

trusts. The plaintiff rejects this

contention and argues that the trust

instruments at issue do not indicate a

preference for either the income or

principal beneficiaries and therefore the

defendants' admitted attempts to maximize

income constitute an abuse of discretion.

The plaintiff carries this argument so far

that it reads the George Ewing Inter Vivos

Trust as providing only for the

extraordinary and unforeseeable needs

Alexander and Michael might face during

Alexander Ewing's life; absent such needs

plaintiff claims the essential intent of

the settlor in that instrument was to

provide Micheel with substantial sums of

money. The Court refuses to adopt either

of these views.

A-37

Outside of the liberal discretionary

powers set out above, the language of

Myra's Testamentary Trust indicates

neither a preference to favor the income

beneficiary nor the principal beneficiary.

The fact that there is no language

authorizing an invasion of the corpus for

the benefit of the plaintiff or his father

indicates an intent to create some rough

equivalency between their competing

interests. Furthermore, any intent to

favor the plaintiff is negated by the fact

that there was no restriction on the

purposes for which the income was to be

paid to Alexander Ewing.

As previously described, George Ewing

Testamentary Trust contained liberal

discretionary powers on the choice of

investment to be made by the trustees. It

also empowered the corporate trustee,

A-38

Citybank, in the exercise of its sole and

absolute discretion, to pay the net income

of the trust to Alexander and Michael

Ewing in any amount it deemed advisable,

"without regard to equality of

distribution." Furthermore, Citytrust was

authorized to use its discretion to invade

the principal for the benefit of Alexander

or Michael Ewing at any time and for any

reason. Upon the death of George Ewing,

one-half of the eomaitidet of the trust

corpus was to go to the plaintiff and one-

half was to go in trust with Lynda Ewing,

income during her life with the remainder

being distributed to her four children

from a previous marriage.

Insofar as this instrument names two

income beneficiaries and authorizes

A-39

income beneficiaries essentially without

restriction, the Court holds that it was

not the primary intent of the settlor to

ensure the substantial appreciation of the

trust corpus for the remaindermen. The

primary intent of the settlor in this

instance appear to have been to provide

the two income beneficiaries with a fund

upon which they could draw income and

invade principal as the need arose.

The Same reasoning and interpretation

given to George Ewing's Testamentary

Trust, also applies to George's Inter

Vivos Trust. It named Alexander and

Michael as co-income beneficiaries and

empowered Citytrust to invade the

principal for both of them without regard

to equality of distribution. Like Myra's

trust, it failed to state any restrictions

A-40

Finally, George's Inter Vivos Trust

empowered Citytrust "to make, retain or

change any investment without liability on

account thereof." For these reasons, the

Court holds that it was not the primary

intent of this trust to ensure the

substantial appreciation of the trust

corpus, but rather to provide the co-

income beneficiaries with a fund upon

which they could draw income and invade

principal as the need arose.

A trustee has abused his discretion when

he has failed to perform his duties or

acted dishonestly or in bad faith or acted

from an improper motive. See Gimbel, 166

Trusts ("Restatement") $ 187, comments e,

f (1959). Under normal circumstances, in

the course of performing his duties, a

trustee must strive to act with

A-41

impartiality as to Successive

beneficiaries; he has no power to alter

their respective beneficial interests.

Gimbel at 34; Restatement § 183 (1959).

Where there are successive beneficiaries,

a trustee must balance their interests

Such that, on the one hand, he must not

retain unproductive property likely to

yield an income far below that which is

normally earned by a like instrument, and

On the other hand, he must not purchase or

Seexin assets or property likely to waste

Or depreciate in value. Restatement $232,

comment b (1959). However, while a trustee

must always act with "due regard" for each

beneficiary's interest, where he is given

the authority to favor one beneficiary

Over another, a court must not interfere

except to prevent abuses of discretion.

id. at §183, comment a, §232. Ultimately,

A-42

[a] trustee is neither the insurer

nor the guarantor of the value of a

trust's assets. A trustee's

performance is not judged by

success or failure, and while

negligence may result in liability,

a mere error in judgment will not.

Bohart, 197 Conn. at 149 (citing Hartford

(

Nat'l Bank §& Trust Co, vy. Donahue,

Conn. Supp. 194, 402 A.2d 1195 (1972)).

Based on a reading of the three tru

instruments, the Court holds that t

trustees-defendants did not abuse thei

discretion in the performance of the

duties. The Court is not prepared to ho

that the defendants’ investment strate

was undertaken in bad faith

improper motives or was in dereliction

their duties or substantially

materially altered the beneficiarie

interests as set out in the tru

’

4 o+ mantsc

INSTIFUMENTS .

WY)

A-43

Based on the Court's holding that it was

not the primary intent of the two George

Ewing Trusts to ensure the substantial

appreciation of the corpus for the

remaindermen and the fact that these

trusts granted the trustees liberal

investment powers, the defendants had the

discretion to favor the interests of the

income beneficiaries--one of whom was in

fact the SLs atitt. As an income

beneficiary of the George Ewing

Testamentary Trust, Michael Ewing received

a $66,000.00 distribution of income and

Principal in September 1968. Furthermore,

the principal of the same trust was

invaded for his benefit on other occasions

and without objection in the amount of at

least $60,000.00. Likewise the principal

of the George Ewing Inter Vivos Trust was

invaded for Michael's benefit without

objection, in the amount of $15,000.00 in

A-44

1982 for his medical expenses, and in the

amount of $24,000.00 respectively in both

1983 and 1984 for his living expenses.

There is no doubt that Alexander drew a

Substantial income as a result of the

defendants' investment policies. However,

in light of the income and principal

distributions for the benefit of the

plaintiff noted above, the Court is

unwilling to hold that the defendants'

investment strategy constituted an abuse

Moreover, the fact remains that Myra's

trust appreciated in value from

$388,188.00 to $462,000.00 over the course

f fifteen years. Though small and perhaps

in real dollar terms negligible or non-

existent, this appreciation indicates, at

a minimum, preservation as opposed to

destruction of the corpus for the

A-45

“4

rea

ephone Co,,

—_— -—

trustee's attempt to

A-46

of the settlor in providing for the life

tenant and remaindermen simply because the

remaindermen were unhappy about the new

investments made by the trustee. Id. at

441. The Kimball court made this ruling

despite the fact that the trustee, who was

granted a wide berth of discretion, sold

blue-chip stocks at a low market price.

id. Because a trustee is neither the

insurer nor guarantor of the value of

trust assets and because a mere error in

judgment will not result in liability,

Bohart, 197 Conn. at 49, the Court refuses

to hold that the trustees' investment

Strategy constituted an abuse of

discretion.

A-47

RB) ##THE_DELEGATION OF INVESTMENT

CONTROL TO ALVIN RUML

Plaintiff also argues that Citytrust,

alone, breached its fiduciary duty by

delegating to Alvin Ruml the authority to

dictate the investment policy of the Ewing

trusts. The Court rejects this argument

for the reasons set forth below.

A trustee is under a duty not to

delegate acts which it can and reasonably

at eEemMmMeanrt

M~qiil-gege

Should be required to perform. Res

S 171 (1959). If such a delegation takes

place, it may constitute an abuse of

discretion. See Kolodney Vv. Kolodney, 6

Conn. App. 118, 122-23, 503 A.2d 625

(1986) (abuse of discretion to delegate

duty to exercise independent judgment as

to a beneficiary's needs). In particular,

a trustee cannot delegate the power to

7 ; : o ~ A eae

select investments. Restatement “Taree 63 |

A-48

however, should not be read to mean that a

trustee may not consult with others in the

process of administering a trust. Jd. at

comment f£ (1959).

While the trustee may not delegate

his duties and powers to others, it

is obvious that he must act

frequently through agents or

attorneys. This is not a delegation

of his powers, for the trustee

remains responsible for the

reasonable diligence of his agent

Or attorney. . . . Whether, in a

given case, the trustee wil

justified in entrusting a specific

part of the administration of the

trust to an agent, must depend upon

whether such act would be the act

of the reasonably prudent trustee

A-49

The plaintiff's argument that Citytrust

abused its discretion in delegating

investment powers to Alvin Ruml is

misdirected. On June 18, 1970, Alexander

Ewing notified Citytrust that he had

delegated his authority as co-trustee of

the George Ewing Testamentary Trust to

Alvin Ruml and noted that his letter

"([would] be (Citytrust's] authority to

require [Ruml's approval] in connection

with any investment changes [therein]".

Insofar as piaintiff's argument relies on

this delegation, it is ill-founded because

Alexander Ewing, and not Cit ve rust.

delegated his duties.

mm : Ae : : , shire ata -

The record does indicate, however, a

longstanding relationship between Ruml and

Citytrust. From at least December

1967, through January 31, 1984, Citytrust

oe * -

; ' 1 ; '

} tT » | wit. R} ) r ‘ raIng , ra

1 > SG Ww aa K um e¢va MA 4 -

A-50

investment policy on each of the three

Ewing trusts. For example, the plaintiff

has submitted three letters dated December

12, 1967, April 23, 1968, and October 20,

1970, wherein Citytrust asked Ruml to

approve its recommendations as to

investment decisions in the two George

Ewing trusts. Alexander Ewing was carbon-

copied on each of these letters. In light

of Alexander's formal delegation discussed

above, the Court reads these letters to

imply that Ruml, both formally and

informally, acted as a conduit between

Citytrust and Alexander Ewing.

Citytrust's investment reviews for the

period of 1967 to 1984 indicate that Rum]

also acted as an investment adviser and

broker on all three of the Ewing trusts.

They indicate that the buy and sell orders

a ’ — ‘

flowing from CLEVE Lust «Ss investment

A-51

decisions were processed through the

brokerage firm where Mr. Ruml worked,

namely First Manhattan Corporation. In

this context, it is clear that Ruml: 1)

commented on and approved investment

recommendations made by Citytrust both in

the role of investment adviser and as the

"representative" of Alexander Ewing; 2)

communicated to Citytrust regarding

Alexander's income needs: 3) offered

unsolicited investment advice; and 4)

generally acted as an all-purpose

investment broker.

This course of dealings does not

indicate that Citytrust delegated its

investment responsibilities to Ruml, as

did Alexander Ewing. It has not been shown

in any of these investment decisions that

Ruml exercised any kind of ultimate,

controlling authority as to which

-~-r

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A-52

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A-53

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A-57

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A-58

vy. Thresher, 77 Conn. 70, 80-2, 58 A. 460

(1904). While any of the above-described

omissions alone may have not have raised

the same questions of bad faith or

dereliction of duty, when taken together

and examined in conjunction with the clear

language of the George Ewing Testamentary

Trust and the negative inference raised by

the inadequate disclosure made to the

Probate Court in the Final Accounting,

they indicate that Citytrust abused its

discretion in allowing Alexander Ewin

invade the remaining principal of

$111,000.00 thus terminating the George

6 The Court rejects Citytrust's argumen

that Michael Ewing explicitly O°

implicitly consented to the trustee's act

and is thereby barred from recovery, see

Matthews v, Sheehan, 76 Conn. 654, 662, 57

nr OQ

A. 694 (1904), because at least with

nm mre ai in a a on 2 -“" }

(rootncte continued)

A-59

respect to the invasion of the principal

of George Ewing's Testamentary Trust, the

record is clear that plaintiff was neither

actually nor constructively put on notice

as to Citytrust's actions. Also,

Citytrust's affirmative defenses (not

argued in its brief) that the SiSiACiL£E*s

of laches are without merit as to th

issue on which the plaintiff is grante

Summary judgment. This is so because, bu

for a few exceptions not applicable here,

the remedies of a beneficiary against a

trustee are equitable in nature.

Restatement § 197 (1959). Though the

invasion claim for breach of fiduciary

duty is a cause of action sounding in tort

3227}

to which Conn. Ger Stat 952-57 three

year statute of limitations applies (which

the plaintiff's clajim falls within), a

court applying its equitable powers may

provide a remedy for a claim even though

the statute of limitations has expired (so

long as it does not deem the action barred

by laches). Carbone v, Atlantic Richfield

Co., 204 Conn. 303, 327-27, 528 A.2da 1137

(1987). Because there has not been an

"unreasonable, inexcusable, and

prejudicial delay" in the Pisintigft¢*

Prosecution of the invasion of principal

Claim, laches will not bar plaintiff's

Suit or recovery thereon. See ld.

Furthermore, Michael Ewing's argument

that Citytrust failed to apprise the

Probate Court of his beneficiary statu:

A-60

CONCLUSION

In all but one instance, the executors

and trustees of the Ewing trusts acted

within the bounds of discretion granted

them. Only with respect to the final

invasion of the principal of the George

Ewing Testamentary Trust did Citytrust,

acting as trustee, abuse its discretion.

and his out-of-state address in the

probate and accounting proceedings

discussed herein need not be addressed.

Insofar as the right to collaterally

attack those proceeding and surcharge the

defendants is predicated on showing an

abuse of discretion, the Court's finding

that no such abuse was shown except with

the respect to the invasion of principal

discussed above, obviates the need to

resolve the notice issue. See Locke &

Kohn, Connecticut Probate Practices $% 106

(1951) (the trustee may be held liable to

any party not given legal notice "for the

amount of the trust estate erroneously

Misapplied, notwithstanding the ex parte

acceptance of the trustee's accounts

Showing this misapplication ; a

(emphasis added).

A-61

Accordingly, partial Summary judgment

Shall enter for the plaintiff only on the

question of liability with regard to that

issue.’ Michael Ewing is hereby directed

to submit an appropriate application on

the question of damages within twenty days

of the date of this ruling. Citytrust is

to respond to that application not later

than twenty days after it is filed. On

the remaining issues involving the

investment policy pursued by the executors

and the trustees and the deiaakneee of

7 The nature of the plaintiff's complaint

makes it difficult if not impossible for

the Court to Grant judgmegt as to a

specific count because the co Plaint seeks

recovery for a "FIRST CLAIM", a "SECOND

CLAIM", and a "THIRD CLAIM" which are not

linked specifically to the particular

abuses alleged in the Plaintiff's motion

for summary judgment. Therefore, the

Court will refer to issues rather than

counts.

A-62

investment powers to Alvin Ruml, partial

summary judgment shall enter in favor of

defendants Citytrust and the Estate of

Alexander Ewing. Finally, neither

plaintiff nor defendants have addressed

the "THIRD CLAIM" of the complaint

relating to an alleged improper

distribution of principal from Myra

Ewing's Testamentary Trust. Therefore, it

is not encompassed within this Ruling.

Dated at Bridgeport, Connecticut this

21st day of November 1988.

/s/_ TT, F. Gilroy Daly

T. F. Gilroy Daly, CH. U.S.D.JdJ.

A-63

39-7246/7258

United States Court of Appeals

for the

Second Circuit

MICHEAL EWING,

Plaintiff-Appellant-

Cross-Appellee

-against-

CITYTRUST and ALVIN RUML and

LYNDA EWING

As Executors of the Estate of

Alexander Ewing,

Defendants-Respodents-

Cross Appellant.

ON APPEAL FROM THE UNITED STATES

DISTRICT COURT FOR THE

DISTRICT OF CONNECTICUT

APPELLANT'S BRIEF

William R. Horner, Esq.

Horner & ISaacs, P.C.

Attorneys for Plaintiff-

Appellant-Cross Appellee

489 Fifth Avenue

New York, New York 10017

(212) 953-2288

Table of AuthoritieS ..-----++e+ee: 1

Preliminary Statement....--+++++--. 3

Issues Presented....-- eee eeeeces 3

Statement of the CaS€....-+-++eee 5

Statement of FactS...---++eeeeeees 9

Argument

I. OVEFVIEW. .. cc eee eer eecees 26

II. Discretion and the Prudent

Man Rule ....eeeeeeeveecs 38

Iil Intent to Favor Income?.. 37

IV. Abuse of Discretion..... 74

V. Duty to Preserve wre sy ss 85

VI. Delegation to Ruml....... 89

A-64

TABLE OF CONTENTS

Relief Sougnt....--seeereeererees 89

A-65

TABLE OF AUTHORITIES

: Adickes v. S.H. Kress and Co., 398

U.S. 144 (1970)

2. 5 Am. Jur. 2d, Appeal & Error § 845

3. Bogart, Trusts & Trustees, 2nd Ed,

Rev., 1982

4. Bull's Corner Restaurant Vv.

Director, Federal Emergency

Management Agency, 759 F.2d 500

(Sth Cir. 1985)

5. Connecticut Bank & Trust Co. vy.

Lyman, 148 Conn. 273, 170 A.2d 130

(1961)

6. Connor _v. Hart, 157 Conn. 265, 253

A.2d 9 (1968)

7. Dennis v. Rhode Island Hospital

Trust National Bank, 571 F. Supp.

663 (D. Rhode Island, 1983),

modified on appeal, 744 F.2d 893

(lst Cir. 1984)

8. Gimbel v. Bernard F. & Alva B.

Gimbel Foundation, Inc., 166 Conn.

21, 347 A. 2d 81 (1974)

9. Jackson _v. Conland, 178 Conn. 52,

420 A.2d 898 (1979)

SO ———————

A-66

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A-67

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A-68

il. Do the three instruments here

at issue manifest an intent of the

testator/testatrix (with regard to the

estates and the testamentary trusts)

and the settlor (with regard to the

intervivos trust) to favor production

of income over preservation of the

buying power of the corpus?

o> Was the court below clearly

erroneous in holding that the appellee

did not abuse whatever discretion was

granted to it in the instruments by

favoring the competing interests of the

income beneficiaries over those of the

remaindermen in making investment

decisions for the estates and trusts?

iV. Was the holding of the court

below that appellee did not breach its

fiduciary duty to appeilant by

permitting Alexander Ewing to assign

his duties as co-executor and

co-trustee to Alvin Ruml Clearly

erroneous?

v4 Is there a_ genuine issue of

material fact on the question of

whether appellee permitted a

non-employee, Alvin Ruml, to have

effective control over investment

decisions for the estates and trusts?

STATEMENT OF THE CASE

Appellant commenced the case in the

Southern District of New York by

service a Summons and Complaint (Index

#: 86 Civ 4840 JES) on appellee's New

A-70

York City branch office on or about

June 19, 1986. Appellant alleged

breach of fiduciary duty owed to him by

appellee in its administration of the

two estates and three trusts here at

issue. Appellee denied the claim, moved

to join the Estate of Alexander Ewing

as a necessary party and to remove the

action to the District of Connecticut.

On Stipulation, the Complaint was

amended to include as a defendant the

Estate of Alexander Ewing and the

matter wasS removed to the District of

Connecticut on or about April 30, 1987,

and assigned Index No. B87-314 (TFGD).

Appellee proceeded to take the

deposition of Appellant on October 8,

1987. Appellant was granted the

opportunity to examine documents

relevant to the case in appellee's

possession on August 26, 1987, and

requested copies of those it deemed

relevant by letter to appellee's

counsel dated September 30, 1987.

Appellee finally made delivery of the

documents requested on or about

February 10, 1988.

On January 26, 1988, appellee moved

the District Court to compel appellant

to answer certain questions which he

refused to answer during his deposition

on advice of counsel and to compel

appellant to fully and completely

answer questions posed in appellee's

interrogatories which appellee claimed

appellant had answered in an incomplete

and/or evasive manner. Before the

District Court could rule on these

pending motions, appellee made its

A-72

motion for summary judgment on February

22; 1988, thus short-circuiting the

still incomplete discovery process and,

in effect, abandoning its then pending

motions to compel.

After a non-relevant procedural

dispute between the District Court and

appellant's trial counsel was resolved,

appellant decided not tO oppose the

regularity of appellee's motion for

summary judgment but, instead, to

cross-move for summary judgment in the

belief that the documents’) discovered

from appellee and from Norwalk Probate

Court records were sufficient to prove

up his cause of action. Appellant's

cross-motion for summary judgment was

filed on April 22, 1988. Appellee's

Reply Memorandum was filed on May 10,

1988, and the Ruling on which the

pennies

—

A-73

instant appeal is based was entered on

November 21, 1988. Final Judgment in

accord with said ruling was entered on

February 10, 1989. Notice of appeal

was filed by appellant on March 8,

1989, and Notice of Cross-Appeal was

filed by appellee on March 10, 1989.

STATEMENT OF FACTS

At the heart of this case is the

interpretation under Connecticut law of

appellee's fiduciary duty to appellant

pursuant to the terms of three

instruments, the Last Will and

Testament of Myra Goldsmith Ewing, set

forth at A 199 - 210 ("“Myra's Will"),

the Last Will and Testament of George

Ross MacKenzie Ewing, set forth at A

211 - 221 (“George's Will"), and the

A-74

Intervivos Trust of George Ross

MacKenzie Ewing, set forth at A 270 -

274 ("George's Trust under

Agreement"). Since these instruments

cannot be interpreted in 2a vacuum, and

since there are some issues’ which

cannot be resolved within the four

corners of these instruments, appellant

will summarize first those facts

believed to be undisputed (i.e., not

controverted by appellee and/or _ so

found by the Court below), then

highlight those terms of each

instrument which appellant believes to

be relevant in this case, and finally

those facts which may (if this Court

does not otherwise dispose of this

case) be both material and genuinely in

dispute.

A-75

A. UNDISPUTED FACTS

Alexander Ewing was the sole

issue of Myra and George Ewing and

Michael Ewing is the sole issue of

Alexander.

Zs Appellee was co-executor, with

Alexander Ewing, of the Estates of both

Myra and George Ewing.

De Appellee was sole trustee of

the testamentary trust established by

paragraph ELEVENTH of Myra's Will

("Myra's Testamentary Trust").

4. Appellee was sole trustee of

George's Trust under Agreement.

i Appellee was co-trustee, with

Alexander Ewing of the testamentary

trust established by paragraph TWELFTH

("George's Testamentary Trust").

A-76

6. Although appellant was over the

age of twenty-one years and not a

resident of the State of Connecticut at

the time appellee caused Final

Accountings for Myra's Estate and

George's Estate to be filed, appellee

never notified appellant of the filing

thereof nor did appellee advise the

Norwalk Probate Court of appellant's

interest as a remainderman therein

(Ewing Affidavit, p. 3, A - 187).

Fa Alexander Ewing inherited $

2,169,198.00 outright from Myra and

George Ewing at their deaths in 1967

(Daly Ruling, p. 3, A - 396).

8. On November 28, 1969, Alexander

Ewing had brokerage account with

Hallgarten & Co. with a balance of

$752,300.00 (Ewing Affidavit, p. 8, A -

192).

ws a

A-77

9. Appellee never even alleged

that it made any investigation to

ascertain Alexander Ewing's need for

income during its administration of the

estates and trusts.

10. Appellee never advised

appellant of his rights in and to the

estates and trusts here at issue (Ewing

Affidavit, p. 5-7, A 189 - 191).

> Appellee acquiesced in the

improper delegation by Alexander Ewing

of his responsibilities as a

co-executor and aS a co-trustee to

Alvin Ruml, which was done without the

knowledge or consent of appellant (Daly

Ruling, p. 4., A - 397).

Lae At her death, Myra Ewing had a

diversified portfolio of blue-chip

common stock (Inventory of her Estate,

A 262 - 264) all of which appellee sold

A-78

within two (2) months after her death,

converting the entire proceeds thereof

into municipal bonds (Daly Ruling, p.

10, A - 403).

13. Within the first year after

Myra Ewing's death, appellee lost

$103,577.34 in trading municipal bonds

in her estate (Daly Ruling, p. 10, A

-403).

14. Appellee administered Myra's

Estate and her Testamentary Trust at

all times in a manner designed solely

to maximize the income produced thereby

for the benefit of Alexander Ewing

without considering appellant's

remainder interest therein and in spite

of appellee's knowledge of ‘the

substantial wealth Alexander inherited

outright from Myra and George Ewing

upon their deaths:

A-79

"Defendant Citytrust

administered Myra's Trust to

maximize income..."

Daly Ruling, p. 2, A - 395,

aa At his death, George Ewing had

a diversified portfolio Of blue-chip

common stocks (Inventory of his Estate,

A 265 - 269) all of which appellee

Sold in less than two (2) months after

his, converting the entire proceeds

thereof into municipal bonds (Daly

RULING, Pp, 10, A-- 403).

16. Appellee administered George's

Estate and Testamentary Trust at all

times in a manner designed solely to

maximize income for the benefit of

Alexander Ewing without considering

appellant's remainder interests therein

and in spite of appellee's Knowledge of

the Substantial wealth Alexander

inherited outright from his parents

upon their deaths:

A-80

MY oak

W")

Stamentary

was adm

TLUst

limes

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all

nistered

nec

to maximize

without

corpus

A-81

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A-82

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A-83

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A-85

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—- ssn we 2h WILLIS

produced thereby to Alexander and/or

Michael

.--e-in such amounts) and

proportions as my said

corporate Trustee [appellee] in

its sole discretion shall deem

advisable from time to time

without regard to equality of

distribution."

George's Will also authorizes:

ITNE

-- only my corporat

Trustee in the administratio

of the Trust created by this

paragraph to invade the

principal for any reason in its

discretion for the benefit of

my Said son. or the lawful

= 1 cs livwi 2

Lssue of my Sala son living a

} - 4 mtr Ac hy

the time of my death.

aba: 'c \ ne he Air oo .

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als!

A-87

her life. Upon the death O

appellant's stepmother, the half of the

Original corpus which remained in trust

after Alexander's death is to be

distributed, in equal parts, to the

four children of appellant's stepmother

by her prior marriage.

The investment Powers provisions in

George's Trust under Agreement are

extremely similar to those set forth in

his and Myra's Wills. The Wills give

" 8B TN Myo - ne roarnrywoc+ 73 Ae +

Asians & Ww & 414 V SG SD vv Pao '

restriction r 1 mit sn Tha Y c+

56 < sd ail y) a + 4 a 4 4 4 iL 42it US

7 4 A a=" mar - Yr 17AcC oats’ habat=" an) aiat='

under Agreement jives the appellee the

" ry

= -_ wit > Che 4 arson + nea raitr aAc+ =

DOWEL 1 l : and rel ]

Y r\r nar » + | iA =

> | b i ait WU a 4

1th os 7 +) - - an’ re ~~ ~ mar neo

Witnout AestinalatLli Of) VOTH ~ SMMNO | =I sa

r + Te) + aa c r) ~ + a ) 7

Drerer eG -AS } ‘ad 4 Wil Xv > Db

slanr+ + +

any investment without

account thereof..." All other

investment powers granted in all three

instruments are entirely unremarkable

anda have no conceivable pearing on tn

mm ~ lep AL EF a ¥

rhe only difference in the

Ajenncitive tarme hat a ARanr lo

Ai D> ds eo de VG L-eriMs petween 3JeOrge —

m — Mri o } ae Dee —

Testamentary Prust and his Trust under

7.)

—

Ou.

”)

Agreement 1S

Agreement, :

ey)

4 |

4 @

)

OO.

~ ) nw > ~ + +

invade principal for the benefit >f

a vw > r rp : = ~ os a

Alexanaer and/or Micnael 1S aS broad as

+ | 5 7} + ry = oe ~ 7a ‘ ie il an

he appellee's discretion to apportion

; _ ~~ WR ~ . ¢ . | : + a

Lncome between them while, ln the

rm T - c ~

restamentary Trust, the appellee's

“4 “-yrear r + +nwane rinerina) - nor

oo = 2 * o a et + iv Ae tlh + ~ iw ~& ~ ~ s

~ } = ; ~ ~ - } - ‘oe Aston TF

as broad as tne appeiice 5s qiscretion

: lara _ _neam re +.) - Alawvann

allocate income petween ALexancer

A-89

Agreement, paragraph 1 (A - 270). At

Alexander's death, the corpus of the

Trust under Agreement is to be treated

the same as George's Testamentary

Trust: one-half Outright to appellant

with the remaining one-half to remain

in trust with appellant's stepmother as

income beneficiary and her four

children by prior marriage the

remaindermen.

C. DISPUTED FACTS

a Did Alvin Ruml exercise

effective control over the investment

decisions made ln both estates and al]

dé Did appellee ever advise

appellant of his rights in and to the

Cwo estates and the three trusts?

A-90

Did appellee ever consider

—

appellant's needs in administrati

the two estates ana the three trusts?

ARGUMENT

L . OVERVIEW

Appellant's primary contention

throughout this case has always been

that appellee breached its fiduciary

duty to appellant by making investment

decisions in both estates and in ali

t+hrae + nore ae r — 4 + 7a + + rod Arann

Vide = CruUsStls 2S) max Lm1LZe L ne pr =) we td On

»f Lncome without regard to tne

competing interests of remaindermen 1n

preservation of the buying power of the

below agree with appellant's contention

that Connecticut law follows the

yenerdai ruie Ln mos jurisdictions 1Nn

A-91

requiring a fiduciary to balance the

competing interests of Successive

beneficiaries in making investment

decisions in estates and trusts:

"Naturally, even if the Trustee

given the widest possible

discretion, there

nevertheless a duty to

impartially with Successor

beneficiaries."

Appellee Memorandum of Law, Dp.

83.

"Under normal circumstances,

the course of performing his

duties, a trustee must strive

to act with impartiality as to

successive heneficiaries;

haS no power to aliter

respective beneficial

interests. Gimbel at

Restatement § 183 (1959).

Where there are Successive

beneficiaries, a trustee

balance their interests

that, on the one hand, he must

not retain unproductive

property likely to yield

income far below that which is

normally earned by a

instrument, and on the

A-92

hand, he must not purchase or

retain assets or property

likely to waste or depreciate

in value."

Daly Ruling, p. 14, A - 407.

Appellee argued, in its motion for

summary judgment, among other theories,

that its admitted conduct in favoring

production of income over preservation

of the buying power of the corpus was

justified by the discretion allegedly

given in all three instruments here at

issue to favor the interests of the

income beneficiaries over the competing

interests of the remaindermen.

In a footnote to its decision, the

Court below accepted appellee's

argument in that regard:

"By virtue of the grants of

discretion in the trust

instruments at issue, the

prudent investor rule does not

A-93

apply and defendants need only

have acted in accordance with

and not abused the discretion

granted them to avoid

liability. See United States

Trust Co. v. Bohart, 197 Conn.

34, 48 495 A.2d 1034 (1985);

Jackson v. Conland, 178 Conn.

BR 55-57, 420 A.2da 898

(1979)."

Daly Ruling, p. 8, A - 401.

Appellant respectfully urges that

the Court below was clearly erroneous

aS amatter of law in so concluding for

two reasons, which will be examined in

Section II below. First, the Court

below mistakenly concluded that

whatever discretion does exist in the

three instruments had the effect of

relieving appellee of the constraints

imposed under Connecticut law by the

prudent man rule. The Court below then

compounded the error by concluding that

if appellee waS not bound by the

A-94

prudent man rule it was automatically

free to invest in a manner which

favored maximizing income over

preservation of the buying power of the

corpus of the estates and trusts.

Simply put, appellant believes that

there is no necessary connection

between the application of the prudent

man rule to a trustee's investment

powers and the other obligations of a

trustee/executor to a beneficiary,

including, without limitation, the duty

to act impartially as to successor

beneficiaries.

Appellee also argued that the terms

of all three instruments manifest an

intent to favor production of income

over preservation of the buying power

of the corpus. The Court below agreed

with regard to both George Ewing's

A-95

Testamentary Trust and his Trust under

Agreement:

"The designation...of Alexander

and Michael Ewing as co-income

beneficiaries also Supports the

decision to sell George's stock

portfolio and exchange it for a

bond portfolio that would

support, if necessary two

income beneficiaries who were

also granted principal invasion

powers. For all these reasons,

the Court holds that the

executors' actions in

liquidating the stock holdings

of Myra and George Ewing's

Estates and exchanging them for

bond holdings, were not an

abuse of discretion."

Daly Ruling, p. 11, A - 404.

"Insofar as this instrument

nameS two income beneficiaries

and authorizes invasion of the

principal by either of th

income beneficiaries

essentially without

restriction, the Court holds

that it was not the primary

intent of the settlor to ensure

the substantial appreciation of

the trust corpus for the

remaindermen. The primary

intent of the settlor in this

instance appears to have been

to provide the two income

beneficiaries with a fund upon

which they could draw income

and invade principal as the

need arose."

Daly Ruling, p. 13, A - 406.

Appellant respectfully urges that

the Court below was clearly erroneous

aS amatter of law in so concluding for

two reasons which will be fully

examined in Section III hereinbelow.

First, the Court neglected to note that

this reasoning cannot be applied to

Myra's Testamentary Trust. Secondly,

this Sours will note that neither

George's Will nor George's Trust under

Agreement authorize invasion of the

corpus "Dy either of the income

beneficiaries without restriction" as

the Court below held. Ratner,

appellee, and appellee alone, is given

discretion to invade the corpus of

A-97

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the beneficiaries of the estate and/or

trust. Among these are the duty not to

delegate; the duty of loyalty; the duty

to act impartially between different

beneficiaries (whether simultaneous or

Successive); and the duty to invest the

corpuS with the care of a prudent man.

That connecticut law follows these

general principals will be made amply

clear aS we examine the cases cited by

trustee of the duty to balance the

competing interests of the income

beneficiaries wth those Of the

remaindermen either by means of

language to chat effect in the

instrument's dispositive provisions, or

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A-104

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A-105

man rule, the executor or trustee would

still be bound to deal impartially with

successive beneficiaries.

Appellant contends that the cases

cited by the Court below make it

abundantly clear that Connecticut law

does not permit interpretation of

investment powers (administrative)

provisions to alter the dispositive

provisions except in cases where the

executor/trustee is expressly required

to retain assets of the

testator/settlor and compliance with

such instructions necessarily effects

the amount of income produced or limits

the fiduciary's ability to preserve the

buylng power of the corpus. Whatever

aAiscretion may exist in the language

cited by the Court below relating to

A-106

assets of the estates can be ignored

Since it 1s clear that appellee chose

to retain none of the blue-chip stocks

with which Myra and George Ewing died

Thus, the only discretion accorded

to appellee in the investment powers

provisions of either Will relevant in

this case is the power "to invest and

reinvest without restriction or

limitation." As we have seen, George's

Trust Under Agreement has oniy slightly

and immaterially different language in

Lts investment powers provisions. The

question then becomes what did Myra and

George Ewing intend in giving appellee

the power "to invest and reinvest

without restriction or imitation"?

Does this language give appellee

Sufficient discretion to support its

A-107

admitted conduct of administering both

estates and all three trusts at all

times in a manner Calculated to

maximize income without regard

preservation of the buying power of the

corpus for the remaindermen?

The cases

in its

to Support

interpretation

language here

States Trust

footnote

cited by the Court below

Simply cannot be read

such an expansive

of the investment powers

at issue. In United

Co. Vv. Bohart, 197 Conn.

34,

Peters noted

president,

shareholder

stock

whose

the trust

(United

1034 (1985) Chief Justice

that

founder and

Prentice-Hall,

principal

Lust Co,

States Vv.

Bohart, supra,

the defendant'

the

that

complaint was

A-108

trustee should have diversified the

trust corpus by selling the

Prentice-Hall stock before it fell

sharply in value in 1972-73 (Id. at

48). Chief Justice Peters concluded

that:

"The law governing the

duties of a trustee respecting

investment of trust assets 1S

well settled. Generally, a

trustee must act with the care

of a prudent investor. Jackson

v. Conland, 178 Conn. 52, 55

420 A. 42a 898 (1979); sf

Restatement (Second), Trusts

(1959) § 174. A trust

agreement may, however,

“specifically permit trustees

to invest in speculative or

otherwise hazardous

investments." Jackson Vv.

Conland, supra; see 1

Restatement (Second), Trusts

(1959) § 174, comment d. When

a trustee has been vested with

such discretion, liability

attaches only if the discretion

is abused. McCarthy Vv.

Tierney, 116 Conn. 588, 591-92,

165 A.807 (1933); see Conway Vv.

Emeny, 139 Conn. 612, 619, 96

A.4G 221 (1953).

A-109

The record in this case

reveals that the plaintiff was

acorded the discretion to act

as ph did. The second

paragraph of the trust

agreement provides in relevant

part: "The Trustee is

specifically authorized to

continue to hold the property

as received from the

Settiors...." As the trial

court found, one of the

settlors' motivations for

creating a trust composed

almost exclusively of

Prentice-Hall stock was to

preserve family control of the

company....While, in

retrospect, the value of the

trust could have been maximized

had the plaintiff divined the

downward course of the stock

market in the 1970's, we cannot

say that yo abused the

discretion specifically granted

it in continuing to hold

Prentice-Hall stock."

Id. at 48-49.

Appellant contends that the holding

of the Bohart case cannot be used to

interpret the investment powers

language in the three instruments as an

intent on the part of George or Myra

A-110

Ewing to either waive the prudent man

rule or to favor production of income

over preservation of the buying power

of the corpus. The other case cited by

the Court below in the footnote is

equally inapplicable to the investment

powers language here at issue. In

Jackson v. Conland, 179 Conn. 52, 420

A.2d 898 (1979), the settlor created a

trust funded by all but two of the

30,011 shares of a newspaper owned and

published by the settlor (420 A.2d at

900). The beneficiaries sued

complaining that the trustee breached

its fiduciary duty to them by buying

another newspaper which turned out to

be a money losing venture (420 A.2d at

900). The Jackson Court affirmed that

the trustees had discretion under the

instrument to purchase the money losing

A-111

newspaper because the trust instrument

had investment powers’ language

three instruments here at issue:

much,

much broader than that contained in the

"In the preamble to the section

of the trust indenture

sets forth the powers

duties of the trustees,

settlor states he intends

“enable the trustees to

which

and

the

act

forcefully and unhampered by

[the] limitations frequently

imposed upon fiduciaries."

Pursuant to that purpose,

then directs that in

the

administration of the trust the

trustees may “retain as

principal ail or any part of

the property ... transferred to

them ... or they may at any

time ... sell [such property]"

and that "in exercising their

discretion with respect to this

matter, they shall not be

influenced solely by the

character of the newspaper

business, which is’ inherently

hazardous."

---"{nJo trustee shall be held

liable to any beneficiary

for any act or omission to act

as such trustee or

director or officer of

as a

any

A-112

corporation stocks or other

securities of which are held as

an asset of such fund unless

such act or omission to act

constituted willful misconduct

on his part." The above

provisions reveal clearly that

it was the settlor's intent to

relieve the trustees of the

limitations otherwise imposed

upon their actions by the

prudent | investor rule."

(emphasis added)

420 A.2d at 900-901.

If anything, the Bohart and Conland

cases stand for the proposition that

the duties of an executor and/or

trustee to beneficiaries cannot be

altered by language in the investment

powers provisions unless such language

expressly mandates altering the normal

duties of the executor/trustee.

Moreover, both these leading cases make

it Clear that even if testator or

settlor does expressly waive the

prudent man rule, that alone will not

A-113

suffice to permit an executor or

trustee to invest in a manner which

alters the respective rights of

successive beneficiaries. Appellant

contends that to accept the

interpretation made by the Court below

of the investment powers language in

the three instruments here at issue is

tantamount to rewriting the dispositive

provisions of these three instruments

and every Connecticut will and trust

containing Similar investment powers

language. See Connor v. Hart, 15/7

Conn. 265, 276 (1968):

"Tt certainly would constitute

a violent and’ wholly

unwarranted repudiation and

reversal of heretofore settled

Connecticut trust law to

construe any or all of these

administrative powers conferred

on the trustees aS powers

which, separately or

collectively, authorized the

trustees to destroy or cripple

A-114

a charitable bequest....For the

trustee so to do would be an

impermissible and illegal abuse

of discretion and would

obviously be in violation of

the settled rule that "[wJhen

there are two or more

beneficiaries of a trust, the

trustee is under a duty to deal

impartially with them"

Restatement (Second), 1 Trusts

ios

Appellant urges that the investment

powers language in the three

instruments here at issue is’ merely

"boilerplate" left over from the time

in Connecticut when, prior to 1949,

permissible investments for fiduciaries

were Strictly limited by law. In

discussing investments permitted by

Connecticut law, Bogart notes:

Prior Law

Prior to 1949 a

Statutory legal list was in

effect limiting the investment

of trust funds to mortgages

secured by real estate, state

and local obligations, savings

bank deposits and the capital

A-115

stock of any state-chartered

insurance company. Conn. -

Gen.St. 1930, §§ 4836-4837.

Bogart, Trusts and Trustees, 2nd Ed.

Rev. (1982), § 622, p. 141.

Because the so-called "statutory

list" was so restrictive, wills and

trust instruments were commonly drafted

to Give the fiduciary more liberal

investment powers. Although

Connecticut adopted the "prudent man"

rule in 1949 (C.G.S. § 6393 (1949)),

Bogart notes that:

5 4 3 CRO statute and the

present Statute (C.G.S.A. §§

45-88 and 45-89) establish

types of investments in which

trustees, guardians and

conservators may invest "with

the care of a prudent

investor."

_—

A-116

Bogart, supra, § 622, p. 129.

As pointed out in appellant's

Memorandum of Law in support of its

Motion for Summary Judgment, p. 27-28 A

140 - 141, Connecticut Law provides a

specific statutory method for enlarging

the fiduciary's investment powers which

was not utilized in any of the three

instruments here at issue. a as

appellant's contention that the

language investment powers in the three

instruments was merely intended to

permit appellee to invest as a “prudent

man” without being limited to the type

of investments set forth in C.G.S.

§ 45-88.

In discussing discretionary

investments permissible by a trustee in

light of the “prudent man" rule, Bogart

notes:

"u. Interpretation of the

terms of the trust. When

discretion as to investments is

conferred upon the trustee by

the terms of the trust, it is a

question of interpretation

whether and to what extent the

settlor intends to enlarge the

scope of permissible

investments. If by the terms

of the trust the trustee is

authorized to make investments

"in his discretion," such an

authorization does not

ordinarily permit the trustee

to make investments other than

those which a prudent man would

make under the rule stated in

Clause (a). By the terms of

the trust, however, the trustee

may be permitted to invest in

securities which are

speculative or otherwise

improper under the rule stated

in Clause (a). The provisions

of the trust instrument are

ordinarily Strictly construed

against an enlargement of the

scope of permissible

investments beyond those

allowed under the _ rule stated

in Clause (a)."

Bogart, supra, §227, p. 538-9 (emphasis

added).

Bogart then notes:

A-118

a Successive

beneficiaries. An investment

which would not otherwise be

improper as a trust investment

is improper where the trust is

created for successive

beneficiaries, if the

investment would be unduly

favorable to one beneficiary at

the expense of the other. See

S232."

Bogart, supra, § 227, p. 540.

Appellant contends that the

investment powers language in the three

instruments here at issue should: (a)

be construed only to enlarge appellee's

authority from investing as a prudent

man in the specific categories of

investments set forth incC.G.S. 45-88

to investing as a prudent man without

being limited to the specific

categories of investments set forth in

C.G.S.45-88 and (b) not be construed to

alter appellee's obligation to balance

the competing interests of the income

A-119

beneficiaries with those of the

remaindermen.

Appellant also points to the fact

that the investment powers paragraphs

of both Myra's Will and George's Will

are identical word for word, while, as

has been previously emphasized

hereinabove, the dispositive provisions

of their respective Wills differ very

distinctly. The investment powers

language in George's Trust under

Agreement is only slightly and

immaterially different. This should

also lead to the conclusion that the

investment powers provisions in the

three instruments here at issue are

mere "“boilerplate" designed solely to

allow appellee to make investment

decisions as a “prudent man" instead of

limiting investments to those types set

A-120

forth in the law, to be made as the

Statute requires "with the care of a

prudent investor."

If this Court is not convinced that

appellant's arguments on this issue

require reversal of the Court below,

appellant respectfully urges the

interpretation of the investment powers

provisions of the three instruments

here at issue iS a genuine issue of

material fact for the determination of

which this Court should remand this

case back to the District Court for a

trial wherein the parties can offer

expert testimony to elucidate the

meaning of the words in question.

Il. INTENT TO FAVOR INCOME?

Appellant agrees with the Court

A-121

below which found that Connecticut law

requires

that the testatrix's

“expressed intent must control," citing

Connecticut Bank & Trust Co. v. Lyman,

supra,

402.

at 278-79, Daly Ruling, p. 9.A

A. MYRA'S WILL

construing Myra Ewing's intent,

the Court below first concludes that:

. the language of Myra's

Testamentary Trust indicates

neither a preference to favor

the income beneficiary nor the

principal beneficiary. The

fact that there is no language

authorizing an invasion of the

corpus for the benefit of the

plaintiff or his father

indicates an intent to create

some rough equivalency between

their competing interest."

Daly Ruling, p. 12, A - 405.

The Court below, nevertheless, then

proceeds to approve appellee's conduct

of maximizing income in Myra's Estate

and her Testamentary Trust by

concluding that:

",..-to the extent that there

are no restrictions or

limitations on the income to be

paid to Alexander, the Court is

not prepared to override the

judgment of Myra's executors to

provide for such income by the

Sale of stocks and the purchase

of bonds....« AS @ practical

matter, it may have been more

efficient to use Myra's trust

as the main income producing

source for Alexander Ewing

Since this trust was the only

one of the three to name

Alexander as the sol€ income

beneficiary."

Daly Ruling, p. 1l, A - 404.

Appellant contends that this

conclusion is clearly erroneous aS a

matter of law. To begin with, it

A-123

simply makes no-_ sense in light of the

undisputed fact that appellee

administered both estates and all three

trusts at all times to maximize income

for Alexander without regard to

appellant's remainder interest.

Secondly, it contradicts the very plain

dispositive language of Myra'ts Will

which requires that all income be paid

over to Alexander, regardless of his

need therefor, and requires that the

corpus of her Testamentary Trust be

paid over to appellant herein without

permitting any invasion of the

principal thereof for any reason

whatsoever. Appellant renews the

argument it made to the Court below

that, in the normal scheme of events,

power to invade the corpus is routinely

given to the executor and trustee to be

A-124

exercised in their discretion in the

evenc that any beneficiary has real

need thereof due to unusual

circumstances not foreseen or

foreseeable when the instrument was

executed. Appellant contends that

Myra's Will is unusual in denying such

power of invasion and that the Court

below clearly erred as a matter of law

in not giving due effect to the absence

of such power to invade the corpus.

Appellant contends that the absence of

power to invade the corpus'7 leads

inescapably to the conclusion that Myra

Ewing wanted the appeliee to administer

her estate and her Testamentary Trust

in a manner which balanced the

competing interests of the sole income

beneficiary with those of the _ sole

remainderman.

A-125

Appellant also contends that, in

construing Myra's Will, the Court below

neglected to consider the circumstances

which existed when Myra Ewing executed

her Will as the Court below recognized

is mandated by Connecticut law. In the

absence of proof to the contrary, it

must be assumed that Myra Ewing knew

that her income beneficiary, her only

child, Alexander, would inherit

Outright from herself and her husband,

George, more than Two Million Dollars.

It must also be assumed that Myra Ewing

knew that her sole grandchild,

appellant herein, would inherit only

the remaining corpus her trust upon her

son's death (since at the time Myra

executed her Will, in 1966, her husband

George had not, aS yet, made any

residuary provision for appellant -

which he did only in 1967).

Under these circumstances,

appellant respectfully urges that the

dispositive provisions of Myra's Will

must be read to infer an intent on her

part to reguire her executors and her

trustee to balance the competing

interests of her income beneficiary

with those of her remainderman, which

appellee admittedly failed to do _ in

making investment decisions for her

estate and her Testamentary Trust.

Accordingly, appeliant contents that

appellee must be surcharged for its

brazen refusal to follow the plain

mandate of Myra's Will.

B. GEORGE'S WILL AND TRUST UNDER

AGREEMENT

George's Will and his Trust under

Agreement admittedly give appellee, not

A-127

the income beneficiaries as the Court

below seems to have believed, the

discretion to allocate income between

appellant and his father and the

discretion to invade the corpus’ for

either or both of them. In sharp

contrast to Myra's Will, neither

instrument requires appellee to

distribute any income to either

appellant or his father or to invade

the corpus for either or both of them.

The Court below cites Gimbel v. Bernard

F. & Alva B. Gimbel Foundation, Inc.,

166 Conn. 21, 36, 347 A.2d 81 (1974)

and Kimball v. New England Trust Co.,

14 Conn. Supp. 432 (1947) as mandating

interpretation of this discretion to

require appellee to favor income

A-128

production over preservation of the

buying power of the corpus.

The fact pattern of the Gimbel case

bears almost no resemblance to that of

the instant case. The only Similarity

is that in Gimbel, as in the instant

case, the court was asked to construe

the powers of the executors and

testamentary trustees to make certain

investments which altered the competing

interests of an income beneficiary with

those of a remainderman (Gimbel, Supra,

at £23) As this court can see, there

1s no discretion accorded in the

dispositive provisions of the Gimbel

Will and there iS no power to invade

the corpus. In Gimbel, the discretion

is solely in the Will's investment

powers paragraph:

A-129

"i0 contrast to the

Simplicity of these

[dispositive] provisions, the

thirteenth article of the will

set forth in twenty-three

paragraphs a detailed

specification of rights, powers

and authority granted to the

trustees "in furtherance and

not in limitation or

restriction of those conferred

upon them by law." The settlor

expressly provided that any or

all cf these powers might be

exercised by the trustees "in

whole or in part, at any time

Or times and from time to time,

in their sole, absoiute and

uncontrolled discretion, in

such manner as they deem

advisable, without liability

and without the necessity of

obtaining any order or the

approval of any court."

Gimbel, supra, at 26-27. The Gimbel

estate had essentially three assets:

interests in oil and gas _ properties

worth $210,005.12; 11,000 shares of

Gimbel Brothers, Inc., worth just under

$600,000.00; and 41,600 Shares of

Occidental worth $1,666,600.00. The

A-130

question the executors and trustees

posed to the court was:

"D>. May the executors and

trustees exercise the powers,

authorities and discretions

conferred upon them by the Will

in such a manner as to alter

Substantially the value of the

respective interests of the

income beneficiary and the

remainderman (1) in oil and gas

property interests; (2) in the

estate and trust assets, other

than oil and gaS property

interests."

Gimbel, supra, at 27-28.

In deciding how to answer this

question, the Gimbel court noted:

"Although the settlor

imparted to the trustees the

widest possible discretion,

they are, nonetheless, under a

duty to deal impartially with

the succesSive beneficiaries.

Connor v. Hart, 157 Conn. 265,

277, 253 A.2d 9; Restatement

(Second), 1 Trusts §§ 183, 232.

"[T)he interests of the two

beneficiaries are toa certain

extent antagonistic, and the

trustee is under a duty so to

A-131

administer the trust as to

preserve a fair balance between

them." 3 Scott, Trusts (3d Ed.)

GS 434. In the Connor case, we

stated (p. 274): “Although the

use of the term "sole

discretion' confers a wide

discretion, no language in a

trust will be so construed as

to remove a trustee from

equitable control. ‘To the

extent to which the trustees

had discretion, the court will

not attempt to control their

exercise of it as long as they

have not abused it.... But the

law will not tolerate its

abuse, however great the

creator of the trust intended

the grant of discretion to be.'

Conway v.Emeny,...[139 Conn.

612, 619, 96 A.2d 221). This

rule applies even when the will

has used the term ‘'absolute' or

‘sole' discretion. Ibid. The

same rule is recognized in

Connecticut Bank & Trust Co. v.

Lyman, 148 Conn. 273, 281, 170

Av#e i130.”

Gimbel, Supra, at 34-35.

The

Supports only the appellant's position

answer the Gimbel court came to

herein:

A-132

"While the settlor's will in

article thirteenth both greatly

enlarges the administrative

powers of the trustees and

insulates them from liability

for the exercise of those

powers, they have been given no

dispositive, as distinguished

from administrative, powers and

there is nothing in the will

which would allow the executors

and trustees to exercise any of

their administrative powers to

alter substantially the value

of the respective interests of

the income beneficiary and tne

remainderman either in the oil

and gas interests or the other

trust assets. Our answer to

guestions B (5), C and Dis

"No.""(emphasis added)

Gimbel, supra, at 35-36.

In examining the Kimball case,

appellant notes that this decision was

made in 1947, not 1977, as the Court

below erroneously noted, and that this

lower Connecticut court decision was

made before Connecticut adopted the

current, limited prudent man rule

(embodied in C.G.S. 45-88) in 1949.

A-133

A careful reading of the Kimball

case reveals that it, also, has no

applicability to the instant case. In

Kimball, the trust was initially funded

with blue-chip stocks and the trustee

was directed to pay the income produced

by the corpus to named income

beneficiaries for their lives and, on

the death of the last income

beneficiary, to distribute the corpus

to remaindermen. (Kimball, supra, at

433 and 435) The case does not

indicate if there was any power to

invade the corpus. The Kimball Will

gave his executors and testamentary

trustees "to invest and reinvest the

[corpus], and, in its discretion, to

sell the same..." (Kimball, supra, at

434). The Will also stated that "...in

no event shall the Executor be liable

A-134

for any loss or depreciation of

property held by it aS Executor

hereunder unless such loss occurs

through its bad faith or wilful

default." (Kimball, supra, at 434).

The remaindermen complained of losses

incurred by the executor in selling

blue-chip stocks (primarily AT&T and

GE) during the depressed stock market

conditions which prevailed during World

War II in order to diversify the

portfolio of the estate.

The Kimball court notes that under

Connecticut law

"[t]he executor's primary duty

is to settle the estate, pay

debts, and make distribution,

and not to sell and reinvest the

assets....The general rule as to

the duty of a trustee is that he

must exercise due diligence in

light of the particular

circumstances surrounding the

administration of his trust.

[citations omitted])...He must

A-135

act aS a prudent man under the

circumstances [citations

omitted])."

Kimball, supra, at 440.

The Kimball Court then noted that:

wre. acts of this

executor-trustee must be

examined in the light of the

“exculpatory clauses" of this

Widds"

Kimball, supra, at 440, primarily as a

result of which the Kimball court

concluded that the trustee had not

breached its fiduciary duty to the

remaindermen.

Simply put, it 1s appellant's

position that none of the Connecticut

cases cited by the Court below can be

read to Support the position that

either a grant of discretion to

allocate income among various income

beneficiaries or a grant of discretion

A-136

to invade principal for the benefit of

one or more income beneficiaries can be

interpreted to indicate an intent by

George wang to authorize appellee to

make investment decisions for his

estate, his Testamentary Trust, or his

Trust under Agreement which have the

effect of favoring income production

over preservation of the buying power

of the corpus. Moreover, the Court

should note that the dispositive terms

of Geotge's Will and Trust under

Agreement do not come within the only

exception to such duty to balance

interests which is when the income

beneficiaries and the remaindermen

(whether one or more) are the same

individuals or parties. In the instant

case, Alexander Ewing is not a

remainderman and some of the

A-137

remaindermen (Lynda Ewing and her

children by her prior marriage) are not

income beneficiaries. To the extent

that the Court below relied upon the

fact that appellant was both one of the

income beneficiaries and one of the

remaindermen, appellant respectfully

urges that such reliance is clearly

erroneous aS a matter of law.

Appellant also respectfully

contends that the Court below

misconstrued the meaning of the

dispositive provisions in George's Will

and his Trust under Agreement in

ignoring the Significant wealth

Alexander Ewing inherited outright from

his parents and in ignoring George

Ewing's apparent intent in both

instruments to provide for remaindermen

wno were not also income beneficiaries

A-138

- Lynda Ewing and her four children by

her prior marriage. The interpretation

which the Court below made of the

discretion George Ewing granted to

appellee makes a mockery of the clear

intent envisioned by the plain language

of his will and Trust under Agreement.

Accordingly, appellant contends that

appellee must be surcharged for

brazenly ignoring George Ewing's clear

intent.

IV. ABUSE OF DISCRETION

Even if this Court sustains the

decision of the Court below that all

three of the instruments here at issue

gave appellee the discretion to make

investment decisions in a manner

favoring the income beneficiaries over

A-139

appellant's remainder interests

therein, appellant respectfully urges

that the decision of the Court below

waS clearly erroneous as a matter of

law in holding that appellee's conduct

did not constitute an abuse of such

discretion. Appellee justifies its

conduct... "[{bJecause of the income

needs of Alexander --.-" (Appellee

Memorandum of Law, p. 2, A - 82), and

that "...it was clearly the duty of the

Trustee to provide the necessary income

for Alexander." (Appellee Memorandum

of Law, p. 5, A - 82, emphasis added),

without ever offering even one shred of

evidence that appeliee either

investigated Alexander's need for

income or that Alexander in fact had

any such need. On the contrary,

",..-Alexander inherited outright from

A-140

his parents' estates [in 1967)

approximately $2,169,198.00..." (Daly

Ruling, p. 3, A - 396). Although not

cited by the Court below, it is also

undisputed that Alexander had a trading

account with the brokerage firm of

Hallgarten & Co., which had a balance

of $752,300.00 on November 28, 1969

(Affidavit of Ewing, Exhibit Q, A -

360).

Appellant asks this Court to take

judicial notice of the fact that Two

Million Dollars was a great deal of

money in 1967, and, even with the

substantial inflation which has since

occurred, is still a rather tidy sum.

Given the substantial wealth Alexander

inherited, even if he had no other

means of support, appellant contends

that this Court should conclude aS a

A-141

matter of law that appellee abused

whatever discretion it had pursuant to

the terms of the three instruments by

administering both estates an all three

trusts from their inception (literally

within months after the deatns of Myra

and George) solely to maximize income

for the benefit of Alexander.

Appellee also argues that the

discretion given to it to invade

principal (in George's trusts only!) is

sufficient to permit appellee "...to

invade the principal and pay the entire

amount to Alexander...". (Appellee

Memorandum, p. 14, A - 94.) Appellee's

argument would permit it to invade the

principal to Support, for example,

gambling on horses by Alexander. The

Gimbel decision makes it clear that no

grant of discretion is broad enough to

A-142

permit such a result. In considering

this argument advanced by appellee,

this Court must note that appellee has

never offered any justification for its

invasions of principal, even though it

is clear aS a matter of law that no

discretion is untrammeled. This is an

abuse of discretion.

Appellee then urged upon the Court

below the theory that it had discretion

to maximize income produced by both

estates and all three trusts to avoid

the necessity to invade the corpus

thereof to provide for Alexander's

alleged but never documented needs:

"...[Citytrust] attempted to maximize

income to meet the needs of

Alexander....without invasion of

principal, in an attempt to preserve

the estate. (Appellee Memorandum of

A-143

Law, p. 3, A - 83). Appellant notes

that this theory is totally

inconsistent with the justification

offered by appellee above. Also,

appellee cites no law to support its

extremely novel theory in this regard.

In fact, such theory is totally

inconsistent with the undisputed

requirement of Connecticut law

requiring a fiduciary to balance the

competing interests of successive

beneficiaries, and conflicts with

appellee's own internal "Investment

Policy" guidelines set forth at A 276 -

ye TE

Sensing that it could not prevail

on the theory of reasonable exercise of

discretion granted to it in the three

instruments, and admitting "[t]here is

no material dispute as to the

A-144

investment ~~ policy [pursued by

appellee}...." appellee urged upon the

Court below that "[{t)he Trustee, in

fact, made investments to increase

income for Michael's father as it was

obligated to do under the trust

instruments." (Appellee's Memorandum of

Law, P. 15, A - 95). Since appellant

has shown in hereinabove that the

instruments cannot be read to permit or

mandate such discrimination in favor of

an income beneficiary over the

competing interests of the

remaindermen, appellee's admitted

conduct in doing so must be held to be

an abuse of discretion as a matter of

law.

Although appellee also contended

that its conduct in administering the

estates was justified because it sold

A-145

",..high concentrations of speculative

securities..." (Appellee Memorandum of

Law, p. 2, A - 82), the Court below

found that appellee, in George's estate

"4 SOAS his blue-chip stock

holdings..." (Daly Ruling, p. 10, A -

403), and "...in the case of Myra

Ewing's Estate, two months after her

death her stock holdings of General

Electric, Eastman Kodak Co., IBM,

Singer, Standard Oia, etc., were

S0iGs+." (Daly Ruling, p. 10, A -

403). Moreover, the Court below held

that:

"Nine months later in December

1967, these same executors sold

these municipal bonds at a loss

of $103,577.00 and the proceeds

were again used to purchase

municipal bonds." (Daly Ruling

mp. 19, A = 603).

A-146

This is not the appropriate liquidation

of “speculative securities" as appellee

contends, but a clear abuse for which

appellee ought to be surcharged.

One of the reasons the Court below

found the conduct of appellee not to be

an abuse of discretion was because some

income went to appellant and because

some invasions of principal were made

for appellant's benefit:

rere, * requests made by

plaintiff for additional

allowance, or monies, from

defendant during his father's

lifetime were acceded to and

were sufficient to meet his

living expenses and other

needs." (Daly Ruling, pg. 5, A

- 398).

"As an income beneficiary of

the George Ewing Testamentary

Trust, Michael Ewing received a

$66,000.00 distribution of

income and principal in

September 1968. Furthermore,

the principal of the same trust

was invaded for his benefit on

other occasions and without

A-147

objection in the amount of at

least $60,000.00. Likewise,

the principal of the George

Ewing Inter Vivos Trust was

invaded for Michael's benefit

without objection, in the

amount of $15,000.00 in 1982

for his medical expenses, and

in the amount of $24,000.00

respectively in both 1983 and

1984 for his living expenses."

(Daly Ruling, p. 15-16, A 408 -

409).

Although appellant received no

income on a regular basis from the

estates or trustS prior to 1979, the

entire issue of what money flowed to

appellant prior to his father's death

is legally irrelevant because, as the

Court below did recognize:

"52th plaintiff is not

contesting the income

allocations from either of the

George Ewing Trusts between

Plaintiff and his father or the

invasions of principal for his

father under the George Ewing

Inter Vivos Trust.* (Daly

Ruling, p. 5-6, A 398 - 399).

A-148

The real point here is that appellee

has never even alleged hat it ever

considered appellant's needs during the

seventeen year period of its

administration of the estates and

trusts here at issue. This court must

conclude as a matter of law that

appellee's total failure to consider

appellant's needs makes the investment

policy of maximizing income over the

competing interest of preserving the

buying power of the trust corpus an

abuse of discretion.

In fact, what stands out is that

appellee always gave virtually all

income in both estates and all three

trust to Alexander while it always

invaded the principal of one or the

other of George's two trusts in these

A-149

few occasions when it did determine to

provide money for appellant. sc. an

respectfully urged that such conduct is

clear evidence of an abuse of

discretion by appellee.

V. DUTY TO PRESERVE

Althcugh appellant never argued

that the instruments here at issue

required appellee to guarantee

Substantial appreciation of the corpus

of the estates and trusts, appellant

disagrees with the holding of the Court

below that:

"Based on the Court's holding

that it was not the primary

intent of the two George Ewing

Trusts to ensure the

substantial appreciation of the

corpus for the remaindermen and

the fact that these trusts

A-150

granted the trustees liberal

investment powers, the

Gefendants had the discretion

to favor the interests of the

income beneficiaries -- one of

whom was in fact the

plaintiff."

Daly Ruling, P. 15, A - 408.

The Court below also observes that

since appellant inherited over One

Million Dollars from Myra's

Testamentary Trust and George's Trust

Under Agreement, his instant complaint

is like those of the Kimball

remaindermen who complained they would

have inherited more if the trustee has

made better investments (Daly Ruling,

p. 16-17, A 409 = 410). The Court

below entirely misconstrues the nature

of appellant's complaint, and

completely ignores the precedent cited

in Dennis v. Rhode Island Hospital

Trust National Bank, 571 F. Supp. 623

RE ee)

A-151

(P. Rhode Island, 1983). On appeal of

that case, the First Circuit confirmed

that the trustee had violated its duty

to deal impartially with successor

beneficiaries and held that:

"For one thing, it seems

reasonable for the court - in

devising a remedy for the

trustee's violation of its duty

of impartiality - to assume

that a fair trustee would have

maintained the property's real

value from 1950 through

1982....Such an assumption is

consistent with basic trust law

policies of providing income to

| income beneficiaries while

preserving principal for the

remaindermen,....Where a court

is trying to create, not a

measure of the trustee's duty,

but Simply 4 plausible

reconstruction of what would

have occurred to a hypothetical

1950 reinvestment, we see

nothing unreasonable in

assuming that the value of the

corpus would have kept pace

with inflation." (emphasis

added)

A-152

Dennis v. Rhode Island Hospital Trust

National Bank, 744 F.2d 893, 900

(1984).

It is appellant's contention that

what appellee did in the estates and

trusts here at issue is fundamentally

no different that the breach committed

by the corporate trustee in the Dennis

case. The value of appellant's

remainder interests in both estates and

in George's Trust under Agreement when

they were established was $

1,344,728.00, , but on his father's death

only $ 1,193,564.00 was distributed to

appellant by appeliee in spite of the

fact that the Consumer Price Index went

up 312% over this period!!

A-153

VI. DELEGATION TO RUML

In the event that this Court does

not rule in favor appellant on the

basis of appellee's admitted failure to

balance the competing interests of the

income beneficiaries with those of the

remaindermen, appellant respectfully

urges that appellee failed to meet its

obligation below to extinguish all

genuine issue of material fact

regarding Mr. Ruml's role in

controlling investment decisions in

the estates and trusts, for which

reason the case should be remanded for

trial on this issue.

RELIEF SOUGHT

Appellant respectfully requests

this Court to direct entry of Judgment

A-154

against appellee in the amount of

$3,001,998.50 (plus statutory interest

in Connecticut at 10% per annum from

October 29, 1984, when appellant's

father, Alexander Ewing, died, thus

triggering distribution to appellant)

which represents the difference between

what appellant should have inherited

had appellee invested to keep up with

inflation, (See number fta Be 3h

hereinabove) and the $1,193,564.00

which appellant actually received from

appellee on his father's death, as

calculated below.

& Myra Ewing's Residuary Estate

as of January 22, 1967 (A -

238) = $459,260.00

x 3.12 (Conswner Price Index -

See p. 11 hereinabove)

= $1,432,891.00 less

$472,259.16 actually

received by appellant from

appellee

= $960,632.00.

Il.

Ill.

IV.

$442,

By:

A-155

George Ewing's Residuary

Estate as of June 3, 1967 (A -

256) = $283,492.00

x 3.12 = $884,495.00 divided

by 2 (appellant only 1/2

remainderman) =

$442,247.00 less amount

distributed by appellee to

appellant of $ 0.00

= $442,247.00.

George Ewing's Trust Under

Agreement as of May 2, 1967 (A

- 268) = $1,487,445.60

x 3.12 = $4,640,830.20 divided

by 2 (appellant only 1/2

remainderman) =

$2,320,415.10 less amount

distributed by appellee to

appellant of $721,305.85

= $1,599,109.30.

Total: $960,632.00 plus

247.00 plus

$1,599,109.00 = $3,001,988.00.

APPELLANT

MICHAEL EWING

William R. Horner, Esq.

Horner & ISaacs, P.C.

489 Fifth Avenue

New York, NY 10017

(212) 953-2288

A-156

UNITED STATES COURT OF APPEALS

FOR THE

SECOND CIRCUIT

MICHAEL EWING,

Plaintiff-Appellant,

-against-

CITYTRUST and ALVIN RUML and LYNDA EWING

As Executors of the Estate

of Alexander Ewing,

Defendants-Cross-Appellants.

ON APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF CONNECTICUT

$$ —————— —E—E el

APPELLEE'S AND

CROSS-APPELLANT'S' BRIEF

Dion W. Moore

Williams, Cooney & Sheehy

One Lafayette Circle

Bridgeport, CT 06604

(203) 331-0888

A-157

AnrKIM

AWL

"Tre

VIEW

A-158

CASE PAGE

Anderson v. Liberty Lobby, Inc.,

106 3.00 2505 1ES06) ve seucss

Brig Cj

Beach, 119 Conn. 131, 139, 174

Rie SOS eee se creer eee

Carten v, Carten, 153 Conn. 603,

CLG, 2he Ace Fae SESS? oO 8 aves

Celotex Corp, v, Catrett, 106 S.

CE. BOSS: CRSCO? bee ee bc wees wees

Lyman, 148 Conn. 273, 278, 170

> eee 4 8 Se ee

Cromwell] _v. Converse, 108 Conn.

412, 425, 143 Atl. 416 (1928)

Davis v ngi in -

549 F.2d 314, 324 (Sth Cir.

kg oy are en eae

Dennis v, Rhode Island Hospital

Trust National Bank, 571 F.

Supp. -622 (DB. R,1.¢ LISS) «scces

eS eee ee ee ee ee

Fed. R. App. P. 2S (a) (9) ccsviccccvers

G r : lin, |76 N.H.

SUiy: OS.Bs Bad 34 686 Overebe Seas

A-159

CASE

Gimbel_ vy, Bernard F. and Alva B.

Gimbel Foundation, Inc., 166

Conn. 21, 36, 347 A.2d 81

CEPEU) bo eewneee canbe

Harris v, Plastics Mfg.Co., 617

F.2d 438, 440 (Sth Cir. 1980)

Kelly v, Ivler, 187 Conn. 31, 39,

$50 A.2@ BT (i906) ccc.

Kimball _v, New England Trust Co.,

14 Conn. Supp. 432 (1947) .....

King v. Horizon Corp., 701 F.2d

1313, 1315 (10th Cir. 1983)

Knight v. United States Fire Ins.

Co., 804 F.2d 9 (2nd Cir.

Res is ew ae ob ee eee

Loveridge v. Dreagoux, 678 F

G70, 877 (i0th Cir. 19862) .....

Mathews v, Sheehan, 76 Conn. 654,

660, 57 Atl. 694 (1904) .......

Rhode Island Hospital Trust

Company v,. Egan, 52 R.I. 384,

aes Be £96 55595 eee eee

Rousseau v, United ;

(S.D.N.Y 19

A-160

CASE PAGE

Smith v. Sturm, Ruger & of. eee 6

524 F.2d 776 (9th Cir. 1975)

United States Trust Co, vy, Bohart,

197 Conn. 34,495 A.2d 1034

(1968S) ccscvcccceveweeeen eevee.

Wards Co,, Inc, V. Stamford

Ridgeway Associates, 761 F.2d

117 (2nd Cir. 1985) .----+-+eeees

Zeoli v,. Commissioner of Social

Services, 179 Conn. 83,425

A.2d 553 (1979) cc ececeseveces

C AC Cr) \

conn Gen Stat 15-100e (37)

Conn Gen Stat 1 re ee a

A-161

UNITED STATES COURT OF APPEALS

FOR THE

SECOND CIRCUIT

MICHAEL EWING,

Plaintiff-Appellant,

-against-

CITYTRUST and ALVIN RUML and LYNDA EWING

As Executors of the Estate

of Alexander Ewing,

Defendants-Cross-Appellants.

ON APPEAL FROM THE UNITED STA

COURT FOR THE DISTRICT OF

APPELLEE'S AND

CROSS-APPELLANT'S BRIEF

INTRODUCTION

This is an appeal and cross-appeal from

CAas\s

A-162

on a Ruling on Pending Motions (A-473) in

a diversity case decided by the District

Court for the District of Connecticut (The

Hon. T. F. Gilroy Daly). In its Ruling on

Cross-Motions for Summary Judgment, the

Court, based upon undisputed material

facts, concluded, as a matter of

Connecticut law, that the defendant,

Citytrust, as trustee, did not abuse its

discretion in its administration of

certain Estates and Trusts created by

George and Myra Ewing. (A-400-410).

The District Court did conclude, how-

ever, that Citytrust abused its discretion

when it invaded the principal of George

Ewing's Testamentary Trust for the benefit

of his son, Alexander, despite language in

that Trust which authorized the Trustee

"to invade the principal for any reason in

its discretion. ; : ae (A-413). The

A-163

invasion involved was in the amount of

$111,000 and terminated the George Ewing

Testamentary Trust. (A-416). As the

grandson, Michael, had a one-half

remainder interest in this Trust, damages

were awarded in the amount of $55,500 plus

prejudgment interest resulting in the

judgment in the amount of $81,769.58. (A-

479-480). It is from this judgment that

Citytrust filed a Cross-Appeal relating

solely to the issue of the invasion of

principal of the George Ewing Testamentary

Trust.

STATEMENT OF ISSUES

1. Did the District court correctly

decide, as a matter of Connecticut Law,

that Citytrust did not abuse cs

discretion in the administration and

investment policies relating to the George

vr) + Py

SUS S.<

and Myra Ewing Estates and

A-164

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A-165

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A-166

under the laws of the State of

Connecticut." (A-205). The trustee was to

invest and reinvest the residuary estate

and pay over the net income to Alexander

for his life. Upon his’ death, the

principal was to go to his lawful issue in

equal shares per stirpes. (A-203). In the

event that Alexander and Michael

predeceased Myra, all the residue was to

be paid to Lynda Ewing, Alexander's wife

and Michael's stepmother, and upon her

death to her children, Michael's

stepbrothers and sisters.

The Estate of Myra Ewing had high

concentrations of IBM and Singer stock.

These securities were sold, and the trust,

from its inception was invested in tax-

exempt bonds which appreciated in market

value from approximately $388,000 to

$462,000 as well as providing income for

A-167

Alexander. By way of comparison, Singer

Stock lost substantially all of its value

in the mid-1970's, and IBM produced little

income. (A-104-105).

Just prior to his death, George Ewing

Created an jnter Vivos Trust funded

largely with Singer and IBM stock.

Citytrust was the Trustee and was

authorized to invest and reinvest the

funds in the trust and to "pay the income

therefrom and so much of the principal as

(

rustee

may in the judgment of the

desirable to or for the benefit of th

40)

Grantor's son, Alexander Lunt Ewing, or

Grantor's grandson, Michael George Ewing,

in such amounts and Proportions as my said

Corporate Trustee in its sole and absolute

discretion shall deem advisable from time

to time without regard to equality of

fat , ih : : " eo

distribution. (A-27

A-168

her children, were also named in the inter

yivos Trust. (A-271). The Trustee had the

power "to invest and reinvest in any

property oF security” and "to make, retain

or change any investment without liability

on account thereof." (A-272).

The inter vivos Trust originally

consisted largely of Singer and IBM stock.

However, during the course of the

administration of the Trust, Citytrust

sold these concentrations, and invested in

a diversified portfolio mainly in bonds,

which preserved the principal and provided

a dramatic increase in income. Michael

received principal distributions from this

Trust in the approximate amount of $40,000

compared to $6,000 of principal dis-

tributed to his father, Alexander. (A-

102)... :As2 requests made by Michael for

3 8 s ; ee re + oo i. ~~ YT)

additional allowance or monies from

A-169

Citytrust during his father's lifetime

were acceded to and were sufficient to

meet his living expenses and other needs.

(A-398) .

George Ewing also created a Testamentary

Trust funded by one-half of the residuary

of his Estate, which was in the

approximate amount of $283,492. Under the

terms of the Will, the Trustee was

empowered to pay sO much of the net income

to Alexander Ewing and the lawful issue of

Alexander "in such amount and proportions

as my said Corporate Trustee in its sole

and absolute discretion shall deem

advisable from time to time without regard

to equality of distribution. " (A-214).

Lynda Ewing and Michael's stepbrothers and

sisters weve again mentioned in the George

Ewing's Testamentary Trust (A-215). The

Trustee also had the power to invest and

A-170

(A-218). It was also suggested

Trustee consult with George

attorneys, Perry & McKendry,

matters pertaining to the conduct

settlement of my Estate

administration of the Trust.

220).1

1 In this regard, Citytru

letters from Perry & McKendry

of 1973, and May of 1980 . Th

indicate that

possible power and discreti

invasion of principal and that

intent of the Grantor/Testat

the son, Alexander, except ich

might be necessary to supplemer:

"obligation to support hin

The District Court t

upon the letters from Perr

scrivener of the three Trust

the District Court wa : 4

the language in tI T

unambiguous and unequiv

footnote 4)

that the

Ewing's

"in ai

re + _

- ~+> a

my,

a »

- . .

“~

> >

“

and

A-171

In addition, Michael Ewing recei

Statements relating to the Trus

administered by Citytrust since 1980,

not longer. (A-190). However, he

1@))

¢))

threw them in his desk, often unopened,

and he never made any inquiry

Citytrust, his father or anybody e

regarding statements. (A-106). After

death of his father in October of 195

Michael received final accounts submit

to the Probate court, however, he nev

, ® 8 Se » om . a] 2 C

In this suit filed on June 19 19%

Michael nor seeks “te review

1 estment policies of Citytrust

determine if Citytrust has violated

rt)

ad its fiduci

whether Citytrust breach

ay)

)

A-172

principal in the George Ewing Testamentary

Trust for the benefit of Alexander. (A-

194). Michael makes the unusual request of

an Appellate Court by asking that it take

judicial notice of the consumer price

index (Brief at p. 10) and enter judgment

in the amount of $3,000,000.00.

ARGUMENT:

I. THE STANDARD OF REVIEW AND

PROPRIETY OF SUMMARY

JUDGMENT.

Upon careful review of the underlying

Trust documents, and the undisputed

material facts, the District Court deter-

the claims that it had breached its

A-173

that there was no improper delegation by

Citytrust of its investment responsi-

bilities to Alvin Ruml. (A-412). The Court

did find, however, "that Citytrust abused

its discretion in authorizing {the

invasion of the George Ewing Testamentary

Trust] for the monthly support of Lynda

Ewing's children. , thd (A-414) This

conclusion was reached because certain

interpretations by the Court "cast a

Substantial shadow of doubt on Citytrust's

good faith, or at the least call into

question its performance of its duties as

Trustee," (A-414).

At the Outset, appellate review Of the

“es, re c PhS oe eet ae -

qagetermination of tne District LOurt ina

A-174

In addition, since the action was

one based on diversity "(d)eference

is to be accorded the views of a

resident federal district judge

with respect to the interpretation

and application of the law of his

state . . . (and) appellate review

is . . . governed by the “clearly

erroneous standard." Loveridge v.

Dreagoux, 678 F.2d 870, 877 (10th

Cir. 1982) Courts of Appeals have

generally taken the view that it

will not overrule a district judge

on questions of state law unless

the judge's findings are "clearly

wrong." Smith v. Sturm, Ruger §&

Co., Inc,, 524 F.2d 776 (9th Cir.

1975).

In Connecticut, the construction of a

WY)

a0)

ey)

(Tt

> ty

will or a tf

law for the Court to determine from a

| reading of the instrument as a whole in

A-175

148 Conn. 273, 278, 170 A.2d 130 (1961)

the Court wrote:

We cannot rewrite a Will or a

Trust instrument. The express

intent must control, although this

is to be determined from reading

the instrument as a whole in the

light of the circumstances

surrounding the testator or settlor

when the instrument was executed,

including the condition of his

estate, his relations to his family

and beneficiaries, and their

situation and condition. 'The

construing court will put itself as

far as possible in the position of

the .. . [settlor], in the effort

to construe .. .- [any] uncertain

language used by him in such a way

as shall, conformably to the

language, give force and effect to

his intention.'

The same type of judicial review is made

with respect to other documents in

Connecticut, and the meaning and effect

————K

A-176

are to be determined by the intent

expressed in the language of the document

considering all of its relevant provisions

and reading it in the light of the

Surrounding circumstances. In Connecticut,

the interpretation of the document

presents a question of law. See: Kelly v.

Ivierwr, i187 Conn. 31, 39. 450 A.2@ §17

(1982).

The District Court properly applied this

analysis in reviewing the provisions of

the Trust documents. It also had before it

the undisputed underlying facts

Surrounding the execution and the factual

circumstances relating to the parties

involved. Rule 56(c) provides that summary

judgment shall be rendered if there is no

genuine issue of any material fact and the

moving party is entitled to judgment as a

matter of law. As there were no

A-177

ambiguities in the language of the Trusts,

and no disputed factual issues concerning

the investments made or actions taken by

the Trustee with respect to the

administration of those Trusts, Citytrust

was properly entitled to judgment as a

matter of law under both federal procedure

and Connecticut substantive law. See:

Anderson v,. Liberty Lobby, Inc,., 106 S.Ct.

2505 (1986); Celotex Corp. v, Catrett, 106

S.Ct. 2548 (1986); ight Unite tates

Eire Ins, Co,., 804 F.2d 9 (2nd cir. 1986);

Wards Co,, Inc, v,. Stamford Ridgeway

Associates, 761 F.2d 117 (2nd Cir. 1985).

II. THE DISTRICT COURT

CORRECTLY DETERMINED THAT

CITYTRUST DID NOT ABUSE

ITS DISCRETION IN ITS

ADMINISTRATION AND

INVESTMENT POLICIES.

The District Court, applying Connecticut

law, recognized the long-standing

A-178

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A-180

Trustee" be desirable either for Alexander

or Michael "in its sole and absolute

aiaeretion. << -%"

The power to invest and reinvest was

clearly within the discretionary powers

given to the Trustee. Just as clearly, the

actions taken by the Trustee did not

constitute an abuse of that discretion

under Connecticut law. see: Ze¢01......v«

Commissioner of Social Services, 179 Conn.

83, °° €25- X20 553 (1979). Indeed, had the

Trustee failed to embark upon a program of

diversification of the Singer and IBM

stock, it might well have been criticized

for retaining such stocks. See: Mathews v.

Sheehan, 76 Conn. 654, 660, 57 Atl. 694

(1904); United States Trust Co, v. Bohart,

197 Conn. 34, 495 A.2d 1034 (1985). As to

the discretionary power conferred upon the

Trustee to appoint income or principal in

A-181

bad

aa)

4 4 TS s

= rx

4 ~

=. 4

mx ‘

j { 4

4 4

j |

4 .

( S

f 2 +

j 4

A-182

(A-407) Citing, Gimbel v. Bernard F, and

Alva Gimbel Foundation. Inc., 166 Conn.

21, 347 A.2d 81 (1974). The Court also

rejected Michael's argument that he would

have.received more money shad the Trust

been managed differently placing greater

emphasis on the interest of the

remainderman. Again, the Court rejected

this argument citing Kimball] v. New

England Trust Co,, 14 Conn. Supp. 432

(1947) and writing:

In Kimball, the Court refused to

upset the Trustee's attempt to

diversify the trust holdings to

meet the perceived intentions of

the settlor in providing for the

life tenant and remainderman simply

because the remainderman were

unhappy about the new investments

made by the Trustee. Id. at 441.

The Kimball Court made this ruling

despite the fact that the Trustee,

who was granted a wide berth of

discretion, sold blue-chip stocks

A-183

at a low market price. Id. Because

a trustee is neither the insurer

nor guarantor of the value of trust

assets and because a mere error in

judgment will not result in

liability, Bohart, 197 Conn. at 49,

the Court refuses to hold that the

Trustee's investment strategy

constituted an abuse of discretion.

While Appellant, in his brief, arques

that the construction given by the

District Court "makes a mockery of the

clear intent envisioned by the plain

language of his Will and Trust under

Agreement," (Brief at p. 29) it is clear

that Judge Daly made a careful analysis of

the underlying documents in light of the

clear principles of probate law in

Connecticut. More appropriately, it is

Appellant's strained attempt to

distinguish the cases cited by the lower

court which “makes a mockery" of the

applicabie rinciples and the roper

Pt p p

A-184

application of those principles to the

undisputed facts.

2 much of the plaintiff's brief with

respect to this appeal is devoted to

distinguishing cases cited by the court

and reliance on Dennis v. Rhode Island

Hospital Trust National Bank, 571 F. Supp.

623 (D.R.I., 1983). In Dennis, there was a

clear issue of permitting property to

decline while continuing to pay income.

This created a partiality problem which

could have been avoided had the property

been sold and the proceeds reinvested in

assets of roughly equivalent total value.

The trust was not, as in the instant case,

a trust in which the trustee had

discretionary powers to allocate income

and principal to co-beneficiaries but was

rather a clear choice of permitting the

corpus of the trust, comprised of real

estate, to depreciate, without

maintenance, so that income could be

distributed. This resulted in the District

Court's finding that the trustee, while

not necessarily acting imprudently, acted

unfairly between income beneficiaries and

remainderman. In this case, however, the

trustee not only protected the trust

corpus) but increased income for the

benefit of both income beneficiaries,

Alexander and Michael. That Alexander may

have been distributed more income than

Michael is Odd Sig. That was 42

discretionary power given to the trustee

(Footnote continued)

A-185

III. LOWER COURT CORRECTLY HELD

THAT CITYTRUST DID NOT

DELEGATE INVESTMENT CONTROL

Part B of the lower court's ruling

relates to the claimed delegation of

investment control to a friend and advisor

of Alexander Ewing, Alvin Ruml. Appellant

substantially ignores the Court's ruling

in this regard except for a short para-

graph at p. 47 of his brief without cita-

tion or reference. Under such circum-

stances, it might well be construed that

this argument is being abandoned. Fed. R.

App.P.28(a) (4); Harris v. Plastics Mfg,

Co., 617 F.2d 438, 440 (5th Cir. 1980);

eer] os 2s Fi 2e

wee, gas (Sth Cir. 1977).

in its sole discretion, and the discretion

exercised was in accordance with the

intent of the testator.

A-186

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A-187

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CITYTRUST DID NOT ABUSE IT

DISCRETION IN THE INVASION

THE TESTAMENTARY TRUST

GEORGE EWING.

7 1 4 4 + 7

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A-188

“7

A-189

plaintiff argued that Citytrust did, in

fact, act in bad faith arguing 1) that the

invasion of principal was made for the

benefit of Lynda Ewing's four children, 2)

that the authorization for invasion of

principal failed to mention that the

plaintiff was an income beneficiary and

remainderman of the Trust, 3) that the

authorization was not co-signed by two

trust officers, and 4) that the final

accounting of the Trust failed to advise

the Probate Court that Michael had an

income, and a remainder interest in the

Trust. As George Ewing's Testamentary

Trust clearly and unequivocally permitted

the invasion made, little emphasis was

placed on this issue as it was not

perceived to be a claim in the Complaint

and was admittedly not a primary claim of

the plaintiff. (A-133). Accordingly,

ytrust made no particular analysis of

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A-191

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A-192

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A-193

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A-194

an abuse of discretion given to the

Trustee.

The Court also relied, for its

conclusion, on its interpretation of

various facts. Tt found that the

investment policy guidelines required two

Signatures which were not present, that

the authorization form failed to indicate

that the plaintiff was an income

beneficiary, and chat the caption used on

the Final Accounting stated that the Trust

was "FOR THE BENEFIT OF ALEXANDER EWING."

(A-415).

In its Motion for Reconsideration,

Citytrust presented an affidavit

indicating 1) that the Caption "FOR THE

BENEFIT OF ALEXANDER EWING" was one

dictated by the Probate Court in its

Original appointment, 2) that the Probate

Court was very much aware of Michael's

A-195

interest in the Trust, and 3) that the

Policy guidelines do not require two

Signatures but merely approval which was,

in cact, obtained from the Trust

Administrative Committee. Finally, notice

concerning the invasion of Principal of

the George Ewing Testamentary Trust was,

in fact, given to Michael Ewing by copy of

a letter dated April 18, 1984, (A-440) .

Accounts duly accepted and allowed by

the Probate court in Connecticut, without

any appeal, are final and binding. Carten

Mw. Carten, 153 Conn. 603, 616, 219 A.2a

711 (1966). Conn. Gen. Stat. §45-9,

Likewise, a Federal Court can grant relief

Only when similar relief would be

available in the State Courts of the

District. Probate decrees Ordering and

accepting distribution are final if

Original jurisdiction to administer the

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A-200

89-7246/7258

United States Court of Appeals

for the

Second Circuit

MICHEAL EWING,

Plaintiff-Appellant-

Cross-Appellee

-against-

CITYTRUST and ALVIN RUML and

LYNDA EWING

As Executors of the Estate of

Alexander Ewing,

Defendants-Respodents-

Cross Appellant.

ON APPEAL FROM THE UNITED STATES

DISTRICT COURT FOR THE

DISTRICT OF CONNECTICUT

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Horner & Isaacs, P.

Attorneys for Plain

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Appellant-Cross Appellee

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the remainder interests therein of

appellant (cross-appellee), arguing

variously that it was required by law

to do so, that it had been given

discretion in the instruments here at

issue to do so, and that it did so to

avoid having had to make larger and

more frequent invasions of principal

(corpus).

The primary reason for this appeal

is appellant's contention that the

Court below was clearly erroneous aS a

matter of law when it held, in Part "A"

of its ruling (A400-410), that the

instruments here at issue gave appellee

discretion to make investment decisions

which favored production of income over

preservation of the buying power of the

corpus, and that such discretion had

not been abused by appellee, except in

A-203

one instance (the subject of appellee's

cross-appeal). Both parties agree with

the Court below that the language of

the instruments here at issue is clear

and unambiguous. Appellant, however,

argued strongly in its Main Brief that

there was no language in the

instruments, which gave, or could even

be construed as giving, such discretion

to Appellee. Appellant also argued, in

its Main Brief, that even if this Court

should agree with the Court below tnat

appellee had been given such discretion

in all of instruments here at issue,

this Court should reverse the lower

Court's determination that such

discretion had not been abused by

appellee. Finally, appellant

emphasized that the Court below had

failed to explain how it inferred that

appellee

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A-206

reinvest without limitation" by holding

that such language is evidence that the

testator and/or settlor intended to

give the executor and/or trustee

authority to discriminate between

successive beneficiaries in making

investment decisions for such estates

and trusts.

Appellant also argued in its main

brief that, even if appellee had

discretion to favor the income

beneficiaries over the remaindermen, it

should be held to have abused this

discretion. Appellee chose not to

attempt rebuttal of these arguments,

and instead contended, in effect, that

its discretion was so broad that it

could not have been abused. Since

Connecticut law clearly holds that no

grant of discretion is absolute and

A-207

unconditional, if this Court sustains

Part A of the Ruling below, it will be

reversing long-standing Connecticut law

in this regard. Such a ruling would

mean that fiduciaries in Connecticut

are beyond the reach of Court review in

their conduct in handling estate and

trust assets.

II. THE FACTS

Appellee has never taken the

trouble to really familiarize itself

with the facts of the case. In

contrast, all facts cited by the

appellant are fully documented in the

record of this case. Appellee refers

to the date of death of Myra Ewing as

May 22, 1964 (which is the date of her

Will), when she actually died on

January 22, 1967 (A - 196). Likewise,

appellee refers to the date of death of

George Ewing as May 3, 1967 (the date

on which his Will was executed) when he

actually died on June 3, 1967 (A -

198).

Appellee also frequently refers to

facts which are totally irrelevant to

the instant proceeding. One example,

which might be funny if the bank's

misconduct were not so serious, is the

reference (on page 3 of Appellee's main

brief) to the language in all three

instruments authorizing the appellee to

hold and retain any securities with

which either George or Myra Ewing died

seized (or in the case of George's

Intervivos

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