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Harlan v. Citizens Nat. Bank of Danville

June 20, 1952

HARLAN
v.
CITIZENS NAT. BANK OF DANVILLE ET AL.



Sims

SIMS, Justice. This declaratory action was brought by the Citizens National Bank of Danville, as trustee of George L. Harlan, deceased, against his surviving brother and sister, Jay W. Harlan and Mrs. Sue Robinson, to determine whether a power of appointment the will of their mother, Mrs. Annie S. Harlan, gave George was exclusive or nonexclusive. The chancellor in an exhaustive and well-reasoned opinion held the power to be nonexclusive, which we think was an erroneous conclusion as we will attempt to show.

For the sake of brevity and to avoid confusion, since all persons involved in this litigation, except Mrs. Robinson, have the same surname, we will refer to Mrs. Annie S. Harlan as Annie; to Mrs. Sue Robinson as Sue; to Messrs. Jay W. Harlan and George L. Harlan as Jay and George.

Annie died in February 1939, after executing her will on March 1, 1938. She was survived by three children, Jay, George and Sue. George never married but Jay and Sue married and each have two children. After making certain specific bequests to each of her three children, to her grandchildren and to the wife of Jay, testatrix in the third article of her will devised the residue of her estate to George in trust for life and then provided:

'At the death of said George L. Harlan, said share and his entire interest in my estate, in whatever manner acquired, shall pass to and vest in equal shares in his descendants, per stirpes, and his widow if any, said widow to share and be regarded as one of his children, provided, however, that said George L. Harlan may devise his interest to his widow, his descendants or my descendants.

'In the event George L. Harlan leaves no descendants nor widow nor makes no testamentary disposition of his said interest as above provided, then one-half thereof shall pass to and vest in Jay W. Harlan or his descendants, per stirpes, and his widow, if any, said widow to be regarded and share as one of his children, and the other one-half thereof shall pass to and vest in my daughter Sue Lee Robinson, but if Sue Lee Robinson does not survive George L. Harlan, the said other one-half shall pass to and vest in Jay W. Harlan or his descendants per stirpes, and his widow, if any, said widow to share as one of the children of said Jay W. Harlan.'

George died in 1951, and in the third paragraph of his will he devised all of his property to Jay 'absolutely and in fee simple'.

It is insisted by Sue that the power of appointment given George in their mother's will was nonexclusive, therefore when he excluded her, his will was void and she inherited from him the same as if he had died intestate. Jay contends that the power was exclusive and he took George's entire estate under his will.

We think it may help to set out the distinction between an exclusive and nonexclusive power. 41 Am.Jur., Powers, § 63, page 852, says:

'Powers of appointment are necessarily either exclusive or nonexclusive, according to the reasonable import of the language creating them. A power is 'exclusive' when there is granted the right to exclude from the distribution any of the designated objects of the power; 'nonexclusive' when no such right of selection or exclusion is conferred. In the case of 'nonexclusive' powers, the exclusion of any member of the designated class in making the appointments invalidates the attempted exercise of the power. But if the donor expressly provides that there may be exclusions, there is no objection to the execution of a power in favor of less than all of the class. There can be no doubt that where a donee is given a power to appoint to all or any one or more of a class, he may appoint to one or more to the exclusion of the others.'

Dealing with the same subject 'exclusive and nonexclusive power,' 69 C.J. § 1949, p. 842 states the rule:

'A power to appoint, divide, or distribute property 'to' or 'among' designated persons, or a specified class, is nonexclusive; * * * the donee's authority extending only to determining what portion each shall receive. Where, however, the power to appoint or distribute the property among 'any of' designated persons, or members of a designated class, or 'such of' them as the donee may wish or direct, * * * it is an exclusive one, and may be exercised by appointing to such one or more of the designated persons, or the members of the designated class, as the donee may choose, to the exclusion of another or others, * * * except where a contrary intention appears in the will.'

The more modern rule, and we think the better one, appears in the Restatement, 'Property and Future Interest,' § 360, p. 1985, in these words:

'The donee of a special power may, by an otherwise effective appointment, exclude one or more objects of the power from distribution of the property covered thereby, unless the donor manifests a contrary intent.

'The nature and scope of the discretion given to the donee depends upon the intent of the donor. When the donor creates a power of appointment it is inferable that he intends the donee to be unrestricted in its exercise except as restrictions are affirmatively imposed. Unless the contrary is indicated, it is to be inferred that the donee is intended to have as broad a power of selection among the objects, including the power to exclude one or more, as the ...


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