Stuart v. Wilmington Trust Co.

Elbridge A. Stuart was a founder of the Carnation Company. In 1934 Elbridge A. Stuart transferred the majority of shares for E. A. Stuart Company, Carnation’s holding company, into a revocable trust with the Wilmington Trust Company (Wilmington) (plaintiff). Part of the trust estate was eventually transferred to three trusts in the name of Elbridge A. Stuart’s three grandsons. After Elbridge A. Stuart’s death, a two-member board of advisors was established for each grandson’s trust. Elbridge A. Stuart’s son was the first trust advisor, and after his death, the first advisor would be the grandson for whom the trust was named. The second advisor was a non-family member. The trust provided that trust income was payable to the beneficiary, and if the trust income was insufficient to provide properly for the beneficiary’s support, maintenance, benefit, and education, then the trustee, with the approval of the trustee advisors, could invade the trust’s principal. The trust agreements were also intended to preserve the Stuart family’s influence on Carnation. Only the family members could vote the stock, and the trustees were required to exhaust efforts to borrow money before selling stock to make distributions. In the 1980s, Dwight Lyman Stuart (defendant), one of Elbridge A. Stuart’s grandsons, sought to invade the trust principal to buy a private jet for his benefit. Dwight argued that because after a beneficiary’s education was complete, a beneficiary could never seek a payment for support, maintenance, benefit, and education, it followed that the word “and” must be read as “or.” The other trust advisor, Jane S. Whitman (plaintiff), did not consent. Whitman and Wilmington filed a petition for instructions. The chancellor held that the trust did not permit an invasion of principal if the invasion was not necessary to provide for the beneficiary’s support, maintenance, benefit, and education.