## Facts

- Joseph Pulitzer died owning controlling interests in two newspaper corporations: Pulitzer Publishing Company and Press Publishing Company.
- His will and codicils directed that the corporate shares be placed in trust for his three sons, who were both trustees and life income beneficiaries; principal was to pass to their male descendants.
- The testamentary plan expressed a preference that Press Publishing Company be continued, and it restricted trustee discretion to sell that company’s stock more than it restricted sale of Pulitzer Publishing Company stock.
- After probate, the newspaper businesses suffered serious financial distress following the 1929 market collapse and sustained operating losses.
- The trustees received purchase offers for Press Publishing Company and sought court guidance on whether they had authority to sell and whether acceptance would be consistent with their fiduciary duties.

## Issues

1. Whether the will and codicils authorized the trustees to sell Press Publishing Company stock notwithstanding language favoring continuation of that enterprise.
2. If a sale was authorized, what fiduciary standards governed the trustees’ decision and what role the Surrogate’s Court should play in approving the transaction.

## Decision

- The Surrogate’s Court held that the trustees possessed authority, properly construed, to sell the corporate stock, including Press Publishing Company stock, when necessary or appropriate to protect the trust and its beneficiaries.
- The court treated the testator’s continuation preference as a guiding objective rather than an absolute bar to sale in materially changed economic conditions.
- The court indicated it would not replace informed, good-faith trustee judgment with its own where trustees acted within granted powers, investigated reasonably, and proceeded loyally and prudently.
- The court approved the trustees’ ability to proceed with a sale subject to court review of the specific terms presented.

## Legal Principles

- Testamentary directions concerning retention or continuation of a closely held business are construed in the context of the entire plan and do not compel continued operation that would foreseeably impair the trust’s financial purposes.
- Trustees controlling stock in an operating business may sell or restructure those holdings when consistent with the instrument’s powers and required by prudent administration.
- Courts generally defer to trustees’ informed, good-faith business judgment when trustees act within authority, avoid conflicts, and make a reasonable investigation; judicial review focuses on power, loyalty, and prudence rather than the court’s preferred business outcome.

## Conclusion

The court construed Pulitzer’s testamentary scheme to permit trustees to sell stock in his newspaper enterprise despite language favoring continuation, because fiduciary duties to preserve the trust for income and remainder beneficiaries allowed departure from continuation preferences when continued operation threatened substantial loss.


In re Pulitzer’s Estate, 139 Misc. 575, 249 N.Y.S. 87 (Sur. Ct. N.Y. Cnty. 1931)