23 Misc. 272 | N.Y. Sup. Ct. | 1898
This action is brought to construe the will of ¡Nathan Clark, deceased, in reference to the trusts created by the' second and third clauses thereof.
Said clauses are as follows, to-wit:
“ Second. I give and bequeath to my grandson. ■ Harrison Clark, the sum of twenty thousand dollars ($20,000) to be held in trust for him by my-son Nathan Clark, Percy B. Heilner and Gilbert Holmes Crawford, until he shall have arrived at the age of' thirty years,- when said trustees or their successors shall pay over to him the principal of this bequest, together with such additions thereto as may then be remaining in their hands. I direct that said trustees shall, as soon, as practicable after my death, invest said sum of twenty thousand dollars ($20,000) in first mortgage notes, secured on real estate in the city of Chicago, Illinois, and that the income from such investment shall be paid semi-annually to- his guardian, until he shall have attained his majority, and then semi-annually to him, until he shall have attained the age of thirty years as aforesaid.
“ Third. I hereby give, devise and bequeath one-half of the remainder of my estate, of every kind and nature whatsoever and wheresoever situated, to my son Nathan, to be his absolutely, and the other half of said remainder, I give, dévise and bequeath to my son, Nathan Clark,^Percy B. Heilner and Gilbert Holmes Crawford in trust for the following purposes:
“ 1st. To invest said trust fund in. first mortgage notes, or other first-class securities, which will bear as high a rate of. interest ns said trustees shall, deem consistent with the safety of the investment.
“ 2d. To pay semi-annually so much of the income derived from such investment as they may think necessary for the comfortable support of my son Harrison, they keeping in view the necessities of his wife and children and the remainder of such income, semiannually to Josephine, wife-of my said son Harrison, for the use of herself and children. .
“ In thus providing for the support of my said son. .Harrison, and his wife and children, I intend to and do give to my said trustees, large discretion as to how they shall divide such incomé, desiring that they should act with (reference thereto, as they think I would act if living.
“In the évent of the death of my grandson, Harrison, before he shall have attained the age of thirty years, I direct that the bequest
“ In the event of the death of niy said son Harrison, prior .to the death of his said wife, Josephine, I direct that the portion of said income which would otherwise, under the provisions of this yvill, be paid to him, shall be paid to bis said wife, Josephine, for the use !of herself and children, and in the event of her death, that the por•tion of said income which would otherwise be paid to her for the use of herself and children, shall be paid to the guardian of such children, if they are minors. In the event, however, that at the time of the death of said Josephine, all of the children of my said son Harrison and his said wife, Josephine, shall have attained their majority, then the portion of said income which would have been paid to their mother, if living, for her and their úse, shall be paid in equal parts to such of said children as may then be surviving.
“In the event of the death of my said son Harrison and his said wife, Josephine, leaving children surviving them, I direct that the trust fund herein provided for them and their children shall be held by my said trustees or their successors, until the yopngest of such surviving children shall have attained the age of thirty year's, when each one shall receive an equal portion of the fund so. held in trust for them by my said trustees.”
The testator, Hathan Clark, died May. 1, 1895. At the time of his death he was a resident of the state of Hew York, and a widower and left him siu-viving, Iris son Hathan Clark, a plaintiff herein, and his son Harrison Clark, a defendant herein, ¡his only heirs-at-law and next of kin, both of whom are now living. ■
The defendant, Josephine Clark, is the wife of the testator’s son Harrison, and the defendants, Harrison Clark, Jr., Ethel Mary Clark, Violet Amelia Clark and Gladys Clark are all the children of said Harrison and Josephine, who survived the testator and are all still living and under age.
The questions arising upon the paragraphs above set forth and' ' as to which the judgment of the court has been invoked by the complaint in this action, are as follows:
First. Whether the trust created by said testator in the second paragraph of said will for his grandson, Harrison (said grandson
Second. Whether the-trust created as to one-half of the residue of testator’s estate in the third paragraph of said will is valid and enfor-’ ciblé in whole or in part; whether the said trust if not valid in its en.tirety is valid during the lives of the defendants Harrison Clark and Josephine Clark; whether upon the death of the survivor of the said defendants Harrison and Josephine Clark the said fund held in trust during. their lives will vest in absolute ownership immediately, share and share alike, in their then. surviving children, with postponement of payment of the shares until the youngest of such surviving children shall reach the age of thirty years, the income of the shares to be paid meanwhile 'in equal parts to, such surviving children respectively, or whether the said fund so held in trust vested on the testator’s, death in his next ¡of kin subject only to payment of the income thereof to the defendants Harrison Clark and Josephine Clark during their lives as directed in his said will, ' the said fund to be distributed to such next of kin of testator upon the death of the survivor of said life beneficiaries, and whether in the event last above supposed the said defendant Harrison Clark has the right to assign or dispose of by will any interest in remainder in said trust firnd.
Third. Whether, if the said trust created by the third paragraph of said will in one-half the residue of said estate be declared valid in whole or in part, the trustees appointed .therein are’authorized by the terms thereof to invest said fund in securities which in their opinion are “ first-class,” wdthout regard to the usual rule governing investments by trustees, and whether said trustees are authorized or obliged to invest the trust fund for Harrison Clark, Jr., as' directed in said will.
Fourth. Whether the said trustees are charged with any, and if any, with what responsibility respecting the disposition of the ■ income to be paid to the defendant Josephine Clark, for the use of
The intention of the testator as revealed by the general scheme of the will was to set apart the sum of $20,000 to the use of ibis grandson, the defendant Harrison Clark, Jr., and to create a trust for that purpose, and, after having done this, to divide the remainder of his estate into two equal parts, one of which was to- go immediately and absolutely to his son Uathan Clark, while the other was set apart in trust for the 'benefit of his son Harrison and said son’s family.
Both trusts, viz.: the trust for the benefit of the grandson ana the trust for the benefit of the son Harrison and his family, have reference to personal property, and both are, when each is considered in its entirety and full effect is given to each, in contravention of the statute forbidding the suspension of the absolute ownership for more than two lives in being. The reasons are as follows:
' As to the residuary estate: One-half of the residuary estate is to.be held in trust for the joint lives of Harrison and Josephine Clark, and upon the death of the survivor of these two- the trust is to continue until the youngest of their children, who- may survive them, shall have attained the age of thirty years, when each of said surviving children is to receive an equal portion -of the principal of the trust fund. Thus it appears that the fund in question may remain in the hands of the trustees for two lives and for an uncertain period after the expiration o-f these two lives.
As to the trust fund of $20,000 —for the benefit of the grandson, Harrison Clark, Jr::
This fund is to be held in trust for the benefit of said grandson until he shall reach the age of thirty years, when the principal is to be paid to him, he to receive the income meanwhile. But if he die before reaching the age of thirty years, then the principal is to be added to the other trust fund created for the benefit of the testator’s son Harrison and his family and is thereafter to be treated as a part of the latter.
Thus the absolute ownership of the $20,000 fund may possibly be suspended for the life ’of the {testator’s grandson, and also- for the lives of the testator’s son Harrison, and the wife of the latter.
How if either or both 'of these trusts were declared wholly invalid and the rest of the will be permitted to stand, results would
If the trust of $20,000, for the benefit :of his grandson, be declared. void, the latter would lose all benefit thereunder, and yet the clear intent, of the testator was to make a special provision for him over and above his ordinary share. .
So upon a careful reading of the entire will the clear intention of the testator was, after the creation of the trust fund of $20,000, for the benefit of his grandson.to divide the remainder of his estate into two equal portions,' one of such portions to be given to his son ¡Nathan absolutely, and the other portion to be held in trust for the benefit of his son Harrison and his family.
. There is no intention which can be read into the will that ¡Nathan should have more than óne-half of said remainder, yet, if the trust for the benefit of the son Harrison and his family shall be declared void and the rest of the will declared valid, Nathán would be entitled to one-half of the remainder absolutely and one-half of-the fund in trust, or three-fourths of the whole remainder, which was clearly not the intention of - the testator.
- Again, if the trust last referred to shall be considered good during the lives of Harrison and Josephine Clark,' and invalid thereafter, then the whole trust fund after the death of Harrison and Josephine will go to the heirs of the testator, one-half thereof to the testator’s son ¡Nathan absolutely and the other share to the surviving children of Harrison, which will give ¡Nathan three-fourths of the en-' tire remainder of. the estate, which was cléarly not the intention of the testator.
In every aspect, of the case it would be clearly against the wishes of the testator as declared in his will as well as manifestly unjust to Harrison and his family,' to give three-fourths of the estate to -Nathan,, and hence it seems, that if the trust.for the benefit’ of Harrison and 'his family must be declared void, the- whole testamentary disposition attempted in the third paragraph of the will should be declared void.
-But this would also lead to a result against which the testator wished to guard.
For some reason the testator desired not. to give the control of that portion of his estate placed in trust for his son Harrison and family, directly to Harrison, and yet if the said trust fails and the court decides the whole third paragraph void by reason /of the void
It, therefore, remains to be seen whether a liberal construction cannot be adopted which will validate and carry into effect at least the main part of the testamentary scheme of the testator and yet not be in violation of the law of this state. If this can be done, it should be done, especially as the 'rule -is well settled that partial intestacy should be prevented where by a liberal and yet feasible construction it is possible to avoid it.
A search for some case which has exactly the same state of facts as the one before the court has resulted in finding no¡ case which fully covers the question here presented. The Court of Appeals says: “ Each case must rest upon its own peculiar-facts.” Greene v. Greene, 125 N. Y. 512. There are numerous cases, however, which hold that where a trust is in part good -and in part bad, the good may be retained and the bad stricken out as long as the intention of the testator and the general scheme of the trust can be carried out.
In the case of Harrison v. Harrison, 36 N. Y. 543, the Court of Appeals says: “ It is a fundamental principle of construction in regard to all instruments and contracts that the instruments should rather be made available than suffered to fail. Effect should be given to the whole instrument, and to every part of it, if it can be done without violating the rules of law.”
“ The principle is now well settled that the courts lean in favor of the preservation of all such valid parts of ¡a will as can be separated from those that are invalid, without defeating the'general intent of the testator.
“ It is no objection to the application of this rule to the case at bar, that the limitations, as well those which are good as the one alleged to be bad, are embraced in a single trust. A single trust created for two piu’poses, lone lawful and the other unlawful, is good for the lawful purpose, although void for the unlawful one.” Page 548.
To the same effect aré Van Schuyver v. Mulford, 59 N. Y. 432; Manice v. Manice, 43 id. 303; Brown v. Richter, 76 Hun, 472; Kennedy v. Hoy, 105 N. Y. 134; Henderson v. Henderson, 113 id. 15.
In the recent pase of Greene v. Greene, 125 N. Y. 506, the following significant language was used by the Court of Appeals at p. 512:
“ The present case illustrates the peculiar character of cases involving a construction of wills. Each case must be determined upon its own particular facts and features, and former precedents are rarely availing in the office of construction. The supreme importance of giving effect to the last will of the decedent requires the court to search out his intention and to validate his scheme, unless to do so would contravene the statute. The endeavor is •to find a way of upholding the will, not of breaking it down, and thus in every case the inherent purpose, Sf lawful, should be effectuated through what legal channels of construction may be open. We should not make a new will for the testator, and we need not strain to support his testamentary plan, if the object is unworthy, or commands our just condemnation.”
The question then arises in the case at bar whether the general' principles enunciated in the foregoing cases can be applied so as to cut off the ulterior limitation over, contained in the trust created by the third paragraph of the will.
If this ulterior limitation over be cut off, then and in that event, the evident intention of the testator can be carried out so far as the main part of the trust is concerned..
Erom the oral argument it seems that all of the parties interested, desire that the trust may be declared valid.
But such ulterior limitation over cannot well be cut off unless it then can be held that, notwithstanding the devise, of the said trust , estate in form to trustees for the pruposes of the trust, the estate so created by the testator vested upon his death in the four children, then living, of Harrison and Josephine Clark, subject to' the life interests of their parents,, and subject to be deféated as to any such child by death without issue during the running of the life estates.
The question whether in that case there is such a vested remainder, within the limits stated, involves a careful examination of the state of the law under the statute against perpetuities, existing at the time of the death of the testator.
The trust under consideration relates to personal property. As to such property the.statute at that time provided and still pro
At one time it was thought that suspension of the absolute ownership of personal property could be effected only by the creation of a future contingency, and not by the creation of any personal property trust. But it is now decided that it may also be occasioned by certain trusts, even though all interests are absolutely vested. Haynes v. Sherman, 117 N. Y. 433; Brewer v. Brewer, 11 Hun, 147.
But in each case the only question to be determined is whether the absolute ownership is suspended beyond the statutory period.
The statutory period consists of “ two lives in being.” The suspension, therefore, must be bounded strictly by two lives in being, and the crucial test is whether the limitations are such that the property must, within two lives in being, if ever, become absolutely vested in beneficial owners.
As a general rule, where there is no gift, but by a direction to executors or trustees to divide or pay at a future time, the vesting in the legatee will not take place until'that time arrives. In such a case the gift is future and not immediate; it is contingent and not vested. Shipman v. Rollins, 98 N. Y. 311 (327); Smith v. Edwards, 88 id. 92; Greenland v. Waddell, 116 id. 234 244); Delafield v. Shipman, 103 id. 463.
This is sometimes expressed by saying that if (futurity is annexed to the substance of the gift, vesting is suspended. Everitt v. Everitt, 29 N. Y. 39 (75).
But where the gift is absolute and the time of payment only postponed, here time, not being of the substance of the gift, but relating to the payment, does not suspend the gift, but merely defers the payment. Goebel v. Wolf, 113 N. Y. 405 (412); Savage v. Burnham, 17 id. 561 (575).
And it was thereupon held that such a provision does not occa* sion suspension.
Indeed it seems to be- fully settled now that the presence, in the instrument, of restrictions on mere possession does not occasion a suspension of the absolute ownership of personal property. Whether, in any given case, the restriction is void and, therefore, harmless; or is valid as a power in trust in the executors consistent with absolute vesting and with full right in the legatee to: sell, assign, release or bequeath; in either event, .the net result, so- far as the subject of suspension is concerned, is the same, for in either event the provision for postponement of possession does not involve suspension.of the absolute ownership. Vanderpoel v. Loew, 112 N. Y. 167 (186); Oxley v. Lane, 35 id. 340 (344-345); Beekman v. Bonsor, 23 id. 298 (317); Everitt v. Everitt, 29 id. 39; Manice v. Manice, 43 id. 303.
'The authorities in this state favor the theory of immediate vesting both as to "real and personal property, although the statutes relating to the kinds of property differ. The statute relating to real estate forbids the suspension of'the absolute power-of alienation for more than two lives, while the statute relating to personal property forbids the suspension of the absolute ownership for more than two lives. But the statutory period is the same in both cases. It consists of two lives in being. As to both kinds of property the authorities in this state favor the theory of immediate vesting, and the courts are always willing to shape their decisions in doubtful cases with reference to these authorities. Indeed it may be said that even "where there are no words implying an ínuñediate gift, and the title is nominally conveyed to trustees for the purposes, of the trust, if the courts, from the will as a whole, can spell out a tenancy in common, they will do so for the -purpose of declaring a direct vesting and avoiding a forfeiture.
In this connection and especially as the statute relating to personal property, after forbidding the suspension of the absolute ownership by any limitation or condition for more than two lives, also provides that in all other respects limitations of future or contingent interests in personal property shall be subject to the rules prescribed in relation to future estates in real property, it may be ■well to refer to, the Revisers’ ’Rote on ü. R. S., )§ 14 «fCart.i I of title II, relating to the.creation and division of estates in real property and the alienation thereof. They said with reference to the future estates therein mentioned: ■
“ To prevent a possible difficulty in the mind of those to whom the subject is not familiar, we may also add that an estate is, never inalienable unless there is a contingent remainder and the contingency has not yet occurred. This is the meaning of the irule of law prohibiting perpetuities and is the effect of the definition in section 14.”
This was the intention .and the opinion of the revisers, and the Court of Appeals has in the main adopted the same rule of interpretation. See Radley v. Kuhn, 97 N. Y., at p. 35.
It thus appears that, under the authorities referred to, the ulterior limitation over, contained in the trust created by the third paragraph of the will, may be cut off and then the remaining part of the trust sustained on the theory of an immediate vesting.
I have, therefore, come to the conclusion, after a careful examination of the will as a whole and the circumstances surrounding its execution, that the said ulterior limitation over should be cut off and that it should be held that the estate created by the testator by the third paragraph of his will vested upon his death in the four children then living of Harrison and Josephine Clark, subject to the life interests, of their parents, and subject to be defeated as to any such child by death without issue during the rimning of the life estates.
“ In the event of the death of my grandson, Harrison, before he shall have attained the age of thirty years, I direct that the be-* quest hereinbefore made, to him shall be added to the trust fund provided for my son Harrison and his said wife and family, to become a part thereof and to" be managed by them, my said trustees, in the same manner as they are directed to manage the specific bequest herein made to them for the use of my said son and his said wife and family.”
This limitation is for three lives in being, to.-wit, Harrison Clark, Jr., Josephine-Clark and Harrison Clark, and is void.
Under the authorities, this limitation can be cut off and the provision for the grandson becomes a direct gift, with postponement of actual delivery to him until he shall attain the age of thirty years. • ,
The testator uses strong words of gift in presentí. He says:
“ I give and bequeath to my grandson, Harrison Clark, the sum of $20,000.”
These Words should.be considered as establishing a direct legacy which, in itself, is absolute and which is followed by an invalid condition subsequent, divesting the legacy. The rule is that a di-rect gift, in words which standing alone would vest a-good title, when followed by an unlawful condition subsequent, is valid, notwithstanding the declared illegality of the condition. It is only where the unlawful condition is a condition precedent, that the subsequent estate does not take effect. See Oxley v. Lane, 35 N. Y. 340; Lovett v. Gillender, id. 617.
The trust created for the benefit of the said grandson should, therefore, be construed in conformity with the views expressed by me. The consequence is that, if he attains the age- of thirty years,then the fund is to be delivered to him under the terms- of the will. If, however, Harrison Clark, Jr., should die before attaining that age, the principal sum will go to his heirs: -
In' the second paragraph of the will the trustees are directed to invest the $20,000 trust fund in first mortgage notes secured on real estate in the city of Chicago, state of Hlinois. The trustees
The trustees also ask the instructions of the court as to their powers under the third paragraph of the will .which provides that they shall invest the trust fund therein referred to in first mortgage notes, or other first-class securities which will bear as high rate of interest as said trustees shall deem consistent with the safety of the investment. In exercising their powers in that respect, the trustees are bound to see to it.
1. That the securities are first-class, and
2. That they are safe.
After that has been done, the further duty arises to make due discrimination between the securities falling within the description with the view of selecting such as bear the highest rate of interest. And the selection should be made with reference to the law of this state as to the class of securities ’in which trustees .are justified to invest. Prior to 1889 the leading case upon that point was King v. Talbot, 40 N. Y. 76. In 1889, it was provided by chapter 65 of the laws of said year that it shall be lawful for executors, administrators, guardians and trustees and others holding trust funds for investment, to invest the funds so held by them in trust, in bonds or stocks of any of the cities of this state, issued pursuant to the authority of any law of this state.
By the third paragraph of the will, the trustees are directed to pay to Josephine, the wife of the testator’s son Harrison Clark, a portion of the income of the trust fund to be determined by them for the use of herself and children. After such determination and the payment thereunder of the amount to. Mrs. Josephine Clark, their responsibility ceases and they are not charged with the duty of supervising her expenditure of the same.
“ To pay semi-annually so touch of the income-derived from such investment as they may think necessary for the comfortable support of my son Harrison, they keeping in view the necessities of Ms wife and children, and the remainder of such income, semiannually to Josephine, wife of iny said son Harrison, for the use of herself and children. In thus providing for the support of my said son Harrison and his wife and children, I intend to and do give to my said trustees, large discretion, as to how they shall divide such income, "desiring that they should act with reference thereto, as they think I would.act, if'living.” '
There can he no doubt that however large the discretion of trustees may be in the exercise and execution of their .trusts, the court never loses its power to review the use of tMs discretion, and if need be, to correct any abuse in its exercise, Ireland v. Ireland, 84 N. Y. 321, at p. 325; Holden v. Strong, 116 id. 471, at p. 474; Perry on Trusts, § 511; Collister v. Fassit, 7 App. Div. 20; Bound v. T. C. R. R. Co., 50 Fed. Repr. 854; Banning v. Gunn, 4 Dem. 337, at p. 339; Mason v. Mason, 4 Sandf. Ch. 623; Bryanv. Knickerbacker, 1 Barb. Ch. 409; Forman"v. Whitney, 2 Keyes, 165; Wormley v. Wormley, 8 Wheat. (U. S.) 421, at p. 442; Hancox v. Wall, 28 Hun, 214.
In Ireland v. Ireland, 84 N. Y. 321, Earl J., says on page 326, et seq.:
“ A court, of equity, by virtue ¡of its general ¡jurisdiction -over trusts and trustees, can, upon a proper state of facts, direct how their discretion-shall be exercised ; in other words, how the trust fund shall be administered.” In this case the court directed the division of the income among the beneficiaries in equal proportions.
In Holden v. Strong, 116 N. Y. 471, the action was brought to procure a judicial construction of the will of Heman' Holden, deceased, the father of the-plaintiff, and'to procure a decree giving directions to Charles D. Strong, the executor arid trustee, as to the amount he should pay over annually to the plaintiffs.” The trial
The similarity of this case to the one under consideration is marked' — they are both brought for the ¡construction,of a will — and the court, in both, is asked to give its direction to the trustees as to how they shall exercise the discretion vested in them by the respective testators, and while on a technicality, in the case of Holden v. Strong, the court did not decide this latter matter, Haight, J., says on page 474, bottom of page and page 475:
“We wish to (state for the future 'guidance and conduct of the trustee, that we are not entirely satisfied with the manner in which he has discharged the duties of his trust. * * * We fully agree with the trial court in its construction of the will, that the plaintiff is entitled to his support and maintenance according to- his condition in life.
“ As long as the plaintiff remains rational, prudent, industrious and saving, there can be no abuse of discretion in allowing him fo take the annual or semi-annual appropriations to 'expend for his own comfort and maintenance in his own way and in the gratification of his own choice.”
In Bryan v. Knickerbacker, 1 Barb. Ch. 409, Ruggles, V. C., says on pages 411, 412:
“ The exercise of a discretion by a trustee is subject to the regulation and control of the court, so far at least ‘as to prevent its abuse. The discretion must be reasonable.” ■
In Forman v. Whitney, 2 Keyes, 165, the Will contained the following provision: “ I give !and bequeath to my wife during her natural life, the interest of $3,000, or so much of said interest as my executors may deem necessary for her comfort.”
The court held that the discretion vested in the executors was not absolute, but must be exercised reasonably; and Davis, J., says on page 168:
• “ The comfort for which the testator provided- was not bounded by a mere quantum sufficit to eat, to drink and to Wear. * * * The word embraces whatever is requisite to give security from want,
Relying upon these authorities, the defendant Harrison Clark asks the court to direct the trustees to pay to him one-quarter of the net income of the trust fund established for the benefit of himself and his family. Hone of the parties objects to it and the briefs submitted by counsel for Josephine Clark states that so far as she has the right to do so on her individual behalf, she makes no objection to such an order, but that she is advised that she has no. authority to give a consent which shall in any way affect the rights of her minor children;
The testator speaks of the “comfortable support” of his son and of the “necessities” of his wife and children, a distinction which fairly belongs to a proper consideration of the matter which the testator has put in the charge of t-he trustees. So while it is true that the will of the testator is to be construed in the light of the circumstances surrounding the estate and the. beneficiaries at the time it was made, it is equally true that the application and distribution of the income should be made in view of the circumstances as they now exist.
It appears that the trust fund under consideration amounts to over $100,000, and that its net income will be about $5,000. One-quarter of. this income would not be an excessive, allowance for the “comfortable support” of Harrison Clark, and, under the circumstances so far as they have been disclosed, would even have to'be considered as a fair and reasonable allowance. Consequently, if the trustees should see fit to pay to him one-quarter of the said income and the remaining three-quarters to his wife for the benefit of herself and children, the court would have no objection to it. nevertheless I am unwilling to make .an absolute, order to that effect. There evidently were family reasons which do not as yet fully appear, which induced the testator to make the provision in. the form he made it and to give to the trustees large discretion as to the division of said income and to express to them his desire to act in the matter as they might think he would act, if living. I shall, therefore, content myself with the foregoing simple expression of my views and leave the trustees free to act thereunder according to their own conscience. The decree to be entered in this case should reserve, however, to Harrison Clark the right to
Let a decree be presented for settlement in accordance with this opinion.
Ordered accordingly.