137 Misc. 679 | N.Y. Sup. Ct. | 1930
This is a motion to dismiss the complaint, the disposition of which depends upon the validity of a trust established on March 15, 1921, by Samuel Wacht, since deceased. By that agreement personal property (Nedlin Realty Co., Inc., v. Bachner, 223 App. Div. 785) consisting of a subordinate interest in a bond and mortgage was placed “ in trust for the benefit of Sadie Cohen,” his daughter and the plaintiff here. His wife, the defendant Tillie Wacht, was created trustee under that agreement, which, so far as material here, provides: “ 7th. This trust is to continue for a period of ten years from date hereof and at the end of such period the party of the second part is authorized to turn over unto Sadie Cohen the amount of principal and interest accumulated and the said Sadie Cohen is to have the same absolute.' 8th. Should the said Sadie Cohen die before the expiration of said period and leave issue it is agreed that the trust created is to continue under the same terms and conditions for the benefit of such issue until the said issue reach the age of 21 years at which time the principal and interest collected are to be turned over unto them. 9th. Should the said Sadie Cohen die without leaving issue before the expiration of this trust agreement, it is agreed that the said principal and interest accumulated are to be divided among the brothers and sisters of the said Sadie Cohen, share and share alike.” By stipulation filed upon this motion it is conceded that Sadie Cohen had no issue at the time of the execution of the agreement, but that two children have subsequently been born. The complaint seeks the enforcement of the trust agreement, which, it is alleged, the defendants have repudiated, and demands judgment adjudicating the rights and obligations of the parties. The defendants rely upon the alleged invalidity of the trust, which, it is asserted, violates the rule against perpetuities applicable to personal property (Pers. Prop. Law, § 11, as amd. by Laws of 1929, chap. 229) by suspending the power of alienation beyond the prescribed statutory period
By the agreement Samuel Wacht established a trust which may be described as a trust for Sadie Cohen, the corpus of which the trustee is authorized to pay “ absolute ” to her at the expiration of a period of ten years. If Sadie Cohen dies within this period of ten years the agreement creates alternative contingent remainders, depending upon whether she dies with or without issue. If she shall die leaving issue the trust, under paragraph 8, “ is to continue under the same terms and conditions ” until such issue shall attain the age of twenty-one years. If she shall die without leaving issue the corpus of the trust, under paragraph 9, vests absolutely in her brothers and sisters. It is not expressly provided, however, what disposition shall be made of the corpus of the trust if she shall die within ten years without issue and without brothers or sisters.
There is an unlawful suspension of the power of alienation unless the estate vests in every possible contingency within the statutory period. (Matter of Mount, 185 N. Y. 162; Schettler v. Smith, 41 id. 328; Haynes v. Sherman, 117 id. 433; Central Trust Co. of N. Y. v. Egleston, 185 id. 23; Matter of Hitchcock, 222 id. 57.) It is not sufficient that it may or, even, that subsequently it does vest. (Matter of Horner, 237 N. Y. 489, 502.) Paragraph 8 requires that if Sadie Cohen dies, leaving issue, before the expiration of the ten-year period, the trust is to continue until such issue, though not “ in being ” at the time of the execution of the trust agreement, shall attain the age of twenty-one years. This attempt to create a trust measured by the lives of persons not in existence at the time of its creation is in plain violation of the rule against the suspension of the power of alienation. (Matter of Wilcox, 194 N. Y. 288; Bailey v. Buffalo L. T. & S. D. Co., 213 id. 525; Matter of Hardgrove, 223 App. Div. 646.)
It follows that the trust attempted to be created for the benefit of the issue of Sadie Cohen fails and the question is presented whether with it fails, also, the trust created for the benefit of Sadie Cohen. It is contended that it is not possible here to preserve the trust for Sadie Cohen by means of the rule, frequently applied, whereby an invalid contingent remainder is severed from a valid antecedent estate. (Matter of Horner, supra; Matter of Trevor, 239 N. Y. 6; Davis v. McMahon, 161 App. Div. 458; Matter of Chittick, 243 N. Y. 304; Tiers v. Tiers, 98 id. 568.) Excision of the trust
Whether the trust for the issue of Sadie Cohen may be severed and the trust for Sadie Cohen sustained depends upon whether the trust for Sadie Cohen is valid. If, as is claimed, that trust is also invalid, no process of excision will avail. The validity of the trust for Sadie Cohen, in turn, depends upon whether it continues for the full term of ten years if Sadie Cohen dies within that period without issue and without brothers or sisters (Brown v. Quintard, supra; Hagemeyer v. Saulpaugh, supra; McGuire v. McGuire, supra; Matter of Hitchcock, supra); or whether the stipulated period of ten years operates as a limitation on the duration of the trust, within the life of Sadie Cohen. If it operates only as a limitation, then the trust, though subject to earlier termination, ends upon the death of Sadie Cohen and does not contravene the statute. (Sawyer v. Cubby, 146 N. Y. 192; Provost v. Provost, 70 id. 141.)
I am of the opinion that the trust for Sadie Cohen is valid and that, by severing the invalid provisions of paragraph 8, it may be sustained. That trust contains no affirmative provision that it shall survive her if she dies within ten years. True, it contains the provision that “ this trust is to continue for a period of ten years,” but this provision occurs in close relation to the other provision authorizing the trustee “ to turn over unto Sadie Cohen ” the principal and accumulated income “ at the end of such period,” indicating that in paragraph 7 the founder of the trust contemplated only the contingency that Sadie Cohen would be alive at the end of ten years. Paragraph 7 does not concern itself with the disposition of the corpus of the trust if Sadie Cohen dies within ten years and what is there provided concerning the duration of the trust must be taken as qualified by this consideration. The devolution of the fund if she should die within ten years was to be dealt with in the two succeeding paragraphs of the agreement. A somewhat similar condition existed. in Provost v. Provost (supra). The
There is here, as I have said, no implacable provision requiring the trust to continue for ten years if Sadie Cohen shall have died within that time and there are opposing indications of intention which, in my opinion, are too strong to be resisted. In ascertaining that intention the general scheme of disposition is more significant than forms or phrases. (Matter of Gallien, 247 N. Y. 195; Matter of Drury, 249 id. 154.) The purpose of the creator of the trust was obvious. If his daughter lived for ten years she should receive the fund, augmented by the accumulated income; if she died within that period the fund would be held for the benefit of her children. If she died childless it would be divided among his other children. If, of all these, none should five and take, the fund by operation of law would eventually revert to him. It could hardly have occurred to him that if his daughter died childless and without brothers or sisters the estate of the trustee would continue during the unexpired fragment of a ten-year term to operate as an impediment to his own possession of the fund. The agreement contains no suggestion of such a purpose, nor does it designate any other person as the beneficiary in this contingency. There is here an indication of a convincing and substantial kind, revealing the intention of the founder of the trust. Whenever he intended the trust to continue he has said for whom it should be held and when and how the fund should be distributed. It is a reasonable assumption that when its purpose was accomplished and when he named no person as the beneficiary of the trust, he intended it to cease. That purpose was a trust “ for the benefit of Sadie Cohen ”— not a trust for his own benefit. An intention to create a trust
I conclude, therefore, that upon the death of Sadie Cohen within ten years without issue and without brothers or sisters the trust created by paragraph 7 ends and the fund reverts to Samuel Wacht or his estate. That conclusion is also decisive of the question which arises in consequence of the invalidity of paragraph 8. Deleting that paragraph from the agreement will result in a condition where there is no trust for the issue of Sadie Cohen even if she dies with issue within ten years. To that situation the same principles previously considered will apply. Her issue would not take on account of the invalidity of paragraph 8; her brothers and sisters
Order signed.