178 A.D. 764 | N.Y. App. Div. | 1917
Henry Dexter died on July 11, 1910, leaving a last will and testament executed October 6, 1906, and eight codicils thereto, all of which were duly admitted to probate by the Surrogate’s Court of New York county. He left him surviving as sole heir at law his daughter, Clarissa Treadwell Dexter, who has been continually of unsound mind for many years and who was confined in Bloomingdale Asylum as early as 1883, remaining there until 1894, since which time for the greater part of the period she has been residing and cared for in her father’s home, and since his death in the family home. Her disease is incurable, although she has never been judicially declared incompetent nor has any committee of her person or property been appointed. Decedent’s estate at the time of his death was valued at $1,400,797.90. By his will a trust was created under the 4th paragraph thereof, which is the source of the controversy between the parties hereto and which reads as follows:
“ Fourth. I give, devise and bequeath all the rest, residue and remainder of my property and estate, real, personal and mixed, wheresoever and whatsoever, which I may own, or be in any wise entitled to at the time of my decease; unto my executors hereinafter named, or such of them as shall take upon themselves the execution of this my Will, and the survivors and survivor of them, in trust, for the following uses and purposes:
“1. To pay and discharge all transfer or succession taxes upon all the bequests and devises contained in this my Will, so that no legacy or devise specifically given therein may suffer diminution by reason of such taxes; but such taxes shall be paid out of the residue of my estate.
“ 2. To apply the interest or income of the said rest, residue and remainder of my property and estate (after payment of such taxes), or so much thereof as may be necessary in their best judgment and discretion, but not less than Five*767 thousand dollars per annum, to the care, support, maintenance, benefit and use of my daughter Clarissa Treadwell Dexter, for and during her natural life, such care, support, maintenance, benefit and use to include all proper attendance, such as she is now receiving, and also such additional care, support, maintenance, benefit and use as shall thereafter become necessary or proper for her health, well being, comfort and happiness.
“3. If at any time my said daughter shall recover her mental and physical health, so as in the opinion of my executors, or those taking upon themselves the execution of my Will, or the survivors or survivor of them, to render it proper and safe to do so, then I hereby authorize them to pay over to my said daughter, the whole of the interest and income of said rest, residue and remainder of my said property and estate not theretofore disposed of by them in payment of legacies under the power and authority hereinafter given to them.
“ 4. It is my desire that my present residence Number 42 West Fifty-sixth Street in the Borough of Manhattan, City of New York, shall be maintained for my daughter’s occupancy during her life, and that she shall be surrounded with everything which shall make for her comfort and pleasure, the number in service in the home being maintained as I would have it if living and as befitting one in her station in life. Her every wish shall be respected — with regard to her pleasure and whether she shall remain at home or travel, etc.— when in the judgment of the majority of my executors it shall not seem unwise so to do.
“ 5. At the end of each year of their trusteeship, whatever funds may remain of the income of my estate, after the payment of all bills for the proper maintenance of my daughter, my executors shall have the power and it is my desire that out of the remaining income they may pay the pecuniary legacies bequeathed herein to individual legatees in whole or in part pro rata, until such legacies shall be wholly paid; and when such legacies to individuals shall have been wholly paid, my executors shall in like manner out of said remaining income pay pro rata on account of the pecuniary legacies to corporations bequeathed herein (other than gifts of the residue*768 of my estate) until such legacies to corporations shall be fully paid; unless in any year it should in the judgment of my executors seem unwise to do so, keeping in mind always the sufficiency of my daughter’s income. And I also authorize my executors at any time during my daughter’s lifetime if they shall deem it proper and safe to do so, to transfer to the Protestant Episcopal Mission in Mexico, the shares of the capital stock of the Woodlawn Cemetery bequeathed to them herein; but in no other respect shall my executors pay over or distribute the principal of said trust fund during the lifetime of my said daughter, than to transfer said shares of stock of the Woodlawn Cemetery as above indicated.
“6. My executors and trustees are authorized to retain the securities in which my estate shall be invested at the time of my decease and they need only change such investments when in their judgment it shall make for the better security of my daughter’s income.”
By the 5th paragraph of his will the testator provided: “After the decease of my daughter Clarissa Treadwell Dexter, I hereby direct my executors to dispose of the said rest, residue and remainder of my property and estate in manner following: * * *” Then followed directions for the payment and transfer of twenty-five shares of the capital stock of the Woodlawn Cemetery to the Protestant Episcopal Mission in Mexico, and to certain individuals pecuniary bequests aggregating $39,000, and to three corporations pecuniary bequests aggregating $1,200. Then by the 7th paragraph of his will testator directed:
“ Seventh. All of the trust fund constituted by the Fourth Paragraph of this my Will, that shall remain undistributed by my executors at the decease of my said daughter after payment in full, whether before or after her decease, of all the legacies directed to be paid in the Fifth Paragraph of this my Will, I hereby direct my executors, or the ones taking upon them the execution of this my Will, or the survivors or survivor of them, to distribute as follows, that is to say; my executors shall pay to the following legatees the sums of money- which I give and bequeath to them respectively, to wit:”
Then follow bequests to certain charitable organizations
Outside of the 7th paragraph of his will, the opening clause of which has been quoted, there is no general residuary clause of the usual type in the original will; but his 1st codicil thereto bearing date the same day as the will itself provided:
“ In case my estate remaining undistributed as mentioned in the Seventh Paragraph of my said Will, shall not be sufficient to pay in full all the bequests contained in said Seventh Paragraph, then I direct my executors first to pay in full the bequests therein made to the Salvation Army in the United States, the Young Men’s Christian Association of the City of New York and the American Bible Society, and to pay the rest of said legacies pro rata.
“And if it should happen that anything should remain of my estate after paying in full all of the bequests given by my said Will, then I direct that such surplus shall be divided equally between the three corporations last above named.
“And in all other respects I hereby ratify and confirm my said Last Will and Testament.”
By the 7th codicil, executed December 31, 1909, testator revoked the appointment of Henry U. Palmer as one of his executors and trustees, and further provided:
*770 “ Item. In case it should appear at or after my decease that I have devised and bequeathed to benevolent, charitable, literary, scientific, religious or missionary societies, associations or corporations, in trust or otherwise, more than one-half of my estate, after the payment of my debts, and that for any reason such devises or bequests are invalid to some extent; then and in such case only, I hereby give, devise and bequeath to my friend Mr. S. Clinton Sherwood, all that portion of my estate as to which such devises or bequests may be invalid, and which otherwise would descend or be distributed to, or among my heirs, or next of kin.”*789 profits thereof, so long as William Shepherd Dana, my adopted 'son, shall live and twenty-one years shall not have expired and to pay the same, after the deduction of all proper charges and expenses to the persons entitled to the residue of my estate according to the provisions hereof and in the same proportions. I authorize my executors to lease any or all of said real estate, or at any time during the continuance of this trust to sell any or all of the same at such prices and upon such terms as they may deem advisable. I also empower my executors to mortgage parcels of my real estate for the purpose of providing money for improving such parcels. In the event of any such sale I direct my executors to thereupon terminate the said trust to the extent of the property so sold and to pay the net proceeds of such sale to the persons entitled to the residue of my estate according to the provisions hereof and in the same proportions. Upon the termination of this trust by limitation of time or by the death of my adopted son, William Shepherd Dana, I give and devise such of said real estate as shall then remain unsold to the persons entitled to the residue of my estate according to the provisions hereof and in the same proportions.” There is then a third trust created of premises 136 to 140 Front street, New York city, the income wherefrom is to be paid to Ethel Dana Shepherd and William Shepherd Dana for life, and it is provided: “ I authorize my executors to lease said premises, or, at any time during the continuance of this trust, to sell the same at such price and upon such terms as they may determine, and to invest and reinvest the proceeds in any manner in their discretion, being free from the usual restrictions as to trustees’ investments. The income of such substituted investments to be disposed of in like manner as above directed with respect to the rents, issues and profits of the said premises. Upon the death of both Ethel Dana Shepherd and William Shepherd Dana, I direct my executors to convey the said premises or to transfer and pay over the investments representing the sale of said premises to the issue of William Shepherd Dana, or if there be no such issue, then to the person entitled to the residue of my estate, according to the provisions hereof and in the same proportions.”
The charitable organizations to which the testator bequeathed an aggregate of $972,000 contend that the surplus income of each year did not vest in the.decedent’s daughter; that there was no effectual disposition of the surplus income under the will, and that consequently the surplus income for each year belongs to those presumptively entitled to the next eventual estate, being the charitable corporations to which the specific bequests of $972,000 were made, and who claim as well the residuary estate of $326,810.33, which they have been awarded by the judgment herein.
S. Clinton Sherwood contends that the unexpended income did not belong to the testator’s daughter but should be paid pro rata on account of the specific legacies to the corporations named in article 7 of the will, and that if the charitable corporations should receive all of such unexpended income dining the daughter’s lifetime and then upon her death all the principal of the trust fund, there would be a gift of more than one-half of the testator’s estate (less his debts) to charitable corporations, coming within the prohibition of the Decedent Estate Law (Consol. Laws, chap. 13 [Laws of 1909,
The learned referee has held that the testator did not intend to leave the surplus income from the trust fund to his daughter, and that there was no valid direction for its accumulation, nor was there any effectual disposition of the surplus income; and that, therefore, that portion of the income not expended for the daughter’s benefit was not disposed of by the will but passed by operation of law to the charitable-corporations as owners of the next eventual estate; and that, therefore, the statute had not been violated.
As I read the testator’s will, its provisions are inconsistent with an interpretation which would give to the daughter less than the whole income of the trust estate, subject to the exercise of the discretion of the executors as to how much thereof should be applied to her care and maintenance, but in no event less than $5,000. This discretion by one of the codicils is vested in Sherwood. The 3d subdivision of the 4th paragraph, as will be seen, authorizes the executors to pay to the daughter when in their opinion she recovers her mental and physical health, the whole of the interest and income of his property not used to pay legacies, and those legacies, as will hereafter be seen, are only the ones specified in the 5th paragraph of his will, aggregating $40,200, and which have already been paid. The care with which these comparatively small legacies are authorized to be paid out of surplus income and the larger legacies withheld for payment ■until her death, is evidence in itself of the fact that the testator did not contemplate that the surplus income each year over what was expended on his daughter should be exhausted in paying off nearly $1,000,000 of legacies left to charitable corporations. The payment of the $40,200 of legacies would not have made an appreciable difference to the income for more than a single year, and those legacies were of an intimate and personal kind which the testator evidently wished to have paid off as speedily as possible.
That the language used by the testator created a gift to the daughter of the entire income from the trust fund (subject only to the payment of the specific bequests of $40,200) is well supported by the authorities. The decision in Matter of Hoyt (116 App. Div. 217; affd. without opinion, 189 N. Y. 511) is very closely in point. There the testator gave his executors a trust fund and directed them to “ keep the same invested and to collect and receive the interest, dividends and income therefrom and from each and every part thereof and to apply to her use for and during her natural life in
“ The direction to accumulate in this will can be stricken out and there then still remains a valid disposition of the rents and profits. The testator gave the fund to the trustees to collect the income from each and every part of it. He clothed his trustees with power to apply the entire income to the use of his daughter. He also clothed them with power, in their discretion, if they did not think she needed all of the income, to accumulate it, and if they did so, he gave it to the remaindermen. The authority, as we have seen, to accumulate is void but the authority to pay the entire income to the daughter is nevertheless valid and enforcible. If this be true, then the daughter was entitled to the entire income and whatever had accrued at the time she died passed to her representatives. This conclusion, it seems to me necessarily follows from the rule laid down in Pray v. Hegeman (92 N. Y. 508), and Barbour v. DeForest (95 id. 13).”
In Hill v. Guaranty Trust Co. (163 App. Div. 374) the testatrix gave her residuary estate to her executors and trustees upon the following terms: “ To receive the rents, issues, income and profits thereof and to apply the whole, or such portions of such rents, issues, income and profits, as my said executors and trustees may deem advisable, for the use and benefit of my son * * * during bis natural life, and on the death of my said son I give, devise and bequeath all of said rest, residue and remainder of my estate with the accumulations, if any, thereon * * * to my said sister Marie Hill absolutely and forever.” The son at the time of the execution of the will was a life convict and after his mother’s death became insane and was still so when suit was brought. The executors at the time of the accounting had applied only a small portion of the income to his use and the remainderman sought to have the accumulated income paid to her as the person presumptively entitled to the next eventual estate. This was refused, the court saying, in part: “ Although a considerable surplus has been accumu
“ There is, therefore, in the present case nothing unlawful in the trustees holding the unexpended balance in their hands — certainly not if the will of the testatrix be construed as giving the entire income to her son. Whether the will should be so construed is a question which is not necessary to deter
“ If this conclusion be correct, then the trustees should continue to hold the income not immediately applied, subject to its future application, if they deem it advisable for his use and benefit.”
In Matter of Bavier, No. 1 (164 App. Div. 358), where there was a trust fund created for the benefit of a feeble-minded person, the court cited with approval Hill v. Guaranty Trust Co. (supra) and said: “ This court, reviewing the authorities, held that the will did not, either expressly or by necessary implication, direct any accumulation of the income; that although a considerable surplus had been accumulated, it was by no means certain that circumstances might not arise, before the termination of the trust, under which the trustees might deem it advisable to apply all this income to the use and benefit of the beneficiary, and that the trustees should continue to hold the income not immediately applied,
“ We think, as the question here involved has so recently been determined by that well-considered case, it is unnecessary to discuss it further.”
In Matter of Bavier, No. 2 (164 App. Div. 363), the will gave to the trustees two-thirds of the net rents, issues and profits of certain real estate in trust to apply the same or so much thereof as testator’s wife during her life or the surviving trustees after her death might think necessary or proper for the care,- education, maintenance and support of the testator’s daughter and such issue as she might have. The daughter was an incompetent, although not judicially declared so to be. The will then provided that upon the daughter’s death the income from the trust fund with any and all surplus thereof unexpended, if any, should be divided in certain alternative ways. There was also a direction that if, under the provisions of the will, there should remain in the hands of the trustees accumulations of the net rents, issues and profits not authorized by the laws of the State of New York, the same should be regarded as real property and be distributed according to the statutes of New York relating to descent. Upon the accounting there was found a balance of unexpended income which the surrogate held to be an unlawful accumulation and, therefore, under the will distributable according to the Statute of Descent. This court said: “ There is no express provision in this will for any accumulation of income, and the direction for the distribution of such is only precautionary and made in view of the discretionary power vested in the trustees by the 4th clause of the will. The conclusions reached by Mr. Justice Clarke in Matter of Bavier, No. 1 (164 App. Div. 358) are found upon considerations equally applicable to the case at bar and require a like disposition of the present appeal.”
It will be seen that in this last cited case there was an express disposition of accumulated income, as in the case at bar. We deem it unnecessary to cite further the cases in line with these determinations, believing that they sufficiently establish the law applicable to the question before us. The testator’s clear intention as deducible from the -will being that
The conclusions of law found by the learned referee herein should be modified by including the Mne conclusions of law proposed on behalf of the defendant Clarissa Treadwell Dexter, and the appropriate findings of fact in connection therewith, and by reversing the findings of fact and conclusions of law inconsistent therewith, and the judgment appealed from will be modified accordingly, so as to adjudge that the defendant Clarissa Treadwell Dexter is entitled to the entire net income of the trust created in and by said will for her fife, with the exception only of the sum of $40,200 heretofore paid by the plaintiffs pursuant to the provisions of the will to the legatees mentioned in paragraph 5 thereof Costs and disbursements are awarded to all parties appearing upon this appeal, payable out of the estate.
Clarke, P. J., Laixghlin, Smith and Page, JJ., concurred.
Judgment modified as directed in opmion, with costs to all parties appearing upon tMs appeal, payable out of the estate. Order to be settled on notice. .