6 Misc. 2d 110 | N.Y. Sur. Ct. | 1957
The petitioner, as the executor under the testator’s will and as the trustee of the trust created by the nineteenth article of that instrument, is accounting in both of these capacities and requests a construction of the nineteenth article, authority to abandon certain securities which he deems to be worthless and for directions respecting the payment of income taxes. Objections interposed to the account raise construction issues in respect of the fifth and twenty-third articles of the will.
The nineteenth article of the will created two trusts. The portions of that article which are pertinent to its construction read: “I give and bequeath to my Trustee hereinafter named
The problem of construction arises in the allocation of assets between the two trusts created in the foregoing provisions. At the date of the testator’s death on December 21, 1951, there were 560 shares of Farsouth Growers Cooperative Association in the testator’s name and there also were certain agreements between the testator and others relating to property rights in Florida. There then was not a current account designated No. 21 in the testator’s book. If the will were to be regarded as speaking as of the time of the testator’s death, a question of ademption would exist but it is quite evident that this testator had in mind the extent and nature of his assets at the time he executed his will and that in allocating assets between the two trusts, and particularly in referring to account No. 21, he was referring to the condition of his assets at the time the will was signed. It follows that his intention is to be ascertained by what was in his contemplation at that time (Rogers v. Rogers, 153 N. Y. 343; Matter of Hoffman, 201 N. Y. 247; Matter of Phelps, 184 Misc. 278, affd. 269 App. Div. 768, affd. 295 N. Y. 834).
The relevant facts are not in dispute. In April, 1950, when the will was drawn, the testator and eight other persons were engaged in a joint undertaking. The testator managed this enterprise and recorded its financial affairs in his books under
“ I am holding in my name 560 shares in that association, with whatever rights in leased lands or other operations are held therewith, all being in my name.
“ Tour interest in the whole is a 9% interest. Inasmuch as this interest has never been transferred out of my name on the books of the Company, I am writing this letter to make your interest clear and to establish what shall happen in the event of the death of either you or me. I am agreeing with you now that in the event of my death or of your death, either I or my estate shall pay to you or your estate in cash 9% of the total then fair value of the interest in the Farsouth Growers Cooperative Association, and any affiliated properties.” The agreement further provided that in the event the cash amount to be paid to the secretary should be in dispute the value of the secretary’s interest should be fixed by three appraisers.
Although the testator at his death was the record holder of 560 shares of Farsouth, the executor has presented a question as to the method of constituting the trust created by the nineteenth article in view of the agreement between the testator and his secretary. The bequest to the trustee is described as all real estate in Florida including property and leases owned in conjunction with one Peters and all shares of stock in any co-operative organization. The testator’s direction is to divide
The principal of the niece’s trust is defined in the will as a portion ‘ ‘ representing ’ ’ the 300 shares of Farsouth standing in the testator’s name and not included in account No. 21. The direction for payment of the income of this trust reads: “ to pay over the net income of the said second portion of the said property including the three hundred (300) shares of Farsouth Growers Cooperative Association now standing in my name and not included in so-called Account #21”. This direction would seem to envisage that 300 shares of Farsouth, rather than their equivalent in other property or cash, were to be in this trust. There is also an intimation that additional property would be included in the trust but neither the amount nor the character of this property is defined either in the direction for the payment of income or in the earlier direction for division
At this point in the analysis of the will it can be said that the trustee would be acting in conformity with the will if he were to allocate 210 shares of Farsouth to the son’s trust and 300 shares of Farsouth to the niece’s trust. The testator held 560 shares of the stock in his name at the time of his death but it is contended that a total of 510 shares may not be allocated to the trusts because the testator’s holding in the stock was subject to a 9% interest of his secretary which entitled the latter to 50.4 shares of the stock. This contention does not conform to the facts. The secretary did not have a right to 50.4 shares. His interest under his agreement with the testator was a right to payment in cash of 9% of the fair value of the 560 shares held by the testator. It is clear that the purpose of the testator’s agreement with his secretary was to avoid a liquidation of the shares in the event of the testator’s death. If the secretary at some time had a claim to shares of stock by reason of his interest in account No. 21, and it is not clear that he could require payment of that interest in stock, his explicit agreement made subsequent to the liquidation of account No. 21 was to accept a cash payment from the testator’s estate. The secretary was a creditor of the estate and, at least so long as funds were available from the estate to pay his claim, he had no claim to or against the shares of stock.
It is suggested that the testator intended to dispose of his entire holding of Farsouth stock by the nineteenth article of his will. The initial bequest to the trustee would indicate such an intention but the unfortunate fact is that the directions for division of the bequest into two portions dispose of a total of 510 shares only. The necessary consequence is that the excess of 50 shares passes as residuary property.
A further question of construction arises with respect to the fifth article of the will which bequeaths the testator’s apartment, most of the apartment’s contents and certain oil paintings to the testator’s niece. The final sentence of that article reads: “ I further give and bequeath to my said niece, Audrey Jane Higginson Downes, all shares of capital stock and any other interest held by me in the corporation known as Pepperidge Farm, Inc., Norwalk, Connecticut, or the proceeds of the sale thereof Two hundred fifty shares of the stock so bequeathed were owned by the testator at the date of his will. This stock was redeemed by the corporation in the testator’s lifetime and he deposited the proceeds of redemption in an account in a
The second subdivision of the twenty-third article of the will attempts to create trusts for the children of the testator’s daughter and four named persons. This subdivision is replete with ambiguity but the sole question raised in this proceeding concerns the number of trusts which the testator intended to create. This subdivision of the will was designed to be a disposition of two thirds of the residuary estate. The testator’s
There may be a more fundamental question of construction existing in this subdivision of the will but the parties appear to read this provision as containing both adequate directions as to the duration of the trust for the testator’s grandchild and a disposition of the trust remainder (cf. Matter of deVarona, 274 App. Div. 303, affd. 299 N. Y. 726).
It is held that the legal fee of the attorneys for the trustee is properly allocable between the two trusts created by the nineteenth article of the will in proportion to the respective principal values of these trusts. The application for authority to
Submit decree on notice construing the will and settling the account.