142 Misc. 271 | N.Y. Sur. Ct. | 1931
The sole question for determination in this proceeding is whether the estate of this decedent is the real owner of a certain bond and mortgage evidencing an obligation of $18,000, or whether it is properly a part of the trust res of a trust erected in 1913 of which the decedent and his wife, Clara R. Gerken, were the trustees, and of which she and Corn Exchange Bank Trust Company are the present fiduciaries.
The evidence adduced has demonstrated that prior to 1889 a considerable tract of property on Kings highway and Coney Island avenue in Brooklyn belonged to one Edward Ridley, the grandfather of respondent Clara R. Gerken. On March 7, 1889, this was conveyed by his executors to Carrie Ridley, the mother of Clara Gerken, who, in turn, devised it to the latter. On May
The sums received in cash by the decedent on the sale to Minore materially exceeded the amount paid by him from his own funds at the time title was taken. It was also demonstrated that for several years while the property was held by the dummies the rents received therefrom were carried into the accounts of the trustees.
The net estate of the decedent approximates $100,000, in consequence of which there are no rights of creditors involved. The practical effect of a decision ‘in favor of or adverse to the contention of the trustees that this mortgage can and should be traced into the estate of the decedent and claimed as part of their trust res must necessarily be of negligible practical importance. If the
No power is granted to the trustees by the deed of trust either to hold trust properties in their individual names or in those of nominees, nor are they authorized to invade the corpus of the trust for any purpose. Since, on the proofs adduced, it is unquestionable that approximately $9,000 of the funds of the trust were employed in the purchase of the St. Johns place property, title to which was not taken in the names of the trustees, and further that the decedent as trustee commingled his own funds with those of the trust, it is obvious that a devastavit was committed for which the present trustees of the trust can hold the estate of the deceased trustee hable. (Sur. Ct. Act, § 231; Matter of Early, 112 Misc. 54, 60; affd., 195 App. Div. 889; Matter of Harbeck, 142 Misc. 57.)
It is open to the successor trustees to elect whether they will affirm the investment of the trust funds in the St. Johns place property, whereupon it or its avails would become the property of the trust, or will disaffirm the transaction and hold the trustee hable for his devastavit, receiving an equitable hen on the property into which the trust funds went, for the amount which may be determined to be due as a result of the devastavit. (King v. Talbot, 40 N. Y. 76, 90; Villard v. Villard, 219 id. 482, 499; Ostrander v. Ostrander, 194 App. Div. 1, 6; Mullin v. Mullin, 119 id. 521; Matter of Harbeck, supra.) They have elected to pursue the former remedy, to affirm the transaction, and to take the mortgage received by the deceased trustee in his own name in satisfaction of his habihty.
The trustees were entitled to and have succeeded in tracing the trust funds into the St. Johns place bond and mortgage. (Holmes v. Gilman, 138 N. Y. 369, 384; Welch v. Polley, 177 id. 117, 123; Newton v. Porter, 69 id. 133, 138; Frank v. Firestone, 132 App. Div. 932, 933.) It follows, therefore, that no rights of creditors being involved, the executors of his estate are not entitled to the possession of the securities and are under obligation to do such necessary acts as may be required to perfect title and possession thereof in the trustees of the inter vivos trust.
Proceed accordingly.