32 Misc. 2d 38 | N.Y. Sur. Ct. | 1961
This application to reargue the prior decision of this court (N. Y. L. J., July 17, 1961, p. 6, col. 8) is granted and upon reargument that decision is withdrawn. In this proceeding the surviving successor trustee requests a construction of decedent’s will in respect of the apportionment of the proceeds of sale of alleged unproductive shares of stock. The testator died on July 16, 1931, and his will, dated February 28, 1930, was admitted to probate. The testator created a trust of his residuary estate for the benefit of his only son. One third of the corpus was directed to be paid to the income beneficiary when he attained the age of 40 years, and upon reaching that age in 1945, that share was paid to him. Upon the' death of the income beneficiary, the remainder of the trust was directed
Upon reargument this court’s attention is directed to certain facts not emphasized originally relating to the question of estoppel. The beneficiary trustee actively participated in the management of this trust fund. Pursuant to the will he received one third of its corpus during his lifetime. There existed the possibility of lawful descendants and the vesting of the remainder in them. Moreover, upon default of lawful descendants, scholarship funds are to be named for the beneficiary and his father. The beneficiary thus was not wholly disinterested in the execution of the charitable gift. The will authorized the retention of investments owned by the testator and to the date the trust was terminated, these securities were retained by and with the approval, not passive but active, of the beneficiary trustee. The securities were readily salable in the open market, and the trustees could at any time have joined in a sale of these securities and an investment in others with a greater yield. This was not a case where the market did not fairly reflect the value of the stock and the trustees felt impelled to await a more fair opportunity for sale. The securities could have been sold at almost any time in this long period for their reasonable value. Whatever motivated the trustees, they refrained from disposing of the shares.
The will does not give the life beneficiary any interest except in the income of the fund and the share of the corpus which has been paid to him. The right of such a trust beneficiary to an allocated portion of the proceeds of sale of unproductive prop
It should be noted also that there had been three prior accountings which had the cumulative effect of judicially settling the accounts from July 16, 1931 to June 15, 1957. The existence of a duty to sell these shares was never raised in any of these proceedings. To say now that there had existed a duty to sell during all these past 30 years, is to say that the beneficiary trustee continuously and deliberately violated that duty, because a sale could have been made at any time in the open market, and, insofar as this record shows, there was no reason or justification for delaying sale. The personal representative now asks the court to compensate him for this breach of his asserted duty.
The court must not be understood as saying that there was in fact a duty to sell these securities. What it does say is that unless there was some duty to sell these securities there is no basis for an apportionment of the proceeds of the “ delayed sale ”, that the beneficiary’s claim must be predicated upon the existence of a duty to sell, and that, if we assume existence of such a duty, nothing stood in the way of its discharge except the act or omission of the trustees. It is axiomatic that fiduciaries, ‘ ‘ whether executors or trustees, are under a duty profitably to employ funds in their hands under penalty of personal liability for their neglect. * # * As a corollary to that
The proceeding is entitled as one to construe the will of the testator. Nothing in the text of the will expresses an intention on the part of the testator that his son was to share in these principal assets, or furnishes a basis for implying such an actual intent. The court is asked to imply such an intent from the fact that the beneficiary was the chief object of the testator’s bounty and that1 ‘ the gift of income to him is not to be rendered illusory by the failure of the trust asset to yield a fair income thereon.” There is nothing in the will, however, which required the trustees to retain any particular asset. There is nothing in the will which gives the income beneficiary any right to participate in the proceeds of sale of the principal assets. What the petitioner’s argument really comes down to is an appeal for adjustment of the interests of income and principal in a case where the income yield has been relatively low and the capital gains are unusually high. The adoption of any such rule of equitable adjustment would so complicate trust administration as to rob it of many of its benefits and advantages.