118 Misc. 598 | N.Y. Sur. Ct. | 1922
The executors have asked for a construction of the 2d paragraph of article 12 of the will, which paragraph reads as follows:
“ To divide the same into as many separate equal shares or portions as I may leave daughters surviving me; to collect the income, interest and profits of each of said shares or portions; to keep the principal thereof invested so as to bring in the largest income compatible with reasonable safety of the principal and to pay over the net income thereof semi-annually as follows: ”
Two questions are raised concerning the duty of the executor and trustee: Is the executor and trustee authorized to retain in the trust established by the testatrix securities which she owned at the time of her death, although such securities are not of the character prescribed as legal investments of the state of New York? Is the executor authorized to invest and reinvest the proceeds of any sales of property held in said trust in securities which are not prescribed as legal trust investments?
Section 111 of the Decedent Estate Law relates to investment of trust funds and sets forth the character of investments in which an executor or trustee may invest. Banking Law (Laws of 1914, chap. 369), § 239. Any other investments would be a breach of duty unless the will gives discretion to the executor or trustee. King v. Talbot, 40 N. Y. 76; National Surety Co. v. Manhattan Mortgage Co., 185 App. Div. 733. The court must consider and decide whether the testatrix had an intention of giving discretion to the trustee over the investments of the principal of the trust. In Matter of Hall, 164 N. Y. 196, the court in its opinion said: “ The range of so-called ‘ legal securities ’ for the investment of trust funds is so narrow in this state that a testator may well be disposed to grant to his executors or trustees greater liberty in placing the funds of the estate. But such a discretion in the absence of words in the will giving greater authority should not be held to authorize investments of the fund in new, speculative or hazardous ventures.”
In Lawton v. Lawton, 35 App. Div. 389, the will read: “ I hereby direct my executors to hold in trust to and for the use and benefit of said child or children, and to keep the same invested in such securities as to the said executors shall seem best.” The court said it was clear from the provisions of the will that the testator intended to give his executors a discretion and not to confine them to court securities. It distinguished King v. Talbot, supra, on the ground that in King v. Talbot, the will showed no intention to
It seems to the court that the words “ with reasonable safety of the principal ” and “ largest income compatible ” clearly grant discretion to the trustee as to investments,- and take it out of the zone of investments declared by law (Decedent Estate Law, § 111) to be absolutely safe investments. The word “ income ” means annual receipts from property. The word “ reasonable ” means rational according to the dictates of reason and not excessive or immoderate. The testator undoubtedly had in mind, and it was his desire to have the trustees secure a greater amount of income than would flow from investments in court securities, because he asked them to bring into the trust the largest income compatible with reasonable safety, with rational safety, the safety that a prudent man would use in the conduct of his own affairs.
The petition herein sets forth the character of securities left by the decedent. Apparently, they are seasoned investments for the reason that the companies have been doing business for a long period of time. The discretion herein would not give the trustees the
The burden of purchasing securities for trust funds is one thing. The exercise of diligence and prudence in declining market is another burden cast upon the trustee. Villard v. Villard, 219 N. Y. 482, 498; Matter of Jarvis, 110 Misc. Rep. 5; Matter of United States Trust Co., 189 App. Div. 75.
Every will, in conformity, of course, to the several rules of construction, must be determined by the intention of the testator. Furniss v. Cruikshank, 191 App. Div. 450, 465. Measured by the standard, I must hold that a proper construction of the paragraph in question permits the trustee to hold the securities owned by the testatrix at her death and to invest and reinvest the proceeds of sales of property held in said trust in securities which are not prescribed as legal trust investments, subject, however, at all times to the requirements laid down in this opinion.
Decreed accordingly.