Lippincott v. Lippincott

47 N.J. Eq. 21 | New York Court of Chancery | 1890

The Chancellor.

Shortly stated, the testamentary provisions which concern this inquiry are as follows: Ann Pancoast directs that the residue of her estate shall be converted into money and that that money shall be divided into as many parts as she has children. She then declares that two of the parts are intended for two sons, whom she names, and directs her executors “to pay” those parts to trustees, who, in turn, are required to invest them and pay the entire income therefrom equally to her two sons, until the trustees shall deem it prudent “ to pay ” the principal to the sons, and then, she directs, the “shares shall be paid over to my said sons.” Then, without making disposition of the shares in event of its never being deemed proper or prudent, by the trustees, to pay them over, she proceeds to dispose of the remaining six shares of the residue of her estate.

David C. Pancoast directs a conversion of the residue of his estate into money and the division of it into seven equal parts, one of which parts is to be paid to trustees for the benefit and support of his son ’William. The trustees are to put it at interest .and to pay the entire interest “arising from his share” to William, until such time as they may deem it proper and prudent to pay him the principal, and that, at such time, they shall pay the-principal to William “or his heirs.” Without making disposition over, in the event of the trustees never thinking it proper to pay William the principal, the testator proceeds to dispose of the remaining shares of the residue of his estate.

In behalf of the testators’ next of kin, it is insisted that the direction to pay the principal funds to William, upon the determination by the trustees that it is prudent to do so, makes that determination a condition precedent to the vesting of those funds in him, and as that event never happened, that the funds did not vest, and are therefore now parts of the estates of- the respective testators, of which they died intestate.

The rule, which is invoked in support of this position, is stated in 2 Williams on Executors 1232, in this language:

“ Where there is no gift, but a direction to pay, or divided and pay at a future time or on a given event, the vesting will be postponed till after that time has arrived, or that event has happened, unless horn particular circumstances, a contrary intention is to be collected.”

In the statement of this rule it is perceived that, before it can 'be applied, inquiry must be made whether there are expressions, in the will considered, which explain and control the terms relied upon as creating a condition precedent to the vesting of the principal, and give to those terms a different import.

In the first place, it is observed, in the wills before me, that, until the happening of the event upon which the principal is to be paid, William is to have the entire interest of the trust funds. "There is no limitation as to the continuance of the payment of interest and there is no other disposition of it, or of the fund; from which it comes.

In Adamson v. Armitage, 19 Ves. 419, Sir William Grant, said: “ In a case of a devise of realty words of limitation must be added to give more than an estate for life. In case of personalty words of qualification are required to restrain the extent and duration of interest. Prima facie, the gift of the produce • of a fund is a gift of that produce in perpetuity, and is consequently a gift of the fund itself, unless there is something upon> the face of the will to show that such was not the intention.”

It is a well-established rule of construction, in this state, that a gift of the interest or produce of a fund, either directly or-through the intervention of a trustee, without limitation as to-continuance, is a gift of the fund itself. Craft v. Snook, 2 Beas. 122; Gulick v. Gulick, 10 C. E. Gr. 324; S. C. on appeal, 12 C. E. Gr. 498; Huston v. Read, 5 Stew. Eq. 596; Post v. Rivers, 13 Stew. Eq. 21; Bishop v. McClelland, 17 Stew. Eq. 450.

Under this rule the principal would vest upon the death of the-testator. Here, then, terms which are apt to create a condition, precedent to the vesting, and terms which favor an immediate-vesting, meet. Of such a situation Mr. Roper says:

“ When the period of payment or enjoyment of the fund is deferred until' the legatee shall attain twenty-one, and the first gift of it is made to him when or after he shall attain that age, but in the meantime the property is given to a parent, guardian or trustee, for the legatee’s benefit, the words ‘when’ or ‘ after,’ which import a condition precedent to the vesting of the legacy, will not be permitted to produce that effect; on the contrary, they will be considered as merely descriptive of the time when the legatee was to be let into the-possession of the fund, and then, according to the rule mentioned in the first-section” [that when a legacy is given to a person to he paid or payable at or-when he shall attain the age of twenty-one, it is vested upon the testor’s death as debitum in praesenti sohendum in futuro, the time being only annexed to the ■ payment and not to the gift of the legacy], “the interest in the legacy will vest-at the death of the testator, and, if the legatee dies before twenty-one, his personal representative will be entitled to the money. The principle is this: since the whole interest in the fund is given in one way or the other to or for ■ the benefit of the legatee, it could not be the testator’s intention to make it contingent whether the legatee should have the absolute interest.” 1 Rop. Leg. 573.

It is observed, in the second place, that the wills of the testator and testatrix, respectively, use language indicative of a contemplation of the principal fund as the property of "William, the possession of which he is presently deprived. Mrs. Pancoast, in her will, speaks of it as being “intended” for him. The trustees are to hold the fund until they deem it prudent to “pay,” not to give, it, and they are to pay it “ over.” Mr. Pancoast, in his will, directs the payment to William of interest “ arising from his share,” and that, when they deem it prudent to do so, the trustees are to “pay ” the principal to him “ or his heirs.”

The ordinary and natural signification of the word “pay,” as here used, is to render that which is due. When one pays “ over,” he gives up that which belongs to another.

In the third place, there is no provision in either will for the event of the non-happening of the contingency upon which William is to be paid the principal. The wills undertake to dispose of the residue of the estates with which they deal. Courts do not favor a construction that will admit of partial intestacy, and they will adopt any reasonable interpretation which will prevent it. I think that such an interpretation of the wills before me is apparent. Eor some undisclosed reason William Pancoast was deemed to be unfit to be let into possession of the principal of the trust funds. To prevent his dissipation or misuse of them, and to secure to him the enjoyment of their product, they were placed in the hands of trustees to hold until he should satisfy the trustees of the propriety of their giving him the possession of them, or, that failing, for his life. The event which is claimed as a condition precedent affected possession only, not the gift itself. It was created by parents, in terrorem, to induce some change of conduct. William’s right and interest in the principal, however, was vested. At his death the purpose of the trust- being fulfilled, his personal representative, executor or administrator, became entitled to demand and have the funds.

I think that the words “ or his heirs,” in the will of David C. Pancoast, were used simply to indicate that William was to-have the entire and absolute interest in the fund referred to-Put if they are to be regarded as words of substitution, in the event of 'William’s death before the payment over to him, it is quite clear, as they deal with personalty, that they must be held ¡to mean the persons who would be.entitled to the personal estate of William by virtue of the statute of distributions, if he had died intestate. Hawk. Wills 92.

At his death, William was domiciled in Colorado. The distribution of his personal estate therefore- must be governed by the statute of distributions of that state. He had no children, but left a widow. In such a case, under the statute of distributions of Colorado, his entire personal estate will go to his widow. It is, then, immaterial here whether the words “ or his heirs ” are words of substitution, for whether they be words of substitution or limitation the practical result is the same.

The trustee will be directed to pay the principal of both funds •to the personal representatives of William H. Pancoast.