Passman v. Guarantee Trust & Safe Deposit Co.

57 N.J. Eq. 273 | New York Court of Chancery | 1898

Grey, V. C.

The whole contention in this case turns upon the construction of the effect of the residuary clause in the will of Thomas Costello, by which he gives the remainder of his property to two trustees, the survivor of them, and the executors, administrators and successors of the survivor, in trust to collect income, rent and revenue, pay taxes and repairs and the expense of the trust, and to pay over the net income annually in twenty-two parts, unequally distributed among named beneficiaries. The portions of the net income given to each beneficiary are expressed to be given to him, “ his heirs and assigns forever.”

No power of sale is created by the will. The provisions for the collection of rents and for the expenses of repairs indicate that • the testator, in disposing of this residue to produce an income, expected it to continue, in part at least, as real estate. There is no further disposition of the property included in the residue than is shown by the gift of the income to be derived from it, and there is no limitation over of any of the shares of the income. In fact, there'is no testamentary action of any kind touching the residue, than the gift of the income, to the first takers. As the trust is expressed in the will, the trustees must keep the principal of the fund, and pay out the net income to the beneficiaries, their heirs and assigns, without limit of time or circumstance. The only duty the trustees are charged to perform is to collect income, pay taxes, repairs and expenses, and turn over the whole net income, so that it should not be liable for the debts of the beneficiaries.

The rule appears to be settled that the bequest of the income without limit as to time, or gift over which can operate, is a bequest of the principal, if there be no expression of a contrary intent. Elton v. Sheppard, 1 Bro. Ch. C. 532; ^* Haig v. Swiney, 1 Sim. & S. 487; Manning v. Craig, 3 Gr. Ch. 436; Craft v. Snook, 2 Beas. 121; Gulick v. Gulick, 12 C. E. Gr. 500. The same rule applies whether the gift be direct or through the intervention of a trustee. Ibid. So a devise of the income of land without limitation or devise over, is equivalent to a devise of the land itself. Den v. Manners, Spenc. 144; Diament v. Lore, 2 Vr. 222; Post v. Rivers, 13 Stew. Eq. 22; Conynham v. Conynham, 1 Ves. Sr. 522; Sir Thomas Plumer, V. C., in Stretch v. Watkins, 1 Madd. 143. The same rule applies to a gift of a perpetual annuity. Huston v. Read, 5 Stew. Eq. 596. In devises of trust estates where no conveyance is directed to be made the construction is the same in chancery ás it would be at law upon a devise of the legal estate. Martling v. Martling, 10 Dick. Ch. Rep. 781.

The operation of the rule is not defeated because some duty in realizing assets and securing and paying the income is cast upon the trustees. In Earl v. Grim, 1 Johns. Ch. 499, executors were directed by the will to rent or sell lands as they saw fit, and, in case of sale, to put the money at interest and pay the interest annually to G. P., &c. Chancellor Kent held that those who, by the terms of the will, were entitled to the interest were also entitled to the principal of the proceeds of sale. In Phillips v. Chamberlain, 4 Ves. *51, the testator gave the residue of his real and personal estate to trustees to convert into money and invest, &c., and directed them to pay the surplus of dividend and interest to his daughter, son, nieces, &c. The court held that the bequest to the trustee upon trust, to pay the interest from time to time without limitation of duration, carried the principal also.

In the case under consideration the whole income is given to the cestuis que trustent, their heirs and assigns. As between the beneficiaries and the trustees, the latter have no power to refuse the payment of any portion of the income, nor have they any duty to retain the residuary estate for the benefit of any successor in interest.

The whole structure of the will shows that the testator disposed of all his estate of every character, and had no intent to die intestate of any portion of it. The phrasing in the residuary clause, by which the shares of income are given to the beneficiaries, their “ heirs and assigns,” indicates an intent to give to them an absolute estate in the residue, and when considered in connection with the absence of any further gift, must, I think, bring the construction of this residuary gift under the rule applied in Phillips v. Chamberlain, ubi supra, where there was an absolute and unlimited gift of income to arise from a disposition of both real and personal estate, and it was held to pass the title to the principal of the funds realized.

The answer admits that the defendant the Guarantee Trust and Safe Deposit Company accepted the position of trustee under Thomas Costello’s will. The buildings on the premises on Atlantic and Maryland avenues are shown to be in very dilapidated condition and probably produce little rent or profit.

The trustee should state an account of the gross receipts of income from the residuary estate and of its disbursements therefrom and lawful charges, and should pay over the balance in, hand to the complainants, according as their holdings of residuary shares may entitle them.

In view of the apparent devolution of title to the residuary lands upon the trustee by the terms of the will, it may be desirable, in order to perfect the chain of title upon the record, that the' trustee should convey by deed with proper recitals, but without warranty, to the holders of residuary shares, in the proportions in which their interests may appear. This mode of relief is, not specifically prayed for, but is within the scope of the general prayer. The several steps by which the immediate devisees passed their shares to grantees should have been made by deed effectual ;tb pass real estáte. ’ No costs should be taxed as'against the defendants.