172 Misc. 290 | N.Y. Sup. Ct. | 1939
On July 12, 1933, Julius Janowitz executed, duly acknowledged and delivered to the plaintiff as trustee a certain indenture of inter vivos trust. The instrument reserved the right to the donor to modify, amend, alter or revoke the trust agreement, in whole or in part, by an instrument in writing, duly signed, executed and delivered to the trustee. Pursuant to that reserved right of modification and amendment the donor subsequently executed, acknowledged and delivered to the trustee four separate modification and amendatory instruments as follows: First. The first dated August 11, 1934. Second. The second dated March 27, 1935. Third. The third dated September 26, 1935, and Fourth. The fourth dated November 27, 1935. The approximate fair market value of the property in the possession of the trustee under the trust indenture, etc., was on the date of the delivery of the original instrument $392,459.13; on September 26,1935, $354,448.05 and on the date of the death of the donor $306,934.30. Julius Janowitz on September 26, 1935, executed his last will and testament in the manner required by the laws of this State. He died on January 29, 1937, a resident of Westchester county, survived by his widow, the defendant Emma S. Janowitz, to whom he had been married for some twenty years, and two children by a .former wife. His will of September 26, 1935, was thereafter duly
This action was originally commenced by the trustee under the trust indenture, as amended, for a judicial settlement of its accounts as such trustee, etc. The widow by her pleading has attacked the validity of the will, the validity of the trust indenture and raises a question with respect to the application of one paragraph of the will, in the event that it be adjudged valid, so far as it relates to certain trade acceptances and promissory notes arising in connection therewith. All of the parties appear to be before the court so that a complete determination may here be had on the subject of these three questions.
Practically all of the facts in the case are undisputed. It would serve no useful purpose to attempt a detailed restatement thereof.
So far as any matters of fact appear to be in question the court wall try to indicate its determination with respect thereto during the course of this opinion.
The first question to be decided relates to the validity of paragraph “third” of the will which provides as follows: “ Third. I give, devise and bequeath to President and Directors of the Manhattan Company, and their co-trustee, if any, as trustee or trustees under a certain agreement made and dated the twelfth day of July, Nineteen hundred and thirty-three, between me as Donor and the said President and Directors of the Manhattan Company, as trustee, any and all sums of money on deposit to my credit in banks or trust companies in the United States at the time of my death, and also any and all stocks, bonds, mortgages and other securities which I may own at the time of my death, and also any and all real estate of which I may die seized and possessed, all of which moneys, securities and real estate shall be added to the trust fund which is the subject of the said agreement, and administered in accordance .with the terms and provisions thereof, which are to the effect that"!? the income from one-third of the amount hereby added to such trust fund shall be paid to my wife during her life.” —1
The widow and the two children by the former wife claim that the quoted paragraph of the will is illegal and void on the theory that it is an unlawful attempt to incorporate by reference some other instrument in the will of the testator. All parties, other than the widow, interested under the indenture of trust claim that the provision is entirely valid.
The doctrine against incorporation of other documents in a will has been to some extent modified in this State by decisions of the
The second question involved in the action relates to the validity of the trust indenture and four amendatory instruments, so far as the trust fund itself is concerned. The claim of the widow is that the purported trust thereby provided for was illusory as against her rights of inheritance by virtue of the Decedent Estate Law (§§ 18, 83). The other parties interested under the trust instruments claim that such instruments are entirely valid and enforcible against any alleged claim of the widow adverse thereto.
There are collated in two annotations in American Law Reports Annotated many cases on the subject of transfers by a husband in
This conclusion, however, that the trust is illusory, does not finally dispose of the controversy on this phase of the case. It still remains to be determined to what extent, if any, the plaintiff may be entitled to relief against the trust by the decree of this court. Excluding the so-called “ Totten ” trusts of bank deposits under the banking laws, etc., and without considering the rights of creditors to which certain special rules are applicable and which are not involved now, alleged trusts created by a husband during his lifetime may be regarded, so far as the claim of a widow under the Decedent Estate Law is concerned, as of three general classes: First. There may be an absolute conveyance in trust by the husband during his lifetime, irrevocable in form and under which he parts absolutely in good faith with all ownership over the trust property, and surrenders all dominion thereover. Such a trust, otherwise valid, is equally valid against any claim of the widow under the Decedent Estate Law. (Newman v. Dore, supra.) Second. There may be a transaction where the reserved rights of the donor are so extensive in various matters that the alleged trustee is merely the agent of the donor and in legal effect merely a custodian, without discretion and without authority. Such a transaction does not pass any title from the dónor and such property passes as his estate upon his death. (Newman v. Dore, 275 N. Y. 371, 380, citing Restatement, Trusts, § 57, subd. 2; Matter of Ihmsen, 253 App. Div. 472.) Third. There may be a situation where': a trust is created, generally lawful, but under which the reserved-control of the donor is so great as to render it illusory or unreal as against a surviving widow whose rights are thereby prejudiced. Such a trust would be valid as to all parties except the widow and as to her it is invalid only to the extent that she is prejudiced thereby. Such a trust comes within the rule that while “ from the technical point of view such a conveyance does
So considered it is not apparent that the widow, whose right to apply to make an election has been extended, has really any right of election against the provisions of the will. But whether she has or not, section 18 does not purport to give her any right to elect
We have then the situation that the only difference between the will as supplemented by the trust indenture and first three amendments, and the trust fund as constituted by the trust indenture and all four amendments, is that with respect to the trust fund only there is a limitation of $5,000 per year for the widow. In determining the validity of such an instrument it has been said that the rights of the widow are to be measured by the will and the trust instruments considered together. (Weber v. Salisbury, 149 Ky. 327; 148 S. W. 34.) So considered it cannot be said that there is any evidence whatever of any intention of the testator generally to deprive his widow of the share to which she would otherwise be entitled in his estate. The most that can be said is that the third amendment indicates a limited intention on the part of the donor with respect to the trust fund only to limit her annual income therefrom to $5,000. This difference in the income is more theoretical than real because in practical operation it is quite unlikly that such income will exceed $5,000 per year. Such a limitation contained in the will may be assumed sufficient to permit the widow to make an election against the will, but the same result does not necessarily follow here in this action of an equitable nature. The situation disclosed by the record does not appear to be at all inequitable. Such a situation has been regarded by the Appellate Division in the Third Department as indicating the validity of the entire inter vivos trust. (Marine Midland Trust Co. of Binghamton v. Stanford,
Apart, however, from the general principles of equity and viewing the situation as one in which there is a potential disadvantage to the wife by the possibility that in actual operation she may be deprived of some excess income of the trust fund beyond $5,000 per year, full justice between the parties can be done here by adjudging the invalidity of the third amendatory instrument so far as it purports to limit such income to the widow to $5,000 per year and to give the excess, if any, to the National Farm School. There is no difficulty in such an adjudication because the National Farm School, in its brief, states that it is entirely ready and willing to waive any claim which it may have to such excess income, if any. It will, therefore, be adjudged that the trust agreement represented by the original instrument and the four supplemental instruments is valid in all respects as against the widow and that the corpus of the trust fund shall be disposed of thereunder, with the exception only that it will be adjudged that the limitation by the third supplemental instrument of the income of the wife to $5,000 per year is illegal and void as against her because to that extent she may be prejudiced in her rights under the will to which she might otherwise be entitled. In final result such adjudication is the equivalent of returning the widow’s share of the trust fund to the general estate, passing it back through the will to the trustee for disposition in accordance wim the provisions of the will and trust indenture.
The third question relates to the trade acceptances and promissory notes in connection therewith. Without any elaborate analysis of that situation, it is sufficient to say that it clearly appears that it was the intention of the testator that such property should pass under the “ third ” paragraph of his will. It will be so adjudged.
The merits of the account as filed have not been considered. An interlocutory decree will be granted in accordance with this memorandum, under which the accounts presented by the plaintiff will be considered as filed, and all parties in interest afforded an opportunity to present such objections thereto as they may desire, for such further proceedings thereon as the case may require.
Settle findings and judgment on five days’ notice at chambers, Poughkeepsie.
All pleadings and exhibits submitted in this matter have been forwarded to the clerk at Special Term, Part I, White Plains, where they may be withdrawn by the parties entitled thereto.