93 N.Y.S. 92 | N.Y. App. Div. | 1905
The object óf the action is to have it adjudged that both the declaration of trust and the will are invalid and that the decedent died intestate as to all or some of his property. The plaintiff is a nephew and one of the next of kin of the decedent. Neither the will nor the declaration of trust contains any provision for his benefit. • The contention of the respondent is not that the college had not under the laws of Pennsylvania legal capacity to take the property upon the conditions and subject to the liens or charges or trusts specified in the declaration of trust, but that the declaration of trust was, in effect, a testamentary disposition of property and was not executed as a will; that it and the will disposed of more than one-half of the estate of the decedent for a charitable use in violation of chapter 360 of the Laws of New York of 1860, since he left a widow, and furthermore that the declaration of trust created invalid trusts suspending the absolute owmership of personal property for more than two lives in being, in violation of .section 2 of the Personal Property Law of the State of New York (Laws of 1897, chap. 417).
The equities are all with the college and with the designated beneficiaries. The widow approved the declaration of trust and asks that it be sustained. The decedent left no child or parent. He was concededly competent to dispose of his property; and he did not intend that the plaintiff, who had no legal or moral claim
Many questions, both difficult and interesting, have been discussed in the briefs and on the argument, some of which, however, in the view we take of others, need not be considered. We will, therefore, express our views only on those which we deem important and decisive.
First. Some of the appellants contend, at the outset, that the plaintiff has no standing to maintain the action because he is not within the protection of the provisions of chapter 360 of the Laws of 1860. That statute provides as follows: “ No person having a husband, wife, child or parent, shall, by his or her last will and testament, devise or bequeath to any benevolent, charitable, literary, scientific, religious or missionary society, association or corporation, in trust or otherwise, more than one-half part of his or her estate, after the payment of his or her debts (and such devise or bequest shall be valid to the extent of one-lialf, and no more).”
No child or parent having survived, it is claimed that the widow only may take advantage of the statute; and that she has, by the ante-nuptial contract and by her subsequent acts released her right to object in this regard. It was competent for her to release her rights, and doubtless she could not now be heard to complain that the statute has been violated. (Amherst College v. Ritch, 151 N. Y. 282; Matter of Stilson, 85 App. Div. 132.) Expressions more or less deliberate are to be found in judicial opinions to the effect that no one other than those specified in the statute, or one deriving title through them, may object to a disposition of property in violation thereof. (Amherst College v. Ritch, supra ; Allen v. Stevens, 161 N. Y. 149 ; Frazer v. Hoguet, 65 App. Div. 192.) If the Legislature intended this statute for the benefit only of those therein specified, I think it would have provided that the devise or bequest would be void as to them, so that they would take as if it had not been made. The language is prohibitive, and I think the proper construction, and the one favored by the preponderance of judicial authority, is that any one who would take any interest in the estate if the instrument should be declared invalid, may invoke
Second. The appellants contend that the college was entitled to the corpus of these securities on the death of Wallace by virtue of the contract resting in parol and stated in the declaration of trust, which was fully executed on its part. This is an independent proposition, and I am of opinion that it is sound regardless of whether there was a valid gift inter vivos, or a valid declaration of trust, or whether the provision for the annuities constitutes a strict statutory trust, or, if so, whether it was valid. On the facts, which have been fully stated separately and need not be again recited, it clearly appears that the college, in the lifetime of Wallace, fully performed every condition precedent to its right to come into the possession of these securities and to the ownership of the corpus subject to the payments to certain beneficiaries out of the principal and to the annuitants. Everything contemplated to be done by Wallace as well as by the college, including the trust in him for life, was completely executed. The college, at great expense, established this professorship at his instance, and extensively advertised that it had been endowed and was to be permanent. It thus incurred financial obligations which it could not repudiate, and became committed to a plan and policy which it could not abandon without jeopardizing its prestige. This was done on the faith of his agreement that the college should receive these securities at his death subject to the specified charges. It is a general rule of law that where one party induces another to do a lawful act, incurring a liability upon a promise of indemnification, the performance is a good
Third. Aside from the question of contract rights first discussed,
Before proceeding to analyze the declaration of trust it is well to consider the rules of construction by which we are to ascertain its meaning and validity. As in the case of wills, so in the construction of declarations of trusts, the intention/of the settlor, if not violative of any statute or rule of law, is controlling and must be given effect; and it is to be gathered from a consideration not of the precatory "words alone, but of all the provisions of the instrument in the light of any circumstances shown that have a bearing thereon. (Browne v. Murdock, 12 Abb. N. C. 360; 2 Pom. Erp Juris. § 1016; Van Cott v. Prentice, 104 N. Y. 45 ; Case v. Dexter, 106 id. 553.) IBs intention is also controlling on the question as to whether he intended it as a deed or transfer or will. (Sharp v. Hall, 86 Ala. 110.) It is important to bear in mind also that “ It is a rule of construction that whatever may be fairly implied from the terms or language of an instrument is in judgment of law contained in it.” (Baldwin v. Humphrey, 44 N. Y. 614; Rogers v. Kneeland, 10 Wend. 218.) In Lewin on Trusts (Yol. 1 [Text Book Series], p. 153, note 1) the editor in a foot note well states the rule as follows: “ Whether a trust has been created is a question of fact in each case. In deciding it the court will give effect to the relation and situation of the parties, the nature and situation of the property and the purposes the settlor had in view in making the disposition.” If ambiguous or open to either of two constructions, that one should be adopted which will make the trust valid. (Roe v. Vingut, 117 N. Y. 204; Union Trust Co. v. Owen, 77 App. Div. 60.) The general rule to effectuate the purpose of the person executing the instrument is well stated by Peckham, J., in Roe v. Vingut (supra, 212), wherein, after stating that the intent is to be gleaned from a perusal of the whole instrument, he says : “ Upon such perusal, if a general scheme can be found to have been intended and provided for in the instrument, and such general scheme is consistent with the rules of law, and so may be declared valid, it is the duty of courts to effectuate the main purpose of the
The language of the codicil revoking the legacies and trusts, and assigning as a reason therefor that “ present provision ” had been made for the legatees by the declaration of trust is significant as showing that Wallace understood this distinction between a will and a declaration of trust, and intended by the latter to make present provision for the legatees and beneficiaries, although as to them enjoyment was postponed until after his death. We then turn to the declaration of trust to ascertain what provision he has made for theta, which he thus characterized as “ present provision,” and we find its entire tenor in accord with that intent and susceptible of, if not requiring, a construction that he made a present provision for those for whom he had previously made a testamentary provision. In the 1st preamble he states that he “ desires to now irrevocably appropriate and settle” these securities on the college “ subject, however, to the payment of certain sums hereinafter designated,” and assigns as his reason therefor that the professorship may be “ immediately established cmd hereafter perpetually «maintained” by the college. The 2d preamble shows that he desired to found the chair then rather than after his death, and, with that end in view, he desired that “ the principal sum or corpus of his settlement he irrevocably given and set apart to the said object at once,” but that he desired during life “ to hold and manage said securities in trust'for said College ” and to use part of the income for his own support. The 3d preamble recites, in the past tense, that the college has accepted the securities for the purpose stated and in the terms imposed, and has agreed “ in consideration thereof” to establish the chair immediately in accordance with his wishes and “ otherwise to faithfully comply with the terms of this frr'ust.” The 4th preamble, as counsel for the college urges, indicates that the declaration of trust was merely intended to perpetuate the parol agreement previously made. The settlor then declares that he has.that day “ irrevocably appropriated'and set aside ” the securi
The trust and power in the settlor during his life were simple and lawful. He was to have ¡possession of the securities and collect the income, with authority to change the investment and the right to substitute beneficiaries as to that part of the principal and income which it was not intended that the college should enjoy. This neither restored to nor gave him individual control or ownership. The only authority or control which he was authorized to exercise, so far as the corpus and income which the college was to take, was as trustee for it. ( Van Cott v. Prentice, 104 N. Y. 53-55.) He could only act in his own behalf in appropriating to his own use the surplus income over $1,800 per annum and in exercising the power to substitute beneficiaries — matters which did not concern the college. Reserving a specified residue of the income of the securities to his own use during life did not prevent the vesting of the corpus and $1,800 per annum of the income in the college. As the learned counsel for the college well argues, it was competent for Wallace to have a beneficial interest in the securities and at the same time to hold them as trustee for the college. A merger of the legal and equitable titles takes place only when the trustee is the sole beneficiary, in which event a trust would not be effectually created ; but not so where, as here, the interest of the trustee only extended to part of the income. ( Woodward v. James, 115 N. Y. 357; Matter of James, 146 id. 98; Losey v. Stanley, 147 id. 568; Rankine v. Metzger, 69 App. Div. 264; Greene v. Greene, 125 N. Y. 506.) Upon his death he assumed, in form, to appoint the college trustee in his place and to authorize and empower it to take and hold the securities “ as I now hold them in trust to presently pay
A power of revocation in whole or in part is perfectly consistent with a valid trust, and in such case the trust continues until or unless revoked. ( Von Hesse v. MacKaye, 136 N. Y. 114; Rosenburg v. Rosenburg, 40 Hun, 91; Stone v. Hachett, 78 Mass. [12 Gray] 232.) The reservation of the power of appointment or of the right to substitute other beneficiaries might have rendered the instrument and the right intended to be conferred thereby to this extent void as to creditors, but no rights of creditors are presented. It was not invalid as between the parties. Although this rendered the disposition of those interests ‘somewhat ambulatory, like a will, it was not an attempted testamentary disposition, nor did it prevent the right vesting in the beneficiary, subject to the power which was never exercised. (Matter of Bostwick, 160 N. Y. 489, 492; Matter of Delano, 82 App. Div. 147,152; Brown v. Spohr, 87 id. 522; Rosenburg v. Rosenburg, 40 Hun, 91; Von Hesse v. MacKaye, 136 N. Y. 114] Van Cott v. Prentice, supra ; Grafing v. Heilmann, 1 App. Div. 260 ; affd., 153 N. Y. 673; Dickerson's Appeal, 115 Penn. St. 198, 210; Stockett v. Ryan, 176 id. 71.) Where, as here, property is disposed of inprwsenti by a declaration of trust, so that title is intended to vest before, instead of, as in the case of wills, at the death of the settlor, this constitutes a valid contract, even though
It is claimed that the beneficiaries who were to be paid out of the corpus took directly under the declaration of trust, and that this constitutes a testamentary disposition. I regard it quite clear, however, that the college took the securities subject to the payment and on condition that it pay the specified beneficiaries who were to receive their respective shares on the death of the settlor. He declared himself a trustee, not for these beneficiaries, but for the college. In the codicil he declared that he had by this declaration of trust made present provision for the former legatees. As he had given them nothing directly, this could only be true upon the theory that he had changed their interests upon the property which he had given to the college. He directed the college and not his executors to make the payments, and he provided that the college and not his executors should be entitled to the securities upon his death. He authorized the college to take immediate possession of the securities upon his death, and he authorized the trust company to deliver the securities directly to the college. He had, as has been seen, given it joint control. He even foresaw that some obstacle might arise to prevent the college obtaining possession of the securities, and to insure its succeeding thereto he authorized the executors, if necessary, to turn the securities over to the college and to assign them to it; and, in that event, provided in effect that they should not be required to account to his estate therefor. Wallace could have made a voluntary settlement of these securities on the college on condition that it pay him the surplus income over $1,800 per annum during life, and the other beneficiaries at and after his death, making the amounts payable to them charges or liens upon the securities, without offending against either chapter 360 of the Laws of 1860 or the statutes regulating the testamentary or other disposition of property; and the trust would have been irrevocable unless power of revocation was reserved. ( Von Hesse v. MacKaye, supra; Grafing v.
Of course the mere fact that a trustee is willing to execute a trust and that the beneficiaries consent thereto, will not justify witholding property from the heirs or next of kin or legatees or devisees of a settlor if the trust be invalid and incapable of enforcement without such consent. (Holland v. Alcock, 108 N. Y. 312.) It does not follow, however, if part of a disposition of property under a trust in a will or declaration of trust be invalid that the entire disposition or trust falls. The rule is that if the valid may be separated from the invalid and given effect “ without maiming the general frame of the will or the testator’s substantial and dominant purpose ” (Matter of Butterfield, 133 N. Y. 473), or if the primary or principal purpose can be given effect (Hascall v. King, 162 id. 134), although the invalid provisions, which must fall, relate to the same single trust, this will be done. (Harrison v. Harrison, 36 N. Y. 543 ; Kennedy v. Hoy, 105 id. 134; Savage v. Burnham, 17 id. 561; Van Schuyver v. Mulford, 59 id. 426 ; Benedict v. Webb, 98 id. 460 ; Wetmore v. Parker, 52 id. 450 ; Van Horne v. Campbell, 100 id. 287 ; Robert v. Corning, 89 id. 225, 241.) The rule is otherwise where the invalid portions are an essential part of the disposition or trust as an entity and not separable. (Post v. Hover, 33 N. Y. 593 ; Dupre v. Thompson, 4 Barb. 279, 284 ; Underwood v. Curtis, 127 N. Y. 523; Knox v. Jones, 47 id. 389 ; Manice v. Manice, 43 id. 303.) Within these rules, hereinbefore discussed, as well as by virtue of contract right, I am of opinion that the declaration of trust can be sustained as transferring title to the college even though otherwise it should be deemed to create an invalid trust for the annuitants. The settlor has as forcibly and clearly as language could make it declared it his primary and principal pur
Fourth. If there was a strict statutory trust created for the annuitants which is not severable and would be void under our statute on account of suspending the power of alienation of part of the income during the lives of the seven annuitants, still its validity in that respect is to be determined by the law of Pennsylvania. Assuming that this is the only infirmity in the declaration of trust it is clear that the settlor contemplated that immediately upon his death the college should take possession of- the securities, not through the executors or any proceedings in the Surrogate’s or other courts here, but by virtue of right and title conferred by the declaration of trust. The college was not required to leave the securities here. On the contrary, I think from the direction to the trust company to surrender them to it, the settlor contemplated that they should be removed from the State. The college was a foreign corporation and its seat was in a foreign State. It owned, held and invested its personal property there and was accountable to the laws of Pennsylvania and subject to the supervision of its courts. The professorship was established and was to be maintained there. The surplus income from the securities during the life of the annuitants and the whole of it thereafter was to be applied to this particular use there. Five of the annuitants resided in Pennsylvania and only one here. The trust, if any, therefore, was to be executed in that State. Our statute forbidding the suspension of the absolute ownership of personal property for more than two lives in being at the date of the instrument containing the limitation or condition (Pers. Prop. Law [Laws of 1897, chap. 417], § 2) was designed to prevent perpetuities or accumulations of personal property in this State and not in a foreign State or country, even though the settlor was domiciled here. (Hope v. Brewer, 136 N. Y. 126, 138.) The law of the domicile of the settlor governs as to the execution and construction of the instrument and his competency to dispose of the property; and hence a disposition in violation of chapter 360 of the
Fifth. Even if the law of New York governs on the question as to whether there is a strict statutory trust as to the annuitants and its validity, still the declaration of trust as to the annuities would be valid and enforcible. It has already been shown that a gift or a devise to a charitable corporation is not within the laws of New York prohibiting perpetuities and that such a corporation when it takes an interest may take the same subject to a lien or charge of annuities and may in such case act as trustee for other beneficiaries.
The only points that remain to be considered are whether these annuities were intended as a mere lien or charge upon the income
There is room for argument that even if a single strict statutory trust had been created in the college, and it had been appointed trustee for the benefit of these annuitants, and in such circumstances that the trust continued until the death of the last survivor, being the expiration of the seven lives in being, and in such manner that the annuities would not be assignable, yet the trust would be valid, because the statute prohibiting the suspending of the absolute ownership for more than two lives in being is not applicable to charitable corporations taking fpr a charitable use with incidental trusts, and there is some support in the authorities for this view although I
In Tabernacle Church v. Fifth Ave. Church (supra) there was in form a direct trust created in one charitable corporation of the entire income to another for a period of years, which was sustained, and although the precise ground is not specified this could only be upon the theory either that the statute against perpetuities did not apply or that this was a mere charge, for a suspension for years is for more than two lives in being. (Underwood v. Curtis, 127 N. Y. 523.) In Booth v. Baptist Church (supra) a trust in form of a single fund was created in a charitable corporation with directions to pay annuities for three lives in being, and it was sustained. This could only be upon one or the other of these theories. The opinion rather indicated that the decision went upon the theory that it was a charge.
I am, therefore, of opinion that the decisions which seem to indicate that the statute against perpetuities is not applicable to trusts of this nature really rest on the theory, which I consider sounder and better, that no strict statutory trust was created and that the annuities constituted a lien or charge upon income merely.
Sixth. I am of opinion, however, that if this be a strict statutory trust for the annuitants and the annuities be'not assignable, the trust could be sustained upon the theory that, although the securities constituting the trust fund are not severed or severable, yet that the trust is severable as to the interests of the respective annuitants so that there would be a suspension of the power of alienation of that part of the income accruing to each annuitant only during his life, which would not be a violation of the statute, and upon this
It is manifest that the facts could not be changed upon a new trial, and the error not being in the findings, but in the conclusions of law, the judgment should be reversed, yrith separate bills of costs to the appellants appearing separately against the respondent, and judgment directed adjudging the validity of the declaration of . trust and directing the delivery of the securities to the college thereunder, subject to the charges specified, and for the immediate payment to each of the appellants, W. N. Wallace and Benjamin E. Lillie, or their attorneys by the college out of the principal of the securities of the sum of $5,000 and income thereon from May 2, 1903, the date of the death of the settlor, and dismissing the complaint upon the merits, with separate bills of costs to the appellants .who appeared separately upon the trial.
All concurred.
Judgment reversed, with separate bills of costs to the appellants appearing separately against the respondent, and judgment ordered as directed in opinion, with separate bills of costs to the appellants appearing separately.