21 Del. Ch. 242 | New York Court of Chancery | 1936
A line of decisions in this State firmly settles the rule that real estate carried in a general residuary gift of all that rémains, or what is left, or the rest and residue, after debts and legacies have been paid, is chargeable with pecuniary legacies in case the personal estate is insufficient for the purpose, to the extent of the insufficiency. Hilford v. Way, 1 Del. Ch. 342; Rambo v. Rumer, 4 Del. Ch. 9; Getchell v. Rust, 8 Del. Ch. 284, 291, 68 A. 404; Ferris v. Ferris, 11 Del. Ch. 171, 98 A. 215; Rice v. Rice, et al., 12 Del. Ch. 245, 111 A. 439; Walters v. Young, et al., 12 Del. Ch. 297, 114 A. 164; University of Delaware, et al., v. Equitable Trust Co., et al., 18 Del. Ch. 335, 160 A. 754; Cooper, Ex’r., v. Bishop, et al., 19 Del. Ch. 98, 163 A. 644. The rule is not founded in technical considerations. It is a subsidiary of the cardinal one that in
Now it may be true that if the balance of personal estate available for general legacies lacks only a trifling sum, such, to emphasize the thought, as one hundred dollars, to meet them in full, it would be unreasonable to say that the. testator intended the real estate embraced in a residuary gift to be chargeable with the deficiency; for in that case it might well be that the small size of the deficiency was a result of a mere miscalculation by the testator of the value realizable from his personalty, and is not revelatory of an intent to throw any part of the burden of the legacies upon the real estate. See Briggs v. Carroll, 117 N. Y. 288, 22 N. E. 1054. In the instant case, however, the deficiency of the personal estate in a substantial amount to meet the general legacies must have been manifest to the testatrix if she gave any thought to the matter, as we must assume she did. It was of such size that it must be inferred that she intended that recourse should be had to her real estate to make it up. The evidence is not persuasive that her annual income was of sufficient amount as to indicate a reasonable expectation on her part that she could build her personal estate up to a size that in the course of a few years would enable the legacies-to be fully paid from it. She may have indulged a hope of that kind and her optimism may have led her to think that perhaps her investments would experience an increase in value with the passing of time. The presence of the residuary clause does not necessarily indicate such a hope and optimism. In view of the state of her investments both when the will was made and when she died, the residuary devise is rather to be understood as a provision, inserted out of an abundance of precaution, which would operate if anything might, contrary to present prospects, develop to invoke its opera
The conclusion is, then, that the real estate is chargeable with the deficiency of the personal property to meet the general legacies.
2. The briefs discuss the question of whether the executor was justified in applying $8,425.33 in satisfying two mortgages which were a lien on one of the pieces of real estate left by the testatrix. These mortgages were given by one who was a predecessor in title to the testatrix. The mortgagees did not hold the personal obligations of the testatrix. It is contended that the executor had no right to apply any portion of the fund applicable to legacies to the discharge of liens on land to the benefit of the residuary devisee. This question, however, in view of the conclusion just stated, viz., that the lands are chargeable with the legacies, appears to be conceded as of no further interest, for the satisfaction of the liens, in view of that conclusion, operated not for the benefit of the residuary devisee but for the benefit of the general legatees, since there will still be a deficiency below the legacies even with the full value of the land appropriated to their payment. The land to which they may look is liberated from the burden of the liens. The only possible question that can now arise in connection with the payment of the mortgages is whether the executor exercised prudence in protecting the equity in the property for the benefit of the legatees. That question is not presented by this bill. It is therefore not passed on.
It is not proper for the court to pass on the question presented under this head, because the payment of the mortgages was an accomplished fact when the bill was filed. The propriety of the payment is therefore not a matter for instructions. If it is to be questioned, it is a matter for suit at law or perhaps a bill for an accounting in equity.
With respect to general pecuniary legacies, they are not due and payable until one year after the testator’s death and do not bear interest until after expiration of that time. Curtis & Wife v. Potter’s Adm’r., 1 Houst. 382, 68 Am. Dec. 422. Where, however, a testator bequeaths a residue to a trustee for his widow or child or to one to whom he stood in loco parentis, with remainder over, this court allows equitable income to the beneficiary from the date of the testator’s death. Equitable Guarantee & Trust Co. v. McCurdy, et al., 11 Del. Ch. 156, 98 A. 220; Equitable Trust Co. v. Kent, et al., 11 Del. Ch. 334, 101 A. 875. In these two cases, the life beneficiary was a child of the testator. In Wilmington Trust Co. v. Blades, et al., 20 Del. Ch. 98, 171 A. 757, annual payments of definite sums out of the income of the residue which was given in trust, were decreed to be payable from the testator’s death, notwithstanding the beneficiaries were neither children of the testator nor persons to whom he stood in loco parentis, to the extent that income sufficient for the purpose was realized. Thus, in that case the question was not one of equitable income.
In the instant case the legacy to the trustee is a general pecuniary one and was not to arise out of the residue. The legacy is a fixed sum and is not under any possibility subject to increase in consequence of a saving of income during the course of administration as in the case of a residuary legacy which is indefinite in amount and capable of growth by the increment of income during the course of administration. There is therefore in the case of such a legacy as this one, no danger of enriching a remainderman at the
The conclusion is that the legacy of fifty thousand dollars to the trustee stands in the same category as any other legacy of a general pecuniary character and is therefore not entitled to equitable income during the period of administration. In view of this conclusion, it becomes unnecessary to consider the further question which was argued on one of the briefs, viz., whether the rate of four and one-half per cent, which Chancellor Curtis allowed in Equitable Trust Co. v. Kent, et al., supra, as the measure of equitable income should be lowered in view of the alleged reductions in the' earning power of money since his decision was rendered in 1917.
Decree in accordance with the foregoing.