Stagg v. Beekman

| New York Court of Chancery | Jun 24, 1833

The Vice-Chancellor:

As the codicil revokes the bequest of the legacy and the devise of the lot, and substitutes the direction to the executors to hold the same for the complainant’s personal use and benefit (subject to the order and direction of the court), it is manifest the testator intended to create a trust which equity should protect and preserve, if possible, for the benefit of the complainant, to the exclusion of his creditors; and if this could not be done, then for the same to fall into the residuum of his estate. This is an intention which the court is competent to carry into effect, by declaring the executors to be trustees for the purpose or by appointing other persons trustees and directing the due application of the rents and income. This is a power which the court has by virtue of its general and exclusive jurisdiction over trusts ; and will exercise it in all eases, upon the principle that a trust is not to fail for the want of a trustee nor from any other cause—unless it be inconsistent with public policy or against the law of the land.

Although the provisions of the Revised Statutes, in relation to wills, are not to affect the construction of those which were made previous to the year one thousand eight hundred and thirty (2. R. S. 68. §. 70.) yet, I apprehend, other provisions of the statutes, in relation to the creation and division of estates and to uses and trusts do apply; since this will took effect from the death of the testator, and which was subsequent to the month of January one thousand eight hundred and thirty. So far from prohibiting such a trust as is here proposed, the statute expressly authorises it: 1. R. S. 728. §. 55. Rents and profits of lands may be applied to the use of the cestui que trust during life or left to accumulate for certain purposes and within certain limits. It is only when no valid direction for accumulation is given that the surplus of rents and profits, beyond what is necessary for the support of the person for whose benefit the trust is created, shall be liable in equity to the claims of creditors. And it is declared that every valid express trust will vest the whole estate in the trustees both at law and in equity, subject only to the execution of the trust, &c.: 1. R, S, 729. §. 57 to 60.

I think it very clear the trusts in the present case may be declared in conformity with these regulations and consistently with the will and designs of the testator, so as to prevent a lapse. And, consequently, the complainant be entitled to the benefit of the bequest and devise. But then comes the question, as to what extent this can be done ? It appears he is to have the benefit of them for his personal use for life and so that his creditors are not to take any part of the same. The whole is made subject to the order and direction of th@ court of chancery—the court may allow an accumulation—» or (if necessary for his support) the principal of the legacy and the capital of the trust-property may be broken in upon for such a purpose. The remainder after his life-estate is not expressly disposed of by the codicil: but, considering the trust as intended to be a substitute for the previous absolute devise and bequest and that this court is to order and direct the settlement and limitation of the estate and the same is only to sink into the residue in case it cannot be secured for the complainant solely, I am of opinion the remainder may be limited in the trust to the heirs of the complainant as a devise in fee. This might appear rather a forced construction, if the peculiar circumstance of the case did not warrant it. The next question is, whether the note for five hundred dollars made by the complainant, held by the testator, and given for money advanced to the former by the latter, is to be deducted from the legacy of one thousand dollars ?

After making the codicil, by which the legacy, in the first instance, was given, the testator advanced the sum of five hundred dollars to his legatee and took his promissory note, payable one year after date, with interest. The deceased made the last codicil nearly three years after the date of the will ;■ and' thereby converted the legacy into a trust fund, without making mention of the note.

At law, a testamentary act cannot operate as a release of a debt owing to the testator; while, in a court of equity, it may sometimes have the effect of extinguishing the debt: Ram on Assets, 469. A mere bequest, however, of a legacy by a creditor to his debtor is not necessarily or even prima facie a release or extinguishment. The court requires evidence clearly expressive of such an intention, before it will give effect to the act. If this intention is not expressed or rendered apparent on the face of the will, then evidence aliunde will be admitted to prove an intention to release or discharge it: 2. Roper on Legacies, 37. 62. 64.

In the present case, the evidence of such intention is wanting ; and the contrary is plainly inferrable. The amount of bounty is fixed in the shape of a pecuniary legacy of one thousand dollars ; an advance of five hundred dollars after-wards takes place % a note is given for it; this note is kept in the testator’s possession uncancelled; and in the last codicil nothing appears to show an intention to increase the bounty beyond what was originally contemplated; such however, will be the effect, provided the complainant can retain the sum advanced and also receive the benefit of the whole original bequest:—taking the note and preserving it among his papers, are all circumstances which clearly indicate that the testator intended the advance should remain as a debt against his legatee and be deducted and retained by his executors. This they have a right to do: Jeffs v. Wood, 2. P. Wms. 128.; Rankin v. Barnard, 5. Mad. R. 32.

The clause in the will authorising the executors, to compound with any of the debtors to the estate and to forbear suing altogether, is not sufficient to warrant a contrary conclusion. It does not go to the extent of releasing the debtors. It shows the humane and. benevolent feelings of the testator towards those who might be poor and unfortunate; and, although the complainant may be of that class, still the executors would hardly be justified, under their discretionary power, in suffering the opportunity to pass of realizing this debt by a non-exercise of their right to retain and deduct the amount of the note and interest out of the legacy.

The balance only must be considered as held in trust for him.

A provision made by the will for the costs and expenses of carrying its trusts into effect, may fairly be considered as embracing the costs of this suit. They must be paid out of the remainder of the testator’s estate.