32 N.Y.S. 183 | N.Y. Sup. Ct. | 1894
The question to be détermined in this case is whether the provisions of the thirty-third clause of the will of W. F. T. Steinway, whereby 4,000 shares of the stock of the corporation of Steinway & Sons are disposed of, is valid; and it is with reluctance that I have been forced to the conclusion that the scheme of the testator cannot be sustained.
The intention of the testator is clear, and I think it also clear that to carry that intention into effect would be to violate the one limitation which the law of this state imposes upon the disposition of personal property, and that is that the vesting of the absolute ownership of such property shall nof be suspended for a longer period than two lives in being at the date of the instrument containing the limitation or condition.
The will of the testator, after making a large number of legacies, provides, in the thirty-third clause, for the disposition of his stock in the corporation above named. That clause commences as follows: “ Thirty-third — I give and bequeath all my shares in the corporation of Steinway & Sons, of the city of New York, to my executors and trustees, hereinafter named, m trust, to be managed by them until the first day of January, in the year one thousand nine hundred and four (January 1st, 1904), as follows: A—One-fourth part of such shares in the Steinway & Sons’ corporation to and for the benefit of the five children of my sister, Wilhelmine Candidus, late of the city of New York, deceased, viz.: Louise Deppermann, wife of Gustave Deppermann, of Hamburg, Germany; Albertine S. Ziegler, wife of Henry Ziegler, of New York, and Harry Candidus, Johanne Candidus and Gustave Candidus, and to pay to them, in equal proportions, an annual sum representing an income of five per centum on and from such phares, and on the first day- of January, 1904, to pay over, in equal proportions, to the said five children of Wilhelmine Candidus, deceased, or their heirs, the said shares in the Steinway & Sons’ corporation, or the proceeds thereof, to have and to hold to him, her or them, his, her or their heirs and assigns forever.
Subdivisions B and C of said clause make provision in identically the same language; subdivision B disposing of one-fourth part of said shares to and for the benefit of the children of his sister Dorrette Ziegler, and subdivision C disposing of one-fourth part óf said shares to and for the benefit of his brother Charles Steinway. Subdivision D of the said clause contains a provision disposing of one-fourth part of said stock for the benefit of his brother William Steinway. But the variation between subdivision D and the other subdivisions is important, as throwing light upon the intention of the testator.
Subdivision D is as follows: “ One-fourth part of my shares in the said Steinway & Sons’ corporation to and for the benefit of my brother. William Stein way, or, in case of his death prior to January 1st, 1904, to and for his son George A. Steinway, his daughter Paula Th. Steinway, and his children by his second wife, Elisabeth C. Steinway, nee Ranft; and to pay to him, or; in case of his death, to his said children, an annual sum representing an income of five per centum in and from such shares, and on the first day of January, 1904, to pay over to my said brother William Steinway, or, in case of his death prior to -that date, to his said children as mentioned in this section of this my last will and testament, or their heirs, in equal proportions, the said shares in the Steinway & Sons’ corporation, or the proceeds thereof, to have and to hold to him, her or them, his, her or their heirs or assigns forever.” And the clause then contains the same provision as to the excess of the annual income of such shares over and above the five per cent.
The thirty-sixth clause of the will is also important as show
Our first duty is to ascertain, if possible, just what the intention of 'the testator was in respect to these shares of stock. As was said by Chief Justice Church, in Colton v. Fox, 67 N. Y. 348 : “ The intention of the testator must be ascertained and the will construed accordingly, if practicable, and when the construction is determined, that is, when it is ascertained what disposition the testator intended to make of his property, the question then is whether such disposition is in accordance with the law of the state.”
A careful consideration of these two clauses of the will that I have named can leave no doubt as to what the testator intended. The intention is clearly expressed that his stock in the Stein way & Sons’ corporation should be held by his executors ; should stand in their name upon the books of the corporation ; should be voted upon 'by them for the election of officers and the control of the business of the corporation,
Thus this stock, representing a value of over $1,000,000, was placed in such a position that It could not be sold or disposed of in any way for a period not limited upon lives in being, but fixed at about twenty years from the date of the will, and nearly fifteen years from the- death of the testator. During that period it was the clear intention of the testator that the stock should,not be sold or disposed of in any way, but should remain in bulk, managed and voted upon by the trustees, who were also to receive the dividends upon it, responsible to no one for their actions, and who were really to exercise every power and do every act, except sell the stock, that the owner of it could do.
The provision as to the dividends of the stock is also peculiar, and emphasizes the intention of the testator. It was provided that the trustees should pay to the persons named in each subdivision of this clause, in equal proportions, an annual sum representing an income of five per centum on and from said shares. That was not made dependent upon the shares paying any dividends, nor upon the trustees receiving any income at all from it, but appears to have been an absolute condition imposed upon the trustees upon their accepting the trust. It apparently had no relation to the income that was received from the stock, itself. And then by a further clause the executors and trustees are authorized to retain any excess of income derived from said stock over and above the five per centum as their compensation for the management of the stock; and the evidence is that the amounts retained by the executors under this clause have been in excess of three-fifths of the dividend, amounting generally to three-fourths of such
Let us look for a moment at the nature of the property transferred to the trustees. It was stock in an incorporated company. The property that the owner of shares of stock has in such a company is somewhat different from that which the owner of other real or personal property has where the possession of the property is necessary to its beneficial use.
The owner of such shares of stock has a right to the dividends declared on the stock ; the right to vote so as to have a voice in the management of the company and in the selection of its officers, and to determine generally when it is for the interest of the stockholders to dissolve the corporation; and upon the dissolution of the corporation, the right to receive his proportion of the property of the corporation after payment of its debts. I can think of no other right or power, except the right to sell, that the owner of shares of stock has, nor any other act that need indicate absolute ownership. And, with the right to sell the stock, these rights comprise the sole and beneficial use that the owner of capital stock of a corporation has by virtue-of his ownership.
Now, during this period of nearly fifteen years, from the death of the testator down to the 1st day of January, 1904, every one of these acts of ownership or right to the beneficial enjoyment of the stock, except the right to sell, was conferred upon the trustees; and the right to sell was given neither to the trustees nor to the persons who were to own the stock on the 1st day of January, 1904. And in the event that the corporation should be dissolved, then the testator provided that the amount paid as the distributive share of this particular stock should still be held by the trustees until January 1,1904, and should be invested by them and retained upon the same conditions that the stock itself was to be retained. Thus, upon no possible contingency could any of these beneficiaries receive any interest in this stock, except a payment of a sum
But for this suspension of the ownership I thin-k it clear that this would constitute a valid trust of personal property. The laws of this state have placed no restriction upon the owner of personal property creating a trust for any purpose that he desires. There is but one limitation on the power of a person to deal with personal property, and that is contained in the following section of the Revised Statutes: “ The absolute ownership of personal property shall not be suspended by any limitation or condition whatever for a longer period than during the continuance and until the termination of not more than two lives in being at the date of the instrument containing such limitation or condition, or if such instrument be a will, for not more than two lives in being at the death of the testator.” (1 R. S. § 1, p. 773.) And the question here is, whether this provision suspends the absolute ownership of this stock for a period greater than that of two lives in being.
The testator died on the 26th day of March, 1889; the stock was to be delivered to the persons named on January 1, 1904. The period was thus not to be determined by lives in being at the time of the death of the testator, but was for a fixed period of nearly fifteen years. If this were valid for fifteen years, it would be equally valid for fifteen hundred years, which would be practically perpetual. Is there any possible reason why it would be void if fixed to end in 2004, and not void ending in 1904 ? Clearly not. And the only question, therefore, is whether the absolute ownership of this stock has been by this scheme suspended until 1904. What does the statute mean when it speaks of the absolute ownership of personal property ? Does it mean an abstract right to-have it at a future time, but which in the meanwhile excludes-every act that the owner of like property can exercise over the property? Would it mean, in case of a horse, that a person was to call himself the owner, but should have no light to-use the horse in any way, either to sell it, make a contract in regard to it, make any disposition of it at all, or have posses
Just what was meant by the words “ absolute ownership ” was before the General Term of the Supreme Court in the case of Converse v. Kellogg (7 Barb. 596), and the judge (Allen) there discussed what is meant by absolute ownership with great ability and clearness, and, I think, with convincing force. The question that was presented to the court is stated by him as follows: “ If absolute ownership means nothing more than a vesting of the property, with a right of alienation, without the right of possession, then the restriction upon a division of the estate is not in conflict with the statute. But if the term used in the statute includes not only the property but the right to actual, immediate and unconditional possession, then the clause is repugnant to the statute and is void. For, beyond all question, the condition contemplates the possession of the personal property by the executors in whom it vested, as incident to their office, until the time fixed for the distribution. Until that time there could be no ownership in severalty by the devisees of any part of the property. All would have an interest in évery part, but no one would be entitled to any separate part to the exclusion of the others, and neither any nor all of the devisees would be entitled to the possession of the personal estate to the exclusion of the executors.” The question presented here could not be stated more clearly.
After calling attention to the difference in the language of the statute in regard to real and personal property, the learned judge continues: Personal property is strictly and technically the subject of absolute ownership, while, in theory at
Many cases have been cited on the briefs of counsel, and they have all been examined and studied, besides many cases not cited. I must confess that in some of the cases distinctions are taken and arguments used which may be to some extent inconsistent with the views above expressed. These cases generally, however, apply to legacies- of money left by will or legacies of a part or the whole of á residuary estate when the effect was simply to postpone payment of a legacy, but I have not been able to find one that distinctly applies to specific personal property of the character of the ^property in .question. Of the many cases cited I think none more instructive than the case of Hillyer v. Vandewater, reported in the official reports in 121 Hew York, 681, where it is stated that the opinions are not published because a majority of the judges did not agree in any opinion. The opinions in full are printed in 31 New York State Reporter, 671. Three opinions appear to have.
How different the facts of this case before us, where upon no contingency can there ever be any disposition of this property until 1904. If one of the persons named should die, the sum fixed to be paid to him as five per cent upon the shares of stock which was ultimately to come to him or his heirs was to be paid to his heirs until the full period had expired, and in that case the personal representatives or assigns of the person so dying would have no interest in the shares of stock, but the trustees were bound to ascertain on January 1, 1904, who were then the heirs of the one dying, and transfer the stock to such heirs.
The opinion of Judge Eabl, stating his construction of the will, which differs materially from that of Judge Fiitoh, says : “ If during the term one of the daughters should convey her share in the remainder, the purchaser would take it subject to the trust; and if either of them should die during the term, her representatives would take her remainder subject to the trust, and the duty of the trustees, who during the term are joint tenants, to divide the estate at the end of the ten years between the persons then entitled to the same, would still remain. There was, therefore, an attempt to create a trust term for ten years, during which time, if the trust is valid, the corpus of the estate is tied up in the hands of the trustees, and rendered inalienable, and its absolute ownership suspended. That such a disposition of the property violates the statute against perpetuities cannot be doubted.”
It seems to me that I can leave this case without further argument, and without the citation of further authorities, upon this quotation from Judge Eabl’s opinion; for the result of this clause in the will certainly is to create a trust for over fifteen years, during which time, if the trust is valid, the corpus of the estate is tied up in the hands of the trustees,
That such a trust estate is created is clear. Look again for a moment at a provision of the clause in question. The testator gives and bequeaths his shares of stock to the executors and trustees, in trust, “ to be managed by them until the first day of January, in the year one thousand nine hundred and four, as follows: ” One-fourth of such shares in the Steinway Company “ to and for the benefit of the five children,” etc. The title is here in express terms given to the trustees to manage the personal property to and for the benefit of the beneficiaries; and what he meant by management of the property is expressed in the thirty-sixth clause of the will. It is to vote on the shares of the stock and in their discretion to assent to or oppose any reduction or increase of the capital stock, and, also, in case of such reduction thereof, or the discontinuance of the corporation being determined upon, to invest the proceeds of his shares in securities deemed good and sufficient by them, and to apply and manage principal and interest of such investments precisely as it was directed to be done with the shares of stock, thus, as above stated, giving to the trustees the power to do every act that the owner of that property could do, except to sell it; and no act happening prior to the year 1904 could terminate the trust. The death of all the persons named within that period would not terminate it, nor would any interest in the stock pass to either their assigns or their personal representatives, but the trustees would be bound to deliver the stock to such persons as should be ascertained to be the heirs of the beneficiaries named, except in the case of Mr. William Steinway, when the stock was to be delivered to certain of his children.
It would be useless for me to discuss any of the other cases cited by counsel. As before stated, they have all been examined, and I do not find anything decided in any of them that is controlling upon this question.
-I think, therefore, that a trust was created by this clause of the will, and that that trust is void because it suspends the
The point is taken that this court has no jurisdiction of this action, but that the same should be left to the Surrogate’s Court. I think that question is settled in the case of Wager v. Wager (89 N. Y. 161); and while the court might refuse to take jurisdiction and send the case to the Surrogate’s Court, in a case of this importance I think the court should decide the question.
The defendant also claims that the plaintiff is estopped from insisting upon this clause being void, first, because he has accepted and received legacies under the will, and agreed to an increase of the capital stock of the corporation Steinway & Sons of $500,000. These acts undoubtedly would estop him from questioning the validity of the increase or the disposition that was made of the increased stock with his consent. It could not, however, operate to prevent his claiming that the whole trust was void. The receipt of other legacies under the will is not inconsistent with claiming that this trust is void; and, under the trust, the plaintiff had nothing to do with consenting to the increase of stock, as that was clearly vested in the trustees.
Nor do I think that the receipt, which also contains words of release, is conclusive. Under the form of the receipt, the executors are only released by the plaintiff from any claim that he might have as heir at law, and not as residuary legatee. The paper, however, is merely a receipt, and is always open to explanations ; and it is clear that neither the executors nor the plaintiff understood when plaintiff signed that paper that it released a claim that this trust was void. It does not appear that the plaintiff received any consideration for such release, there then being paid to him only the amount that he was entitled to as one of the residuary legatees. The plaintiff here does not claim under the trust and at the same time seek to 9avoid the trust; he claims that the trust is void, find.that the property passes to him as residuary legatee under the will, and I can see no act of his that estops him from asserting such a claim.
I shall not further discuss the questions presented, although of great interest, as I think this opinion is now too long. It represents but a small portion of the time that I have spent upon this case, but upon the whole case I am clearly of the opinion that the plaintiff is entitled to the judgment asked for, and judgment is directed accordingly.
Judgment ordered for plaintiff in accordance with the foregoing opinion.