2 Redf. 58 | N.Y. Sur. Ct. | 1871
It is objected by the counsel for the administrators that I have no power, jurisdiction or authority to alter, open or correct or amend the decree made upon the accounting.
It is objected further that I have no power or jurisdiction except upon notice to the heirs at law, next of kin, and creditors of the said Harvey Wallace.
This objection I shall also overrule. I think the trustee need only call upon the administrators for the fund. It is not necessary that any others have notice of this proceeding.
It is objected further that the Surrogate has no power or authority to decree payment to said Edgar A. Wells without having proof that he had presented the claim to the administrators, and that its validity was allowed.
I do not see the force of this objection. The claim to the amount of $1,610.86 and interest, is not disputed-The administrators had notice of the claim and admitted it to that amount. Slothing further was needed, but at that time there was no trustee to present the claim to, if a presentation was necessary, and no advantage can be taken when notice is in fact given. This answers all the objections filed. I think that whenever an error has been committed, the Surrogate on application upon notice may correct the same. It is only necessary for me to decide these objections. Whether the decree will be opened depends upon other questions, but the objection to my jurisdiction and power to open a decree of my own entering must be overruled.
The petition was consequently heard upon the merits.
Duryea & Bacon, for the administrators.
Dill & Royce, and D. F. Gedney, for E. A. Wells, the trustee.
Two questions are submitted for my decision.
1st. Upon the death of Henry Wallace, trustee of the fund of $2,000 under the will of William Wallace, deceased, upon whom did the trust devolve ? Shall the administrator with the will annexed, John C. Wallace have it, or Mr. Wells, the trustee 1
Upon this question I meet with various opinions of judges and opposite decisions. It is held in three cases which are cited below that the statute of uses and trusts does not apply to a trust of personal property. (Kane v. Gott, 24 Wend., 641; Savage v. Burnham, 17 N. Y., 561; Bunn v. Vaughan, 1 Abb. Ct. App. Dec., 253.
The revised statutes of this State have not defined the objects for which express trusts in personal estate may be created, but have done so as to real estate, and the statute of uses and trusts as to express trust of real estate provides, that upon the death of the trustee the trust shall devolve upon the Court of Chancery, (now Supreme Court). But section 2 of title 4, chap. 4th, 1st part of the revised statutes, provides as follows: “ In all other respects limitations of future or contingent interests in personal property, shall be subject to the rules prescribed in the first chapter of this Act in relation to future estates in lands f and one of those rules is, that upon the death of the trustee, the trust devolves upon the Supreme Court.
I am unable to see how we are to read the above statute otherwise than that it applies to trusts in either real or personal estate; and, conclude in my own judgment, that upon the death of Harvey Wallace, the trustee under the will of William Wallace, the trust devolved upon the Supreme Court, and that Edgar A. Wells is now, by virtue of the appointment by that court, the trustee of the said trust fund.
This disposes of the first question. But I will remark, that in some of the cases it is held or intimated that the administrator with the will annexed, (John C. Wallace) is entitled to this fund. The case in 1 Abb. Ct. App. Dec., 253, holds, that upon the death of the trustee the trust devolves upon his representatives. John 0. Wallace is not the representative of Harvey Wallace.
2d. It "being conceded that Harvey Wallace in his lifetime used this fund with his own in business, and so mixed it withhis own as to become un distinguishable, and could not be identified from his funds,—has the trustee a claim superior to that of a general creditor of his deceasedf
The parties have stipulated as to the facts upon which this question depends; they have stipulated that the amount of the funds in the hands of the administrators of Harvey Wallace, belonging to the estate of William Wallace, deceased, to wit, the said sum of $1,610 and interest, is the unexpended portion of said trust fund of $2,000, and that it was not kept separate from his own funds, but was by him used and mixed with his own money in business, &c.; by which admission, I conclude that the administrators of Harvey Wallace find from his books this balance of $1,610 and interest, which appears to be the unexpended portion of the $2,000 trust money; but they fail to find any investment of the same, and find that it is a part and portion of his property, owned by him at his death, he having used and mixed it with his own money in his business, &c.
The making of a trustee is the voluntary act of the party creating the trust. It is the confiding of your property to another to do with as you may will or direct. The court is not asked to aid you. The trustee is of your choosing; and it is the person choosing the trustee who is at fault, for the whole matter is with him. He may require the trustee to give security. But where a person makes a testamentary trustee of a trust estate, and no security is required, if the trust is for the benefit of some third person, the person beneficially intended may make complaint to the court in case the trustee is squandering the trust funds, or for many other reasons; and the court will remove the trustee, or require him to give security, as the case may be. It is not often that a trustee is called to an account; and no one knows except himself, one case in a hundred excepted perhaps, how he is handling the trust or what he has it invested in. Take this case. Matilda Wallace was a sister of Harvey; she was of age, and competent to look after her own interest; yet she contented herself by asking her brother for some money when she would or wanted it, and while she was so contented and confiding toward that brother, he was using her trust fund in speculation in stocks, when he was made bankrupt.
Even if she knew her brother was not keeping the fund separate from his own money, she would be very reluctant in requiring him to give security, or to offend him about the fund their father had entrusted him with by his last will and testament. But such is one’s privilege; and if the trader squanders the money, he has betrayed the confidence reposed in him.
It is a great hardship for the cestui que trust to lose, the beneficial intent by the wrongful act of the trustee. It is also a hardship for a creditor to lose his money.
Suppose a poor widow with a large family of small children had loaned to Mr. Harvey "Wallace say $2,000, all the money she had. We might suppose that Matilda herself had loaned her brother $2,000, of money given her by her father. In either case it would be a great hardship to lose the money, or most of it, yet the lender certainly would. The substituted trustee, in this case, has no greater or superior claim, in my opinion. The trust money having been used by Harvey in his business, proves, upon his death, to have been either lost in speculation or mixed with his own funds in the property left by him. He has, perhaps, obtained credit by using this fund, and creditors are entitled to share in his estate.
I will refer for the reasons of the rule to Barlow v. Yeomans (50 Barb., 187).
I confidently hope enough may yet be realized from the estate of Harvey Wallace to nearly pay all in full.
I decide, that upon the death of the trustee of an express trust, whether of real or personal property or both, the trust devolves upon the Supreme Court, and,
2d, That it appearing that the trust fund was so mixed by the trustee with his own property that it cannot be separated or indentified, it must be paid pro rata, as the creditors of the trustee are paid.
The application to appear and amend the decree
A reasonable allowance will be made to both parties for their costs, on application therefor.
Decree accordingly.