Majority
p. 531Sarah E. Stewart, Individually and as Executrix of and Trustee under the Last Will and Testament of Edward A. Woolley, Deceased, Appellant, v. John H. Woolley, Individually and as Executor of and Trustee under Said Will, and The Attorney-General of the State of New York, Respondents, Impleaded with George E. Woolley, Individually and as Administrator, etc., of George W. Woolley, Deceased, Appellant, and Others. Second Department, October 4, 1907.
Headnote
Will — unlawful suspension of power of alienation — power of sale construed — unlawful accumulation — when scheme of distribution does not fail — payment of specific bequests from rents—void trust.A devise to executors in trust to take charge of lands, to collect the rents and-- “ to sell and dispose of the same at such time "within five years after” the testator's death, “ as they may be able to obtain the sum of §50,000 in the aggregate, therefor and immediately upon the expiration of' five years from the date” of the testator’s death “if such premises remain so long unsold to sell and dispose of the same * * * at such price as they in their discretion shall deem most beneficial ” should be construed as an express trust, not as a power in trust.
Hence, as the trustees cannot sell within five years unless they obtain §50,000 for the lands, the power of alienation is unlawfully suspended, not being measured by lives. The possibility that said sum might be realized Toes not validate the devise, for a limitation which by possibility may. create an unlawful suspension is -void.
When such will further provides that a specific part of the proceeds of the sale .be held in trust during the lifetime of a son of the testator, and after paying specific legacies the residue of the proceeds be distributed to such churches as the executors “then acting” shall in their discretion deem most deserving, the power of sale cannot be eliminated from the will, being necessary to the execution of the trust and the distribution to churches whose, right to take can be determined only after a sale.
A direction for the accumulation of-the profits from lands which are not to be sold within five years of the testator’s death unless a certain sum can bo obtained, is void.
But although the direction not to .sell within five years unless a certain sum be obtained and the incidental provision for accumulation be' void, the scheme . of distribution of the proceeds of a sale is not dependent thereon and does not fail when the invalid clauses are eliminated. By retaining the power of sale free from the invalid restriction the testator’s intention is merely accelerated.
p. 532
If in exercising said power of sale the proceeds do not amount to enough to pay ■ specific bequests, the deficit should be made up from -the rents collected, and the surplus rents be distributed-to the churches under the residuary clause.
A provision that a portion of the rents and profits of lands be accumulated and held in trust for the life of the beneficiary and then distributed to his' children • is void.
■ Separate appeals by the plaintiff, Sarah E. Stewart, individually and as executrix, etc., and by the defendant, George E. Woolley,'.individually and as administrator, etc., from certain portions of a judgment of the Supreme Court’in favor of certain of the defendants, entered in the office of the clerk of the county of Kings on the 18th day óf May, 1906, upon the, decision of the court rendered after a trial at the Kings County-Special Term.
The action is for construction .of a part of the will of Ed ward , A. Woolley,, admitted to probate on October 12, 1899. That part provides : “ I give and devise to my executors hereinafter named or such of them as shall qualify arid the survivors or survivor of them and li'is or her successors the house and lot of land situate on the northeasterly corner of Fulton Street and Ashland Place (late Raymond Street) and also the house and lot of land in the- rear thereof known as number 59 Ashland Place in the City of Brooklyn in Trust, to receive and take charge of the same and to sell and dispose of the' same' at such time within five years after my decease as they may be able to obtain the sum of fifty thousand dollars in the. aggregate therefor,, and immediately upon the expiration of five yeai’s from the date of my decease, if said premises remain so long unsold, to sell and dispose of the same separately or together, either at public or private sale, at such price and upon such terms as they in their discretion shall deem most beneficial, and to execute and deliver good and valid deeds of conveyance therefor,- and’ until said premises shall he sold upon the further trust to collect and receive the rents, issues and profits thereof, to pay the taxes, water rates and' assessments that may be imposed on said premises, premiums of insurance-and-the interest on the mortgage (if any) thereon,-and to keep the same in good repair ánd to invest and keep invested the balance of said rents, issues and profits until said premises shall' be sold -as aforesaid, when the purchase money received by them from the sale of said premises, together with the said rents, issues and
p. 533
profits, and the accumulations thereof, shall be paid and distributed by them as follows : Ten thousand dollars thereof to my son, John H. Woolley. Ten thousand dollars thereof to my daughter, Sarah E. Stewart. Ten thousand dollars thereof to be retained by my' executoi's hereinafter named, or such of them as shall qualify, and the survivors or survivor of them and his or her successors until the death of my son, George E. Woolley, in trust for the following uses and purposes, to wit: to invest and keep the same invested in good and sufficient securities, and'to apply the interest and income thereof towards the payment of the interest, taxes, assessments, water rates, premium of insurance and necessary repairs upon the ten houses on Fourth Avenue devised to my executors under the clause of this, will; any balance to be paid to my said son, George E. Woolley, during the term of his life in quarterly payments; -in case the said rents, issues and profits of said premises shall be insufficient to pay said taxes, assessments, water rates, insurance and repairs.
“ In case the rents, issues and profits arising out of the said premises so devised to my executors under said clause of this, my will, together with the interest and income out of said trust fund aforesaid shall be insufficient to pay and discharge the taxes, assessments, water rates, insurance and all necessary repairs to said premises, then I hereby direct my executors to apply so much of-the principal of said trust fund from time tó time as shall be necessary to carry out said trust.
“ IIpon the death of my said son, George E. Woolley, if there he any of said trust funds remaining in their hands, then I direct my executors to pay and distribute the same among the children of said George E. Woolley, share and share alike..
“ The balance of residue of the proceeds of the sale of premises cofner of Raymond Street and Fulton and Ashland place, City of Brooklyn, to be distributed to and amongst such Free Protestant Clnjrch and Evangelical Protestant Churches in sums not to exceed five hundred dollars to any one church, as my said Executors or the majority of them then acting shall in their discretion deem most deserving and in need thereof,- but no church shall be selected to receive any benefit under this provision of my will unless the same shall be a free church, where no charge is made of fee is required
p. 534
to be paid to occupy the pews or sittings therein during divine services.”. .
William Sullivan, for the plaintiff, appellant.
Melville J. France, for the appellant George E. Woolley 1
A. F. Van Thun, Jr. [John Dill, Jr., with him on the brief], for-the respondent John H. Woolley.
George Fielder, for the .respondent the Attorney-General of the State of New York. • '
I think that the intendment of the testator was an express trust in the executors; not a power, in trust. (Spitzer v. Spitzer, 38 App. Div. 438 ; Hubbard v. Housley, 43 id. 129; affd., 160 N. Y. 688 ; Staples v. Hawes, 39 App. Div. 548 .) I think that the provision empowering the executors to sell “at such time within five years after my decease as they may be able to obtain the' sum of fifty thousand dollars in the aggregate therefor,” is not merely advisory but is a limitation, so that they have no authority to sell during that period for a less price. Fowler, on Beal Property Law of the State of New York (2d ed. 479, citing authorities), writes: “ While a peremptory power .of sale does not,per se, suspend the power of alienation, á'power to sell and distribute; does not necessarily relieve a-trust limitation, óthenvise invalid, from the effect of suspending the • power of alienation. So if the execution of even a, power of sale is, by any limitation, unduly postponed, such limitation violates- the rule' against a perpetuity, and is void, unless, the power is of such a nature as to be presently extinguished or merged.- Where the power' may be released by a. person entirely sui juris, it would seem to create a perpetuity.” If the power of alienation w'aá' suspended for a term not measured by lives, then the provision is void. (Brown v. Quintard, 177 N. Y. 75 , 82; McGuire v. McGuire, 80 App. Div. 63 .) It is bad if, at the time of the creation of .the trust,- there, was á possibility that there could be no sale for the period- of five years. Nelson, Oh.. J., in Hawley v. James ( 16 Wend. 61 , 120), says: “ Now if in either aspect the limitation of the estate might suspend the power of alienation beyond the timé
p. 535
allowed by the law, it will be impossible to sustain it, because the rule is well established that a limitation which, by possibility, may create such a suspension, is void.” (See, too, Amory v. Lord, 9 N. Y. 403 , 415, citing Hawley v. James, supra; Herzog v. Title Guarantee & Trust Co., 177 N. Y. 86 , 99; Trowbridge v. Metcalf, 5 App. Div. 318 ; affd., 158 N. Y. 682 .) In Spitzer v. Spitzer (supra) this court, per Cullen, J., said: “ The will directs that the executor shall sell,' as soon as possible after the testator’s death and within two years from the admission of her will' to probate,, for the best price that can.be realized, but for not less than $18,500 without the written consent of the testator’s sons. It seems to us that this' does not violate the statute against perpetuities. The- trust is to continue until the time of sale. If ¿he authority to sell was unqualifiedly limited by the- provision that the executor should obtain the sum of $18,500 for the property, the trust would be illegal because it might be that the executor never could obtain that price.” (See, too, Stewart v. Hamilton, 37 Hun, 19 , 21.) -The learned Special Term was moved to pronounce the provision valid by the consideration that a price well within the fair market value of the thing to be sold is no more than is implied in all powers of sale, and there was no attempt to show that the realty could not fetch, the price named within five- years. But the fact that normally •a voluntary vendor does not sell at a sacrifice, if in any way, germane to the question before us, could indicate nothing more than that this testator thought that the sum which he named might be realized within the five years. And the implied restriction upon an agent or a trustee that he should not make a ■ voluntary sale at a foolish price, is quite- different from an express prohibition that he should sell only at a prescribed, price. The validity of the provision, as I have shown, is not to be determined by probabilities or possibilities of a sale, but the possibility that there could not be a sale.-
- I am of opinion that the power of sale cannot be' defeated or annulled. A specified part of the proceeds of a sale is to be held by the -executors in trust for the lifetime of the testator’s son George. Hence there cannot be a present right in existence to dispose of the entire interest. (Garvey v. McDevitt, 72 N. Y. 556 .) In addition, -after the-gifts to his children John and Sarah, and the making of
p. 536
the-said trust for the life of George, any residué of the sale, is to he distributed “ amongst Such Free Protestant Church and Evangelical Protestant Churches in sums- not to exceed five hundred dollars fib any one church, as my said .Executors or the majority of them then acting shall, in their discretion deem most deserving and-in need thereof, but-no church shall-be selected to receive any benefit under this provision of my will unless the same, shall be a free church, where no charge is made or fee is required to be'paid-tb occupy the pews or sittings therein, during-diyine services.” How I do riot-find ¡that there is any religious denomination ■ known or. .described- even approximately as the Free Protestant Church. There is a,religious body known as the Evangelical Church, but there is doubt whether.the' testator by the expression “Evangelical” intended any more definite., designation than those churches\which conformed,.to the principles of the gospel of Jesus Christ. (Century Dictionary.) It is to be noted that there is'no territorial limitation whatever, b.ut for aught, expressed all churches within those Terms may be selected by the-executors. .There is serious question under the rule of Read v. Williams ( 125 N. Y. 560 ) whether this power is not too indefinite. However this may be, this .residue w.as. not given to any church- or churches which could be selected at the time of the. death of "the -testator,' for only after the sale was the residue to be. given to such churches “ as my said Executors or the majority of them then acting shall in their discretion deem most deserving.and in need thereof-;” It-seems clear that the executors cannot now exercise-such ,a discretion-which must regard the deserts and needs of particular churches, which at the time of the distribution, may then ,show themselves, worthy and free churches.' .... . .
The scheme of the part of the will under consideration-coptemplated the creation of a fund which required the. sale of- the realty'. specified.- It is true that the. power, of sale was limited for a period by the provision in question, but ait the expiry of that, period the the power of sale was. imperative. All agree that the provision' for accumulations meanwhile is bad. The question is whether tlie -provisions are' so articulated with the scheme that the scheme itself must fail. If. we eliminate the void provisions as to the sale (that, for accumulations is but incidental • to it) we cpfi Off a provision-designed not to -defer the scheme but. to secure' a particular price.
p. 537
Whenever that price could .be obtained the scheme of distribution was to be carried out. It was not essential to the scheme that a par. ticular price be obtained, inasmuch as there is no restriction as to price after the 'lapse of five years. Elimination of the void provision leaves intact both the imperative power of sale and the plan of distribution! If we uphold the scheme, aside from the void provisions, we but now make possible the plan the testator intended should become effective immediately within five years if the fixejd price was realized, and in any event upon the lapse of that period. We write, then, no'new will. We but possibly accelerate the operation of testator’s dominant purpose. The disposition of the fund to be realized from a sale does not offend the law. The trust in $10,000 thereof is measured by the life of the son George: 'The other parts thereof áre to be distributed outright, and the disposition of the residue, if any, may be sustained. Under the doctrine of Kalish v. Kalish ( 166 N. Y. 368 , 372); Haxtun v. Corse ( 2 Barb. Ch. 506 ) and Van Vechten v. Van Veghten (8 Paige, 104) I think that this should be the disposition of this case. My view constrains me to differ and to ágree with the learned" Special Term. First; I differ .in that I think that the limitation of the power of sale for five years is bad-. Second, I agree that the direction for the accumulation of the net rents and profits until the sale is bad. Third; I agree that if the sale does not realize the sum of $30,000 the rents are given to the absolute distributees- to the extent necessary to make the fiind $30,000; aud; further, I think that an excess of rents over that sum is applicable to the provision for. the churches. Fourth, I agree that the one-third of that contribution which is directed to be held in trust for the life of George E. Woolley,is void. Fifth, in other respects I agree. .1 advise that the judgment as thus modified should be affirmed, with costs .to all parties, payable out of the estate. - ;
Hirschbero, P. J., Woodward, Hooker and Miller, JJ., concurred. • . •
Judgment modified in accordance with opinion of Jenks, J., and-as so modified affirmed, with costs to ail parties payable o.ut of the estate. Order to-be settled on notice before Mr. Justice Jénes
Cases cited
- Staples v. Hawes 39 App. Div. 548 p. 534
- Brown v. Quintard 177 N. Y. 75 at 82 p. 534
- Hawley v. James 16 Wend. 61 at 120 p. 534
- Amory v. Lord 9 N. Y. 403 at 415 p. 535
- Herzog v. Title Guarantee & Trust Co. 177 N. Y. 86 at 99 p. 535
- Trowbridge v. Metcalf 5 App. Div. 318 p. 535
- Garvey v. McDevitt 72 N. Y. 556 p. 535
- Read v. Williams 125 N. Y. 560 p. 536
- Kalish v. Kalish 166 N. Y. 368 at 372 p. 537
- Haxtun v. Corse 2 Barb. Ch. 506 p. 537