Majority
p. 276Elise M. Jewett, Respondent, v. Melinda P. Schmidt, a Daughter of George Parbury Pollen, Deceased, and Bache McEvers Schmidt, Individually and as Administrators with the Will Annexed of George Parbury Pollen, Deceased, Appellants, Impleaded with Elizabeth M. Jewett and Others, Respondents.
Headnote
Will—when a trust is created without an express bequest in trust —form of appointment by the Supreme Court of a person to represent it in the execution of a trust, the trustee of which has died.The will of a testator provided, “ To my daughter Melinda, I also give the interest or income as it accrues on Two hundred thousand (§200,000) dollars during her natural life. The said amount to be set apart in such good dividend paying stocks and bonds as may stand in my name at the time of my decease and at the then market value of the same. And at her death I will that the said amount of Two hundred thousand dollars go to her legal issue in equal portions after they severally reach the full age of twenty-one years.”
By a codicil thereto he gave his executors power “ to change the stock securities thereof at discretion as a measure of safety,” and directed that the payments of income under the will be tnadé monthly.
In an action brought by the executors for a judicial construction of the will, to which all the persons interested in the testator’s estate were made parties, a judgment was rendered directing the executors to provide the §200,000 fund for Melinda P. Schmidt, “by setting apart stocks and bonds now held by the .said executors at the present market value thereof and including therein the one equal half part of the good dividend paying stocks and bonds held by the said executors at the time of the death of the testator at the then market value thereof, and in case of sale of any of such stocks, the stock or cash substituted therefor and that the said executors may change the said stock securities at discretion; that the said executors pay the interest or income arising from such stocks and bonds so set apart to the said Melinda P. Schmidt in monthly' payments during her natural life and after her death that the said executors pay and distribute such stocks and bonds so held and to be retained by them, or such stocks, bonds or other securities as may be substituted by the said executors in place of the securities so to be set apart, to and among the legal issue of the said Melinda P. Schmidt in equal portions after they severally reach the full age of twenty-one years.”
In pursuance of this judgment, the executors set apart the §200,000 fund. Thereafter they commenced a proceeding for a final judicial settlement of their accounts as executors. This proceeding, to which Melinda P. Schmidt was made a party, resulted in a decree directing the executors to set apart the §200,000 fund in a separate account in their names as trustees for Melinda P. Schmidt and her children and to account for the same as such trustees.
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After the provisions of this decree had been carried out, the executors died and Melinda P. Schmidt and her son were appointed administrators with the will annexed of the testator. Such administrators with the will annexed thereupon took into their possession, and thereafter retained without accounting therefor, the stocks and securities constituting the $200,000 fund.
In an action brought by a daughter of Melinda P. Schmidt to compel the administrators with the will annexed to account for the property and to have a trustee appointed in place of those named in the testator’s will, it was
Held, that the will created a trust in the executors in respect to the $200,000 fund, notwithstanding that it contained no express bequest to such executors in trust;
That it was the testator’s intention that, from the time when his estate had become so far settled that his executors could set apart the $200,000 fund, they should act with reference to such fund as trustees and not as executors;
That the latter construction was the one placed upon the will by the judgment rendered in the action brought to construe the same;
That upon the death of the executors named in the will, the trust devolved upon the Supreme Court pursuant to the statute and that it became the duty of the court to appoint some person to carry out such trust on its behalf;
That the person so appointed would not be a substituted trustee, but simply the representative of the court to carry out the trust.
Appeal by the defendants, Melinda P. Schmidt, a daughter of G-eorge Parbury Pollen, deceased, and another, individually and as administrators with the will annexed of George Parbury Pollen, deceased, from portions of an interlocutory judgment of the Supreme Court in favor of the plaintiff and certain of the defendants, entered in the office of the clerk of the county of New York on the 24th day of December, 1902, upon the decision of the court, rendered after a trial at the New York Special Term, appointing a trustee of a trust fund and directing an accounting.
In August, 1877, George P. Pollen died leaving a last will and testament and a codicil thereto which were admitted to probate and letters testamentary issued to the executors named in the codicil. So much of the will as is material to the question here presented reads as follows : “ To my daughter Melinda, I also give the interest or income as it accrues on Two hundred thousand ($200,000) dollars during her natural life. The said amount to be set apart in such good dividend paying stocks and bonds as may stand in my name at the time of my decease and at the then market value of the same. And at her death I will that the said amount of Two hundred thousand dollars go to her legal issue in equal portions
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after they severally reach the full age of twenty-one years.” The will appointed Cornelius C. Colgate and Edward Colgate and the testator’s two daughters, Ann Eliza Leggett and one of the appellants, Melinda P. Schmidt, executors and executrices. The appointment of the two daughters as executrices was, however, revoked by the codicil and power was given to the executors “ to change the stock securities thereof at discretion as a measure of safety ” and directed that the payments of income under the will be made monthly. Subsequently a suit was brought by the executors for a judicial construction of the will against the appellants Melinda P. Schmidt and Bache McEvers Schmidt. This plaintiff and others and all of the parties to this action who were then in being were made parties to that action and were either served with a copy of the summons or appeared in the action by attorneys or guardians ad litem. That action was prosecuted to and resulted in a judgment which adjudged and determined, among other things, as follows: “ And it is further ordered, adjudged and decreed that the plaintiffs as executors of the last will and testament of the said George P. Pollen, deceased, out of the one equal half part of the remainder of personal assets, in the next place, set apart the sum of Two hundred thousand dollars or so much thereof as the personal assets of the estate will allow, besides other claims, for the purpose of providing an income therefrom for the benefit of the defendant Melinda P. Schmidt, by setting' apart stocks and bonds now held by the said executors at the present market value thereof and including therein the one equal half part of the good dividend paying stocks and bonds held by the said executors at the time of the death of the testator at the then market value thereof, and in case of sale of any of such stocks, the stock or cash substituted therefor and that the said executors may change the said stock securities at discretion ; that the said executors pay the interest or income arising from such stocks and bonds so set apart to the said Melinda P. Schmidt in monthly payments during her natural life and after her death that the said executors pay and distribute such stocks and bonds so held and to be retained by them, or such stocks, bonds or other securities as may be substituted by the said executors in place of the securities so to be set apart, to and among the legal issue of the said Melinda P. Schmidt in equal portions after they
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severally reach the full age of twenty-one years.” After the entry of this judgment the said executors, pursuant to the directions contained therein, constituted and set apart for the appellant Melinda P. Schmidt, a fund of $200,000, the income of which they regularly paid to her. Thereafter the executors commenced a proceeding in the Surrogate’s Court of the county of Hew York for a final judicial settlement of their accounts as such, to which she was made a' party and the same was finally settled by a decree of the Surrogate’s Court and their commissions as executors were paid and they were directed to set apart the fund of $200,000 to a separate account in their names as trustees for Melinda P. Schmidt and her children, and pay the income to her as directed in the will, and thereafter account . as such trustees. They set apart the fund; paid the income as directed, and subsequently accounted as trustees and were paid commissions, and in such accountings Melinda P. Schmidt was a party. On or prior to May 28, 1894, both of the executors died, and thereupon, upon the application of Melinda P. Schmidt, she and her son, Bache McEvers Schmidt, were appointed administrators with the will annexed of the estate of George P. Pollen, deceased, and as such took into their possession and thereafter retained, without accounting therefor, the stocks and securities constituting the trust fund of $200,000. The plaintiff, a daughter of said Melinda P. Schmidt, thereupon brought this action to compel her mother and brother to account for this property and to have a trustee appointed in place of those named in her father’s will and who had died. She had an interlocutory judgment appointing a referee to take and state the accounts, and naming the Morton Trust Company of the city of Hew York trustee, and it is from this judgment that the appellants have appealed.
Barclay E. V. McCarty, for the appellants.
Thomas J. Falls, for the plaintiff, respondent.
Walter Carroll Low, for Fritz L. Schmidt, Jr., defendant, respondent.
The appellants insist that the judgment appealed from is erroneous and should be reversed, principally upon the ground that
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under the will of George P. Pollen a trust was not created and that was determined in the action brought to construe the will, which judgment is binding upon the parties to this action. Whether or not a trust was created necessarily depends upon the construction to be given to the will and codicil when read and construed together. It will be observed that there is no express devise to the executors in trust nor are the executors described as trustees, but these facts are immaterial if the court can see from the other words used that the intent of the testator was to create a trust. To create a trust it is not necessary to use the word “trust ” or “trustee.” It is necessary, however, that words shall be used which will express, clearly and intelligently, the intention of the testator, as gathered from all of the words used — that is, from his entire will — to accomplish that purpose. Here, notwithstanding there is no express devise to the executors in trust, the testator refers in express terms to a trust which he has specifically created. The executors were to have the management and direction of, and were entitled to the fund referred to, until the death of Melinda P. Schmidt, and when that occurred they were to distribute the same among her issue in equal portions after they respectively reached the age of twenty-one years. This not only appears from the provisions of the will and codicil, but also from the judgment of the Supreme Court, which is binding upon all of the parties. They were not only to have the management of the estate during that time, but they were clothed with power “ to change the stock securities thereof at discretion as a measure of safety.” They were, therefore, directed to hold the securities, to pay the income monthly during the life of Melinda P. Schmidt to her, and upon her death to distribute among her children, and if they deemed it advisable in the meantime they could sell the securities and purchase others. These duties were to be performed by them, not as executors, but as trustees, and it is entirely immaterial by what name they were designated in the will. Calling a person an executor does not make him such, if the duties which he is required to perform are such as do not pertain to that office; in other words, the act which the person does determines the capacity in which he acts. There is a marked difference between the acts of an executor and the acts of a trustee. The acts of an executor are similar to those which devolve upon an administrator. His duties
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are to take possession of the assets of the testator, collect the outstanding debts, sell the goods and chattels, so far as necessary for the payment of debts and legacies and to pay the latter in accordance with the terms of the will. These are precisely the duties of an administrator, except that he is, after the payment of debts, under an order of the Surrogate’s Court to distribute the surplus to the widow, children or next of kin of the deceased. If any other duties are imposed upon an executor, or any power conferred not pertaining to such duties, then a trust or trust power is created and the executor becomes, in the execution of that power, a trustee or donee of a trust power. (Matter of Union Trust Co., 70 App. Div. 5 .) This distinction is pointed out by Mr. Eedtield in his Law and Practice of Surrogate’s Courts (6th ed. § 319), in which he states that the office of an executor and that of a testamentary trustee are distinct, notwithstanding the same person is appointed in both capacities. “ In the former capacity,” he says, “ it is his duty to collect the property and pay the debts and legacies; in the latter, he is called upon to invest and manage a particular fund or trust estate in accordance with the directions of the will.” It is alluded to in Hurlburt v. Durant ( 88 N. Y. 126 ), the court saying: “ If any duty was imposed upon the executors or any power conferred not appertaining to the duties of his[1] office, ‘ a trust or trust power is created and the executor becomes a trustee or a donee of a trust power. And such powers are conferred and such duties imposed upon him, not as incidents to his office of executor, but as belonging to an entirely distinct character &emdash; that of trustee. And in all such cases the trust and executorship are distinguishable and separate.’ ”
In the will and codicil here under consideration the general scheme and purpose of the testator indicate what he had in mind, and that he intended there should be a period of time when the duties of his executors as such, so far as the fund of $200,000 set apart for the benefit of his daughter Melinda was concerned, should terminate, and that they should thereafter assume, for the benefit of his daughter and her children, the character of trustees of such fund. When was that period of time and what were the duties he contemplated casting upon his executors as trustees? It was, when his estate had become so far settled that his executors could set apart
* Sic.
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the fund directed, that from that time their acts with reference to that fund should be the acts of trustees, and not executors. They were directed to hold the fund or reinvest it as they saw fit. They were to receive the income from it-and pay the same to the daughter during her life and thereafter divide the principal among her issue. The investment of this fund and the reinvestment as occasion required; the collection of the income and payment to the daughter during her life, and the division among her issue upon her death were all acts of trustees and not the acts of executors. The question in this respect is much like Matter of Hecht ( 71 Hun, 62 ). There the bequest was “ to my brother Daniel Schneider * * * the interest of the sum of $10,000 at the rate of six per cent per annum, and to be paid semi-annually by the below-named executor during his natural life.” Upon the death of Daniel Schneider the $10,000 was directed to be divided among the testator’s brothers and sisters, and the court held that a trust was created and its execution devolved upon the executor in express terms. Here it-will be noticed that the “interest or income as-it accrues on Two hundred thousand ($200,000) dollars during her natural life ” is to be paid to the daughter and at her death to her legal issue, and the executors are directed to pay the income monthly.
Matter of Dewey ( 153 N. Y. 63 ) is also in point. There the language was : “ I give, devise and bequeath to my said wife, Caroline J. Dewey, the interest upon the sum of twelve thousand dollars to be paid to her annually during the period of her natural life by my executors hereinafter named, said sum to be in lieu of her dower interest in my real estate,” and the court, in passing upon the question as to whether the executors were also trustees, said the testator “ does not, in express language, invest his executors with the powers of trustees. He does, however, require them to carry the provisions of his will into effect and gives them the power to sell or dispose of his real or personal property as in their judgment may seem best. The third clause of the will required them to annually pay to his widow the interest upon $12,000. This necessitated an investment so that the $12,000 would earn an income. This duty was imposed upon them as executors. It was an active duty and such as usually pertains to the office of trustees and such they must be deemed to be for the performance of these duties.”
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We are also of the opinion that the proper construction to be put upon the judgment rendered by this court in the action brought to procure a construction of the will is to the effect that after the trust fund had been created the executors named in the will were to thereafter hold such fund as trustees and not as executors. This seems to have been the view of all the parties because thereafter the executors as such rendered a final account and the subsequent accountings which were had by them were as trustees, and commissions were allowed to them as such and the decrees of the surrogate in this respect seem to have been satisfactory to all of the parties, inasmuch as no appeals, so far as appears, were ever taken therefrom.
If we are right in the conclusion that the executors named in the codicil of Mr. Pollen, after the creation of the trust fund referred to, acted not as executors but as trustees of that fund, then upon their death the trust, pursuant to the statute (Laws of 1882, chap. 185, revised by Real Prop. Law [Laws of 1896, chap. 547], § 91, as amd. by Laws of 1902, chap. 151), devolved upon the Supreme Court, and it became its duty to appoint some person to carry out the trust on its behalf, as provided therein. (Horsfield v. Black, 40 App. Div. 264 .) The judgment appealed from did not appoint a person to carry out the trust as provided in the statute, but instead appointed the Morton Trust Company trustee. The court had no power to make such appointment. A trustee of a trust fund can only be appointed under section 92 of the Real Property Law, and that is when the trustee has resigned or been removed.
The judgment appealed from, therefore, must be modified by striking therefrom the provision appointing the Morton Trust Company trustee, and providing that upon the death of the original trustee, the trust, being unexecuted, vested in the Supreme Court, and appointing the Morton Trust Company the representative of the court to carry out its provisions ; and as thus modified affirmed, with costs to the respondent payable out of the fund.
Van Brunt, P. J., Patterson, O’Brien and Ingraham, JJ., concurred.
Judgment modified as directed in opinion, and as modified affirmed, with costs to respondents payable out of the fund.
Cases cited
- In re Union Trust Co. 70 App. Div. 5 p. 281
- In re Dewey 153 N. Y. 63 p. 282