Street v. Post

Headnote

Trust — construction of trust deed — disposition of residue — assignment for benefit of creditors — termination of interest of assignee.

Street v. Post, 197 App. Div. 304 , affirmed.

Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered May 27, 1921, which affirmed an interlocutory judgment entered upon a decision of the court at Special Term construing a trust deed made as a marriage settlement and providing for the payment" of the income to the intended wife of the maker during her lifetime. The marriage was solemnized and the controversy arises over the disposition to be made of the. fund by the trustee on the death of the wife, Penelope O. Morgan, who died in 1918, having survived her husband, Henry Morgan, who died intestate on March 13, 1891. The provision of the trust deed upon that subject is as follows: “ and upon the death of the said Penelope Overton White, the said intended wife, upon which event it is hereby declared the said trust shall terminate, to transfer and deliver over the capital of the said trust fund to the said Henry Morgan, if he be then living, and if the said Henry Morgan be then dead, then to his personal representatives or to whomsoever may be entitled under his last will and testament to receive the same as part of his estate, it being hereby expressly declared and agreed that the whole residuary interest in said trust fund by payment over of the net income to the said Penelope Overton White during her life as aforesaid is reserved to and shall belong to the said Henry Morgan as his property.” Shortly after making the trust deed and on June 24, 1884, Henry Morgan made an assignment for the benefit of his creditors to William P. Dixon, who has never been discharged and is still acting as such

trustee. On the trial of this action the trial justice decided that Henry Morgan retained the entire residuary interest in the trust fund of $100,000 and that it passed as intestate property, one-third to his widow and the remaining two-thirds to his next of kin to be distributed among them, and also decided that William P. Dixon, as assignee, had no interest in the fund, as any rights that passed to- him are deemed to have expired in twenty-five years under the provisions of section 10 of the Real Property Law.

The following questions were certified: “ 1. Are the executrices of Penelope O. Morgan entitled to receive one-third of the trust fund under the trust herein created by Henry Morgan? 2. Did William P. Dixon, as assignee for the benefit of creditors of Henry Morgan, become entitled to the trust fund on the death of Henry Morgan? ”