National Park Bank v. Billings

[3] Whether an issue of law arising upon the pleadings is brought on under section 547 or section 976, the order should contain the appropriate provisions to work substantial justice which have heretofore

[4] We are therefore of the opinion that the motion in the present case was properly brought on under section 547, since the question of law raised by the demurrer went to the whole cause of action.

On the merits, however, we are of opinion that the demurrer was properly overruled. The will of Chester Billings, deceased, does contain a gift to appellant not in express words, but in a direction to trustees to divide and pay; wherefore futurity is annexed to the substance of the gift, the same as though there were express words of gift with futurity annexed to the substance thereof by express words.

[5] In Smith v. Edwards, 88 N. Y. 92 , 104, Judge Finch cited in support of the rule the early English cases and Jarman on Wills (see Fifth American Edition, p. 837), from which it plainly appears that a gift, found only in a direction to trustees to pay or to divide and pay in the future, is the same as a gift at a future time. The distinction is between an absolute gift, payment only being postponed, and a gift to the substance of which futurity is annexed; in other words, between a gift of a vested future interest and a gift of a contingent future interest.

[6] The latter is more than a bare possibility, unaccompanied by any interest, or the mere chance of sharing as next of kin in the estate of another upon his death, referred to in Smith v. Kearney, 2 Barb. Ch. 533 , 546. In Jones v. Roe, 3 T. R. 87, Lord Kenyon referred to the kind of possibility which was not the subject of disposition thus, "that which the heir has from the curtesy of his ancestor, and which is nothing more than the mere hope of succession”; and in Miller v. Emans, 19 N. Y. 384 , 391, Judge Selden quoted from Sheppard’s Touchstone a description of the three classes of possibilities which could not be released at common law, and certainly the case in hand is not one of them. The appellant then acquired upon the death of his father, not a bare possibility merely, but the right to the possession and enjoyment of one-half of his father’s estate in the event that he should attain the age of 25 years and survive his mother, and that right was not subject to the will of a-third party. The question is whether such a right or interest in property is within the meaning of section 1871 of the Code of Civil Procedure.

While there appears to be no controlling authority in this state on the point, it has been assumed by this court in this and the Second Department that a future contingent interest in personal property is alienable, the same as a contingent remainder in real property. See Stringer v. Barker, 110 App. Div. 37 , 96 N. Y. Supp. 1052 ; Cohalan v. Parker, 138 App. Div. 849 , 123 N. Y. Supp. 343 . The question was not even indirectly involved in any of the cases cited by my Brother SCOTT in support of the said rule of construction. The sentence quoted from the opinion of Judge Earl in Delafield v. Shipman, 103 N. Y. 463 , 9 N. E. 184 , is strictly accurate without reference to the question before us, but a distinction must be noted between the estate in the hands of trustees and a future interest limited thereon.

Section 11 of the personal property law (Consol. Laws 1909, c. 41), which was taken from 1 Rev. St. pt. 2, c. 4, tit. 4, §§ 1-2, contains this provision:

“In other respects limitations of future or contingent interests in personal property are subject to the rules prescribed in relation to future estates in real property.”

Doubtless that section applies only to the creation or limitation of such interests (see. Kane v. Gott, 24 Wend. 641 , 35 Am. Dec. 641 ; Graff v. Bonnett, 31 N. Y. 8 , 17, 88 Am. Dec. 236 ; Cutting v. Cutting, 86 N. Y. 522 , 545), but there is manifest propriety in assimilating as far as possible the rules applicable to both species of property, and the courts have gradually assimilated most of the rules governing the incidents of future estates in real property to those applicable to future interests in personal property (Graff v. Bonnett, supra; Williams v. Thorn, 70 N. Y. 270 ; Cutting v. Cutting, supra; Lent v. Howard, 89 N. Y. 169 ; Mills v. Husson, 140 N. Y. 99 , 35 N. E. 422 ; Cochrane v. Schell, 140 N. Y. 516 , 35 N. E. 971 ; Bergmann v. Lord, 194 N. Y. 70 , 86 N. E. 828 ). In the last case cited the court held, by analogy to section 59 of the real property law, that a vested future interest in personal property could be reached in a judgment creditor’s action. To be sure, that case involved a vested interest; but why stop the analogy there? Is there not as close analogy between a future contingent interest in personal property and a contingent remainder in real property as there is between a vested future interest in personal property and a vested remainder in real property ? It may be said that a remainder in real property is an estate, that the title is carved up into different estates—e. g., a life estate and an estate in remainder—whereas, in the case of a future interest in personal property, limited upon a trust estate, the whole estate is in the trustee. But that is so whether the future interest is vested or contingent. A contingent remainder in real property involves the same elements of chance as a future contingent interest in personal property, and no practical reason can be suggested against the assignment of one which does not apply to the other. By the rules of the ancient common law there could be no future interest in personal property, but with the increasing importance of that species of property the right to the use, as distinguished from the thing itself, was first recognized. Then that distinction was disregarded, and in Blackstone’s time limitations of remainder interests in personal goods and chattels were recognized. Sharwood’s Blackstone, book 2, p. 398. Nowadays the distinction between future interests in personal property and future estates in real property appears to have

At common law contingent interests were not alienable or assignable to strangers for the same reason that choses in action were not assignable—i. e., to prevent maintenance—but they could be released to a party having an interest as that tended to diminish the sources of litigation. See Miller v. Emans, 19 N. Y. 384 , 390. Practically, however, such interests are assignable, for to get around the strict rule of law the doctrine of equitable estoppel was invoked. The peculiar condition of society which gave rise to the common law doctrine of maintenance no longer exists. Wherefore that doctrine does not prevail in this state except as expressly preserved by statute. Thallhimer v. Brinckerhoff, 3 Cow. 623 , 643, 15 Am. Dec. 308 ; Sedgwick v. Stanton, 14 N. Y. 289 , 293. Courts of law now recognized the assignability of .choses in action, not because the common law has been changed by statute, but because it is progressive. The reason for the old rule having disappeared, the law courts followed the rule in equity to keep pace with the changed conditions of society and the needs of commerce. Welch v. Mandeville, 14 U. S. 233 , 4 L. Ed. 79 ; Mandeville v. Welch, 18 U. S. 277 , 5 L. Ed. 87 ; Gibson v. Cooke, 20 Pick. (Mass.) 15 , 32 Am. Dec. 194 ; Tuttle v. Bebee, 8 Johns. 152 .

Of course, a rule of real property might well survive the reason for it; wherefore the propriety of the statute. Said section 59 of the real property law, originally 1 Rev. St. pt. 2, c. 1, tit. 2, § 35. But, independently of the statute, the rule even in respect to real property would doubtless by this time have been the same both in law and equity. See Washburn on Real Property (6th Ed.) § 1557, and cases cited in note. For what reason or upon what principle can it be said, then, that a future contingent interest in personal property is not assignable at law as well as in equity? Mot because such right or interest does not exist, because we have seen that it is a present right, which cannot be defeated by the act of a third party, and which will ripen into an estate in enjoyment upon the happening of a contingency. If there is now any rule against the assignability of such an interest, it must exist as a remnant of an ancient rule adopted to prevent the oppression of the weak by the strong, when it was supposed that both did not have an equal chance in the courts of justice.

As early as 1719, it was decided that a future contingent interest in personal property was transmissible (Pinbury v. Elkin, 1 P. Wms. 562); and during the eighteenth century that became a settled rule of law (King v. Withers, 3 P. Wms. 414; Chauncey v. Graydon, 2 Atk. 616; Devisme v. Mello, 1 Bro. C. C. 538; Barnes v. Allen, 1 Bro. C. C. 182). In Higden v. Williamson, 3 P. Wms. 132, decided in 1731, the following facts were involved: A., seised in fee of a copyhold estate, surrendered the premises to the use of his will, and afterwards devised them to his daughter for life, then to trustees to be sold, and the money arising from the sale to be divided among such of the daughter’s children as should be living at the time of her death. A son of the daughter during her lifetime became bankrupt. The commissioners assigned his estate. On a bill brought by the assignees for the

While there appears to be no authority in this state squarely on the question, it is settled in Massachusetts that contingent interests in both real and personal property are capable of alienation, subject,.of course, to-the same contingencies in the hands of the assignee as in those of the assignor, that they will pass by an assignment under the insolvency laws and also to an assignee in bankruptcy, and can be reached by a creditor’s bill. See Winslow v. Goodwin, 7 Mete. 363; Gardner v. Hooper, 3 Gray, 398 ; Pierce v. Lee, 9 Gray, 42 ; Nash v. Nash, 12 Allen, 345 ; Dunn v. Sargent, 101 Mass. 336 ; Minot v. Tappan, 122 Mass. 535 ; Daniels v. Eldredge, 125 Mass. 356 . Gardner v. Hooper and Daniels v. Eldredge, supra, cannot be distinguished in principle from this case.

If there had been a gift in express words to the appellant, coupled with a gift over in the event of his death prior to that of his mother, he would have a vested .interest subject to be divested by such prior death, and I take it, Bergmann v. Lord, supra, would be a direct authority for the proposition that such interest could be reached in a judgment creditor’s suit. But what possible reason can be suggested

The order should be modified, so as to give the defendant leave to withdraw the demurrer, and, as thus modified, affirmed, with $10 costs and disbursements.

CLARICE and DOWLING, JJ., concur.

(dissenting). I wholly concur with Mr. Justice MILLER as to the practice, but am unable to agree with him. as to the nature and extent of the interest of Henry B. Billings in the estate of his deceased father. This action is by a judgment creditor of said Henry B. Billings, and its purpose is to procure a sale of his interest in the estate of his father, Chester Billings, deceased. The question is whether or not Henry B. Billings has such a present interest as may be sold in a creditor’s action, and this depends upon the construction to be put upon the father’s will. By the third clause, the entire estate, real and personal, is given to the executors and trustees, with provisions which undoubtedly work an equitable conversion of the realty into personalty. A certain sum it to be set aside and kept invested for the benefit of a sister (now deceased), and the balance of the estate is to be held for the benefit of testator’s widow during her lifetime. The provision for the son Henry B. Billings is contained in the following clause:

“And as to all the rest of the money collected and realized from both my said personal and real estate upon trust that my said trustees and executors hereinafter named or the survivors of them do and shall invest and loan the same and keep the same invested and loaned upon Bonds and Mortgages on unincumbered real estate in the State of New York or upon such, other bonds, stocks and securities as they or the survivor of them may think proper with full power in the discretion of my said trustees and the survivor of them to change, vary and transpose the said loans and investments from time to time for any other loan or investment of a similar nature and as to all the interest and income arising from said loans and investments upon trust to pay the same from time to time to my wife Sarah, for and during her natural life. And I declare that the provisions made by me in this my last will for my said wife shall be taken and accepted by her in lieu of and in full satisfaction of her claims to dower or thirds out of any and all the real and personal estate of which I have been seized or now am or shall be seized or possessed. And if my son and daughter my only two children shall

both be living at the time of my wife’s death or if one or both of them should then be dead leaving issue living at the time of my wife’s death, then it is my will and I direct that my trustees and executors or the survivor of them do and shall at once upon the death of my wife divide the principal of my estate, excepting the ten thousand dollars invested- for my said sister if she still Be living, into two equal portions or shares and shall set apart one share, one half part, for my son or his issue and one share, the other half part, for my daughter or her issue.”

If the son shall not have attained the age of 25 years at the time of the wife’s death, his share is to be held by the trustee until he does attain that age, and is then to be paid over. Other provisions follow as to the disposition to be made by the trustees in case the son dies before the widow, or before arriving at the age of 25 years, as follows:

“But if my son should be dead at the time of my wife’s death leaving issue him surviving at the time of .her death, or if my son should die at any time between the death of my wife and his attaining the age of twenty-five years leaving issue him surviving then my said trustees shall in either of these events at once pay over and distribute his said share of my said estate, in equal proportions share and share alike to and among such of his children as shall then be living, and the issue of such as shall then be dead, such issue taking his, her or their parent’s share.”

The will contains no words of gift to the testator’s son and daughter, but only a direction to the trustees to pay over at a future time, the person to whom payment is then to be made to be determined at the time when the distribution is to be made. The general rule applicable to such a will is well settled. “Where there is no gift but by a direction to executors or trustees to pay or divide and pay at a future time, the vesting in the beneficiary will not take place until that time arrives.” Warner v. Durant, 76 N. Y. 133 -136. The same rule has been stated in many cases. Smith v. Edwards, 88 N. Y. 92 ; Shipman v. Rollins, 98 N. Y. 311 ; Delafield v. Shipman, 103 N. Y. 463 , 9 N. E. 184 ; Matter of Crane, 164 N. Y. 71 , 58 N. E. 47 ; Herzog v. Title Guarantee & Trust Co., 177 N. Y. 99 , 69 N. E. 283 , 67 L. R. A. 146 . In Delafield v. Shipman, supra, the question was, under a somewhat similar provision, whether a daughter - to whom a share was to be paid if she survived her mother, but who died before her mother, had any present interest in the estate which she could devise; in other words, whether she had a present, alienable interest. It was held that she had not, because futurity attached to the substance of the gift, which was not direct, but was to be found only in a direction to the trustees to divide and pay over after the death of the widow. Speaking of the testator’s intention, the court said:

“He vested the whole estate in the trustees during the life of his widow, and during that time evidently intended that it should remain there, and not be subject to the disposal of his children, or liable to be seized by their creditors, and after the death of his widow he gave it, not to the children living at his death, but to the children and descendants of children deceased living at her death.”

These very words might most appropriately be applied to the will now under consideration. So in Matter of Crane, 164 N. Y. 71 , 58

"First. When the only words of gift are found in the direction to divide or pay at a future time the gift is future, and not immediate; contingent, and not vested.

“Second. When the gift is of money and the direction to convert the estate is absolute, the legacy given to a class of persons vests in those who answer the description and are capable of taking at the time of the distribution.”

After discussing the provisions of the will, which did not differ essentially from the one under consideration, the court stated its conclusion as follows:

"That, aside from the direction to the executors or trustees to divide and distribute the estate, there are no words importing a gift, and hence it becomes our duty to give force and effect to the rule that, where the only gift is found in a direction to divide or pay at a future time, the gift is future, not immediate; contingent, and not vested.”

It seems to me to be the inevitable deduction to be drawn from these well-settled rules that during the lifetime of the testator’s widow (who is still living) the appellant has no right of property or present interest in the estate. The will made no gift to him, but merely provided that in a certain contingency a portion of the estate should be given. Futurity attaches as well to the gift, as to its enjoyment, and herein I conceive is to be found the fundamental distinction between such a gift as this and the present gift of a future contingent estate. In Bergmann v. Lord, 194 N. Y. 71 , 86 N. E. 828 , it was held that a creditor’s action could reach the debtor’s vested remainder in personal property, but in that case the will contained a present gift of the remainder of a fund after the death of the testator’s widow for whose benefit meanwhile it was to be held in trust, and great stress was laid in the opinion upon the fact that the gift was to be vested upon the death of the testator. All the appellant now has is the possibility, perhaps the expectancy, that he may hereafter receive or be entitled to a share in the estate. Perhaps he might dispose of that possibility, if he could find any one to buy it, so effectually that upon the happening of the contingency he would be estopped to deny his grantees’ right to receive it, but he would not sell property or a share in the estate, but merely the chance that he might hereafter become entitled to receive a share. Such a chance is not property, and its present value must necessarily be purely speculative. Section 1871, Code Civil Procedure, under which this action is brought, describes what may be reached as follows:

“Anything in action, or other property belonging to the judgment creditor, or any money, thing in action or other property due to him or held in trust for him.”

The possible future interest in his father’s estate which the plaintiff seeks to reach does not fall within the terms of the statute. “A judgment creditor’s action, whether instituted under the provisions of the Revised Statutes (vol. 2, tit. 2, pt. 3, c. 1, art. 2) or the Code of Civil Procedure (tit. 4, art. 1, c. 15), can reach only property belonging to or things in action due to the judgment debtor or held in

I am therefore of the opinion that the demurrer was erroneously overruled on the merits, and that the order appealed from should be reversed and the motion for judgment granted.

(dissenting). Action to have a judgment for upwards of $29,000 against the defendant Henry B. Billings, upon which an execution has been issued and returned unsatisfied, adjudged to be a lien upon his alleged interest in a trust fund created by the will of his father and for a sale thereof. He demurred to the complaint upon the ground that it did not state facts sufficient to constitute a cause of action. The plaintiff thereupon moved for judgment upon the pleadings. The motion was granted with $10 costs, “with leave, however, to said defendant upon payment of such costs to serve an answer”; and, if the costs were paid and the answer served, then the motion was denied.

The motion for judgment was made under section 547 of the Code of Civil Procedure. This section is a part of chapter 6, tit. 2, of the Code of Civil Procedure. Title 2 is headed “Provisions generally applicable to. pleadings,” and the first section in the title (518) provides that:

“This chapter prescribes the form of pleadings in an action and the rules by which the sufficiency thereof is determined, except where special provision is otherwise made by law.”

A new section, known as 547, was added in 1908 (chapter 166, Laws • 1908), and provides that:

“If either party is entitled to judgment upon the pleadings, the court may, upon motion, at any time after issue joined, give judgment accordingly.”

The purpose sought to be accomplished by this section was to enable the parties to avoid the long delay incident to waiting until the action was reached upon the calendar for trial, and to permit them, after issue was joined, to move for judgment at Special Term upon the same grounds and governed by the same rules as. though the motion were made at the trial. Clark v. Levy, 130 App. Div. 389 , 114 N. Y. Supp. 890 ; Mitchell v. Dunmore Realty Co., 135 App. Div. . 583 , 120 N. Y. Supp. 771 . A motion for judgment under this section cannot, however, be granted if a material issue of fact or law be raised by the pleadings. If material issues, either of fact or law, are raised, they must be disposed of before judgment can be rendered,

“The issues treated oí in this chapter are those only which are presented by the pleadings. An issue arises where a fact or a conclusion of law is maintained by one party and controverted by the other. Issues are of two kinds. 1. Of law; and 2. Of fact.”

Section 964 provides, “An issue of law arises only upon a demurrer.” Then follow provisions as to the manner in which issues of fact and issues of law are to be tried, and an issue either of fact or of law must be tried in the manner pointed out in chapter 10, tit. 1, art. 1, “unless it is disposed .of as prescribed in chapter sixth of this act.” A demurrer raises an issue of law which must be tried and disposed of in the manner pointed out, because provision is not made for its trial or disposition “in chapter sixth’-’ and is made in chapter 10. If the demurrer be frivolous, it does not raise any issue, and a summary application for judgment may be made under section 537 or 547. Delmar v. Kinderhook Knitting Co., 134 App. Div: 558, 119 N. Y. Supp. 705 . Otherwise, the issue raised by it must be tried (section 965, Code Civ. Proc.), and after such trial a decision in writing fnust be filed in the clerk’s office (Id. § 1010). The decision, when filed, must direct the final or interlocutory judgment to be entered thereon (Id. § 1021). The trial by the court of an issue raised by the pleadings in an action, whether of fact or of law, must be followed by a decision in writing, because that constitutes the only basis for a judgment. Wise v. Cohen, 113 App. Div. 859 , 99 N. Y. Supp. 663 ; Lederer v. Lederer, 108 App. Div. 228 , 95 N. Y. Supp. 623 ; Sommer v. Sommer, 87 App. Div. 434 , 84 N. Y. Supp. 444 ; Gein v. Little, 86 App. Div. 503 , 83 N. Y. Supp. 685 ; Lentschner v. Lentschner, 80 App. Div. 43 , 80 N. Y. Supp. 146 .

The demurrer in the present case clearly is not frivolous. Whether the appellant has a present interest in the trust fund created by the will of his father which can be sold to satisfy a judgment against him presents a question of law, of which much might be said in opposition. Sections 1879, 2463, Code Civ. Proc. Under the will, the only words of present gift are to the trustees therein named, in whom the legal estate is vested subject to a trust for the benefit of the testator’s widow during her life, and it is only upon the death of the widow that the trustees are directed -to divide and dispose of the principal sum. The direction is that at such time—that is, the death of the widow— the trustees distribute such fund among such of testator’s descendants as may be living, not at the time of the testator’s death, but at the time of the death of the widow, who is still living. The demurrer raises this issue, and it must be determined by a trial, followed by a decision, upon which judgment can be entered. I use the word “decision,” not because there is any magic in the name, but because the Legislature has enacted that the trial of an issue of law shall be followed by a “decision” (subdivision 5, § 3343, Code Civ. Proc.) in writing upon which judgment shall be entered. Id. §§ 1010, 1021.

There seems to be some misapprehension as to the purpose of section 976 of the Code of Civil Procedure and the practice to-be adopted under it. This section is the same as section 255 of the Code of Procedure, as amended by chapter 946 of the Laws of 1895, chapter 569 of the Laws of 1900, and chapter 493 of the Laws of 1909. Prior to the amendment of 1900, an issue raised by a demurrer had to be tried at a Trial or Special Term in the county where the venue was laid. In some of the counties of the state not more than two Trial and Special Terms were held each year, and in many of them not over four or five, but in the judicial districts in which such counties were located Special Terms were frequently held for the purpose of hearing contested motions. ' To obviate the delay which a demurrer necessarily brought about in the counties referred to, section 976 was amended in 1900 (and made applicable to the whole state, except the First and Second Judicial Districts) by adding the sentence, “an issue of law may be brought' on and tried, at any term of court, as a contested motion.” The section remained as thus amended until 1909, when the exception was stricken out and the section made applicable to the whole state. Chapter 493, Laws 1909. The amendment permitting "the issue raised by demurrer to be brought on as a contested motion did not mean that it could be disposed of in the same manner as a contested motion—that is, by the simple entry of an order. The issue raised by the demurrer, after the amendment, had to be tried and disposed of in precisely the same manner that such issues had theretofore been disposed of. All that the amendment did was to enable a party to dispose of the issue raised by a demurrer by bringing the same to trial at any of the terms of court where a contested motion could be heard. If this is not the meaning of the amendment, then it is somewhat significant that its correct meaning was not ascertained by the profession for nearly- 10 years, and then only after it was made applicable to the First Judicial District, where prior, as well as subsequent, to the amendment, an issue raised by a demurrer could be brought to trial within a very few days.

My conclusion, therefore, is that the order appealed from should be reversed, with $10 costs and disbursements, and the motion for judgment denied, with $10 costs.