Spencer v. Spencer

By the sixth clause of his will, Lorillard .Spencer, 2d, provided among other, things as follows:

“Sixth.—All the rest, residue and remainder of my estate of every nature and kind, whether real, personal or mixed, and wheresoever situated, which I have or may have or of which I may die possessed, and whether in possession, reversion or remainder, so far as X have power to dispose of the same by will, I give, devise and bequeath to my said Trustees hereinafter named, their survivors or survivor, successors or successor, in trust, however, for the following purposes: To invest and reinvest the funds of said trust estate and change the investments thereof according to their or his best skill and judgment in the way and manner hereinafter provided; to collect and receive the rents, dividends, interest and income thereof and to pay over to my said wife, Caroline S. Spencer, during her life, the net annual income in quarterly installments.”

Among other property deceased left a one-third interest in a tract of land situated at Williamsbridge, borough of the Bronx, city of New York, which had come to him through inheritance, and which had been in his family for many years. As to this one-third interest-he directed by the third=clause of his will that if the farm was not sold by the executors of his brother Charles before July 28, 1911, the proceeds of the testator’s interest in said farm should be divided as follows: If he sold his entire interest in the farm previous to his death, he bequeathed to his son, Lorillard Spencer, Jr., the sum of $100,000; or, if he only sold a portion thereof before his death, then a sum equal to 25 per cent, of the net proceeds of the sale. If, after the testator’s death, the whole of his interest in the farm, or any part thereof, was sold by his executors, then he gave and bequeathed to his son, Lorillard Spencer,-Jr;, a sum equal to 25 per- cent, of the net amount realized on the sale. If the son should die before him, or if, at the time of his death, the whole or. any part of the farm should .remain unsold, then he gave to his daughter-in-law,- Mary R. Spencer, the same share in the proceeds -of said property which his son would have received if living. No disposition was made of the remainder of his one-third interest in the said farm, or the proceeds of, sale thereof, or any interest therein,’ over and above the amount' so bequeathed to his son. The personal property turned over to the trustees amounted to $156,-802.50, in securities and cash, subsequently increased. The testator held' other real estate' as well as the Williamsbridge farm.

I therefore think the judgment appealed from should be affirmed, with costs. Order filed.

McLAUGHLIN and HOTCHKISS, JJ., concur.

The question presented on this appeal is when certain amounts paid by the trustees for taxes on an interest of the testator in certain unproductive real property should be paid from the income of the trust property. The testator had upwards of $250,000 of personalty, several parcels of productive real estate located in the city of New York, a residence at Newport, R. I., and an undivided third interest in a tract of land at Williamsbridge. He had an income of from $35,000 to $45,000 a year, of which his property produced about $20,000 per year, and $20,000 per year was the income of certain property held in trust, to the income of which he was entitled for life, with remainder to his son. , On April 27,1911, he executed his will, and he died March 14, 1912, leaving him surviving his widow, the appellant, and one son, who was one of the trustees, his only heirs at law and next of kin. He had resided at Newport, R. I., for many years. By his will he left $100,000 and all his household furniture, pictures, jewelry, and other articles of personal property to his wife, except certain articles which he specifically bequeathed to his son, and, with the exception of some legacies to servants and the sum of $25,000 in trust for his grandson and an annuity of $200 a year, he gave, devised, and bequeathed all the rest, residue, and remainder of his estate, “of every nature and kind, whether real, personal or mixed, and wheresoever situated,” to trustees to pay to h'is wife during her

A consideration of the careful provisions of this will must satisfy any one reading it that the first thought-of the testator was to insure to his wife an income for her life. The interest on all the bonds was to be paid to her, and no amount was to be retained for a sinking fund, and all the net income of the residue of his estate was to- be paid to his wife, and after her death to his son. When the will was executed the testator owned an undivided third interest in the Williamsbridge farm. He treated this as distinct from his other property, evidently understanding, that it would be disposed of before his death. The will recited that he had an agreement with his brother and sister to divide the farm if it was not sold before July 28, 1911, and then directed that “the proceeds of my said interest in or share of said" farm shall be divided as follows” : If he sold his entire interest in said farm before his death, then his son was to have $100,000. If he sold part of it, his son was to have 25 per cent, of the net proceeds of such sale. If after his death the interest in the farm was sold by his trustees, then his son was to have 25 per cent, of the amount realized from such sale or sales, with no provision as to what should be done with the remaining 75 per cent. The agreement with his brother and sister to divide the farm was not carried out during his life, nor was any of it sold either before or after the death of the testator, and it is evident that since his death conditions have existed that have made it impossible to sell at anything like its value; but it produces no income, and the taxes that have been imposed and the cost of carrying it have absorbed all the income of the estate, so that.the wife has received but $3,060.62 during a period of more than two years from the testator’s death.

It would seem that the net income from the estate during this period has been about $23,278.63. From this has been expended on the Newport property, which has been occupied by the widow, $8,824.45, and for carrying charges and taxes on the Williamsbridge property $9,-877.79. The trustees paid this sum for taxes out of the income received from the balance of the trust. The widow claims that these taxes and charges should not be- paid out of such income, and the court has sustained the contention of the trustees. Did the testator intend that the charges for carrying the Williamsbridge property until it could be sold, as. he evidently intended that it should, should be paid out of the

This property, however, does come within this rule, for it was evidently not the intention of the testator that it was to go to the trustees as part of the trust. Its disposition was specifically provided for by the third clause of the will. If all sold before his death, $100,000, or one-fourth of the net proceeds of the part sold, if only a part was sold, was to be paid to his son. As to that portion of the proceeds which was to be paid to his son, it was not and never would be a part of the trust estate. The testator evidently understood that this Williamsbridge property would not produce any income; that if he did not sell it during his life, his trustees would; and that the proceeds would be disposed of as he directed—that is, one-quarter to his son, and the remaining three-quarters to become part of the residuary estate. It was clearly not anticipated that the period before the sale of the property would be so long that the question as to how the taxes should be provided for would be serious, and so the property was left in a class by itself, the taxes and carrying charges to be paid from the proceeds of the sale when made. Considering the careful provisions in the will by which the whole income of his property should be assured to the testator’s widow, and to his son after her death, without deduction for the so-called “sinking fund,” or to make up any deficiency, and the separate disposition that he makes of the proceeds of this Williamsbridge property when sold, they seem to me to carry the conviction that it was not the intention that this farm until sold should be a part of the trust property, so that the cost of carrying it should be paid out of income of the property which was to be devoted to the support and maintenance of his wife; and I think it will best carry out the expressed intention of the testator by providing" that these taxes shall be paid out of the principal of the estate.

The judgment should therefore be modified, as hereinbefore indicated, with costs to all parties payable out of the estate.

LAUGHLIN, J., concurs.