Bigelow v. Tilden

This action is brought by the plaintiffs for the purpose of obtaining a construction of certain portions of the will of their testator concerning their duties as trustees,' and also for the purpose of enabling them to make a final distribution of such of the estate as now remains in their hands. This will has already been before the court, and has been construed, but only with respect to the attempted disposition by the testator of his residuary estate. The questions which arose in that connection have been finally disposed of by the court of appeals, and are not open to discussion here. Tilden v. Green, 130 N. Y. 29 , 28 N. E. 880 .

The accounts of the plaintiffs have been substantially settled by an agreement entered into between them and the heirs at law and next, of kin of the deceased, to whom the residuary estate has

The complaint propounds certain questions for solution by the court, the determination of which the plaintiffs deem to be essential in order to enable them to close the estate, and also to properly execute and perform the special trusts which have been devolved upon them by the terms of the will. The first two call for a construction of the thirty-third and thirty-fourth articles of the will, with respect to the establishment of a library and free reading room at New Lebanon and at the city of Yonkers, respectively. The briefs which have been submitted upon the points involved are most instructive and elaborate. I do not.think, however, that it is necessary for me to discuss the point as to whether-the scheme of the testator in either case is sufficiently definite and certain to afford a basis for a judgment for the enforcement of the trusts which the testator has attempted to create. With respect to-these matters, I think both provisions are open to the fatal objection that they violate the statute against perpetuities. No time is-specified within which the trusts are to be executed, measured by any life in being, and the law is now well settled that in the case-of charitable trusts such a limitation is indispensable to their validity. Booth v. Baptist Church, 126 N. Y. 215 , 28 N. E. 238 . These attempted dispositions are, therefore, void, and the plaintiffs rest under no duty with respect to them.

The next question upon which the judgment of the court is sought is as to whether the will of Mary B. Pelton, deceased, which purported to devise and bequeath all her property, real and personal, was a valid exercise in favor of the defendant Laura P. Hazard of a power of appointment given by the testator to her with respect to a certain trust fund of $50,000. Under the ninth article of the will the testator, among other things, directed his trustees to invest the sum of $50,000, and to apply the income thereof to the use of his sister, Mary B. Pelton, during her life, and upon her decease to the use of the defendant Laura P. Hazard, for life, unless, as he says, Mrs. Pelton “shall by her last will and testament have made a different disposition of the same, which she is hereby empowered to do.” Mrs. Pelton died after the testator, leaving a last will and testament, in and by which she gave all of her property to Mrs. Hazard, under a clause which reads as follows: “(1) I give, devise, and bequeath all of my property,

A similar question arises under the tenth article of testator’s will, where, among other things, an investment of $25,000 is directed to be made and held by the plaintiffs in trust, to apply the income to the use of Lucy F. Tilden for life, and upon her decease to the use of the defendant Adelaide E. Buchannan for life, unless the said Lucy F. Tilden should have made a different disposition of the same, which the will empowered her to do. Here, as in the former case, the power was intended to apply to the principal of the trust fund thus created. Lucy F. Tilden died after the plaintiffs’ testator, leaving a last will and testament, in which, .after making certain bequests of specific articles, she disposes of all her residuary estate in the following words:

“Fifth. I give, devise, and bequeath to my said daughter Addie E. T. Buchannan. all the rest, residue, and remainder of all the estate, both real and personal, of which I may be seised, or to which I may at the time of my decease be entitled, wherever the same may be situated; and I request my said daughter, in her dis•cretion, but do not direct her, to give to my said brother, Egbert H. Campbell, any articles or things that might be useful to him or to his daughter Lucy, and ■such as would be of little value to my said daughter.”

The will closes with the appointment of Miss Buchannan as sole executrix thereof. It follows from what has already been said that there was a valid exercise of the power of appointment ■of the fund in question in favor of the defendant Adelaide E. Buchannan, and that she is entitled to have the same paid to her .absolutely.

Another question arises under the will of Mr. Tilden, which the complaint states in the following language:

“Whether these plaintiffs have lawful power and authority, with or without the •consent of the defendant Marie Celeste Stauffer, to sell the first mortgage 0 per ■ cent, bonds of the International & Great Northern Railroad Company, and the first mortgage bonds of the Oregon Short-Line Railroad Company, which have been set apart as a special trust for the benefit of said defendant Marie Celeste : Stauffer, in accordance with the twenty-third article of said will of Samuel J.

Tilden, deceased, for the purpose of changing the nature of the investment of the funds constituting said trust.”

The article in question reads as follows:

“Twenty-Third. I direct my said executors and trustees to set apart $50,000 of first mortgage 6 per cent. International & Great Northern Railroad Company bonds, and $50,000 of the first mortgage bonds of the Oregon Short-Line Railway Company, guarantied by the Union Pacific Railway Company, as a special trust for the benefit of my friend, Miss Marie Celeste Stauffer, daughter of Isaac Stauffer, Esq., of New Orleans. The income of the said special trust shall be applied by the trustees thereof to the use of the said Marie Celeste Stauffer during her natural life, free from any interference or control of any husband she may have; and upon the decease of the said Marie Celeste Stauffer the trustees of the said special trust shall pay over the principal of the said bonds or assign the same to the devisees or heirs of the said Marie Celeste Stauffer.”

Another question has been raised with respect to this same trust, not by the plaintiffs, but by the attorneys for Miss Stauffer, in the answer which they have interposed on her behalf, under which it is claimed, among other things, that it is the duty of the trustees to make provision out of the moneys in their hands for additions from time to time to the principal of the trust, to the end that it shall at all times be equal in value to the sum of $100,000, or to such an extent that the trust shall at all times yield an income to the beneficiary of 6 per cent, upon the sum of $100,000. The two questions will be considered together.

The testamentary scheme of the testator involved the creation of a number of separate trusts for different individuals, which he denominated “special trusts,” and also the creation of what he describes as “the general trust,” which was intended to include his entire residuary estate. It becomes necessary, to a proper understanding and solution of the questions in controversy, to enter upon an examination, to some extent at least, of the various special trusts, so called, which are found in the will. The first is that which is created under the ninth clause in favor of Mrs. Pelton, a sister of testator, and her granddaughter, Mrs."Hazard, to which some reference has already been made. This bequest took the form of a direction on the part of the testator to his executors and trustees to invest certain sums of money therein described. A precisely similar direction is given with respect to the constitution of the trusts in favor of Lucy F. Tilden, under the tenth clause of the will, which has already been referred to. Under the eleventh clause the executors and trustees are also directed to invest the sum of $50,000, and to apply the income of the same to the use of Susan (I. Tilden, the widow of a brother of the testator, during her life, and upon her decease to apply such income to the use of his niece Henrietta A. Swan, during her natural life, unless the said Susan G. Tilden shall have exercised a power of appointment over the principal, which is expressly conferred upon her by the will; and in default of such an appointment, and upon the decease of the said Henrietta A. Swan, it is directed that the principal of the trust shall be paid over either to the issue of the said Henrietta A. Swan, or to such persons as she may appoint by her last will and testament. Under the seventeenth clause a sim

The special trusts thus briefly enumerated belong to a class distingúishable from another class, to which I shall presently refer., in that in each case a specific sum of money is set apart by the testator for the constitution of the trust, without any special direction to the executors and trustees with respect to the investment of the fund. That was a matter which he intended to commit entirely to the judgment of the trustees, and it was, therefore, their duty to invest such moneys upon securities of their own selection, within the limits permitted by law. There is, however, another class of special trusts contained in the will, where the testator himself has set apart specific securities, or has directed that the corpus of the trust shall consist of certain specific securities, the income from which the trustees are required to apply to the use of the selected beneficiaries during their respective lives. The special rrust created for the benefit of Miss -Stauffer is of this class, as art-also the following, viz.: An additional trust, under the tenth clause of the will, for the benefit of Adelaide E. Buchannan, where the plaintiffs are directed to set apart $20,000 in first mortgage bonds of the Oregon Short-Line Railway Company, the income to be applied by them to her use during her life; a further trust, in the twelfth clause of the will, for the benefit of testator’s niece Caroline B. Whittlesey, in the constitution of which the testator appropriates 100 shares of the stock of the Cleveland & Pittsburgh Railway Company, which he describes as “standing in my name as trustee, but for which she holds a power of attorney from me to collect the income thereof,” and directs the trustees to apply the income thereof to her use during her life, and upon her decease to “pay over the proceeds of the said stock or assign the said stock to the heirs of the body” of the said Caroline B. Whittlesey, if she leave any, and, if she leave no such heirs, then to pay over or assign the same to such person as she may by her last will and testament direct. A somewhat similar provision in favor of the same

We are now in a position to consider certain general provisions of the will dealing with the powers and functions of the trustees in the administration of these various special trusts. The twenty-ninth article of the will provides as follows:

“Twenty-Ninth. The trustees oí the said special trusts are hereby authorized from time to time to change the investments hereby directed to be made ior the use and benefit oí specific persons; to sell the securities originally purchased ior or set apart for such specific persons, and to purchase other securities in lieu thereof, except in the cases where the securities are herein designated and appropriated to a specific purpose.”

The determination of the controversy which has arisen with respect to the power of the trustees to sell the securities set apart for the Stauffer trust and the other trusts which have been similarly constituted, depends upon the solution of the question whether the limitation upon the power of the trustees contained in the above exception is operative with respect to such trusts. It will be observed that the entire article is, in terms, limited to the special trusts, as distinguished from the “general trust,” as the testator describes it, to which reference has already been made; and it is, therefore, among them, and among them alone, that we must seek for the cases which the testator intended to except from the operation of the powers which he conferred upon the trustees under this article of his will. A careful examination of these trusts, and of the whole will, leads inevitably to the conclusion that the object of the exception was to preserve the subject-matter of the trust in all cases where the testator himself had defined its character, and had specified the securities of which it should consist, intact and unchanged during the continuance of such trust. If such was not his meaning, I am unable to find in the will any other reason for the existence of this exception, or any other case to which it can be applied. Attention has already been called to the fact, which becomes of some importance in this connection, that these special trusts are of two classes,—one where the testator has set apart a certain sum of money which he directs his trustees to invest, without requiring such investment to be of any specific character ; the other, where, as in the Stauffer case, he has directed Ms executors and trustees to set apart from his general estate certain designated securities, upon which the trust and all dependent limitations are specifically impressed. Bearing this distinction in mind, it becomes very apparent that the object of the twenty-ninth clause was to authorize a change of investment from time to time by the trustees in all cases where, from the nature of the bequest, it became the duty of the trustees to exercise their discretion in constituting the corpus of the trust estate. In all such cases it was

It is claimed, however, that" under such a construction of this article of the will effect cannot be given to the eighth article, which reads as follows:

“Eighth. My said executors and trustees are directed to constitute the trusts for specific persons hereinafter more particularly described and defined. My said executors and trustees shall be trustees of the special trusts by them so constituted, but the said trusts shall be distinct and separate from the general trust under this instrument. In their capacity as trustees of trusts for specific persons they shall have power to manage the several trusts; to collect the income thereof, and to apply the same as herein directed; to sell in their discretion the securities, and to reinvest the proceeds thereof.”

The contention is that the power to sell thus expressed is broadly conferred upon the trustees in a single clause under which the testator intended to express the general powers of the trustees with respect to all of the special trusts which he was about to create, and that no distinction upon any reasonable ground can, therefore, be made between them with respect to the applicability of this provision. Had this been the only provision contained in the will upon the subject, doubtless the claim would be tenable, but it is a cardinal rule of construction that effect, if possible, must be given to every

I have not overlooked the provisions of the thirty-eighth article, which enumerates certain powers that the testator further intended to confer upon the plaintiffs, including authority to dispose of his-real estate "and other property bequeathed to them.” I shall have occasion to refer to this article later in another connection. It is. sufficient for me to say here that it was intended, in my opinion, mainly to authorize the executors and trustees to exercise the power referred to with respect to testator’s general estate, and in connection with the general trust which he attempted to create in his residuary estate. This only remained to be done, the powers with respect to the management of the special trusts having already been completely provided for, as we have seen, in the twenty-ninth article, which was exclusively devoted to that subject. This construction seems to accord with the general plan and intent of the testator, and should, therefore, be preferred to one which can be established only by rejecting a provision for repugnancy.

It may also be urged against this construction that it is one which the court should not adopt, if any other is possible, by reason of the risk of depletion to which a “trust estate is at all times exposed where the trustees are committed to the retention of securities that are subject to fluctuations in value, and to all the hazards to-which railroad properties are exposed; and that, while a testator may authorize a trustee to invest in any form of security, the general policy of the law of this state is that such investments should be confined within certain specified limits, which do not include securities of the character designated in the will. The answer to this seems to be that the testator had this in mind, and provided, or thought that he had adequately provided, for any such contingency; for by the terms of the twenty-fifth article it is provided that where any special trust should fail in whole or in part by-depreciation of securities, the same should be made good in certain ways which will be hereafter referred to in another connection. We thus find, upon consideration of the whole will, a perfectly definite scheme in regard to these special trusts. Where no-direction is given by the testator with respect to the manner of' investment, such investments are to 'be made by the trustees themselves, in 'the exercise of their discretion, with the associated right

I shall now take up the consideration of the claim made on behalf of the defendant Marie Celeste Stauffer that the general estate of the testator is subject to a continuing charge in her favor to make good her trust fund, both as to principal and interest, in the event of any failure thereof in whole or in part by depreciation of securities. This claim is based on the twenty-fifth article of the will, under which the testator directs his trustees, in case any special trust constituted under his will shall fail in whole or in part by depreciation of securities, to make the same good out of his general estate, “so long as the general trust to my executors and trustees shall continue.” In case any portion of the general estate

■ It is urged, however, that the general trust should still be regarded as continuing for the purpose of supporting the charge created for the protection of the special trusts from depletion. I do not think, however, that this is a tenable position. The intention of the testator in the creation of the general trust was to carry out the provision he had made for a disposition of the bulk of' his property for charitable purposes. The provision for the protection of the special trusts was a subordinate incident to the gen-, eral plan. It was to be carried out while the executors themselves'

The question will now be considered whether the executors and trustees of the special trust created for the, benefit of Mrs. Mary B. Pelton and the defendant Laura P. Hazard in the premises No. 38 West Thirty-Eighth street, in this city, have power to sell the same for the purpose of changing the nature of the investment. The contention of Mrs. Hazard, the sole beneficiary living, is that there is no' such power. In addition to the provisions made under the ninth clause of the will for their benefit, to which reference has already been made, the testator in the same article constituted a further special trust in the following terms:

“I hereby direct my said executors and trustees to allow my sister, Mrs. Mary B. Pelton, during her natural life, the use of the house No. 38 West Thirty-Eighth street, in the city of New York. I also direct them to pay any mortgage to which the said premises may be now subject. * * * Upon the decease of my said sister, Mary B. Pelton, the house known as ‘No. 38 West Thirty-Eighth street, in the city of New York, shall be applied to the use of my grandniece Laura A. Pelton for the remainder of her natural life. * * * Upon the decease of the said Laura A. Pelton, if she leave issue, the said house No. 38 West Thirty-Eighth street, designated as the first trust, and the principal of the said second trust, being fifty thousand dollars, shall be paid over to the heirs of her body. If she leave no issue, the principal of said first trust, being of the said house No. 38 West Thirty-Eighth street, shall be paid over as she may by her last will and testament direct.”

There is, further, what seems to be a limitation over of this property in the event of the death of Mrs. Hazard without leaving issue, and without having made a testamentary appointment of the property, to which it is unnecessary to refer. Standing by itself, it is obvious that under this article no power whatsoever is Vested in the executors or trustees to sell the property during the lifetime of Mrs. Hazard. The words used by the testator in providihg for its disposition after the death of Mrs. Hazard, viz. that the real estate “shall be paid over,” while inapt as a description of a transfer of title to real estate, probably means nothing more than that such real estate shall devolve upon her devisees; and, if any inference at all might be permissible that the testator intended thus to dispose of the proceeds, and not of the property itself, and that there was, therefore, an implied power of sale over the real estate, such power could be exercised only after the death of Mrs. Hazard, and when the occasion arose for disposing of the subject-matter of the trust. I do not think that the intention to confer such a power can properly be found in the provisions of the eighth article of the will, to which reference has already been made. There, it will be remembered, the executors and trustees of the special

The only provision of the will apparently under which a power to sell real estate is directly conferred is found in the thirty-eighth article, which follows that under which the testator directs the disposition of his residuary estate for charitable purposes. Taking into account its location in the will,—which, while in no sense controlling, is still worthy of some consideration,—it may fairly be inferred from its context that the powers thereby conferred were intended to be exercised in the main with respect to the residuary estate, and in furtherance of the objects and purposes of the general trust. The testator owned other real estate than that which he had specifically devised. The importance, therefore, of the existence of the power to sell with respect to such property is plain, in order to enable the executors and trustees to realize upon all of the residuary estate, and to convert the same into money, in order to make a feasible, or at least convenient, application of the property to the charitable purposes for which it was intended. The powers contained in the article in question are stated in three paragraphs, which read as follows:

“(1) To manage the funds herein directed to be invested in the trusts for specific persons until such investments shall have been made, with like authorities as in cases of other portions of my estate.

“(2) To sell and dispose, from time to time, in their discretion, of such parts and parcels of the real estate and other property hereby devised, given, and bequeathed to them as they shall deem advisable; and so to sell and dispose of the same at public Or private sale, at such price or prices and upon such terms as to mode, time, and security of payment as they shall deem proper; and to sign, seal, execute, and deliver all proper and necessary conveyances therefor.

“(3) From time to time to invest and reinvest all moneys belonging to my estate, whether derived from sales of said devised and bequeathed property or otherwise, in such manner as they may deem expedient, subject, however, to the same trusts upon which said moneys Or property were originally held by my said executors and trustees.”

The first paragraph, it will be observed, refers to the special trusts alone, and makes provision for the management of the funds appropriated for their benefit until the investments shall have been made in which the corpus of the trust estate was to be embodied. In other words, it relates to conditions before the practical formation of the fund upon which the trust is to operate, and refers rather to the performance of executorial duties in establishing the trust than to the powers and authorities appertaining to the execution of the same after it is established. The remaining para

There remains one other question to be disposed of, arising under the fifteenth article of the will. This articles relates to the acquisition by the executors and trustees of certain family property at New Lebanon, and the application of the same to the use of the testator’s nephews the defendants George H. Tilden and Samuel J. Tilden, Jr., for their lives, upon whom also a power of appointment by will with respect to the same is conferred. The provision is loosely drawn, suggesting rather the outline of a testamentary scheme, the details of which had not been worked out. The central idea, however, is that, as the property is associated with the family name, it should be kept together in the ownership of members of the family, and to that end the devise for the benefit of the two nephews was accordingly made. Various theories have been suggested with respect to the exact nature of the interests, powers, and estates which the beneficiaries were intended to take, none of which is free from some objection. A discussion of the subject at length would serve no useful purpose. I have accordingly decided to adopt the construction advocated by the learned counsel for these defendants, who, after all, are substantially the only persons interested, whatever view may be taken as to the real meaning of this article, I do not think that the testator intended

Judgment is awarded accordingly, with costs to all parties payable out of the fund.