Hayden v. Sugden

These actions are brought to partition certain premises in this state. It is conceded that the properties should be divided into lots and sold. The main question presented is the construction of the will oi Jessie Sugden. Both complaints pray that the exact interests of the husband and children of the testatrix and the trustees named in the will may be judicially settled and determined. The will, dated December 29, 1897, was'drawn and executed in England, where the testatrix died on October 25, 1901, seised of undivided interests in the 'premises described in the complaints. She left her surviving her husband, two infant daughters, and an infant son, and they, as well as the trustees, reside in England. -The will was probated in London and letters testamentary issued to the trustees, to whom ancillary letters testamentary were issued by the surrogate of. New York county. The will is apparently drawn for the purpose of creating trusts of real and personal property, which may be permissible under the laws of Great Britain, but which in part are forbidden by the statutes of this state. The will, as far as it affects the interests of Jessie Sugden in the premises in question, must be construed as a will of real property. The will does not make an equi

“I devise and bequeath all my real and personal estate whatsoever ana wheresoever not hereby otherwise disposed of unto my trustees upon trust that my trustees shall either retain the same in such state of investment as it may he at my death or shall sell, call in and convert into money the same, or such part thereof as shall not consist of money, and shall with and out of the moneys produced by any such sale, calling in or conversion and out of my ready money pay my funeral and testamentary expenses and debts and the said legacy, and shall invest the residue thereof as hereinafter authorized, and shall-stand possessed of the said residuary trust property and moneys -and the investments for the time being representing the same (hereinafter called ‘the residuary trust fund’)” in trust as by the will further-provided.

The trustees are by" this provision to stand possessed of the residuary trust property. This is the same as the residuary trust fund, and includes not only the personalty remaining after'payment of the debts and legacy, but also all the real estate of which testatrix died seised. Moreover, by the ninth paragraph of the will the testatrix declares:

“My trustees may postpone the sale and conversion of my real and personal estate, or any part thereof, for so long as they shall think fit, and that the rents, profits and income to accrue from and after my decease of and from such part of my estate as shall for the time being remain unsold and unconverted shall be paid and applied to the person or persons and in the manner to whom and in which the income of the moneys produced by such sale and conversion would for the time being be payable or applicable under this my will if such sale and conversion had been actually made.”

By the tenth clause the trustees are given power to appoint agents in the United States of America for the purpose, among others, “of cultivating any of my property which may be abroad.” The eleventh clause provides: “Any moneys to be invested hereunder may, be invested in or upon any of” the personal properties specified. The intention of the testatrix was not to impress a new character upon her real estate. When executors or trustees are merely authorized to change real property into personal property, as they may think fit, and their judgment is to be formed from conditions existing after the death of the testatrix, the property will not be deemed to be equitably converted. Harris v. Clark, 7 N. Y. 242 .

Mr. Justice Patterson has recently summarized the rules of law on the subject of equitable conversion by wills in Phoenix v. Trustees of Columbia College, 87 App. Div. 438 , 84 N. Y. Supp. 897 , which was affirmed on the opinion below in 179 N. Y. 592 , 72 N. E. 1149 , as follows:

“The inquiry is as to the intention of the testator. It is the rule of law in this state that such intention must appear plainly, distinctly and unequivocally. Scholle v. Scholle, 113 N. Y. 261 , 21 N. E. 84 ; Clift v. Moses, 116 N. Y. 144 , 22 N. E. 393 . An intention to convert may be manifested in various ways: First, by a positive direction to the executors or trustees to make-it; * * * second, the intention may be ascertained from the necessity of a sale, in order to carry out the general scheme of a testator; * * * and, third, the property may be deemed to be equitably converted, when the purpose of the testator would fail without such conversion.”

In Matter of Tatum, 169 N. Y. 514 , 518, 62 N. E. 580 , 581, Judge Gray says:

“Unless the purpose of the testator will fail without a conversion, equity will not presume it. There should be an implication of a direction to convert, so unequivocal and so strong' as to leave no substantial doubt in the mind. Hobson v. Hale, 95 N. Y. 588 ; Scholle v. Scholle, 113 N. Y. 261 , 21 N. E. 84 . Indeed, conversion, to be decreed, must he so necessary, as that, without it, the provisions of the will would be rendered unreasonable and incapable of a just and an effective operation.”

The material provisions of the will declaring the trust may be briefly stated, and for convenient reference divided into paragraphs as follows: (1) In trust to pay the income to my husband during his life until he shall marry again (but subject to the power of advancement hereinafter given to my trustees) and from and after his decease or second marriage. (2) In trust for all my children who shall attain the age of 25 years or marry under that age in equal shares. In case, any child of mine shall die in my lifetime, the children of any such child to take the share which his, her, or their parent would have taken in the residuary trust fund if such parent had survived me and attained the age of 25 years. If there shall be no child or grandchildren of mine, then (3) in trust for my husband absolutely, if he shall survive me; but if he shall predecease me (4) in trust for my sister and my brother in equal shares; (5) provided always and I hereby declare that my trustees shall retain the share of each of my daughters in the residuary trust fund upon trust to pay the interest thereof to such daughter during her life, and so that if and while she shall be under coverture the same shall be for her sole and separate use and she shall not have power to dispose of the same in the way of anticipation, but with power, nevertheless, for such daughter to appoint by deed or will that after her decease the whole or any part of such income shall be paid to -any husband who may survive' her during his life or for any less period. (6) And from and after the decease of such daughter and subject to any appointment which may be made to her husband in trust for the children of my same daughter, or any of them or any of their issue, upon certain conditions in such share and manner, as she shall by deed or will appoint. And in default of appointment (7) in trust for the children of my same daughter, who being sons shall attain the age of 21 years, or being daughters shall attain that age or marry, in equal shares. And in case there shall be no child of my same daughter, who being a son

Before considering these latter provisions and looking at the general plan for benefit of husband and children, it appears that four persons are to share in the beneficial enjoyment of the estate during their lives. The corpus of the estate is not specifically divided into separate parcels. It is, however, clear that the testatrix intended that each child was to take a separate share after the termination of the husband’s estate. There is not, therefore, one trust limited upon the four lives. The shares and interests may be several, even though the trust fund or corpus remain undivided, where it was clearly the intention that the income and principal given in equal shares were to constitute separate trusts under which the rights of each beneficiary are separate and distinct in his share of the income, and the property is kept in solido for mere convenience of investment or administration. Schermerhorn v. Cotting, 131 N. Y. 48 , 29 N. E. 980 ; Vanderpoel v. Loew, 112 N. Y. 167 , 19 N.

This brings us .to the peculiar provisions made concerning the daughters’ shares contained in sections 5 to 9, inclusive, of the will. By these provisions certain powers of appointment were given to each daughter. By section 5 power is given to continue payment of a part or the whole of the income to any husband who may survive her. This is the only provision specifically referring to income. The next power, section 6, is stated to be subject to the appointment for the husband, “in trust” for such children or grandchildren of the daughter in such share and manner as she shall appoint. By section 8, if there be.“no child of my same daughter who being a son shall attain the age of 21 years or being a daughter shall attain that age or marry,” then appointment may be made upon such trusts and in such manner as the daughter designates. These are, the powers. Sections 7 and 9 provide for- disposition in default of the exercise, of 'them. “And in default of such appointment” (section 7) “in trust for the children of my same daughter who being sons shall attain the age of 21 years or being daughters shall attain that age or marry in equal shares and if there be only one such child the whole to be in trust for that one child.” If there are grandchildren, the appointment must be made in the class or this clause becomes operative; but, if there are no grandchildren and no appointment under section 8, then, by. section 9—

<rIn trust for my other children who attain the age of 25 years or many in equal shares and so that the share or shares accruing to each or any daughter of mine under this trust shall be subject to the trusts hereby declared concerning the original share of the same daughter under this my will.”

I am of opinion that these provisions continue the trust term beyond the time permitted by statute.

It must be noted that the use of the words “in trust” is prefixed to each disposition, whether it be by way of appointment under the power or by devise in default thereof. The nature of the trust is not in terms defined, except in the fifth section, but the only meaning possible is for a continuation of the trust to pay the income, except that in the eighth section the daughters are given power to designate the terms upon which the trusts may under that section be continued. The attempted continuance of the trust after the decease of the husband and a daughter for the benefit of the daughter’s husband by power of appointment of the income (section 5) is invalid, in that it suspends the absolute power of alienation for a longer period than two lives in being, and, moreover, the daughter’s husband is not a life in being at the time of the creation of the estate. Van Brunt v. Van Brunt, 111 N. Y. 178 , 19 N. E. 60 ; Tiers v. Tiers, 98 N. Y. 568 ; Schettler v. Smith, 41 N. Y. 328 ; Durfee v. Pomeroy, 7 App. Div. 431 , 40 N. Y. Supp. 1022 . The same reasons apply to the other powers, whereby the estate would be kept in the hands of the trustees during the term designated by the appointment in excess of two lives, and not in being at the creation of the estate. Where the proposed estate could not be created by direct devise, except by limiting the necessary suspension by more than two lives, it may not be created through the intervention of a power. Booth v. Baptist Church, 126 N. Y. 215 , 240, 28 N. E. 238 . The alternate provisions in case, of default in the exercise of the power of appointment are no better. If there be grandchildren by the daughters, the trust is to be continued for their benefit; if sons, until they are 21 years, or, if daughters, until they attain that age or marry. If there be no grandchildren, the property is still to be retained in trust for the children of testatrix who attain the age of 25 years, or marry, in equal shares ; the daughters’ shares being further subject to the trust under which they are to receive income for life. Under this clause, upon the death of a daughter without children, the suspension of the power of alienation of her share would be further limited as to one-half by the minority of her brother, if living, and as to the other half by the life of her sister, or, if the brother had predeceased her, then the whole share, by the life of the surviving sister. In case one of the daughters survived both her brother and sister, there being no other.child of the testatrix surviving, no provision appears to be made as to the disposition of such share, and it would, therefore, vest in the heirs of the testatrix. A situation is therefore presented in some respects analagtius to that in Purdy v. Hayt, 92 N. Y. 446 , where the trust was held valid. As in that case, the ultimate remainder is contingent, the interests of the daughters, although undivided, are distinct shares, and the share of the sister dying first is limited to pass through more than two life estates before reaching the ultimate remainder, while

“If the principal disposition can he upheld, we should disregard ulterior, contingent limitations, which threaten violation of statutory rules respecting the ownership of property.”

So a trust limited upon the life of a widow was held separable from a void limitation subsequent of a term of years. Underwood v. Curtis, 127 N. Y. 523 , 28 N. E. 585 ; Kennedy v. Hoy, 105 N. Y. 134 , 11 N. E390.

Applying this rule of construction of these, provisions as to the daughters’ shares, one-third of the estate is held in trust to pay the income to the husband during his life, and, after his death, to a daughter^ and a second third upon similar trust limited by the lives of the husband and the other daughter. In addition to these trust provisions, by sections 2, 10, 11, and 12 of the will, direction is given for the accumulation of income for the benefit of all the children .until they attain the age of 25 years, with power to apply the income for their benefit and with power of advancement given the trustees

“In trust for all my children who shall attain the age of 25 years or marry under that age in equal shares.”

As has been assumed in previous discussion, the words “in trust” refer to a continuance of the trust to pay income which is created by the preceding section for the benefit of the husband “and from and after his decease or second marriage” continued “in trust for all my children.” Each child is by this section given an equal share in the entire income and principal. That the language was intended to devise an interest in the principal is made more clear by the provision in the same section devising to grandchildren, in case testatrix’s children predeceased her, “the share which his, her or their parent would have taken of and in the residuary trust fund if such parent had survived me and attained the age of 25 years.” The descriptive words, “who shall attain the age of 25 years or marry under that age,” do not limit the trust to pay income by a term other than lives which would defeat the trust. Neither, in my opinion, do they create a contingency upon the happening of which the vesting of each child’s share is made dependent, but the remainders vested upon the death of testatrix, and are not contingent upon the attainment of the

The remaining questions may be disposed of briefly. The will is made by a woman, born, a citizen of the United States, who married an alien. She creates a trust for the. benefit of the foreign-born children and the alien husband, who are nonresidents, and appoints nonresident alien trustees of the real property situate in this state. The inquiry is three-fold as to the right of the testatrix to create, of the alien beneficiaries to receive, and of the alien trustees to take and hold. By express statutory provision (section 6, Real Property Law) a woman born a citizen of the United States, who has married an alien, and the foreign-born children of such woman, are, notwithstanding their residence in a foreign country, entitled to take, hold, convey, and devise real property situated within this state as if citizens of the United States, where, as here, the title to such real property has been derived through a citizen of the United States. The right thereby given to devise includes the right to do so upon such trusts as our laws permit. The citizenship of the beneficiary does not appear to be material where the legal title is vested in the trustees. It has been held that, where -the trustees are citizens, active trusts for the benefit of aliens, if otherwise lawful, are valid. Marx v. McGlynn, 88 N. Y. 357 , 376 ; Meakings v. Cromwell, 5 N. Y. 136 ; Wainright v. Low, 132 N. Y. 313 , 30 N. E. 747 . There is.no express .regulation of the right of an alien to take and hold as trustee. The reason given, in the cases last cited, for permitting an alien to take the beneficial use, is that the title to the land is still within* the control of the. state; it being in the hands of citizen trustees, who owe allegiance to our government and can be called upon to discharge the duties of citizenship. But where this control is expressly abandoned,

"There is no objection to the execution of a trust by an alien excepting that which arises from his incapacity to hold lands.”

The fact that the beneficiary is also an alien makes no difference. If the property may be held by an alien for his own use, it may be held by him for the use of another alien. The capacity to hold property is the test, and this is equally true where the trust is created by devise. Section 4, Wills. 2 Rev. St. (1st Ed.) pt. 2, p. 57, c. 6, tit. 1, § 4, provides:

“Every devise of any interest in real property, to a person who, at the time of the death of the testator, shall be an alien, not authorized by statute to hold real estate, shall be void.”

The trustees in this case, being British subjects, are authorized to take and hold real estate, in this state. This right is conferred by section 5a of the real property law (Laws 1897, p. 706, c. 593), under which any citizen of a nation which, by its laws, confers similar privileges on citizens of the United States, may take, acquire, hold, and convey real estate within this state in the same manner and with like effect as if such person were at the time a citizen of the United States. Similar privileges are conferred upon citizens of the United States by an act of Parliament of Great Britain, enacted in 1870 (St. 33 Vict. p. 166, c. 14, § 2), which provides in part:

“Real and personal property of every description may be taken, acquired, held and disposed of by an alien in the same manner in all respects as by a natural bom British subject.”

See Fay v. Taylor, 31 Misc. Rep. 32 , 63 N. Y. Supp. 572 .

The guardian for infants Sugden in their answer in the Arnold action alleges that partition is unnecessary, imposes an unnecessary burden and expense upon the parties entitled to proceeds of sale, and is injurious to the interests of infant defendants. The contention is that plaintiff already has power of sale of premises described in the complaint under the will of one Mary Hart, the common source of title. But as Jessie Sugden, deceased, the mother of these infants, derived .her share under this Hart will, it is clear that a construction of the Sugden will would also be necessary to determine the proper distribution of the proceeds if a sale were made by plaintiff under his power as executor of the Hart will rather than under a decree in partition. The share of the Sugden infants is collectively only one-tenth part of the parcels described in the complaint in the Arnold action. All other parties acquiesce in the partition. It is not shown that any greater expense is imposed upon the estate by proceeding to partition this property with the other parcels than would be incurred by a separate sale under the power and a proceeding to construe the will upon distribution. The interests of the infants are not prejudiced by the partition. I reach the conclusion that partitions should be decreed, that the interests in the real estate in question have not been converted into personalty, and that the will of Jessie

Partition will be decreed accordingly.