In re the Application for Appointment of a Trustee of a Beneficiary Fund Arising Under a CertifiCate of Insurance Upon the Life of Morian

Majority

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In the Matter of the Application for Appointment of a Trustee of a Beneficiary Fund Arising Under a Certificate of Insurance upon the life of Thomas H. Morian, deceased.

(Surrogate’s Court, Chautauqua County,

Filed June 10, 1889.)

Headnote

Insurance (Life)—Will—When will and policy should be construed

TOGETHER—AUTHORITY TO APPOINT TRUSTEE—AUTHORITY OF SURROGATE’S COURT TO APPOINT TRUSTEE OF FUND—CODE ClVIL PRO., § 2818 —Estate of testators no interest in fund M. obtained a certificate of insurance on his life for $2,000, in the A O. TJ. W., payable, on its face, to W., as sole beneficiary. On same day and date of the certificate of insurance, said M. made his will, reciting the fact of having obtained such insurance, and that, being desirous of making an

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equitable disposition of his property, he made his will, and by it, in terms bequeathed the beneficiary fund to said W , his executor, to pay funeral expenses, erect a monument, and to pay the balance of the fund, except $430, to fourteen relatives of the testator; and such balance of $430, he gave to said W., the executor of his will, and died eight days after making his will. His executor qualified and elected to accept the fund as a trustee under the will, and not as the beneficiary as named in the policy, and paid part of the leggcies named under the will and died intestate before completing his trust, and R. and H. were appointed his administrators. On contest between the administrators of the trustee, W., and the administrator with the will annexed of M., the testator, for the appointment of a new trustee of the balance of the fund, Held, that the facts proved warranted the finding that the will and policy should be construed together, as constituting authority for the appointment of a trustee, under the will, considered together with the verbal agreement to same, made at the same time of the making of the will and policy, as found by the surrogate, between the testator ana his trustee or executor. Held, that the surrogates court had jurisdiction, under section 2818 of the code, to appoint a trustee of the balance of the fund, in place of W., deceased, and that the residuary beneficiary of the fund should be appointed such trustee, and that the estate of the testator, had no interest in the fund. Matter of Van JDermoor, 42 Hun, 326 ; 3 IT. Y. State Rep., 713, distinguished. •

C. R. Lockwood, for petitioners, administrators of estate-of Stephen H. Warner, deceased; C. D. Murray, for administrator, with will annexed of estate of Thomas H. Morian, .deceased.

Thomas H. Morían died June 22d, 1887. Eight days prior to his death he made his will, which was probated July 11th of the same year, appointing Stephen H. Warner the executor thereof.

On the same day he made his will he procured a beneficiary certificate of insurance on his life for $2,000, in the Ancient Order of United Workmen, payable at his death to said Stephen H. Warner.

The testator, by his will, first states that being desirous of making an equitable disposition of his property at his decease, makes his last will and testament. That having directed the said beneficiary fund, due at his death from the Ancient Order of United Workmen, should be paid to-said Stephen. H. Warner, he directs, by his will, that said Warner should, out of said beneficiary fund, pay the funeral expenses of the testator, and erect a suitable monument for himself and his deceased wife, not exceeding in value $250; and then that said Warner should pay to each of the four children of a deceased brother of said executor fifty dollars; to each of the two daughters of another brother of1 the executor fifty dollars; to a niece of the testator fifty dollars; to each of the two daughters of William Morían, a brother of said testator, fifty dollars, to Rosette Warner, a relative by marriage of the testator, and wife of said Stephen H. Warner, executor, $500; to Julia Lewis, his niece, fifty dollars; to Hattie Lewis, niece, $100; to

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Hattie Hawkins $100, and to said Stephen H. Warner all the residue of said beneficiary fund, being $430.

The deceased died, leaving no widow and no descendants, but leaving him surviving his father, Anthony Morían, of advanced age, his only heir at law and having ample means for his support.

Said Thomas H. Morían, at his decease, owned property other than said beneficiary certificate, most of which he bequeathed and devised to his collateral relatives, also making his said executor, Stephen H. Warner, the residuary legatee thereof.

Said Stephen H. Warner, executor, and trustee of said beneficiary fund, died intestate September 15th, 1887, about two months after qualifying as such executor; and soon afterwards his said widow, Rosette Warner, and Thomas P. Hinds were appointed administrators of his estate.

Soon after the death of said Warner, one Benjamin L. Harrison was appointed administrator with the will annexed of the estate or said Thomas H. Morían, deceased, in the place of said Warner, executor.

The controversy herein arises upon the petition of the said Rosette Warner and Thomas P. Hinds, administrators of the estate of said Stephen H. Warner, deceased, for the appointment of trustees of such beneficiary fund under the will of said Thomas H. Morían, deceased.

The application is opposed by said Harrison, administrator, with the will annexed of said Thomas H. Morían, deceased, claiming by his answer that said beneficiary fund is assets-for the payment of the debts of the estate of said Morían, and that he, said Harrison, should be appointed trustee of such fund lay the surrogate’s court.

The important propositions to be considered in this proceeding are:

First. Did this beneficiary fund upon the death of Morían become the absolute property of Stephen H. Warner, the beneficiary named in the certificate?

Second. Did the will with other facts as hereinafter found, constitute Warner a sole trustee of that fund to be paid by him to the several persons named in andas directed by the will of Morían?

Third. Has the surrogate’s court jurisdiction to appoint a trustee of this fund under section 2818 of the Code?

In considering these propositions additional facts as found herein become material to be stated.

By the certificate of insurance, as considered alone, Warner was the beneficiary entitled to the whole fund on the death of Morían, and .no part of it belonged to the estate of or could be used to his debts or funeral

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expenses. But it appears that Warner, upon qualifying as executor of the estate of Morían, elected, against his own interests as the beneficiary thereof, to accept the fund as a trustee under said will. He received the $2,000 on August 19, 1887, and as such trustee, under the will, expended $120 of it,- as directed by the will, in paying the funeral expenses of Morían, and paid to Rosette Warner the $500 legacy as a trustee under the will, and placed the balance of the fund, $1,380, to his own credit, separate from the other funds of said estate, in the Chautauqua County National Bank at Jamestown, previously to his death, which occurred September 16, 1887—less than one month after his appointment as such executor and trustee by the decree of the surrogate’s court, and such funds still remain in the bank.

The will of Morían provided that his executor should not be required to give bonds for the execution of his will.

I have found, as a fact, that there was no written agreement between the said trustee and the testator, constituting said Warner a trustee of such fund, aside from the will and certificate of insurance considered together as one instrument, but that at the time these two instruments were executed there was an understanding and agreement between Warner, and Morían that Warner should act as the trustee of this fund under the will of Morían after his decease, which agreement said Warner, as the trustee, in good faith performed until the trust was closed by his own death.

I am of the opinion that the facts as stated and found constituted Warner a trustee of this fund under the will of Morían, and that the surrogate has jurisdiction under section 2818 of the Code, to appoint a trustee of the balance of the fund unexpended; and that Rosette Warner, widow of said Stephen H. Warner, being the residuary legatee of this fund, is first entitled to such appointment.

The facts as found in this case are exceptional. I have examined with care the line of cases holding, as a general rule, that a testator has no power to change by his will the beneficiaries named in the policy of insurance on his life, unless such change shall be authorized by the by-laws of the company or association insuring. These cases are believed to have little or no application to the peculiar circumstances of the case in hand.

The question here is: Was Warner at and before his death a testamentary trustee under the will of Thomas H. Morían ? With full knowledge of the contents of the will and of the verbal agreement made with the testator at the time the will was made, and of the provisions of the policy when issued, he elected upon qualifying as executor to'

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accept the trust created by the will, and afterwards partially executed same.

Was this a trust under the will ? If it was, it would seem clear that upon the death of the trustee, the surrogate has jurisdiction to appoint a new trustee in place of the one deceased, as provided by section 2818 of the Code, the trust not having been fully executed.

But it is claimed that this beneficiary fund was not the property of the testator at his death, and was not assets of the estate in the hands of Warner, the trustee, and, therefore, that the surrogate has no jurisdiction to appoint a trustee in the place of Warner, deceased. The answer to this is, that Warner held this fund as a testamentary trustee under the will of Morían, and in no other capacity, and the section of the Code above cited expressly gives the surrogate’s court jurisdiction to appoint his successor. Such authority was conferred upon the surrogate’s court of the city and county of New York, by chapter 359, section 3, of the Laws of 1871, and has been since made to apply to the other surrogates’ courts of the state, wherever such appointment is necessary, in order to comply with the express terms of the will; and when such appointment would be for the benefit of the cestu que trust, there cannot be any question but such appointment is necessary in this case in order to comply with the express terms of the will, and is especially so for the benefit of the cestui que trust.

In Matter of Van Dermoor ( 42 Hun, 326 ; 3 N. Y. State Rep., 713) the policy of insurance upon the life of the insured made the amount insured payable “ to said assured, his. executors, administrators or assigns * * * for the benefit of his widow, if any.” The executor received the fund from the insurance company. The widow of the testator petitioned to the surrogate’s court of the county of Schenectady for an order requiring the executor to pay the fund to her as the beneficiary named in the policy. The supreme court, third department, held that the surrogate had no jurisdiction to make such order, on the ground that the funds were not assets of the estate of the deceased, that the executor was .in no sense a trustee under the will, but was a trustee under the policy for the beneficiary. The surrogate based his authority for making his order to compel the payment by the executor to the beneficiary upon sections 2717, 2718 and 2472 of the Code and not upon section 2818 above cited, relating to appointment of a testamentary trustee in the place of one who has died or béenremoved. The opinion of Barnard, J., in the above case, cites Marston v. Paulding (10 Paige, 40), Woodruff v. Young ( 31 Hun, 420 ) and Austin v. Munro ( 47 N Y., 360 ). The cases so cited appear to have no application to this case,

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where the original appointment of the trustee was made by the will itself, and where the trustee, under the will, qualified by accepting the trust created under the verbal agreement between the trustee and testator, made during the lives of both, and has died after partly executing the trust under the will and such agreement. In this case the facts found show that the executor was a trustee under the will, insurance certificate and agreement, all made at the same time, and constituting one complete contract, made valid, as a whole, by being partially executed.

An executor is always a trustee of the personal estate for those interested under the will. Mott v. Ackerman, 92 N„ Y., 539; Kepler v. Supreme Lodge of Knights of Honor, 10 N. Y. State Rep., 383.

Decree made appointing Rosette Warner and Thomas P. Hinds as trustees of such beneficiary fund, with directions to pay the balance of same unpaid to the several beneficiaries named, as directed by the terms of the will1 of Thomas H. Morían, deceased.