Cotting v. Schermerhorn — 35 N.Y. St. Rep. 125

Majority

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Elizabeth Cotting, Ex’rx, v. Katie Schermerhorn et al., App’lts, and Charles Uriah Cotting, Trustee, Resp’t.

(Supreme Court, General Term, First Department,

Filed December 29, 1890.)

Headnote

1. Will—Trust.

A testator devised his residuary estate to his brother in trust to pay over to his widow one-third of the net income, rents and profits, and one-third to a daughter, and one-third to a son; in the event of the death of the son or daughter, the widow was to receive one-half of the income, and the surviving son or daughter the other half; and in case of the death of both son and daughter intestate, and without issue, the widow was to receive the whole income. But in regard to the son’s (a minor) share, the trustee was to accumulate the income, and make only certain payments up to certain ages; if the son died during the widow’s life-time, one-half of the income was to go to the widow during life, and the other half to the daughter; if the son be dead at the death of the widow, thereupon the whole net income is to go to the daughter. Held, that the trust was void, as it depended upon three lives in being. Under it, if the son die in the life-time of the widow, and after attaining the age of twenty-one years, he might enjoy one-third of the net proceeds during his life, the widow one-half of this third during her l'fe, and the daughter, if she survive both, one-half of this third during her life.

2. Same—Accumulations.

A trust directing accumulations for the benefit of a minor after he reaches majority is void.

Appeal from a judgment recovered at the special term.

John G. Cameron, for app’lts; P. H Vernon, for resp’t.

The action was commenced by Joseph Addison Jameson, as one of the executors of the estate of Amos Cotting, deceased, to obtain a judicial construction of his will. The testator died on or about the 12th of May, 1889, leaving his widow and two children surviving him. His son was then of the age of fifteen years, and the daughter had intermarried with J. Egmont Schermerhorn, and they had two children, who are defendants in this action. During the pendency of the action the plaintiff Jameson died, and it was afterwards revived and the widow, who was executrix with him, was made the plaintiff, she having previ

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ously been a defendant, owing to her refusal to join as plaintiff m its commencement.

By his will, which was proved before the surrogate of the county of New York, of which the testator had been an-inhabitant, he appointed his brother, Charles Uriah Cotting, the respondent, trustee of his estate, to whom he gave, devised and bequeathed all the rest and residue of his estate not previously and otherwise disposed of, §.nd the rents, profits and issues thereof, in trust for the benefit of his widow and his two children. This trust has been resisted by the persons immediately and beneficially interested therein, as having been illegally created and for that reason void; while the trustee has dissented from that view, and insisted upon the residue of the estate being transferred to him, to be used and employed in the execution of the trade.

The court at the trial held the trust to be valid, except the direction for an accumulation of profits for the benefit of the testator’s son after his attainment of the age of twenty-one years. That was held to be unlawful, as it surely was, and the rents and profits directed to be accumulated were by the judgment made payable to the son after he shall become twenty-one years of age, as the person legally entitled to receive them. And as he was eventually to .become the owner of so much of the estate as would supply these rents and profits, this determination beyond all fair ground for controversy conformed to the statute. Schettler v. Smith, 41 N. Y., 328 ; Embury v. Sheldon, 68 id., 227, 237.

The trustee has been directed by the will. To pay over to my wife Elizabeth Cotting in equal quarterly instalments, payable on the first days of January, April, July and October, in each and every year, reckoning from the first of said quarter days occurring after my decease, and with power to anticipate any one of said ■quarterly payments at her request, the full and equal one-third part and portion of the whole net income, rents and profits derived from said trust estate.

And, in the event of the death of either my said son or my said daughter during the lifetime of my said wife, then and in such case, to pay the one equal moiety or one-half part of the whole net income, rents and profits of said trust estate to my said wife during her lifetime' and the other moiety or equal one-half part thereof to the survivor of my said children, each to be paid in the same manner and on the days • and months designated in item first of this clause.

And still further, in the event of the death of both my said children intestate and without lawful issue them surviving, prior to the death of my said wife, then and in such case, to pay to my said wife, said Elizabeth Cotting, during her lifetime, the whole net income, rents and profits of said trust estate.

The devise and bequest of the residue of the estate to the trustee for the purpose of conforming to these directions would create an express trust, and if it were lawfully directed would vest him with the title. Vernon v. Vernon, 53 N. Y., 351 ; Knox v. Jones, 47 id., 389 . For the trustee is to take the rents and profits of the

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estate and apply them in this manner to the support and maintenance of the widow.

The same use of proportionate parts of the income and profits was directed for the benefit, respectively, of the son and daughter of the testator. ■ And for these objects, also, it is necessary that the trustee shall have the legal title to the estate commensurate with the duration of his duties, which would for that time suspend the power of alienation, and absolute ownership of the property. 2 R. S., 6th Ed., 1110, § 78; Cook v. Lowry, 95 N. Y., 108 , 111 And that has not been permitted to extend beyond two lives in being at the time of the creation of the trust estate. 2 E. S., 6tli Ed., 1101, §§ 14, 15. This restraint, it has been alleged, has been violated in the present instance, and if it has, then it follows that the trust is void.

To ascertain whether that is the effect of the testator’s directions in favor of these beneficiaries, a further examination of the will must be made. If that restraint has been transcended, it has been done by the provisions affecting the rights of the testator’s son under the trust, and by the contingent directions for the disposition of a part of his interest in favor of the widow and of the daughter before the estate can vest absolutely in her appointees or in her children.

By the second subdivision of the fourth clause of the will, the trustee has been directed to pay to the guardian of the son, for his support, maintenance and education, such yearly sum as the guardian shall think necessary, not exceeding the sum of $1,000, until he attains the 'age of fifteen years, and $1,500 per annum after that until he shall be twenty-one years of age. And by the third sub-division, this yearly amount is then to be increased to $2,500, until the age of twenty-five years, and after that one third of the whole net income, rents and profits of the trust estate are made payable to him, subject to a possible contribution directed by the last paragraph of this division to maintain the income of tne widow at the sum of $12,000 per annum.

And to ensure these payments to the son, the testator, by the third subdivision, further directed that “the remainder of one equal one-third portion of the whole net income, rents and profits of said intestate shall be set aside and be held by said trustee, and reinvested as he may in his discretion deem best, to and for the use and benefit of my said son; which seemed to him a divisible third of the income trust estate. This part of the will also authorized the trustee to advance to the son, after the age of twenty-five years, and before the determination of the trust as to him, a sum not exceeding $50,000. But as this will not affect the continuation of the trust in the residue, no further attention will be bestowed upon this direction.

Upon the decease of the widow, if at that time the son shall have attained the age of twenty-five years, the trustee is directed, by the fifth subdivision of paragraph four, to pay to him one-half the net income, rents and profits of the estate. But if he shall be under that age, then this direction has been subjected to those previously given for payments and accumulations to bo made,

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-which so far as they relate to what should be done after the son shall become twenty-one years of age would be necessarily inoperative under the statutes restraining the time beyond which accumulations will not be permitted.

It was further directed when the son shall reach the age of thirty years,' if that shall be after the decease of the widow, and if not, then after her decease, and the acquirement of that age, that the trustee shall pay over to him one-half part or share of the estate, subject to any advancement previously made to him, as that has been authorized to an extent not exceeding $50,000. But by the eighth subdivision of paragraph four, if the son shall die during the lifetime of the widow, then the trustee is directed “ to pay the one equal moiety, or one-half part, of the whole net income, rents and profits of said trust estate, to my said wife during her lifetime, and the other moiety, or equal one-half part thereof, to the survivor of my said children.” This direction, if it should be complied with, would give to the widow one-half of one-third of the income, rents and profits, previously directed to be paid to the testator’s son during his_ life for the residue of her life, after his decease.

The further direction has also been added: But if my said son shall be deceased, intestate and without lawful issue him surviving, at the time of the decease of my said wife, then and in such case at, upon, and after the death of my said wife, to pay to my said daughter Katie T. Ootting, during her lifetime, the whole net income, rents and profits of the whole of said estate in the manner and on the days and months designated in item first of this clause, but in all respects subject to the directions given and declared in item fifth' of this clause: and at and upon the death of my said daughter, the whole of said estate shall pass, vest, and be paid over, assigned, transferred, conveyed and delivered as provided for, declared and directed in item seventh of this clause.

And if that, together with those beforé given, should be complied with, then the son dying in the lifetime of his mother after he attains.the age of twenty-one years, will have one-third of the net proceeds of the trust during his lifetime, his mother, the widow, will have one-half of his third during the residue of her life, and the daughter, if she shall survive both, will receive the same proportion of this share of the income, rents and profits, during her life. This is a succession of interests which have all been provided for by the will And as there is a possibility that the son will die during the life of the widow, this devolution of interests if the trust is to be executed may, in the future, take place. He may' enjoy the use of his third of the rents, income and profits during his life, the widow may become entitled, under the language of the will, to one-half of that third after his decease in her lifetime, for the residue of her life, and the daughter, as the final survivor, may take the same after the termination of the life of the widow, for the period of her own life. And the trust estate must all remain together under the control and management of the trustee, to obtain the income,, rents and profits to be in this manner administered and applied, until the

Concurrence

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decease of the testator’s daughter. At no earlier time could it be terminated, if the directions of the will should be executed. This is clearly the construction required, for while all three of the beneficiaries live the rents and profits to be divided must be obtained from the entire residue of the estate. And if the son shall die in the lifetime of his mother, the same necessity will exist, for all the rents, income and profits are in that event to be divided between the widow and the daughter, .and after the decease of the widow, then all are to be paid to the daughter during her lifetime. And that can only be done by maintaining the trust .as an entirety until the decease of the daughter. And that does provide for the suspension of the power of alienation and absolute ownership for more than two lives in being at the time of the ■creation of the trust estate, which under the law renders this will inoperative and void, for no separation can be made, as the directions have been given, of one part, or share in the trust from that of the others. Colton v. Fox, 67 N. Y., 349 ; Ward v. Ward, 105 id., 68, 75; 6 N. Y. State Rep., 798. The judgment should accordingly be reversed, and judgment directed declaring the trust which the testator intended to create to be unlawful and void, with costs to the appellant and respondent to be paid out of the estate, and a suitable compensation to the guardian ad litem upon the presentation of his affidavit required by the general rules of practice.

I concur. It appears conclusively that the provisions of the will depend upon three lives, for until the death •of the widow and both children there can be no distribution of the estate.

Brady, J., concurs.