Sweeney v. Warren — 40 N.Y. St. Rep. 304

Majority

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James Sweeney et al., App’lts, v. Phœbe Jane Warren et al., Ex’rs, Resp’ts.^[1]

(Court of Appeals, Second Division,

Filed October 6,1891.)

Headnote

1. Will—Construction of—Power to sell real estate.

Before the personal estate of a testator will he discharged from the burden. of paying the debts, it must clearly appear that he intended that it should be, which will not be inferred from the fact that authority is given to sell all, or some part of, the real estate for the payment of debts, and. especially where no disposition is made of the personalty.

(Vann,' J., dissenting.)

2. Same—Powers in trust.

Testator directed his executors to sell certain specified real estate, naming no grantee, but saying, “ and it is my desire that the said land shall be sold in a body for commercial purposes." Held, that as this disclosed no purpose to be accomplished, nor any person or class of persons to be benefited by the alienation of the land, a valid power in trust was not created by it.

3. Same—Beneficial power—Title.

As the power sought to be conferred by the clause ran to the executors in their representative capacity, and not to them as individuals, and was not for their personal benefit, it did not create a valid beneficial power.

4. Surrogate’s court—Jurisdiction.

A surrogate’s court has no jurisdiction over realty left by a decedent, or its avails, unless brought within it by a will, or by a statute, for the purpose of being dealt with for some special purpose.

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Appeal from a judgment of the general term of the supreme court, of the fifth judicial department, entered on a verdict directed subject to the opinion of the general term.

On October 12, 1854, John Sweeney died, leaving Caroline Sweeney, his widow, and several collateral relatives, who were his heirs-at-law and next of kin. He left a will executed October 9, 1854, which was probated December 26, 1854, and letters testamentary were then duly issued thereon to the two executors nominated therein, who immediately entered upon the execution of their trust and continued therein until 1856, when one of them died, and thereafter the survivor discharged the duties imposed by the will on both executors. In the first division of the will the testator devised two village lots to his wife in fee, and a life estate in a farm of sixty acres and the stock thereon in lieu of dower.

In the second division the testator provided:

“ Second. I hereby direct and authorize my executors, hereinafter named, to sell and convey to the New York Central Bail-road Company a certain strip of land (described), * * * on

condition and in consideration that the said railroad company fulfill the agreement and contract made by them with the heirs of James Sweeney.

“ I also desire and authorize my executors to sell and convey all that part of block F, on the Niagara river (particularly described), * * * and it is my desire that the said land shall be sold in a body for commercial purposes.” Then follows in this division thirteen specific devises, and also a devise of the remainder of the sixty-acre farm subject to the life estate of the wife. Near the end of the will, and in the second division, is the following provision: “I authorize and direct my executors to sell and convey (the land directed to be sold for commercial purposes) and also that piece of land on Sweeney street, east of the building known as the shoe shop, for the purpose of discharging all my debts.” The will contained no residuary clause and makes no disposition of the testator’s personal estate, nor of the avails of the two pieces of real estate directed to be sold unless used in payment of debts.

The testator also died seized of four other parcels of land worth about $3,500, which were not disposed of by his will. January 27, 1855, the surviving executor sold and conveyed to the testator’s widow the land in block F for $500, at which time the executor and widow knew that after payment of all debts and expenses of administration there was a surplus of more than $1,200 arising from the personal estate. On the 10th of March, 1874, this action of ejectment was begun by the testator’s heirs-at-law against Caroline Sweeney to recover possessson of the lot purchased by her. Subsequently Mrs. Sweeney died leaving a will, which was admitted to probate, and her executors were substituted as parties defendants in her stead. On the trial of the action a verdict was directed for the defendants subject to the opinion of the general term, where a judgment was ordered for

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the defendants upon the verdict, and thereafter a case was made pursuant to § 1339 of the Code of Civil Procedure.

Sherman S. Rogers, forapp’lts; E. C. Sprague, for resp’ts.

In considering the questions involved in this appeal it will be convenient to examine separately the two clauses which, it is asserted, gave the executor power to sell the lot sought to be recovered. The clause contained in the latter part of the will provides: “ I authorize and direct my executors to sell and convey the strip of land heretofore mentioned and described as lying on -the Niagara river, and also that piece of land on Sweeney street and on the Tonawanda creek, east of the building known as the shoe shop, for the purpose of discharging all my debts.” By this provision the lots mentioned are not converted into money, out and out, but the executors are empowered to convert them for a specific purpose, to wit: the payment of the testator's debts. When a testator authorizes his executors to sell and convert into money all, or a part of his realty for a specific purpose, which fails, or is accomplished without a conversion, the power is extinguished and the land cannot be sold by virtue of it, or treated as money ; but it descends to the heir unless it is devised. Wood v. Keyes, 8 Paige, 365 ; McCarty v. Terry, 7 Lans., 236 ; Jackson v. Jansen, 6 Johns., 73 ; Sharpsteen v. Tillou, 3 Cow., 651 ; Bogert v. Hertell, 4 Hill, 492 ; Hetzel v. Barber, 69 N. Y., 1 ; Read v. Williams, 125 id., 560; 35 N. Y. State Rep., 909; Hill v. Cock, 1 Vesey & B., 175 ; Chitty v. Parker, 2 Ves., Jr., 271; Taylor v. Taylor, 3 De Gex, M. & G., 190; Leigh & D. Conv., 93; Lewin Tr. (8th ed.), 149 and 953.

When the executor sold the lot both he and the purchaser knew that the testator’s personal property exceeded, by more than $1,200, the testator’s debts and the expenses of administration; which defeated the power to sell under this clause, unless, as it is argued, the testator intended that these lots should be sold and the avails applied towards the payment of his debts for the purpose of relieving to that extent the personal estate from the burden imposed by the rule of the common law, that it is primarily liable for the payment of debts, and must be first exhausted, unless there is a clear direction that the real estate, or some part of it, shall be first so applied. This question was considered in Heermans v. Robertson, 64 N. Y, 332 , where it is said: “ The order of marshaling assets for the payment of debts is to apply, first, the general personal estate; second, estates specially devised for the payment of debts; third, estates descended; fourth, estates devised, though generally charged with the payment of debts. 2 Williams on Ex., 1526, note 2; Livingston v. Newkirk, 3 Johns. Ch., 312 ; 4 Kent’s Comm.-, 420. In order to effect a change in the order there must be some absolute and positive direction, clearly indicating an intent to relieve the class of assets primarily liable, and to charge some other portion of the estate in exoneration of the funds and property primarily liable. A mere direction to an executor to sell real estate does not make the proceeds

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necessarily liable as personal assets; but they will be only applicable to the payment of debts when the assets personal in their character shall have been exhausted.” (Page 344.) Before the personal estate of a testator will be discharged from the burden of paying the debts it must clearly appear that he intended that it should be, which will not be inferred from the fact that authority is given to sell all, or some part of the real estate for the payment of debts, and especially in a case where, as in this, no disposition is made of the personalty. Gray v. Minnethorpe, 3 Ves., Jr., 103 ; Hartley v. Hurle, 5 id., 540; Hancox v. Abbey, 11 id., 179. Under this clause the executor had no power to sell the lot in question.

It remains to be considered whether the sale can be sustained under the power contained in the earlier part of the will, which provides: “I also desire and authorize my executors to sell and convey all that part of block F on the Niagara river, running back from said river to a continuation of the west line (to the north) of a projected canal as laid down on a map made by Augustus Canfield, on lot or block Gr, being nearly on a parallel line with the said Niagara river, and it is my desire that the said land shall be sold in a body for commercial purposes.”

Powers, as they existed prior to January 1, 1830, were abolished by article third “ Of Powers ” of title 2 of chap. 1 of the second part of the Revised Statutes, § 73, which article was intended to be a codification of the law under which powers were thereafter to be created, governed and construed. Cutting v. Cutting, 86 N. Y., 522 ; Hutton v. Benkard, 92 id., 295, 305. As to beneficial powers, it is enacted by the ninety-second section that none except those enumerated in the article shall be valid.

“A power is an authority to do some act in relation to lands, or the creation of estates therein or of charges thereon which the owner granting or reserving such power might himself lawfully perform.” Section 74. All powers are divided into two general classes; beneficial powers and powers in trust “A * * * power is beneficial, when no person other than the grantee has, by the terras of its creation, any interest in its execution.” Section 79. “A * * * power is in trust, when any person or class of persons, other than the grantee of such power, is designated as entitled to the proceeds, or any portion of the proceeds, or other benefits to result from the alienation of the land, according to the power.” Section 94. These powers are subdivided into general and special powers. “A power is general, when it authorizes the alienation in fee, * * * of the lands embraced in the power, to any alienee whatever.” Section 77. Special powers are defined in the seventy-eighth section, but it is unnecessary to call attention to the definition, as it is agreed by counsel, and is clear, that the power claimed to be created is a general one.

To create a valid power, either beneficial or in trust, it is indispensable that the object, or objects to be benefited by its execution shall be specified in or be clearly ascertainable from the instrument by which the power is attempted to be created. Jennings v. Conboy, 73 N. Y, 230 ; 1 Sugden on Powers, 117 (3d

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Am. ed.), 173; Farwell on Powers, 29, 401; Abb. Law Dict, Objects of a Power; 4 Cruise R. P., chap. 19, § 32 ; vol 2, Greenl. ed., 294, § 32. For the creation of a valid power in trust it is essential that its execution be beneficial to some person, or class of persons other than the grantee of the power, who can compel the due execution of the trust, which person, or class of persons, must be designated in, or be clearly ascertainable from, .the instrument by which the power is created. 1 R. S., 734, § 94; Read v. Williams, 125 N. Y., 560 ; 35 N. Y. State Rep., 909. As this will discloses no purpose to be accomplished, nor any person or class of persons to be benefited by the alienation of the land under the clause last quoted, a valid power in trust was not created by it.

Does the clause create a beneficial power ? When a power is conferred upon an individual (not upon a trustee), and no person other than the grantee of the power has an interest in its execution, it is beneficial; and so, a power is beneficial when it is silent as to the person to be benefited by its execution. Jennings v. Conboy, 73 N. Y., 230 . Undoubtedly á power may be vested in executors, as such, to be exercised for their own benefit as individuals, which would be a beneficial one; but when a power is conferred upon executors by virtue of their office, and not on them as individuals, there being no other evidence that it was intended to be beneficial to them, the presumption is that it was given for the purpose of being executed in the interest of the estate, and not for their own benefit In this case the power sought to be conferred by this clause runs to the executors in their representative capacity, and not to them as individuals; and it is clear that the testator did not intend to confer a power on his executors for their personal benefit, but for the purpose of administering his estate, which purpose has failed, as before shown.

Flo such beneficial power as is claimed to exist under this clause is authorized or enumerated in the article relating to powers, and consequently the clause in question does not create a valid beneficial power. 1 R. S., 733, § 92. Flo valid beneficial power, or valid power in trust being created by this clause, and the purpose for which the power was given in the clause first considered having failed before the land was conveyed,- no title was acquired under the conveyance executed by the executor.

After paying the debts and expenses of administration there was in the executor’s hands,arising from the personal estate, a surplus of $1,292.92 and $180, received from George H. Bryant for the lot sold to him, which sums, amounting to $1,472.92, were May 25, 1857, paid over to the widow, who at that time receipted therefor and also for the $500 due from her on the purchase of the lot in question, which three sums amounted to $1,972.92. In September, 1857, the executor applied to the surrogate’s court for a final settlement of his accounts, and a citation was duly issued and personally served on all the heirs, next of kin and persons interested in the estate (including these plaintiffs), to attend such final settlement On the 14th of September, 1857, the account as presented was settled, the two sums, amounting to $680, arising from the sale of real estate, were treated as personalty, and the payment

Dissent

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of May 25, 1857, to the widow was ratified and confirmed, upon the theory that the testator not having bequeathed his personalty and not having left descendants, his widow was entitled to the residue of the personalty, unless it exceeded $2,000. Whether any of the persons interested in the estate were present, or were represented on the accounting, does not appear.

It is now insisted in behalf of the defendants that the heirs are estopped by the proceedings in the surrogate’s court from maintaining this action for the recovery of the land.

A surrogate’s court has no jurisdiction over realty left by a decedent, or its avails, unless brought within it by a will or by a statute for the purpose of being dealt with for some special purpose, like the payment of debts in case the personalty is inadequate for that purpose, and, therefore, there is no judicial estoppel by a court having jurisdiction. Hone of the elements of an equitable estoppel, or of an estoppel in pais, have been pointed out by the learned counsel for the respondent, nor have we discovered any. The sale was not induced by the conduct of any of the heirs. The widow, who purchased the lot, never changed her position, nor have her executors, the defendants, changed theirs by reason of any act done or omitted by the heirs. She paid nothing and parted with nothing in exchange for the deed which she took. It is true she agreed to pay $500, but she did not, that sum being charged as paid to her by the executor in his final account There is nothing in the record showing any expenditure or change made, or steps taken in respect to the property since the final accounting. The defendants are not purchasers of the lot for value, nor are they the representatives of one who purchased for value, relying upon the proceedings in the surrogate’s court and the acquiescence of the heirs.

The judgment should be reversed and a new trial granted, with costs to abide the event

The will in question was made by the testator but three days before his death and in anticipation of that event He could not, therefore, have expected that any change in his estate would take place before he died and there was no proof of any. He was a man of good business ability, conversant with his business affairs and therefore presumed to know that his personal property was more than sufficient to pay his debts. In common with all men, he is presumed to have known the law, and hence to have known that his personal property would be first used to pay his debts unless he directed otherwise. His will should be interpreted in the light of these presumptions and his intention, when thus ascertained, carried into effect, due regard being paid to the rule that if the will is capable of two constructions, one leading to a legal and the other to an illegal result, the former is to be preferred. Crozier v. Bray, 120 N. Y., 366 ; 31 N. Y. State Rep., 506; Du Bois v. Ray, 35 N. Y, 162 .

The paragraphs of the will that require construction are in these words: “ I also desire and authorize my executors to sell

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and convey,” the premises in question, “ and it is my desire that the said land shall he sold in a body for commercial purposes. ” In a later clause, after appointing executors, he adds, “ and I authorize and direct my executors to sell and convey ” said premises with another piece of land “ for the purpose of discharging all my debts.” His desire that the land should be sold for commercial purposes is not inconsistent with his direction that it be sold to pay debts, because, even if the former is not in the nature of a recommendation merely, both desire and direction could be satisfied by the same act and probably a higher price thereby realized. It will be observed that he directed his executors to sell the real estate for the purpose of paying all his debts. The use of the word “all ” indicates the intention that no part of his personal property should be used to pay debts, provided the proceeds of this real estate were sufficient for that purpose. Adequate force can be given to that word- in no other way than by holding that every debt was to be discharged through a sale of this land if possible. It was not a direction to sell and pay debts in order to provide against a possible deficiency of personal assets, but to sell ■“ for the purpose of discharging all ” the debts. “ All,” as thus used, means the whole and not the remainder after application of the personal property. He directed a certain act to be done and specifically stated the purpose of that act, and the act and purpose necessarily involved the exoneration of the personal property from the payment of debts, either absolutely or pro tanto. This was the natural and necessary result of the act directed with the purpose indicated. It was not essential for him to state that he gave that direction with that purpose, for the further purpose of relieving his personal property, because if all his debts were paid his personal property would necessarily be relieved and the last purpose was, therefore, included in the first. This construction prevents partial intestacy, Vernon v. Vernon, 53 N. Y., 351 , prefers the widow to collateral heirs, gives effect to a clause which otherwise would be inoperative and is in harmony with the practical construction of the heirs themselves, who not only acquiesced in the settlement of the executors’ accounts based upon the sale as made under the will, but even waited for nearly twenty years after the death of the testator before they brought this action, claiming to have inherited the land from him. It is no longer necessary to use express words in order to exempt personal property from the payment of debts, but “ it is sufficient,” as was said by the court in Hoes v. Van Hoesen, 1 N. Y, 120 , 122, “if there appears upon the will an evident demonstration, a plain intention, or a necessary implication.”

I think that the direction to pay all the debts from a certain fund by “ necessary implication ” prohibits the payment of any debt from any other fund until the former is exhausted, and I am, therefore, compelled to dissent from the judgment rendered by my associates and to vote in favor of affirming the judgment appealed from.

Judgment reversed and new trial granted, with costs to abide the event.

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All concur, except Vann, J., dissenting, and Haight, J., not sitting.