Cochrane v. Schell — 46 N.Y. St. Rep. 819

Majority

p. 819

John W. Cochrane et al., Ex’rs, Resp’ts, v. Cornelia Elizabeth Schell, App’lt, and Sarah Ann Kip et al., Resp’ts.

(Supreme Court, General Term, First Department,

Filed June 3, 1892.)

Headnote

1. Will—Action to construe.

Executors who are in doubt as to the rights of the persons interested under a will as to surplus income, and as to their own duties in respect thereto, are not entitled to a general construction of the will, but only so far as to reach a determination as to their present duty.

2. Same—Trust—Undisposed op income.

Testator, by his wil', gave the residue of his estate to his executors in trust to receive the ren.s and income, and to pay certain specified amounts

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to his daughter and grandchildren, and on the death of the daughter to transfer all the estate to the grandchildren. The income largely exceeded the sums so directed to be paid. Reid, that the trust was one of those provided by the statute, and was not invalid merely because it failed to dispose of the entire income, and that the surplus should be paid to the grandchildren, who were entitled to the next eventual estate.

Appeal from judgment construing will.

James Otis Hoyt, for app’lt; Frank L. Hall, for pl’ffs-resp’ts; Chas Steele and Walter C. Gilson, for def’ts-resp’ts.

The object of this action was to obtain a judicial construction of the last will and testament of Adam W. Spies, deceased, and particularly of the ninth and twelfth paragraphs of said will as the same are modified by the third and fourth paragraphs of the second codicil thereto, with a view to having a determination of the persons to whom surplus of income in the hands of the executors and trustees should be given.

As most of the questions arising upon this appeal are dependent for their solution upon the view to be taken as to the scope of this action, a preliminary statement of what is sought by the ■complaint is rendered necessary.

The complaint alleges that Adam W. Spies died in May, 1891, leaving a last will and testament by which the plaintiffs were appointed executors and trusteesthat all the above named defendants are the only heirs of law and next of kin, and the only persons entitled to share in the income of distribution of the estate under the terms of the will; that the principal of the estate largely ■exceeds the amount of the specific bequests made by the said will, together with any probable claims against it; that the amount of income largely exceeds the payments directed to be made; and that the plaintiffs are in doubt as to the rights of the several defendants under the provisions of the will, and especially as to the proper and legal disposition of any surplus or income from the .said estate remaining after the payments therefrom directed by the said will to be made, and as to their duties as executors and trustees in respect thereto.

While, therefore, the object sought by the action might at first blush be regarded as an attempt to obtain a construction of the ■entire will, it is evident that the primary and essential purpose was to have a determination in respect to the proper and legal disposition of the surplus of income. The facts showing an existing doubt in regard to a present question, we do not think that the court would have any right to extend the scope of the action beyond a determination of such present existing question. In other words, the executors have only a right to ask the opinion of the court as to their present existing duties, what they shall now •do, not what they may do or shall hereafter do upon any future facts. The plaintiffs were, therefore, entitled only to instructions and an opinion from the court as to their duties to-day. That such must be the rule is evident when we consider the character and nature of the action and remember, as is well exemplified in this case, that a broader rule would result in passing upon- the rights of parties not before the court and perhaps still unborn.

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For the purpose of guiding these executors and trustees in the discharge of their duties, and of disposing of the question presented, it was undoubtedly necessary for the learned judge below to so far construe the will as to reach a determination as to the persons who would be entitled to the next eventual estate, it being conceded that the persons so entitled should receive the surplus income. While, therefore, a number of questions were presented to the trial judge, just as they are presented upon this appeal, for discussion, the real ones involved relate solely to the validity of the trust to plaintiffs and a proper judicial determination of the persons to whom they may properly pay over the surplus of rents and income which may remain after the payment of the annuities provided in the will. That this view of the limited scope of this action is correct is enforced by the pleadings, and particularly by the failure of any of the defendants as against each other to ask for any affirmative relief, or, with that object in view, to serve, as required by the Code, their answer upon their co-defendants. We are of opinion, therefore, that, whatever may be the determination as to these questions, the judgment, as amended, adjudging that the testator’s residuary estate was vested absolutely in remainder in the eight grandchildren, and that the surplus income of the estate, in case of the death of any grandchild during the continuance of the trust created by the will, is payable to the heirs and next of kin of such grandchild, should be so amended as to exclude any such determination thus made, and should be confined solely to a determination whether the trust under the will was valid, coupled with the direction to the trustees to distribute the surplus income among those entitled thereto.

To determine these questions resort must be had to the will and codicils. By the ninth paragraph, all the residue of the testator’s estate, both real and personal, is given to his executors and trustees thereinafter named, and to the survivor and survivors of them and their successors, in trust, to collect and receive all rents of the estate "and all interest, dividends and income from the personal estate, and, after paying taxes, insurance and other legal and necessary expenses thereon, to pay thereout to the daughter and to the grandchildren named, certain amounts annually. By the tenth paragraph, power of sale is given to the executors covering all the property granted to them by the ninth. The twelfth paragraph, as to which the principal question arises, is as follows :

Twelfth: At the death of my said daughter Sarah Ann, to close this trust I direct that my executors and trustees convey and transfer all my estate, both real and personal, then remaining in their hands to such of my grandchildren as shall then be living (except my said granddaughter Sarah Ann French), viz. : Arthur De Witt Cochrane, Adam W. Spies Cochrane, Cornelia Elizabeth Schell, Henry Spies Kip, Garret Berg Kip, William Rudolph Kip and Florence Adele Kip, equally, share and share alike, and I hereby give, devise and bequeath the same to such seven grandchildren, but if any of said seven grandchildren shall die previous to the decease of my daughter Sarah Ann, leaving issue him, her or them surviving, then I direct that such issue shall take the share

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to which their parent would have been entitled hereunder (if living); under this clause of my will said shares to be received by said grandchildren or their descendants free from any control or claim of any husband that she or they may have at any time.

By the fourth paragraph of the second codicil, he directs that his granddaughter Sarah Ann French shall be included in the division of his estate as mentioned in the twelfth clause, and shall share therein equally with his other seven grandchildren.

It therefore appears that, until the death of the defendant Sarah Ann Kip, the testator has provided for the distribution of but $20,000 of the annual income, which, in the event of the arrival at the age of twenty-five years by the defendant Arthur De Witt Cochrane, would be increased to the amount of $22,000. The court below found that the testator’s residuary estate consisted of real estate of the value of $1,000,000, yielding an income of about $80,000, and personalty amounting to $2,000,000, yielding an income of about $60,000; making the annual net income of the residuary estate about the sum of $80,000; thus leaving after the payment of annuities a surplus of about $60,000 every year undisposed of. ^

Whatever doubt may have existed as to what rule prevailed at common law, the statutes of this state make provision for the disposition of surplus income in certain cases as follows: “When, in consequence of a valid limitation of an expectant estate, there shall be a suspense of the power of alienation, or of the ownership, during the continuance of which the rents and profits shall be undisposed of, and no valid direction for their accumulation is given, such rents and profits shall belong to the persons presumptively entitled to the next eventual estate.” 1 R. S., 726, § 40.

With respect to the excess here, neither the will nor the codicils contain any provision for its disposition; and the question whether the statute applies is to be determined by the conclusion to be reached as to whether, in consequence of a valid limitation of an expectant estate, there is a suspense of the power of alienation or of the ownership.

On the one side the position is taken that as to his residuary estate the testator died wholly or partially intestate; while on the other, it is as strenuously insisted, as found by the learned judge below, that the grandchildren took a vested estate in remainder in such residuary estate. This latter view assumes that the trust created by the ninth and tenth paragraphs of the will is valid, and vests the whole residuary estate in the trustees during the life of Mrs. Kip, just as the contention of the appellant is predicated upon the theory that no valid trust was created, and no estate was vested in the executors and trustees. Among the four express trusts provided by statute is one “to receive the rents and profits of lands and apply them to the use of any person during the life of such person, or for any shorter time.” It would seem, therefore, that the testator did what the statute permitted him to do; and the only argument urged against the validity of the trust results from a failure to direct the disposition of all the income. It is evident, however, that the testator

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deemed it requisite that all his residuary estate should be devoted to the execution of the trusts, and there is no right or power in the court to assume the responsibility of deciding otherwise. If the argument thus urged against the validity of this trust is to prevail, it would follow that unless a fund can be set apart which shall produce exactly the amount of the annuities, and no more, the trust would be invalid. That such is not the law has been determined by the cases of Hawley v. James, 16 Wend., 60 ; Leggett v. Perkins, 2 N. Y., 297 ; Haxtun v. Corse, 2 Barb. Ch., 506 .

In the first case it was said: “ It can make no difference whether the trust extends to all the rents and profits of an estate, or is confined to some specified sum of money. It is not neces.sary that the trustee should have a discretion as to the amount to be applied; the donor may settle that for himself.”

Besides these cases, however, a consideration of the purpose sought to be effected by the statute relating to the disposition of surplus income shows that cases may arise where all the income is not disposed of during the continuance of the trust. If, therefore, a failure to dispose of the entire income would render a trust pro tanto invalid, there would be no income to dispose of and a case could not arise to which the statute would be applicable. This would be in effect to hold that the statute regulating the disposition of surplus income was nugatory and useless, because applying to a contingency that could never happen. It is plain, therefore, that the trust is not invalid merely because there may be income from the trust estate beyond the amount required to pay the annuities provided by the will. Besides those already referred to, the statute has been applied in the following cases where questions in respect to undisposed income under a trust have been presented. Cook v. Lowry, 95 N. Y., 103 ; Pray v. Hegeman, 92 id., 508; Barbour v. De Forest, 95 id., 13; Horton v. Cantwell, 108 id., 255; 13 St. Rep., 615 .

This being a case, therefore, where the statute will apply, it remains to determine who are the persons presumptively entitled to the next eventual estate, because to such must be paid over the surplus income. We think, upon a reading of the will and codicils, that these persons at the present time are the eight grandchildren to whom the expectant estates are given: this conclusion applying to the income from personalty as well as to the rents and profits from the realty.

It will thus be seen that we agree with the conclusion reached by the learned trial judge as to the disposition to be made of the surplus income, the only criticism to be made relating to the determination of questions not properly within the scope of the action ; our conclusion being that the decree should be limited to declaring that the trust under the will was valid, and directing that the trustees should distribute the present surplus income equally among the eight named grandchildren. We think that to this extent the judgment should be affirmed, and in other respects should be modified, thus leaving the other questions as to

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the interests of the parties to be determined when they arise, the costs of the appeal to all parties to be paid out of the fund.

Van Brunt, P. J., and Barrett, J., concur.