Knowlton v. Atkins — 47 N.Y. St. Rep. 620

Majority

p. 620

Frank B. Knowlton, App'lt, v. Thomas J. Atkins, Resp’t.^[1]

(Court of Appeals, Second Division,

Filed October 1, 1892.)

Headnote

Trust—Declaration—Construction.

Defendant executed a declaration of trust stating that certain lands-deeded absolutely to him by Ids brother during his life time were held by him in trust, with power to sell as in his judgment best for the benefit of the widow and two children, to collect the income and pay one-third to-the widow during life, the remainder to be invested for the benefit of the children until majority. The trust could terminate by consent of the widow and a reconveyance he made to the children of their interest, and must terminate upon the majority of the youngest child. In case of the death of both the children before majority, then the whole to the widow. The widow died before either of the children came of age. Held, that the widow left no estate expectant or contingent which descended on her death to her children.

Appeal from an order of the general term of the supreme-court in the second judicial department, reversing interlocutory judgment entered upon report of a referee and granting a new trial.

The action was brought to obtain conveyance of' certain lands- and an accounting for the proceeds of certain other lands sold by the defendant, all the subject of a trust arising out of the conveyance made by one Osmin W. Atkins, in which his wife joined,, to the defendant.

This conveyance was made by deed absolute in terms and covered lands in the county of Kings. The grantor died in September, 1871, and afterwards, September 17, 1872, the defendant executed under his hand and seal a declaration of trust by which, after referring to the deed and giving a description of the lands, it was recited that the conveyance was made to enable him to sell and dispose of the lands for the benefit of the widow and children of the grantor in case of his decease, and that be had since-deceased leaving a widow Cordelia Atkins and two minor children, Albert S. and Osinin M. Atkins. Then followed his declaration that he had taken and then held the property in trust only, and for the use and purposes:

First. .To sell, convey and dispose of the property as in his-judgment should be for the. best interest of the widow and children.

Second. To collect the rents, issues and profits of the property, hold them and the proceeds of sales in trust for the use and benefit of the widow and the two children or the survivor of them. The widow to receive from the net income and proceeds of sale one-third thereof, payable to her semi-annually during her life; The remaining two-thirds to be invested for the use and benefit of the two children during their respective minorities or for the use

p. 621

and benefit of the survivor of them in case of the death of either of them before his majority, without issue. But out of the two-thirds the widow should receive sums reasonable for the support and education of the two children.

Third. To terminate the trust at his option with the consent in writing of the widow, and thereupon convey the lands remaining unsold (subject to the-life use'of the widow in one-third) to the children or to the survivor of them, or his heirs in case the deceased left no issue, and make a like disposition of the income and proceeds of sales in his hands, except that the then value of the interest of the widow in them be paid to her, and if in his and her judgment it is best to do so, ■ to also pay her the then value of her interest in the property remaining unsold.

“ Fourth. This trust is to terminate, if not previously terminated as above provided, when the younger of said children, or the survivor of them, shall attain the age of twenty-one years, at which time I am to convey to them as joint tenants in equal proportions, share and share alike, all of said property unsold, subject to the dower rights of said Cordelia, and to divide and pay over to each of them his equal share of all income and proceeds of sales then in my hands after deducting all lawful charges and expenses, and first paying to said Cordelia the' then present value of her interest therein.

“ Fifth. In case of the death of both of said children before-the age of maturity, then I am to convey all and every part of said property then remaining unsold, and to pay over all income- and proceeds of sales in my hands (deducting charges and expenses) to said Cordelia for her sole use and benefit forever.”

Sixth. In case of his death before the maturity of the children or the survivor of them, the widow Cordelia is to succeed to the trust.

Seventh. In case of the death of Albert S. and Osmin M. Atkins, or either of them, in minority “ leaving lawful issue, the-children so left shall take the share of their parent or parents respectively per stirpes and not per capita.”

The widow Cordelia died in November, 1873. In December, 1881, both of the children died on the same day at the ages of twelve and ten years. And although their death was caused by drowning on the same occasion, the referee found that the elder one, Albert S. Atkins, survived Osmin M. Atkins, the younger.

Their only immediate relatives were the defendant, the brother of their father, and Mrs. Knowlton, the mother, and the plaintiff, the brother of their mother Cordelia. Mrs. Knowlton died before this action was commenced. The referee determined that the plaintiff was entitled to three-fourths of the trust estate, and that the defendant should convey and account to him accordingly. Thereupon, with a view to his accounting for the income and proceeds of sales an interlocutory judgment was entered.

James B. Ludlow, for app’lt; W. W. MacFarland, for resp’t.

—The controversy has relation to the inheritance-of the property in question. The declaration of trust is presumed

p. 622

to express the purpose of the conveyance by Osmin W. Atkins .and Cordelia, his wife, to the defendant, and both may be treated .as if embraced in a single instrument. The plaintiff claims title by descent from the children Albert S. and Osmin M. Atkins, through their mother, who was his sister; and the defendant .asserts his claim to the title by descent on the teimination of the trust from his brother. The brother having the title was the ■creator of the trust, and if as the defendant contends the estate then reverted to his heirs, he, as such heir, took it. The plaintiff, on the contrary, insists that the widow Cordelia had by the trust .an estate in expectancy in the property, which on her death descended to her two children ; and that on their death in minority the estate became absolute and vested in their heirs. And because it came to them in that event on the part of their mother it descended to their maternal uncle, except as to one-half which came to Albert by descent from his brother Osmin M., whom he •survived ; and as to that half both the defendant and plaintiff, as his paternal and maternal uncles, took and shared equally. This would be so upon the assumption that such wms the stock of •descent, since for the purpose of determining who in that manner take under our statute reference is had to the immediate source of descent, and not to the blood of him in whom was the earlier inheritable title. 1 R. S., 752, §§ 10, 13; Hyatt v. Pugsley, 33 Barb., 373 . The main inquiry here is whether or not the widow Cordelia had in the property an estate which descended on her death to her children. Her alleged estate was the product of the grant made by Osmin W. Atkins to the defendant for the declared purpose of the trust. And the fact that this was an express trust, and therefore vested the whole estate in the trustee subject to the execution of the trust, 1 R. S., 729, § 60, did not prevent Cordelia and the children taking through the same grant so made vested future estates in the property, although they were held until its termination subject to- the execution of the trust. Id., § 61; Embury v. Sheldon, 68 N. Y., 227 , 234; Goebel v. Wolf, 113 id., 405; 23 St. Rep., 176 ; Van Axte v. Fisher, 117 N. Y., 401 ; 27 St. Rep., 257 ; Re Tienken, 131 N. Y., 391 ; 43 St Rep., 184 . Upon this proposition in the present case Townshend, v. Frommer, 125 N. Y., 446 ; 36 St. Rep., 153 , has no necessary application. The future estates which there were the subject of consideration were treated as contingent.

In the case .at bar, those children, through the instruments creating the trust, acquired a future estate. And it was defeasible, as appears by the fifth article of such declaration, which provides that “in case of the death of both of said children before the age of maturity, then I am to convey all and every part of said property then remaining unsold, and to pay over all proceeds of sale in my hands, (deducting charges and expenses) to said Cordelia for her sole use and benefit forever.” The trust was terminated by the death of those children. They died in minority. The estate so acquired by them was not contingent, but a vested estate, defeasible only by condition subsequent, and may be designated as a determinable fee. And the limitation over to Cordelia created in

p. 623

her an estate in expectancy, limited upon the contingency of death of the children within the age of minority. This was also a limitation to her in fee, to become absolute only upon the specified contingency. The doctrine of the common law upon the subject has-been somewhat simplified by the statute, in the removal of the distinction between contingent remainders and executory devises. Thus treating them alike as future or expectant estates, and subject to the same provisions. As defined- by the statute, estates in expectancy embrace future estates and reversions; and a future estate is vested when there is a person in being who would have an immediate right to the possession upon the ceasing of the intermediate or precedent estate. 1 R. S., 723, §§ 8, 13. They may be created to take effect in the alternative, and a fee may be limited on a fee upon a contingency. Id. 724, §§ 24, 25. It follows-that by the provisions of the fifth article of the declaration of trust, a vested future estate in Cordelia was created, which would, become absolute on the contingency upon which it was limited. And this estate was acquired by her as of the time of the creation of the trust. Id. 726, § 41.

The further and important question in this connection, is-whether this estate did descend to her children, and become absolute on their death. As an expectant estate is descendible, id. 725, § 35, such was the effect of the survival of her by them, unless it was defeated by her death.

It is urged by the defendant that the future estate of the widow Cordelia was dependent upon not only the death of the children while in minority, but also upon her surviving them. This becomes a matter of construction of the declaration of trust. Because her survivorship of the children was not essential to such expectant estate, unless made so by the contingency upon which it was limited, although it could not become absolute without the death of the children in minority, and the estate so descending from their mother never could be enjoyed by them. Hennessy v. Patterson, 85 N. Y., 91 ; Kenyon v. See, 94 id., 563; Van Axte v. Fisher, 117 id., 401; 27 St. Rep., 257 ; Griffin v. Shepard, 124 N. Y., 70 ; 35 St. Rep., 210 .

It may be observed that the provisions of the fifth article of the declaration of trust do not in express terms make such survivor-ship of Cordelia a contingency upon which the conversion of her future estate into an estate in possession was made dependent But it is the duty of the court to give effect to the intent with which the declaration of trust was made, so far as such intent can be collected from the whole instrument. 1 R. S., 748, § 2. And for this purpose reference may be had to the general scheme of the trust, its object and purpose as so represented. It appears to have been created solely for the benefit of the widow and children of the grantor, and for that purpose, to enable the trustee to sell and dispose of the property as well as to receive the rents and profits. He was to pay one-third of them and of the proceeds of sales to the widow and invest for the benefit of the children the other two-thirds less sufficient for their maintenance and education to be received by her. This was to continue during her life, un

p. 624

less during that time the children reached the age of majority, or unless at the option of the trustee and with the consent of the widow a conveyance was sooner made of the property to the children, in which event it should be made to them subject to her dower, and if not so made before their majority the property ■should then be conveyed to them in like manner subject to her ■dower if she survived that period of time. The trust if not ended before, was to terminate with their minority. The opportunity for its earlier termination unless-both of them should in the meantime die was defeated by the death of the widow. It was designed that she should take the property in the event the trust was terminated by the death of the children under age. That is to say, if by reason of the early death of the children they were unable to take the property under the trust she would be entitled to it.

This was the . apparent purpose of the provisions of the fifth article. The creation in the widow of an expectant estate which would on her death while the children were in minority descend to them, could be of no value to them in case they, or either of them, reached the age of maturity, as then they would be entitled to the property and would take it by virtue of the trust; and if they should not reach that period in. life, it could not be enjoyed by them because it could become an estate in possession only by means of their death in the age of minority. The situation thus presented would be such that on their survival-of their mother, the children would have two vested future estates, the one to become absolute on their demise in minority and to be superseded by the other if they reached the age of majority. If, however, such was the intent it must be effectuated. But it is seen that the respective interests of the beneficiaries in the income and profits of the property during the continuance of the trust were defined; and in like manner were they preserved in the property on, the termination of the trust in the event all of the beneficiaries survived it And it quite evidently appears by the instrument that the primary purpose in respect to the final disposition of the property as between those persons was that, subject to the dower interest to be reserved for the widow, it should go to the children, and only in the event that they did not survive the opportunity to take the property, it should go to the widow for her use and benefit; and that to reach her in this order of vesting the estate in possession, her survival of the event which should defeat the right of the children to take it was essential. This apparently- seems to have been the scheme in view in creating the trust and is in general harmony with its declared purposes. And it may be observed that there were no words of grant or gift to Cordelia other than as expressed in the purpose to convey to her in the specified event for her use and benefit. This purpose so expressed tended somewhat to show the understanding of the provision by the trustee in respect to the personal relation of the widow to the right to do so when the event should occur upon which she would be permitted to take the property. That provision is that, “ in case of the death of both of said children be

p. 625

fore the age of maturity I am to convey * * * to the said 'Cordelia for her sole use and benefit forever.”

We do not assume that a conveyance was essential to perfect her right to the property when the event occurred which entitled her to it. But reference is made to the expression used by the trustee as indicative, so far as it may be, of his intention in respect to the event upon which such provision made for the benefit of Cordelia should become effectual to convert her future estate into a present one.

In Hennessy v. Patterson, the provisions of the will furnished nothing indicating any intent of the testator to make the survivor-ship of his nephew a contingency upon which his right to take under the devise should depend. But the purpose there was apparent to defeat descent of the property to those not of his blood •on the death of his daughter to whose use its income was devoted during her life.

And it may be observed that upon doubtful construction the tendency of the law is to favor that which permits descent to remain in the line of ancestral blood. Quinn v. Hardenbrook, 54 N.Y., 83 ; Wood v. Mitcham, 92 id., 375.

Without proceeding further with the discussion of this question, we think that the intent of the persons creating the trust, as such intent may be collected from the whole instrument, was that not only the death of the children under the age of twenty-one years, but the survivorship of them by their mother was an element of the contingency upon which her. future estate was limited. In reaching this conclusion no consideration has been given to the earlier instrument executed by the defendant upon the subject of the trust, because on review of the determination on which the motion for a new trial was founded, questions of law only can be brought to the attention of the court Dorchester v. Dorchester, 121 N. Y., 156 ; 30 St. Rep., 498 .

These views lead to the conclusion that the expectant estate of the widow Cordelia was defeasible, and by her death before that of the children it was defeated and if as the consequence the future estate of those children became indefeasible, the inheritance was from them, and in view of the facts as found in respect to the survivorship of one of the children by the other, one-half of the estate upon that assumption descended first to such survivor, and from and through him the whole of it to the parties to this action in the proportion of three-fourths to the defendant and one-fourth to the plaintiff. But whether the descent was from the children, or by means of reversion from the creator of the trust to his heirs, is not essentially a question now here and'therefore is not considered.

The defendant sought to review the determination of the referee by appeal from the interlocutory judgment as well as by motion for a new trial. While the appeal from the judgment to the generalterm was unauthorized, Dorchester v. Dorchester, supra, the motion for a new trial was properly made there. Code, § 1001. The issues were tried before a referee appointed pursuant to consent

p. 626

of the parties in open court. And in such case, it seems that when not otherwise provided by the stipulation, the court must, if a new trial is granted, appoint another referee. Code, § 1011; May v. Moore, 24 Hun, 351 ; Lennon v. Smith, 47 St. Rep., 483 . The interlocutory judgment was by the general term reversed “and a new trial granted at special term.” The plaintiff’s counsel takes the objection that as no review could be had upon the appeal from the judgment the reversal was unauthorized, and that the court erred in directing a new trial at special term. The view taken leads to the conclusion that the defendant'Was entitied to a new trial upon the motion made therefor.

The remaining question is whether by reason of the reversal and the ordering of a new trial at special term, the result here can be other than judgment absolute against the plaintiff.

In Dorchester v. Dorchester it was said obiter that upon the motion for a new trial the general term was authorized “ to reverse the interlocutory judgment.” However that may be, there is no substantial difference in effect between the reversal of it and the setting it aside. The latter would be the consequence of the granting of a new trial. And the plaintiff by motion may have obtained relief from the direction of a new trial at special term and had another referee appointed to hear and determine the issues.

In view of the circumstances the defendant should not have costs.

The order should be affirmed and judgment absolute directed ' against the plaintiff, without costs.

All concur.