Majority
p. 180Frederic Williams, App’lt, v. Thomas J. Montgomery et al., Resp’ts. (Supreme Court, General Term, First Department, Filed December 15, 1893.)
Headnote
COHTBACTS—PEBFETUITIES.A contract, which provides that certain shares of stock shall not be sold, but shall be delivered to and held by a third party for a given period, is condemned by the statute against perpetuities, unless the period of suspension is measured by two lives.
Appeal from a judgment dismissing the complaint.
The contract sought to be enforced is as follows:
“ This agreement, made this second day of November, 1892, by and between John B. Powell, Bernard Lande and Thos. J. Montgomery, all of the city of New York, and Fred. Williams, of London, England, witnesseth : For and in consideration of one dollar, paid by each of the parties hereto to each other, the receipt whereof is hereby respectively acknowledged, it is agreed as follows: That of the capital stock of the Hydraulic Brake Company, one million ($1,000,000) dollars shall be put into the treasury of the company for working capital, four hundred and fifty thousand ($450,000) dollars shall be issued to Messrs. Montgomery and Powell as trustees, four hundred thousand ($400,000) dollars to Messrs. Montgomery and Powell as trustees, one million and six thousand two hundred and fifty ($1,006,250) dollars to Thos. J. Montgomery, seven hundred and seventy-five thousand ($775,000) dollars to John B. Powell, seven hundred and seventy-five thousand ($775,000) dollars to Bernard Lande, and five hundred and forty-three thousand seven hundred and fifty ($543,-750) dollars to Fred. Williams. We also agree that the above certificates to Montgomery, Powell, Lande and Williams shall be deposited in the Central Trust Company, with a copy of this agreement, and shall not be withdrawn for the period of six
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months from this date, without the written consent of each and every party thereto; but with this proviso: That if sufficient treasury stock shall he sold to realize the sum. of thirty thousand ($30,000) dollars in cash, then, and in that event, the stock which has been deposited in the Central Trust Company may be withdrawn by either of the parties, provided said party shall first notify the other parties hereto in writing at least five days before said withdrawal.
“ In witness whereof, the parties hereto have set their hands and seals the day and year first above written.
(Signed)" “ Bernard Lande. [l. s.]
“ Thos. J. Montgomery, [l: s.] “Fred. Williams. [l. s.]
“ John B. Powell. [l. s.]
“ In the presence of:
“ M. J. Glynn, for Lande.
“ Montgomery & Williams.
“W. P. Wentworth.”
“ .Regarding the notification clause of five days in the within agreement, I hereby agree that any notice served upon my attorney, Geo. M. Pinney, Jr., Ho. 96 Broadway, is binding upon me, the same as if served upon myself.
“Fred. Williams.”
George M. Pinney, Jr., for app’lt; Stern & Rushmore, for resp’t Lande; Waller, Cook & Wagner (William W. Cook, of counsel), for resp’t Powell.
We are content with the position taken in this case on the appeal from the order denying plaintiff's motion for an injunction pendente lite. Williams v. Montgomery, 68 Hun, 416 ; 52 St. Rep., 470 . Further reflection induces us to emphasize the assertion then made, that if the agreement was intended to restrain the disposition of the stock for a period of six months from its date, it was in violation of the statute relating to accumulations of personal property and expectant estates in such property. The statute reads:
“The absolute ownership of personal property shall not be suspended by any limitation or condition whatever, for a longer period than during the continuance and until the termination of not more than two lives in being at the date of the instrument containing such limitation or condition ; or if the instrument be a will for not more than two lives in being at the death of the testator.” 1 Rev. St., p. 773, § 1.
Justice Allen, speaking for the court in Converse v. Kellogg, 7 Barb., 597 , had under consideration the meaning which should be given to the word “ absolute,” which bad prior to that time been introduced into the statute. He said that “ the word 1 absolute ’ was doubtless used as the opposite of ‘ conditional,’ and in the same sense as‘perfect.’ It signifies 1 without any condition or incumbrance.’ ” This construes the statute as if it read : “ The unconditional and unincumbered ownership of personal property shall not be sus
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pended by any limitation or condition whatever.” And clearly a contract which provides that certain shares of stock shall not be sold, but shall be delivered to and held by a third party for a given period, is condemned by that statute, unless the period of suspension is measured by two lives. Yice Chancellor Hoffman, in Butler v. Butler, Hoff. Ch. 347, remarked : “ The rule is inflexibly established that there can be no. limitation of personal estate by which the power of entire alienation shall be suspended for a longer period than the continuance of two lives,”'—an interpretation of the statute which accords with the views of Justice Allen already alluded to, and has been followed in many subsequent cases, including Manice v. Manice, 43 N. Y., 303 , and nowhere, so far as we have observed, criticised. It commands the determination that an agreement which prohibits the sale and transfer of personal property for a period.other than provided by the statute is condemned by it, and therefore invalid. Instances in which efforts to outwit the statute have been brought to the attention of the courts have generally arisen under wills, but the statute applies alike to wills and other written instruments. It follows that the authorities, in so far as they discuss what accords with and what violates the provision of statute providing how the term of suspension shall be assured, are alike applicable to both wills' and contracts. A few instances of unsuccessful efforts to avoid the rigor of the' statute may be cited. In Cruikshank v. Home for the Friendless, 113 N. Y., 337 ; 22 St. Rep., 738 ; and People v. Simonson, 126 N. Y., 299 ; 37 St. Rep., 371 ; the trusts were to continue until the legislature should authorize by appropriate enactment an incorporation such as testator desired should receive the estate; in Garvey v. McDevitt, 72 N. Y., 566 , the duration of the trust was sought to be limited to a period of four years immediately after testator’s death; in Killam v. Allen, 52 Barb., 605 , until the payment and extinction of certain mortgages; in Moore v. Moore, 47 Barb., 257 , until the reformation of a person, not exceeding three years. Other cases might be cited, but need not be, for with one accord they declare the statute violated whenever a suspension of the power of entire alienation of personal property is attempted for any other term or period whatever than that authorized by statnte.
The judgment should be affirmed, with costs.