Hitchcock v. Peaslee

Edmund E. Peaslee, the father of Edward H. and Frances M. Peaslee, died in January, 1878, and the present litigation arises out of a provision of his will made for the testator’s daughter, as follows:

“ I give to my daughter, Fanny M. Peaslee, twenty thousand dollars in money, or its equivalent in stocks, as my executor may decide, and twenty thousand dollars in trust, the same to revert, at her death, if without issue, equally to my wife and son.”

An action was brought for the purpose of ascertaining the executor’s duty relative to this fund, and it was therein adjudged that the executor should pay over $20,000 to the daughter, arid she was directed safely and securely to invest and hold the same for those entitled to the principal sum at her death. This judgment did not require her to give security, nor was any given. In 1879 or 1880 she invested this money in stocks and bonds, so that prior to the summer of 1880 the entire amount was lost. Shortly thereafter she informed her mother and brother of the loss, but no action was taken by either of them until 1892, when this proceeding was begun to compel a restitution or security for the fund. The referee reported that the fund was entirely lost; that Edward H. Peaslee individually was entitled to security for one-half of the fund, to wit, $10,000; and that the executors of Mrs. Peaslee,» who in the meantime had died, were not entitled to security for the other half, because upon her death the one-half to which she might have been entitled had she survived became the absolute property of her daughter, and because in her lifetime she had released her interest to her daughter. The referee’s report was confirmed, and an order entered, which, not conforming to the decision of the judge at special term, a motion for a resettled order was made and granted, and it is from this resettled order that the present appeal is had. Edward H. Peaslee appeals from so much of the order as holds, in effect, that any interest which he may have in the fund in question is contingent upon his surviving his sister. Fanny M. Peaslee appeals from so much of the order as

The referee’s conclusion, which was assented to by the special term, was that, as the reversion was “ equally to my wife and my son," without the addition of the words of survivorship,—•“ legal representatives," or other like words,—the interest which would have belonged to Mrs. Peaslee, had she survived, became, upon her death, the absolute property of the daughter, freed from the trust. This construction, it is claimed, was erroneous, it being insisted that the provision in the will in question created a vested interest in the son Edward, which on the death of his sister without issue, would be payable to him, or, if he died during the lifetime of the sister, the same would go, should she die without issue, to his legal representatives; and that, even though the interest of Edward would be defeated by his death in the lifetime of his sister, this defeated interest would not pass to her, but would form part of the residuary estate of the testator. On the other hand, it is claimed that the true legal effect of the bequest was to create a vested estate in the daughter, subject to being divested in favor of her brother, should he survive her, and should she die without issue. The latter was the view taken by the referee and by the learned judge at special term, and, for reasons that may be briefly stated, we think should be sustained.

It is true that the testator, in connection with this bequest, used the word “trust,” but when we come to read the entire clause it will be found that the essential elements of a legal trust, viz. an expressly-'designated cestui, and express purpose, object, and terms of trust are all wanting. Eliminating this idea of a-legal trust, or that the daughter was a trustee, strictly speaking, we are by easy steps led to the conclusion, either that a vested interest was created in the daughter, subject to being divested in favor of her mother and brother by the happening of the contingency of her death without issue, or that a vested interest in the wife and son was created subject only to the life interest of the daughter in the contingency of issue surviving her. Upon which of these constructions is right this controversy hinges. The language used makes the interest of the wife and son expressly contingent upon the daughter’s dying without issue, and it is only in this latter event that it is to revert to them equally. It is not provided that upon the death of either the wife or son their interest should go to their legal representatives; and if we can reach (he conclusion that it was the testator’s intention effectually to dispose by this provision of the $20,000, and not to have it become part of the residuary estate, we must construe his language with a view of effectuating such intention. We think, from the language used, that the fair intent was effectually to dispose of this fund, and that the daughter was to have a vested interest therein, which should survive her, and go to her issue, if any; and upon her death without issue that it should go to the wife and son of the testator, if living; and that, in the event of either of them dying, the one-half in which the one so dying had a contingent interest should become the absolute property of

The argument made that this contingent interest of Edward was barred by the statute of limitations or by estoppel is without force. It is true that twelve years before bringing this proceeding he was aware that she had lost the fund, and that with such knowledge he remained passive during that period, justifying his conduct by the statement that the sister was irresponsible, and that any proceeding against her would result in no benefit. Were this a case of a cause of action arising in favor of Edward which accrued at a certain time, and which he had neglected to prosecute, then undoubtedly the statute would run. Here, however, the sister had the possession and custody of the fund, and this she had a right to have until the contingency happened which would transfer it, and make it the property of another. As already shown, had both mother and brother died, she would have been absolutely entitled to the whole fund; and the referee was right in his conclusion that the non-interference of the cestui que trust before his interest comes into possession does not constitute an assent to the breach of the trust, nor does his knowledge and inaction set the statute of limitations running. The daughter was directed by the judgment which gave her possession of the property to keep it safely until the final determination of the persons to whom it should go, and this obligation resting upon her was continuous, and would remain until that time arrived. The right to insist that she should at all times have the fund did not, strictly speaking, constitute a cause of action in favor of those who might eventually become entitled to such fund, which must be brought as soon as knowledge that

Without discussing the subsidiary questions we think that the order appealed from was right, and should be affirmed.

Parker, J., concurs; Van Brunt, P. J., concurs in result.