In re Judicial Settlement of the Accounts of Russell

59 A.D. 242, 69 N.Y.S. 563

Opinion

Hirschberg, J.:

The question presented on this appeal is whether in the case of a “ devise,” in terms, not of real estate but of the proceeds of its sale, the subject of the gift on the death of the devisee, after the testator but before the execution of a naked power of sale conferred upon the executors, is to be regarded for the purposes of devolution as real or as personal estate.

The will of the testator, J ames Russell, contains the following clauses:

“ Sixth. All the rest, residue and remainder of my personal estate and the net proceeds of the sales of the rest, residue and remainder of my real estate owned by me individually or with my copartner Edward Tracy or others, I give, devise a/nd bequeath to my wife and my children to be divided equally between them share and share alike, that is to say, to my wife one share, to each child an equal share with my wife. Should any of my children home died leaving lawful issue, such deceased child’s share to be given to such, issue.

“ Seventh. For the purpose of' such distribution of my estate among my wife and children, I fully authorize and empower my executors and executrix hereinafter named, or such of them as shall qualify, and the survivors or survivor of them, to sell and dispose of any and all my real estate, and interests in real estate, at public Or private sale at such time or times within a lawful period, and on such terms.as they shall deem most advantageous to my estate, and to execute and deliver to the purchaser or purchasers thereof good ■•and sufficient deeds of conveyance thereof, and to do each and every act and thing lawful and necessary for them to carry out and complete said sales. I also authorize my executrix and executors hereinafter named to invest and reinvest the moneys of my estate until ■its distribution, such’ investments to be on improved real estate in the City of New York or bonds of the United States Government or New York State or City bonds. The net income of my estate %mtil its distribution I direct to be divided equally between my wife and children, share and share alike.”

At the time of the execution of the will the testator had five children who,- with his wife, survived him. He had no other children. He died a resident of this State in January, 1888. His -daughter Elizabeth D. married James IL Black on the 28th day of January, 1891, at the city of New York,,and died without having had children, intestate and under age, at Belfast, Ireland, on the 9th day of December, 1892, leaving her husband surviving. The proceedings herein were commenced on petition of her husband as ■ancillary administrator of her estate, and resulted in the filing of an ' account by the executors, in which they denied that he had any -right or claim in or to the estate, but the' surrogate has decided that lie was entitled to receive one-sixth of the residue of the testator’s personal estate and of the net proceeds of the sale of his real estate. The testator left a very large amount of real estate in this and other States, a part of it in his own name and considerable of it in joint ownership with his partner. The executors sold some of the real estate before and some-after the death of Mrs. Black.

It seems quite beyond question that there was an equitable conversion of the real estate “ out and out.” It is immaterial to inquire -whether the. beneficiaries could have restored the property to its •original character by any united action, inasmuch, as they never attempted to do so, and Mrs. Black died before she was legally competent to join in such an effort. The question of conversion of course is to be determined frpm the intention of the testator as shown by the provisions of the will, and such intention may be found according to the authorities either (1) in a positive direction for a conversion; or (2) an absolute necessity to sell in order to carry out the provisions of the will; or (3) such a blending of the real and personal estate by the testator in the will as clearly to show an intention to create a fund out of both real and personal estate and to bequeath the fund as money. In this case just such a blending has been directed, and the proceeds of the sale of the real estate with the corpus of the personal estate are bequeathed in express terms. And no discretion is vested in the executors excepting as to the selection of the time and the fixing of the terms of sale. It is true that the direction to sell is not imperative, but a sale is necessary in order to carry out the scheme of distribution, and it is settled that whether the sale is directed or merely authorized, the doctrine of equitable conversion equally applies. (Phelps’ Executor v. Pond, 23 N. Y. 69; Ross v. Roberts, 2 Hun, 90; affd., 63 N. Y. 652; Power v. Cassidy, 79 id. 602, 613 ; Matter of Hosford, 27 App. Div. 427.)

In Moncrief v. Ross (50 N. Y. 431, 436) the court said, “ by the power the land was equitably converted into money from the time-the sale was directed to be made, and will be so regarded thereafter in equity for all purposes. (Bogert v. Hertell, 4 Hill, 492; 1 Jarman on Wills, 525, 530.) This is upon the principle that equity regards as done what ought to be done. (Manice v. Manice, 43 N. Y. 303; White v. Howard, 46 N. Y. 144.) It follows that the land must be regarded as converted into money for the purpose of determining who is entitled to the proceeds, whether arising from income or a sale. So regarded by the eighth and ninth clauses of the will, the entire proceeds of the land, except the funeral expenses, etc., are given as money to the sisters of the testator, Jane and Agnes. Any income derived from the real estate before the sale has been made, in equity clearly belongs to these sisters, and not to the plaintiff.”

In Fisher v. Banta (66 N. Y. 468) the will directed a division of the real estate between the testator’s two sons. In a codicil the executor Was directed to sell the real estate, having no discretion, “ except as to the time and manner of sale.” (P. 476.) The sons survived the testator, but one of them died before the execution of the power. The court said (p. 477): “ From the moment of the testator’s death the conversion took place, and the land became money for all purposes of administration. The impression of money' was fixed upon it; the sons took their interest in the converted property as legatees, and upon thei/r death, before actual sale, it would pass to their personal representatives. (Fletcher v. Ashburner, 1 Bro. Ch. Cas. 497; Leslie v. Craig, 3 Wheat. 587; Bogert v. Hertell, 4 Hill, 492, and cases cited; Stagg v. Jackson, 1 Comst. 206.) The power of sale was not affected by the death of Charles Edward Banta before the lands of Albert Banta were sold by his executor. The necessity of a sale for the purpose of a division between the surviving brother and the personal representatives of Charles Edward, continued. Nor was conversion prevented from taking place, because the legal estate was not given in trust to the person in whom the power of sale was vested, or because then there was no devise of the lands, and that they passed by descent to the two sons of the testator. (1 Jar. 465; Post v. Hover, 33 N. Y. 593; Bogert v. Hertell, supra.) ”

In Morse v. Morse (85 N. Y. 53) there was authority to sell expressed in the words “ I will, authorize and empower,” etc., with ■ power to lease meanwhile. Judge Andrews said (p. 59): “It is clear that the power of sale in the will in'question was conferred for the purpose of conversion, and with a view to the distribution of the proceeds of the sale of the land among the testator’s children. This is not expressly declared, but the prior gift of the whole residuary estate to them, followed by the power of sale to the executors, permits of no other inference. (Fisher v. Banta, 66 N. Y. 468 ; Marsh v. Wheeler, 2 Edw. Ch. 156 ; Kinnier v. Rogers, 42 N. Y. 531.) The direction to sell was imperative, and operated in equity as a conversion of the land into money. It was the intention of the testator that the beneficiaries should receive their respective interests in money, and not in land.”

In Hope v. Brewer (136 N. Y. 126) the executors were directed to sell and convert into money all the testator’s real- estate as soon as might conveniently be doné after his death. The court said (p. 134) : “ This provision of the will operates to convert the real estate of which Thomas Hope died seized into personalty, and subjects it to the operation, of the rules of law governing the devolution of per sonal property" (See, also, Lent v. Howard, 89 N. Y. 177; Delafield v. Barlow, 107 id. 535 ; Cottman v. Grace, 112 id. 305; Asche v. Asche, 113 id. 232; Greenland v. Waddell, 116 id. 234; Fraser v. Trustees, etc., U. P. Church, 124 id. 485 ; Underwood v. Curtis, 127 id. 523; Bowditch v. Ayrault, 138 id. 227; McDonald v. O’Hara, 144 id. 568.)

Under this will the wife and children of the testator take the estate not only in money upon the conversion of the realty, but their interests are vested and immediate, both in tenure and in the right of enjoyment. There is no contingency, no uncertainty as to the beneficiaries, no dependency upon survivorship, no future event to determine the period of distribution, but, on the contrary, the executors may sell and divide the funds among the wife and children living both at the date of the will and of the testator’s death, as speedily as may be consistent with the due administration of their trust. The words “ should any of my children have died,” etc., in Mr. Russell’s will refer to a death before the testator, and not before ■distribution. The distinguished counsel for the appellants has labored with characteristic power and assiduity to gather sanction from the authorities for a contrary view from that herein stated, and to maintain that this is one of the cases where division is to be made in the future among a class whose members can only be determined when the time for distribution arrives. The authorities in this State are uniformly opposed to his contention. They were collated by the writer in Canfield v. Fallon (26 Misc. Rep. 345) in a case where the only gift was to be found in a direction to divide at a future date, and the opinion that even there, following the intention of the testator, the estate created was to be regarded as vested was ■adopted by this court (43 App. Div. 561) and by the Court of Appeals (161 N. Y. 623). But here the case is infinitely stronger; here the beneficiaries are. at all times known, the wife and children •of the testator as though mentioned individually by name; there is no postponement of payment until the happening of any contingency in a legal sense, and the property is given to them by direct and precise words of bequest. In Matter of Baer (147 N. Y. 348), to which the learned counsel for the appellants invites “ special attention,” the distinction here suggested was emphasized by the court (p. 354). “ Moreover,” wrote Judge O’Brien, “ there is not in this devise any words of' dvr ect and immediate gift to the children or heirs of the brother, but a direction that the trustees should convey to them at a future time on a certain contingency. They were to take through the medium of a power in trust, and the time of the-vesting of the interest was thus deferred in form, at least, until the time of distribution. It is a case then, where, as the cases express-it,. ‘ futurity is annexed to the substance of the gift,’ and warrants-. the -application of the' principle that where a future interest is. devised, not directly to a given person,, but indirectly through the-exercise of a power conferred upon trustees, the devise is designed to be contingent, and survivorship at the time of distribution is an essential condition to the acquisition of an interest in, the subject of the gift.”

To the like effect is Matter of Crane (164 N. Y. 71), also-cited by the appellants’ counsel. The division there, was postponed by the terms of the will until The death of the testator’s widow,, and was to be among the survivors of the testator’s brothers, sisters- and niece, and the issue of such as were dead, and the courts below held that the postponement was merely for convenience in administration and not for the purpose of annexing futurity to the subject of the gift, and that the case, therefore, fell within the exceptions to the rule now under consideration. The Court of Appeals held otherwise,, and on the express ground that the will contained no words of- gift. Chief Judge Parker said (p. 7.6): “ We are unable-to agree with the courts below in the construction given to ■ this, provision of the will. In the first place it will.be noted that. ¿Aerais no direct gift of the principal of the trust estate, but instead a-direction to divide it on the death of the testator’s widow. Tho Will provides: ‘Upon the decease of my said wife I order and. direct that my estate be divided as follows, viz.: Equally between my brothers and sisters and my niece, Flora W. Bulkley, each one-to take one equal share thereof. * * * Provided, further, thafcif any of-my said brothers and sisters and niece shall depart this-life before my said Wife, leaving lawful issue him or her surviving,, then the share of the one so dying shall be paid over to their issue-in equal shares.’ Two well-known rules of construction are applicable to this provision: First. Where the only words of gift are-found in the direction to divide or pay at a future time the gift is future, not immediate; contingent' and not vested.. (Matter of Baer, 147 N. Y. 348, 354; Delafield v. Shipman, 103 N. Y. 464 ; Delaney v. McCormack, 88 N. Y. 174, 183.) Second. Where the gift is of money and the direction to convert the estate is absolute, the legacy given to a class of persons vests in those who answer the description and are capable of taking at the time of the distribution. (Teed v. Morton, 60 N. Y. 506; Matter of Baer, supra, 353; Smith v. Edwards, 88 N. Y. 92.) In the latter case Judge Finch said : ‘ It has been often held that if futurity is annexed to the substance of the gift, the vesting is suspended ¡ * * * that where the only gift is in the direction to pay or distribute at a future time, the case is not to be ranked with those in which the payment or distribution only is deferred, but is one in which time is of the essence of the gift.’ It is true that, to these general rules of construction there are exceptions, and the cases noting them can be grouped under two heads: First. If the postponement of the payment is for the purpose of letting in an intermediate estate, then the interest shall be deemed vested at the death of the testator, and the class of . legatees is to be determined as .of that date, for futurity is not annexed ! to the substance of the gift. * * * The second exception is where "there are words importing a gift in addition to the direction to ! executors or trustees to pay over, divide or distribute; in such a - case the general rule of construction does not govern because the ^language employed, outside of the direction to divide or distribute, 1 imports a gift, and, therefore, the situation is precisely as if the ’^will contained words of gift.” The opinion concludes with this -positive reiteration of the doctrine which is decisive of this branch < of the case at bar (p. 80): “ Without pursuing this subject further, í I state the conclusion at which we have arrived: That aside from "the direction to the executors or trustees to divide and distribute the . estate, there are no words importing a gift, and hence it becomes ; our duty to give force and effect to the rule that where the only í gift is found in a direction to divide or pay at a future time, the gift j is future, not immediate; contingent and not vested.”

' ■ It is proper to note that the rule referred to by Chief Judge Parker to the effect that where the gift is of money and the direction to convert the estate is absolute, the legacy given to a class vests only., in those who answer the description at the time* of distribution, can of necessity only relate to a case where the distribution is postponed until the happening of some future event, or where it is to be among a class dependent upon survivorship or other contingency. It has no application to a direction to divide immediately; and no application to a direct and absolute gift in positive terms, notwithstanding it is coupled with a powér of sale conferred only in order to form a homogeneous fund, and to- promote convenience and secure economy in' the physical severance of the interests created by the will.

. The other points presented, and which are subsidiary to those discussed, have been considered, and nothing is found affecting the result. The conclusion reached is, that this will is to be regarded precisely as though . the testator had left personal property only, and had bequeathed the same directly to his wife and children in equal shares.

The decree and order should be affirmed.

All concurred.

Decree and order of the Surrogate’s Court of Westchester county affirmed, with costs.