In re the Intermediate Judicial Settlement of the Account of Proceedings of The Manufacturers National Bank of Troy

245 A.D. 120, 281 N.Y.S. 163, 1935 N.Y. App. Div. LEXIS 10242

This text of 245 A.D. 120 (In re the Intermediate Judicial Settlement of the Account of Proceedings of The Manufacturers National Bank of Troy) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Intermediate Judicial Settlement of the Account of Proceedings of The Manufacturers National Bank of Troy, 245 A.D. 120, 281 N.Y.S. 163, 1935 N.Y. App. Div. LEXIS 10242 (N.Y. Ct. App. 1935).

Opinion

Rhodes, J.

The appeal herein brings up for review a portion of the decree of the surrogate whereby he assumed to exercise the discretion vested in the testamentary trustee by the will of testator herein.

By said will provision was made for testator’s aunt, Sabina L. Curley, who predeceased him, and we are, therefore, concerned only with the provisions of his will making disposition of his property after her death. So far as material, they are as follows:

“ 5. All the rest, residue and remainder of said trust fund, I direct said Trustees to continue to hold and keep invested as aforesaid and to pay over to my cousin, Margaret C. McDonnell, who now resides at No. 141 Third Street, Troy, N. Y., the net income thereof, in quarter-yearly installments, and such part of the principal thereof as she may require for her care, support and comfort, during her natural life.
“ 6. Upon the death of my said cousin, Margaret C. McDonnell, I give, devise and bequeath the principal of the trust estate hereby created, as the same shall then exist after such withdrawals of principal of the trust estate as are herein provided for, to the Little Sisters of the Poor, a charitable organization having a home for the aged on Ninth Street, in the City of Troy, N. Y.”

In 1927 the testamentary trustee herein filed its supplemental account for settlement, and the beneficiary appellant herein petitioned for a decree directing the trustee to pay her under the provisions of the said will the sum of $8,000 per annum.

A hearing was had upon the matter and the record discloses that in connection therewith the following stipulation was made:- “All [122]*122parties interested agree that the matter should be submitted to the court for such order as the court believes just and proper under the circumstances.”

Thereupon the court made a decree which, so far as material, directed, that the sum of Four thousand dollars per annum be and it hereby is fixed as sufficient for the care, support and comfort of said Margaret C. McDonnell, the said Margaret C. McDonnell, however, to have all income earned by the said trust fund if said income exceeds the sum of $4,000, or if the income should be less than $4,000 the trustee is authorized and directed to pay to the said Margaret C. McDonnell quarterly on the first days of October, January, April and July in each year such a sum from the principal of the trust fund as will equal the sum of $4,000 per annum; and that any party interested in the estate may apply hereto for a modification of this provision of the decree upon proper notice.”

In 1934 the trustee petitioned for an intermediate judicial settlement of its account subsequent to the prior decree, and thereupon the Home for the Aged of the Little Sisters of the Poor of Troy, N. Y., the residuary legatee, respondent herein, filed its petition praying that the above provision of the decree of 1927 be modified so as to provide that only the income of said trust fund be paid to said Margaret C. McDonnell. An answer was interposed by said Margaret C. McDonnell, and after hearings had a decree was granted and entered by the surrogate on December 27,1934, modifying the said provisions of the decree of 1927, and providing as follows:

“ Ordered, Adjudged and Decreed, that the sum of $2,800.00 per annum be and it hereby is fixed as sufficient for the care, support and comfort of said Margaret C. McDonnell, said Margaret C. McDonnell, however, to have all income earned by the said trust" fund if said income exceeds the sum of $2,800.00, or, if the income should be less than $2,800.00, the Trustee is authorized and directed to pay to the said Margaret C. McDonnell quarterly, on the first days of January, April, July and October, in each year, such sum from the principal of the trust fund as will equal the sum of $2,800.00 per annum, and that any party interested in the estate may apply hereto for a modification of this provision of the decree upon proper notice, and that the foregoing modification shall be effective only beginning January' 1st, 1935, and as to all payments made upon income accruing subsequent to the 1st day of January, 1935.”

It is from so much of this decree as modifies the decree of 1927 in the respects indicated, that the appeal herein comes on.

The rule is so well established that it may be said to be fundamental and elemental that courts will not substitute their judgment [123]*123for the discretion fairly exercised, which is lawfully reposed in officials, boards or tribunals. This rule has long been applied to the office of executor and trustee. The reason therefor is well stated in Proctor v. Heyer (122 Mass. 525). The court there said: The questions relate to the administration of a trust, in respect to matters which the testator has expressly confided to the wise discretion of trustees selected by himself. There is no suggestion, from any quarter, that they are likely to abuse that trust by an arbitrary or capricious exercise of authority. The judgment of this court cannot be substituted for the discretion of the trustees, reasonably and fairly exercised.”

Attention was called to this rule in Matter of Shea (234 App. Div. 176), and it is unnecessary to add to what was said on the subject therein.

It is proper that the trustee should be instructed by the court as to the meaning of the terms of the will and as to the scope and limitation of the power of the trustee thereunder, but the court having given such instruction, should not then attempt to usurp or exercise the discretion confided to the trustee. In this connection a question has been raised concerning the construction of the said trust clause, which should now be decided.

It is argued in behalf of the respondent that the corpus of the trust may not be invaded for the support of the beneficiary unless she has no resources of her own available therefor.

The decree of 1927 and the decree appealed from do not in terms thus limit her right to have devoted to her support a portion of the principal. In this the learned surrogate was correct. She is entitled to support and maintenance out of the trust fund, irrespective of whether she possesses property of her own available therefor. (Holden v. Strong, 116 N. Y. 471; Rezzemini v. Brooks, 236 id. 184.) (See cases cited and discussed in Matter of Gatehouse, 149 Misc. 648.)

The respondents argue that the surrogate was authorized and justified in attempting to decide how much should be paid to Margaret McDonnell out of the trust fund by virtue of the stipulation above referred to by which all parties previous to the making of the decree in 1927 consented that the matter should be submitted to the court, “ for such order as the court believes just and proper under the circumstances.”

As to the payments already made by the trustee to the beneficiary pursuant to that decree, the beneficiary is not in a position to raise any question. The trustee followed the suggestion of the court as expressed in the decree. The payments thus made by the trustee must be deemed to have been made by it in the exercise of its proper [124]*124discretion, buttressed by the judgment of the court.

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Related

Holden v. . Strong
22 N.E. 960 (New York Court of Appeals, 1889)
In re the Testamentary Trust Created by the Will of Shea
234 A.D. 176 (Appellate Division of the Supreme Court of New York, 1931)
In re the Estate of Gatehouse
149 Misc. 648 (New York Surrogate's Court, 1933)
Proctor v. Heyer
122 Mass. 525 (Massachusetts Supreme Judicial Court, 1877)
Hill v. Moors
224 Mass. 163 (Massachusetts Supreme Judicial Court, 1916)

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245 A.D. 120, 281 N.Y.S. 163, 1935 N.Y. App. Div. LEXIS 10242, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-intermediate-judicial-settlement-of-the-account-of-proceedings-of-nyappdiv-1935.