In re the Judicial Settlement of the Accounts of Coolidge

85 A.D. 295, 83 N.Y.S. 299

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: July 1, 1903
• Status: Published

Opinion

Chester, J.:

Two questions only need, to be discussed in determining this appeal: First, whether or not the will operated as an equitable conversion of the testator’s real estate into personalty. Second, whether or not upon the death of the testator’s son, Forest T. Lee, Haney Holland and the other persons then living who answered the description of next of kin of the testator, acquired vested rights to share in the distribution of his estate.

First. There is no dispute here as to the law relating to equitable conversion, but the trouble arises in applying the law to the facts in this case. The law has been settled by a long' line of authorities that where, as here, the power of sale given to the executors is diseretionary and not mandatory, conversion- will not be decreed'unless there is an absolute necessity-td sell in order to carry out the scheme . -of the. wil-Lor unless the intention that" there should be a. sale is-to ■ be foundin the-wh.ole scope and tenor of • the will.; It was said in . Matter, of.Tatum, (169 H. Y. 518), which was a case where the power. giv.en' to sell the real estate was. discretionary only, that “ unless the purpose of the -testator will fail, -without a conversion, . equity-will not presume it. There should be an-implication, of a - direction to convert, so. unequivocal -and so strong ás to leave no' substantial doubt in the "mind, * * "x" . Indeed, conversion, to he decreed, must be so necessary, as that, without it, the provisions, qf the will would b,e rendered unreasonable" and incapable óf. a just and- an effective operation.”

" In the case, at bar the testator owned at the time of' his death his residence' property in the village of Glens' Falls, which by- the: 9th paragraph of his will he authorized his trustees to allow his son to ■occupy for his residence free of rent. He also owned another house .and lot near such village, the use of which he devised - to liis sister Haney Holland during her life by the' 2d paragraph of his will; and- he also owned some half dozen other pieces of real estate, part of which were vacant: All of this real estate went into the trust created by the 6th paragraph of the will and only, one piece has been ■sold by the trustees. By the 11th paragraph the testator directs that, the Words “ trust fund ” or “ trust funds,” as used “ shall be construed to include real estate as well as personal property.” And by the 13th paragraph lie expressly authorizes his trustees to “ retain and hold, as a part of said trust funds, any stocks, bonds or other securi- • ties or investments'whatever,” which he may have at the time of -his death. This language is broad enough to cover' his investments in real estate. The testator left upwards of $250,000 of personal property. This was ample to pay all debts and expenses. of administration, as well as all the specific legacies, and also to provide capital for all the trusts created in the will, outside of the trust created for the benefit of the son and to leave for the capital of the trust - so created not less than $200,000-personal property besides .the real estate. Thus far each of' the purposes of the testator, as expressed in his will, could be fully carried out without any conversion of -the'real estate into personalty, and without the exercise of the power of sale given to the executors and trustees. I think, also, the further scheme of the will, that is, the distribution of the property, provided for in the 9th paragraph, upon the death of the son, between the next of kin in that paragraph mentioned, can also be carried out without such a conversion, and it would' seem, also, from the language there used, that the testator had such a distribution in his mind. He there provides that upon the death of his son the principal of the trust fund designated for him, together with all income therefrom then in the hands of the trustees or uncollected, “ shall be transferred and paid over by the said trustees to my next of kin, to be divided between them * * * in shares between themselves, according to the Statute of Distribution; and I give, devise and bequeath the same to such next of kin accordingly.” The use of the word “ transferred ” in addition to the words “ pay over,” and the use of the word “ devise,” indicate very clearly that the testator contemplated that at the time of the distribution there would be real estate to be transferred to those entitled thereto, and he, therefore, devised the same accordingly. It is urged by the. administrator of Mrs. Holland, however, that because the division under these paragraphs was to be “ in shares between themselves, according to the Statute of. Distribution,” that indicated an intention that the fund should be wholly personal before being distributed. I think, on the contrary, when viewed in the light of the entire will, it only indicates that the amount of the shares is to be governed by the Statute of Distributions (Code Civ. Proe. § 2732), whether those shares be personal property or real estate, or both.

The same reasoning will apply to the trust fund created for -either of the beneficiaries thereof, other than the son, for the testator provides in the 7th paragraph that “upon the death of the beneficiary (my brother or sister) for whom the trust fund shall have been designated, the principal of said trust fund shall be added to the principal of the trust fund to be designated for my said son, and thereafter shall be held, used and disposed of by the said trustees in the manner hereinafter provided for the disposition of the principal of the said trust fund to be designated for my son.”

That the testator did not intend a conversion is also apparent in the 9th paragraph where the trustees are given authority to allow the son. to occupy the testator’s house and lot as a residence free of: rent, and where also- the trustees are authorized in their discretion- “ to transfer or pay over to him (that is, the son) at any time, or from time to time, the whole or any portion of the principal of the said trust fund so designated for him; and in such case I give,-devise and bequeath to my said son, absolutely, so much of said trust fund as shall be so transferred or paid over to him by said trustees.’ Here again the use of the words “to transfer” as well as the words to “ pay over ” and the word “ devise ” as well as the word “bequeath” shows an intention to give authority to the trustees to-pass the title of real estate as well as personal property to the son. Indeed throughout the entire will the testator lias carefully observed the distinction between the meaning of the words “ bequeath ” and “ devise.” It is apparent from the context that his use of these words either separately, or when coupled together has not been a careless or accidental one, but had been to accomplish an intelligent purpose. That being so, the use of both these words not only in the creation of the trust fund for the son, but in disposing of the remainder upon his death, shows very clearly that it was his intention that such trust fund should consist of both real and personal property and that he had in mind that the trustees -might hold the residuary estate in the form in which he left it and at the terminar tion of the trust that they would transfer it, or pay it over, in kind, to the remaindermen.

- I think for these reasons that this will does not show that the testator intended by it to work an equitable conversion of real estate into personalty, nor is there any necessity for such a conversion to carry out the will, and, therefore, the decision of the surrogate that the will did not work such a conversion was right.

Second. The contention of Sarah J. Snyder and the other surviving next of kin, that the administrator of the estate of Haney Holland is not entitled to share in the distribution of the trust funds created by the will, is based upon the 11th paragraph of the will, where it is directed that “ no person who shall at the time of my death answer the description of ‘ my next of kin,’ or my ‘ next of kin exclusive of my son,’ shall be deemed, by reason of that fact, to have acquired any vested right to share in. the distribution of any portion of my estate ; but the phrases above quoted shall be construed in each case as including only such persons as shall answer the description at the time of making the payment or distribution.” . As the son Forest died February 16, 1902, and the sister Nancy Holland March 25, 1902, no distribution of the estate had been made prior to the death of Mrs. Holland,. nor prior to the death of the brother James Lee, who died October 9, 1902, while the proceeding for an accounting was pending. The only surviving beneficiary of a trust fund is the sister, Sarah J. Snyder. The surviving next of kin claim that the testator’s intent, as shown by the 11th paragraph of the will,, above quoted, was that no estate should vest in his next of kin until the time of making distribution, and that any one who died prior to the time of distribution should not. share in it. , It is argued that the time of making distribution referred to is the time provided by law for the distribution, which in this case would be at the expiration of one year after letters were issued upon the testator’s estate, regardless of the time when the death of Forest, the son, should occur. It seems quite clear, however, from the will itself that this con-. tention cannot be upheld. It is true that the testator has provided in the 11th paragraph that there should be no vesting of his estate in these next of kin at the time of his death, but he has clearly fixed the time of the vesting of his residuary estate in such next of kin to be at the time of the death of his son, for he provides in the 9th paragraph, that“ upon the death of my said son, the principal of said trust fund so designated for him * * * shall be transferred and paid over by the said trustees to my next of kin, to be divided between them * * * in shares between themselves, according to the Statute of Distribution; and I give, devise and bequeath the same to such next of kin accordingly.” Here is a direct gift to the next of kin, to take effect at the time of the death of the son.- It cannot be that the testator by saying in the 11th paragraph that his next of kin should include “ only such persons as shall answer the description at the time of making the payment or distribution” meant at the time when his trustees should physically divide his estate among those entitled thereto, or at the time when under the law such division should be made, but it is moré reasonable that he meant at the time when he by the terms of his will had directed the payment or distribution to be made among them. If,, as is claimed, he meant when the trustees should divide, or when under the law they were required.1 to divide, such interpretation would make the residuary clause invalid, for there would then be an, unlawful suspension of the power of alienation that is, a suspension based upon a time limit and not upon two lives in being, and it cannot be presumed that he intened to do that.

In each of the cases of Manice v. Manice (43 N. Y. 303, 367) and Shipman v. Rollins (98 id. 311, 325) the question was presented under facts quite similar to those existing herd, whether the estate vested at the time appointed by the testator for its distribution or at the time the actual distribution was made, and it was ■ held in each case that there was a vesting at the time fixed by the ■ testator for the division, and I think that principle must apply here..

Upon the death of the son, therefore, the residue of the estate vested in the next of kin of the testator described in the 9th- paragraph of his will, sub ject, of course, to the three trusts and the payment of the three annuities provided for therein, and subject to the expenses of administration, all the debts and the specific ■ legacies having been paid.

The testator, in addition to the brother and the two sisters who survived him and who were trust beneficiaries under his will, left as ■ next of kin, after the death of his son, the children of three .sisters who died before he did, so that upon a division there are six shares to be provided for, and one of these shares vested in Nancy Holland, and so far as it consisted of personal property passes to her administrator.

The decree should be affirmed, without costs.

All concurred.

Decree affirmed, without costs.

Sasjes DETERMINED IN THE FOURTH DEPARTMENT nr the APPELLATE DIVISION,' %xxvlzt 1903.