Mills v. Mills

50 A.D. 221, 63 N.Y.S. 771

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: April 15, 1900
• Status: Published

Opinions

Rumsey, J.:

The plaintiffs are trastees under the will of Dexter T. Mills, deceased. Mr. Mills, a citizen and resident of the State of Massachusetts, died on the 6th of March, 1896, being the owner, among other property, of certain real estate in the city of New York. By his will, after certain legacies, he devised the remainder of his estate to the plaintiffs' as trustees to pay the income to La.vinia Frances Mills, his wife, Anna Dexter Mills, Helen Whittington Coolidge and Susan Lincoln Mills, his daughters, oy such of them as might be living at his death in equal shares for their lives, and he further directed that upon the death of either of the said beneficiaries after himself, the income previously paid to such deceased should be divided equally between such other cestuis que trustent as survived, “ it being my desire that the entire income from said trust fund shall be divided into as many parts or portions as there are survivors of my said wife and daughters from time to time.” He gave some legacies payable upon the death of the last survivor of the cestuis que trustent, and the residue of the trust fund he devised to the trustees of the Museum of Fine Arts in Boston, in fee.

The question presented by the trustees is whether these devises of the will are valid, so far as they relate to the real estate in the city of New York. The learned justice at the Special Term held that the devise in trust for the wife and daughters of the testator was not valid so far as it included the real estate in the city of New York, and that that devise being invalid, the remainder to the Boston Museum of Fine Arts fell with the precedent estate, so that as to the real estate in the city of New York, the testator died intes"tate. From that portion of the judgment entered upon his decision, the Boston Museum of Fine Arts has appealed.

There can be no doubt that down to the year 1893 the devise in trust in this will would have been invalid as to the lands in this State, because it suspended the power of alienation during the lives of all of the cestuis que trustent in violation of the statute, and that the decision of the 'learned justice at the Special Term was not only warranted but required by the law, as it had existed for many years and down to that time. But in 1893 an amendment was made to section 63 of the Revised Statutes, to which his attention was not called, and it is claimed by the Museum of Fine Arts that the effect of that amendment is to authorize a conveyance in fee of the lands devised in trust, so that since that time there is no suspension of the power of alienation of such lands, and, therefore, this devise is valid.

If the amendment in question has the effect claimed for it it has worked a grave change in the law as it has existed in this State for many years, and it is not strange that one whose attention is called to that statute for the first time should be surprised at its provisions and should be slow to believe that it operated to create so great a change as is claimed by the appellant. Before that statute there can be no doubt that a devise of lands upon the express trust established by this will would operate to suspend the power of alienation during the existence of the trust. To permit this in like cases and to a certain extent had been the policy of the -State for many years. Such a suspension was not first authorized by the Revised Statutes, although those statutes for the first time regulated and controlled them more closely than had been done before.

It is claimed by the respondents here, and it is undoubtedly the case, that so great a change from what had been for many- years the established policy with reference to estates in land, will not be deemed to have been made unless the provisions of the statute by which it is done are so plain and clear that its reasonable interpretation requires that construction to be given it.

The statute in question is section 63, part 2, chapter 1, title 2, article 2 of the Revised Statutes (1 R. S. 730, § 63). As originally enacted and as the law stood in 1893, the section read : “ Ro person beneficially interested in a trust for the receipt of the rents and profits of lands can assign or in any manner dispose of such interest; but the rights and interests of every person for whose benefit a trust for the payment of a sum in gross is created are assignable.” In 1893 (Laws of 1893, chap. 452) that section was amended by adding to it a provision, which, omitting the verbiage and transcribing only so much of it as is material to. this case, is as follows: Whenever the person beneficially interested in the income of any trust created for receipt of the rents and profits of lands shall, or may, be or become entitled in his own right to the remainder of the principal fund so held in trust, it shall be lawful for such person to make and execute a conveyance or release whereby such person shall convey and release to himself or the person presumptively entitled to the remainder or reversion upon the then determination of the trust estate, all his right, title and interest in and to the income of such estate, and thereupon the estate of the trustee as to the principal fund so held in trust shall cease and determine, and the trust estate shall be and become forthwith merged in such remainder or reversion.

The question is whether the effect of this statute is to make the beneficial interest in a trust to receive the rents and profits of land so far assignable that the cestui que trust may at his pleasure with the assistance of the remainderman terminate the trust and convey an absolute fee in possession. In otlipr words, does that statute, fairly construed, give the power to alienate the absolute fee so that such power is no longer suspended by the creation of such an express trust as this. The prohibition of the statute is that “ Every future estate shall be void in its creation which shall suspend the absolute power of alienation for a longer period than is prescribed in this Article. Such power of alienation is suspended when there are no persons in being by whom an absolute fee in possession can be conveyed.” Were there after the passage of the act of 1893, mentioned above, persons in being who could convey an absolute fee in possession of the land devised by the will of Mr. Mills ?

The test of the alienability of the property under this section is that there are persons in being who can presently give a perfect title. Where there are living persons who have unitedly the right of ownership the statute has no application. The ownership is absolute whether the power of alienation rests in one or in several. If there is a present right to dispose of the entire interest even though its existence depends upon the consent of several persons there is no unlawful suspension of the power of alienation. (Williams v. Montgomery, 148 N. Y. 519, 526.) To convey an absolute fee by this statute it is not necessary that every person making the deed should have such an interest as may be conveyed. If one peiv son in being has an interest which may be conveyed and another person has an interest which he may dispose of by release, and the effect of the conveyance and the release is to give to the grantee and releasee an absolute fee in possession of the land, there is no suspension of the power of alienation. (Beardsley v. Hotchkiss, 96 N. Y. 201, 214; Matter of N. Y, L. & W. R. Co., 105 id. 89, 96 ; Emmons v. Cairns, 3 Barb. 243, 248; Garvey v. McDevitt, 72 N. Y. 557, 563; Hunter v. Hunter, 17 Barb. 25, 90; Chapl. Susp. Alien. § 64.)

In the case of Beardsley v. Hotchkiss, above cited, the question ■ was whether there was any unlawful suspension of the power of alienation by the will of Mrs. Hotchkiss, who had devised a vested interest to her son ISTathan and a contingent remainder in his share to other children. It was claimed that the other children could not convey their contingent interest to strangers, and that, therefore, the power of alienation was suspended during the lives of all of them. In reply to that the court said : “ If it were true as claimed * * * that the other children could not have conveyed their contingent interest to a stranger, it is admitted that they could release their interest to ISTathan and then he could have conveyed the whole estate. So in any view there were persons in being at the death of Mrs. Hotchkiss who could convey an absolute fee in possession to Hathan’s share in the real estate, and hence there was no illegal suspension of the power of alienation in respect thereto.”

There is no magic in the word “ conveyed ” as used in the statute quoted above. The important question is whether there are persons in being by whose act all outstanding interests together can be presently converted -into a fee so that the person taking it has an immediate right to the possession of the land. If that state of affairs exists the suspension of the power of alienation is not accomplished. So it remains to be considered whether that suspension exists in this case under this statute. The statute deals only with the power of alienation. If the power to alien exists there is no suspension no matter how complicated the means, nor how numerous so ever the instruments required to carry it into effect.

Before the passage of the act of 1893, as we have seen, the right of the cestui que trust could not be assigned or disposed of and it was impracticable under the law for the trustee to convey away the land free from the trust which was charged upon it. Although he might convey yet the proceeds of his conveyance stood charged with the same trust as did the land which he conveyed. There was no way by which the estate in remainder and the trusts for the lives of the beneficiaries could be put together free from the trust, so that an absolute fee in possession should result. If a way has been created by this statute by which that can be done, then it must be that there is no suspension of the power of alienation within the rules laid down in the cases cited above.

The statute provides that when the person interested in the income of the trust fund, “ Shall “ * * or may * * * be or become entitled in his * * * own right * * * to the remainder ” of the fund he may do certain things. Is there any limitation as to the manner in which a beneficiary may become i entitled to the remainder ? If the statute only applies to a case where the remainder shall have been devolved upon the beneficiary by operation of law then it is very clear that until that has taken place he is in no situation to release his beneficial interest, because as he cannot become the owner of the remainder by purchase there is no one in being who can transfer it to him, and, therefore, it is not possible for the remainder and the beneficial interest to become united so that the right given by this statute may come into existence. But the statute by its terms is not limited to the case of one who becomes entitled to the remainder by operation of the law nor is there anything in it which requires so limited a construction to be given to it. The statute makes his power to release depend upon his ownership of the remainder and sets no bounds to the manner of obtaining that ownership. If one buys the remainder he becomes entitled to it and there never was any reason why a cestui que trust should not purchase the remainder, thereby becoming entitled to it if he saw fit. If he did purchase it he became entitled to it just as much as though it had been devised to him or it had descended to him as an heir at law. Hothing in this statute limits the meaning of the word “ entitle ” and no reason is seen why there should not be given to it in the construction of the statute the ordinary and usual meaning which the word has. Giving it that meaning it includes the case of one who becomes the purchaser of the remainder. There are then persons in being who can when they choose transfer and receive it.

It is quite clear then that a beneficiary of a trust estate uniting with the remainderman may be put in such a situation that he can make a release of his interest in the trust fund, and that when that release is made the trust is at an end. When that is done he has an absolute fee in possession. But it is said that he has not an absolute fee in possession until he has become the owner of the remainder so that he can release to himself the beneficiary interest in the trust estate, and, therefore, it is argued that the statute, instead of putting an end to the suspension of the power of alienation, only authorizes the taking of a step by the beneficiary which should enable him to'do it. Undoubtedly it is true that until the beneficiary and the remainderman have made the sale of the remainder, the interest of the beneficiary cannot be released and the property cannot be transferred in fee. But if two persons in being can do an act whenever they choose which when done empowers one of them to do another act, they clearly have the power between them to do both acts although the exercise of the power is begun by doing the first. In this case the transfer of the remainder to the beneficiary authorizes the beneficiary to release to himself and when that is done an absolute fee in possession vests in him as the result of his act and he may transfer it to anybody he chooses. The remainderman and the beneficiary are the two persons in being who have the power to convert this estate into an absolute fee in possession. If the remainderman sees fit to sell and the beneficiary to buy his remainder which he has the power to do, then the statute has given to him absolute power to release the beneficial interest and an absolute fee vests in him at once. To be sure to so vest it 8 requires two instruments, but the persons are now in existence who can make those instruments. If they choose to do it nobody can prevent them, and the result of their action is to vest an absolute ' fee in the beneficiary with power in him to convey to whomsoever he sees fit.

The statute does not limit the number of deeds to be used in transferring the fee. It is satisfied if there are at present in existence persons by whom an absolute fee in possession may be conveyed without regard for the manner in which it is to be done, or the number of the instruments necessary to do it. If it be said that the remainderman and the beneficiary of the trust cannot to-day transfer an absolute fee in possession of these premises it would be a perfect answer if they at once should proceed to do it as they lawfully might by a conveyance by the remainderman to the beneficiary, by the release of the beneficiary to himself, and by a conveyance then of the whole estate to anybody they saw fit. It seems idle to say that when such a condition of affairs can be brought about by persons in being under the law, without the permission of anybody, and that as the result of the action an absolute fee is conveyed, that there is a suspension of the power of alienation.

The appellant, the Boston Museum of Fine Arts, appeals from so much of the judgment as adjudges that the payment of the $9,000 mortgage on the Hew York property was just and proper. As this payment was made by the plaintiffs as executors, and their accounts, including the credit of this payment, have been submitted to and approved by the Probate Court of Massachusetts, it is very doubtful whether the propriety of that payment could be considered in this action even if the conclusion which we have reached in the first part of this opinion did not make it unnecessary to do so. But it is sufficient to say that that portion of the judgment was correct.

The heirs at law appeal from so much of the judgment as charges the costs of all the parties in this action upon the property which it was decreed descended to them. So far as their interests were involved in tins action, they were the successful parties, and although the court had discretion whether to give costs to them or not, it had no discretion to require the costs to be paid out of the property (Couch v. Millard, 41 Hun, 212), especially when that property does not of itself constitute a fund in court which is to be disposed of by the judgment. The right to this property was undoubtedly in dispute, but it was not a fund because the title to it was to be determined by the court. So far as that portion of the judgment is concerned, the requirement that the costs should be paid out of this Hew York property is undoubtedly erroneous.

As there is practically no disputed question of fact in the case, it seems to be proper that this court should direct the judgment which is to be entered. It is accordingly directed and adjudged that the trust created by the will of Dexter T. Mills, so far as it affects the lands in the State of Hew York, does not suspend the power of alienation, and that these lands are properly disposed of by the will. It is further adjudged that the payment of the $9,000 mortgage by the trustees out of the personal estate of the testator was properly made and properly allowed to them. It is further ordered that the appellant, the Trustees of the Museum of Fine Arts in Boston, shall have its costs of this action to be paid by the plaintiffs out of the property of the trust estate in their hands, and that the eestuis que trustent and the plaintiffs shall also be allowed their costs out of the estate.

O’Brien, J., concurred.