Smith v. Campbell

26 N.Y.S. 1087, 82 N.Y. Sup. Ct. 155, 58 N.Y. St. Rep. 182, 75 Hun 155

Opinion

FOLLETT, J.

The sole question involved in this case is whether the income which accumulated on Martha’s share prior to her death goes with the principal to her sister Rosalie C. Campbell or to the administratrix of Martha’s estate, to be equally divided between herself and Rosalie C. Campbell. It is provided by sections 3 and 4 of title 4 of chapter 4 of part 2 of the Revised Statutes¹ that all directions for the accumulations of the income of personal property shall be void unless such accumulation is for the benefit of one or more minors. It is urged in behalf of the appellant that in case two separate trusts are created by a testator, each for the benefit of an infant, the income from each trust may be accumulated during the minority of the cestui que trust for whose benefit it was primarily created; and in the case of the death of either infant the trust estate set apart for him, and the accumulations thereon, may be bequeathed to the other infant. Such a construction of the statute would produce results which, we think, were not contemplated by its authors. Suppose the younger of the infants should die just after the elder reached his majority, to whom would the accumulated income go? Not to the adult cestui que trust, for that would be in violation of the statute. The accumulated income would not go to the next of kin of the deceased infant, unless it vested as it accrued; and the accumulation would have to be held to be unbequeathed assets of the testator, which certainly would defeat the intention of most testators. Did the testator intend that the accumulated income of Martha’s share should become part of the trust estate, and go to those entitled to it after her death? Clearly not in case she reached the age of 21 years, in which event all the accumulations were to be paid over to her. It is evident that the testator did not intend that the accumulated income from Martha’s share should be added to and become a part of the sum to be held in trust for her during her minority, but intended that it should be kept separate, so that it could he paid over to her when she arrived at full age. It is urged that the accumulated income vested in Martha, subject to be divested in case she died before reaching 21. We find no language in the will indicative of such a purpose. The testator evidently intended to dispose of his entire estate, and we cannot believe he intended, in case the younger daughter should die during her minority, without issue, but after the elder had become of agé, or that in case both should die without issue before becoming 21, that the accumulated income should be assets of his estate and undisposed of by his will. We think the testator intended that the income which accumulated on Martha’s share should vest in her absolutely as it accumulated, and be paid over to her in case she became 21 years of age, but did not intend, in case of her death without issue before reaching that age, that it should be divested for the benefit of those who should be entitled to the remainder of the principal sum, for it might well be that the persons entitled to the principal could not take the accumulations.

In case personal property is bequeathed in trust, with direction to apply so much of the income as may be necessary to support a cestui que trust during life, with a direction to accumulate during the minority of the cestui que trust so much of the income as should not be necessary for the support of the beneficiary, to be added to the principal fund with a remainder over, the title to the accumulations vests in the minor, and when he reaches his majority he is entitled to the accumulations, and if he die during his minority they become part of his estate. Pray v. Hegeman, 92 N. Y. 508; Barbour v. De Forest, 95 N. Y. 13. In the first case cited the testator directed the surplus income accruing during the minority of the cestui que trust to be added to the trust fund, and the income of the whole to be paid to the cestui que trust for life, and after his death the whole estate was bequeathed to others. In an action brought by a creditor of the cestui que trust after he had become of age it was held that the direction to accumulate was void, and that the accumulations belonged to the cestui que trust, and could be reached by bis creditors. The direction to accumulate was held void, because the accumulations were not solely for the benefit of the infant. In the second case the testator devised and bequeathed property in trust, directing that so much of the income therefrom as should be necessary for the support of the cestui que trust during her minority should be so applied, and the remainder added to the principal, and after her majority she should receive the income from the funds so augmented during life, and at her death the trust fund should be divided among her children, if any, but, if she had none, among other persons. In an action brought by the cestui que trust during her minority for the construction of the will it was held that the direction to accumulate was void, and that the accumulation vested in the cestui que trust, and that she was entitled to the whole income. Whether a testator who establishes two independent trusts for two minors, and directs the surplus income arising from each trust to be accumulated during the minority of the cestui que trust, can lawfully provide that, in case of the death of either while both are minors, the survivor shall take the accumulations, was not decided in the cases cited, nor in any case that has come to our notice; nor need we decide that question, for we think this testator did not intend such a result, and, besides, the trust fund, with the added accumulations, (assuming it was to be augmented by the accumulations,) would not necessarily go to an infant, but might to an adult sister or to adult aunts. In Harris v. Clark, 7 N. Y. 242, 257, 258, it was held that the accumulation must be for the exclusive benefit of a minor, and that, if it may be for the benefit of an adult, the direction to accumulate is void. In Wood v. Mitcham, 92 N. Y. 375, the direction was to invest a fund, and accumulate the income until a minor granddaughter of the testator became of age, and then pay the fund and its accumulations to her, and, in case she died before becoming 21, the fund and its accumulations were to be paid to her issue, if she left any, but, if she left none, the fund and its accumulations were to be paid “to her then living brother and sisters.” The granddaughter died a minor, without issue, leaving a brother and two sisters of the whole blood, and two half sisters, who were strangers to the blood of the testator. The question debated and decided in that case was whether the word “sister” included half sisters, who were strangers to the blood of the testator, or included only sisters of the whole blood. The validity of the direction to accumulate was not considered. The question in the case at bar was involved in the case, but was not raised. In Goebel v. Wolf, 113 N. Y. 405, 21 N. E. 388, the testator left a widow and four minor children, and directed by his will that his executors should invest one-half of the net rents from certain realty and the net profits of a business on bond and mortgage, for the benefit of Ms minor children, which was to be kept invested until the youngest became of age, and then to be divided equally among them, provided his widow was then dead, but, if she was not, the trust property and the accumulations were to remain undivided until her death. The widow remarried, and one of the children died, under age, without issue. In an action brought by the executor for a construction of the will it was held that the accumulations vested in the infants as they accrued, and that the heirs at law and next of kin of the deceased infant became entitled to one-fourth of the trust and to one-fourth of the accumulations. The position that the title to accumulations arising from personalty held in trust vests at once in a minor or minors under the statute, and cannot be the subject of a valid remainder, finds some support in the fifth section of the title relating to accumulation of personal property, which authorizes the supreme court to “cause a suitable sum to be taken from the moneys accumulated or directed to be accumulated, and to be applied to the support or education of such minor.” It is assumed in tMs section that accumulations vest in the minor. The judgment should be affirmed, with costs, payable out of the accumulations, in favor of Emeline F. Parsons and in favor of the appellant. All concur.

Footnotes

1

Volume 4, (8th Ed.) p. 2516.