Opinion
No. 3602.
Decided December 3, 1946.
The fact that property was directed by the testator to be held in trust to accumulate for a specified time, after which it was to be distributed to certain named beneficiaries, does not postpone the vesting of a beneficiary's interest therein until the termination of the trust, but the interest vests immediately upon the testator's death in the absence of a contrary provision. The "divide and pay over" canon of construction employed to favor the existence of a condition precedent of survival is not recognized in this state.
PETITION for instructions brought by the trustees under the will of Lemuel C. Ring, who died in 1933. The testator left the residue of his estate to his trustees to hold intact for a period of ten years after his decease, the interest and income to "be allowed to accumulate" and to be "reinvested without depletion," except that "the trustees in their sole discretion may pay out of the trust fund before the expiration of ten years such sums as they may see fit for the use and support of the named beneficiaries in case of sickness or necessity," or for the education of "any named beneficiary."
The will provides that any sums expended under the foregoing power "shall be deducted from the share of each beneficiary at the time of distribution insofar as such sums have been expended in his or her behalf." The trustees are directed to pay, at the termination of the trust, the sum of one thousand dollars to that one of the testator's grandsons who, by his own efforts, has accumulated the largest net estate, and to pay over the remainder of the fund in equal shares to the testator's daughter, Ethel Redman, and to each of six grandchildren (of whom the defendant Robert H. Ring is one) and a great-granddaughter, each designated by name.
Except in the case of Ethel Redman, the will provides that the trustees shall pay to each named beneficiary his or her share if such beneficiary is then living, otherwise in equal shares to his or her children then living. In case no issue survives a named beneficiary, his or her share is to be divided "among his or her brothers and sisters." The bequest to Ethel Redman reads, "to (1) my daughter Ethel Redman of Hampton."
Ethel Redman died in 1941 before the expiration of the ten-year period, having bequeathed her entire estate to her husband, who has duly qualified as the executor of her will. The trustees pray that they may be instructed "as to the manner in which the share of Ethel Redman shall be distributed."
Transferred by Goodnow, J., without a ruling.
George R. Scammon, for the plaintiffs.
Hughes Burns, for the defendant Robert H. Ring.
Relying on the so-called "divide and pay over" rule, counsel for the defendant Robert H. Ring contend that where, as here, property is bequeathed in trust with directions that it be held for a designated period to accumulate, both corpus and accumulations to be transferred at the end of the period, "the gift is future, not immediate; contingent and not vested." Matter of Crane, 164 N.Y. 71, 76.
They concede that there are cases in this jurisdiction which hold that a testator's direction that property be paid over to designated beneficiaries at the death of the life tenant does not postpone the vesting of a beneficiary's interest until the termination of the life estate but vests it immediately upon the testator's death. See Upton v. White, 92 N.H. 221, 226, and cases there cited.
They suggest, however, that while these cases are seemingly inconsistent with the "divide and pay over" rule, they are not so in fact, since the rule is generally held to be inapplicable where the postponement of the division and payment is for the purpose of letting in an intermediate estate. Matter of Crane, supra.
The rule in question, which is not a rule of law but a mere canon of construction (28 Mich. Law Rev. 621, 622), has never received recognition in this state. It has been severely criticised in many jurisdictions, and even "courts that purport to adhere" to the rule "really give it little weight in the actual decision of concrete cases." Barker v. Monks, 315 Mass. 620, 625.
In the case of White v. Smith, 87 Conn. 663, 668, the court declares: "This principle has had some vogue in New York, and perhaps elsewhere, but so artificial and unsatisfactory is it that in our more recent cases it has been relegated to the domain of the inconsequential." See 33 Am. Jur. 571, s. 114; Gluck, "The `Divide and Pay Over' Rule in New York," 24 Columbia Law Rev. 8, 25; 48 Harv. Law Rev. 1202, 1218.
In the Restatement of Property (section 260, comment a) it is said: "Wherever this `divide and pay over' rule has been asserted to exert constructional force in favor of the existence of a condition precedent of survival, two exceptions to the rule have been also recognized," and these exceptions "so completely cancel the rule as to leave nothing in either the rule or its exceptions helpful to the construer of a limitation."
The present case is not one in which the intended taker of the bequest cannot be ascertained until the time arrives for division and distribution, and there is nothing in the will which indicates an intention to defer the vesting of the daughter's interest. On the contrary, the absence of a gift over in case of Ethel Redman's death and the fact that payments could have been made to her out of the fund before the ten-year period had elapsed support the inference that her interest was intended to vest at the testator's death.
The trustees are instructed that Ethel Redman's interest was transmissible (Upton v. White, 92 N.H. 221, 226; Plitt v. Peppler, 167 Md. 252) and that it should now be paid to her husband as executor of her will.
Case discharged.
All concurred.