Summary
In Vanderpoel v. Loew (supra) the court said: "The case is one in which the whole income of each share, from the death of the parent to the time of payment, is bequeathed to the remaindermen, a circumstance to which we have invariably given great weight as denoting an intention to vest the remainder from the time at which the income begins to issue."
Summary of this case from Fulton Trust Co. v. PhillipsOpinion
Argued December 17, 1888
Decided January 15, 1889
William Man for appellant.
A.T. Compton for Mary E. Vanderpoel, appellant. Joseph H. Choate for respondents.
Gherardi Davis and William B. Rankine, guardians ad litem for infant respondents.
The pivotal question in this case is the inquiry whether the testator meant to create one trust, enveloping the interests of all the beneficiaries, and holding them in its grasp until a final or ultimate division, or whether he intended to constitute five separate trusts, each to be measured by its own terms, and having its own several purpose to accomplish. It is scarcely denied that upon the first construction the limitations will prove too remote, and result in a failure of the trust, and an intestacy as to the bulk of the estate; and so we are in duty bound to reject that construction if any fair and reasonable interpretation of the testator's language enables us to save his dispositions and give his will effect.
There are some provisions of the will which tend to establish a purpose to create a single trust, and to suspend the power of alienation beyond the prescribed lives in being. These are that the whole rest and residue of the estate is given to the executors in trust without any expressed separation or division; that such residue was to be invested and kept invested with the assent of a majority of the children; that it was to remain actually undivided until the period of final distribution; that merely income was specifically given pending the arrival of that period; and that the shares of children dying without issue go into what is denominated the common fund, remaining presumably in the possession and control of the trustees until the ultimate remaindermen, respectively, reach the age of thirty years. It is undeniable that these difficulties, which have been pressed upon us with great force and ability, deserve careful study and consideration and are not to be lightly dismissed, and yet it seems to me possible to hold them not insuperable.
We are struck at the outset with a separation and division which the testator did make, and the reason and manner of which reflect some light upon the dispositions which follow. His estate amounted to about $600,000, a very small part of which was personalty, and he left four children and one grandchild, who was the daughter of his deceased son, Benjamin. By the will the whole residue of the property, after payment of debts and expenses and the cost of a suitable monument, is devised and bequeathed to the executors in trust. That is done by the first paragraph of the dispositions directed. The second requires the trustees to "set apart" and invest $20,000 for the benefit of the granddaughter, Mary Elizabeth, applying the income to her support and education during her minority, and thereafter paying the income to her during her natural life. It is plain that this trust was meant to be a separate and several one for the benefit of the granddaughter alone, and shows that the general devise of the whole net estate to the executors was not intended to prevent a separation of interests or conclusively indicate their union. Then follows the trust for the benefit of the four children. The direction is to invest the residue remaining, after setting apart the fund for the granddaughter, in such securities as a majority of the children may approve, and pay to each of the four one-quarter of the income annually, such payments to continue, the testator adds, "during the terms of the respective lives of my said children." The word "respective" indicates that the legacies of income are to be treated distributively, and that each child takes his or her share during his or her life. The principal is not actually separated, because the interests in its accruing income are equal. If they had been unequal, what the testator did in the case of his granddaughter where inequality existed, he would also naturally have done in the case of his children, but did not do so because their equality of interest admitted of one common form of expression, and made an actual separation of the principal needless, while yet the interests dependent upon it were several and ran each for a separate and distinct period. That explains the provision as to investments, and the control over them of a majority of the children. The fund was to be kept together without actual division while it served to produce the four shares of income, and the discretion of the executors was put under the watch of the beneficiaries for that reason, but their shares were meant to be separate and distinct, and the trust as to each share was terminable at its own date, so that the trust as a whole ran for four different periods and in four different divisions or sections. Pausing at this stage of the will, and without noting the disposition of the remainders, it seems just and reasonable to say that the testator contemplated not one trust running for four lives, but four trusts running each for a single life.
We come now to the limitations over of the remainders. By the fourth paragraph of the will provision is made for a specified contingency, and that is, in the words of the testator, "when any one of my said children shall depart this life leaving lawful issue," and "in case my said grandchild shall depart this life leaving lawful issue." The reference is to each one of the five life-beneficiaries severally, and by himself or herself; and the direction is to take and invest the $20,000 already "set apart" for the grandchild, Mary Elizabeth, and to "set apart one undivided fourth part" of the invested rest and residue "for the use and benefit of the issue of such deceased child or grandchild" and to appropriate the income thereof "for its or their maintenance and education," or pay the income "to it or them until it or they shall respectively reach the age of thirty years, when the whole of the principal so set apart as above mentioned or such part thereof as they may be respectively entitled to, (if the issue shall consist of more than one,) shall be paid over to it or them." It seems to me that I discern in this language a persistent and almost laborious effort to keep asunder the five several trusts and dispose of and terminate each by itself. An undivided fourth was to be set apart for each grandchild or group of grandchildren. Once before the testator had used the phrase, "set apart," and had meant by it a severance of Mary Elizabeth's $20,000 from the general fund. Its repetition indicates the same purpose and intention as to the undivided fourth provided for the issue of each child, modified only by the absence of a necessity for an actual or physical division. The interest of that fourth so "set apart" was to go "to it or them;" to it if the issue of any one child was but one; to them if such issue should be more in number, and to each of them respectively; and final payment to it or them was to be made of the principal so set apart. There is here recognized a division of the rest and residue into four separate and several principals, the whole of each one of which is to go to the prescribed issue, whether one or many. The difficulty suggested at this point is that the separation indicated is of undivided fourths, showing that the trust fund was to be kept together and not in fact to be divided into four separate principals. But, unless I misinterpret the authorities, that is not a difficulty in the way of a severance of the trusts. ( Manice v. Manice, 43 N.Y. 303.) In many cases where, as in this, income and principal were given in equal shares, although out of one fund kept in solido for convenience of investment, a severance of the trust into its component parts has been adjudged. ( Savage v. Burnham, 17 N.Y. 561; Stevenson v. Leslie, 70 id. 512; In re Verplanck, 91 id. 443.) The shares and interests are several, although the fund remains undivided.
It results thus far that each of the five primary legatees and devisees took an equitable estate for life in his or her several share with a vested remainder over to his or her issue. It is not necessary to determine whether such remainders in fee vested at the death of the testator, or in each case at the death of the life tenant, although some interesting suggestions have been made respecting that inquiry, and the consistency of our rulings on the subject has been questioned. It is enough for our present purpose that the issue of each life tenant respectively took estates in remainder which vested at least upon the death of the father or mother, respectively, and so at the termination of one life in being. For, the construction that the vesting was intended to be postponed until some one of the issue should reach the age of thirty years, I think, cannot be successfully maintained. The words of the testator are words of payment implying a gift made but remaining to be fulfilled. "Shall be paid over to it or them" is the expression, and that is preceded by the explicit direction to set apart the share at the death of the parent for the use and benefit of the issue. That imports a gift of the share, and is strengthened by the phrase "as they may be respectively entitled to" occurring before the direction to pay. And, besides, the case is one in which the whole income of each share, from the death of the parent to the time of payment, is bequeathed to the remaindermen, a circumstance to which we have invariably given great weight as denoting an intention to vest the remainder from the time at which the income begins to accrue. ( Warner v. Durant, 76 N.Y. 133; Smith v. Edwards, 88 id. 103; Bushnell v. Carpenter, 92 id. 270.) Whether or not the trust continued up to the time of payment it is not necessary to consider, for, in either event, the fact would not prevent the vesting of the remainders at the death of the respective parents. ( Embury v. Sheldon, 68 N.Y. 227; Robert v. Corning, 89 id. 225.) I have not overlooked the presence, at the close of this fourth paragraph of the will, of the usual habendum clause as it appears in a deed, or the inference sought to be drawn therefrom that no estate was vested in any one of the issue until and unless he or she should attain the age of thirty years. That clause is in no manner connected with the provision for final payment which immediately precedes it. It stands in a separate sentence alone by itself. It relates to the character of the remainders previously constituted, and stamps them as in fee. It is like, if the illustration may be pardoned, the rear guard on a march, which protects the whole army and not merely the nearest regiment.
One more contingency was provided for in the will. One or more substituted remainders were created in case one or more of the five life beneficiaries should die without issue, and so the original remainder fail to take effect; and the manner of this disposition has been the subject of extended argument. The palpable purpose of the testator was to vest such share in the issue of the children who had such issue in the same manner as the original shares were vested, that is, severally and in due proportion. The income of the share was to be divided among the surviving children of the testator, and the issue of any deceased child, who for that purpose represented and stood in the place of its or their parent, during their respective lives; and the principal of such accrued or secondary share was to vest at their several deaths in their issue. The intention was to add the primary share of a child dying without issue in equal parts to the remaining primary shares existing and provided for, and subject the added proportions to precisely the same limitations as already governed the several original shares. The result might be to add a second life in being to the period of suspension in each case. If one died without issue and three children survived, one-third of an original share of the income would go to each of the three children for life, with several remainders over. If a second child died without issue, then one-half of an original share of income would go in the same way. And in each case the substituted remainder of each secondary share would vest as did the primary shares at the death of the parent, and therefore at the end of two lives. This result was accomplished by an easy and very natural form of expression, which saved repetition and a troublesome explanation of details, and which seems, therefore, to have been adopted. The principal of such secondary shares to go in substituted remainders was to be put in what the testator denominated the "common fund," and that expression has been strongly relied upon by the appellants. At the present stage of the argument we are in no danger of mistaking its meaning. It refers simply to the actually undivided fund out of which, as we have seen, had been carved four several legal interests or primary shares. Putting the secondary shares to be disposed of into that common fund implies that they had previously got out and become freed from its control. The testator says, speaking of the primary share of a child dying without issue, " the principal shall form a part of the common fund." By "the principal" is plainly meant the child's one-fourth, and the direction that it shall go anew into the common fund implies, first, that it has been withdrawn, severally and by itself, from that fund by a death without issue necessitating some new disposition; and second, upon the principle of " noscitur a sociis," that it was to return to the common fund to be again divided into separate shares, which has been shown to be the law and rule of the fund. It develops the idea in testator's mind that there had been one division of that fund into shares, and now there must be an added one of the share falling in. The learned counsel for appellant asks, "If there had been a previous division how could there be a common fund?" But we may ask, in turn, if there had been no division in the testator's mind, how could " the principal" of a primary share exist severally, and so outside of the fund as to require to be specially again placed in it? By the phrase "common fund," is clearly meant the aggregate of the several shares, kept together for purposes of investment; and where a child dies without issue, the intention is to take that share and divide it according to the law of the fund as to the several interests given, but keep the shares, both primary and secondary, together for convenience of investment while income is being distributed from it. Each accrued share, as the undivided quarter of a child dying without issue has been denominated, vests in its several proportions as did the original shares upon the death of the parent to whose share its aliquot part was added as the source of income. That, however, disposes only of the primary and secondary shares, but not of the fractions of the latter passing from one child to another.
As to them, a nice and critical analysis of the pos-possibilities of the situation develops a final difficulty, which is, perhaps, the most obstinate of all. We have said that the original shares of one-quarter each vested in the issue of each child upon the death of such child. It is a fair and just inference that, whatever, once separated from the common fund and set free by the death of a beneficiary so as to require a new disposition, was again placed in it, would vest at the same time and in the same manner as the original shares whose aggregate constituted the fund, and we have declared that to be the fact. And hence, if first one and then a second of the children should die without issue, a part of the income drawn by the first would go to the second, and then to the survivors, and the vesting, it is claimed, would occur only upon the death of one or both of the latter. There would thus prove to be a fraction of the estate which would finally vest only at the end of three lives. The first dying would have the income of one share for his or her life; a part of that in the form of a secondary share would be enjoyed by the second during his or her life, and a fraction of that would pass to each of the survivors for his or her life, and so three lives be interposed before the final vesting. It is observable that this difficulty depends upon the assumption that the testator meant, without saying it, that such a fraction of a secondary share, when set free by the death of a beneficiary, should itself be placed in the common fund, and, therefore, vest according to its rule. I do not accede to that assumption. The testator did not so direct. What he replaced in the common fund and subjected to its discipline, was, in his own words, "the principal" of that income to which he or she "would have been entitled if living." The case provided for is the death of a child without issue and the disposition of that child's original share, and it is the principal of that, of the undivided one-quarter, to be furnished with a new ownership, to which, alone, the whole attention of the testator was directed, and which only is directed to form a part of the common fund. That original share, and each of such original shares set free by the death of a beneficiary without issue, do go into the common fund and vest accordingly, but the fraction of a share which has been twice immersed in the common fund, and each time by an affirmative and specific direction, is not to be drowned in it a third time upon presumption and without explicit command, and to the utter destruction of the entire trust.
Some inferences of such a purpose might be drawn by a broadening and extension of the testator's words, but they should not be strained to work an invalidity of his dispositions, and may fairly and justly be held to mean exactly what they say and nothing more. This construction is not only supported by the literal language of the will, but has quite pertinent authority in its favor. In Everitt v. Everitt ( 29 N.Y. 39) the trust discussed was for the benefit of the testator's three youngest daughters, and contained provisions for survivorship in the shares of one or more. The court said (p. 85): "By the final clause, upon any one dying before the time of distribution, it is her share which is to go to the survivor or survivors. By the strict language, therefore, upon a second death happening, it is the proper share of the one so dying that is to go to the sole survivor, while nothing is said respecting an interest which had accrued to that second deceased daughter upon the death of the first." And Judge DENIO added: "Hence I think the literal import of the language would not retain an accrued interest arising upon the death of any of them without issue within the scope of the trust." In the present case, instead of the general word "share," there is the specific description of "the principal" of the original one-quarter part. In Oxley v. Lane ( 35 N.Y. 349) the court said, in respect to a similar question: "This conclusion assumes that the word `share', as used in the eighth item, relates exclusively to the portion primarily given by the will to each of the children of the testator and the two grandchildren, and does not include the fractions of such portions which the surviving children will acquire on the death of the first takers, respectively." In the present case what is to go into the common fund and so be subjected fairly to its rule of vesting is each primary share, "the principal" of each undivided one-quarter, and nothing else. The accrued fractions are not mentioned or described, and these vest in each case upon the death of their owner, and without waiting for the additional death of the parent. For they are included in the general words of gift which we have already said were sufficient to vest the original shares; and, since the words of payment, as we have also said, were not effective to postpone the vesting, and so no other date is indicated, we may properly hold that they vested upon the death of the child to whose life estate these fractions had been added. It follows that such portions of testator's property vested and became alienable at the end of two lives in being, and there was no unlawful suspension of the power of alienation.
These views lead to a concurrence with the General Term.
The judgment should be affirmed, with costs of all parties payable out of the estate.
All concur, except GRAY, J., not voting.
Judgment affirmed.