Opinion
01-05-1920
CANDA v. CANDA et al. (two cases).
Harrison P. Lindabury, of Newark, for complainant. Vredenburgh, Wall & Carey, of Jersey City, A. C. Wall, of Jersey City, Henry B. Gayley, of New York City, for defendants.
Bill by Ida H. Canda against Abeel Canda and Henry B. Gayley, executors of the will of Charles H. Canda, and others, and against Abeel Canda and Henry B. Gayley, as executors of the will of Catherine E. Canda, and others. Decree for complainant. (Affirmed 112 Atl. 727.)
Harrison P. Lindabury, of Newark, for complainant.
Vredenburgh, Wall & Carey, of Jersey City, A. C. Wall, of Jersey City, Henry B. Gayley, of New York City, for defendants.
LANE, Advisory Master. November 29, 1914, Charles J. Canda died testate. His will provides:
"Second. I direct that my funeral and testamentary expenses shall be paid as soon as practical after my death. And that my estate shall be kept practically intact during the life of my wife, Catherine E. Canda, and until all my debts, liabilities, and obligations of whatsoever nature (including amounts that I may owe to my said wife) shall have been liquidated and paid."
"Fourth. I give, devise and bequeath to my executors and trustees hereinafter appointed, and to the survivor of them ami their successors and successor, all the rest, residue and remainder of my estate, real, personal and mixed, in trust nevertheless, to sell, invest and reinvest the same as herein provided, and to collect and receive all income, interest and dividends which may be payable thereon, and to pay over to my said wife, from time to time, any sum or sums which she shall call for, either from the income or from the principal of my estate, and to apply any surplus income to the liquidation of my indebtedness; such payment or payments to my said wife of any sum or sums which she shall call for and shall receive from my estate being in lieu of her dower rights.
"Fifth. After the death of my said wife, the liquidation of my said indebtedness, including my indebtedness to my said wife, and the liquidation of the indebtedness of the Chrome Steel Works, I give, devise and bequeath fifteen hundred (1,500) shares of the preferred capital stock of the Chrome Steel Works and four hundred (400) shares of the capital stock of the Canada Realty Company to each of my three daughters, viz. Emeline Cunda Wheeler, Angeline Canda and Estelle Canda Gayley—say in all forty-five hundred (4,500) shares of the preferred capital stock of the Chrome Steel Works and twelve hundred (1,200) shares of the capital stock of the Chrome Realty Company, to be divided equally between and delivered over to them immediately after the death and after the liquidation aforesaid. The current dividends on said shares to accrue and to be paid to my said daughters from and after the date when the said shares shall have been delivered over to them as herein provided. And if it shall happen that any dividend or dividends shall have accrued on the said preferred Chrome shares which shall not have been paid when due, then my executors and trustees hereinafter named are to procure the cancellation of said unpaid dividends by said Chrome Company or they must arrange in some way so that all the dividends which shall accrue on the said preferred shares of the Chrome Steel Works after such delivery of said shares to my said daughters shall be paid to them regularly if earned, on dividend dates; if not earned at said dividend dates, then as soon thereafter as possible; it being my intention that my said daughters shall have no interest whatever in any dividends on said preferred Chrome shares which may have accrued thereon prior to, or before, the delivery of said preferred Chrome shares to them as herein provided. And it is also my intention that, as to any said dividend which shall accrue and bepayable subsequently to or after said delivery of said shares to my said daughters, nothing shall prevent the payment to my said daughters, promptly on dividend days, if earned of the quarterly dividends on said preferred shares which shall accrue and become payable thereon, as provided by the charter of said Chrome Steel Works.
"Sixth. After the death of my said wife, the liquidation of my said indebtedness, including my indebtedness to-my said wife, and the liquidation of the indebtedness of the Chrome Steel Works, I give, devise and bequeath all the rest, residue and remainder of my estate to my two sons, Charles A. Canda and Abeel Canda, to be equally divided between them.
"Seventh. In the event that my daughters, or either of them, shall desire to sell their shares in the Chrome Steel Works, it is my wish that they shall give my sons the opportunity to purchase them, at their fair value, and that they shall facilitate the transaction in every way, particularly as to terms of payment for same.
"Eighth. In the event that my executors and trustees hereunder shall sell my entire interest in the Chrome Steel Works, as they are herein empowered, before a distribution of my property shall have been made as hereinbefore provider], then, I give, devise and bequeath all my property, absolutely to my five children above named, to be distributed and divided among them after the death of my said wife, share and share alike, anything herein to the contrary notwithstanding.
"Ninth. It is my will that none of these legacies shall lapse, but that the same shall pass to the heirs of the persons intended to be benefited thereby."
By the tenth clause testator provides that the gifts and bequests shall be free from legacy, transfer or succession taxes, which he directs shall be paid out of his residuary estate as part of the expenses of the settlement of the estate.
By the eleventh clause he gives his executors and trustees and their successors full discretion at any time to sell any part of his estate.
By the twelfth clause he gives his executors and trustees full discretion to postpone until such times as in their judgment shall seem expedient the sale, calling in, or conversion of the whole or any part of his estate, to retain his investments and make actual partition of his residuary estate and distribution in species.
By the thirteenth clause he empowers his executors and trustees to invest and reinvest the principal of the trust estate as they see fit, conferring on them the like full and discretionary power as if they were the owners of the trust estate.
The fourteenth clause reads as follows:
"Fourteenth. I especially authorize and empower my said executors and trustees hereinafter appointed, or such of them as shall qualify, and the survivor of them, and their successor or successors, to renew any and all guaranties which I have given and indorsements which I have made in connection with the business of the Chrome Steel Works; and also to give any further guaranty or guaranties and to make any further indorsement or indorsements, to bind my estate, which they may consider necessary or desirable in connection with said business of said company; it being my intention that my said executors and trustees, or either of them, shall have the same full power to bind my estate to protect the business and credit of the Chrome Steel Works as I would myself have if living."
To summarize: This will attempts to give the executors and trustees the same power over the estate as the testator would have if living until such time as his wife should die, his own indebtedness and the indebtedness of the Chrome Steel Works be liquidated. By the provision in the will which gives the executors and trustees full and complete power to invest and reinvest and to make such guaranties and indorsements for the benefit of the Chrome Steel Works as they see fit he puts it within their power to prolong the trust for an indefinite time subject to be determined, aside from the exercise of discretion by the executors, only by the contingency (assuming the death of his wife and the payment of his indebtedness) that the debts of the Chrome Steel Works shall have been liquidated. There is some doubt in my mind as to whether, under the will, the income which may accumulate on the preferred stock of the Chrome Steel. Works prior to distribution goes, at the time of distribution, as the corpus of the stock, to the three daughters, or, falls in the residue and is disposed of by the sixth clause. By an agreement, subsequently to be noted, the parties in interest changed the method of distribution and agreed to a division of the entire estate equally between the sons and daughters and the payment of the income until the time of distribution, as it accrued, to them, equally.
On June 18, 1915, Catherine E. Canda, the widow of Charles J. Canda, died testate. By her will, after making certain specific bequests and directing by the seventh clause her executors to divide the residue of her estate in five equal shares, she provides:
"Eleventh. I give, devise and bequeath the fourth of said shares or portions of my said property and estate to my son Charles A. Canda and to my daughters Emeline Canda Wheeler and Angeline Canda, the survivors and survivor of them, their successors and successor, in trust nevertheless, to sell, invest and reinvest the same in their discretion, and to collect and receive all income, interest and dividends which may be payable on the said share or portion of my property and estate from time to time, and to pay over such income, interest and dividends as follows, viz.: First, to my son Charles A. Canda one thousand dollars ($1,000) per annum, in quarterly installments of two hundred and fifty dollars ($250) each, and the balance of said income to my husband during his natural life; and, after the death of my said husband, to pay over all said income,interest and dividends derived from said share or portion of my estate, to my son Charles A. Canda during his natural life; and at the death of my said son to pay over and distribute the principal of said share or portion as my said son shall by his last will and testament direct. In the event that my said son shall have failed to make a last will and testament, then said share or portion shall be distributed and paid over to the heirs at law of my said son."
By the seventeenth clause the testatrix gives all property that should come to her from her husband's estate to he divided equally among the five children.
By the fifteenth clause she provides:
"Fifteenth. I authorize my executors and trustees hereinafter appointed, or such of them as shall qualify, and the survivors and survivor of them, their successors and successor, at any time after my death, in their or his discretion, to sell all or any part of my real estate and personal property, of which I shall die seized, at public or private sale, for cash or on credit, and on such terms and conditions as to them or him shall seem expedient, to execute and deliver. And I also authorize my executors and trustees to postpone until such time as in their judgment shall seem expedient, the sale, calling in and conversion of any part of my real and personal estate, to retain any investment in real or personal property in which my estate shall be at the time of my death, to make actual partition of my residuary estate, or any part thereof, and distribution in specie or kind of my residuary estate, or any part thereof. Until such sale, calling in or conversion the net rents of my said real estate and the income of my said personal estate shall be deemed income for the purposes of this my will."
Charles A. Canda, the son for whom provision is made in the eleventh clause, died February 8, 1917, leaving a will by which he gave all of his property to his wife, Ida H. Canda, who is the conrplainant in the litigation sub judice. Henry B. Gayley was appointed substituted executor and trustee under the will of Catherine E. Canda, and he and Abeel Canda are acting as executors under the will. Emeline Canda Wheeler, Angeline Canda, and Henry B. Gayley are, as I understand it, acting as trustees under the eleventh clause. Abeel Canda and Henry B. Gayley are acting as executors and trustees under the will of Charles J. Canda.
The heirs at law and next of kin of Charles J. Canda and Catherine E. Canda were, at the time of their deaths, the five children provided for in their wills, to wit, Emeline Canda Wheeler, Angeline Canda, Estelle Canda Gayley, Abeel Canda and Charles A. Canda. As has been noted Charles A. Canda has since died, and his wife, Ida H. Canda, has succeeded to his interest.
The four surviving children, with Ida H. Canda, being all who were interested in the estate of Charles J. Canda (as far as the subject-matter of this litigation is concerned) either under the will, or as heirs at law and next of kin, on March 20, 1917, made an agreement which reads as follows:
"Agreement made and entered into this 20th day of March, one thousand nine hundred and seventeen, by and between Emeline Canda Wheeler, Angeline Canda, Estelle Canda Gayley, Abeel Canda and Ida Holmes Canda, Witnesseth:
"Whereas, Charles J. Canda, late of the city of Summit, county of Union, state of New Jersey, died on the 29th day of November, 1914, leaving a last will and testament bearing date the 24th day of June, 1914, which said last will and testament was duly admitted to probate on the 11th day of December, 1914, by the surrogate of the county of Union, State of New Jersey, and letters testamentary were duly issued by the said surrogate of the county of Union, state of New Jersey, on the 11th day of December, 1914, to Charles A. Canda and Abeel Canda, the executors named in the said will, and the said executors duly qualified thereunder, and
"Whereas, in and by the fourth paragraph of said will, all of the income of said estate was directed to be paid to his wife, Catherine E. Canda, during her life, and the said Catherine E. Canda died on the 29th day of June, 1915; and
"Whereas, it was provided in and by paragraphs fifth and sixth of said last will and testament of the said Charles J. Canda, that after the death of his said wife, the liquidation of his indebtedness, including his indebtedness of his said wife, and the liquidation of the indebtedness to the Chrome Steel Works, all the rest, residue and remainder of his property was to be divided and distributed in various proportions among the five children of the testator, to wit, Emeline Canda Wheeler, Charles A. Canda, Angeline Canda, Estelle Canda Gayley and Abeel Canda; and
"Whereas, Charles A. Canda died on the 8th day of February, 1917, leaving a last will and testament which was duly admitted to probate by the surrogate of Union county, in the State of New Jersey on the 19th day of February, 1917, wherein and whereby the said Charles A. Canda gave, devised and bequeathed all his property, both real and personal, including his share in the estate of the said Charles J. Canda, to his wife, Ida Holmes Canda, and
"Whereas, the said Emeline Canda Wheeler, Angeline Canda, Estelle Canda Gayley, Abeel Canda and Ida Holmes Canda are the only persons entitled to share in the said estate of the said Charles J. Canda, and are all of full age and of sound mind; and
"Whereas, the said parties desire to make an equal division of the said estate of the said Charles J. Canda, and to deal with and dispose of the said estate in the manner herein expressed, notwithstanding the division and disposition thereof by the said last will and testament of the said Charles J. Canda:
"Now, therefore, in consideration of the premises, and in order to avoid questions and disputes as to the division of the said estate, and in consideration of other valuable considerations, it is hereby declared and agreed and the said parties hereto do hereby mutually covenant and agree as follows:
"I. That the provisions of paragraphs fifth and sixth of said last will and testament arehereby abrogated, and that all of the property of ] the estate of the said Charles J. Canda, instead of being divided among the parties hereto as provided in the fifth and sixth paragraphs of said last will and testament, shall be divided equally between the parties hereto, so that each party hereto shall be entitled to and shall receive on the distribution of the said estate, one equal fifth part thereof, anything in said last will and testament to the contrary notwithstanding, and the executor or executors of said will are hereby authorized and directed to make distribution of the said estate in accordance herewith; the distribution, however, of the said shares of said estate is to be made at the time specified in said last will and testament, i. e., after the liquidation of all the debts of the testator, including his indebtedness to his wife, and the liquidation of the indebtedness of the Chrome Steel Works.
"II. That until such time as distribution shall be made of said estate, the executor or executors of said estate shall continue to hold and administer said estate, and shall collect all interest, dividends and other income derived from said estate, and shall pay over said income to the parties hereto in equal shares.
"III. That with the exception of the changes in this agreement made as to the provisions of the fifth and sixth paragraphs of said will, all the terms of the said last will and testament shall be followed, and the same are embodied herein as part of this agreement. That a copy of said last will and testament is hereto attached marked 'A.'
"IV. That all and every of the parties hereto, and their respective heirs, executors, administrators, and assigns shall execute all such deeds and documents, and do all such acts as may be necessary or be deemed expedient to give complete effect to this agreement, and the cost of preparation and execution of all such documents shall be deemed an expense of said estate."
The executors of Charles J. Canda accepted the agreement in the following words:
"We accept the foregoing agreement and agree to carry out such terms thereof as are required to be carried out by us."
At the time of the death of Charles J. Canda he owed his wife approximately $87,461.55. This indebtedness has been reduced so that the estate of Charles J. Canda now owes the estate of Catherine E. Canda, the wife, $79,022.60 approximately. There are a few other small debts of the estate unpaid so that the total indebtedness is between $82,000 and $83,000. His entire indebtedness at the time of death was approximately $120,000.
The capital stock of the Chrome Steel Works is, and was at the time of the death of Charles J. Canda, $1,000,000 preferred and $2,000,000 common, of which stock one-half is owned by the estate of Charles J. Canda and one-half by a brother of Charles J. Canda, Ferdinand E. Canda, who is the president of the company. At the time of the death of Charles J. Canda the Chrome Steel Works owed approximately $715,000. The indebtedness has now been reduced to approximately $450,000, which sum may be termed a "funded" debt due to a partnership known as Canda Bros. The partnership consisted of Ferdinand E. Canda and the testator Charles J. Canda. It has never been formally dissolved. Aside from this "funded" debt the Chrome Steel Company owes only current indebtedness of approximately $100,000. It had, at the time of the hearing, in excess of $300,000, cash in its treasury. It needs anywhere from $150,000 to $300,000, as fluid working capital. Since the agreement of March, 1917, it has paid in dividends 60 per cent. on preferred stock, or an item of $600,000 and 6 per cent. on common stock, or an item of $60,000, of which sums Ida H. Canda, as the successor in interest of Charles A. Canda, the deceased son of Charles J. Canda and Catherine E. Canda, has received approximately $80,000.
The net worth of the Chrome Steel Works is approximately $3,150,000, so that the stock, both preferred and common, has a book value in excess of par. Among the liabilities considered in arriving at net worth is an item of approximately $614,000 undistributed earnings.
At the time of the death of Charles J. Canda there were guaranties or indorsements, signed by him for the benefit of the Chrome Steel Work, amounting to $250,000. Against these no moneys have been borrowed so that the estate of Charles J. Canda is not now liable upon any guaranty or indorsement, nor is there any evidence that the Chrome Steel Works is now likely to become in such a condition as that it will be necessary to resort to such method of financing. Indeed, the evidence points to a contrary conclusion.
The bills are filed by Ida H. Canda, and the purpose is to secure an immediate liquidation and distribution of the two estates. Upon distribution, complainant is entitled to a one-fifth part of the net assets of the estate of Charles J. Canda and to the payment of the corpus of the trust fund provided for in the eleventh paragraph of the will of Catherine E. Canda.
With respect to the Charles J. Canda estate the positions taken by complainant are that the clause of the will which postpones distribution until after the debts of the Chrome Steel Works are liquidated is invalid; that if the legacies are contingent the contingency is so remote as to offend the rule against perpetuities; that if the legacies are vested, then the severance of the possession from ownership for the indefinite time provided for by the will is void as repugnant to the absolute gift, or is void because unreasonable and opposed to the public policy upon which the rule against perpetuities is founded; that in any event, reasonably construing the will in the light of its manifest purpose, the time for distribution has arrived, because, although the debts of the Chrome Steel Works have not been paid, nevertheless it has been and is now in a position where itmay, if it desires, pay its debts, and it has distributed in dividends an amount much more than sufficient to liquidate the indebtedness, and although the indebtedness to the estate of Catherine E. Canda has not been paid the executors have had more than sufficient moneys in their hands, properly applicable to such payment, to liquidate the indebtedness. It is argued that when the testator used the term "liquidated" he did not mean "paid," but rather a condition in which the debts were provided for or might be paid. It is also argued that the rule that equity considers done that which ought to have been done applies. It is further argued that only by such a construction as will compel distribution at this time under the circumstances now existent can the court avoid holding that the will vests in the executors and trustees such an unreasonable and undeterminative discretion as to render it void so far as these provisions are concerned.
Whether under the terms of the will the legacies vest before the time of distribution may be questionable. It is, of course, conceded that where there is a direct gift, and the time of enjoyment alone is postponed, there is a vesting upon the death of the testator, and the mere fact that the words of direct gift follow the words which postpone the enjoyment is not decisive that it was the intent of the testator that the legacy should not vest. L. R. A. 1918E, p. 1097; Security Trust Co. v. Lovett, 78 N. J. Eq. 445, at page 450, 79 Atl. 610, and cases cited, 2 Jarman on Wills (6th Ed.) p. 1401, ch. 37. But the author of the Sixth Edition of Jarman states (page 1402):
"Moreover, as Mr. Jarman points out (1st Ed. p. 761), 'If the payment or distribution is deferred not merely until the lapse of a definite interval of time, which will certainly arrive, but until an event which may or may not happen, the effect, it should seem, is to render the legacy itself contingent.'"
This distinction between cases in which the time is certain to arrive, although uncertain as to the time when it will arrive, and those cases in which the time is uncertain as to whether it will ever arrive or not, was recognized in the early case of Atkins v. Hiccocks (1773) by Lord Hardwicke, 1 Atk. 500, 26 English Reprint, 316.
In the case at bar the distribution is not to be made until the debts of the Chrome Steel Works shall have been paid or liquidated. This event may never occur. The corporation may not choose to pay its debts. Its creditors may not choose to seek payment. The executors and trustees have no power as such to compel the liquidation nor have they the power under the will to pay the debts.
If the legacies are contingent, then it is not arguable, I think, but that the contingency offends the rule against perpetuities. That rule requires that the estate must vest within the time prescribed by its limitations, not that it may vest. 2 Jarman on Wills (6th 13d.) p. 299. Accumulation for the payment of the debts of a testator is not offensive to the rule. 2 Jarman on Wills (6th Ed.) p. 382. A trust, however, for accumulation for the payment of debts of a stranger or for any other purpose (excluding now charitable trusts) beyond the limits provided for by the rule is void. Id.; Gray, Rule against Perpetuities (2d Ed.) § 676. Considered as a trust to accumulate until the liquidation of the debts of the Chrome Steel Works, the provision in the will would be void. 1 Lewin on Trusts (Flint's Edition, 1888) p. 121, star page 89, and note. The answer of the executors to this is that by the agreement of 1917 the element of accumulation has been removed. I will consider this in dealing with the effect of that agreement.
It is argued that, if the legacies are to be considered as vested (and it is contended that they must be so considered from a consideration of the whole will, notwithstanding the uncertainty as to whether the time of distribution will ever arrive) the case of Lembeck v. Lembeck, 73 N. J. Eq. 427, 68 Atl. 337, affirmed 74 N. J. Eq. 848, 71 Atl. 240, upon the opinion below, is decisive; that the Court of Appeals has held that a testator may separate possession from ownership so long as he sees fit. In the Lembeck Case a provision of the will gave the executors power to hold possession of certain stock bequeathed, for a period of 25 years. The Chancellor, considering this provision, said:
"The rule against perpetuities is a rule against postponing the vesting of estates for a period extended beyond lives in being and 21 years after. 22 Am. & Eng. Encycl. L. 703. The rule is directed solely against the unlawful postponement of the vesting of estates, and is not applicable to their possession or enjoyment. 22 Am. & Eng. Eneyel. L. 722, Redf. Wills, 846; Brandenburg v. Thorndike, 139 Mass. 102; Seaver v. Fitzgerald, 141 Mass. 401; Howe v. Morse, 174 Mass. 401."
And it is argued that if a testator may separate possession from ownership for a period of 25 years and not offend the rule he may do it for any period.
Brandenburg v. Thorndike, 139 Mass. 102, 28 N. E. 575, was decided upon the ground that by a fair construction of the will the time limited for the payment was not more than reasonably necessary to settle the estate.
In Seaver v. Fitzgerald, 141 Mass. 401, 6 N. E. 73, the court did say that the rule only required vesting within the prescribed period, and that the right of possession might be postponed longer. The court did not intimate that there was no limitation upon the length of time that possession could be postponed.
Howe v. Morse, 174 Mass. 491, 55 N. E. 213, was a case in which the question involved was whether an agreement under theterms of which a voluntary association, called a building association, held title to land and issued shares to various shareholders, was offensive to the rule against perpetuities. It was held that such agreement was not.
A leading case in Massachusetts upon the subject is Claflin v. Claflin, 149 Mass. 19, 20 N. E. 454, 3 L. R. A. 370, 14 Am. St. Rep. 393. The provision of the will was that payments should be made by the executors to the legatee in installments at the ages of 21, 25, and 30. The court held that this arrangement was valid, basing its conclusion apparently largely upon the manifest reason for the restriction upon the legatee's possession. It admitted that the English rule was to the contrary, and noticed that in England the provision would be held to be void upon the ground that the direction to withhold possession was inconsistent with the absolute rights of property given by the will.
In Winsor v. Mills, 157 Mass. 362, 364, 32 N. E. 352, the court had under consideration a conveyance of land to P. in trust for the benefit of P. and M., with the direction that P. should not sell the property or put it to any use which might affect the value of other property of P. and M. lying in the same neighborhood, without the consent of both parties. The court noticed that under the law of Massachusetts certain restraints of alienation are permissible, and said:
"But where such a restraint is held permissible for a limited time it would be deemed unreasonable, and contrary to the policy of the law, to allow it to continue beyond the period fixed by the rule against perpetuities."
The court intimated that where the restraint does not come within the strict letter of the rule the same period may be applied by analogy.
In Wirth v. Wirth, 183 Mass. 527, 67 N. E. 657, the provisions of the will was that the personal representative of the deceased should carry on the testator's business for the benefit of certain legatees. The point was made that the will created a trust which might continue for an indefinite period extending beyond the expiration of 21 years from the end of a life or lives in being. It was replied that the interests of the legatee were vested, and that the rule did not apply. The court decided the case upon another point, expressly disclaiming any intent to intimate any opinion on the subject.
The decision of the Massachusetts Court in Claflin v. Claflin is noticed by Prof. Gray in his Rule against Perpetuities (2d Ed.) § 121 C et seq. He says (sec. 121 E):
"The suggestion that the right to enjoy is a right independent of the vested property, and such right to enjoy, being on a remote condition precedent, can never come into effect, though the vested interest exists, or, in other words, that a man may have a vested interest which he can never by any possibility enjoy, is too absurd for consideration." Section 121 H.
"Suppose, again, that a devise takes this form: Property is given to A. and his heirs in trust to pay the income to B. and his heirs, with a proviso that the trust is not to be determined until A. wishes it. Apparently the Massachusetts court would apply the doctrine of Claflin v. Claflin, and would refuse to compel the trustee to convey against his will. But how if it is provided that the trust shall not be terminated until A. or his heirs wish it, or until some other possibly remote contingency happens? Section 121 I.
"The fact is that the Massachusetts court in Claflin v. Claflin introduced a novel idea into the law, that of the inalienability of absolute interests, just as the Court of Kings Bench in Pells v. Brown introduced a novel idea into the law, that of the indestructibility of future interests. And as the rule against perpetuities had to be invented to control the indestructible future interests created by Pells v. Brown, so some rule must be invented to control the inalienable interests created by Claflin v. Claflin, it is perhaps likely that the same period as that prescribed by the rule against perpetuities will be taken, although it would seem quite open to the court to adopt some other period if found more convenient."
The rule in England is clear that when a person is entitled absolutely to property any provision postponing its transfer is void.
Gray says (section 121):
"As such provisions are void, no question of remoteness can be raised with regard to them. If such a provision to pay or convey to a legatee at a period beyond the limit of the rule against perpetuities is a condition precedent to the right to enjoy, and is, apart from the rule, valid, it would be bad as violating the rule; but, as it is invalid, apart from the rule, the objection of remoteness does not apply to it."
In 1 Jarman on Wills (6th Ed.) p. 303, the author states:
"If a vested interest in property is given to a person, with a direction that payment or possession shall be postponed for a period beyond the limits allowed by the rule, this direction, being inoperative, does not affect the validity of the gift." And "On the same principle, if a testator directs the income of his property to be accumulated until it produces the sum of 3,000 pounds, or thereabouts,' and then to hold it in trust for A., B., C, and D. during their lives, and after the death of the survivor upon trust for their issue, these trusts are not void for remoteness, because the issue take vested interest on the death of the last tenant for life, and if the fund has not then reached £3,000 they can stop the accumulation. Oddie v. Brown, 4 DeG. & J. 179, 45 English Reprint, 70."
It may be argued that the trust provided for in the will under consideration does not come within the operation of the rule last referred to because it was not created solely for the benefit of those who ultimately would take, but for the benefit of a third party, to wit, the Chrome Steel Works. The will does permit the executors and trustees to makeguaranties upon which money may be raised for the benefit of the Chrome Steel Works, and it is undoubtedly true that the intent of the testator was to protect the interests of the Chrome Steel Works. But if the trust be for such a purpose, then it would seem that under the English decisions it would fall within the rule against perpetuities. Gray on Perpetuities (2d Ed.) § 118 A et seq., section 121 and note.
In Re Smisson, 79 N. J. Eq. 233, 82 Atl. 614, Chancellor Pitney said that the rule with respect to perpetuities applied in this state is the rule adopted by the English courts.
Assuming, but not deciding (because it does not appear that there was brought to the attention of the Chancellor the English rule that postponement of possession, at least beyond the time provided for by the rule against perpetuities, is repugnant to an absolute gift) that the Chancellor, in Lembeck v. Lembeck, intended to establish the Massachusetts rule stated in Claflin v. Claflin, supra, as the rule of this state, the question remains as to whether the court intended to hold that severance of enjoyment and possession from ownership for any conceivable length of time no matter how remote is legal. In Lembeck v. Lembeck it does not appear that any question arose as to the reasonableness of the time provided for in the will. As Prof. Gray says (sec. 121 I):
"And as the rule against perpetuities had to be invented to control the indestructible future interests created by Pells v. Brown, so some rule must be invented to control the inalienable interests created by Claflin v. Claflin. It is perhaps likely that the same period as that prescribed by the rule against perpetuities will be taken, although it would seem quite open to the court to adopt some other period, if found more convenient."
In Offield v. Attorney General (1914) 219 Mass. 378, 106 N. E. 1015, the court held:
"That the limits of an accumulation for the benefit of a charity are subject to the order of a court of equity, although such a provision ought not to be interfered with unless the accumulation appears to be unreasonable, unnecessary, or to the public injury—unless, in other words, it is against a sound public policy."
And see Collector of Taxes of Norton v. Oldfield, 219 Mass. 374, 106 N. E. 1014.
While I am precluded by the decision of the Chancellor in Lembeck v. Lembeck, affirmed by the Court of Errors and Appeals, from holding that the rule against perpetuities in its strictness applies to a postponement of possession or enjoyment as distinguished from ownership, nevertheless, as I conceive it, I am not precluded from holding that there is a limitation upon the time for which such possession and enjoyment may be severed from ownership. Suppose, in the Lembeck Case, the provision had been that the executors and their successors might retain the stock for 100 years instead of 25, or for 2,000 years instead of 25, or until doomsday. Such provisions would, I think, unliesitatedly be held to be void if for no other reason than that they were unreasonable.
I am of the opinion that where the direction of the will operates to withhold possession and enjoyment of an absolute gift for an unreasonable length of time it may be disregarded.
I am further of the opinion that where the time of enjoyment or possession is so uncertain as that a court cannot determine with any reasonable approximation when enjoyment and possession will be united to ownership, the provision postponing possession and enjoyment may be disregarded.
In 2 Jarman on Wills (6th Ed.) p. 1679, the author says:
"But if a definite vested gift be followed by a direction postponing distribution beyond the legal period, the direction will be rejected as void and the gift left intact. * * *"
The provision in the will postponing possession and enjoyment may be likened to a condition, that is, the legatee has the absolute ownership of the interest, with the condition imposed that he shall not enjoy possession for a certain period. A condition may be void for uncertainty. 2 Jarman on Wills (6th Ed.) p. 1465. The operation of the provision in the will, if considered as a condition, is so uncertain as to render it void.
Applying those principles to the will under discussion, we find that the testator has, assuming the legacies to be vested, postponed possession and enjoyment until "after the death of my said wife, the liquidation of my said indebtedness including my indebtedness to my said wife and the liquidation of the indebtedness of the Chrome Steel Works." I have no difficulty with the first two contintingencies. The wife is dead, and although the indebtedness to the wife has not; in fact, been paid, nevertheless, the executors may be directed to pay it in the course of the settlement of the estate. The debts of the Chrome Steel Works may never be liquidated. It may go into insolvency, in which event its debts may never be paid. The executors under the will are given no power to pay the debts. I am aware that this situation of insolvency may be met by holding that if the performance of the contingency becomes impossible the court will disregard it. But the debts of the Chrome Steel Works may never be paid, because it may elect, with the consent of its creditors, not to pay. The executors, as stockholders of the Chrome Steel Works, have no power to compel the corporation to pay its debts. At best, they have but a half interest in the corporation's capital. It may well be that a court would never compel the corporation to pay its debts. It cannot be said to be bad business judgment for a corporation to permit a debt of $450,000, practically funded, to remain, with theconsent of the creditor. A dissolution of Canda Bros. may not help the situation, for the surviving partner, Ferdinand E. Canda, may take over the indebtedness. The time, therefore, when the contingency provided for by the will may happen is altogether uncertain. If the provision of the will applies to all debts of the corporation whether existent at the time of the testator's death or not, then an almost impossible situation has been created. For it is almost inconceivable that at any particular time a corporation actively engaged in business will be entirely free from debt. If the indebtedness is to be confined to such as the testator was also liable for, the condition has been fulfilled.
I conclude that the provision in the will postponing distribution of the estate until after the liquidation of the indebtedness of the Chrome Steel Works is so uncertain as to be unreasonable, and therefore void.
It may be argued that, although the provision with respect to the liquidation of the indebtedness of the Chrome Steel Works is uncertain, the court will permit its observation so far as it may be reasonable to observe it; that is, will allow a sufficient time to elapse before compelling distribution, within which it is reasonable to expect, if the parties desire, the indebtedness will be liquidated. The complete answer is that it is demonstrated that a sufficient length of time has elapsed. The Chrome Steel Works, since the death of the testator, has distributed in dividends more than sufficient to pay all of its debts. It has undistributed earnings of upwards of $600,000, and has a net worth of upwards of $3,000,000, so that its stock has a book value of par.
It is insisted for the executors that it is immaterial whether the provision of the will is valid or not because of the agreement of March, 1917, made between the five persons beneficially interested in the estate under the will who were also all the heirs at law and next of kin (or representatives of such) of the testator. The manifest purpose of that agreement, as disclosed by its context, was to change the distributive shares so that all the children would share equally in the estate. Its first paragraph provides that the property be divided equally between the parties notwithstanding the will, the distribution, however, of the said shares to be made at the time specified in the will (quoting)
"i. e., after the liquidation of all the debts of the testator, including his indebtedness to his wife, and the liquidation of the indebtedness of the Chrome Steel Works."
Its second paragraph provides that until the time of distribution the executors continue to hold and administer the estate, "and shall collect all interest, dividends and other incomes derived from said estate and shall pay over said income to the parties hereto in equal shares." Its third paragraph provides that in all other respects the will shall be followed. Its fourth paragraph provides that all parties shall execute such proper instruments as necessary to give effect to the agreement.
As I look at this agreement its sole purpose was to change the method of final distribution, and to provide in the meantime for the enjoyment of the income by the ultimate distributees. I do not regard it as an agreement, separate and distinct from the will, by which the parties undertook to trustee their property for the purposes indicated by the will. It is to be construed as the will is to be construed. The provisions in paragraph I with respect to the distribution being made in accordance with the will are mere matters of recital, and inserted for the purpose of indicating that the agreement was not intended to change the provisions of the will in any respect except as to the quantum of the estate that each distributee would ultimately get. If the provision in the will that the distribution should not be made until after the liquidation of the debts of the Chrome Steel Works is to be disregarded. I do not think that the executors can rest any right upon the agreement.
But be that as it may be, it seems to me that the same objection that applies to the provision in the will applies to the provision in the agreement. The rule against perpetuities attaches to interests created by contract as well as by will. London and Southwestern Railway Company v. Gomm, 20 Ch. Div. 562; Winsor v. Mills, 157 Mass. 363, 32 N. E. 352; Starcher Brothers v. Duty, 61 W. Va. 373, 56 S. E. 524, 9 L. R. A. (N. S.) 912, 123 Am. St Rep. 990; Barton v. Thaw, 246 Pa. 348, 92 Atl. 312, Ann. Cas. 1916D, 570; H. J. Lewis Oyster Co. v. West, 93 Conn. 518, 107 Atl. 138; Manchester Ship Canal Company v. Manchester Race Course Company (1900) 2 Ch. 352; Worthing Corporation v. Heather (1906) 2 Ch. 532; Woodall v. Clifton (1905) 2 Ch. 257. (An interesting consideration of the law with respect to the application of the rule against perpetuities to covenants to convey contained in leases and covenants to renew, and the distinction between the two will be found in the two last cases cited, particularly 2 Ch. Div. [1905] at page 263.)
If the interests of the distributees created by the will are contingent, so are the interests of the distributees under the contract Whether these interests are contingent or vested I have not found it necessary to decide. The effect of the contract, if considered as a separate, independent document, is to do that which the will attempted to do, assuming the interest of the parties to be vested, that is, separate the ownership of the property from the full right of enjoyment and possession, for an indefinite time so uncertain as to be unreasonable. Considered as an independent document, the agreement createsan interest in the executors and trustees in the properties precisely the same as does the will. Assuming, therefore, that the contract might be sustained, even if the will be invalid, I find the same objection to the provision of the contract postponing enjoyment and possession until after the liquidation of the debts of the Chrome Steel Works as I find to the similar clause in the will.
I do not think that complainant is estopped by the agreement from insisting that the provision of the will with respect to the time of distribution is so uncertain as to be void.
No attack is made upon the will as such or upon the agreement as such. The agreement, properly construed, I think, must be confined in its operation to its purpose of changing the quantum of the estate which each distributee is to ultimately get Under it the distribution is to take place whenever distribution may properly take place under the will; if the provision in the will for distribution after the liquidation of the indebtedness of the Chrome Steel Works be valid, then after such liquidation; if not, then at such time as the court may find the distribution should be made.
Neither is complainant estopped by her acceptance of the income in accordance with the provisions of the agreement. The elements of estoppel are absent. No one has changed position. The payment and acceptance of income have no relation whatever to the time of distribution.
I conclude therefore that the provision postponing distribution until after the liquidation of the indebtedness of the Chrome Steel Works contained both in the will and agreement is. to be disregarded.
In determining this question and in referring to the English law, I have, of course, disregarded the effect of the Thellusson Act. I have considered, besides the cases to which I have heretofore referred, the following: Huber v. Donoghue, 49 N. J. Eq. 125, 23 Atl. 495; Clement v. Creveling, 82 N. J. Eq. 27, 88 Atl. 189; Doyle v. Blake, 77 N. J. Eq. 142. 77 Atl. 347; Morse v. Hackensack Savings Bank, 47 N. J. Eq. 279, 20 Atl. 961, 12 L. R. A. 62; Dodge v. Pond, 23 N. Y. 69; Schuyler on Personal Property (5th Ed.) § 146; Jackson v. Marjoribanks, 12 Sim. 92, 59 English Reprint, 1066; Borastonsbase, 3 Co. Rep. 19 A.," 76 English Reprint, 668; Curtis v. Larkin, 5 Beav. 147, 49 English Reprint, 522; Searisbrick v. Skelmersdare, 17 Sim. 196, 60 English Reprint, 1100; Kervern v. Williams, 5 Sim. 171, 58 English Reprint, 301; Bateman v. Hotchkin, 10 Beav. 462, 50 English Reprint, 646; 30 Cyc. title, "Perpetuities"; 22 Am. English Encyc. of Law (2d Ed.) title, "Perpetuities"; Southampton v. Hartford, 2 V. & B. 55, 35 English Reprint, 239; Pearson v. Lane, 17 Ves. Jr. Ch. Rep. 101, 34 Eng. Reprint, 39; Jasselyn v. Jasselyn, 9 Sim. Ch. 63, 59 Eng. Rep. 283; Sanders v. Vautier, 4 Beav. 115, 49 Eng. Rep, 292; Rocke v. Rocke, 9 Beav. 66, 50 Eng. Reprint, 267; Gosling v. Gosling, Johns, Mass. 395; Innis v. Flint, 106 Minn. 343, 119 N. W. 48.
Assuming now that the provision in the will and agreement with respect to the postponement of distribution until after the liquidation of the debts of the Chrome Steel Works is valid and to be observed, my conclusion la that the contingency upon which distribution is to be made has arrived, properly construing the provision. While it is a fact that the Chrome Steel Works owes some $450,000 to Canda Bros., and has an indebtedness for current expenses of approximately $100,000, it appears that subsequent to the death of the testator and the making of the agreement the Chrome Steel Works has had within its control much more than sufficient excess assets to liquidate the indebtedness had it desired, and had the creditors been desirous of having payment. More than $600,000 has been distributed as dividends on stock. With respect to its current indebtedness the company has not now more than it will in the natural course of business continue to have indefinitely. It has in its treasury an amount more than three times sufficient to liquidate the current indebtedness, besides an investment of some $250,000 in Liberty Bonds. It has a net worth in excess of $3,000,000, and in computing this net worth there has been considered as a liability a sum in excess of approximately $680,000 undistributed earnings.
In view of all of the circumstances, I cannot read the clause in the will and in the agreement as contemplating that before there shall be distribution every dollar of the indebtedness of the Chrome Steel Works shall be paid. I construe the word "liquidation" to mean, not payment or provision for payment in the sense of the setting aside of a fund for payment, but rather a financial condition which will, if desired, warrant payment and the ability to provide for payment if desired. Considering the language of the will in the light of the circumstances surrounding the testator at the time of its making, it is apparent that his purpose in postponing the time of distribution was to permit his estate to be so used as to lend support to the Chrome Steel Works if the corporation needed support. Since his death the corporation has reached a point where it no longer need financial assistance from the estate. The estate has not been called upon to guaranty any indebtedness. I do not think that it can be considered that it was the intent, either of the testator or of the parties to the agreement, that this estate should be kept intact indefinitely in the discretion of the executors and trustees and Ferdinand E. Canda and the remaining directors of the Chrome Steel Works. This would impute tothe testator and the parties to the agreement an intent to permit the executors and trustees and Ferdinand E. Canda and the directors of the Chrome Steel Works to indefinitely postpone distribution, for, as I have before pointed out, the executors cannot compel the Chrome Steel Works to pay or liquidate its indebtedness, nor can they compel Ferdinand Canda, as surviving partner of Canda Bros., to call upon the Chrome Steel Works to liquidate its indebtedness to the partnership. The corporation now is in a healthy condition, able to pay its debts. It might have long since paid if it had seen fit. Is the estate to continue to stand back of this corporation so that if disastrous times come it may be placed in a position where it will be of much less value than it is at the present time, and the accumulations be swept away?
I am of the opinion that, as the words are to be construed in the will and agreement, the indebtedness of the Chrome Steel Works has been liquidated. But whether it has or not the indebtedness might have been liquidated and before distribution of dividends it was the duty of the directors to provide for the debts. Equity will consider that as done which ought to have been done. It is argued that by the acceptance of income by virtue of the provisions of the agreement of 1917 under which complainant received income derived from the dividends on the capital stock of the Chrome Steel Works she is estopped from claiming that the moneys instead of having been paid out in dividends should have been applied to liquidation of indebtedness. There is nothing in the agreement which indicates that it was contemplated by the parties that any moneys which ought to have been applied by the Chrome Steel Works to the payment of debts should be applied to dividends. Neither the executors nor the beneficiaries under the trust had any power to direct the Chrome Steel Works to pay its debts or to refrain from paying dividends. The executors could not use the dividends for the purpose of paying the debts of the Chrome Steel Works. The mere acceptance by complainant of her share of dividends which the executors and trustees had no power to refuse to receive is not evidence of consent on her part that the Chrome Steel Works should pay dividends rather than debts.
With respect to the provision in the will and the agreement that there should be no distribution until after the debts of the testator to his wife should have been liquidated, it is sufficient to say that a sufficient length of time has elapsed within which in the ordinary course of administration this indebtedness should have been paid. The executors have had in their hands much more than sufficient income to pay the debt. It was the duty of the executors under the will to apply the income to the liquidation of debts (clause 4). I find nothing in the agreement of 1917 which affects this duty. It must be construed as providing merely for the distribution of surplus income. It is inconceivable that the parties intended that all of the income should be distributed to the beneficiaries, because, in that event, we must conceive that they intended that there never should be a distribution of the principal of the estate, unless the executors in their discretion concluded to liquidate the debts out of the principal of the assets. Complainant is not estopped by her acceptance of her portion of the income under the agreement of 1917. There is nothing in evidence to show that she knew that the indebtedness to the estate of Mrs. Canda had not been liquidated, and that the moneys that she was receiving were moneys which ought to have been applied toward such liquidation, and in the absence of such evidence I think I am bound to hold that she must be considered as having assumed that what she was receiving was net income, and that the executors and trustees were performing their duties.
While the result of my conclusion is that the time has arrived when there should be a distribution of the estate of Charles J. Canda, nevertheless the circumstances are such as that the liquidation and distribution should be so conducted as to do as little harm as possible. While I have held that complainant is not estopped by her agreement and the acceptance of income from insisting either that the provision of the will and agreement postponing distribution until after the liquidation of the debts of the Chrome Steel Works should be disregarded, or that, properly construing that provision, the time for distribution has arrived, still the administration of the estate by the executors and trustees in the manner that they have administered was acquiesced in by complainant up until about the time of the filing of the bill in February, 1919. An immediate distribution, I think, may be made of that portion of the estate consisting of capital stock of the Chrome Steel Works. While it may be said that this immediate distribution may do injury to the Chrome Steel Works and to the beneficiaries because of the destruction of the voting control of the executors and trustees, this) injury is no greater than that which always results when a court dissolves an illegal voting trust, and, after all, the trusteeship of the stock in the hands of the executors and trustees amounts to a voting trust which would be illegal under Warren v. Pim, 66 N. J. Eq. 353, 59 Atl. 773, for although the purpose of the trust may be proper (General Investment Co. v. Bethlehem Steel Co., 87 N. J. Eq. p. 234. at page 242, 100 Atl. 347; Frost v. Carse, 108 Atl. 642, opinion of the court of Errors and Appeals, November term, 1919, not yet [officially] reported), the duration of the trustis so unlimited as to render it invalid. I say that this trust, so far as it concerns the stock of the Chrome Steel Works, is no more than a voting trust; for, while it is true that the executors and trustees have power to dispose of the stock, still it is not contemplated by the parties that they should dispose of it, and the beneficiaries are in the meantime receiving the income. It may be that the continuance of this stock in the control of the trustees would be ultimately beneficial to the beneficiaries, and I am inclined to think this is so, but the hope of ultimate benefit cannot avail to defeat the claims of one of the beneficiaries whom I hold to be entitled to absolute possession. The testator clearly intended a division of the stock among his legatees at some time. He did not contemplate unlimited control in the executors and trustees. No injury can come to the corporation as such by the distribution. The sole possible objection that I can see would be to an inability of the executors and trustees to raise sufficient moneys, by a conversion of a sufficient amount of the stock, or by other means to pay the debt due to the estate of Catherine E. Canda, approximately $75,000, and as to whether there is any substance in any such objection I will hear counsel on application to settle final decree. The same objection may be presented with respect to the liquidation of the interest of the estate in the partnership of Canda Bros. As I understand the situation, the estate is entitled to one-half of the net worth of Canda Bros. Canda Bros. is indebted to the extent of approximately $400,000, of which amount $100,000 approximately is owed the estate of Catherine E. Canda. On this indebtedness interest has been regularly paid. The only assets of Canda Bros. are the debt due to it from the Chrome Steel Works of approximately $400,000 and certain real estate. The Chrome Steel Works may not be in a position, in view of the large payments of dividends which it has made, without embarrassment to pay the debt due from it to Canda Bros. Complainant has put herself in a position where she cannot insist upon a decree directing the executors and trustees to so deal with the interest of the estate in Canda Bros. as to cause the firm and the Chrome Steel Works such embarrassment as will result in loss to the beneficiaries if there is a reasonable assurance that within a reasonable space of time there can be liquidation without loss or embarrassment.
The same observations apply to the interest of the estate in the Canda Realty Company. Upon these matters I will hear counsel on application to settle decree.
As to the estate of Catherine E. Canda: Catherine E. Canda died June 18, 1915, and by her will, as has been previously noted, she directed her executors to divide her property into five shares or portions, and devised and bequeathed these shares or portions to trustees, providing in each instance for a child as a life tenant, with devise and bequest over to such person as the child should designate by last will or, in the case of failure to designate, to the heirs at law of the child. Charles A. Canda, one of the children, has died, and has devised and bequeathed all his estate to complainant, and she is therefore entitled, under the terms of the will, to the principal of the trust. The executors have divided the estate into shares as directed by the will, with the exception of the moneys due and owing to the estate of Charles J. Canda and by Canda Bros. The principal of the trust fund segregated for Charles A. Canda has been turned over to complainant, with the exception of her interest in these two amounts receivable. The executors justify their conduct under the provisions of the fifteenth clause of the will, which, in terms, provides as follows:
"And I also authorize my executors and trustees to postpone until such time as in their judgment shall seem expedient, the sale, calling in and conversion of any part of my real and persoual estate, to retain any investment in real or personal property, in which my estate shall be at the time of my death, to make actual partition of my residuary estate, or any part thereof, and distribution in specie or kind of my residuary estate, or any part thereof. Until such sale, calling in or conversion the net rents of my said real estate and the income of my said personal estate shall be deemed income for the purpose of this my will."
While the fifteenth clause apparently gives the executors unlimited discretion, nevertheless the clause must be read in conjunction with the seventh clause, which directs the executors to divide the estate into five shares.
In Brandenburg v. Thorndike, 139 Mass. 102, 28 N. E. 575, the provision of the will was that at the expiration of three years from the death of the wife, or at such time, whether earlier or later, as may, in the discretion of the trustees, be found expedient and practicable for the final settlement and distribution of the estate, the trustees shall convey. The court said:
"Taking the view most favorable to the plaintiffs, the discretion of the trustees to delay the payment after the expiration of the 3 years is limited to such time as is reasonably necessary to settle the estate. They could not delay longer without violating their duty, and in case of unreasonable delay they would be compelled by a court of equity to make the payment and transfer."
I am well aware of the rule that where executors are given unlimited discretion, the court will not usually interfere, but this rule is subject to many exceptions. Iadmit that merely convincing the court that the time for stile or partition is at hand is not sufficient for complainant to prevail, but actual fraud on the part of the executors need not be shown, as, for instance, if the executors refrain from conversion and partition bona fide, but for a reason which is not in the interests of the beneficiaries the court may control their judgment.
In the instant case the executors justify their failure to call in the debt due from the estate of Charles J. Canda by the fact that the beneficiaries of the estate of Charles J. Canda, including complainant, united in the agreement by which the income of the Charles J. Canda estate, which by his will was directed to be applied toward the liquidation of his debts, has been distributed to the beneficiaries, including complainant.
I have held that this agreement can only be construed to apply to the distribution of net income, and there is no evidence before me to warrant me in finding that complainant knew that more than net income was being distributed. As against one not estopped, the excuse that the executors of the Catherine E. Canda estate did not call in the debt due from the Charles J. Canda estate so that the beneficiaries of the Charles J. Canda estate should enjoy the income, which, under the directions of the will of Charles J. Canda, should be applied toward the liquidation of the debt due the Catherine E. Canda estate, would be so apparently unsound as to warrant the court in immediately interfering with the discretion of the executors, not upon the ground of actual fraud, but because the matter set up in excuse has no relation whatever to the interest of the Catherine E. Canda estate, or of the beneficiaries therein. If the beneficiaries of the Catherine E. Canda estate were different from the beneficiaries of the Charles J. Canda estate, this would be immediately apparent. While the beneficiaries of the Catherine E. Canda estate are the same as the beneficiaries of the Charles J. Canda estate, they do not take in the same way. Under the will of Catherine E. Canda the beneficiaries take merely life interests, with devise or bequest over. Under the will of Charles J. Canda they take absolute interests. It so happens that, by reason of the death of Charles A. Canda, complainant takes an absolute interest under both wills. I think there is no reasonable excuse for the failure of the executors of the Catherine E. Canda estate to collect from the Charles J. Canda estate the amount due the Catherine E. Canda estate. Whether because of the situation which has been created the amount due from the Charles J. Canda estate to the Catherine E. Canda estate should be immediately paid involves a consideration of the same matter which I referred to in considering the same subject in the matter of the Charles J. Canda estate, and I will hear counsel on settlement of final decree.
With respect to the failure to call in the debt due from Canda Bros. to the estate of Catherine E. Canda, as I understand the position of the executors, it is this: That the money was loaned to Canda Bros. for a permanent investment in the Chrome Steel Works, and is now represented as a part of the $400,000 due from Chrome Steel Works to Canda Bros. This investment the testator contemplated should be converted at some time or another. She has given her executors discretion with respect to the time of conversion, but that discretion is limited, it seems to me, to such time as may be reasonably necessary to convert without loss or embarrassment. Had the executors acted without regard to the agreement of 1917, and had Ferdinand E. Canda, who controls the stock of the Chrome Steel Works not controlled by the estate of Charles J. Canda, acted with a view to liquidating the debts of the Chrome Steel Works, the amount due from the Chrome Steel Works to Canda Bros. might have now been paid, and the proceeds of the debt coming to Canda Bros. been distributed to those beneficially entitled. The mere fact that this money was put in as a permanent investment, and that it draws 6 per cent. interest, is not sufficient to justify the executors indefinitely refusing to call it in, and thus indefinitely put off compliance with the terms of the will and indefinitely postpone the enjoyment by the beneficiaries of the principal of the trust funds. Nor can the act of Ferdinand E. Canda in electing to permit the Chrome Steel Works to pay dividends, rather than the debt to Canda Bros., excuse the executors indefinitely putting off the calling in of this debt, upon the ground that to call it would embarrass Canda Bros. Still the executors are entitled to take into consideration, in view of the relations existing between Charles J. Canda, Catherine E. Canda, his wife, and Ferdinand E. Canda, and the positions occupied by them respectively to Canda Bros. and the Chrome Steel Works, the effect that an immediate calling in of this debt might have upon Canda Bros. and the Chrome Steel Works. Whether that effect will be such as to warrant the executors in now declining to call in the debt is a matter upon which I desire to hear counsel upon settlement of final decree. Complainant is entitled at least to a decree which will so direct the executors as that within a reasonable space of time the estate will be liquidated.
Either side may move for decree upon two days' notice.
I intend to and have decided the very right of the controversy between the parties as I see it, and if the pleadings need to be amended to support the decree they may be.If the views I have expressed, or such amended pleadings as may be filed in the opinion of counsel, call for the production of further testimony on either side, on proper application, this will be permitted.
The matter of counsel fees and costs will be considered on application for final decree. Any application counsel desire to make in the cause may be on two days' notice.