Case ID: ad_84/html/0569-01.html
Source: Caselaw Access Project
Author: {"author": "Hirschberg, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William J. Thall and Others, Plaintiffs, v. Felix Dreyfus, Defendant.
    
      Trust to pay the income of a fund to three children and, upon the death of two, to pay the corpus to the survivor ■—it cannot he terminated hy a release hy the beneficiaries to themselves as remaindermen.
    
    A testatrix devised her residuary estate to trustees, “in trust nevertheless for the .benefit of my children, William J. Thall, Jennie Thall and Mamie S. Andre-sen, the income of said estate to be paid to them during their life; should either one of them die before the other then his or her share of the income of my estate is to go to those surviving and uron the death of two of them then the said trust shall cease and the whole of my said estate is to go to the swvivor for his or her own sole use and benefit forever. The income, however, is to be paid to my said children share and .share alike.”
    The testatrix was survived by the three children designated, and they, together with' a granddaughter, were the only persons who, at the time of the testatrix’s death, answered the description of heirs at law.
    After the testatrix’s death, the three children of the testatrix conveyed the residuary estate derived by them under the will to one Paynter, and the latter, on the same day, reconveyed such estate to them.
    Thereafter the children of the testatrix and the trustees named in the will assumed to convey to the beneficiaries all the residuary estate, for the purpose, as stated in the conveyance, of merging the trust estate in the remainder. The attempt to merge the trust estate in the remainder was made pursuant to section 83 of the Real Property Law (Laws of 1896, chap. 547) and section 3 of the Personal Property Law (Laws of 1897, chap. 417) which provide in substance that whenever a person beneficially interested in the income of a trust created for the receipt of the rents and profits of lands or the income of personal property, shall or may be or become - entitled in Ms own right to the remainder in the principal fund so held in trust, it shall be lawful for such person to make and execute a conveyance nr release whereby such person shall convey or release to himself all his right, title and interest in and to the income of such trust estate, and thereupon the estate of the trustee as to the principal fund so held in trust shall cease and determine, and the trust estate shall he and become forthwith merged in such remainder.
    
      Meld, that the court would not compel a party, who had entered into a contract with the testatrix’s three children to purchase a portion of the residuary real estate, to specifically perform his contract;
    •That the statutes authorizing the merger of trust estates only apply to an expectant estate to which the remainderman is so far “entitled” that his interest is beyond the possibility of being lessened or defeated in the future;
    That the interest of the testatrix’s three children in the remainder was not of such a nature, as, if all of them or the two last survivors should die simultaneously, a contingency remote but not impossible, the provision for survivor-ship would be defeated and the remainder would pass by inheritance.
    . Submission of a controversy upon an agreed statement- of facts, pursuant to section 1279 of the Code of Civil Procedure.
    
      Joseph A. Burr, for the plaintiffs.
    
      Alexander H. Geismar, for the defendant.
   Hirschberg, J.:

The controversy is as to the title to certain real estate which the plaintiffs have contracted to sell to the defendant in fee simple, subject only to certain specified incumbrances. The real estáte was owned and possessed by the plaintiffs’ mother, Jennie Thall, at the time of her death, February 12, 1902. She left a will, which was duly proved and admitted to probate in the Surrogate’s Court of Kings county, naming John Jenkins, Jr., and her son, William J. Thall, as executors and trustees. With the exception of a small bequest having no bearing on the issue, she disposed of her property for the benefit of her three children, the plaintiffs (one of whom is the executor and trustee), as follows: I give, devise and bequeath all the rest, residue and remainder of my estate, both real and personal, unto John Jenkins, Junior, and my son William J. Thall, in trust nevertheless for the benefit of my children, William J. Thall, Jennie Thall and Mamie S. Andresen, the income of said estate to be paid to them during their life ; should either one of them die before the other then his or her share of the income of my estate is to go to those surviving and upon the death of two of them then the said trust shall cease and the whole of my said estate is to go to ,the survivor for. his or her own sole use and benefit forever» The income, however, is to he paid to my said children share and share alike.”

On September 4, 1902, the plaintiffs, as parties of the first part, by an instrument duly executed under seal granted and released to W. Elmer Paynter and to his heirs and assigns, for a valuable consideration, all the expectant estate, both real and personal, devised or bequeathed to the above named parties of the first part, or either of them, by the last will and testament of Jennie Thall, deceased, together with the appurtenances, and all the estate and rights of the parties of the first part in and to the said real and personal property.” On the same day, but subsequently to the execution and delivery of this grant and release, W. Elmer Paynter, for a valuable consideration, by a like instrument, duly executed under seal and delivered, granted and released to the plaintiffs and their heirs and assigns all the said expectant estate, both real and personal, so devised and bequeathed, with the appurtenances, and all his estate and rights in and to the premises. Thereafter and on the same day an instrument was duly executed and delivered under seal by the plaintiffs and by the executors and trustees, the former as the parties both of the first part and of the third part, and the latter as the parties of the second part, which provided after a recital of the pro■visions of the will of Jennie Thall, that “ Whereas the said William J. Thall, Jennie Thall and Mamie S. Andresen, the parties of the first and third part hereto, have acquired the estate in remainder to the whole of the principal fund held in trust for them subject to •their beneficial estate therein, Row in consideration of the premises .and of the sum of one dollar to them in hand paid, the receipt whereof is hereby acknowledged, the said parties of the first part ■do hereby release unto themselves as parties of the third part hereto all the interest in the rents and profits of said estate, real and personal, devised or bequeathed by the said Jennie Thall to John Jenkins, Jr., and William J. Thall in trust for their benefit, with the intent and for the purpose of merging such trust estate in such remainder, and the said parties of the second part hereto in consideration of the sum of one dollar to them in hand paid, the receipt whereof is hereby acknowledged, do hereby consent to such release and merger, and execute this instrument for the purpose of- signifydng and giving evidence of such consent.”

The contract for the sale of the real estate in question was executed by the parties to this submission on or about September 13, 1902.

The only persons who would answer the description of heirs at law and next of kin of Jennie Thall at the timé of her death are her children, the plaintiffs, and a granddaughter, Olga Haight.

In Matter of Hogarty (62 App. Div. 79) the direction made by the testatrix was to pay over the income of a trust fund to her sister for life, and upon the latter’s death to distribute and divide the principal among her children. The gift of the remainder was there held to be contingent and not vested, and as a consequence an attempt somewhat similar to that made herein to vest in the life tenant both the corpus and the income of the trust estate was held to be void. I cannot .see that the provisions of Mrs. Thall’s will differ materially from those in which a direction to divide or pay over on the termination of a precedent trust estate has been'held to-create a contingent remainder. In that view the deed to Paynter conveyed only a future contingent estate^ and his' deed to the plaintiffs only returned it to them. They could convey nothing which they did not have, and could receive nothing back which they had not conveyed. Conceding, however, that the intention of the testatrix was to vest the remainder at Tier death in the one survivor among the plaintiffs, it is apparent that the validity of the .scheme which the plaintiffs have adopted to terminate the precedent trust estate and to merge it in the remainder depends upon the accuracy of their claim that the remainder, although contingent in the sense that it might be defeated by a failure of survivorship, nevertheless vested in interest at the death of the testatrix so as to create an absolute and indefeasible title in some one at least of the three remaindermen, independently of the happening or the failure of survivorship. It is not enough, assuming it to be a fact, that futurity under the authorities' may not be regarded as annexed to the substance of the gift in remainder. What has been said on that subject in most, if not all, of the numerous cases construing trusts created by will relates generally to the validity of testamentary provisions and their effect upon the rights and interest of the parties before the court under the then existing conditions, and its application is not necessarily controlling in an action to compel specific performance in which equity should protect a prospective purchaser from the ■consequences of the future divesting of a vested estate by the happening of an unlikely but possible event, which, on its occurrence, would serve to either defeat the estate altogether or to let in a beneficiary who is not concluded by the contract of sale. "Where the validity of a will with respect to the suspension of the power of alienation depends upon the vesting of interests, or where the nature and extent of the interests depend upon the determination of the ■class which is to take, the will may be held to be conformable to the statutes and the rights of the class adjusted, even although the vesting is subject to be subsequently defeated ; but a very different question is presented where the defeat of the vesting of interest by some subsequent event operates to open and let in beneficiaries who may take, not under the will, but on the theory of intestacy, and where the question before the court relates to the absolute present and future title to the fund or estate.

Prior to the passage of chapter 452 of the Laws of 1893 it was provided by section 63 of the Statute of Uses and Trusts (1 R. S. 730) that no person beneficially interested in a trust for the receipt of the rents and profits of lands can assign or in any manner dispose of such interest.” The act of 1893 amended this section by adding a provision in substance to the effect that whenever a person beneficially interested in the income of a trust created for the receipt of the rents and profits of lands or the' income of personal property, shall or may be or become entitled in his own right to the remainder in the principal fund so held in trust, it shall be lawful for such person to make and execute a conveyance or release whereby such person shall convey or release to himself all his right, title and interest in and to the income of such trust estate, ■and thereupon the estate of the trustee as to the principal fund so held in trust shall cease and determine, and the trust estate shall be ■and become forthwith merged in such remainder. A similar provision is now embodied in section 83 of the Real Property Law (Laws of 1896, chap. 547) and in section 3 of the Personal Property Law (Laws of 1897, chap. 417), the language employed in each instance limiting the privilege of creating the merger as in the act of 1893 to the case of a beneficiary in a trust who is entitled to the remainder in whole or in part of the principal fund. It was held by a divided court in Mills v. Mills (50 App. Div. 221) that the. effect of the statute of 1893-is not to limit the right to create a merger - by conveyance or release to a case where the remainder has devolved upon the cestui que trust by operation of law, but that it includes the case of the acquisition of the remainder by purchase, and fob-lowing that decision it might be easy perhaps to hold that the plain?/ tiffs are in position to create the contemplated merger by virtue off the mesne conveyances to themselves. But the difficulty I find in. this case arises from the belief that the statutes are intended to apply only to an expectant estate to which the remainderman is so faff “ entitled ” that his title is perfect beyond the possibility of a future lessening or defeat; in other words, that the word “ entitled ” in the-statutes refers not only to a right, which is vested in a present ¡ interest, but which is also free from the possibility of an ultimate-l ■ defeasance. The obvious purpose of the statutory innovation .is to' merge titles or interests in- which no other person has or can liaveany claim in his own right as distinguished from that of a trustee, and while it is unnecessary to decide that question it might possibly be held that a transaction which could be deemed sufficient to defeat' the estate Of a trustee would nevertheless be regarded as wholly-inadequate to defeat the future estate of an heir at law or next of kin who was not a party to the proceeding and upon whose expect?-' ánt rights'no statutory purpose of -infringement is apparent. Certainly a title so created is not one of the kind which a court of equity should force upon an unwilling purchaser.

Under the will of Mrs. Thall the survivor of the three plaintiffs, if any, undoubtedly takes an estate in remainder in all the property' of which the testatrix died seized, subject to the precedent trust estate. The trust estate ends upon the happening of a certain event,, viz., the death of two of the plaintiffs. But the remainder, goes-only to the survivor, and it is not only uncertain who the survivor will be, but it is uncertain whether there will be any survivor. However unlikely, it is by no means impossible that all will die at the same moment," or that one will die first and the other two simultaneously thereafter. In either event suggested the remainder would fail; and while it is true that no one other than the plaintiffs can take in: remainder under the will, it-is not true that no one else can take the reversion by inheritance. It is no answer to the suggestion that the. contingency of intestacy may thus arise to assert that it cannot arise in this case because, by the conveyances and release in question, thq trust has already ceased during the lifetime of all the life tenants, and, of course, without a failure of survivorship. The argument of the learned counsel for the plaintiffs begs the whole question by assuming a lawful termination of the trust estate as the basis of the contention that no future claim can arise on the part of the unrepresented heir at law, whereas the plain fact is, that the possibility of the existence of such claim in the future is a clear and controlling reason for the assertion that as to such heir at law the trust estate is to be deemed still intact, at least for the purpose of determining whether the principal shall finally pass under the will or by virtue of the statute of inheritance.

It follows that the defendant is entitled to judgment relieving him from the performance of the contract, but, under the terms of the submission, without costs.

Bartlett, Woodward, Jenks and Hooker, JJ., concurred.

Judgment for the defendant, without costs, under the terms of the submission.