Case ID: ad_127/html/0118-01.html
Source: Caselaw Access Project
Author: {"author": "Miller, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Judicial Settlement of the Accounts of the Title Guarantee and Trust Company, as Trustee under the Eighteenth Clause of the Last Will and Testament of Alfred T. Baxter, Deceased. Methodist Episcopal Hospital in the City of Brooklyn and Others, Appellants; Frederick W. Baxter and Others, Respondents.
    Second Department,
    June 12, 1908.
    Will — trust r— general and residuary legatees — abatement of legacies.
    A testator, apprehending -that his estate might not suffice to pay the general legacies in full, expressly provided that in that event they should be reduced pro rata, with the exception of provisions for his wife ahd daughter. By another clause he created a trust, income to be paid to his wife for life, the remainder to be paid into and form part of the residuary estate. The latter he left to certain persons named. The estate being insufficient to pay the general legacies in full) they were reduced pro rata.
    
    
      Held, that on-the termination of the trust the remainder should be paid to the residuary legatees, not distributed to the general legatees to make up the balance unpaid on their legacies ;
    That the rule that general ■ legacies must be paid before payment to residuary legatees did not apply, since the latter took the remainder as a specific bequest.
    Hooker," J., dissented.
    
      Appeal by the Methodist Episcopal Hospital in the City of Brooklyn and others from a decree of the Surrogate’s Court of the county of Kings, entered in said Surrogate’s Court on the 4th day of December, 19.07.
    
      George S. Ingraham, for the appellant the Methodist Episcopal Hospital.
    
      George W. Robinson, for the respondents Frederick W. Baxter and others.
    
      Albert R. Moore [Hermon H. Shook with him on the brief], for the respondents Rebecca A. Linington and others.
    
      J. Harry Snook, special guardian for Mary E. Baxter and Charles H. Baxter, respondents.
   Miller, J.:

The will of Alfred T.. Baxter, after providing for a number of separate bequests, contained among others the following clauses, viz.: “ Eighteenth: I give to my said Executor the sum of Twenty thousand dollars in trust to keep the same invested, and to pay the net rents, issues, income and profits thereof, semi-annually, to my wife Julia, during her life, and upon her death, it is my will that the principal of the fund so set apart in trust for her, together with any accumulated income therefrom, that there then maybe, be paid into and form a part of my residuary estate hereinafter disposed of. * * * .Twenty-fifth: In cáse my estate proves inadequate and insufficient to meet and satisfy all the provisions of this my Will, as hereinabove provided, then and in that case it is my Will that the trust funds herein set apart for the benefit of my adopted son, Frederick W. Baxter, and the several legacies and bequests herein made, except the provision herein made for my wife Julia, and my adopted daughter Melanie be reduced fro rata and in proportion to such deficiency, if any such there be, to the end that said reduction shall equal in the aggregate the amount of such deficiency and no more.” The residuary estate was bequeathed to three charitable institutions and to three of his relatives, who were also given general legacies. . The estate was not sufficient to pay the general legar cies in full. ' The executor set apart the sum of $20,000 as the trust fund for the benefit of the widow pursuant to said 18th clause. The widow has now died, and it becomes necessary to determine' how the testator intended to dispose of the remainder of the said trust estate. The appeal is from a decree of the Surrogate’s Court directing' its distribution among the general legatees in payment of the balance-unpaid on their legacies, with interest.

The learned surrogate made said decree, and the respondents seek to sustain it, upon the well-settled rule that general. legacies must be paid in full before there can be any payment to residuary legatees. Of course there can be no residuary estate until the debts of the testator and the general legacies are paid, but the question before us is purely one of construction. The testator apprehended that his estate might not suffice to pay in full all of the general legacies, and expressly provided that in that event they should be reduced pro rata, but that there should be no reduction in the provisions for his wife and adopted daughter. By the said 18th clause he created a trust estate of $20,000, arid provided that the income should be paid to his-wife for life, the remainder to “ be paid into and form a part of my residuary estate hereinafter disposed of.” Had he bequeathed the remainder in express words to his residuary legatees by name, there could be no doubt of his intention. But -he did that in effect, describing them as a class. He knew that there might bé no residuary estate, for he provided for a pro rata reduction of the general legacies; if he had intended the remainder of the trust estate to go to the general legatees, in case their legacies had not been paid in. full, he could easily have said so, but instead he expressly provided as hereinbefore stated, thus unequivocally evidencing an intention .that said remainder should go to the residuary legatees in the manner in which he disposed of his residuary estate. When the trust fund was set apart, it ceased to be a part of the testator’s /estate, and the executor had nothing more to do with it. The fact that the executor was also trustee does not change the case. The ’ rule relied upon has no application for the reason that the residuary legatees take the remainder as a specific bequest, irrespective of whether there was any residue of the estate. An argument' is made that the testator could not have intended that the residuary legatees should take the said remainder unless the general legatees were paid in full, but we must determine his intention from what he said. Knowing that the general legacies might not be paid in full, he provided for the same disposition of said remainder as he made of his residuary estate, i. e., he bequeathed it in equal parts to the six residuary legatees. It does not seem that precedent is needed for this construction, but there is controlling authority for it. ( United States Trust Co. v. Black, 146 N. Y. 1.) In that case the remainder of a trust estate- was disposed of in the following language, viz.: “ I order and direct that the principal of said trust fund shall form part of my residuary estate, and the same be disposed of as the same is. hereinafter disposed of;” there was no true residuary estate for the reason that the estate was not sufficient to pay all the general legacies. That case was complicated by the fact that the testati’ix by three successive clauses disposed of the “ rest, residue and remainder ” of her estate, in effect disposing of a residue of a residue, but there was only one true residuary clause, i. e., the last. The question discussed was the meaning of the words “ residuary estate” in the sentence quoted supra, the testatrix having used that expression in more than one sense; and it was held that the expression referred to the true residuary estate, and that the said remainder must go to the four true residuary legatees, notwithstanding the fact that the legacies to be paid out of a “ residue ” as provided by the clause preceding the true residuary clause, had not been paid in full. ' We have no such complication in this case.

The decree should be modified so as to direct the distribution of the. remainder of the said trust estate among the residuary legatees.

Woodward, Jenks and Rich, JJ., concurred; Hooker, J., voted to affirm upon the opinion of the surrogate.

Decree of the. Surrogate’s Court of Kings county modified in accordance with the opinion of Miller, J., and as so modified affirmed, with costs to all parties payable out of the fund.