Case Name: Helene Rochat Metcalfe, Appellant, v. Union Trust Company of New York, as Trustee of the Estate of Francis J. Metcalfe, Deceased, Respondent, Impleaded with Others
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1905-02-21
Citations: 181 N.Y. 39
Docket Number: 
Parties: Helene Rochat Metcalfe, Appellant, v. Union Trust Company of New York, as Trustee of the Estate of Francis J. Metcalfe, Deceased, Respondent, Impleaded with Others.
Judges: 
Reporter: New York Reports
Volume: 181
Pages: 39–62

Head Matter:
Helene Rochat Metcalfe, Appellant, v. Union Trust Company of New York, as Trustee of the Estate of Francis J. Metcalfe, Deceased, Respondent, Impleaded with Others.
1. Testamentary Trusts — Statute Permitting Merging of Remainder of Trust Estate in Beneficiary Entitled to Income Thereof—Personal Property Law (L. 1897, Ch. 417, § 3) Not Retroactive. The provision of the Personal Property Law (L. 1897, ch. 417. § 3) which relates to trusts of personal property created to provide an income for the beneficiary thereof and provides a way in which the principal fund of such trusts may be merged in the beneficiary and the estate of the trustee thereupon cease is not retroactive and applies only to trusts created after its enactment; it superseded and took the place of chapter 452 of the Laws of 1893, changing the former rule (1 R. S. 780, § 63), which by its language was expressly applicable to “any trust heretofore or hereafter created,” and omitted the words “any trust heretofore or hereafter created,” thereby justifying the inference that the legislature intended to make the new statute prospective and applicable only to trusts created after its enactment.
2. Same—When Trust to Pay Income to Testator’s Widow for Life, or Until She Remarry, Cannot Be Merged in Her by Release of Remaindermen. Where the children of a testator entitled to the principal of a trust fund established by testator to provide an income for his widow during her life or until she should remarry, duly assigned and transferred to the widow all their right, title and interest in and to the remainder in such trust fund, and the widow by a subsequent instrument in writing released to herself, as the person entitled to the entire remainder, all of her interest in the income of the fund, the trust is not thereby merged and terminated, and the trustee released from responsibility under the trust, under the Personal Property Law (L. 1897, ch. 417, § 3)> where the will, by which the trust was created, became effective in 1892, when the statute then in force (1 R. S. 730, § 63), made the interest of the beneficiary of such trust inalienable, and the testator clearly expressed his intention that his widow’s interest should be restricted to the income of the trust fund during her life, or until she remarried.
Metcalfe v. Union Trust Co., 87 App. Div. 144, affirmed.
(Argued January 24, 1905;
decided February 21, 1905.)
Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered December 22, 1903, in favor of defendant upon the submission of a controversy under the provisions of sections 1279 and 1280 of the Code of Civil Procedure.
The following are the material facts, which are set forth in an agreed statement by the parties, upon the submission of their ■ controversy to the Appellate Division, in the first department. The defendant, the Union Trust Company, holds, as trustee under the will of Francis J. Metcalfe, deceased, and by direction of a decree of the Supreme Court, construing the testator’s will, a fund ; the income of which it is required to pay to the plaintiff, Helene R Metcalfe, the testator’s widow, during her life, or until she remarry. The principal of the fund, upon the happening of either event terminating the trust, is to be paid over to the four children of the testator, also defendants, in the proportions, as to each, specified in the will. The children, being a son and three daughters, having become of age, as remaindermen, by an instrument in writing and under seal, in February, 1903, assigned and transferred all their right, title and interest in and to the remainder in the trust fund to the plaintiff; wdio, thereupon, by another instrument in writing, released to herself, as the person entitled to the entire remainder, all of her interest in the income of the fund. Thereafter, she demanded from the Union Trust Company the payment of the trust funds; offering a release from its liability, as trustee. Her demand was refused by the trustee, upon the grounds that the trust had not been terminated and that the release would not protect it from liability. The trustee declares its willingness to relinquish the corpus of the trust, if it be decided that the trust was terminated by the transactions mentioned.
The question, as defined by the submission, is whether the trust has terminated and whether the fund, with all its accrued income, is now payable to the plaintiff. The testator died in 1892; having provided for his wife and four children by a will, which gave his residuary estate, (with an unimportant exception), to the trust company npon trusts for their benefit. In an action for the judicial construction of the provisions of the will, it was adjudged, so far as it is material to this controversy, that the trust for the widow’s benefit is valid and “ entitles her to the income of one-third of the entire estate during lier life, or until she remarry.” The trust provisions for the children were adjudged to be ineffectual and the distribution of the estate, remaining after setting apart one-third for the widow’s trust, was directed to be made to the children. In this adjudication all parties have acquiesced. According to the will, which was thus construed, the trusts for the testator’s three daughters were intended to continue for their lives, with remainders over to issue, or, failing issue, to survivors; while the son’s trust was to terminate at his majority. The testator, when providing with respect to the trust for his widow, expressed his “ desire,” in the event of her remarriage, or death, “ that the interest of her one-third be used to increase the investments made for my children; ” either all, naming them, or the survivors.
The Appellate Division directed judgment against the plaintiff upon the question in difference between the parties.
Lester da Graves (Harmon 8. Graves and Charles 8. Yawger of counsel) for appellant.
The trust has been terminated under the provisions of the Revised Statutes of Yew York, viz., chapter 452 of the Laws of 1893 and chapter 417 of the Laws of 1897. These statutes are clearly constitutional. (Lewin on Trusts [3d ed.], 262, 269, 566, 595, 598, 633, 781; Jones v. Lewis, 1 Cox, 199 ; Atty.-Gen. v. Parker, 3 Atk. 577; Atty.-Gen. v. Forster, 10 Ves. 338; Wilkinson v. Parry, 4 Russ. 276; Dyett v. C. T. Co., 140 N. Y. 65; Schenck v. Barnes, 156 N. Y. 316; Fowler Pers. Prop. Law, 38, 49; Noyes v. Blakeman, 6 N. Y. 576; Leggett v. Perkins, 2 N. Y. 297; Gott v. Cook, 7 Paige, 537; Lent v. Howard, 89 N. Y. 169; Cochrane v. Schell, 140 N. Y. 523; Robinson v. Pett, 2 White & Tudor L. C. 215.) When all interests have certainly and finally vested, and all parties are in being and sui juris and desire the termination of a trust, a court of equity will terminate the same, if equity demands it. (Short v. Wilson, 13 Johns. 33; Blood v. Kane, 130 N. Y. 519; Locke v. F. L. & T. Co., 140 N. Y. 135; Smith v. Harrington, 4 Allen, 566; Bowditch v. Andrews, 8 Allen, 339; Norris v. Thompson, 19 N. J. Eq. 314; 2 Beach on Trusts, § 760; Cuthbert v. Chauvet, 136 N. Y. 328; Matter of Stone, 138 Mass. 476; Sears v. Choate, 146 Mass. 395; Snedeker v. Congdon, 41 App. Div. 436.)
Hoffman Miller for respondent.
Chapter 417 of the Laws of 1897 is not retroactive in its effect. (4 R. S. [8th ed.] 2439 ; Lent v. Howard, 89 N. Y. 169; Graff v. Bonnett, 31 N. Y. 9.) By testator’s will the estate of trustee and beneficiary was limited, and could not be abridged by act of either party. (Lent v. Howard, 89 N. Y. 169 ; Matter of U. S. T. Co., 175 N. Y. 304; Oviatt v. Hopkins, 20 App. Div. 170; Snedeker v. Congdon, 41 App. Div. 433 ; Newcomb v. Newcomb, 33 Misc. Rep. 191; Mills v. Mills, 50 App. Div. 221.)

Opinion:
Gray, J.
The judgment rendered in the action brought for the construction of the will has settled, as the law of the case, that the trust created for the testator's widow was valid for her life, or until her remarriage, and the only question for our consideration is whether that trust had ceased, as the result of the assignment by the remaindermen of their right to the remainder and of the release by the widow of the interest in the income. When the trust was created, in 1892, section 63 of the Statute of Uses and Trusts was in force, (1 R. S. 730), applicable alike to real and personal property; which prevented the beneficiary of such a trust from assigning, or disposing of, his interest.' Subsequently, in 1893, (Laws of 1893, chap. 452), that section of the Revised Statutes was amended, so as to permit a " person beneficially interested in the whole or any part of the income of any trust heretofore or hereafter created for the receipt of the rents and profits of lands or the income of personal property," who " shall have heretofore become or may hereafter be or become entitled " to the remainder in a trust fund, to release to himself all his interest in the income of the trust estate and, thereafter, the estate of the trustee was to cease and determine. In 1897, (Chap. 417, Laws of 1897), the Personal Property Law was enacted;. section 3 of which repealed previous statutes upon the subject and read that " The right of the beneficiary to enforce the performance of a trust to receive the income of personal property, and to apply it to the use of any person, cannot be transferred by assignment or otherwise; but the right and interest of the beneficiary of any other trust in personal property may be transferred. Whenever a beneficiary in a trust for the receipt of the income of personal property is entitled to a remainder in the whole or a part of the principal fund so held in trust, subject to his beneficial estate for a life or lives, or a shorter term, he may release his interest in such income, and thereupon the estate of the trustee shall cease in that part of such principal fund to which such beneficiary has become entitled in remainder, and such trust estate merges in such remainder."
It is upon this enactment that the appellant rests her right to have the trust declared terminated. It is interesting to note, and I agree with Mr. Justice Patterson of the Appellate Division in his expression of satisfaction, that the legislature, by chapter 88 of the Taws of 1903, has restored the state of the law to its earlier condition under the Revised Statutes; whereby the interest of a beneficiary in such a trust is rendered inalienable.
The Appellate Division has denied the right of the plaintiff to a decree, declaring that the trust had terminated, upon two grounds. It was held, in the first place, that as " the legal estate in the trust fund is in the trustee, it thereby became property in his hands," of which the legislature could not, constitutionally, deprive him without his consent, and, in the second place, that, as the widow's interest wras for her life, or until she remarries, it was not an absolute estate, but was conditional in its nature and, hence, not within the purview of the statute.
I am not disposed to take the view of the unconstitutionality of the act of 1893, although forcibly presented in the opinion of the very learned justice, who spoke for the court below. It impairs no contract. (Cochran v. Van Surlay, 20 Wend. 365.) Although the legal estate is in the trustee, he but possesses a naked right, which is to be exercised, not for his own benefit, but for that of another. His estate is commensurate with the trust duties imposed upon him and it ceases when they áre performed, or when they are at an end. The whole beneficial proprietorship, or interest, is in the cestui que trust, for whom he holds the estate and who has the right to enforce the performance of the trust. At common law, when the latter had the equitable fee, he could call for the conveyance of the estate by the trustee and extinguish the trust. (Lewin's Trusts, *486.) At common law, and under our Be vised Statutes, the trustee's tenure has been under the supervisory power of courts of chancery, or of equity, and it was dependent upon conditions having no relation to any interest of his in the estate. If he has a right to commissions, it was given to him by statute, only. The argument that the constitutional'guaranty against the deprivation of one's property, without due process of law, lias its application to the case of this trustee is, in my opinion, unsound. That guaranty exists for the protection of the citizen's property against arbitrary legislation, and every arbitrary proceeding, which does, or may, affect it. But what is there about the right, or estate, of a trustee, which involves the idea of " property," as that term is commonly understood and as it was undoubtedly employed by the framers of our Federal and State constitutions ? To the ordinary mind, and that is one of the best tests in interpreting statutes, the term " property " suggests some unrestricted, or exclusive, right to that which has been • created, or acquired. It is an inherent right to the dominion over, and the beneficial enjoyment of, some valuable right, or interest. How can that be predicated of the estate of a trustee ? He exercises certain powers for the sole benefit of the cestui que trust. He has no beneficial interest and he can be removed whenever, in the judgment of a court of equity and by the exercise of its inherent power, it becomes necessary, and independently of the instrument of his appointment. (Perry on Trusts, 276.) His right, or interest, lacks those ele inents of ownership,' which are associated in our minds with the idea of property. In my opinion, if the conditions of the statute are met by the facts of the case, there is no constitutional difficulty in adjudging the termination of the trust.
When, however, we come to the construction of the statute of 1897, I think we shall find it difficult to make it operative upon the testamentary trust in question ; a difficulty which, as I shall endeavor to point out, is to be further met with, when we consider the testamentary plan, in connection with the conditional nature of the estate created for the widow. The intention of a testator, when clear and not contravening any statute, or rule of law, must be implicitly obeyed. If it cannot be wholly effectuated, as was the case here, because the children's trust did contravene the statute, nevertheless, if the intention, apparent from the provision made for the widow and from the general design of the will, was such as to presuppose a purely conditional and, therefore, an inalienable estate in the widow, the statute should not be allowed operation. But, passing to a consideration of the statute, it is to be noticed that, while the act of 1893 was in force, no action was taken to terminate the trust; perhaps, because of the minority of the children. By its language, that act ivas made expressly applicable to "any trust heretofore, or hereafter created /" but when the legislature came to enact the Real Property Law of 1896 and the Personal Property Law of 1897, superseding prior legislation, in eacli enactment, it omitted those words. The omission is quite significant and should be borne in mind, when considering whether the act should be given a retroactive effect. The general rule is that every law operates prospectively and will not be given a retroactive effect; unless a contrary intent appears, in express terms, or by clear implication. Doubtless, where no constitutional security is invaded, the legislature can make its enactments retroactive and it had the power to do by the act of 1897 what it had done' by that of 1893; but not having done so, we should, rather, conclude that the omission in the later act of the words " any trust heretofore or hereafter created " was intentional and a change of the legislative mind upon the subject of the alienability of a beneficiary's interest. I concede the force of the argument that the words " whenever a beneficiary is entitled to a remainder " etc., used in the act of 1897, may possess a retroactive meaning; but they are not strong enough, under the circumstances of their introduction, and I prefer, rather, to infer that the legislature intended to make the statute prospective and, when so radically changing a long existing law, did not' deem it wise to alter the conditions under which a testator had made a disposition of his estate.
Passing, then, from the consideration of the statute to that of the will before us, wre perceive, and very plainly so, that it was drawn by some hand unskilled in the law; but, as it has been said of a will ignorantly drawn, " if the court can pick out the meaning, that ought to take place." (Upwell v. Halsey, 1 P. Wins. 651, cited in Wright v. Miller, 8 N. Y. 26.) The testator meant that his residuary estate should be held upon two trusts; namely, one-third thereof for his wife and two-thirds for his son and three daughters. He plainly expressed himself as intending that his widow's interest in his estate should be restricted to the enjoyment of the income of one-third during her life, or until she remarried, and, under his testamentary plan, it could never have been other than of that conditional nature. . The portion of the son might become his, absolutely, upon attaining his majority ; but the portions of the three daughters were to be held, at all times, in trust for their lives. " In case of the remarriage, or the death," of his widow, he provides that the interest of her one-third was " to be used to increase the investments made for his children; " that is to say, it was to be added to the trust fund in the trustee's hands. It is true that the trust for the children has been adjudged to be invalid and- that they were, consequently, in a position to assign their remainders; but that was not within the contemplation of the testator. When he made his will, and when it became effective by his death, the statutes of the state made the interest of the beneficiary of such a trust inalienable. Whatever may have been his actual knowledge, he will be presumed to have known of the existence of a statute of the state, which made the beneficiary's interest inalienable and, thus, afforded protection to a provision, which, in theory of law, is presumed to be made for the helpless, the unfortunate, or the improvident. What this testator's idea was, we do not know, except from the will, and it may well be that this is not a case where the protection of the statute becomes important; but that is not a controlling consideration. If the scheme of the statute was such, that, if valid, the widow's interest in his estate would have been always conditional upon her remaining unmarried, it evidenced an intention, which the statute should not be permitted to override. It seems to me that every consideration, suggested by the language of this will, comes in aid of a construction, which would effectuate the testator's intention that his wife's enjoyment of an interest in his estate should be conditional and not possible of alienation.
For these reasons I advise the affirmance of the judgment, with costs to the plaintiff and to the respondent payable out of the fund.
Bartlett, J. I agree with the result reached by Judge Gray that the judgment should be affirmed. I also agree that the act of 18$V, chapter 417, § 3 (Personal Property Law), has no retroactive effect; also, that the beneficiary is not completely and absolutely entitled to the whole estate, as her right to the income is conditional, it terminating if she remarries.
I, however, agree with the learned Appellate Division that the legal estate in the trust fund is in the trustee, and that it thereby becomes property in his hands, and that the legislature cannot deprive him of that property without due process of law.
The Appellate Division lays stress on the fact that the trustee has not consented to the destruction of this trust; that the only stipulation on the part of the trustee is that in the event of the court deciding that the trust has been terminated judgment may be entered that the fund be paid oyer to the plaintiff. The statute provides that an express trust vests in the trustee the legal estate, subject only to the execution of the trust, and that the beneficiary takes no estate, but may enforce the performance of the trust.
I cannot, however, yield assent to the doctrine that the wills of testators may be destroyed by life tenants and remaindermen, even if trustees consent, acting under legislative sanction, on the ground that there is no one left to complain, when, in fact, the scheme of the will is ignored. It comes to this: That a testator possessed of large wealth and having several children cannot carve out trusts to meet the particular situation confronting him with the assurance that they will survive the majority of the beneficiaries if the legislature see fit to sanction their destruction. Assume the case where there are an improvident son and an extravagant and frivolous daughter; the testator, while giving to several of his children their shares of his estate absolutely, sought to perpetuate his paternal care of the improvident and extravagant by securing to them a fixed income for life by creating trusts in conformity to existing statutes. Can it be' logically or legally said that a trustee, vested with the legal estate, subject to the execution of the trust, can, by legislative sanction, join with the life tenants and remaindermen and abandon the execution of the trust, the main feature of which is the care for life of those unfitted to manage their own affairs, and who presumably by the terms of the will are not permitted to alienate or dispose of the income of the trust %
The testator knew that the policy of the state is to prohibit the accumulation of property in " dead hands; " that it said to him, you must limit the duration of your trust upon two lives in being, and you take the risk of those lives falling in long before your testamentary scheme is carried out. The testator thereupon creates trusts, legal in every respect, and dies, realizing that they may be terminated at any time by the uncertainty of human life, but hoping their duration may be prolonged sufficiently to serve his purposes.
I am of opinion that a trustee vested with the legal title for the purposes of the trust cannot by his act shorten the duration thereof so long as the scheme of the will is not carried out; that his estate is property, and the Constitution protects it against legislative interference.
The rule is well stated in Cuthbert v. Chauvet (136 N. Y. 326, 328) as follows: li It is true that Courts of Chancery and other equity tribunals have always exercised a supervisory power over the management of trust estates and the conduct of trustees, but they have never, save in exceptional cases, asserted tlie power to dissolve a trust before the expiration of the term for which it was created. The exceptions have been rare and have always belonged to a well-defined class where the interference of the court did not disturb or destroy the trust scheme, but was rendered necessary in order to prevent its entire failure. Trusts which have become impossible of performance because of the existence of conditions not anticipated or foreseen when they were created are of this character; also marriage settlements where the marital relation has been annulled, and other kindred cases. There was also a larger class where the court would decree dissolution of the trust upon the application of all the interested parties, but this was strictly limited to cases where the whole design and object of the trust scheme had been practically accomplished and all the interests created by it had become vested. (2 Perry on Trusts [3d ed.], § 920 ; Bowditch v. Andrew, 8 Allen, 341.) Even then the assent of the trustee was essential to the exercise of jurisdiction. In none of these cases could it be said that the plan of the trust had been defeated or the trust funds diverted from their original purpose."
A testator has the undoubted power to place the legal title of his estate in a trustee for such a legal period of time as is necessary to carry out the scheme of his will. Any other rule would lead to the destruction of wills at the pleasure of the legislature.
In 2 Perry on Trusts (3d ed. § 920) cited by this court in Cuthbert v. Chauvet (supra) this language is found: " There are two methods in which a trust may be terminated. It may terminate upon the accomplishment of the purposes for which it was created. When the time expires during which a trust is to exist or when the event happens upon which a trust is to cease and the trustees have performed all their duties and distributed the fund as directed, the trust is at an end. If a trust is created for the life of one it cannot be terminated before his death, although there are other words that imply that it may be terminated earlier."
In Bowditch v. Andrew (90 Mass. [8 Allen] 339, 341) Mr. Justice Hoar states : " The case then presents two questions: First, whether the 'direction to the trustee to pay over to the widow of the testator from time to time such }3arts of the income of his estate as should seem to her and the trustee necessary for the maintenance of his family and the support and education of his children, has become inoperative by the death of all the children, the sale of the house in which the family resided and the widow ceasing to keep house for herself ; and secondly, whether the equitable interest which was given to the children was a vested or contingent interest." After dealing with the situation at some length, the learned judge decided this first question as follows: " And after the death of all the children without issue, the sale of the dwelling house, and the ceasing to keep house by the widow', we do not think she can be regarded as constituting the ' family,' for whose support the provision in the will was designed."
It thus appears that the scheme of this will had been carried out. It was in support of this point that the citations in Perry on Trusts and Bowditch v. Andrew were cited in Guthbert v. Chauvet (supra).
Perry on Trusts (§ 920) contains the following: " There can be no doubt upon principle, that, when all those who have the entire legal and beneficial interest in property agree to dispose of it in a particular manner, courts will give effect to their agreements." The learned writer states in the same section : " If a trust is created for the life of one, it cannot be terminated before his death, although there are other words that imply that it may be terminated earlier." (Citing Prentice v. Mall, 106 Mass. 595.)
My precise point is that in the case of an incompetent or improvident child, the testator may protect his unfortunate offspring by a proper trust, and that such beneficiaries have in no legal sense the beneficial interest in the property which would enable them to join in an agreement to terminate the trust. It is not a question of a contract between the living and the dead; it is not a question whether those who have departed this life are to control the affairs of future generations ; the only question is, cannot a testator, whose contracts are enforced after his death, whether favorable or otherwise to his estate, also leave behind him a legal trust, in the case I have supposed, which will continue until the scheme of .his will is accomplished, provided the duration of the selected lives permits ?