Court Opinion

ID: 5215926
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:22:59.687707+00
Date Added: 2024-06-11T08:27:26.503201
License: Public Domain

McLaughlin, J.
(dissenting):
On the 30th .of June, 1879, Montagnie Ward died, leaving a last will and testament, "which was admitted to probate on the sixth of-September of that year. He left him surviving four children, of whom the respondent is one.. By. the will the testator gave all his property to .his executors and trustees in'trust to convert into money, and then, after setting apart certain sums, directed that the residue be divided into as many shares as he should have children him surviving, one share to be separately invested for each child and the-income derived therefrom paid to such child during the term of his natural life, and after his death the principal to be paid "to his. law-*837ful issue, or in default of such issue to his heirs at law. The executors and trustees, following the direction contained in the will, set apart and invested a certain sum for the respondent, and since that time the income therefrom has been paid to him. On the 17th of September, 1909, the appellant recovered a judgment against the respondent in the City Court of the city of New York for the sum of $727.63, and execution was'issued thereon to the sheriff of the county of New York and by him returned wholly unsatisfied. Thereafter the appellant applied, under section 1391 of the Code of Civil Procedure, for an order that an execution issue “ against the income from the trust funds now due or hereafter to become due,” and directing the trustees to pay on account of the execution ten per cent thereof. The motion was denied and an appeal taken to the Appellate Term, where the same was affirmed, and from its determination an appeal was taken to this court.
The section of the Code referred to (§ 1391) provides that under certain conditions an execution may be issued to. the extent of ten per cent against the “ wages, debts, earnings, salary ” and “ income from trust funds” due and owing to the judgment debtor, or thereafter to become due and owing to him,-provided the same amount to twelve dollars or more per week, and that such execution, when issued and duly presented, becomes a lien and continuing levy until it and the expenses thereof are fully paid or until the execution is modified as therein prescribed. This section in its amended form took effect on the 1st of September, 1908 (Laws of 1908, chap. 148), and it is settled that an execution may issue against “ wages,” although the judgment upon which the execution is issued was rendered before the enactment of such amendment.. (Laird v. Carton,, 196 N. Y. 169.) This court has determined in at least three cases that a judgment creditor cannot obtain an execution and levy upon the income derived from a trust estate created prior to the time the amendment became a law (Demuth v. Kemp, 130 App. Div. 546; King v. Irving, 103 id. 420; Sloane v. Tiffany, Id. 540), and the same view has been taken by the Second Department (Rings v. Mortimer, 116 id. 722). The reason assigned, as appears from the opinions in some of the cases, why such levy could not be made, was that the statute did not have a retroactive effect, and, if so, it was unconstitutional, While the Court of Appeals held, in the *838Laird case, that the view of this court as to the retroactive effect of the amendment was erroneous, it- in no way passed upon the-ether question, viz., as to whether the statute1 would be cpnstithtional if it applied to the" income from a trust fund .created prior to the: time it took effect. It seems to me, therefore, that the orderly method of procedure, as well, as respect for our own decisions,, requires the affirmance of the order appealed from, but inasmuch as a majority of the court think otherwise, I desire to- briefly state why, in my opinion, this statute,, if it be held to apply to the income derived from a trust fund, created prior to its enactment, is not a valid exercise of legislative power.
The income here sought to be reached is derived from a trust. futid. The trust was created and the fund set apart in 1879. It was a trust which the statutes authorized to be created, hence was then a legal one, and has since so remained. When Mr. Montagnie Ward made his will the State, in effect, said to him, sneaking through the statutes.: “ If yon will give a portion of. your property to ■ A, in trust, and he will agree to invest the same and pay the income derived .therefrom to your son, the statutes under which you are permitted to thus give it Will-' be sufficient to compel A to keep his-agreement.” Mr. Montagnie Ward having given the property, and the trustees having accepted itj the Legislature coidd not thereafter destroy the trust in Whole or in part, because to do so Would violate that provision of the Federal Constitution (Art. 1, § 10', subd. 1) which prohibits the State from impairing the validity of a Contract. (Humphrey v. Pegues,. 16 Wall. 244.) While the arrangement under which the property was given by the testator and received by the trustees may not, in a strict or technical sense, have amounted to a contract, nevertheless it Was so in spirit. It-is fairly to be inferred that Mr, Montagnie Ward Would not have given his property to the trustees except upon the implied understanding that they would .voluntarily carry out his wishes, and, if not, they would be compelled to do so by the laws of the State. But if the statute in question be valid, then this; contract, agreement or understanding — whatever it may be called— may be entirély destroyed, by the fiat of the Legislature. If it can compel the trusteesto pay ten per cent of theincome to the sheriff it can compel thé payment of one hundred per cent to him or any other person. - This I do not believe it. has the power to do.
*839In People ex rel. Cooper Union v. Wells (180 N. Y. 537) it was held that certain property of Cooper Union was not subject to taxation because the act under which it was incorporated contained a provision to that effect; that Peter Cooper, in pursuance of that provision, had conveyed certain property to the corporation, and by ■ his will provided for its endowment; and that after his death the trustees under his will executed his purpose by transferring property in endowment thereof. The basis of that decision, as stated by the Court of Appeals in People ex rel. Roosevelt Hospital v. Raymond (194 N. Y. 198), was as declared. by Justice Bischoee at Special Term that the exemption was not a spontaneous concession, but was a direct condition to attach to the gift.
Again, if the act in question be given the effect contended for in the prevailing opinion, it is unconstitutional because it deprives one of his property without due process of law. (N. Y. Const, art. 1, § 6.) The title to the trust fund- set apart for the defendant and the income derived therefrom, until paid to him, are lodged in the trustees. It is true they hold the trust funds and the income derived therefrom until paid to him for a specific purpose. That was the condition of the gift. Their right to act as trustees at all depends upon their performing these conditions with fidelity. They have no right to pay the income to any person other than to the one whom the testator designated. If they can be directed to pay ten per cent of the income to the sheriff, then it necessarily follows that the Legislature could direct it all should’ be paid to him. The effect of such a statute would be to deprive one of property without due process of law. (Muhlker v. Harlem R. R. Co., 197 U. S. 544; Livingston v. Livingston, 74 App. Div. 261; affd., 173 N. Y. 377.) In the Muhlker casé it was held that after the court of last resort in a State had determined, that a certain thing’was property, the1 owner could not be deprived of it’without compensation. In the Livingston case it was held that chapter 742 of the Laws of 1900, which amended section 1759 of the Code of Civil Procedure by authorizing the court^ at any time after- the entry of a final judgment of divorce in favor of a wife, to annul,(vary or modify the provisions of the judgment with' respect to the payment of alimony, was unconstitutional in so far as it applied to a judgment entered prior to the time the amendment took effect.
*840The act in question is unconstitutional because it deprives the defendant of a beneficial interest in property without due process of law. As soon as the trust estate was created the defendant bécame entitled to the income derived therefrom. This was a fixed, settled and vested interest— a property right which the Legislature could not take from him and of which he could be deprived only by due process of law- The right to the payment of alimony under a judgment recovered prior to. the passage of a statute, is no greater or more secure than the right to the payment of income derived from a trust fund. If the right is vested in one case, it must also be vested' in the other, and if one is beyond legislative attack, then it seems .to me the other is. .To hold that, the statute applies to trusts created prior -to September 1, 1908, is to diminish-the income to the extent of ten percent which the testator intended for his son, and if this can be legally done, then the Legislature has the power, as we have; already seen, to-deprive the son .of' the whole sum. (Metcalfe v. Union Trust Co., 181. N. Y. 39.)
At the -time the trust in question was created, the Revised Statutes permitted, to a certain extent, income from trust funds to be reached by. creditors (Williams v. Thorn, 70 N. Y. 270; Tolles v. Wood, 99 id. 616), and to this provision the trust, as created by the testator, was at all times subject. The income cannot be reached in any other way until it has actually been paid to the defendant.
The case of Kittel v. Domeyer (175 N. Y. 205) is not- in point, nor does the principle there laid-down have any application to the question here presented: ■
The order appealed from, therefore, should be affirmed.
Ingraham, P. J., concurred.
Determination and order reversed,, with costs to appellant in all courts, and application granted, with ten dollars costs.