Court Opinion

ID: 3619508
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:01:40.992562+00
Date Added: 2024-06-11T14:25:15.932411
License: Public Domain

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The primary question in this case, — deemed irrelevant on one side, but made to dictate the ultimate result on the other, — respects the provision of Mrs. Catin's will, by which she gave to Robert Crooke a trust estate for the life and for the benefit of her daughter, Margaret, and at the same time conferred upon the latter a power to grant and devise the whole property. The inconsistency of these two provisions; by one of which the estate is tied up for a life-time by means of a trust, which the trustee can neither end nor contravene, and the resultant proceeds of which the beneficiary cannot transfer or release (1 R.S. 728, §§ 60, 63, 65); and by the other of which the estate, at the instant of the testatrix's death, is put within the absolute power and control of the beneficiary as broadly and perfectly as if she were sole owner; that inconsistency is so obvious and radical that both parties have alike recognized and conceded it, as have also the members of this court, whose opinions followed a former argument of the appeal. So far, there is little room for doubt or hesitation; but the inquiry how the inconsistency is to be removed, or what are the consequences which it involves, has led to very divergent theories.
The respondent argues, as a consequence of the repugnant provisions, that one of the two must be disregarded or destroyed, and insists that the trust shall disappear and the power be preserved. Having thus eliminated the trust estate, and left in Mrs. Crooke an absolute power of disposition by grant or devise, it became easy, under the provisions of the statute (§§ 81-85), to transmute her estate into a fee, and so establish the title which passed by her will. But this view of the case comes in collision with the plain and clear intention of Mrs. Catin, expressed on the face of the will. With great care and precision she provides that Margaret's husband shall in no event "have any title, estate or interest" in the property "either as tenant by the curtesy, or otherwise, nor shall any creditor of his at any time have any claim" upon the estate devised, "or the rents issues, profits, interest or income thereof." In this purpose explicitly declared, the trust estate had its origin. It was the very means or machinery selected and framed to effect the expressed *Page 434 
intention. While influenced by this motive, and aiming at this result, and creating the trust estate for its accomplishment, that the testatrix should immediately proceed to sweep it all away, and make her careful precautions futile, and open the estate to the interest of the husband and his creditors, by a provision whose legal effect annihilates the trust in the instant of its creation, is difficult to believe and impossible to hold. These considerations, and others more fully stated, led one member of the court to an opposite conclusion as to the effect of the inconsistent provisions. His reasons, which need not here be repeated, were serious and strong for the conclusion that the power was void while the trust remained. But that result is again confronted by a clear intention of the testatrix expressed upon the face of the will. For she framed and created the trust "upon the further condition" and "subject to" the power granted to Margaret. The trust was made the subordinate and the power the dominant creation. The trust existed by permission of the power. The latter was made the essential and master provision, and so was clothed with the right to live in preference, if one of the two must die. In this emergency and as a solvent of the difficult collision, a suggestion has been made which, at least, harmonizes the conflicting provisions, and takes away their inconsistency, leaving it unnecessary to destroy either. That suggestion is that the granting power bestowed upon Margaret must be understood to relate only to the remainder and operate solely upon that. It is our duty to harmonize and retain, so far as possible, all the provisions of the will; to reject no words of its maker except upon imperative necessity; and to seek for all of them some force and operation. The construction suggested is in the line of that duty. It preserves the trust, and so secures to the daughter the use of the estate for life, and puts it beyond the reach of the husband or his creditors. It preserves the granting power to the extent of the remainder, and so enables the daughter to sell subject to the trust, and realize in an emergency, or upon unproductive property, the measure of value in excess of the trust. It is in harmony with the manifest and controlling intention of Mrs. Catin to *Page 435 
vest in her daughter the whole beneficial interest in and ownership of the property devised, so far as it could be done without exposing it to the husband or his creditors. The construction seems to me correct, and I am content to adopt it as the best solution of the difficulty.
From that conclusion it follows that Mrs. Crooke did not take under Mrs. Catin's will an absolute fee. And this result is inevitable because the granting power did not cover the entire fee. In Cutting v. Cutting (86 N.Y. 536), the meaning and construction of the absolute power of disposition specified in sections 81 to 85, inclusive, of the statute relating to powers, was settled with a care and precision which leaves us at liberty to take and depend upon the result without repetition of the analysis which led to it. But one of the sections relates to a devising power, and as that involves transmutation into a fee only in a case where given to "a tenant for life or years," which is not the situation here, our attention must be confined to the remaining four sections. These, it was ruled, operated only upon an absolute power of disposition, such and so broad that it permitted the alienation of the entire fee during the life-time of the donee. Upon the construction to which I accede, the granting power conferred upon Mrs. Crooke was not of that character, but limited to a transfer of the remainder subject to the outstanding estate for her life in her trustee. So that she took no fee under Mrs. Catin's will, and upon the power to devise given by that will to Mrs. Crooke, and its due execution by the latter, must depend the validity or invalidity of the defendant's title.
As we approach the consideration of that power, we are met by a contention of the appellant, urged now for the first time, and so not considered in the opinions heretofore written, and which is aimed at a total destruction of Mrs. Crooke's devise, as contrary to the statute, and leaving the power unexecuted and the remainder to the plaintiffs in Mrs. Catin's will to take effect. The will of Mrs. Crooke created both a trust and a power; the trust for the benefit of her children, and the power an authority to sell, substituting the proceeds as the capital of *Page 436 
the trust. Philip S. Crooke, the husband, was made trustee of the trust and donee of the power. To him the will gave the entire property and estate of the testatrix during his life, in trust, to apply the income to the support and education of her children in his discretion, and after his death it declared that "the said property and estate shall be and remain the property and estate of my said children and their heirs forever and absolutely." The duration of this trust was thus specially declared to be for a single life, that of the trustee. The trust estate, by the literal language of the will, was made to begin at the death of Mrs. Crooke, to continue during the trustee's life, and to end by an absolute vesting of the estate at his death. And because there were nine children who were beneficiaries, and the lives of more than two of them might end before the termination of the trust, and because the selected or standard life was not that of a beneficiary, and might continue after the last of these had died, it is contended that the trust attempted to be created was illegal and void. But the trust here is not, and the statute does not require that it shall be, limited as to its duration upon the lives of beneficiaries alone. Every such trust has three separate elements, intertwined closely, but capable of independent consideration and treatment. These are the trust property, the trust objects, and the trust term; what may be the property subjected to the trust; for whose benefit it may be created; and during what time it may continue. The statute against perpetuities deals only with the third and last element, the duration of the trust, or the lawful suspension of the power of alienation. It sets up a simple and easy standard by which to measure the permitted limit, and that is a period extending beyond not more than two lives in being at the creation of the trust. It does not dictate what lives; it does not concern itself about their selection; it does not direct that they shall be chosen from among beneficiaries; they may be those connected with the trust or total strangers to it; only, they must be "in being" when the trust is created. That is the sole restriction. Any two designated lives are made to serve merely as a standard, *Page 437 
or measure of duration, and for that purpose it is not of the least consequence to the statutory intention whether such lives are those of beneficiaries or not. Any requirement of that sort must be found elsewhere. It is claimed to be found in the statute which authorizes the creation of the trust (1 R.S. 728, § 55), and which, while aiming only to prescribe the character of the trust property and dictate the trust objects, does thereby also affect the trust term. It permits rents and profits to be received and held for the benefit of any number of persons during their lives or a shorter term. Unlike the other statute it fixes no arbitrary limit of two designated lives, but leaves it to run through any number, so far as its own conditions are concerned. But it is argued that it is the inherent and necessary character of such a trust that it cannot exceed in duration the lives of the beneficiaries, and if its term is measured by some other life, that life and so the trust term may continue after the beneficiaries are dead, and no such trust is authorized to be created, but only for the lives of not more than two beneficiaries. But the inherent character of the trust, its own essential limitations, may very well form an element in the construction to be given to the language creating it. That character and those limitations are such that the trust cannot exceed in duration the lives of the beneficiaries, because upon their death its purpose is accomplished, and a trust supposes a beneficiary, and so its very creation implies necessarily, without express words, a termination at such period. If then, in creating the trust, one or two lives of persons not beneficiaries are designated as its measure of duration, it follows that such designation can never be intended to lengthen the trust beyond its possibility of existence, and that the language which confines its benefits to persons who are or may be living, sufficiently indicates an intention to end it at their deaths unless it is earlier terminated by the close of the selected life, or lives. And when in the present case the vesting of the fee was fixed at the death of the trustee, the close of the selected life, that must be read and construed in connection with the other necessary limit indicated by the language declaring the purpose of the trust, and *Page 438 
held to mean that the vesting is to take place at the end of the designated life, or at the period less than that marked by the earlier death of all the beneficiaries. We are not to gather, from the language of the will, the absurd and destructive intention to continue a trust beyond the limit implied by its own nature and inherent character, unless compelled to it by language which will admit of no other interpretation. A similar construction has heretofore been adjudged by this court. InProvost v. Provost (70 N.Y. 141), the trust created was to receive the rents and profits, and apply them to the use of the wife until the children, of whom there were more than two, became of age; and the period of vesting was indicated thus: "It is my will that when the children become of age the trust shall cease." The literal language of its creation exposed that trust to most of the criticism indulged in here. It was not created in terms for the life of the wife; its duration was not limited upon the life of the beneficiary alone, but in combination with the full age of the children; the wife might die before the last of the children reached twenty-one, and so the trust be prolonged beyond the beneficial life. But this court refused to accede to any such literal and rigid interpretation, and held that the trust by necessary implication was for the life of the wife unless sooner determined by the majorities of the children, and so was for the life of a person or a shorter term, and within the express permission of the statute. A construction of the same character must govern Mrs. Crooke's trust, and we must hold here, as was held there, that the duration of the trust may be measured by an event which is not the completed lives of all the beneficiaries, but which may happen earlier and reduce the trust to a "shorter term." Indeed the contrary doctrine urged upon us would make it impossible ever to create such a trust in part for the benefit of unborn persons, for if the trust must be limited as to duration upon the lives of the beneficiaries, and these lives, by the statute of perpetuities, must not exceed two and must be "in being," it follows inevitably that such trust cannot be created for the benefit of children not in esse. And to this logical consequence, the argument *Page 439 
on behalf of the appellants with commendable courage marches boldly. Asserting that the execution of Mrs. Crooke's power must be treated as if written in Mrs. Catin's will; that six of the children at that date were unborn; that a suspension dependent for its duration on lives not in being cannot be created by any limitation or condition whatever, — the argument asserts for such reason the invalidity of the trust. But this court has held differently. In Woodgate v. Fleet (64 N.Y. 569), it was said that "a trust to receive and apply the rents and profits of lands, the duration of which cannot extend beyond the lives of two designated persons in being at the time of the creation of the trust, is permitted by the statute; and its validity is not impaired by the circumstance that during this authorized period of suspension of the power of alienation, more than two persons are to enjoy the benefit of the income, or even that some of the designated beneficiaries are not in esse at the time of the creation of the trust." The right thus to provide for unborn beneficiaries was also asserted in Harrison v. Harrison
(36 N.Y. 546). These cases refute the doctrine of the appellants by denying its logical consequences, and it seems to me indicate its error by drawing a distinction which is more plainly disclosed inManice v. Manice (43 N.Y. 386). There the trust was for the life of the widow, but for her benefit and that of five children. RAPALLO, J., said of it: "The trust is limited for its duration
to the life of the widow, and as to each beneficiary the beneficial interest is for his life or a shorter term." That is, a trust dependent upon lives, as beneficial objects, need not necessarily be dependent upon the same lives for its duration. The two things are inherently different, and yet, when both enter into the constitution of the trust, they affect and modify each other, and together dictate the extreme limit of the trust. The natural term, which is the lives of all the beneficiaries, and the stipulated term, which is the close of the selected and designated lives, may either, taken separately, work out an unlawful trust; while construed together and in combination, as they should be, they bring the trust within the requirements of the statute. The natural term alone *Page 440 
might make the trust last beyond the lawful extent of two lives in being. The stipulated term alone might go beyond the lives of the beneficiaries, but the two combined and made elements of the trust, in its creation, effect a lawful duration, and limit the trust to the stipulated term, unless before it is reached the natural term expires, or to the natural term unless before it is reached the stipulated term expires. Unless the language of the will creating the trust imperatively forbids, where both terms are present as elements of the creation, it must be construed to run for the natural term, except as shortened by the stipulated term; or for the stipulated term except as shortened by the natural term. In the present case, the trust created is limited for its beneficial objects, and so for its natural term upon the nine lives of the children, which would violate the statute by an unlawful suspension; but the trouble is corrected and made harmless by the presence also of a stipulated term, the one life of the trustee, beyond which the natural term is not allowed to run, and which in turn is itself modified so that it cannot carry the trust beyond the natural term. The trust can outrun neither.
In Haxton v. Corse (2 Barb. Ch. 507), the trust to receive rents and profits was for the benefit of a group of children, but the stipulated term was for the one life of Barney Corse, who was neither trustee nor beneficiary, but a stranger to the trust, and the CHANCELLOR held it lawful and within the permission of the statute. In that case, the trust ran for the stipulated term, the life of Barney Corse, unless shortened by the natural term, the lives of the children to whom the income was payable; while inProvost v. Provost (supra) the trust ran for the natural term, the life of the widow cestui que trust unless shortened by the stipulated term, the majorities of the children; and while again, as another variety of the trust, in Gilman v.Reddington (24 N.Y. 9), it ran for the natural term of the lives of three children, but such unlawful duration was made lawful by a stipulated term which selected out the lives of two of the three as a fixed limit which the trust should not exceed.
Still another variety of these trusts is considered in the cases *Page 441 
upon which the appellants rely, and which are not pertinent because they relate to trusts which had no measure of duration except the natural term alone, which consequently became the sole guide to the intended length of the trust, and stood unaffected by the corrective element of an expressed and stipulated term, bringing the duration within the lawful limit. (Hawley v.James, 16 Wend. 61; Jennings v. Jennings, 7 N.Y. 547;Amory v. Lord, 9 id. 404; Savage v. Burnham, 17 id. 561;Downing v. Marshall, 23 id. 366; Knox v. Jones,
47 id. 396.) In no one of these cases was there any restriction by the terms of the trust as created, confining its duration within the limits of two designated lives in being; and in all of them, save one, it was plainly contemplated and provided that the trust should run through all the lives of the beneficiaries as the only measure of duration; and in the one excepted case, three of the beneficiaries were corporations. It seems to me, therefore, certain, both upon principle and authority, that the trust to Philip Crooke was not void for undue suspension of the power of alienation, or lack of authority for its creation.
We are thus brought to the execution of the power by the will of Mrs. Crooke and to the question of delegated powers; a question which I consider irrelevant; and its solution immaterial. A delegated power is an authority which one person transfers to another and which in some cases that other cannot further transfer. Mrs. Crooke never transferred, or attempted to transfer, the authority which she got from Mrs. Catin, or any part or parcel of it. The power given to the daughter was to dispose of the property by will. The latter either did dispose of it or did not, but she never transferred or attempted to transfer to her husband the least atom of her derived power. She never in any manner authorized him to "dispose" of one dollar of it in the sense of that word as used in her authority. The word "dispose" is capable of a double meaning. As used by Mrs. Catin it meant one thing; as applied to Philip Crooke's discretion or power of sale, it means quite another. In the former case it meant power unrestricted to give to any ownership the entire property; as applied to *Page 442 
Philip Crooke's discretion it means, at the most, power to determine proportions among the owners of the ownership already given, and to substitute one form of the property so owned for another. He could not dispose of the estate or of any part of it in the first sense of the word, for others already owned the whole. He might embezzle or convert it, but he could not dispose of any portion of it in the sense of the power conferred by Mrs. Catin upon his wife. There was thus neither transfer nor attempt to transfer that power. It was incapable of delegation in its own inherent nature. It could be exercised by Mrs. Crooke, but could not be delegated whether involving trust or confidence or not. The only question is, did Mrs. Crooke herself exercise the power by her last will, for she alone could do it. If she did not do it, the plaintiffs have title; if she did do it, the defendants have title, and the sole question is whether what she did amounted to a complete disposal by her of the ownership of the whole property. For, to raise the question whether she could lawfully delegate the power is to assume that she herself did not completely execute it, but leaving it in whole or in part unexecuted, sought to provide for its execution by some one else after her death. And precisely that I understand to be the ultimate contention of the learned counsel for the appellants. He says of his adversaries: "The problem is for them to show if they can that the power to devise the estate as created by its owner could be executed by its donee, or by any one else, under a transfer from her, after she had performed her last earthly act and her soul had left its body." In other words: if she did not effectually dispose of the real estate by her will at the moment of her death, nobody else could after she was dead. And thus, since, to delegate her devising power was impossible it is needless to consider whether if it could have been done it would have been lawful or permissible. The sole point is whether she did in fact dispose of the estate, and it seems to me that question may be put in another form which paves the way to a decisive answer; and that is, were there, at the moment of her death, under her will and deriving title therefrom, *Page 443 
actual owners of the whole of her estate so that no part thereof was undisposed of? To ask that question is almost to answer it. Assuredly there were such owners. The life estate of the trustee and the remainder over to the children constituted and vested the entire fee. Not an atom was left undisposed of, or to go anywhere else. The trust life estate was valid, as we have already held, and we see here the full significance of the ingenious and labored attack upon it. That trust estate was valid, and with the remainder constituted a perfect devise of the whole fee. It is wholly immaterial what else Mrs. Crooke did if it was consistent with that devise and did not nullify or undo it. In the criticism upon it the first effort was to destroy the trust estate and carry down the power of sale with it. That I have sought to demonstrate was a failure. It was then said that the remainder to the children was "a sham" because of the power of sale "interjected" before it. That is hardly worthy of serious comment. If every remainder after a trust is a "sham" because the trustee has a power of changing the form of the property by a sale or a reinvestment, and so has an opportunity for fraud upon, or robbery of the beneficiaries, that amounts to an averment that every trust is a sham where it is possible for the trustee to be dishonest. It is further said that a power to dispose is not a disposition. We have already shown that the trustee's discretion was not a power to dispose but merely a control of the manner and proportions of applying a disposition completely and perfectly made. Even that discretion I think has been over-rated. In view of the language used, and the cases bearing upon its interpretation, which were quite elaborately considered and digested in City of Portsmouth v. Shackford (46 N.H. 423), I incline to the opinion that each of the nine children was entitled, during the trustee's life, to an equal share of the income, either in support and education, or in unexpended surplus, payable with the remainder, and that the sole discretion of the trustee was to determine and control how much of each child's share should go to that child in support and education, and how much accumulate for such child as unexpended surplus. The courts do not favor a construction *Page 444 
which lodges an arbitrary discretion, and Mrs. Crooke's will contains no word which necessarily imports a power in the trustee to exclude one or more of the children from the benefits of the trust. It was created for "my children," that is for all of them; not for "some" of them, or "one or more of them," or "any" of them. But however this may be, the discretion cannot be stretched to a power of disposal. That work was done. The whole estate, rents, income and profits, and entire remainder, were given completely and fully to the nine children, or as to the income to some one or more of the nine. At the instant of Mrs. Crooke's death there were owners for every dollar of it. Would it have ceased to have been a complete disposition of the income if it had been payable in terms by the trustee to such one or more of the children as he might designate ? The whole legal estate for his life being in him is there then even a failure to dispose of the whole beneficial interest? Is it not true that, either by the designation, or in the absence of that, by the broad sweep of the remainder, the whole legal and beneficial interest was disposed of by force of Mrs. Crooke's will? That at her death there were under her devise actual owners of every particle of the estate? And so, to question the form of her disposition, the mode of creating that ownership, or rather of settling each owner's share in it, and her power to put that in the trustee's discretion, is simply to narrow and belittle her authority and so destroy her devise and the titles founded upon it. Her authority was as broad as an ownership. It was as if Mrs. Catin had said, dispose of this property as if you were absolute owner; whatever I as owner could do by way of devising it, that I authorize you to do; whatever would be possible, if you were actual owner, that shall be possible for you. Mrs. Catin must have understood that there were a multitude of ways in which an estate could be disposed of by will; that in so doing trusts for the benefit of children, discretion in the trustee, and powers of sale substituting proceeds in the trust were usual, common and appropriate modes of disposition by will. With that knowledge she left her free to choose any lawful disposition from among them, *Page 445 
and authorized it in all its details. Mrs. Crooke was empowered to dispose of the estate as if she was owner; to do that to the extent of the entire fee-simple; she did so in a lawful and appropriate manner; it was within her authority which, therefore, was well executed.
But there is a further assault upon the defendant's title. The argument advances to the power of sale conferred upon Philip S. Crooke, and pronounces it invalid, because authorizing the limitation of an illegal estate, not within the creative permission of the statute; and unduly suspending the power of alienation. The objections turn upon the provision allowing the trustee to sell in fee "or a lesser estate." It is argued that the power authorizes the creation of another life estate, and since it must date back to Mrs. Catin's will, and be treated as if therein written, we have, first, a trust estate for the life of Margaret; second, a trust estate for the life of Philip; and third, a life estate in his vendee. But the last life estate would be alienable at the moment of its creation, and add nothing to the suspension of the power of alienation. At the end of the two trust estates the life tenant and the remaindermen would have legal estates which they could at once transfer. If the three successive life estates preceding the remainder proved inadmissible, the only effect would be the destruction of the third. And that leads to another answer to the difficulty suggested. The "lesser estate" might be for the life of the trustee and so keep the suspension within two lives, or for a term of years within his own life by express stipulation; and notwithstanding Root v. Stuyvesant (18 Wend. 257) we are not to assume, when a lawful estate can be created under the power, that an unlawful one was intended to be authorized.
For these reasons my vote must be for an affirmance of the judgment with costs.