Court Opinion

ID: 5185234
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:47:28.700246+00
Date Added: 2024-06-11T08:26:43.269710
License: Public Domain

O’Brien, J.:
The questions on this appeal are narrowed down to a consideration as to whether the income arising from the investment of the *92$100,000 set apart and which it is agreed shall be annually paid to William 3L Peyton, results from a trust created by the will of his wife, or results from an agreement between him and the trustees the consideration for which moved entirely from him. In the former case the plaintiff could only proceed in equity to reach the surplus of the income, over and above the defendant’s needs. ( Wetmore v. Wetmore, 149 N. Y. 520, 529.) If the latter is true, then the moneys payable under the agreement belong to the defendant, and, regardless of the form, can be reached by creditors.
It is admitted by the demurrer that the trust provisions in favor of the defendant created by the will and codicils of the wife were finally revoked so that the effect of a probate of the instruments, in the absence of a contest, would be to deprive the defendant of any participation in his wife’s estate. He, however, filed objections to the probate, and as a consequence the agreement was reached by which a fund was set apart,, the income of which was payable to the defendant for five years. The consideration for such an agreement, which was the withdrawal of the objections to the probate, moved ■entirely from the defendant.
The fact that a sum was ■specified to be set apart as a trust fund does not change the nature of the transaction. It is clear that the wife never made such a trust in terms for five years, and it is equally clear that her trustees had not the power to create a trust for her, though we concede to them the right, with the approval of the surrogate, to enter into a compromise with the defendant and to use the ■estate of their testatrix to carry it out. It appears that in doing the latter they resorted to the form of a trust, no doubt for convenience in making the payments, or may be in the hope that in this way the moneys to be paid could be placed beyond the reach of creditors.
The substance or basis of the transaction was an agreement to pay to the defendant a certain sum of money annually in consideration of his withdrawing his opposition to the probate of the will. Had the agreement been to pay him $5,000 a year for five years no question would arise but that the moneys were the defendant’s, and could be reached by his creditors. What he did was to relinquish a right to contest the will in consideration of certain sums to be paid to him, The fact that tlie fund out of which the payments were to be made was designated as a trust fund does not change the charac*93tér of the ownership to the income arising from it. Mrs. Peyton created no such trust for her husband, and the trust "here in form created was one due, in fact, to the sale of a personal right, and the income arising therefrom belonged to the defendant and can be reached by creditors.
The appellant rightly contends that the fund in question is merely held by the executors as agents or bailees to carry out the agreement of compromise. The will and codicils which were admitted to probate gave the judgment debtor nothing, and all that he received is the price of his withdrawal of opposition- to the probate. This was a personal right existing in his favor, which he could not convert into a trust beyond the reach of his creditors. The provision in his favor in the will, which had been revoked by the "later codicils, consisted partly of the income of a trust fund and partly of real property absolutely devised. His right to contest its revocation was a-personal property right, and the form adopted by the parties of creating a nominal trust, similar to that provided for by the will, does not make it in fact or law a trust created by the testatrix for his benefit. Although, doubtless, the counsel for the judgment debtor who negotiated the settlement had in view the creation of such a fund as the judgment debtor' could enjoy without molestation from his existing creditors, the law will not aid him in that effort. This fund was not" created by the testatrix, nor did it proceed from her. ' It was a payment to the judgment debtor of- his price for the relinquishment of an existing legal right; the consideration for such relinquishment was his individual property, and is subject to the claims of his creditors.
We think .the order appealed from should be reversed, with ten dollars costs and disbursements, and the motion, granted, with ten dollars costs to abide the event. .
Van Brunt, P. J., Barrett, Rumsey and McLaughlin, JJ., concurred.
• Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs to abide event.