Court Opinion

ID: 5389989
Source: CourtListenerOpinion
Date Created: 2022-01-08 09:44:47.932215+00
Date Added: 2024-06-11T08:30:17.335002
License: Public Domain

Vajst Voorhis, J.
(dissenting). The record shows that no will of the late Joseph N. Ford was in existence during the twenty years of his married life with respondent prior to his death on April 2, 1947. He had no children. It affirmatively appears that he understood the New York law of intestacy, under which his wife would have received $10,000 and one half of his estate had he died at any time prior to the cerebral hemorrhage which he sustained on July 11,1946. He left a brother and four sisters, besides his widow. One of these sisters, Fannie, had kept house for him before his marriage, and he remained on good terms with them all.
After his stroke and on August 2,1946, he executed what purports to have been a trust agreement covering almost all of his property, under which he and the Chase National Bank of the City of New York were named cotrustees. The income was reserved to Mr. Ford for life, one third of the remainder upon his death was directed to be paid to his wife, respondent Marie Ford, and two thirds to his brother and sisters. On September 25, 1946, he executed another instrument purporting to amend this trust so that upon his death his brother and sisters would each receive $2,000, and his wife would have the rest (about $590,000). In giving to her a remainder of one third under the August 2d instrument, he provided less than her intestate share would have been, whereas by the instrument of September 25th he gave to her practically his entire estate.
The testimony indicates that after his stroke he became confined to bed as a helpless cripple, was physically weak and often emotionally overwrought, and that by his request his wife alone took care of him. Their married life continued to be harmonious as it had been. He was not mentally incompetent, and there is no evidence that she exerted undue influence over him resulting: *159in the September 25th amendment of the trust. The circumstance that this instrument made a much more favorable provision for her than he had seen fit to do during the previous nineteen years of his marriage could not prevent a change in his testamentary intention in his wife’s favor, and is not enough to subject her to a charge of undue influence. There is no disagreement among the members of the court in this respect.
The point of difference is that it seems to me that the disposal of these assets by this trust instrument, as amended, was in the nature of a testamentary disposition which could only be accomplished by will. It was not really a trust. The criteria ordinarily adopted in such cases are whether the settlor retained the income from the trust assets for his beneficial use, and whether he retained power to revoke and amend the instrument, as well as power to direct the administration of the trust. If these powers are retained, then, although the instrument in form is one of trust, the effect is really to create the relationship of principal and agent (Matter of Fitzpatrick, 17 N. Y. S. 2d 280; Burns v. Turnbull, 266 App. Div. 779, affd. 294 N. Y. 889; Restatement, Trusts, § 57, comment g, p. 179; Newman v. Dore, 275 N. Y. 371). This arrangement made by Mr. Ford includes all of these features, with the possible exception of retaining power to direct the administration of the trust. Settlor named himself as cotrustee so that no action could be taken by the corporate trustee without his concurrence. That circumstance alone would be insufficient to retain control in the settlor, but it did give him control in combination with his reserved power to amend or revoke the trust. If he disagreed with any of the proposals of the Chase National Bank to buy or sell securities, or if it declined to accede to any of his proposals, all that he needed to do was to revoke or amend the trust. Under these circumstances, he was assured of having his own way in the administration of the trust, and that is what occurred wherever there was a difference of opinion, as there was, for example, concerning his desire to keep 80% of the assets invested in common stocks.' At page 40 of respondent’s brief the following statement is made: ‘1 Where the settlor of a revocable trust is the sole beneficiary and has reserved to himself the right to alter, amend or revoke, it is almost a uniform practice for a corporate co-trustee, not only to conform to the necessity of consulting its individual settlor-co-trustee as to investments, etc., but on any difference of opinion between'them to abide by the settlor’s judgment, providing it is within the realm of prudence.”
*160These conclusions are strengthened in this case by the conversation about the preparation of the trust agreement between Mr. Ford and a Mr. Hicks, a representative of the trust department of the Chase National Bank, who called upon him at his home at his request. Ford preferred not to talk to any lawyer, and had these papers prepared by Hicks, who consulted an attorney of Mr. Ford’s selection for that purpose.
Hicks testified that when he first arrived at Ford’s home, at Ford’s request, he was under the impression that he wished to discuss a will: “ I asked him about his will and he said it was not really what he wanted to discuss. He wanted to discuss the management of his assets. He spoke of his physical condition.” Mr. Ford then referred to the bank’s investment service, which is purely an advisory service, but that did not entirely fulfill his requirements. Mr. Ford could not get out of bed to go to brokerage offices to call for and deliver stock certificates or to attend to the other details of stock transactions; therefore, more than advisory services were necessary. There is no doubt that Ford considered himself to be equal to deciding-how his property should be invested, as he always had done, although he did not know for how long he might remain so. He told Hicks that he intended to direct the investment of the trust funds. The object was to lift the burden from his shoulders of attending to the administrative details, but leaving the decisions to him for so long as he remained competent. He asked Hicks ‘ ‘ what would happen if he was unable to make a decision or if he was unwell. Then he asked me about a trust. He said he wanted a trust that he could direct and then have the bank take over.” The function of the bank Avas intended to be that of agent, not trustee, and that is what it was.
Under the court decisions above cited and under the circumstances of this case, the gifts of the remainder at his death were testamentary in character, and to be valid these instruments had to be executed in the manner provided by statute for the execution of wills. 11 It has been the object of the statutes of the various states prescribing the mode in which wills must be executed, to throw such safeguards around those transactions as mil prevent fraud and imposition, and it is wiser to construe these statutes closely, rather than loosely, and so open a door for the perpetration of the mischiefs which the statutes were designed to prevent.” (Matter of Booth, 127 N. Y. 109, 116.) No grave injustice would be likely to result from such a determination. The effect of allowing the principal of the trust to pass as part of his estate in intestacy, *161would be to dispose of it in the same manner which he had deliberately selected and continued in force during all but the last eight months of his married life.
The final order appealed from should be modified so as to determine that the inter vivos trust agreement dated August 2, 1946, and the amendment thereto dated September 25, 1946, are invalid as instruments of trust, and that decedent Joseph N. Ford died intestate seized of the assets of said trust as part of his estate.
Glennon, J. P., Callahan and Shientag, JJ., concur with Cohn, J.; Van Vooehis, J., dissents and votes to modify, in opinion.
Order affirmed, with $20 costs and disbursements to respondents.