Court Opinion

ID: 3598130
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:45:19.499588+00
Date Added: 2024-06-11T14:21:02.025332
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 486 
The only question arising on this appeal to which reference will be made in this opinion is whether this accounting trustee should have set apart out of the income a sufficient sum each year with which to form a sinking fund of such extent that the principal of the trust would be kept intact and unimpaired. The referee before whom the case was tried decided that it was the duty of the trustee under the will to have so set apart out of the income a sufficient sum each year so that at all times the principal of the fund would be unimpaired, and that because of its failure to do so the trustee was properly chargeable for an amount equal to such a portion of the income as should have been so set aside while it was the trustee. Such portion was found to amount to the sum of $5,260.75, and with that sum the trustee was charged.
The Appellate Division affirmed the judgment entered upon the report of the referee in an opinion that fully covers the question whether under this will it was the duty of the trustee to keep intact the principal of the trust fund by devoting yearly such portion of the income of the bonds as should be required to pay the amount of premiums that the trustee was obliged to pay in order to secure the bonds in which the trust estate was invested. We approve of what was said in that opinion and should affirm on it without further comment were it not that since it was written this court has decided the Hoyt case (Matter of Hoyt,160 N.Y. 607), *Page 488 
which it is strenuously insisted is in conflict with the views expressed by the Appellate Division in the case under review. In support of that contention the provisions of the two wills creating the trusts and making disposition of the income are compared, and as a result of the comparison it is urged that on whichever side of the dividing line in such cases the one belongs the other should be held to belong also. But the difficulty with the argument is that the decision in the Hoyt case was not based solely upon the language of the will. It was not held by this court that the language creating the trust, standing alone, would permit of a construction authorizing the payment to the life tenant of all of the income arising from the bonds in which the capital had been invested by the payment of a large premium. What was held was that it was the duty of the court to ascertain the intention of the testator in that regard, and for that purpose the court in construing the language employed in the will should consider all the surrounding facts and circumstances attending the execution of the will, and if as a result of such examination the conclusion should be reached that it was the intention of the testator that his daughter should have all the income arising from the investment, without allowing any abatement therefrom for the purpose of keeping intact the capital of the trust estate, then such construction should be given to the will, notwithstanding its phraseology, in obedience to that rule of construction which, as has often been said by this court, makes the intention of the party the polar star of construction. Therefore, at the very outset of the discussion, the learned judge who wrote the opinion asserted the proposition that in order to ascertain the intention of the testator in that particular case it was necessary to go outside of the will and learn the situation of the parties, the facts and circumstances surrounding them and the execution of the will by the testator, in order to determine his intention, and that proposition was stated in these words: "In order to determine the question presented by this appeal it is necessary to consider the facts surrounding the execution of the will." Then follows *Page 489 
a detailed account of such facts and circumstances, among which were that the testator was a man of large fortune, estimated at from six to eight million dollars, the bulk of which he bequeathed to his brothers and their children; that he had only one child, a daughter, and for her benefit he set apart $1,250,000, to be held in trust for her benefit during life, and after her death the principal to go to the brothers and children to whom the bulk of the estate had been given. He appointed one of his brothers a trustee, who insisted upon investing the money in bonds bringing a large premium, and then keeping the capital of the estate intact out of the income derived therefrom. Aside from the fact that the will directed that the life tenant should receive "the interest, dividends and income therefrom and from each and every part thereof," the will also expressed the desire of the testator to provide for her in a "most bounteous and liberal manner as to expenditure, and so as to promote her convenience and comfort and gratify her reasonable desires." After a careful analysis of the facts outside of the will that the court deemed it wise to consider in ascertaining the intention of the testator, together with expressions therein outside of the fourth clause by which the trust for the benefit of the daughter was created, and an extract from the opinion inMcLouth v. Hunt (154 N.Y. 179), asserting the principle that the intention of the testator is to control, and that such intention is "to be derived from the language employed in the creation of the trust, from the relations of the parties to each other, their condition and all the surrounding facts and circumstances of the case," the judge proceeds: "In considering the surrounding facts and circumstances in the case at bar, to which we have already alluded, it is reasonable to infer that the testator intended in this sole provision for his daughter that she should receive, as he expresses it in the fourth subdivision of the will, `the interest, dividends and income therefrom, and from each and every part thereof,'" and thus reasoning the conclusion was reached that while the language employed in the creation of the trust, and the paying over of the income, standing *Page 490 
alone, would not admit of a construction that it was the intention of the testator to impose the loss of premium upon the remainderman, nevertheless, when construed in the light of the other provisions of the will, together with the condition of the parties, and the facts and circumstances surrounding them, it was necessary to hold that it was the intention of the testator to give to the life tenant all of the income of the trust fund, no matter in what securities it should be invested.
In the surrounding facts and circumstances in this case we find nothing that leads us to the conclusion that the testator intended any different treatment of the trust than that which the language of the clause creating it plainly indicates, viz., that the capital of the trust should be kept intact, and that to that end an adequate proportion of the annual income should be set apart to make good the amount paid in premiums in order to secure a proper investment.
The referee made a slight error in calculation resulting in an overcharge of $146, as the respondent concedes.
The judgment should, therefore, be modified by deducting therefrom the sum of $146 as of the date of its entry, and as thus modified should be affirmed, with costs to the guardian adlitem, against the plaintiff, appellant.