Court Opinion

ID: 3598303
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:45:26.834729+00
Date Added: 2024-06-11T13:58:59.327137
License: Public Domain

I add a few words to the dissenting opinion of Judge LEWIS in which I concur entirely.
The crux of the prevailing opinion is this striking sentence: "A statutory rule of administration which requires the trustee to apportion income in accordance with a fixed standard which in the exercise of administrative discretion the trustee would even without the statute have power to adopt does not, in our opinion, constitute a taking of property." I cannot assent to so free an appraisal of the retroactive mandate of the Legislature.
No authority is cited to show that it was always open to trustees of their own motion to pay net income to a life tenant at such a "fixed standard," in peremptory disregard of the recoupment rights of remaindermen. Indeed the general understanding of the profession appears to have been the other way, seeing that the Surrogates who devised the statute have vouchsafed us one reason alone for its enactment, viz.,
"Trustees have hesitated to pay such net income because in the case of overpayment to the life tenant, the trustee might be surcharged with that amount." (See L. 1940, p. 1182.)
This recognition by trustees of the conflicting rights of remaindermen was not without justification. It is true that hitherto a trustee for a life tenant and remaindermen was entitled to distribute surplus income in his discretion. (Matterof Otis, 276 N.Y. 101, 115.) But that discretion was always to be exercised by a trustee with reasonable judgment and with an even hand between the life tenant and the remaindermen in the particular circumstances. (See Carrier v. Carrier, 226 N.Y. 114,125, 126; 28 Halsbury's Laws of England [1st ed.] 123, 124; 2 Scott on The Law of Trusts, § 187; 4 Pomeroy on *Page 438 
Equity Jurisprudence, [5th Ed.] § 1062a.) The retroactive provisions of the statute direct trustees instanter to make final payment of net income to a life tenant not at a fixed rate merely, but at the expense of the remaindermen if need be. Hence I cannot accept the presupposition that the statute confers no new power upon trustees.
There is no occasion now for examination of the real nature of the equitable right of a trust beneficiary. At least the beneficiary owns the obligation of the trustee — a thing which is as truly the subject-matter of property as any physical object. (See Ames, Lectures on Legal History, p. 262. Cf. 1 Scott on The Law of Trusts, § 130.) Consequently I see no warrant for the view that the respective interests of beneficiaries of a discretionary trust are not rights of property in the constitutional sense. (See Pritchard v. Norton, 106 U.S. 124, 132.)
LEHMAN, Ch. J., RIPPEY, CONWAY and DESMOND, JJ., concur with FINCH, J.; LEWIS and LOUGHRAN, JJ., dissent in separate opinions in which both concur.
Order affirmed, etc.