New York Life Insurance & Trust Co. v. Cary

Scott, J.: .On January 13, 1892, Jabez A. Bostwick, then a resident of the city of New York, executed and delivered to the New York Life Insurance .and Trust Company a certain trust instrument;' whereby • he undertook to make provision for his daughter Nellie. Bostwick Morrell, then the wife of Francis L. Morrell. The subject of the trust was personal property. The trustee was directed to hold the property during the lifetime of said Nellie Bostwick Morrell paying the income to her so long as she. lived, and - at her déath distributing and paying over the principal to her issue, if she left any. If, however, said Nellie Bostwick Morrell should die without leav [266] ing issue her surviving, the trust property was to revert to and be paid over to the creator of the trust or his estate. On November 8, 1890, the said Jabez A. Bostwick had made a will whereby, after certain devises to his wife and his daughter Nellie, lie directdd' that his residuary estate should be divided into three equal parts, each part to be held in trust for the benefit of his wife, Helen C. Bostwick, during her lifetime. Upon the death of the testator’s wife one part was to continue to be held by the trustee for the lifetime of Nellie Bostwick Morrell; one part to .continue to be held for .the lifetime of Fannie E. Bostwick, a daughter; and one part to continue to be held for the lifetime of Albert. C. Bostwick, a son, except that when the latter arrived at .full age (or upon his mother’s death if he had theretofore become of age) one-half of the .share set apart for. said son was to be [laid over to him absolutely. Upon the death of each child, after the death of Mrs. Bostwick, the share held for such child was directed to.be divided between his or her issue. The clear effect of the trust was to.leave in Jabez A. Bostwick, the creator of the trust, an expectant estate in the reversion of the trust fund, which, -at his death, constitntéd a part of .his residuary estate, and the effect of the trust deed and the will, if read "together, was to suspend the absolute ownership of .the personal property constituting the trust fund, first, for the lifetime of Nellie Bostwick Morrell; second, for. the lifetime of Mrs. Helen 0. Bostwick; and third, as to a portion of it at least, during the lifetime of one or other of the children of Jabez A. Bostwick. Such a result would occur only if, as in fact did happen, Ja.bez A-.Bostwick should die before his daughter Nellie Bostwick Morrell, for if the latter had died, before her father tlié fund would have reverted to him and become his absolute property. Jabez A. Bostwick died in August, 1892. Francis L. Morrell, the husband of Nellie B. Morrell, died in May, 1893, and Nellie B. Morrell (then Nellie B. Cary) died in January, 1906, leaving .no children or descendants. The question involved is whether the disposition of the property constituting the trust fund, by the two instruments above referred to, contravened the provisions of section 1 of title 4 of chapter. 4 of part 2 of the Bevised Statutes (1 R. S. 773), which has been revised in section 2 of the Personal Property Law (Laws of 1897, chap. 417), and which, as [267] revised, provides as follows: “ The. absolute ownership of personal property shall not be suspended by any limitation or condition for a longer period than during the continuance and until the termination of not more than two lives in being at the date of the instrument containing such limitation or condition; or, if such instrument be a will, for not more than two lives in being at the death of the testator.” The respondents argue, and the court below held with them, that the trust deed and the will are not to be read together, but separately, as two distinct and unrelated instruments, neither of which, by itself, created an unlawful suspension of the absolute ownership of the personal property in question. They insist that the fact that Nellie B. Morrell outlived' her father and then died without issue w.as a mere “chance happening” not contemplated when either instrument was executed, and having no bearing upon the validity of either instrument. Support for tliis position is sought to be found in Livingston v. N. Y. Life Ins. & Trust Co. (13 N. Y. Supp. 105). ' In that case two brothers named Livingston owned estates in expectancy in the reversion of a certain fund by a trustee for the benefit'of their mother during the joint lives of herself and her husband.' They executed' a trust deed to the sanie trustee as then held the fund, expressing their desire to continue the trust and conveying to the trustee their expectant estates in the fund upon terms which, at least as to part of the fund, involved the suspension of the absolute ownership during the lives of both of them. The General Term of this department held that, inasmuch as expectant estates are expressly made alienable, the brothers had a right to dispose as they did of their estates in expectancy, and that their power of disposition was not limited by the fact that the property would have been, when the expectancy was realized, already tied up, by the act of another, for two lives. If the facts in the present case were parallel.to those in the Livingston case we should find no difficulty in following it, and might do so if Bostwick, although both the creator of the' trust and the maker of the will, had before his death made an effectual and absolute gift of the property to the trustee so as to retain no interest in it, except the expectancy of a reversion contingent upon the death of his daughter without issue. The trust deed, although expressed in the present tense, and ■ accompanied by a delivery or deposit of the subject of the trust [268] with the trustee, contained the broadest possible powers of revocation, substitution and control by the creator of the trust during his lifetime, reserving to him such dominion over the property as to lead this court and' the Court of Appeals to hold (in a transfer fax case) that the gift to the trustee did not. become effective and was not intended to become effective until the death of the creator of the trust. (Matter of Bostwick, 38 App. Div. 223; 160 N. Y. 489.) The result is that there went into effect at the same moment' a deed of trust and a will executed by the same person and affecting tlie same fund, the effect of the two instruments taken together .being to tie up tlie fund for a longer, period than permitted by law. Under these circumstances we consider that the two instruments must be read together as indicating the general scheme of the disposition of his estate.intended by the testator. ■ The. fact that the deed and will were executed- at different dates, or that the will was executed first, does not affect the question, since they both speak from-the same moment, to wit, the death of Mr. Bostwick.. Hor is it of consequence that it may have been probable, when the deed was executed, that Mrs. Morrell would have children. The rule for testing the. validity or invalidity of a provision for the suspension of the power of alienation of real estate is' not what has actually happened of what was expected to happen, but what might have happened (Herzog v. Title Guarantee & Trust Co., 177 N. Y. 86), and the same rule applies to provisions suspending th'e .absolute ownership of -personal property. As the trust deed and will are to be read together ás constituting parts of a single scheme of disposition we must as far as possible give effect to both, as if both were contained in a single instrument. It was perfectly valid and lawful for Mr. Bostwick to so dispose of the fund that its absolute ownership would be suspended for two . lives, and as it was the clear pui-pose of his will' that his .widow-should enjoy the whole income from his residuary estate during her lifetime, that intention -will be carried out by sustaining the will so far as concerns the trust for the benefit of Mrs. Bostwick during her lifetime, declaring invalid only the subsequent trusts for the benefit of his . children, and holding that so far as concerns the remainder in the trust fund, after the death of Mrs. Bostwick, the testator died intestate. Tlie judgment will be modified accordingly and as modified [269] affirmed, with costs in this court to all parties separately appearing, payable out of the fund. McLaughlin and Laughlin, JJ., concurred ; Patterson, P. J., and Houghton, J., dissented.