Cross v. United States Trust Co.

Van Brunt, P. J. This action was brought apparently to obtain a judicial interpretation and construction of a certain portion of the will of Phoebe Jane Cross, deceased, which creates a trust in the defendant the United States Trust Company of certain property now in the hands of said company. Two of the plaintiffs sue as executors and trustees of the will of Phoebe J. Cross, deceased, and the remaining plaintiffs, being three in number, sue individually. It is conceded that, at the time of her death, Phoebe Jane Cross was a resident of the state of Rhode Island, and her will was proved there, and letters testamentary upon such will were issued by a probate court in Rhode Island to the executors therein named, two of whom are the plaintiffs, the third having since died. What standing these Rhode Island executors can have in the courts of this state to procure the construction of a Rhode Island will we are unable to understand. It is no answer to this suggestion to say that the property is here; because, in order that they should have any right to the property as a matter of right to be enforced by the courts of this state, it would be necessary that the will should be proved in this state, and ancillary letters issued. No such point, however, seems to have been made during the progress of this litigation; and, as there are other individual plaintiffs who perhaps, under the views at which we have arrived in reference to this controversy, might maintain an action, it may not be necessary to pursue this subject further. The facts of the case appear to be that the testatrix, while a resident of the state of New York, executed the will in question. The personal property which is the subject-matter of the trust to. be hereafter considered was within this state. Subsequently the testatrix removed to Rhode Island, and while a resident of Rhode Island died leaving issue, all of whom were residents of New York; and her will, with the codicil thereto, was admitted to probate in said state; and letters testamentary were issued by said probate court of Rhode Island to the executors therein named, who entered upon the execution of their trusts, and one of whom has since died. The provisions of the will, which it is necessary to consider in the disposi — 138 — tian of this case, are embraced within the eighth article thereof, which is as follows: “Art. 8. I give and bequeath to the United States Trust Company of the city of New York ninety of said registered bonds, remaining after discharging the above bequests, and so many of the consolidated mortgage bonds of the New York and Harlem E. E. Co., dated the first day of May, in the year one thousand and eight hundred and seventy-two, and payable on the first day of May, in the year one thousand nine hundred, and secured by a mortgage upon the road of the last-mentioned company to the Union Trust Company, as amount, at their par value, to two hundred and fifty thousand dollars, to have and to hold in trust for the uses and purposes following, namely, to collect and receive the interest and income thereon until the payment of the principal, and, upon such payment, to invest and keep invested the proceeds, in safe interest-paying securities, and to collect and receive the interest or income upon the last-mentioned securities, and after deducting the charges of said trustee as follows, viz.: One-quarter of one per cent, on the amount above bequeathed, for receiving the same; two per cent, upon the amount of interest or income thereon for collecting and paying out the same, pursuant to the following provisions,—to pay from said interest and income, as collected, as follows, to-wit: Item 1. To my husband, James M. Cross, during his life, the interest and income upon so many of said bonds and securities, in this article mentioned, as amount, at their par value, to the sum of one hundred and fifteen thousand dollars, and, upon and after his death, to pay the interest and income upon said last-mehtioned bonds and securities over'to my grandchildren, share and share alike, until the death of my last surviving child, and upon that event to pay the principal as hereinafter directed. Item 2. To each of my three above-mentioned children, viz., Cornelius "V. and Norman B. and Bthelinda, during his or her life, the interest or income upon so many of said bonds or securities, in this article mentioned, as will amount, at their par value, to one hundred and twenty-one thousand two hundred and fifty dollars, and to pay to my said daughter Sophia V. Morse, during her life, the interest or income upon so many of the bonds or securities in this article mentioned as will amount, at their par value, to two hundred and twenty-one thousand two hundred and fifty dollars. Item 3. If either of my said children: shall die leaving no children, then to pay the interest or income which he or she would have been entitled to receive, if living, pursuant to the provisions of this will, to my surviving children, share and share alike, and the children of any deceased child; the last-men tioned children to take as a class the share that the deceased parents would have taken if living. Item4. If either of my said children shall die leaving children, then I direct the said trustee to divide the principal from which the parent shall have received the interest or income, as above provided, into as many parts as there are children of such parent surviving, and after deducting charges for paying out the principal, as hereinafter provided, to deliver one part to each of said children who shall have attained the age of twenty-five years, to have and to hold to him or her, his or her heirs and assigns forever. And, if there is any part or parts remaining to appropriate and set aside, one part for each of the remaining of the last-mentioned children, and to pay the interest or income upon the part so set aside to the child for whom it is appropriated, until said child reaches the age of twenty-five years, and, upon his or her reaching said age, to pay him or her so much of said part as shall remain after deducting charges as hereinafter provided, to have and to hold, to him or her, and to his or her heirs or assigns, forever; and if any of said last-mentioned children should die before reaching said age, then, after deducting charges as aforesaid, to pay his or her said part to his or her surviving brothers or sisters, or to either, if there is but one surviving; and if all the children of the deceased parent above and in this item referred to shall die before arriving at said age, then to pay the sum or sums in — 139 — this item referred to, to which he or she or they would have been entitled, if living at said age, over to my children then living, share and share alike; and if none of my children shall then be living, then to pay said sums over to my surviving grandchildren, share and share alike, to have and to hold to them, him, or her, their, his, or her, heirs and assigns, forever. Item 5. Upon the death of my last surviving child, I direct the said trustee to divide all of said bonds and securities then remaining in its possession, including those from which my husband, the said James M. Cross, shall have derived the interest and income above, and in item 1 of article 8 provided, into as many parts as 1 shall then have grandchildren living, and, after deducting charges for paying out the principal, to pay and deliver one part to each one of the grandchildren who shall have reached the age of twenty-five years, and, if there are any of said grandchildren remaining, to appropriate and set aside one from the remaining of said last-mentioned parts for each of the last-mentioned grandchildren, and to pay the interest and income upon the parts so set aside to the grandchild for whom it is appropriated, until he or she reaches the age of twenty-five years; and, upon his or her reaching said age, to pay to him or her so much of said part so appropriated to him or her as remains after deducting charges for paying out the principal, to have and to hold to him, her, or them, and to his or their heirs and assigns, forever. And if, alter the death of my last surviving child either of said grandchildren shall die before reaching said age, then I direct the said trustee, after deducting charges for paying out the principal, to divide and pay over the remainder of his or her said bonds and securities to my remaining grandchildren, share and share alike, to have and to hold to him, her, or them, his, her, or their heirs and assigns, forever.” It appears that the executors have performed their duties, and that they have handed over to the United States Trust Company, the trustee named in-said will, the property mentioned in the eighth article thereof, in trust for the purposes therein set forth; and the company has accepted such property, and entered upon the performance of the trust, and still continues to perform the same. It was conceded that the trusts in question are valid according to the laws of Rhode Island, and that some of the trusts in said eighth article are void according to the laws of the state of New York; and in this action the court was asked to determine which law would apply, and declare these trusts void because they were governed by the laws of New York; and also to advise the said executors as to their duties in the premises. The court refused to perform these functions, and dismissed the complaint, and from the judgment thereupon entered this appeal is taken. We think, therefore, that the question presented is as to what are the powers and duties of this court in respect to property situate within this jurisdiction, to be administered by a corporation created by the laws of this state, upon trusts created in a will made by a resident of Rhode Island, legal in that state, but which contravene in some respects the laws of this state. The rule in reference to the cases of voluntary transfer, of intestacy, and of devises under a will still remains that which was laid down by Chancellor Kent, namely: “It has become a settled principle of international jurisprudence, and one founded in a comprehensive and enlightened sense of public policy and convenience, that the disposition, succession to, and distribution of personal property, wherever situate, is governed by the law of the country of the owner’s or intestate’s domicile at the time of his death, and not by the conflicting laws of the various places where the goods happen to be situated.” 2 Kent, Comm. § 429. There is a modification, however, which it is necessary to point out, to the broad rule above stated; because it is also well settled that, where the law of the domicile of the owner or testator or intestate conflicts with the public policy of the state in which the property is situate in respect to its transfer, the latter will prevail. — 140 — It seems to us, after an examination of the numerous authorities to which our attention has been called, that the court in the case of Chamberlain v. Chamberlain, 43 N. Y. 432, have stated with remarkable clearness and precision the rules of law applicable to the question under discussion; and our attention has been called to nothing which in any way conflicts with the principles which are there laid down, but, upon the contrary, ever since their enunciation, they have been consistently followed and applied. In the case of Chamberlain v. Chamberlain the question was involved whether a testator residing in Hew York, by a will executed and proved in Hew York, could bequeath to a Pennsylvania corporation a legacy which such corporation would be entitled to claim, notwithstanding the fact that, under the laws, of the state of Hew York, such a corporation had no power to take. In the course of the opinion the court say: “The Centenary Fund Society is a foreign corporation having its existence under the laws of Pennsylvania, and located within that state. The existence, however, of corporations organized under the laws of a sister state is recognized by the courts of this state, and they may take property here under wills executed by citizens of the state, if by the law of their creation they have authority to acquire property by devise or bequest. Sherwood v. Society, *40 N. Y. 565; Harris v. Same, 4 Abb. Pr. (N. S.) 421. That the corporation named was created for charitable purposes, and the bequest to it is for a charity, is not material, if the bequest is not for some other reason invalid. The courts of this state will not administer a foreign charity, but they will direct money devoted to it to be paid over to the proper parties, leaving it to the courts of the state within which the charity is to be established to provide for its due administration and for the proper application of the legacy. Hill, Trustees, 468; 2 Story, Eq. Jur. § 430; Provost v. Aubery, Amb. 236; Burbank v. Whitney, 24 Pick. 154; Attorney General v. Lepine, 2 Swanst. 181. There is no objection to the form or manner of execution of the will or the capacity of the testator. Heither is it claimed that by the terms of the instrument the property would not pass as claimed by the legatees. The law of the testator’s domicile controls as to the formal requisites essential to the validity of the will as a means of transmitting property, the capacity of the testator, and the construction of the instrument. Andrews v. Herriot, 4 Cow. 517; Holmes v. Remsen, 4 Johns. Ch. 469; Parsons v. Lyman, 20 N. Y. 103. Personal property has no locality, and therefore the law of the domicile of the owner governs its transmission, either by last will and testament or by succession in case of intestacy. 2 Kent, Comm. 429; Moultrie v. Hunt, 23 N. Y. 394; Lawrence v. Kitteridge, 21 Conn. 577. But if, within the lex domicilii, a will has all the forms and requisites-to pass the title to personalty, the validity of particular bequests will depend upon the law of the domicile of the legatee, and of the government to which the fund is by the terms of the will to be transmitted for administration, and the particular purposes indicated by the testator. Whatever may be the law of Pennsylvania, a testator domiciled in that state ■cannot establish, by bequests of personalty to citizens or corporations of this state, a charity in trust to be administered here inconsistent with the policy of the laws of this state. A gift by will of a citizen of this state to a charity or upon a trust to be administered in a sister state, which would be lawful in this state, the domicile of the donor, would not be sustained, if it was not in accordance with the laws of the state in which the fund was to be administered. Bequests in aid of foreign charities, valid and legal in the place of their existence, will be supported by the courts of the state in which the bequests are made. Hill, Trustees, 457. If the legatee, whether a natural or artificial person, and whether he takes in his own right or in trust, is capable, by the law of his domicile, to take the-legacy in the capacity and for the purposes for which it is given, and the bequest is in other respects valid, it will be sustained, irrespective of the law of the testator’s domicile; subject, how — 141 — ever, to this qualification: that, if the law of the testator’s domicile, in terms, forbid bequests for a'ny particular purpose, or in any other way limit the capacity of the testator in the disposal of his property by will, a gift in contravention of the law of the testator’s domicile would be void everywhere. But so far as the validity of the bequests depends upon the general law and policy of the state affecting property and its acquisition generally, and relating to its accumulation and a suspension of ownership and the power of alienation, each state is sovereign as to all property within its territory, whether real or personal. It is no part of the policy of the state of Hew York to interdict perpetuities or gifts in mortmain in Pennsylvania or California. Each state determines those matters according to its own views of policy or right, and no other state has any interest in the question; and there is no reason why the courts of this state should follow the funds bequeathed to the Centenary Fund Society to Pennsylvania to see whether they will be there administered in all respects in strict harmony with our policy and our laws.” The question was before the court in Fordyce v. Bridges, 2 Phil. Ch. 497, upon the bequest of a fund in England to be invested in a Scotch entail. Lord Cottenham says: “An objection was made that the bequest of a fund to be invested in a regular Scotch entail was void as a perpetuity. The rules acted upon by the courts in this country with respect to testamentary dispositions tending to perpetuities relate to this country only. What the law of Scotland may be upon such a subject the courts of this country have no judicial knowledge, nor will they, I apprehend, inquire. The fund being to be administered in a foreign country is payable here, though the purpose to which it is to be applied would have been illegal if the administration of the fund liad been to take place in this country. This is exemplified by the well-established rule, in cases of bequests within the statute of mortmain,—a charity legacy, void in this country under the statute of mortmain, is good and payable here, if for a charity in Scotland,” It is to be observed that the court, in considering this question, distinctly state that the fact that the bequest under consideration was for a charity was entirely immaterial, and that throughout the opinion the idea is advanced and is dwelt upon that a gift by will of a citizen of this state upon a trust to be administered in a sister state, which would be lawful in this state, the domicile of the donor, will not be sustained if it was not in accordance with the law of the state in which the gift was to be administered. Therefore, applying this rule to the case at bar, a trust will not be administered in this state which is created contrary to the laws of the state. In other words, a foreigner will not be permitted to do that which is denied to a resident. A person living in Rhode Island will not be permitted to erect a trust to be administered by a trustee within the state of Hew York for the lieneft of cestuis que trustent within this state in defiance of the laws of the state. It seems to have been considered by the learned judge who tried the case in the court below that, because the questions involved in the case of Chamberlain v. Chamberlain related to a charity, therefore some other or different rule applied. But this cannot be so, because it was a principle which was being enunciated applicable to legacies of every description, whether for charitable purposes or upon any other trust. It was recognizing the right of a citizen of the state to erect a trust for the benefit of citizens of another state in accordance with the laws of that state, and it denied the right of a citizen of another state to erect a trust within the state of Hew York for the benefit of residents of the state of Hew York, in defiance of the laws of the state of Hew York. It seems to us to be a strange argument to hold that a man in Jersey City can erect a perpetuity in the state of Hew York, of property within the state of Hew York, by a trustee in the state of Hew York, for the benefit of a cestui que trust living in this state, in defiance of the laws of this state, which prohibit the erection of such trust. It appears clear to us, — 142 — therefore, that such portions of this trust as are void according to the laws of the state of Hew York cannot be administered by the' trustee here, and it is immaterial whether such trustee is a corporation or an individual: The inhibition to administer a trust contrary to the laws of the state would be equally binding in either case. Under these circumstances, it becomes necessary to examine the will, or that portion of the will which is the subject of consideration in this action, to determine as to what parts of the trust attempted to be created contravene the laws of this state; and in the consideration of this question the principle must be borne in mind that, where a limitation is made to take effect on two alternative events, one of which is too remote, and the other valid as within the prescribed limits, although such limitation is void so far as it depends upon the remote event, it will be- allowed to take effect on the happening of the alternative one. Schettler v. Smith, 41 N. Y. 328; Kennedy v. Hoy, 105 N. Y. 134, 11 N. E. Rep. 390. Applying this principle, it would appear that the primary trusts'created by the article in question are valid, and that all the other subsequent provisions are invalid. It is suggested that, in the event of the death of a child of the testatrix leaving issue, the bequest to such issue is good, the limitation upon the right of enjoyment of such bequest only being invalid. This cannot be true, because an estate does not vest absolutely in the holder of an estate for life or years, because the limitation over is invalid, and this would be the result of holding the bequest to issue valid, enabling them to take in defiance of the provisions of the will, which made such right to depend upon attainment of the age of 25 years. It follows, therefore, that, upon the termination of each of the primary trusts; the property held upon such trust goes to the executors, to be administered by them under the laws of Rhode Island, the domicile of the testatrix, and the place of their official domicile; and, as to that portion of the property of which James M. Gross was to receive the income during life, the trust ended at his death, and the trustee should transmit the property to the Rhode Island executors. This transfer of the property to the executors in Rhode Island is entirely in harmony with the principles laid down in Despardv. Churchill, 53 N. Y 192, where the court directed personal property within this state under similar circumstances to be transferred to the executors in California to be appropriated to a trust void under the laws of this state. The courts of this state have no power to decree a distribution of such portions of the fund, as they have no control over the executors, and no control over the estate as such, and only can prevent by their decree the performance of a trust in .defiance of the laws of this state. And all that they can do after having ended the trust, so far as performance in this state is concerned, is -to remit the estate to the source from whence it came. We think, therefore, that the court below erred in dismissing the bill, and should have retained the same for the purpose of rendering judgment in accordance with the views herein expressed. The judgment should be reversed, and a new trial ordered.