In re the Judicial Settlement of the Account of Hazelton

Ketcham, S. The will, in the parts thereof requiring construction, is as follows: After a provision for the continuance of the decedent’ business, these words occur: “ I do further authorize, empower and direct my said executor and executrix and the survivor of them and such of them as shall qualify, for any or all of the purposes and objects of this my will to sell and dispose of as soon after my decease as practicable, taking into consideration, however, the direction and authority to continue after my decease the said co-partnership business as hereinbefore provided for, at public or private sale, for the best price obtainable and upon such terms as to them, in their best judgment, shall seem most expedient, and to convey all or any part of my real and personal estate.” — 404 — Then follow a legacy to the wife of $15,000 and the words as follows: “All the rest, residue and remainder of my estate, real, personal and mixed, of every name, nature and description whatsoever and wheresoever situate, of which I may die seized or possessed, or which I may be entitled to dispose of at the time of my decease, I do hereby give, devise and bequeath unto my dearly beloved children, Mary Elizabeth Maxwell, Florence Gertrude Maxwell, and Arthur Richardson Maxwell, share and share alike, and to their heirs and assigns forever. Inasmuch as my daughter Florence Gertrude Maxwell and my son Arthur Richardson Maxwell are both infants, it is my will that the shares or portions hereinbefore given, devised and bequeathed to them respectively, be securely and safely invested as soon after my decease as practicable in United States bonds or bonds of city or state of New York and held in trust for them by my trustees hereinafter named until they respectively attain the age of twenty-one (21) years; the interest thereon accruing from time to time to be used during their minority for their support, maintenance and education, respectively.” The accountant insists that the provisions quoted contain an absolute devise to the three children mentioned, subject to a discretionary power of sale. In behalf of the child Florence G., it is claimed that the power of sale was imperative and that it wrought an equitable conversion as to all the lands of which the decedent died seized and that the executrix should, therefore, be charged on this accounting with the lands at a sum fixed by her as its value in a former account. The land has not been sold. The two children, Florence G. and Arthur Richardson, — 405 — were infants at the time of the decedent’s death. One of them has since attained majority. The truth seems to be between the two contentions above set forth. As to Mary Elizabeth, there is a devise of one-third of the residue unimpaired by any language in the will and only affected by the power of sale. As to the remaining two-thirds, there is an implied devise in trust to invest and collect income and to apply the same to the two children during their minority. Morse v. Morse, 85 N. Y. 53, and other cases cited in Matter of Harris, N. Y. L. J., June 22, 1912. The power of sale was imperative, and there arose tÉerefrom an equitable conversion at the time of the decedent’s death. For all purposes to which the doctrine of equitable conversion applies the lands are to be regarded as having the qualities of personalty at all times since the death. But from this the objectants would argue that the executrix should account not for the real estate but for an amount of money equal to her own appraisal made in 1906 as if she had received actual cash. This claim is made upon the theory that she has neglected to exercise the mandatory power of sale. An undivided two-thirds of the land vested in the trustee and is part of the fund for which as such she must account. The estimate formerly made is a serviceable, though obviously temporary, basis for ascertaining the sum with which the trustee should be charged and she should, therefore, be debited with the land at a value of $18,333.33. But this charge is made without reference to the power of sale and only because she holds the legal title to two-thirds of the real estate. The discussion now to follow refers only to the remaining one-third. As to this portion, the accountant has never had — 406 — it for it was not devised to her, nor has she ever had its proceeds, its value or its equivalent, for it has not been sold. All that she has received or is chargeable with is the power which cannot be charged against her in this proceeding, nor is it capable of admeasurement in money. Her conduct with respect to that power is not within the jurisdiction of this court. Those concerned in its execution may resort to a court of general equity powers to enforce its exercise and except for appeal to this court for removal of the accountant there is no other method of vindicating their rights under the power. It is asserted in the objectant’s brief that “ The real property belonging to the decedent at the time of his death was, by the terms of his will, converted into personalty [and] passed to the executrix as cash.” And again that “ the property did not vest as real property in anybody.” This ignores the staring truth that lands do vest and that if subject to a power contained in the will the lands of a decedent must descend to heirs or pass to devisees subject to the execution of the power. Morse v. Morse, supra; Lent v. Howard, 89 N. Y. 169. The fiction of equity cannot operate physically upon the lands nor can it affect the proceeds until they are physically produced. The utmost that can be derived from the authorities with respect to equitable conversion is that the doctrine has no origin or application except in the necessity of readjusting the devolution of real property by the rules relative to personalty, that the doctrine has no office or room for operation until there are proceeds which, whether derived from sale or collection of rents, have taken the form of actual personalty, and that the doctrine has never served to reduce unsold lands to the impossible processes of administration, disposition or division as money. — 407 — Words are quoted from Morse v. Morse, supra, to support the claim that this accountant should answer in money for an amount equal to one-third of the value of this land. That was not a case of a power of sale, nor does it contain any teaching as to the nature or the disposition of the proceeds of real estate if sold under a naked power of sale free from a testamentary trust. That case was determined solely upon the ground that although, there was in form an absolute devise to persons named there was an implied trust and, therefore, a devise in trust to executors to sell for the purpose of paying the proceeds of sale to the persons designated. To this result the power of sale in the will contributed only as an incident. The court said, in language which definitely condemns the claim now under discussion: “ Authority given to an executor to sell lands, unless accompanied with a right to receive the rents and profits, vests no estate in the executor, but the lands descend to the heirs or pass to the devisees of the testator, subject to the execution of the power ” (citing cases). The court then added: “But the power of sale conferred upon the executor by the will of Stephen Morse, is accompanied with an authority to rent and lease the land, until the power should be exercised.” Plainly, had the court not found a trust the lands would have passed by a clear devise and the devisees would have owned them subject to the execution of the power. The case intimates no basis for the contention that the executrix at bar should be charged as if she had received the value of the land in money. There the executors were held to have title to the land only as devisees in trust and the doctrine of equitable conversion was considered only so far as it showed that the trust was in part to pay legacies in money. In Fisher v. Banta, 66 N. Y. 468, and in Matter of Rus — 408 — sell, 59 App. Div. 242, the sole question arose only after actual conversion and it was held that the proceeds were to devolve upon legal representatives as personalty and not upon heirs as real estate. The present case is controlled by Matter of Hunter, 3 Redf. 175, in which the same claim upon substantially similar facts was denied. The decree should be settled accordingly. Decreed accordingly.