Shepard v. Bryan

Adams, J. As affecting the controversy, legacies may be divided into three classes: General, specific, demonstrative. Are the bequests named in the third item of the will specific or demonstrative? To this paramount question most of the exceptions have direct or indirect relation. A general legacy is a bequest which is chargeable generally upon the testator’s personal estate, and is not so given as to be distinguishable from other parts of the estate. McGuire v. Evans, 40 N. C., 269; Graham v. Graham, 45 N. C., 297; Smith v. Smith, 192 N. C., 687. A specific legacy is the bequest of a particular thing or money specified and distinguished from all of the same kind, as of a horse, a piece of plate, money in a purse, stock in the public funds, a security for money, which would immediately vest with the assent of the executor. Graham v. Graham, supra; Smith v. Smith, supra. A demonstrative legacy is a bequest of money or other fungible goods, charged upon a particular fund in such a way as not to amount to a gift of the corpus of the fund, or to evince an intent to relieve the general estate from liability, in case the fund fail, and so described as to be indistinguishable from other things of the same kind. Baptist University v. Borden, 132 N. C., 476, 488; Croom v. Whitfield, 45 N. C., 143; Kelly v. Richardson, 100 Ala., 584; Annotation, 11 L. R. A. (N. S.), 61. Such legacies “are called demonstrative, and, like general legacies, are gifts of mere quantity, hut differ from these by being referred to a particular fund for payment. They are so far general that, if the particular fund be called in or fail, the legatees will be permitted to receive their legacies out of the general assets; yet so far specific as not to be subject to abatement, with general legacies,.on a deficiency of assets. They are thus specific in one sense and pecuniary in another; specific, as given out of a particular fund, and not out of the estate at large; pecuniary, as consisting only of definite sums of money, and not amounting to a gift of the fund itself, or any aliquot part of it, the mention of the fund being considered rather by way of demonstration than condition — rather as showing how and by what means the legacy may be paid than whether it shall be paid at all. Smith v. Fitzgerald, 3 Ves. & B. (Eng.), 2; Ward on Legacies, 21. A familiar instance given in the case last cited is a bequest of ten pounds which J. S. owes to the testator; when in truth J. S. does not owe any such money, the gift fails; but if he gives ten pounds, and wills that the same be paid out of the money he has in a certain place, or out of a particular debt due him, the devise is good, notwithstanding there should appear to be no money in the place or no such debt owing. The distinction seems to be this: If a legacy be given with reference to a particular fund, only as pointing out a convenient mode of payment, it is considered demonstrative, and the legatee will not he disappointed, though the fund [829] totally fail. But where tbe gift is of the fund itself, in whole or in part, or so charged upon the object made subject to it as to show an intent to burden that object alone with the payment, it is esteemed specific, and consequently, liable to be adeemed by the alienation or destruction of the object. In this, as in other questions springing from the construction of wills, the intention of the testator is principally to be ascertained, and it is said to be necessary that the intention be either expressed in reference to the thing bequeathed, or otherwise clearly appear from the will to constitute a legacy specific. If it be manifest there was a fixed and independent intent to give the legacy, separate and distinct from the property designated as the source of payment, the legacy will be deemed general or demonstrative, though accompanied by a, direction to pay it out of a particular estate or fund specially named.” Walls v. Stewart, 16 Pa. St., 275, 281, 282. Each of the legacies in item three is a, bequest of money charged upon a particular fund, not amounting to a gift of the corpus, and is so described as to be indistinguishable from other things of the same kind. We must, therefore, ascertain whether the will manifests an intention to relieve the estate from liability if the fund fail — that is, whether the testator intended to make the particular fund, not merely the primary, but the exclusive source of payment. On this point Baptist University v. Borden, supra, is not decisive, the item therein construed expressly providing for the payment in money of any deficiency in the bonds, stocks, and evidences of debt which were designated as the primary source. The appellants contend that the income is the only fund out of which these legacies can be paid; that the testator’s dominant purpose and intention was to keep intact his personal property and his city and suburban real property for his wife, his son, and his grandchildren; and to permit nothing to interfere with his plan. The intention, however, is that which is expressed in the will and not that which may have existed in the maker’s mind if at variance with the obvious meaning of his words. McIver v. McKinney, 184 N. C., 393. Conceding that the intention is controlling, we should nevertheless bear in mind the leaning of the courts against construing doubtful terms into a specific gift, because the gift is lost upon the failure of the fund from any cause, and because it is not subject to the equitable principle of equality by abatement. Perry v. Maxwell, 17 N. C., 488, 503. We should remember, too, that an intention to make a bequest specific must not only be clear (McGuire v. Evans, supra), but must either be expressed in reference to the legacy, or must otherwise plainly appear from the will. In the third item we find nothing inconsistent with the position that “the income from my estate” was pointed out as the primary, but not the exclusive, fund out of which the bequests are to be paid. Neither the [830] word “exclusive” nor any o£ its synonyms was used to qualify the gifts or to circumscribe the fund. 52 L. T. N. S., 754. The terms of these bequests are not final, of course, but we arrive at the same conclusion when we explore the whole will in search of the expressed intention. In our opinion the testator bad no doubt that all the legacies would be paid. According to the inventory filed by the executrix, be left an estate valued at more than $500,000 — real estate, $202,000, and personal property, $311,000; be made provision for the payment of bis'debts; with the exception of about $25,000, be gave bis entire estate to bis wife and son; the legatees named in item three were given $22,000. True, the legacies in question were to be paid at the convenience of the executrix — a clause having regard to the necessity of delay in collecting the income from time to time, but not conferring upon the executrix authority to pay the legacies or to withhold payment in her unlimited discretion. Our conclusion is that the bequests appearing in the third item of the will are demonstrative and not specific. Are these legacies to be paid out of the gross or the net income of the estate? Tbe judge concurred in the referee’s conclusion of law that the testator did not intend to restrict payment of the legacies to the income derived from property not specifically devised or bequeathed, but that the gross income not necessary to pay debts or charges of administration and not specifically bequeathed was chargeable with the payment. “Income” is defined as “that gain or benefit (usually measured in money) which proceeds from labor, business or property.” Whether it imports gross or net income usually depends on the context and the subject-matter; for example, “an annuity to be paid from the income of my property,” is held to be a charge upon the gross income. This, we think, is the sense in which the word was used in item three. It will be noted that these are not gifts of the income from bis estate (40 Cyc., 1879), but gifts of money to be paid out of the income. The intention was to make these legacies a charge upon the gross income of the entire estate. If there is a failure of the fund from which payment of the legacies is to be derived, what is the consequence? Liability to ademption is a distinctive feature of a specific legacy; and, as already indicated, a demonstrative legacy is so far specific that it is not liable to abatement with the general legacies upon a deficiency of'assets, except to the extent that it is to be treated as a general legacy after the application of the fund designated for its payment. Baptist University v. Borden, supra. Treated in this sense and to-this extent as general, the legacies in item three, if the fund fail, must be paid with other general legacies out of the residuary estate, if sufficient for this purpose. 28 R. C. L., 300, sec. 279. [831] While the legacies in item three are demonstrative, they are also pecuniary in the sense that they are to be paid in money; and the general rule is that pecuniary legacies bear interest from the end of one year after the testator’s death. Hart v. Williams, 77 N. C., 426; Moore v. Pullen, 116 N. C., 284. This rule of law was not modified by the phrase “to be paid at the convenience of my executrix.” As to the date from which the interest runs the judgment is free from error. For the purpose and to the extent of satisfying the aggregate amount of these legacies, the executrix is chargeable with the gross income received by her from the estate of the testator since her qualification; and in case of a failure of this fund (which seems to be incompatible with the finding of facts), the residuary estate may be resorted to in order to make good the deficiency, total or pm tanto, including return of the legacy of $29,420.50 paid by the executrix to Charles S. Bryan. We understand the judgment to provide that if the income has been diverted or improperly used for purposes to which other funds or property should have been applied, the funds or property intended for or properly applicable to these specific purposes may be substituted pro tanto for the diverted income, and in this conclusion we discover no error. Our opinion is: 1. The legacies in item three are demonstrative. 2. That they are made a charge upon the gross income of the entire estate. 3. If the fund fail, the residuary estate is chargeable with the deficiency. There are many exceptions to the court’s findings of facts, but if there is any evidence to support the several findings, they are not subject to review on appeal to this Court; and we cannot conclude that either of them is without supporting testimony. Conclusions of law are sustained except in the respects in which the judgment is modified, and the judgment as modified herein is affirmed. Modified and affirmed. Appeal by Charles S. Bryan Adams, J. The trial judge made an order allowing the executrix certain commissions and attorneys’ fees and held that each allowance is a reasonable charge against the estate. Charles S. Bryan excepted and appealed. Upon the facts disclosed, the allowances and not so excessive as to require a reversal of the order as a matter of law. Affirmed. Clarkson, J., not sitting.