text:
    Harriett A. Raymond et al., Pl’ffs, v. The Rochester Trust and Safe Deposit Company, Def't.

      (Supreme Court, General Term, Fifth Department,

      Filed January 18, 1894.)

    W ill—Construction.
    A trust to apply estate moneys for the benefit of the real estate in payment of taxes and assessments and in reduction of existing incumbrances, when devolved upon the person or persons finally charged with the execution of the will, will not be terminated or extinguished by the union of the interests of the life tenant and the remaindermen in one person.
    Submission of controversy without action under § 1279 of the Code.
    T7. H. Shuart, for pl’ffs; W. K. Cogswell, for def’t.
   Dwight, P. J.

The controversy here submitted relates to the construction of the will of the defendant’s testator, of which the following is the text, complete, viz.:

“I, Henry B. Raymond, of the city of Rochester, Monroe county, H. Y., do make, publish, and declare this, my last will and testament, as follows, to wit:
“First After all my lawful debts and funeral expenses are paid, I give, devise, and bequeath to my wife, Hattie A. Raymond, the use of all my real and personal property, including all life insurance moneys, during the term of her natural life, or so long as she shall remain my widow, charging and directing, however, that my said wife give and furnish to my father, Alexander R. Raymond, a good and comfortable support and maintenance daring his natural life.
“Second. After the death or remarriage of my said wife, I give, devise, and bequeath the rest, residue, and remainder of my property to my children, Prank H. Raymond and Dora S. Rappleyea, forever, share and share alike.
“Third. I authorize my executors, hereinafter named, out of any moneys which may come into their hands, to pay any and all taxes, interest, or payments on incumbrances on my real estate, which in their discretion may be necessary and proper; and I further authorize and empower my said executors to sell and dispose of any and all of my real estate, and give good and sufficient deeds of conveyance therefor.
“ I hereby constitute and appoint my said wife, Hattie A. Raymond, and John C. Bertholf, of the city of Rochester, Monroe county, 1SL Y., as the executors of this, my last will and testament, revoking hereby all former wills by me made.
“ In witness whereof 1 have hereunto set my hand, and affixed my seal, this 23rd day of February, 1891
“ (Signed) Henry B. Raymond, [l. s.] ”

The specific question submitted is whether this will, by its third clause, creates a trust as to personal property which cannot be divested or extinguished during the lifetime or widowhood of the widow, the plaintiff Harriett A. Raymond. Letters testamentary were originally granted to John 0. Bertholf, above named, as one of the executors of the will, but they were subsequently revoked, and letters of administration with the will annexed were issued to the defendant. The controversy arises under the following circumstances : The devisee and legatee in remainder, Frank H. Raymond, has sold all his interest in the estate, real and personal, to the plaintiff Lotzar, and the latter, with the other legatee and devisee in remainder Mrs. Rappleyea, have agreed to sell all their estate to the widow, and she has agreed to purchase the same, at a fixed price, provided the defendant, as administrator, etc., will account and pay over to her, as the assignee of the other two plaintiffs, absolutely, all the balance of personal property remaining in its hands. This the defendant, as such administrator declines to do before it shall have been judicially determined whether there is not an existing trust under the will which cannot be divested or extinguished during the life or widowhood of the plaintiff Mrs. Raymond, and it unites in the present submission to obtain the determination mentioned. The action of the defendant was prudent, and its contention here we believe to be well founded. The defendant, as successor or substitute for the executors named in the will, though not in terms denominated a trustee by the will was yet manifestly charged with a trust in respect to the personal estate. Ward v. Ward, 105 N. Y. 68; 6 St. Rep. 798, and the cases cited ; Marx v. McGlynn, 88 N. Y. 358-375. In this case the trust was not merely to invest the moneys of the estate, and collect the income thereof and pay it to the widow during the term limited by the will, but also, in their discretion, to apply such moneys for the benefit of the real estate, not only in the payment of taxes and assessments, but in the reduction of existing incumbrances thereon. These incidents certainly rendered the possession of the corpus of the estate by the executors “ convenient and reasonably necessary,' and, as was said in Ward v. W%rd' supra, rendered them “ trustees for the performance of their duties to the full extent, as though declared to be so by the most explicit language.” Such a trust being created and devolved upon the person or persons finally charged with execution of the will, it seems to be settled by authority, as well as consonant with the reason of the case, that it will*not be terminated or extinguished by the union of the interests of the life tenant and the remainder men in one person. Such is the clear doctrine of the cases of Greer v. Chester, 62 Hun, 329; 42 St. Rep. 289, affirmed in court of appeals, 131 N. Y. 629, and Asche v. Asche, 113 N. Y. 232; 22 St. Rep. 799, and both fcherul'e and the reason of it are well stated in the opinion of Adlington, In re Lewis' Estate, 3 Misc. Rep. 164; 51 St. Rep. 562. In the first of the cases cited, it resulted, from the declared invalidity of certain provisions of the will, that the beneficial interests in a trust for life, and the estate in remainder in the same fund, became once united in the same person. The court at general term in the third department says:

“ There is nothing inconsistent in the fact that the trustee should have an estate in trust for the life of the beneficiary, and that the beneficiary should have the remainder in fee. * * * He can dispose of the remainder in the half of the estate in which he has a financial interest, subject to the trust. But, notwithstanding this, the object-of the testatrix, as we may suppose, viz., to secure the income to the grandson for life against the risks of business or improvidence, should be carried out.”

And in Asche v. Asche, the widow, as in this case, was the beneficiary of the trust for her life, and the remainder men were her .own two children; and it was argued that, upon the death of both children, the widow, as their heir, and at the same time the sole beneficiary of the trust, would become entitled to the immediate possession and control of the trust fund. But the court says:

“We do not think so. The object of the creation of the trust estate would not have been accomplished. The intention of the testator to put the corpus of the fund beyond the hazard of impairment and waste during the life of his wife cannot be defeated or affected by the acquistion by her of the estates in remainder created by the will.”

This statement discloses an apparently sufficient reason for the rule previously stated, and it is applicable, in terms, to the case before us. The question propounded by this submission must be answered in the affirmative, and judgment accordingly directed in favor of the defendant. So-ordered, with cost to the defendont payable out of the fund.

AH concur.


source: Caselaw Access Project

author: Andrews, J.

license: Public Domain

text:
    The Farmers’ Loan and Trust Company, Pl’ff, v. The Hoffman House, Def’t.

      (Supreme Court, New York Special Term,

      Filed February, 1894.)

    1. Corporation—Receiver.
    The appointment of a receiver, in the absence of an injunction restraining the officers of the corporation from defending an action, does not deprive them of the right of continuing such defense.
    2. Same.
    Whether the receiver shall he permitted to appear and defend the action, is wholly discretionary with the court.
    3. Same.
    The knowledge that the receiver has been appointed, and the fact that he has served upon the attorney for the corporation notice revoking his authority, do not operate to terminate such authority.

      4. Trust mortgage —Foreclosure.
    Whenever a mortgage is given to a trustee to secure bonds, and the principal thereof has become due and payable, it is the right and duty of the trustee to institute an action to foreclose the mortgage.
    5. Same.
    A provision in such mortgage postponing the right of a summary entry and sale for three months after demand, does not interfere with an immediate commencement of such action.
    Motion to strike out answer admitting claims of plaintiff and to vacate judgment or foreclosure and sale.

      Turner, McClure & Bolston, for pl’ff; Holmes & Adams, for def’t.
   Andrews, J.

I am of the opinion that the application must be denied for the following reasons:

First. If the receivers appointed by the court of chancery of Hew Jersey, and reappointed by the United States circuit court, have the right, with the permission of this court, to defend this action, nevertheless, the officers of the defendant had the same right before judgment was entered, and the receivers have no standing to make this application, and the court cannot lawfully grant it.' Section 70 of the general corporation law of the state of Hew Jersey, approved April 7th, 1875, provides that when any company shall become insolvent, it shall be lawful for any creditor or stockholder to apply by petition, or bill of complaint, to the chancellor for a writ of injunction, and the appointment of a receiver or receivers; and the same section authorizes the chancellor, if it shall be made to appear to him that the company has become insolvent, to issue an injunction to restrain the said company, and its officers and agents, from exercising any of the privileges or franchises granted by its certificate, or by the act incorporating the said company, and from collecting or receiving ■any debts, and from paying out, selling, assigning, or transferring any of the property of the company until the court shall otherwise order. Section 72 of said act authorizes the court of chancery ■at the lime of ordering the said injunction, or at any time afterwards during the continuance of said injunction, to appoint a receiver or receivers of the corporation.

I have carefully examined said act, and I cannot discover that it confers any power on the court of chancery to appoint a receiver, except at the time of the ordering of the injunction, or at any time afterwards, during the continuance of the injunction. It does not appear, from the papers before me, that said court has at any time granted an injunction, as provided for in the said act; and it is, therefore, somewhat difficult for me to understand how the court had jurisdiction to do more than to exercise the inherent power of a court of equity to appoint receivers, who should be merely the authorized custodians of the' property of tire corporation.

The order of the United States circuit court recites that the said receivers have been appointed by the chancellor of Hew Jersey, and appoints the same persons receivers of the property of the Hoffman House; and it also purports to confer upon the said receivers various powers, including the power .to continue the business of the defendant, and the authority to appear in and conduct the prosecution or defense of any suits against the Hoffman House. Said order also enjoins the Hoffman House and all its officers and agents from interfering with or disposing of any of the property of said corporation, but does not otherwise restrain those officers from exercising the powers possessed by them. The state of New Jersey is not included in the second circuit of the United States, and the appointment of the said receivers by the circuit court is ancillary to their appointment by the court of chancery of New Jersey. It has been held in some cases that a court of equity will appoint a receiver to preserve the property of a foreign corporation, but it has not usually been considered, as I understand the decisions, that a court of equity, in the absence of special statutory authority, has the power n> grant an order appointing receivers, conferring upon them such extensive powers as were conferred by the order in question.

Assuming, however, that both the order of the court of chancery appointing the receivers, and the order of the United States circuit court reappointing the receivers, were regularly and lawfully made, it appears that before such orders were made this action had been commenced, and that a receiver of all the property of the corporation had been duly appointed in this action, and that such receiver had taken possession of all the property of the defendant; and it also appears that the receivers, Hall and Ward, are not in possession of any portion of the property of said corporation.

Under these circumstances, I think that the receivers have no standing to make the present motion. The corporation, itself has been dissolved. No injunction has been granted by the said court of chancery, nor by said circuit court, restraining the corporation, or its officers, from exercising the powers, privileges, and franchises granted by its certificate, or by the act incorporating it, except as above mentioned; or from appearing in and conducting the defense of any suits brought against said corporation. The corporation and its officers had, therefore, authority to appear in, and conduct the defense of, this action. The receivers, until and unless they are made parties to the action, are strangers to the proceedings. Tracy v. First Nat. Bank of Selma, 37 N. Y., 523. The appointment of said receivers, in the absence of an injunction restraining the officers of the defendants from defending the action, did not deprive such officers of the right to continue the defense thereof; and said receivers have no standing to move to set aside the answer which was served, and the judgment which was entered, and to move for leave to serve an answer on their own behalf, in the place of the one which has heretofore been served on behalf of the corporation. In other words, assuming that the receivers, if judgment had not been entered, were duly invested with the right to defend this action, provided this court in the exercise of a judicial discretion should permit them to do so, such fight was not superior to the right of the officers of the defendants to defend the action, and when those officers have permitted judgment to be entered, the ■ receivers cannot claim, and have no legal standing to claim, that they should be permitted to reverse the lawful action of such officers.

Secondly. I am of the opinion that the interlocutory judgment of foreclosure was regularly and duly entered. As above stated, no injunction has been granted restraining the corporation, or its officers or agents, from exercising the powers and franchises of the corporation, except as above stated, and one of those powers was to appear in and defend this action. Assuming that, when the judgment of foreclosure was entered, the Farmers’ Loan & Trust Company -and its attorneys, and the officers of the H >11 man House corporation and its' attorneys, knew that the said receivers had been appointed by both of said courts, and assuming, also, as appears by the papers, that said receivers had notified the attorney who appeared for the Hoffman House in this action that his authority was revoked, nevertheless, such judgment was regularly entered.

Mr. Dclahunty had been employed by said corporation as its attorney in the foreclosure action, and had appeared therein, and he had all the powers possessed by an attorney of record in any action. Those powers could only be terminated by an order of this court substituting another attorney in his ¡>lace, or restraining him from acting as such attorney. The knowledge that the receivers had been appointed, and the fact that they served notice upon him revoking his authority, did not operate to terminate such authority. He still had the legal right to serve such an answer as he was directed to serve by the president of the corporation, who had not been enjoined from exercising the authority conferred upon him by virtue of his office. As was decided by the court of appeals in Tracy v. Nat. Bank of Selma, supra, the receivers were strangers to the proceedings, and their notice to Mr. Delahanty, who had been lawfully employed by such officers, undertaking to revoke his authority was a nullity. The judgment of foreclosure, therefore, must be regarded as having been regularly and duly entered.

Thirdly. Under these circumstances, assuming that the receivers having a standing to make this motion, whether or not the receivers shall be permitted to appear and defend the action, is wholly discretionary with the court (Beach on Receivers, § 708), and upon the papers before me I do not think a case is presented which justifies the court, as a matter of discretion, in granting the application of the receivers.

In the first place the proposed answer does not present a good defense to the action. The interest on the mortgage bonds, due July 1, 1893, was not paid, and such default continued for three months and after, and the holders of more than a majority of the bonds, by a writing delivered to the trustee, declared the principal of all the bonds be immediately due and payable. The answer sets up various proceedings had for the purpose of obtaining an inspection of the books of the corporation, and that the president of the company had abstracted money belonging to the corporation, and had such moneys in his possession when said interest became due to an amount more than sufficient, to pay such interest. However, as the interest was not paid, I do not see how these facts, or any of them, constitute a defense, as against the trustee, who has brought the action to foreclose the mortgage. It might be that, upon a long examination of the affairs of the corporation, it could be proved that the president was indebted to the corporation, but that fact would not, in my judgment, constitute a defense in this action.

The only defense set up in the answer which is valid upon its face is that which alleges that, by the terms of the mortgage itself, the principal of the bonds secured by the mortgage had not become due when the action of foreclosure was brought. I am satisfied, however, by an inspection of the portions of the.mortgage which relate to this matter, that this defense cannot be maintained.

Article 2d of the mortgage provides that if default shall be made in the payment of the interest on any of the bonds at the time when the same may become due and payable, and if such default shall continue for three months, then the holders of a majority in amount of the bonds may, by writing delivered to the trustee, declare the principal of said bonds to be, and the said principal shall thereupon become, immediately due and payable.

Article 8d of the mortgage provides that in case of the principal of any of such bonds becoming due and payable, and remaining unpaid, in whole or in part, for three months after demand thereof, the trustees shall, on the written request of the holders of a majority in amount of such bonds, have power to enter upon the premises and take possession of the property and sell the same.

Article 6, however, provides that nothing contained in the mortgage shall be construed as limiting the right of the trustee to •apply to the court for judgment or decree of foreclosure and sale, under the mortgage, or for the usual relief in the course of such proceeding, and that the trustee may, in his discretion, and must, if not allowed by law to proceed in the manner hereinbefore mentioned, apply to any competent court for relief by way of foreclosure or otherwise, instead of taking possession of or selling such property when required to do so by the bondholders.

It is elementary law that, whenever a mortgage is given to a trustee to secure bonds, and the principal of such bonds has become due and payable, it is the right and duty of the trusted to institute an action to foreclose the mortgage ; and it is not necessary that in a mortgage of this description, any more than it is in a mortgage of any other description, the power to bring such an action should be conferred by the mortgage itself. It is usual, however, in mortgages given to secure the bonds of corporations, to insert a provision similar to the one contained in this mortgage, which gives the trustee the right to enter upon the premises and sell the property summarily without resorting to an action to foreclose the mortgage; and in this case, if the trustee had pursued that course, it would have been necessary for it to wait until three months had elapsed after a demand for the payment of the principal. This provision postponing the right of a summary entry and sale was doubtless inserted with a view to fully protect the corporation and its stockholders against any hasty and summary action on the part of the trustee. If the trustee should commence an action to foreclose the mortgage, the corporation would have an opportunity to defend the same; but, if the trustee elected to adopt the summary method of entry, there would be no opportunity for defense, and, therefore, the mortgage provided that the trustee should not resort to that course until three months after a demand for the payment of the principal. The provisions contained in article 6 were doubtless inserted out of abundant caution, but were unnecessary, for the trustee would have had the right to commence a foreclosure proceeding if the default in the payment of interest continued for three months, and the declaration by bondholders, provided for in said article two, was made, if this .article had not been contained in the mortgage. In my judgment, the provision of article 3d did not operate to postpone the right of the trustee to commence the foreclosure action after the default in the payment of interest had continued for three months after the holders of the majority in amount of the bonds had, by writing delivered to the trustees, declared the principal of all the bonds to be immediately due and payable. The allegation in the •answer, therefore, to the effect that by the terms of the mortgage the principal of the bonds had not become due does not constitute any defense.

In the second place, I do not see that the granting of this application could possibly result in any pecuniary benefit to anyone.

The corporation is undoubtedly insolvent. The application to the court of chancery for the appointment of receivers was based upon the ground that the corporation was insolvent, and that •court appointed the receivers as the result of an adjudication by it that the claim that the corporation was insolvent was well founded.

The application to the United States circuit court for the re-appointment of said receivers was also based upon the same ground, and that court also adjudicated that the corporation was, in fact, insolvent; and the proposed answer, which the receivers ask leave to serve, contains an allegation that the defendant owes .$75,000 to its general creditors. It is quite apparent that the question whether (as it is claimed) Mr. E. S. Stokes owes a large sum of money to the defendant, can only be determined by a long examination of the dealings between him and the corporation; and it may take a number of years to make such examination. The property covered by the mortgage is used in the business of a hotel. Such business has been carried on for many years, and the good will is undoubtedly of considerable value, which value may be seriously impaired if this litigation is continued. The sale of the property under the decree of foreclosure is precisely the result which Mr. W. E. D. Stokes sought to accomplish by means of the bill filed by him in the United States circuit court. That bill prayed for the appointment of receivers, who should take possession of all the property of the defendants, and it also prayed that the court would administer the assets of the corporation. If the receivers appointed in that action had been able to take possession of the property of the defendant, the result would have been that said property would have been sold by.such receivers, and the proceeds applied in the same manner that they will be applied if the property is sold under the decree of foreclosure in this action. Such proceeds must be applied to the payment of the mortgage bonds, all of which, it appears, are owned by Mr. E. S. Stokes, except $50,000, which are owned by Mr. Leary, although $125,000 of said bonds are held by Mr. W. E. D. Stokes as collateral. If, after the payment of such bonds, there is any surplus, it will go to the stockholders. So far as the results are concerned, it cannot, therefore, make any possible difference to any person whether the property is sold by a referee, appointed in this action by this court, or by receivers appointed by the United States circuit court.

If it be true that Mr. E. S. Stokes is largely indebted to the defendant, the law provides abundant methods by which such moneys can be recovered from him, and I see no reason whatever why the question of his liability should be litigated in this action.

The motion will be denied, with $10 costs.


text:
    In the Matter of the Application of the Manhattan Railway Company, Pl’ff, v. Henry M. Taber et al., Def’ts, Relative to Acquiring Title, etc., to Premises Nos. 137, 139 and 141 Pearl street.

      (Supreme Court, New York Special Term,

      Filed February, 1894

    1. Appeal—Printing- papers. ,
    The special term has no power to dispense with the printing of any papers which are to be used on the argument of an appeal from an order on a non-enumerated motion.
    2. Same.
    If the special term may dispense with the printing of papers, which have been submitted to it upon the hearing of a motion, such power must be very sparingly exercised, and only in cases where there can be no reasonable difference of opinion as to the materiality of the papers in question.
    3. Same.
    The printing may be dispensed with where the papers, for the purposes of the appeal, will be wholly useless and unnecessary.
    The defendants appealed in the above’ entitled condemnation proceeding from three orders :
    (1) The order entered on November 28, 1892, upon the order to show cause granted by Mr. Justice Andrews, providing for a perpetual stay of all actions and proceedings interfering with plaintiff’s possession of the property, pursuant to § 3379 of the Code of Civil Procedure, except so much of the order as authorizes the plaintiff to continue in possession of the property upon complying with the terms of the final order confirming the award.
    (2) From the final order confirming the award, entered on November 27, 1893, in so far as the same fails to provide that the defendants recover of the plaintiff the costs of proceeding, etc.
    (3) From the order entered December 23, 1893, by Mr. Justice Ingraham, denying the defendants’ motion to modify the final order so as to provide for costs, etc., and for an additional allowance.
    On December 29, 1893, the defendants served the plaintiff with a stipulation, which they requested it to enter into, dispensing on these appeals with the printing of the minutes of testimony taken before commissioners. As a condition of such stipulation they agreed not to question such minutes on appeal, nor that the report of the commissions was properly confirmed on such record. The plaintiff declined to enter into the stipulation, and on January 12, 1894, the defendants moved at general term for leave to dispense with the printing of such minutes, which motion was denied, the court directing that the defendants apply at special term to the judge who heard the motion to confirm and the motion for the stay.
    The defendants then made this motion before Mr. Justice Andrews for leave to dispense with the printing of the minutes, etc.
    For the motion, John M Parsons, attorney and of counsel; Opposed to the motion, Da ies, Short & Townsend, attorneys; William H. Sodden, of counsel.
   Andrews, J.

Rule 3 provides that when any order on a nonenurnerated motion is entered, the papers used or read on the motion on either side shall be specified in the order, and shall be filed with the clerk, unless otherwise ordered by the court, or the order may be set aside as irregular, with costs. Section 1353 of the Code of Civil Procedure provides that an appeal to the general term from an order must be heard upon a certified copy of the notice of appeal, and of the papers used before the court or the judge upon the hearing of the motion; and rule 41 requires that such papers shall be printed.

It appears by the papers that- application was made to the general term for the relief which it is sought to obtain upon the present motion, and I have, therefore, conferred with the presiding justice of the general term in relation to the matter. After such conference I feel authorized to say that it is not the opinion of the general term that the special term has the power to dispense with the printing of any papers which are to be used on the argument of the appeal; and unless the minutes of the proceedings before the commissioners are printed as a part of the printed papers to be used on the appeal, they cannot be used or referred to upon the argument of the appeal. The offer, therefore, of the appellant’s attorneys to stipulate that the stenographer’s' minutes may be produced and used upon the argument of the appeal does not furnish any grounds for an order dispensing with the printing of those minutes.

A further question is presented as to whether the offer of the appellants to stipulate that they will not, upon said appeals, question either that the report of the commissioners was the proper one upon such testimoney, or that the said report was rightfully confirmed by said order, furnishes any ground upon which the court can grant an . order dispensing with the printing of said minutes. There is no provision of the Code, or of the rules, which authorizes the special term to direct -that papers submitted upon a motion heard at special term, and which have been duly filed, and are recited in the order entered upon such motion, need not be printed in the papers to be used upon the argument of an appeal from such order; and the power to make such direction can be exercised only upon the theory that some of the papers, which have been so submitted, filed and recited, were not actually used, or that they were not considered by the court in deciding the motion. In Weseman v. Wingrove, 85 N. Y., 358, where an objection was raised that papers submitted at the special term were not before the general term, the court of appeals said: “ Reither the Code nor the rule is to be so literally construed as to compel the printing and presentation of unnecessary and superfluous papers. What is material and necessary to the proper action of the appellate court is enough.” In that case there had been no order of the court dispensing with the printing of any of the papers submitted at special term, but certain papers used at special term had been omitted by the attorneys.

Assuming that the special term may dispense with the printing of papers, which have been submitted to it upon the hearing of a motion, such power must, of course, be very sparingly exercised, and only in cases where there can be no reasonable difference of opinion as to the materiality of the papers in question. Otherwise, if the special term, or a justice of this court, in deciding a motion, considers that some of the papers submitted by either side are immaterial, and, therefore, does not consider them in deciding the motion, and ah appeal is taken from the order entered upon the decision, the right of appeal might be rendered wholly valueless if, upon the application of either side, the special term or said justice should direct that the very papers, whose materiality was in dispute, need not be printed.

It appears from the papers that this motion relates to three appeals, which are now pending, namely :

First.- Appeal from an order made by Mr. Justicé Ingraham.

Second. An appeal from so much of the final order entered herein as denied costs to the defendants.

Third. An appeal from an order granting a stay of proceeding.

With regard to the appeal from the order made by Mr. Justice Ingraham, I have no power to give any directions as to what shall be contained in the printed papers to be used on the appeal.

With regard to the appeal from so much of said final order as denied costs to the defendant, it is entirely clear that the appeal must be disposed of by the general term upon a question of law. Costs were not allowed to the defendants by the special term because it was believed that, as matter of law, they were riot entitled to costs. The minutes of the proceedings before the commis. sioners were n.ot considered in the disposal of this question, and would not be considered by the general term upon the appeal if they should be printed. If the general term should decide that, as matter of law, the defendants were entitled to costs, it would then send the matter back, with a direction that the special term should exercise its discretion as to the amount of the allowance to be made. The printing of the minutes, therefore, for the purposes of this appeal would be wholly unnecessary and useless, and I think such printing should be dispensed with.

With regard to the appeal from the order staying proceedings, a different question is presented.

The granting of this order was opposed upon the ground that the court had no power to grant it, and also upon the ground that if the court had such power, it would not be a proper exercise of discretion to grant the order.

The proposed stipulation, offered by the appellant, does not state what questions the appellant proposes to raise upon the appeal, but only what questions it does not propose to raise. This leaves it for the court, to determine from memory what questions were raised on a long argument, which took place nearly three months since, and also to conjecture as to what questions the appellant can, or may, raise upon the argument of the appeal.

The minutes of the proceedings before the commissioners were certainly considered very carefully by me in passing upon the question whether a stay of proceedings should be granted, and I do not know but that it may be very material, in some aspect of the case, for the appellee, that such minutes should be before the general term. As against the objection of the appellee, it is certainly doubtful whether the court has the power to dispense with the printing of such minutes, and it is certainly still more doubtful whether, against such objection, if the court has the power, it ought to exercise it. If the appellant offered to stipulate that upon the appeal questions of law only would be raised, and stated in the stipulation what those questions would be, it might then be apparent that the printing of such minutes would be unnecessary, and such printing might be dispensed with. As the matter stands, however, I cannot foresee what questions may be raised, and I cannot make an order which may imperil the rights of the appellee, when I am in the dark as to what the effect of the order asked for might be.

A motion to dispense with the printing of the minutes on the appeal from the order, made by Mr. Justice Ingraham; will be dismissed.

The motion to dispense with the printing of the minutes on the appeal from so much of the final order - herein as denied costs to the defendant, will be granted.

The motion to dispense with the printing of the minutes on the appeal from the order granting a stay of proceedings, will be denied.

No costs will be granted on either motion.

The orders will be settled on notice.


author: Follett, J.

text:
    Frank Ross, as Ancillary Administrator, etc., Resp’t, v. Wallace P. Willett et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed February 16, 1894.)

    1. Partnership—Profits and losses.
    Persons may agree that they will share the profits and losses arising from the purchase and sale of goods, though, as between themselves, one of them retains the legal title to the goods.
    3. Same—Equitable action,
    In case of a partnership as to profits and losses, an action in equity to determine their amount, and not an action at law, is the appropriate remedy.
    3. Administrator—Ancillary.
    The fact that a person was entitled to the possession of all the personal estate of the decedent, in the province of Quebec, where he resided at his death, authorizes his appointment as ancillary administrator by the surrogate of the county of New York.
    Appeal from a judgment in favor of the plaintiff.

      Theodore F. Sanxay, for app’lts; Wilcox, Adams & Green, (George B. Adams and Herbert Green, of counsel), for resp’t.
   Follett, J.

The court found, and we think the evidence required the finding, that James Gf. Ross and the defendants were engaged in two joint adventures, by which Ross purchased two cai’goes of sugar, taking the legal title to them in his own name, under an agreement between him and the defendants that they should have one-fourth of the profits, if any, and should bear one-fourth of the losses, if any. These facts are established beyond doubt by the defendants’ letters and telegrams. One of these cargoes—the Cornelia Smith—was purchased in April, 1880, and was held until June 17, 1889, when it was finally sold at'a large loss. The other—the Phineas Pendleton—was purchased m December, 1880, and was held until July 2, 1889, when it was also sold at a large loss. During the time that these cargoes were held—between eight and nine years—the defendants were repeatedly asked, but always refused, to pay one-fourth of the cost of the cargoes and the accrued expenses, though they never denied their interest in them, nor their liability for one-fourth of the loss. Ross offered to deliver to the defendants one-fourth of the sugar if they would pay one-fourth of its cost and its expenses, which they refused to do. October 1, 1888, James Gr. Ross died, and on the 25th of April, 1889, ancillary letters of administration upon his estate were issued to the plaintiff by the surrogate of the city and county of New York. On the 17th of June. 1889, the plaintiff in this action sold the Smith cargo, and July 2, 1889, he sold the Pendleton cargo. On the 80th of April, 1890, he brought this action to recover one-fourth of the loss arising from the adventures.

It is insisted in behalf of the appellants that no partnership existed as between James' Gr. Ross and themselves, but, if there were, that his administrator did not succeed to the legal title to the property, and he had no right to sell it. .A joint adventure is a limited partnership; not limited in a statutory sense as to liability, but as to its scope and duration; and under our law joint adventures and partnerships are governed by the same rules. Hubbell v. Buhler, 43 Hun, 82-84; 6 St. Rep. 578. It cannot be denied that it is entirely legal and competent for persons to agree that they will share the profits and losses arising from the purchase and sale of goods, though, as between themselves, one of them retains the legal title to the goods. In case A. and B. agree that the former shall purchase certain articles at an agreed price for the purpose of speculation, and that they shall share the profits and losses arising from the venture, they do not, as between themselves, become partners in the goods, but are such in respect to the profits and losses. Moore v. Huntington, 7 Hun, 425; Ward v. Thompson, 22 How. 330; Smith v. Watson, 2 Barn. & C. 401; Meyer v. Sharpe, 5 Taunt. 74; Story, Partn. § 27; Lindl. Partn. (3d Eng. Ed.) 19, 20, et seq. Under the facts proved in this case it is clear that James Gr. Eoss held the legal title to the two cargoes of sugar, and that the defendants had the right to one-fourth of the profits, if any were made, and were bound to bear one-fourth of the loss, if any accrued. Under such circumstances, the title to the cargoes of sugar not being in the partners, it did not devolve upon the surviving partners, at the death of Eoss, but upon his legal representatives, who had the right to make a sale of the property. The evidence shows that he consulted with these defendants in respect to the time and mode of sale, and that they refused to consent that a sale should be made, and declined to advance the one-fourth part of the sums expended in the venture. It is further shown that the plaintiff sold these cargoes at a time when they brought a larger price than could have been obtained for them at any time subsequent to the death of his intestate, and there is no claim that the sale was not an advantageous one. There being a partnership as to profits and losses, an action in equity to determine their amount was the appropriate remedy, and an action at law to recover one-fourth of the sum could not have been maintained. Attwater v. Fowler, 1 Hall, 180. The profits or losses of one or two joint adventures can no more be adj usted and recovered in a legal action than can those of a general partnership, the same principles being applicable to both. The fact that the defendants admitted in their answer (divisions 8 and 9) that the items constituting the account and set forth in the plaintiff’s bill of particulars were correct, did not deprive the court of equity of its jurisdiction of the action.

It is urged that this plaintiff was not duly appointed ancillary administrator of the estate of the decedent. Section 2696 of the Code of Civil Procedure provides that “in cases where the decedent, at the time of his death, resided without the United States, upon the presentation to such surrogate’s court of satisfactory proof that the party so applying * * * is entitled to the possession in the foreign country of the personal estate of such decedent, the surrogate’s court to which such copy of such foreign letters, so authenticated, or such proof is so presented, must issue ancillary letters of administration in accordance with such application except in the following cases.” The exceptions have no relation to the case in hand. The evidence shows, and the court found, that James G. Ross was a resident citizen of the province ,of Quebec, in the dominion of Canada, where he died October 1st, 1888, and that by certain judicial proceedings known as “verification of heirship,” had in that province, and by virtue of certain powers of attorney, the plaintiff in this action acquired the legal right to the possession of all the personal estate of James G. Ross, deceased. The proof was clear and undisputed that when the plaintiff was appointed ancillary administrator by the surrogate of the county of New York, and when this action was tried, he was entitled to the possession, in the province of Quebec, of the personal estate of James G. Ross, which brings the case precisely within the provisions of the section of the Code above quoted, and authorized his appointment. His authority to act in the province of Quebec had not at the time of the trial been revoked or annulled, and his right to maintain this action was perfect.

Many exceptions were taken on the trial to the admission and rejection of evidence, some of which related to the mode of proving the items of account, about which there was no real controversy, and the other exceptions in no way affect the merits, and they do not deserve consideration. After a careful examination of the evidence contained in this record, we are satisfied that there is no real merit in the defense to this action, and that the judgment should be affirmed, with costs.

All concur.


text:
    Walter K. Freeman, App’lt, v. United States Electric Lighting Company, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed February 16, 1894.)

    Trial—nonsuit—when proper.
    'Where plaintiff’s evidence is entirely insufficient to raise a question of fact, and is so completely contradicted by liis written receipts and by his conduct that a verdict in his favor would have been set aside, a nonsuit is proper.
    Appeal from a judgment entered on an order dismissing the complaint on plaintiff’s evidence.

      A. B. Dyett, for app’lt; William Allen Butler, for resp’t.
   Follett, J.

This action was brought to recover $134,220 damages for the alleged breach of a written contract dated June 21, 1881, which claim is made up of the following items: (1) $1,500 payable pursuant to the second division of the contract; (2) $100,000 payable for patents pursuant to the third division of the contract; (3) $16,516.66 for salary between June 21, 1881, and October 27, 1887; (4) $3,812.50 expenses for experimental purposes between the same dates, pursuant to the first^paragraph of the third division of the contract, less $7,609.16 paid towards items 3 and 4; and (5) $20.000 damages for having been wrongfully discharged, October 27, 1887, from defendant’s service. On the trial the plaintiff abandoned his claim to recover on the first item, of $1,500, so that need not be considered. Testimony having been given from which the jury might have found that the contract of June 21, 1881, was duly made for and in behalf of the defendant, it will be assumed on this appeal that the contract was not the personal agreement of Charles R. Flint, but was the contract of the corporation—the defendant—of which he was president. When the contract was entered into, the plaintiff claimed to have invented an electric lamp with a carbon filament of high resistance, and certain other valuable apparatus for lighting bv electricity. The claim for the second item, $100,000, arises out of the first subdivision of the third division of the contract, which is as follows:

“ (1) In case a patent is gránted to said party of the first part for said carbon filament lamp, and the claims of said Edison thereto are adjudicated invalid, and the patent granted as aforesaid to said party of the first part is adjudicated as securing to the said party of the second part the exclusive use of the said carbon filament lamp in incandescent lighting, so as to prevent said Edison from using his present form of lamp, the said party of the second part shall either pay to the said party of the first part one hundred thousand dollars in cash for said patent, and retain the same as his exclusive property, free from all claims of the said party of the first part, or shall assign back said patent to said party of the first part. And in case a patent is obtained upon said carbon filament lamp, but not in such form as to entirely defeat said Edison’s claims, or secure an entire monopoly therein to the said party of the second part, to the exclusion of said Edison, but nevertheless in such form as to cover valuable features of construction, the said party of the second part shall pay to the said party of the first part a less sum, in proportion to the diminished value of the same, therefor, but at least twenty-five thousand dollars, or assign such patent back to said party of the first part.”

It is conceded that a patent for the lamp which the plaintiff claims to have invented has not been granted to him, and that on the 27th of November, 1883, a patent was granted to Edison for his lamp, and on the 18th of March, 1887, all proceedings pending before the commissioner of patents in support of the invention claimed by the plaintiff terminated adversely' to him and to all persons claiming under him. The plaintiff asserts that defendant failed to prosecute the application for his patent with diligence, and that by reason of its neglect the right to the patent was lost, and he became entitled to receive $100,000. It will be observed that by the terms of the contract quoted the defendant did not absolutely bind itself to pay $100,000 for the patent in case it was granted, but had the right, in lieu thereof, to assign it to the plaintiff. Assuming that an action could be maintained for the contract price, instead of for the damages, if any were sustained by the plaintiff by reason of the defendant’s failure to prosecute the claim, and assuming that this action may now be turned into an action for damages, we are of the opinion that there is no evidence in the record which would have sustained a verdict that the defendant neglected to present all of the evidence of discovery and prior invention presented or suggested by the plaintiff, or which the defendant could obtain by investigations made in its own behalf. The evidence in this case is entirely insufficient to raise a question of fact for the jury as to whether the failure to secure a ]intent occurred through the neglect of the defendant. A careful < xamination of the testimony given by the plaintiff leaves us in doubt whether he believed that he was entitled to a patent. We think the plaintiff failed to establish a prima facie case for the recovery of the $100,000, and that no issue of fact was presented by the evidence relating to this item.

The third, fourth and fifth items which the plaintiff claims to recover all depend on whether plaintiff’s employment under the contract was terminated December 31, 1881, and may be considered together. The plaintiff testified that, pursuant to the contract, he began work for the defendant on the 21st of June, 1881, and continued until the 31st of December of that year, and received payment in full for his services, and that he was also paid in full to December 31, 1881, for electrical experiments, pursuant to the contract. On the • 30th of December, 1881, the plaintiff wrote the defendant that another company had offered to pay him a greater compensation than the defendant was .then paying him, and that, unless some different proposition was made, he should leave the defendant’s service the next day. The defendant’s president testified that January 3, 1882, a letter was written and mailed to the plaintiff, accepting his resignation. The plaintiff testified that he did not receive the letter, but he heard that such a letter had been written, and that his resignation had been accepted, in a sense. The plaintiff also testified—and so did the defendant’s officers—that since January 1, 1882, the plaintiff had not been in the employ of the defendant, except in gathering evidence, and in attempting to establish the patentability of his electric lamp. The plaintiff testified that since December 31, 1881,1 he had not been engaged in making experiments for the defendant. The $50 per month mentioned in the contract are not for plaintiff’s compensation, but for expenses of private experiments. Having made no experiments it is not probable that he has incurred any expenses in experimenting; and, if he had shown that he had been engaged in experimenting, he would have had to go further^ and show that he had incurred expenses, before he could recover for such expenses. The record is barren of evidence to support a claim for the item of $3,812.50.

This brings us to the question, was the evidence sufficient to authorize the jury to find that plaintiff’s employment, under the contract, did not terminate December 31, 1881, and was continued until October 27, 1887? We have referred to the plaintiff’s resignation and its acceptance, but the plaintiff swore that his resignation was a sham, and not designed to take effect, but to effect other purposes, and was so understood by defendant’s officers. The defendant’s president denies this. This, of course, may be said to have presented an issue of fact. But the difficulty is that the plaintiff’s evidence is so completely contradicted by his written receipts and by his conduct that a verdict in his favor would have been set aside. Notwithstanding the plaintiff’s testimony that his resignation was a sham, he is compelled to admit that he performed no service for the defendant after December 31, 1881, except in attempting to secure evidence to establish his right to a patent for an electric lamp, for which he was to receive $100,000. During the year 1881, when the plaintiff was employed by the defendant, he signed 13 receipts, which, on their face, were on account of salary; and in the same year he signed three receipts for money received for experiments, and four for money advanced. After January 1,-1882, all payments for salary and for experiments ceased. In the year 1882, plaintiff received $65, which he receipted for as paid on account. In 1883, he received $955, paid on 33 different dates, for which receipts were given for money received “on account,” “for expenses,” or for “ money advanced.” In 1884 He received $1,020, on 25 different dates, for which he gave receipts “ for money advanced.” In 1885 he received $1,020 on 22 different dates, for which all of the receipts were for money advanced, save one, which was for money on account. In 1886, he received $1,000 in 32 payments, all of which were for money advanced; and in 1887 he received $420 in 12 different payments, which he receipted for as money advanced. From January 1, 1882, to July 14, 1887, 127 payments, aggregating $4,480, were made- by the defendant to the plaintiff, for all of which receipts were given ; and there -is no mention that any payments were for salary, wages, or for expenses incurred in experimenting. After a careful examination of the record, we are unable to find sufficient evidence to have justified the jury in finding that the plaintiff’s employment continued, under the contract, beyond January 1, 1882; and it follows that he could not have been wrongfully discharged from such employment, as alleged in the complaint. We think the plaintiff made no case for the jury, was rightly nonsuited, and that the judgment should be affirmed, with costs.

All concur.


author: O Breen, J.

text:
    In the Matter of the Transfer Tax upon the Estate of Ella S. Hoffman, deceased.

      (Supreme Court, General Term, First Department,

      Filed March, 1894.)
    1. Taxes — Tbanseeb.
    A bequest of the income of a fund to testator’s mother is exempt from the transfer tax, if its present value does not exceed $10,000.
    2. Same — Contingent intebest.
    No appraisement of a contingent interest should be attempted to be made, or any tax imposed thereon, until such interest becomes vested in possession.
    3. Same — Costs.
    The allowance of costs to the comptroller, in such proceeding, rests in the sound discretion of the surrogate.

      Appeal from order or decree of the Surrogate’s Court, assessing and fixing the transfer tax on the property and interest devised under the will of Ella S. Hoffman, deceased.

      Adrian H. Joline, for executors appl’ts; Charles H. Daniels, for Olga Sandford, app’lt; Thomas F. Gilroy, Jr., for resp’t.
   O Breen, J.

Ella S. Hoffman died November 7, 1892, leaving a last will and testament, which was admitted to probate on the 9th day of December, 1892. As the assessment and tax with respect to the residuary estate is not in question here, and the only questions that arise are those presented by the fourth clause of the will, that only need be quoted. That clause provides as follows:

“Fourth. I give, devise and bequeath, to my executors and trustees, hereinafter named, and to their survivors and survivor of them and to their successors and successor, the sum of fifty thousand dollars ($50,000.00), to have and to hold the same as long as my mother, Lucinda E. Starkweather, and my daughter, Ella H. Sandford, or either of them, shall live, upon the following trusts, viz:
“To invest the same, and to keep the same invested, in bonds or stocks of the government of the United States, or of the state or city and County of New York; or in bonds secured by mortgage upon improved real estate, or in the mortgage bonds of railroad companies in good standing and repute; hereby giving my executors and trustees, or a majority of them, who shall be acting as such, and their successor or successors, full authority to change any investments so made whenever, in his or their opinion, it shall be for the interest of the trust hereby created.
“To collect the rents, income and profits arising from said fifty thousand dollars, directed to be invested as aforesaid, as long as my said mother and daughter,, or either of them, shall live.
“To pay over to my mother, Lucinda E. Starkweather, as long as she shall live, the net income arising from said fifty thousand dollars hereinbefore directed to be invested, in as nearly as may be equal quarterly payments.
“In case of the death of my said mother during the lifetime of my said daughter, Ella H. Sanford, I hereby direct that, from and after the death of my said mother, the net income arising from said fifty thousand dollars, hereinbefore directed to be invested, be paid to my said daughter as long as she shall live, and, upon her death, I direct that said fifty thousand dollars be paid to her issue, if any shall then be living; but if she shall die without leaving any issue her surviving, she having survived my said mother, then, upon her death without issue her surviving, I direct that one-half of said fifty thousand dollars be paid over to my niece, Miss Alice Eeid, daughter of George W. Beid, or to her personal representatives, if she be then dead, and the remaining one-half thereof to my niece, Mrs. Cora Marsh, wife of Joseph Marsh, or to her legal representatives, if she then be dead.
“In case my said daughter shall not be living at the death of my said mother, upon the death of my said mother I direct that said fifty thousand dollars bs paid over to the issue of my said daughter, if any issue shall then be living; but if, at the death of my said mother, my said daughter shall be dead, and no issue of my said daughter shall then be living, I direct that one-lialf of said fifty thousand dollars be paid over to my said niece, Miss Alice Reid, or to her legal representative if she then be dead, and the remaining one-half thereof be paid over to my said niece, Mrs. Cora Marsh, or to her legal representatives if she be then dead.”

The appraiser reported, and the order declared that the cash value of the property transferred by' the will and subject to the of the tax, was as follows:

1. Income for life of $50,000 to Mrs. Starkweather.. $9,385 00

2. Income of $50,000 after Mrs. Starkweather’s death,

and for balance of life of Ella H. Sandford..... 25,428 00

8. Remainder interest in $50,000 after death of two

life tenants, to issue of Ella.................. 15,187 00

4. Income for life in residuary estate to Ella....... 310,383 00

5. Remainder interest in residue to grandchildren sur-

viving, or in default thereof to nieces.......... 140,329 92

The taxes assessed and declared to be presently payable were as follows:

Beneficiary. Tax assessed.

Lucinda R. Starkweather........................ $93 85

Ella H. Sandford ($50,U00 bequest)............... 254 28

“ “ (residuary) .................... 3,103 83

Olga Sandford................................. . 151 87

The appellants do not dispute the valuation of the securities; the appeal relates only to the assessment and tax upon the various interests in the fund of fifty thousand dollars and the income thereof.

The appellants insist:

1. That the fair market value of the legacy of income to Mrs. Starkweather being less than ten thousand dollars it is exempt from the transfer tax.

2. That the legacy of the income to Ella II. Sandford after the death of Mrs. Starkweather has no ascertainable “ fair market value,” because it is wholly contingent upon Ella surviving Mrs. Starkweather.

3. That the contingent remainder to Olga Sandford, only child of Ella H. Sandford, is not at present taxable.

4 That it was error to allow costs to the comptroller.

With regard to the first of these contentions, it is conceded that the property passing to the mother of the testatrix is personal property of the value of less than $10,000

By § 2, chapter 399, of the Laws of 1892, it is provided that “ when the property or any beneficial interest therein passes by any such transfer to or for the use of any * * * * mother * * -x- # 0f the decedent, grantor, donor or vendor * * * such transfer of property shall not be taxable under this act. unless it is personal próperty of the value of ten thousand dollars or more, in which case it shall be taxable under this act at the rate of one per centum upon the clear market value of such property.”

Section 11 provides that “ the surrogate shall * * * as often as. and whenever occasion may require, appoint a competent person as appraiser to fix the actual market value at the time of the-transfer thereof of the property of persons whose estates shall be subject to the payment of any tax imposed by this act.”

Section 22 provides that “ The words ‘estate ’ and ‘ property,’ as used in this act shall be taken to mean the property or interest therein of the testator, intestate, grantor, bargainor or vendor, passing or transferred to those not herein specifically exempted from the provisions of this act, and not as the property or interest therein passing or transferred to individual legatees, devisees,, heirs, next of kin, grantees, donees or vendees.”

It is from the definition of the words “estate ” and “property,"' as used in § 22, that the surrogate reached the conclusion that if the property of the testator which passed to the individual legatees exceeded $10,000, then it could be taxed, notwithstanding that less than that amount might have gone to an individual legatee who, under the1 express provisions of the act, was exempt..

We think that in this the learned surrogate fell into error by not keeping in mind that it was the intent and spirit of the act to-fix a tax, not upon the property of the testator, but upon the property that was transferred to individual legatees, and also in failing to note that the statute was intended to create an exemption from "taxation in favor of those who stood in" such a relation to the testator that they were the natural objects of his bounty, and entitled to receive out of his estate, free from taxation, any sum that he might see fit to bequeath to them, provided such amount should not exceed $10,000. It will also be noted that the language of the act favors the construction that it is not the property that passes from the testator, but the property that is transferred to an individual, which is taxed, This distinction is pointed out in the Matter of Howe, 112 N. Y. 100 ; 20 St. Rep. 477, wherein the court said : “ The tax is not imposed upon the estate of which she was seized or possessed, but only upon so much of it as passes to certain persons—not all persons or any person. * * * There are many other provisions of the act, * * * all tending to show that * * * it is simply the share or shares of the beneficiary acquired through the will * * * which is to be valued, and the duty estimated according to its value.”

With regard to the second and third questions, a reference to the fourth clause of the will will show that it creates two future estates to take effect in the alternative, and the right in possession to "the remainder being contingent, it .is impossible to designate the person liable to pay the tax. We can see no distinction between the facts here appearing and those in the Case of Curtis, 56 St. Rep. 113, where it was held that no appraisement of the contingent interest should be attempted to be made, or any tax imposed thereon, until such interest became vested in possession, and, by a removal of the contingency, the rate of taxation and beneficiary could be determined.

As to the contention that the allowance of costs to the comptroller on the appeal to the surrogate was improper, we think that all that is necessary to be said is, that it was a matter resting in the sound discretion of the surrogate, which should not be disturbed except for sufficient cause, which is not present in the record before us.

Our conclusion, therefore, is, that as to the legacy to the mother, being under $10,000, it is exempt, under section 2, chapter 399, of the Laws of 1892 ; that the legacies to Ella H. Sandford and Olga Sandford were improperly taxed, and that in these respects the order or decree of the surrogate should be reversed, and in all other respects affirmed, with costs to appellants.

Follett, J., concurs.


author: Van Brunt, P. J.

text:
    Caroline L. Brown et al., Pl’ffs, v. Charles J. Richter, as Executor, etc., Def’t.

      (Supreme Court, General Term, First Department,

      Filed March, 1894.)

    W ILL—CONSTRUCTION—TRUSTS.
    Where a will creates several independent and complete trusts, some of which are legal and others illegal, and the legal can be upheld without doing injustice or defeating the testator’s intention, the illegal may be cut off and the legal trusts permitted to stand.'
    Motion for new trial where an interlocutory judgment has been entered upon a case containing exceptions.

      L. A. Lockwood, for motion; G. 8. Hives, guardian ad litem., for the infant deft; J. A. Dennison, for pl’ffs opposed.
   Van Brunt, P. J.

This action was brought by the children of James W. Lawrence, deceased, against the executor of the will of James W. Lawrence and Helen Gf. Lawrence, the infant daughter of the plaintiff, James B. Lawrence, and a judgment declaring that the will of said James W. Lawrence is void, as unlawfully suspending the absolute ownership of personal property, and for an accounting by the executor and distribution of the property amongst the plaintiffs. Judgment having been rendered in favor of the plaintiffs, and an interlocutory judgment entered, this motion for a new trial is made under § 1001 of the Code.

The testator died on the 21st of April, 1891, leaving him surviving his widow, two daughters—Caroline, married, and Sarah, unmarried—his son, James B., 'the plaintiff, and his granddaughter, Helen, the daughter of his said son. On the 2d of July, 1885, the defendant executed a will, which was duly admitted to probate, and letters testamentary issued to the defendant, Richter, on the 30th of April, 1891. There was also a codicil to said will, bearing date the 3d of August, 1885, which was also probated, but which does not affect the question involved in this action. The testator’s widow died on the 29th of August, 1891, the whole estate being personal property.

That portion of the will which is involved in this action reads as follows:

“ Third. All the remainder of my estate, real and personal, I give to my executors in trust.
“I. That they sell and dispose of the same at private sale or at public auction, at such time or times and upon such terms as they deem advisable, and invest tibíe proceeds thereof and keep the same invested.
“ II. That they pay the income thereof to my wife during her natural life, with leave to my executors to pay to her from to time any part or the whole of the said principal if, in their judgment, the same shall be necessary for her comfortable maintenance and support.
“III. That upon the decease of my wife, they divide so much of my estate as may then remain into equal portions to the number of children me surviving, the issue, if living, of a deceased child to count one in such division.
“ IY. That they pay the income of one of such portions to my daughter, Caroline Eoof, during her natural life, and, upon her separate receipt and upon her decease, the principal thereof shall be added to and disposed of as a part of the said other portions.
“Y. That they pay the income of one of such portions to my daughter, Sarah Catharine, during her natural life, and, upon her decease, that they pay the principal thereof to her issue, if any; if none, then the same shall be added to and disposed of as a part of the said other portions.
“YI. That they pay the income of one of such portions to my son, James Brewster, during his natural life, and, upon his decease, that they pay the principal thereof to his issue, if any ; if none, then the same shall be added to and disposed of as a part of the said other portions. With leave, however, to my executor to pay from time to time, or at any time, to my said son, the whole or any part of the said portion, if in their judgment they deem such payments to be for the best interest of my son.”

It will be seen, by an examination of this will, that the testator first gives the income of his whole estate to his widow during life, and upon her death his executors are directed to divide his estate into portions equal to the number of children he might leave him surviving, the issue, if living, of a deceased child to count one in such division. The executors were directed to pay the income of one of such portions to each of his daughters, and the remaining portion of income to his son, the plaintiff, James B. Lawrence. After the bequest to his daughter, Caroline, he provides that upon her decease the principal thereof shall be added to and disposed of as part of said other portions, and after the bequest to his daughter, Sarah, he provides that upon her decease the principal shall go to her issue, if any, and if none, that the same should be added to and disposed of as part of the other portions. The testator made the same provision in respect to his son, the executor having leave, however, to pay from time to time, or at any time, to his son, the whole or any part of his portion, if in their judgment they should deem such payment to be for the best interest of his son.

There is no question but that the bequest of the remainders over after the termination of the lives of the children was a violation of the statute, in that the absolute ownership of the estate was suspended for more than two lives in being at the death of the testator; and it is for this reason that it is contended upon the part of the plaintiffs that the whole bequest is void, and that the estate must be divided as in case of intestacy. This is undoubtedly true, if the bequests are so interwoven that they cannot be separated, and the testator cannot be said to have a separate and distinct intention in regard to each. It has become a familiar principle in our law since the decision of the case of Schettler v. Smith, 41 N. Y. 328, that where several trusts are created which are independent of each other, and each complete in itself, some of which are legal and others illegal, and the legal can be separated from the illegal, and upheld without doing injustice or defeating what the testator might, in the emergency, be presumed to wish, the illegal trust may be cut off and the legal permitted to stand. This rule was lately enunciated in the case of Kennedy v. Hoy, 105 N. Y. 134, and our attention has been called to no case which in any way conflicts with the rule thus laid down.

In support of the plaintiffs’ contention this last case is cited as an authority, as also the cases of Tilden v. Green, 130 N. Y. 29 ; 40 St. Rep. 512, and Cross v. U. S. Trust Co., 131 N. Y. 330; 43 St. Rep. 254.

An examination of the case of Kennedy v. Hoy seems to show that it is peculiarly an authority in favor of the proposition that, as far as the provision for the first two life estates is concerned, the will was valid; and that only the remainders over were affected by the unlawful attempt to dispose of the same upon the part of the testator.

In the case last cited the will of the testatrix directed a share of her estate to be placed in the hands of her executors as trustees, the income thereof to be applied to the support and maintenance of her son and his family during his life, and after his death the income to be paid to his surviving children until they reached the age of twenty-one, when the principal was to be divided among them, share and share alike. In the case of the death of the son without issue, or of all his children dying subsequently to his disease before reaching the age of twenty-one, then the will directed the share to be divided among her other children. The son survived the testatrix, having a wife and two children, and during the lifetime of the son a judgment creditor filed a bill to reach the trust fund, he claiming the trust to be void for unlawful suspension of the absolute ownership, and that the title to the trust property vested in the son as the heir of his mother. The judgment of the court was that the claim was untenable; that at least the trust for the life of the son was valid; and as this was a separate trust, complete in itself, it could stand, although the trust to take effect after his death should be held invalid.

Applying the rule laid down in this case to the facts appearing in-the record -before us, it would appear that the testator created a good and valid trust as to each of the three portions during the life of each of his three children, the disposition of such portion after the death of each child being the only violation of the statute ; and, therefore (precisely as was done in the case of Kennedy v. Hoy), the court must hold that the intermediate estates were good during the lives of the respective children, the bequests over only being void. In the case like the one at bar the question is not whether the testator intended to exclude this or that person from participating in his estate, but whether there is a clear and well defined intention that the parties for whom legal provision is made shall have the same, independent of the subsequent provision which contravenes the statute. In such a case the legal may be separated from the illegal, and the testator’s intention carried into effect so far as the law permits ; and it is only when the alternative disposition, which contravenes the statute, is called into effect, that the will becomes inoperative.

The distinction between the case at bar and the case of Tilden v. Green, above cited, is manifest. In the case at bar the testator intended his children to enjoy the portions assigned.to them during their lives, independent of any other consideration. And this he had a lawful right to do. After they were dead, however, he attempted to make a disposition of the portion of each child in a manner which contravened the statute; and it is only this disposition which the court can declare to be void.

In the case of Tilden v. Green a different question arose. The difficulty with the will in that case was that the clause of the will which was claimed to be good, was so dependent upon the succeeding clause, which was conceded by all parties to be bad, that it could not be said that the testator intended that the clause claimed to be valid should go into effect .irrespective of the one succeeding, which was admittedly bad.

The case of Cross v. U. S. Trust Co., also cited by the plaintiffs in support of their proposition, does not seem to have much application to the case at bar, because that was a will executed by a resident of Rhode Island.

It seems to us that, without doing any injustice, or defeating what the testator in the emergency might be presumed to wish, the life estates of the three portions to his children may he sustained and the remainders over declared illegal. Thus the illegal trusts are cut off and the legal permitted to stand.

We think, therefore, that the learned judge erred in declaring the trust absolutely void; and that the remainders over, after the termination of the life estate, are all that are in contravention of the statute.

• The judgment should be reversed and judgment ordered in accordance with this opinion, with costs to all parties appearing to be paid out of the estate.

Follett, J., concurs.


author: Follett, J. Yan Brunt, P. J.

text:
    In the Matter of the Judicial Settlement of the Accounts of Solomon Farian, as Administrator, etc., of Charles Wiegel, Deceased, Resp’t., Frederic W. Wiegel et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed April, 1894.)

    1. Gift — Causa mortis—Presumption.
    There is no presumption of law or fact in favor of a gift.

      2. Same — Proof.
    A gift must be established by evidence which is clear arid convincing, strong and satisfactory.
    3. Same.
    The evidence was held, in this case, insufficient to establish an alleged gift causa mortis through the delivery of savings bank books.
    Appeal from a decree of the surrogate’s court of the city and county of New York finally settling the accounts of Solomon Farian, as administrator of the estate of Charles Wiegel, deceased, entered on the report of a referee.

      Frederick W. Holls, for app’lts; Alfred Sleekier, for resp’t
   Charles Wiegel died intestate at the city of New York on Wednesday, March 11th, 1891, and April 16th, 1891, respondent, claiming to be a creditor, was appointed administrator of his estate by the surrogate’s court of the city and county of New York. This controversy arises over the title to $8,536.29 on deposit to the credit of the intestate at the date of his death, in six savings banks. The respondent asserts that Wiegel gave him these moneys on Sunday, March 8th, 1891, during his last sickness and in apprehension of death, while the appellants, intestate’s next of kin, who are resident citizens of Germany, assert that these deposits were not given to the respondent, but that the title to them is in him, as administrator and not individually.

The referee appointed to determine the rights of the parties reported in favor of the respondent, and his report was sustained by the surrogate’s court. The decision of this appeal depends upon whether, within legal rules, the testimony is sufficient to sustain the conclusion reached by the referee and the surrogate’s court. Before entering upon a discussion of this question it will be well to state the rule of evidence declared by the courts to be applicable to such cases. In this state the rule is that while there is no presumption of law or fact against a gift there is no presumption of law or fact in favor of one, and he who claims title to property through a gift must establish it by evidence which is “clear and convincing, strong and satisfactory.” Devlin v. Greenwich Savs. Bank, 125 N. Y., 756; s. c., 35 St. Rep., 922, reversing 16 Daly, 98; 30 St. Rep. 541; Ridden v. Thrall, 125 N. Y., 572-576; 35 St. Rep. 913; Lewis v. Merritt, 113 N. Y., 386; 22 St. Rep. 714; Harris v. Clark, 3 N. Y. 93-121; Bedell v. Carll, 33 id., 581-585; Grymes v. Hone, 49 id., 17-23; Scoville v. Post, 3 Edw. Ch. 203; Pom. Eq. Juris., § 1146.

This rule should not be relaxed in a case where the donee claims the entire estate of the donor to the exclusion of his next of kin. The intestate was a German by birth and a tailor by trade, and, after working for a few years in Paris, France, came, in 1870, to the city of Hew York, where he resided until he died. In 1871 he began working at his trade for the donee, a merchant tailor, and continued in his employ until his last sickness, in March, 1891. He was never married, and, so far as is known, had no relatives in America. In the early part of his service for the donee he roomed for several years in his house and afterwards slept for some years in his shop; but in December, 1890, he took a room at Ho. 421 Sixth street, a house kept by Mrs. Fix, where he remained until Sunday, March 8, 1891, when he was removed to Mount Sinai Hospital, where he died. The foregoing circumstances are established by undisputed testimony and afford about all the information given in respect to the decedent and his mode of life. The donee and his wife testified that on Thursday, March 5th, 1891, the donor was taken ill, and, on the advice of the donee’s wife, left the shop and went to his lodgings. On Friday and Saturday Mrs. Farian visited him at his lodgings, and on Saturday found him no better and advised him to go to the Mt. Sinai Hospital, to which he had previously expressed a desire to be taken in case of sickness. Mrs. Farian testified that about ten A. M., Sunday, March 8th, she and her husband drove to the donor’s lodgings for the purpose of taking him to the hospital. They found him in bed, and, at first, he seemed reluctant to go to the hospital, but soon consented, and she left the room while he dressed, with the aid of her husband. When the intestate was nearly dressed, her husband called her and she re-entered the room just as the donor was putting on his coat, when, according to her testimony, the following occurred: “Q. Then what happened there ? A. Then he says to my husband : ‘ Mr. Farian, I think I am a very sick man.’ He said this in German. He put his hand in his pocket.

“.Mr. Holls—Tell what he said in English and give the words in German afterwards.

“ A. Mr. Farian, I am a very sick man, and you always have been very good to me. Putting his hand in his pocket be handed my husband a package, and he said: 1 If I should die all the money in bank belongs to you,’ and then we opened the door and went down stairs to the carriage.

“Q. And your husband had these bank books? A. My husband took the package and put it in his pocket.

“Q. How were these bank books wrapped ? A. Wrapped up in a newspaper with a piece of twine around it.”

Thereupon the donor and donee entered the carriage and were driven to the hospital at which, three days afterwards, the donor died. When Mr. Farian returned to his home the package, which the intestate had delivered to him, was opened and found to contain six savings bank books wherein the money in dispute was credited. The foregoing constitutes all of the evidence which tends to establish a gift of the deposits.

On the 16th of March, 1891, Mrs. Farian made an affidavit in which she stated : “ That she was present at 421 Sixth street, City of New York, on Sunday, March 8th, 1891,'when her husband and herself came to take said Wiegel to the Mt. Sinai Hospital, and saw the said Charles Wiegel hand her husband six savings bank books, and heard said Wiegel tell her husband that he was a very sick man, and that if he should die all that was in the bank he would give to her husband, as he had no relatives living as he knew; that deponent and her husband had taken care of him and been good friends to him, and that he wanted him and his wife to have what little he had saved if he should die.”

On the 16th of April, 1891, the donee was appointed sole administrator of the intestate’s estate, and on September 23, 1891, he verified and thereafter filed in the surrogate’s office an inventory in which he included the accounts in the six savings banks as belonging to the estate. Five of the banks paid their deposits to the administrator, and, under some arrangement, the amounts were deposited with the State Trust Company, but the German Savings Bank refused to pay the amount to the credit of intestate, and, April 30, 1891, Mr. Farian, as administrator of the estate of the intestate, brought an action against the bank in the supreme court to recover the amount to the credit of the decedent. It was alleged in the complaint, which was duly verified by Farian, that the money belonged to the estate of the intestate, and that he, as administrator, was entitled to recover it.

We do not think the evidence by which the gift is sought to be established is “ clear and convincing, strong and satisfactory.” All of the testimony tending to support the gift was given by the donee’s wife and, while she had no present legal interest in establishing it, experience has shown that the interest of a loyal wife in the affairs of her husband is as intense as his own and quite as likely to warp her judgment and accuracy when testifying in his behalf as is the legal interest of the husband to warp his judgment when testifying in his own interest. Besides, the fact that the title by gift is supported only by a witness who has, in all senses except the legal one, a strong interest, there are circumstances of great probative force which render the testimony of the wife improbable, or, at least, far from satisfactory and convincing. The record shows that Farian gave an administrator’s bond in the penalty of $16,000, which, presumptively, is twice the value of the estate as stated by the petitioner in his application for letters. Code Giv. Pro., § 2667.

In the “ true and perfect inventory of all the goods, chattels and credits of such * * intestate” made, verified and filed by the administrator (Mi*. Farian), pursuant to art. 2, tit. 3, chap. 6, part 2 of the Bevised Statutes (then in force) it was stated that the sums to the credit of the intestate in the six savings banks belonged to the estate, and in the action brought by Farian, as administrator, against the German Savings Bank, he swore in the verified complaint that the deposit belonged to the estate. These oaths were not the unadvised acts of a person unacquainted with his legal rights, for Farian testified that, as soon as heard of the intestate’s death and before he was buried, he consulted with Nones, an attorney and counsellor of the courts of this state, who assisted in obtaining letters of administration, in making the inventory and who began the action in the supreme court against the German Savings Bank. Aside from the deposits,which are the subject of this controversy, the estate of the intestate amounted to less than $75, and we do not think a stranger to the blood of the intestate should be allowed to succeed to the entire estate upon testimony of the character which was offered to sustain his claim. In Harris v. Clark, supra, it was said: “Assuming, as we must in this case, that the draft is genuine, there is no doubt of the intention of Mr. Smith to give the money in question to his sister—and I come to a conclusion against her right with reluctance—a reluctance qualified, however, by the belief that the clear policy of the law is against the encouragement of gifts of this nature. They are essentially testamentary; they are to take effect only in case of the testator’s death, and they are revocable during his life. The same considerations of prudence and caution which induced the legislature to require wills of personal estate to be executed, published and attested with great formality, would seem to forbid these informal dispositions of property in expectation of death. The temptation to fraud and imposition in regards to these gifts is as powerful and as dangerous as in the case of wills, and yet has been left unchecked and unregulated by statute; and they ought not to be tolerated by the courts, unless they are attended by the requisites which the common law prescribes to give them validity.”

This language is peculiarly applicable to this case. The intestate was not in extremis when it is asserted that he made the gift, but he had ample opportunity to express his intention by a will, executed in accordance with the laws of this state.

We arc of the opinion that the decree is not supported by the evidence, and that it should be reversed and a new hearing had in' the surrogate’s court, with costs to the appellants to abide the event.

O’Brien, J., concurred.

Yan Brunt, P. J.

(concurring) While concurring in the result of Mr. Justice Follett’s opinion, I cannot concur in the reasons which he has assigned therefor.

It is undoubtedly true that in order to support a gift such as is claimed in, this proceeding the proof should be reasonably clear and satisfactory; but the fact that the witness by whom it is sought to establish the gift may be said to be interested in the result should not preclude a finding that the gift had been established by the evidence of such a witness. If the question as to the gift was being tried before a jury, the mere fact that the witness proving the gift was the wife of the donee would not permit the court to take the question from the-jury; and if the jury, under proper instructions, believed the wife, and there was nothing which made it manifest that the story of the wife was incredible, the verdict could not be disturbed. So, in the case at bar, the mere fact that the respondent sought to establish the gift by the testimony of his wife did not prevent a finding in his favor notwithstanding that she may have had a large interest in his success.

Upon an examination of the evidence in this case it seems to me that the wife is singularly supported by the affidavit which she made, and which it is claimed upon the part of the appellants is a contradiction of her testimony in this proceeding.

It is further insisted that the conduct of the respondent in placing in the inventory the subject matter of the gift which is claimed in this proceeding, also tends to weaken the testimony which was given in support thereof. It appears from the evidence that the respondent consulted an attorney. What advice the attorney gave we do not know; but thereafter the respondent and wife made the affidavit referred to and the money in bank was included in the inventory, which inventory was sworn to by him. How the fair inference to be drawn from these facts is that the respondent was advised that the facts which are now claimed to have constituted a gift of the moneys in bank were not sufficient to transfer, the title; and this being the condition of mind of these parties, the affidavits in question were sworn to by the respondent and his wife. In her affidavit she says that she saw the deceased hand her husband six savings bank books, and heard him tell her husband that he was a very sick man, and that if he should die all that was in the bank he would give to her husband as he had no relatives living as he knew; that deponent and her husband had taken care of him and had been good friends to him; and that he wanted him and his wife to have what little he had saved if he should die. This affidavit was made at a time when these parties evidently believed that such a transaction was insufficient to transfer the title. The only variation from this story in the evidence she gave upon the stand, perhaps, is the failure to identify the books as clearly as they are in the affidavit, and the testifying to the statement of the deceased that the witness and her husband had taken care of the deceased and had been good friends to him, and that he wanted him and his wife to have what little he had saved, if he should die. This variation was entirely immaterial; because it is manifest, taking the whole statement together as contained in the affidavit, that the gift was to be to the husband; and that the statement that the deceased wanted him and his wife to have what little he had saved, applied to the assumption upon the part of the deceased that the wife would enjoy what was given to her husband. It seems to me that if the wife was a credible witness her evidence could be and was sufficient to make out a complete gift causa mortis.

The result of holding that such a gift cannot be predicated upon the testimony of the wife is adding a new rule to the law of evidence, viz.: that to establish a fact in reference to a gift causa mortis evidence of parties entirely indifferent is necessary.

But I think, however, that upon the proof as it stands there was one fact which was insufficiently established, and that is that the bank books which are now claimed by the husband were all handed over to him at the time testified to by the wife. All that she saw was a package which the husband put in his pocket, and she did not see what she supposed to be that package for hours thereafter; and it was then in her husband’s possession, and he opened it, and showed to her some bank books. But there is no evidence that she even then knew how many there were, or that they were the bank books in question. And there was ample opportunity upon the part of the husband to put into that package anything he pleased. And as a result the probative force of the testimony of the wife was fatally defective in her not being able to identify that which was handed to the husband at the time of the alleged gift. And for this reason it seems to me the gift was not established.