text:
    Francis R. Upton, Respondent, v. Electric Construction and Supply Company, Defendant. Michael O’Leary, Respondent, v. Same. William O. Gantz, Respondent, v. Same. Edgar W. Youmans, Jr., Respondent, v. Same. Charles Klause, Respondent, v. Same. The Fort Wayne Electric Corporation, Respondent, v. Same. Charles Wendt, Respondent, v. Same. William J. Hammer and Others, as Assignees, etc., of Francis R. Upton, Respondent, v. Same. Thad. T. Grover and Chauncey G. Parker, as Receivers of the Electric Construction and Supply Company, Appellants.

      Attachment, when vacated — •cha/p. 418 of 1892 compels the plaintiff, not the defendant, to pay the sheriffis fees —fees not adjusted until the lien is established by judgment.

    Chapter 418 of the Laws of 1892, which provides that where a warrant of attachment is vacated, set aside or discharged hy order of the court, the sheriff is entitled to poundage upon the value of the property attached and such additional compensation for his trouble and expense in taking possession of and in preserving the property as the judge issuing the warrant allows, preserves the sheriffs right to fees in cases where he has made a levy under an attachment, whether the same be subsequently vacated or not, but where an attachment is so vacated the plaintiff, at whose instance the attachment was issued, and not the defendant, is liable for the sheriff's fees.
    On February 14, 15 and 16,1895, warrants of attachment were granted against the property of the Electric Construction and Supply Company and issued to the sheriff of the county of New York, under which attachments the sheriff claimed to have levied upon its property.
    On February 15, 1895, receivers of the property of such corporation were appointed in the State of New Jersey and in the State of New York, and on the next day they qualified by giving the required bonds.
    In April, 1895, such receivers obtained an order directing the sheriff to turn over the attached property to them, which motion was granted, the order directing that the receivers should sell the property so attached, and that the proceeds of such sale should be subject to the lien of the attachments and of the sheriff.
    Subsequently two of the attachments were vacated, and on July 1, 1895, the sheriff made a motion to have his fees and disbursements adjusted and allowed by the court. The receivers opposed the motion on the ground, among others, that there never liad been a valid levy, and that the sheriff was not entitled to any fees or disbursements.
    Upon an appeal from the order granting such motion,

      Held, that as the right of the sheriff to his fees necessarily depended upon the validity of the process under which he acted, the motion should not have been entertained;
    That the sheriff should be compelled to wait until a determination was reached as to the validity of the respective liens which he claimed against the fund, which liens, when adjusted, could also include an adjustment of the amount of fees to which the sheriff was entitled.
    Appeal by Tliad. T. Grover and another, as. receivers of the Electric Construction and Supply Company, from an order of tlie Supreme Court, made at the New York Special Term and-entered in the office of the clerk of the county of New York on the 16th day of July, 1895, taxing the sheriff’s fees and expenses upon certain levies of attachments in the above-entitled actions, and directing the said receivers to pay the same to the sheriff, as such order was resettled by an order entered in said clerk’s office on the Jth day of August, 1895, and also from said order resettling the same.

      Henry B. Gayley, for the appellants.

      William F. Goldbeck, for Upton, first attaching creditor, respondent.

      Charles F. Wells, for the sheriff, respondent.
   O’Brien, J.:

On February 14, 15 and 16, 1895, warrants of attachment were granted against the property of the defendant company and issued to the sheriff, under which the latter claims to have levied upon its property. On February fifteenth receivers of the property of the company were appointed, both in the State of New Jersey and in this State, and on the sixteenth qualified by giving their bonds. In April the receivers moved for an order directing the sheriff to turn over the attached property to them, which was granted, the order directing that the receivers should sell the property, providing, however, that the proceeds of such sale should be subject to the lien of the attachments and of the sheriff. Subsequently two of these attachments were vacated, and thereafter, and on July first, the sheriff made a motion to have his fees and disbursements adjusted and allowed by tbe court. The receivers opposed the motion on the ground that, never having made a valid levy, and never having made a levy of any kind until after the appointment of the receivers, the sheriff was not entitled to any fees or disbursements; and on the further ground ■ that, though levies were made, the amount claimed by the sheriff was excessive.

With respect to the plaintiff’s action in which the first attachment was issued, and under which the levy was claimed to have been made, no motion to vacate or set aside such attachment was made, although an answer was served and the action is now pending. Just what was done by the sheriff upon receiving the first attachments on the fourteenth of February towards making a levy is placed in doubt by the affidavits presented on the part of the receivers, tending to negative the claim advanced that the sheriff on that day took possession of or made any levy upon the property of the defendant.

The questions now presented on conflicting affidavits as to the validity of the attachments and of the levies made thereunder, and as to the validity of the claims upon which the attachments were based, were raised upon the motion made by the receivers to compel the sheriff to turn over the property to them, and on the granting of such motion it was directed that the proceeds should be held until a determination was made of such questions. This being the disposition made by the court, on which an order was entered and no appeal taken, we think that the present application made by the sheriff to tax his fees and expenses upon the attachments in these various actions is premature. The effect of now considering such questions would be to determine upon a collateral motion the validity of the attachments and the levies thereunder. This collateral attack is made upon a motion to which the attaching creditors were not originally parties, and was made by the sheriff alone upon notice to the receivers, although, on knowledge being brought to such creditors that such motion was.pending, they intervened and have been heard upon the questions involved.

The only justification for the motion at this time is to be found in the position taken by the sheriff, that, irrespective of the justice of the claims which are the basis of the attachments, or the validity of the attachments themselves, and irrespective of whether they are vacated or allowed to stand, he is entitled to his fees and disbursements. Part of this contention is based upon chapter 418 of the Laws of 1892, which, among other things, provides that where the warrant of attachment is vacated, set aside or discharged by order of the court, the sheriff is entitled to poundage upon the value of the property attached and such additional compensation for his trouble and expenses in taking possession and in preserving the property as the judge issuing the warrant allows. "We do not think it was the intention of the Legislature to compel a defendant who succeeds in vacating an attachment to jiay poundage to the sheriff upon the amount specified in the attachment, but justice would seemingly require that where so vacated, the plaintiff, at whose instance the attachment was issued, should be liable for the sheriffs fees. In other words, it was no doubt by this act intended to preserve the sheriff’s right to fees in cases where he had made a levy under an attachment, whether the same was subsequently vacated or not; but there is nothing in the express wording of the act, nor is it susceptible of an interpretation so unjust as, to compel one whose property has been illegally attached, and who has succeeded in having the attachment vacated, to pay the sheriff’s fees for wrongfully seizing upon his property.

Among the attachments issued, two have been already vacated, and the validity of the others, where, as here, they are brought in question, can only be determined when the same are confirmed by judgments. Having in mind the terms of the order under which the property was turned over to the receivers, subject to the liens of the various creditors, including the sheriff, it would hardly be claimed that any of the other creditors would have the right to move to compel the receivers to pay their respective claims until they had established the same by judgments. And as the right of the sheriff to his fees necessarily must depend upon the validity of the process under which he acted, we fail to see how he is in any better position or entitled to any superior rights as against the receivers than the parties at whose instance he acted. "When in a proper proceeding, pursuant to the terms of the former order, it shall bo determined just what liens were created as against the property turned over by the sheriff to the receivers, then, and not till then, can it be determined what fees the sheriff should receive. This was practically the .disposition made by the court in the order turning over the property to the receivers, as will be seen not only from the order, but from the statement we have made of its provisions.

Our conclusion, therefore, is that the court- should not have entertained the motion, but should have denied it, leaving the sheriff: to wait, as all the other creditors are obliged to wait, until a determination is reached as to the validity of the respective liens which are claimed as against the fund, which determination, when such liens are adjusted, can include an adjustment'also of the amount of fees to which the sheriff: is entitled.

We think the order should be reversed, with ten dollars costs and disbursements, and the motion to tax the fees, because premature, denied, without costs. Ordered accordingly.

Van Brunt, P. J., and Parker, J., concurred.

Order reversed, with ten dollars costs and disbursements; motion denied, without costs.


source: Caselaw Access Project

author: O’Brien, J.:

license: Public Domain

text:
    Hiram Hitchcock, as Executor, etc., of Edmund R. Peaslee, Deceased, Plaintiff, v. Edward H. Peaslee, Appellant and Respondent; Hiram Hitchcock and Edward H. Peaslee, as Executors, etc., of Martha K. Peaslee, Deceased, Defendants; Fanny M. Peaslee, Respondent and Appellant.

      Will — security when required from the beneficiary for a fund to which others are contingently entitled — Statute of Limitations.

    A testator by his will provided as follows: “I give to my daughter Fanny M. Peaslee twent}^ thousand dollars in money or its equivalent in stocks, as my executor may decide, and twenty thousand dollars in trust, the same to revert at her death, if without issue, equally to my wife and my son.”
    In accordance with the judgment rendered in an action brought for the purpose of ascertaining the duty of the executor of such will in relation to the trust fund, the executor paid over the §20,000 to Fanny M. Peaslee, and she was directed hy said judgment to safely and securely invest and hold the same for those entitled to the principal sum at her death; the judgment did not require her to give security, nor was any given.
    .She invested the money in stocks and bonds, and prior to the summer of 1880 lost the entire amount. Shortly thereafter she informed her mother and her brother of the loss, but no action was taken by either of them until the year 1892, when. a proceeding was instituted to compel a restitution of or security for the fund, in. which it appeared that tlie testator’s widow, who had subsequently died, had in her lifetime released her interest in the fund to her daughter.

      Held, that the intent of the testator was to effectually dispose of this fund, and that Fanny M. Peaslee obtained a vested interest therein which would survive her and go to her issue, if any, and that upon her death without issue it would go to the wife and son of the testator if living, and in the event of the death of either of them the one-half in which the one so dying had a contingent interest would become the absolute property of the daughter;
    That one-half of the fund became the absolute property of Fanny M. Peaslee upon the death of her mother, and that her mother’s executors were not entitled to security therefor;
    That the • son of the testator was entitled to security for the other half of the fund;
    That the non-interference of the cestui que trust, Edward, before his interest came into possession, did not constitute an assent on his part to the breach of the trust, nor did his knowledge of such breach and his inaction set the Statute of Limitations running.
    CRoss-appeals by tlie defendant Edward H. Peaslee individually, an d tlie defendant Fanny M. Peaslee, from portions of an order of tlie Supreme Court, made at tlie New York Special Term and entered in tlie office of the clerk of the county of New York on the 17th day of April, 1895, confirming the report of a referee and directing that security be given for a trust fund.

      William H. Arnoux and John R. MacArthur, for Fanny M. Peaslee.

      Robert Hunter McGrath, for Edward H. Peaslee:
   O’Brien, J.:

Edmund P. Peaslee, the father of Edward II. and Fanny II. Peaslee, died in January, 1878, and the present litigation arises out of a provision of his will made for the testator’s daughter, as follows : “ I give to my daughter, Fanny M. Peaslee, twenty tliousand dollars in money, or its equivalent in stocks, as my executor may decide, and twenty thousand dollars in trust, the same to revert at her death, if without issue, equally to my wife and nay son.”

An action was brought for the purpose of ascertaining the executor’s duty relative to the trust fund, and it was therein adjudged that the executor should pay over $20,000 to the daughter, ’and she was directed safely and securely to invest and hold the same for those entitled to the principal sum at lier death. This judgment did not require her to give security, nor was any given. In 1879 or 1880 she invested this money in stocks and bonds in such manner that, prior to the summer of 1880, the entire amount was lost. Shortly thereafter she informed her mother and brother of the loss, but no action was taken by either of them until 1892, when this proceeding was begun to compel a restitution or security for the fund. The referee reported that the fund was entirely lost; that Edward IT. Peaslee, individually, was entitled to security for one-half of the fund, to wit, $10,000, and that the executors of Mrs. Peaslee, who in the meantime had died, were not entitled to security for the other half, because upon her death the one-half to which she might have been entitled had she survived, became the absolute property of her daughter, and because in her lifetime she had released her interest to her daughter. The referee’s report was confirmed and an order entered, which' not conforming to the decision of the judge at Special Term, a motion to resettle it was made and granted, and it is from this resettled order that the present appeals are taken. Edward IT. Peaslee appeals from so much' of the order as holds in effect that any interest which he may have in the fund in question is contingent upon his surviving his sister. .Eanny M. Peaslee appeals from so much of the order as holds that Edward has any interest whatsoever in the fund, and that she should give any security whatsoeyer.

The referee’s conclusion, which was assented to by the Special Term, was that as the reversion was “ equally to my wife and my son,” without the addition of words of survivorship, legal repre. sentatives, or other like words, the interest which would have belonged to Mrs. Peaslee, had she survived, became upon her death the absolute property of her daughter, freed from the trust. This construction, it is claimed, was erroneous, it being insisted that the provision in the will in question created a vested interest in the son Edward which, on the death of his sister without issue, would be payable to him, or, if he died during the lifetime of the sister, the same would go, should she die without issue, to his legal representatives; and that, even though the interest of Edward would be defeated by his death during the lifetime of his sister, this defeated interest would not pass to her, but would form part of the residuary estate of tlie testator. On the other hand, it is claimed that the true legal effect of the bequest was to create a vested estate in the daughter, subject to being divested in favor of her mother and brother, should they survive her, and should she die without issue. This latter was the view taken, by the referee and by the learned judge at Special Term, and, for reasons that may be briefly stated, we think should be sustained.

It is true that the testator, in connection with this bequest, used the word “ trust,” but when we come to read the entire clause it will be found that the essential elements of a legal trust, viz., an expressly designated cestui que trust, and an express purpose, object and terms of trust, are all wanting. Eliminating the idea of a legal trust, or that the daughter was a trustee, strictly speaking, we are by easy steps led to the conclusion, either that a vested interest was created in the daughter, subject to being divested in favor of her mother and brother by the happening of the contingency of her death without issue, or that a vested interest in the wife and son was created, subject only to the life interest of the daughter in the contingency of her leaving issue surviving her. Upon the question as to which of these constructions is right this controversy hinges.

The language used makes the interest of the wife and son expressly contingent upon the daughter’s dying without issue, and it is only in this latter event that it is to revert to them equally; It is not provided that upon the death of either the wife or son their interest should go to their legal representatives; and if we can reach the conclusion that it was the testator’s intention effectually to dispose by this provision of the $20,000, and not to have it become part of the residuary estate, we must construe his language with a view to effectuating such intention. ~We think, from the language used, that the fair intent was effectually to dispose of this fund, and that the daughter was to have a vested interest therein which should survive her and go to her issue, if any; and upon her death without issue, that it should go to the wife and son of the testator if living, and that in the event of either of them dying, the one-lialf in which the one so dying had a contingent interest should become the absolute property of the daughter.

There is nothing in this view which contravenes the Revised Statutes defining estates, for while it is therein provided that an estate is vested when there is some person in being who would have an immediate right to possession upon the ceasing of the precedent estate •— which in one view might look as though the estate of Edward was vested — this provision is to be taken in connection with the one immediately following, which defines what are meant by contingent estates, and it is therein provided that "they are contingent whilst the person to whom, or the event upon which, they are limited to take effect remains uncertain.” (1 R. S. 723, § 13.)

Until the death of the daughter without issue it cannot be determined whether the others will come into possession of the estate or not, and so long as that contingency exists the interest is in expectancy, which may or may not ripen into fruition. Without referring to or analyzing the various authorities presented by the respective counsel, and repeating what has been so often said, that in the construction of wills cases directly controlling are difficult to find, because in each instance the language under construction is different, and, therefore, the value of the case as an authority is wanting, it will suffice to say that upon an examination of the cases we find nothing inconsistent with the view taken by the referee, and at which we have arrived, that the language used by the testator means that by the devise in question the daughter took a vested estate in fee, subject to being divested upon a certain contingency, and that Edward and the mother took contingent remainders.

The argument made, that this contingent interest of Edward was barred by the Statute of Limitations or by estoppel, is without force. It is true that twelve years before bringing this action he was aware that she had lost the fund, and that with such knowledge he remained passive during that period, justifying his conduct by the statement that his sister was irresponsible, and that any proceeding against her would result in no benefit. Were this a case of a cause of action arising in favor of Edward which accrued at a certain time, and which he had neglected to prosecute, then undoubtedly the statute would run. Here, however, the sister had the possession and custody of the fund, and this she had a right to have until the contingency happened which would transfer it and make it the property of another. As already shown, had both mother and brother died she would have been absolutely entitled to the whole fund ; and the referee was right in his conclusion that the non-interference of the cestui que trust before his interest comes into possession does not constitute an assent to the breach of the trust, nor does his knowledge and inaction set the Statute of Limitations running. The daughter was directed by the judgment which gave her possession of the property to keep it safely until the final determination of the persons to whom it should go, and this obligation resting upon her was continuous and would remain until that time arrived. The right to insist that she should a,t all times have the fund did not, strictly speaking, constitute a cause of action in favor of those who might eventually become entitled to such fund which must be prosecuted as soon, as knowledge that the fund was dissipated was brought home to them, because all the rights of the parties and the. duties devolving upon the daughter were, fixed by the judgment under which she obtained possession; and being, therefore, obliged to have the fund, it was proper at any period, until the contingency happened when it should go to others, for such others as might be interested, upon obtaining knowledge that the fund had been dissipated, to apply to the court with a view of compelling the daughter to comply with the terms of the judgment in respect to safely keep: ing the fund.

"Without discussing the subsidiary questions we think that the order appealed from was right and should be affirmed.

Parker, J., concurred; Van Brunt, P. J., concurred in result.

Order affirmed, without costs.


text:
    James Roarty, Appellant, v. Edward C. McDermott and Others, Respondents.

      Judicial sale — expense of proceedings to compel a purchaser to take title —payment thereof from the proceeds of sale.

    A purchaser at a judicial sale in partition having refused to complete his purchase, the plaintiff in the partition suit took proceedings, with the knowledge and approval of all the parties, to the action, although there was no agreement that they should reimburse the plaintiff for any expense he might incur in such proceedings, to compel the purchaser to take title.
    The proceedings were finally successful in the Court of Appeals.

      Upon an appeal from the order denying plaintiff’s motion, made at Special Term, to have the sum incurred for services and disbursements in such proceedings paid by the referee and receiver in the action before making a distribution of the proceeds of sale, or of the rents received by him,

      Meld, that the rights of the parties were fixed by the order made in the proceeding to compel the purchaser to take title, and that there was no authority in the Special Term to grant any additional amount out of the fund;
    That although the expenses of the sale were directed by the judgment to be paid, the expense of a proceeding brought to compel a purchaser to complete his purchase could not be included; that the plaintiff had no lien on the fund for such claim, and that the court was without power to order the referee tO' pay such amount out of the proceeds of sale.
    Appeal by the plaintiff, James Roarty and bis attorneys, from that part of an order of the Supreme Court, made at the New York Special Term bearing date the 20th day of July, 1895, and entered in the office of the clerk of the county of New York, which denied the plaintiff’s motion for an order directing the referee and receiver in the action, before making a distribution of the proceeds of sale or of the rents received by him, to pay to the plaintiff, or liis-attorneys, out of the same, a certain bill or charge for services and disbursements incurred by the plaintiff in the proceedings had in the action to compel the purchaser to complete his purchase.

      William H. Hamilton, for the appellant.

      G. A. Seixas, for the respondents.
   O’Brien, J.:

This action was for partition, and under the decido the property involved was sold, and, before the time in which the purchaser was to complete his pmrehase had expired, final judgment was entered, confirming the sale and directing distribution of the proceeds. The purchaser refusing to complete, plaintiff moved to compel him to do so, and succeeded at Special Term, only to be reversed at the General Term and then to be finally successful in the Court of Appeals. It is shown that the proceedings to compel the purchaser to take title were had with the knowledge and approval of the parties to the action, although it is not claimed that there was any agreement or that they undertook to reimburse plaintiff for any expense he might be put to in such proceedings. It is not disputed that the attorneys’ services and disbursements rendered and incurred subsequent to the final judgment were reasonably wortli the amount claimed, $597.47; but the motion to have this sum deducted from the proceeds of the sale was denied at the Special Term on theground'of want of power. In this, we think, the Special Term was right. After final judgment and after the rights of the parties are fixed, there is no express authority for the granting of any additional amounts out of the fund.

Recognizing the force of this, the plaintiff contends that as the expenses of the sale were directed to be paid, these services may be regarded as coming within that category. "What are to be included in the expenses of a sale are so well understood as not to require enumeration, it being sufficient to say that they do not include the expense of a proceeding such as was here brought to compel a purchaser to complete his purchase. In common with the others, plaintiff claimed to have an interest in this property, and by the final judgment his interest was fixed and defined, and it was his privilege, upon the purchaser refusing the title, to take such proceedings as he thought proper to compel him to complete the purchase and thus obtain the fund out of which the amount of his interest could be paid. If he was unwilling to undertake this burden and expense alone, he could have arranged with the other parties by agreement for the payment of their proportion. In the absence of such an agreement, we do not think the court would be warranted in compelling the parties to contribute their proportions, or, against their objection, in allowing the amount to be deducted from the proceeds of sale.

That this is the correct view we think becomes clearer if we consider what would be the situation had the plaintiff failed instead of succeeding as he did in the proceedings. Plaintiff’s theory is that he should be reimbursed for expenses incurred for the common benefit of all. If this principle is sound, there is no reason why they should not be paid him whether successful or unsuccessful, assuming that the proceeding is taken in good faith. -Upon the refusal of a purchaser to complete his purchase, it might very well happen in a given case that the objections to the title would be regarded as valid by some of the parties though seeming untenable to the one who concluded to conduct the proceeding to compel the purchaser to take title. In sucli a case, if tbe proceedings were unsuccessful, .ifc -would be unjust to the one who concluded that the objections made were valid to compel him unwillingly to contribute to the expenses. Yet, if the plaintiff is right, no good reason can be suggested why in the one case one should not be required to pay his proportion as well as in the other. The underlying principle is that though one in endeavoring to enforce his own right may thereby confer a benefit on others, he cannot, in the absence of some express statute or agreement, compel the latter to share the expenses with him.

Our conclusion, therefore, is that, as the plaintiff could have no lien on the fund for such claim, and as there was no agreement between the parties, and we have been referred to no statute which would justify it, we concur in the view of the Special Term that the court was without power to order the referee to pay the amount out of the proceeds of sale.

The order, therefore, is affirmed, with ten dollars costs and disbursements.

Van Brunt, P. J., and Parker, J., concurred.

Order affirmed, with ten dollars costs and disbursements.


author:
O’Brien, J.: Parkee, J.:
      YaN BbuNT, P. J.:

text:
    Joshua L. Baily and Others, Respondents, v. Lewis M. Hornthal, Appellant; Albert Weis and Robert Weis, Defendants.

      Special pu/rtnership —- insolvency — presumed, upon a voluntary transfer of property — special capital effective as a claim only when there is an agreement for its return — debts of a special partnership are to be paid before the withdr/mal of special capital.

    It is only where it appears that a transfer of property was voluntary that the presumption will he indulged that the person making such transfer was insolvent, and the burden of showing that it was not made while he was in an insolvent condition will be imposed upon him.
    If a firm is shown to be overwhelmingly insolvent to-day the inference is justified that it was so yesterday and for some period back, but how far back will necessarily depend upon tire degree of insolvency and the remoteness of the period to which the inference relates.
    In an action brought against Albert and Robert Weis and Lewis M. Hornthal by judgment creditors of Albert and Robert Weis, with unsatisfied executions, to compel Hornthal to account for moneys received from their judgment debtors, it. appeared, that the plaintiffs recovered judgments on December 20, 1892 against Albert and Robert Weis for goods sold and delivered to the firm of “Weis Bros.;” that from May 1, 1886, until April 80, 1891, said firm was a limited partnership, organized under the laws of the State of Texas and transacting business at Galveston in that State, Albert and Robert Weis being general partners and Lewis M. Hornthal a special partner. The partnership was renewed yearly until April 80, 1891, when it was permitted to expire, Albert and Robert Weis retaining the assets and continuing the business under the same name without change or interruption. At the time of the formation of the limited partnership Hornthal contributed $50,000 of its capital, and on each renewal thereof he withdrew and at once returned §50,000, and there was no other or different contribution by him than such as was originally made.
    On November 5, 1891, “Weis Bros.” failed, announcing their insolvency by the execution of a deed of trust to one G-us Lewi for the benefit of certain creditors. The contracts for the sales by the plaintiffs to “Weis Bros.,” with one exception, were made prior to the termination of the limited partnership.
    In November, 1888, “Weis Bros.” loaned to the firm of Hornthal, Whitehead, Weissman & Co. of New York, of which firm Lewis M. Hornthal was a member, their accommodation paper to the amount of §25,000, which was at first entered in the ledger of the latter firm to the credit of Lewis M. Hornthal, but the entry was subsequently corrected and canceled by charging the item back to Lewis M. Hornthal and crediting “Weis Bros.” with the amount, so that it then appeared as a loan from " Weis Bros.” to the firm. After the dissolution of the limited partnership of “Weis Bros.,” Lewis M. Hornthal was charged with §25,000 in his special capital account with “Weis Bros.,” and his New York firm was credited with the same amount in its account, the payment to him being effected by a cancellation of the loan to his New York firm. The balance to Hornthal’s credit in his special capital account was then transferred to the account between “ Weis Bros.” and Hornthal’s New York firm, and for this balance, which was subsequently paid by Lewi to Hornthal, Hornthal was preferred in the trust deed executed to Lewi by the firm of “Weis Bros.” for the benefit of its creditors.
    The trial court found that, at the time of its dissolution, the special partnership of “ Weis Bros.” was insolvent.

      JIM, that if, in the honest belief that the firm of “Weis Bros.” was solvent, the partners, as between themselves, made an agreement by which, in good faith and without injury to the then creditors of the firm, the special partner was to receive what was agreed to be paid to him at a future date, such could not be regarded as a fictitious claim or one that could not be enforced;
    It further appeared there was no agreement between “Weis Bros.” and Hornthal for the return to Hornthal of the capital balance.

      JIM, that in that case there was no agreement that made the capital balance of Hornthal effective as a claim which “Weis Bros.” could lawfully prefer;
    That as, when the preference was given to Hornthal (the liability to the plaintiffs having been contracted subsequent to the dissolution of the limited partnership) the plaintiffs were then existing-creditors, and the special partnership was insolvent, Hornthal, in the absence of any agreement to pay him, was only entitled to the balance of the capital contributed by him after the payment of such creditors;
    That the firm being insolvent and no proof being offered to show that there were sufficient assets to pay all the creditors, and the existence of any claim in favor of Hornthal being negatived, the general partners could not take their assets, and apply them to a claim which was not shown to have had a valid foundation;
    That as to so much of the plaintiffs’ claims as were debts of the special partnership, they were entitled to be paid before the' withdrawal by Hornthal of any portion of his special capital.
    Tan Brunt, P. J., dissenting so far as a recovery was allowed based upqn an-indebtedness contracted subsequent to the dissolution of the special partnership.
    Appeal by the defendant, Lewis M. Hornthal, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 11th day of January, 1895, upon the decision of the court rendered after a trial at the New York Special Term.
    Also an appeal by the defendant, Lewis M. Hornthal, from the decision of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 10th day of January, 1895, which directs judgment for the plaintiffs Joshua L. Baily, Frederic L. Baily and Albert L. Baily for the. sum of $8,333.24 against the defendant, Lewis M. Hornthal; in favor of the plaintiff James Talcott against the defendant, Lewis M. Hornthal, for $865.85, and in favor of the plaintiffs for the sum of $250, additional allowance and the costs and disbursements of this action.

      William N. Cohen and Frederick P. Delafield, for the appellant.

      Charles E. Hughes and Arthur C. Rounds, for the respondents..
   O’Brien, J.:

This is an action by judgment creditors with unsatisfied executions to comjiel the defendant Hornthal to account for moneys received from the judgment debtors. ' These judgments, aggregating $8,189.49, were recovered on December 20, 1892, against Albert Weis and Robert Weis for goods sold and delivered to the firm of Weis Brothers. From May 1, 1886, until April 30, 1891, “Weis Bros.” was a limited partnership (organized under the laws of Texas) doing a dry goods business at Galveston. The judgment debtors, Albert and Robert Weis, were the general partners, .and the defendant Iiornthal was the special partner. The limited partnership was renewed yearly until April 30, 1891, when it was permitted to expire. The judgment debtors, Albert and Robert "Weis, retained the assets and continued the business under the same name without change or interruption. On November 5,1891, Weis Bros.” failed, announcing their insolvency by the execution of a deed of trust to one Gus Lewi for the benefit of certain creditors, whose claims aggregated $225,806.16. This deed of trust covered all the film merchandise and real estate. Certain property of the firm had been pledged previously, and the individual property of Albert "Weis was conveyed in trust for certain creditors, but no surplus was realized from either. The claims of the other creditors (unsecured), including plaintiffs’, amounted to $314,894.56, and the available assets outside of the trust estate were open accounts then estimated to be worth $166,404.23. The contracts for the sales by plaintiffs to Weis Brothers, with one exception, were made prior to the termination of the limited partnership. The deliveries took place in May, June and July, 1891, except two under Joshua L. Baily & Oo.’s first contract, which were made on April 20 and 30, 1891, respectively, and amounted in value to $711.29.

At the formation of the limited partnership in April, 1886, Horntlial contributed $50,000 to its capital. On each renewal he withdrew and at once returned $50,000, so that there was no other or different contribution than such as was originally made. In November, 1888, Weis Brothers loaned to the firm of Iiornthal, Whitehead, Weissman & Go., of New York, their accommodation paper to the amount of $25,000, which was at first entered in the ledger of the latter firm to the credit of L. M. Iiornthal, but this was subsequently corrected and canceled by charging the item back to Iiornthal and crediting Weis Brothers witli the amount, so that it then appeared as a loan from Weis Brothers to the New York firm of which the defendant Iiornthal was a member. After the dissolution of the special partnership Iiornthal was charged with $25,000 in his special capital account with Weis Brothers, and his New York firm was credited with the same amount in their account, the payment to Iiornthal being effected by cancellation of the loan to Iiornthal, Whitehead, Weissman & Co. The balance to Horn-thal’s credit in the special capital account ($26,433.34) was then transferred to the account between Weis Brothers and Horn thal’s New York firm, and for this balance Hornthal was preferred in the Lewi trust deed, which balance was subsequently paid to Hornthal by the trustee.

Upon the trial these facts and others that will be adverted to were presented without objection, and the only exceptions appearing in the record relate to" the findings of the court upon which the decision was based. There being no objections, therefore, to evidence or to the sufficiency of the complaint, what was said in Knapp v. Simon (96 N. Y. 292) is apposite : “ It was also the duty of the court below, in the absence of objections to the sufficiency of the complaint, to give the plaintiff the benefit of any cause of action established by the evidence.”

Turning then to the record as made, and leaving out of consideration the theory that the defendant Hornthal was to be charged with the common-law liability of a general partner, which was abandoned upon the trial and not considered by the judge, the case upon the evidence has two aspects: First, the plaintiffs may be regarded as creditors of Albert "Weis and Robert Weis, whose rights have been violated by the preference of a fictitious claim; or, second, the plaintiffs may be treated as creditors of the special partnership of Weis Brothers. The first was the position taken by the trial court, and in this aspect it was immaterial whether plaintiffs were creditors of the special partnership. Upon the latter theory, if sustain-’ able, $1,323.11, included in the Baily judgment, will have to be eliminated, because the claim therefor arose subsequent to the dissolution of the special partnership.

Upon evidence which we regard as far from satisfactory, the trial judge found that the special partnership of Weis Brothers was insolvent at the time of the dissolution, and that its liabilities were in excess of the amount of special capital contributed by Hornthal. As in this view there was no indebtedness from the firm to Horn-thal, liis claim being treated as fictitious, it was held that the creditors of the firm succeeding the special partnership could recover the amount paid to Hornthal by the trustee. The ground for this conclusion was, that the rights of the creditors of Albert Weis and Robert Weis were violated by the preference of a fictitious claim. As said in tlie opinion below: No money was due to Horntlial, eitlier from tlie special partnership or the new firm, and the general partners had no right to convey to him the property *of this insolvent firm which belonged to its creditors.”

Necessarily the entire foundation for the finding and conclusion of the trial judge was that the special partnership at the time of its dissolution was insolvent. The evidence on the part of the plaintiffs in support of this finding, started with the showing that at the time of tlie failure of the general partnership in November, 1891, there was a deficiency of assets amounting to at least $150,000 ; and it was urged that this raised a presumption that the condition thus appearing dated back to the dissolution of the special partnership in the April preceding, and to support such presumption authorities were relied on which hold that where a voluntary conveyance has been made, and the grantor is subsequently shown to be insolvent, insolvency will be presumed at the time of the. transfer. Without finding fault with this proposition of law, it, may be said that the payment to the defendant Horntlial was not a voluntary conveyance of property of tlie firm, unless we presume that the firm was then insolvent. In other words, to obtain the benefit of the rule two presumptions should be established : First, _ a voluntary conveyance or gift; and, secondly, insolvency when it was made. If the special partnership at its dissolution was not insolvent, then clearly, Horntlial having the right to a repayment of his capital contributed, such repayment could not be regarded as having been made without consideration;, and it would be going further than any of the cases relied upon by plaintiffs to hold that the court will presume that the gift was voluntary,, and upon that build another assumption that tlie firm was insolvent when the payment was made. As we understand it, it is only where it is either conceded or proved that the transfer was voluntary that the presumption will be indulged in that the person making it was insolvent, thus thrusting upon him the burden of showing that it was not made while he was in such an insolvent condition. Undoubtedly, if a firm is shown to be overwhelmingly insolvent to-day, the inference is justified that it was so yesterday and for some period back, but how.far back will necessarily depend upon the degree of insolvency and the remoteness of the period to which the inference relates. This is a logical inference and is to be distinguished from that in the class of cases to which we have referred, in which it has been held that where a voluntary gift is shown insolvency will be presumed. The plaintiffs are entitled to the full benefit of the logical inference that arises, and the weight of this is to be determined by the condition of the general partnership when it failed in November, 1891.

It is admitted by Ilornthal that the deficit at that time amounted to $150,000. In addition, the plaintiffs’ experts presented a report showing the course of business from April 1, 1891, to the date of the failure, which gives the total losses during that period as $32,415. Besides this we have the drawings of the partners from April until November, amounting to between $20,000 and $30,000, to which must be added depreciation of unsold merchandise and losses in outstanding accounts. These represent quite a considerable amount and are as much as, or more than, the deficit of $.150,000 admitted by Ilornthal. It is not onr purpose to go over the accounts, which have been ably summarized by the respective counsel, the plaintiffs showing a deficit of at least $200,000, while the defendant Ilornthal makes an apparent showing of assets amounting to $546,596.21, and of total liabilities, secured and unsecured, amounting to $540,Y00.'72. This wide divergence in the value of the assets is reconciled to some extent by remembering that plaintiffs have taken the valuation of an insolvent firm that has stopped business, while the defendant ITorntlial regards them as assets belonging to a live and going' business and not to a defunct firm. This will account for the financial condition of the firm after it had failed, as shown by plaintiffs, as contrasted with the appellant’s showing when it was a live and going concern. It may be that the plaintiffs are right, and upon conflicting evidence we should not differ with the finding made by the learned trial judge, that at the time of the dissolution of the special partnership it was insolvent; but we have referred to the respective contentious of the parties for the purpose of showing that, while after the failure of the general partnership there was a large deficit, resulting from the sale of property and its distribution among creditors, there was no overwhelming jjroof to sustain the conclusion that the special partnership at the time of its dissolution was insolvent.

Assuming, tlien, a difference of opinion upon tliis question, depending upon bow we look at the proof, and taking the view adopted by the trial judge, that the special partnership was, in fact, insolvent, the question remains whether the adjustment at that time made between the partners can be successfully assailed by those who subsequently became creditors of the general partnership, with which the defendant Hornthal had no connection. At first blush it would seem that upon the dissolution of the special partnership the only ones interested in the adjustment made between the parties would be the partners themselves and their then creditors; and there is no good reason apparent why the partners could not, as between themselves, settle their differences as they saw fit, provided this was done without injury to or violation of the rights of their creditors. If, therefore, their creditors were fully protected, the partners were at liberty, if acting in good faith and without any intent to defraud, to reach a basis of settlement which should include the right of the defendant Hornthal to be paid his special capital. And, assuming that no creditor was wronged, and, as was here done, the special partner permitted the general partners to take over all the assets and continue the business upon an agreement to pay him what he contributed by way of special capital, could not he, as against the general partners, sue and recover upon such agreement to pay him ? Could they, in .such an action, set up as a defense that they were relieved from liability, because, at the time they made the agreement, the firm, without their knowledge, was insolvent, and that the claim they had agreed to pay was, therefore, fictitious % In this connection it must be remembered that the general partners had complete control of the business and the books, and were in such a position when they made the agreement that they knew, or will be presumed to have known, the actual condition of the firm; and, if instead of accounting and determining the exact status, they preferred to make the agreement to pay the special partner his capital, we fail to see why they should not keep such agreement.

Of course, this discussion has proceeded upon the theory that such an arrangement was in good faith and without any intent to defraud. If there was anything to show that the special partnership was so overwhelmingly insolvent that all the partners knew, or should be presumed to have known, its condition, so as to justify the inference that, by a collusive arrangement entered into between the parties, it was agreed that the special partner was to get his money out at the expense of those who subsequently might deal with the general partnership, then, undoubtedly, because a fraud upon them, they could recover the amount which, under such circumstances, was paid. Here, however, there was no evidence of bad faith or fraud, or proof that what was done was with intent to cheat subsequent creditors. One of the Weises, examined for the plaintiffs, testified: “ On the 30th of April, 1891, and prior thereto, the firm of ‘Weis Brothers’ enjoyed good credit, and our assets exceeded our liabilities on the 30th of April, 1891.” It may be that the evidence shows that in this statement the witness was in error, but it is important as rebutting the presumption that the firm was in such a condition of insolvency that the parties knew, or should have known, that it was insolvent. If, in the honest belief that it was solvent — and nothing to the contrary appears in this record — the jiartners as between themselves made an agreement by which, in good faith and without injury to the then creditors, the special partner was to receive what was agreed to be paid him at a future date, we fail to see how this can be regarded as a fictitious claim or one that could not be enforced.

Our conclusion upon this branch of the case, therefore, is that, had there been evidence of an agreement to pay Ilornthal, the plaintiffs’ proofs did not go far enough, and while there may have been sufficient to justify the conclusion that the special partnership was insolvent at the date of its dissolution, there is nothing to show any fraudulent arrangement or agreement made in bad faith by which the claim that the defendant Ilornthal had against the partnership was changed from a valid claim as between themselves into a fictitious one as against subsequent assailing creditors. It will thus be seen that we do not agree with the plaintiffs in the view that if there had been an agreement, at the time of the dissolution of the limited partnership, to ]3ay Ilornthal his capital balance, it and the payments thereunder would have been fraudulent and void as against so much of the plaintiffs’’ claim as arose after such dissolution. We have been led into this discussion because it is alleged in the complaint, and stated by the trial judge in his opinion, that notes were given to Ilornthal for the bal-auce clue liiin. Tliis, as evidencing an adjustment and agreement to pay, would, if proved, liave given tlie defendant Iiorntlial a valid enforcible claim, and tlie intimation to tlie contrary in tbe opinion below was erroneous.

Notwithstanding tlie language of the complaint and the opinion, plaintiffs insist that there was no agreement between "Weis Brothers and Hornthal for the return of the capital balance, and in this we think the plaintiffs are right. That portion of the complaint which alleges that notes were given is denied hy the answer, and there was no evidence produced upon the trial to substantiate it. Moreover, Iiorntlial testified that he had no agreement except that under which the special partnership was organized. Accordingly, the firm simply expired on the '30th of April, 1891. The agreement under which it had existed contains no provision for the return of the capital. The parties were left to the ordinary legal consequences attending the capital contribution. Hornthal had a capital account with Weis Brothers, and when that firm expired there was a book balance of something over $50,000. On May 23, 1891, without any agreement whatever, but simply in part payment of the balance shown by the books, $25,000 was charged to Hornthal in his account with Weis Brothers, and the same amount was credited to Weis Brothers in their account with Hornthal, Whitehead, Weissman & Oo. The debt. from Hornthal, Whitehead, Weissman & Oo. squared this much of the capital balance, and left in Hornthal’s special account a balance of something over $26,000. There was, therefore, no agreement that made the capital balance effective as a claim which the judgment debtors could lawfully prefer. The partners in May, 1891, simply took $25,000, and in the November following $26,433.34 of their property and gave it to Hornthal, and when this preference was given in November the claims of these plaintiffs had been incurred and they were then existing creditors. In this situation the finding that the special partnership was insolvent is all important, because, in the absence of any agreement to pay, Hornthal was simply entitled to the balance of the capital contributed after the payment of creditors. And it appearing that the firm was insolvent, and no 2>roof being offered to show that there were sufficient assets to pay all the creditors, therefore, the existence of any claim in favor of Iiorntlial being negatived, the general partners could not take their assets and apply them to a claim which was not shown to have had a valid foundation.

Upon the other branch of the case, as to so much of plaintiffs’ claims as were debts of the special partnership, nothing need be added to what was said in the opinion of the court below, because, so far as plaintiffs can be considered as creditors of the special partnership of Weis Brothers, they were entitled to be paid before the withdrawal by the defendant Iiornthal of any portion of his special capital, and, to the'extent of their claims as against the amount so withdrawn, the plaintiffs, as creditors of the limited partnership, were entitled to judgment as against Hornthal, first, because of the insolvency of the limited partnership and the preferential payments to such special partner; and, second, because of the withdrawal of special capital during the continuance of the limited partnership.

Our conclusion, therefore, is that the judgment below was right ■and should be affirmed, with costs.

Parkee, J.:

Confirming as we do the finding of the Special Term that the limited partnership was insolvent at its expiration, April 30, 1891, the conclusion necessarily follows that the general partnership which succeeded to its assets and liabilities could not devote any part of .such assets in payment of the amount originally contributed by the special partner, as against creditors either of the limited or the general partnership. And this is so because the general partnership was not indebted to the special partner, or the limited partnership, but was indebted to both prior and subsequent creditors, and such creditors could not be deprived of any portion of the assets at the instance and for the benefit of a third party not a creditor. While the plaintiffs as creditors of the general partnership could not have effectually complained of an honest effort by its members to pay the creditors of the limited partnership in preference to him, he did, and does, have the right to insist that no part of the assets of the firm of which he is a creditor shall be turned over to one who has not an enforcible claim against the general partnership. I concur with Mr. Justice O’BrieN for an affirmance of the judgment.

YaN BbuNT, P. J.:

"While I concur with Mr. Justice O’BeieN in the affirmance of the judgment so far as it relates to liabilities incurred before the dissolution of the special partnership, there seems to me no ground for a recovery based upon indebtedness which was contracted subsequent to such dissolution. The creditors of the new firm certainly had no reason to complain because of the payment back by such new firm of the special capital which had been contributed to the limited partnership by the special partner. The only persons who-could claim that such special capital should be held for the purpose of the payment of their debts were the creditors of the special partnership ; and, although the plaintiffs may have been both creditors of the special partnership and of the new firm, that gave them no greater rights as to the indebtedness of the new firm to them than if such indebtedness had been the only amount which was due to them.

I am of the opinion, therefore, that the judgment should be modified by striking from the recovery the amount of the indebtedness incurred subsequent to the dissolution of the limited partnership, and as modified affirmed, without costs to either party. .

Judgment affirmed, with costs.


text:
    In the Matter of the Application of The Board of Street Opening and Improvement of the City of New York Relative to Acquiring Title to Certain Lands in Pursuance of Chapter 320 of the Laws of 1887. Louis Hanneman, as Committee, etc., of Giovanni Guarino, a Lunatic, Petitioner; Julia Guarino and Others, Respondents.

      Husband and wife — tenancy by the entirety — award for property in condemnation proceedings where the husband is a lunatic — proceeds should be deposited in court and paid to the survivor— Court of Common Pleas has no jurisdiction.

      The proceeds of real property belonging to lunatics or infants, when sold by the order of a court, will be considered real estate so long as the incompetency continues, and upon the death of the lunatic or. infant the money will go to-his heirs.
    Where real property, belonging to a lunatic and his wife as tenants hy the-entirety, is taken in condemnation proceedings for the purposes of a public park in the city of New York, the committee oí such lunatic is not entitled to the possession of any portion of the award, hut is only empowered to collect one-half of the income arising- therefrom.
    In such a case the entire award should be deposited in court, to he retained until the death of one of the .tenants by the entirety, and then paid over to the ■ survivor.
    The Ccurt of Common Pleas of the city of New York has no jurisdiction in regard to the disposition of such an award, although it may have previously adjudged such owner to he a lunatic and appointed his committee, such jurisdiction having been conferred upon the Supreme Court by chapter 820 of the Laws of 1887.
    MotxoN by Louis ITannemari, as committee, etc., of Giovanni Guarino, a lunatic, to confirm the report of a referee directing the distribution of an award made in condemnation proceedings.

      Weekes Bros, and William Gasten, for the motion.

      Andrew G. Cropsey, opposed.
   O’Brien, J.:

This is a motion by the committee of the estate of Giovanni Guarino, who was adjudged a lunatic, to direct the chamberlain to pay to him as committee the whole of an award in condemnation proceedings for the value of real estate of which the lunatic and his wife were seized as tenants by the entirety. It comes up upon the report of a referee to whom it was referred- to take testimony and report with his opinion. He reported that the fund should be deposited in a trust company to be invested ; that one-half of the income from the in vestment should be paid to the committee and the other half to Julia Guarino, the wife of the lunatic; that the attorneys who appeared for the Guarnios in the condemnation proceedings should have a lien on the award for $1,102 for their services, and that the taxes on the property should be paid out of the income of the property.

It is conceded that the estate acquired by Giovanni Guarino and his wife was one by the entirety ; that the awards, being the proceeds of such real property, are held by the same tenure; that the husband and wife are life tenants in common as to the usufruct of these proceeds during their joint lives, the survivor to take the whole of the principal. (Bertles v. Nunan, 92 N. Y. 152, 156; Matter of Blauvelt, 131 id. 249; Matter of Camp, 126 id. 384.) Notwithstanding such concessions, the committee excepts to the conclusions reached by the referee, and insists that as the committee was appointed in a proceeding in the Court of Common Pleas, which adjudged the husband a lunatic, the question of the disposition of the awards should be referred to that court upon the ground that, having first assumed and acquired jurisdiction, such jurisdiction was exclusive, and that if this position is not tenable and this court should assume jurisdiction over the disposition of the awards, the one-half of the principal should be paid to the committee upon giving a bond; that the attorneys who appeared in the condemnation proceedings should have no lien upon the fund, and that the taxes should not be deducted. A brief consideration of the questions thus presented will lead to the conclusion that the referee was correct in his recommendations.

It is true that the Court of Common Pleas first exercised jurisdiction over the person and property of the lunatic, and such jurisdiction being concurrent with the Supreme Court, and, because first exercised, exclusive (Code Civ. Proc. §§ 2320-2344), this court, with respect to matters over which such Court of Common Pleas had jurisdiction, would not interfere. In regard, however, to the disposition of awards made in condemnation proceedings for the purposes of public parks the Court, of Common Pleas has no jurisdiction, that having been conferred upon the Supreme Court by chapter 320 of the Laws of 1887, which expressly provides for the payment of such awards into the Supreme Court, “ to be secured, disposed of, improved and paid out as the said court sitting at General Term for said district shall direct.”

This court having jurisdiction, therefore, we pass to a consideration of the second question presented, as to whether or not the awards should be divided and half paid to the committee and half to the wife. We do not think that the committee is entitled to the possession of any of the award, but that he is only entitled to collect one-half of the income, and we think that the suggestion of the referee, that the entire award should be deposited in a trust company, to be retained until the death of one of the tenants by the entirety, and then paid over to the survivor, is both legal and just. It has been many times held that the proceeds of real property sold by the court, belonging to lunatics or infants, will be considered real estate so long as the incoinpeteney continues; on the death of the lunatic or infant the money will go to his heirs. (Horton v. McCoy, 47 N. Y. 21.) The rights of the parties, therefore, are not affected by condemnation, and each lias the same rights in the award as he or she formerly had in the land itself, the sum awarded for all purposes to be regarded as real estate. Each tenant by the entirety is seized of the whole estate; and to permit the committee to have the absolute control of one-lialf of the money in which the wife has an interest would be to wrest it from her and award its custody to a stranger. Upon the husband’s death the wife instantly becomes entitled to the whole fund, and even though a bond were given by the committee, the wife would not then receive the money, unless it was voluntarily paid over to her, but would have as a substitute a right of action on the bond. Upon no theory can we predicate the committee’s right to the possession and custody of one-half of the award. At best he is but a mere bailiff or servant, and has no title to the property. (Pharis v. Gere, 110 N. Y. 336.) We think, therefore, that the fund should be held entire, and as already intimated, the income should be divided, one-half going to the wife and the other half to the committee.

Upon the remaining questions, as to the lien of the attorneys who appeared in the condemnation proceedings and the deduction of the taxes from the interest allowed on the awards or the income from the estate, we think the referee was right. As to what the committee should be allowed for his compensation and counsel fees and his claim against the lunatic for board and maintenance and the costs in the lunacy proceedings, these should not be determined in this proceeding, but are matters to be passed upon when the committee accounts in the Court of Common Pleas, where he was appointed.

The disposition of the awards, therefore, should be made in accordance with the views herein expressed.

To the extent stated in opinion, motion to confirm report of referee granted.

Follett, J., concurred; Van Brunt, P. J., concurred in result.

Motion to confirm report granted to the extent stated in opinion.


author: O’Brien, I.:

text:
    In the Matter of the Application of The Department of Public Parks Relative to Acquiring Certain Lands Under the Provisions of Chapter 522 of the Laws of 1884. Martha N. Sproat, as Ancillary Guardian, etc., of Louis D. Sproat and Others, Infants, Petitioners; The Mayor, Aldermen and Commonalty of the City of New York, Respondent.

      Proceeds of sale of real property belonging to infants or lunatics — ancillary gucm'd/ian not entitled, thereto.

    The proceeds of real property belonging to lunatics or infants when sold by the order of a court will be considered real estate so long as the incompetency continues, and upon the death of the lunatic or infant the money will go to his heirs.
    The autho.ity conferred upon an ancillary guardian by section 2840 of the Code of Civil Procedure only allows the person to whom such letters of guardianship are issued “to demand and receive the personal property and the rents and profits of the real property of the ward ; ” an ancillary guardian has no title to the real property of his ward and should not be paid an award made to an infant for real property belonging to him taken in condemnation proceedings, but the award should be invested under the direction of the court during the minority of the infant and the income arising therefrom be paid to his guardian.
    MotioN by the petitioner, Martha N. Sproat, as ancillary guardian, etc., of Louis D. Sproat and others, infants, to confirm the report of a referee appointed to take proof of the facts stated in the petition in this matter, and of the rights of the parties therein, and for an order directing the respondent to pay to her an award made in condemnation proceedings.

      H. Kettell, for the motion.

      Charles A. O’Neil, opposed.
   O’Brien, I.:

This is an application for an order for the payment of an award made to unknown owners, and comes before the' court upon the report of a referee. The question presented is as to whether the award should be considered real estate or personal property.

It appears that the petitioner, Martha N. Sproat, individually and as ancillary guardian of the property and persons of the infants herein, applied for payment of the award which was made to unknown owners. The city acquired title to the land long after the death of the father of such infants, and at the time of taking such title the property was owned by the three children, subject to the dower rights of his widow. Letters of guardianship were issued in the State of Ohio to the petitioner, who there gaye a bond, and ancillary letters of guardianship have been issued to her by the surrogate of New York county. The referee reports that the award made for the land should be paid to the petitioner by virtue of such ancillary letters of guardianship, while the' city claims that the award should stand in the place of the land, and, being still real-estate, should not be paid to the petitioner.

It has been held that the proceeds of real property sold by the court belonging to lunatics or infants will be considered real estate so long as the incompetency continues, and on the death of the lunatic or infant the money will go to his heirs. (Horton v. McCoy, 47 N. Y. 21.)

In Ford v. Livingston (70 Hun, 178, headnote) it is held: “ Money paid by an elevated railroad company to the committee of a lunatic, in pursuance of the judgment of a court, as fee damages ’ and as the price of a conveyance of the easements appurtenant to the lunatic’s real estate taken by the railroad, is to be deemed real estate as long as the owner’s incompetencv exists.” And Mr. Pomeroy, in his work on Equity Jurisprudence (Vol. 3, p. 135, note to § 1167), says: “Where land has been taken, not by voluntary negotiation, but by the compulsory proceedings authorized by statute, and the money is paid into court, it continues to be real estate until it is taken out by some person having a right to elect to treat it as money, that is, by some person $ui juris who is an unfettered owner. If the owner is an infant or a lunatic, or if the land is subject to a settlement, the money necessaiily retains its character as real estate.”

Apart from this, however, we do not see by what right the award should be paid to the ancillary guardian, because she is not authorized to receive it. The authority conferred upon such a guardian by section 2840 of the Code of Civil Procedure only allows the person to whom such letters of guardianship are issued “to demand and receive the personal property and the rents and profits of the real property of the ward.” As the award, therefore, must be considered as real estate, and as the ancillary guardian lias no .title to the real property of the infants in the State of New York, she should not receive the award, but the same should be disposed of by this court, by directing its deposit in a trust company, there to remain during the minority of the infants, the income arising therefrom to be paid to the guardian.

Ordered accordingly.

Van Brunt, P. J., and Follett, J., concurred.

Motion denied; order made as directed in opinion, without costs.


author: Per Odeiam : INGEAHAM, J. :

text:
    Winifred J. Mulry, Individually and as Testamentary Trustee, etc., of William Mulry, Deceased, Appellant, v. William P. Mulry and Others, Defendants; Winifred R. Mulry and Others, Respondents.

      Will — trust created thereby — effect of naming the beneficim'y a trustee — power of a beneficia/ry when substituted as trustee under 1 S. 8. p. 730, § 68 —power of sale.

    Where a trust is attempted to he created, and the beneficiary, who is entitled to a beneficial interest in the trust, is created a trustee, no trust is in effect created; the person named as trustee and as beneficiary takes the entire estate. Where, however, there are others interested as beneficiaries in the trust besides the trustee a valid trust is ci'eated.
    Under the Revised Statutes of the State of New York (1 R. S. p. 730, § 68) providing that upon the death of the surviving trustee of an express trust the trust, if then unexecuted, vests in the Supreme Court with all the powers and duties of the original trustee, and shall be executed by some person appointed for that purpose under the direction of the court, an order of the court designating a beneficiary to execute the trust is not void.
    A testator, by his last will and testament, after making certain specific bequests, devised and bequeathed the rest and residue of his property to his executors in trust, to convert the same into cash or other property, and to make, execute and deliver all necessary and proper deeds and conveyances for all the property held by them at any time in trust, and to receive the rents, income and profits of the same, and to apply said rents, income and profits, first, for the benefit of certain persons therein specified, and then to pay one-third of the same to his wife for life, subject to said charges. The balance of the income from said trust estate lie directed should ho applied for the support, education and maintenance of his son, William P. Mulry, and his daughter, Winifred Mulry, in equal shares during their lives, giving full power to his executors, in their discretion, to convey, pay over or deliver to his said children, respectively, share and share alike, all the property held in trust by them in a manner provided in said will. In case of the death of one of his children, without leaving lawful issue, his executors were directed to hold, convey and pay over the share so held by them in trust for the child so dying for or to the survivor, in the same manner as they were authorized, ordered or directed in reference to the share held in trust for such survivor; and in the event of the death of both of his children, without leaving lawful issue, he provided for another disposition of the remainder of his estate.
    By a codicil to his will he gave the rest, residue and remainder of his estate to his executors, as trustees, in two equal shares or portions, to pay one-third of the net income of one share to his wife, and the remaining two-thirds of the net income of such share to his son, William P. Mulry, during his life, and to pay one-third of the net income of the other.share to his wife during her life, and the balance of the net income of such share to his daughter, Winifred Mulry, during her life. He also gave to his trustees full power of sale and provided in said codicil that, except so far as his original will was not inconsistent with . the codicil, the said will and every part thereof was ratified and confirmed.
    One of the persons named as trustee died before the testator, and the other two persons therein named having refused to qualify or act, the testators widow was appointed by the court substituted trustee of the trust contained in the will, and upon her death the testator’s daughter, Winifred Mulry, the beneficiary as to one-half of the trust property, was substituted as trustee in the place of her mother.
    In an action brought by the substituted trustee to obtain a judicial construction of the last will and testament and codicil'of said William Mulry, and for the instruction of the court as to the duties devolving upon her;

      Held, that as none of the trustees named in the will of the testator were beneficiaries, a valid trust was created;
    That the trustees named not having qualified, the trust, with all the powers and duties of the original trustees, was vested in the Supreme Court, and was to be executed under its direction;
    That the trust created by the codicil was a valid trust, and vested the title of the trust estate in the trustees;
    That the court, in the appointment of a substituted trustee, had vested such trustee with the powers contained in the original trust, «except as to the power of sale, which it had reserved to itself, and that such substituted trustee was in the, position of a trustee under the will, whose duty it was to rent the property and invest the personal property and receive the income, rents and profits thereof, and after paying the necessary taxes, assessments and other charges, to divide the net income according to the provisions of said codicil;
    That there was no provision in the will or codicil that could be construed into authority to pay the taxes or assessments on the property out of the principal;

      Thai although the codicil made no disposition of the remainder after the death of the life tenants, the remainder was disposed of under the provision of the will, which provision was confirmed by the codicil;
    That the provision of the will whereby on the death of one of the children of the testator the property was to be held in trust for the surviving child, was void as suspending the power of alienation for more than two lives in being ; that such clause, however, did not invalidate the other trust under which the property was held during the lifetime of the two children;
    That the provision of the will allowing the executors to pay over any portion of the principal of the estate to the children was revoked by the codicil;
    That the power of sale contained in the will and codicil was vested in the court, but as in the order appointing the substituted trustee she was expressly excluded from the exercise of that power, she could only exercise it upon obtaining further authority from the court;
    That the power of sale contained in both the will and codicil was not a mere naked discretionary power, but was given in connection with the trust estate as necessary for the proper performance of the trust; and that it was the intention of the testator to vest this power of sale as a necessary incident to the performance of the trust by the trustees.
    Appeal by the plaintiff, 'Winifred J. Mulry, individually and as testamentary trustee, etc., of William Mulry, deceased, from portions of a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 21st day of January, 1895, upon the decision of the court rendered after a trial at the New York Special Term construing the last will and testament and codicil of William Mulry, deceased.
    The last will and testament of the testator was as follows :

      “ In the name of God, amen. I, William Mulry of the City of New York, being of sound mind and memory, do make, publish and declare this my last will and testament as follows:

      “ I direct my executors hereinafter named to pay all my just debts, funeral and testamentary expenses.
    liI give devise and bequeath to my wife Winifred all my household furniture (except piano) and also the sum of five hundred dollars.
    “I give devise and bequeath to my daughter Winifred my piano and the sum of Two hundred dollars and to my son William P. Mulry the sum of Eight hundred dollars and to the Rev. John McOloskey, Archbishop of the Diocese of New York, or his successor in office, the sum of Two hundred and fifty. dollars or such part thereof as with the donations already made by me will amount to one thousand dollars to be applied towards the erection of the new Roman Catholic Cathedral in the city of New York.
    “ And I give to the Roman Catholic Orphan Asylum of the City of New York the sum of One hundred dollars.
    “ All the rest, residue and remainder of my property and estate, both real and personal, I give devise and bequeath to my executors, hereinafter named, in trust as and for the uses and purposes following, that is to say : Lsr trust with power at their discretion to sell and dispose of the same or the same to convert into cash or other property and to make, execute and deliver all necessary and proper deeds and conveyances for all my property held by them at any time in trust, and to receive the rents, income and profits of the same and to apply the said rents, income and profits as follows:
    “ First. For the support and maintenance of my mother Winifred during her life the sum of One hundred dollars per year. For the education of my nephew Thomas P. Mulry and niece Theresa Mulry, children of my deceased brother Michael, the sum of Seventy-five dollars each per year until they shall respectively attain the age of sixteen years.

      “ Second. One-third of the rent, income and profits aforesaid to pay to my wife Winifred so long as she shall live and remain unmarried after my death, hereby making the above several payments charges upon the above rents, income and profits and the above payments to my wife Winifred to be and to be accepted by her in full satisfaction and payment of any dower or right of dower in my real estate.

      “ Subject to the above charges I hereby order, direct and appoint that the rents, income and profits of the property held in trust as aforesaid or so much thereof as may be necessary for that purpose, be paid and applied for the support, education and maintenance of my son William P. Mulry and my daughter Winifred Mulry, share and share alike so long as they shall live hereby giving full power to my said executors in their discretion, and if to them it shall seem proper, to convey, pay over, or deliver to my said children respectively, share and share alike, subject as aforesaid, all the property held in trust by them, as follows, that is to say:
    “ To either of my said children one-third of the property held in trust for him or her respectively at the expiration of one year after my death. One other third thereof five years after my death and one other third thereof ten years after my death or in the discretion of my said executors the said property may be held in trust for each of my said children respectively during the lifetime of each respectively. -
    “ In case either or both of my said children shall die leaving lawful issue him or her surviving then and in such case my executors shall pay or convey to such issue respectively the property held in trust for such deceased child or children respectively. In case one of my said children should die without leaving lawful issue then I authorize, order and direct my executors to hold, convey or pay over the share held by them for the one thus dying for or to the survivor in the same manner as is hereby authorized, ordered or directed in reference to the share held in trust for such survivor. In case both of my children shall die without lawful issue surviving, then and in such case I give, devise and bequeath all my property and estate then held by my executors in trust (subject always nevertheless to the charges thereon in favor of my mother, nephew and niece and wife, hereinbefore mentioned) one-third to my brother Lawrence Mulry or his lawful issue ; one-third to my brother Thomas Mulry or his lawful issue; one-sixth respectively to my nephew, Thomas P. and my niece Theresa Mulry, children of my deceased brother Michael Mulry, or their lawful issue. Except that in case either of my said brothers or my said nephew and niece should die before my children without leaving lawful issue then and in such case the share or portion above bequeathed to him, her or them respectively shall be divided equally among the survivors of them and the issue of such as are dead leaving lawful issue, share and share alike.

      “ In case the rents, income and profits of all my property should not be sufficient for any of the purposes to which the same may be applied as aforesaid then and in such case I authorize my executors to use such portions of the principal as may be necessary for such purpose.
    “I nominate, constitute and appoint my brothers Lawrence Mulry and Thomas Mulry and my cousin Michael Mulry to be the executors of this my last "Will and Testament, hereby revoking all former or other wills by me made.

      “ In witness whereof I have hereunto set my hand and seal this first day of July in the year one thousand eight hundred and seventy-two.
    “WILLIAM MULRY.”
    The codicil of the said William Mulry was as follows :
    “ I, William Mulry, of the city of New York, do make, publish and declare this my codicil to my last will and testament made on the first day of July A. D. 1812, and hereby
    “ First. I revoke and annul the, or any gift, devise or bequest made in the said will and testament to the Rev. John McCloskey, Archbishop of the diocese of New York or to his successor in office.
    “ Second. I confirm the direction to my executors to pay all my just debts, funeral and testamentary expenses, and except as herein-before revoked or annulled I confirm each and every of the specific gifts, devises and bequests made before' the residuary clause of my said will and testament, and I hereby give and bequeath to public institutions in the city of New York as follows that is to say: to Saint Joseph’s Hospital for the Incurable and to Saint Josejfii’s Home for the Aged and to the Little Sisters of the Poor the sum of Three hundred dollars each.
    “ Third. All the rest, residue and remainder of my property and estate, both real and personal, I hereby give, devise and bequeath in two equal shares or portions in trust to the executors named in my aforesaid will and testament with the same powers as to each of said shares or portions to sell, convert and convey and to receive the rents, income and profits and with the same ultimate disposition of the absolute title to the whole and every part thereof as is specified in the aforesaid will and testament as to the rest, residue and remainder of my property and estate which is therein given, devised and bequeathed to such executors in trust, hereby directing such executors to pay one-tliird of the net income, rents, issues and profits of each of the shares or portions of my property and estate, which is to be held by them in trust, to my wife Winifred so long as she shall live and remain unmarried after my death and hereby making such payments a charge in equal amounts upon each of the shares or portions of the property or estate thus to be held in trust. Such payments to be accepted and received by my said wife in lieu of all dower or right of dower in. my real estate, and I do hereby direct and appoint that the net rents, income and profits of one of said shares or portions less the one-tliird thereof which is to be paid as aforesaid to my said wife shall be paid to my son William P. Mulry during his life, and that the net income or profits of the other of such shares or portions less the one-third thereof which is to be paid as aforesaid to my said wife shall be paid to my daughter Winifred J. Mulry during her life.

      “ Fourth. I revoke such parts or portions of my aforesaid will and testament as are inconsistent with this my codicil thereto and except as aforesaid my aforesaid will and testament and every part thereof which is not rendered nugatory by the death of my mother and the now attained respective ages of my nephew and niece therein named is hereby ratified and confirmed.
    “ In witness whereof I have hereunto set my hand and seal this 16th day of September in the year of our Lord one thousand eight hundred and eighty-seven.
    “ WILLIAM MULRY. [seal.] ”
    The complaint alleged among other things:
    IY. That thereafter Winifred Mulry, the widow of said testator, was, on or about June 14, 1892, by a decree of the surrogate of the county of New York, duly appointed’administratrix, with the will annexed, of the estate of William Mulry, deceased, and duly qualified and acted as such administratrix until the time of her death, on or about the 2d day of April, 1894.
    Y. That on or about the 14th day of August, 1893, an order was entered in this court under the direction of Hon. MokgaN J. O’BeibN, one of the justices of this court, appointing the aforesaid Winifred Mulry sole testamentary trustee under the last will and testament of William Mulry, deceased, upon the execution, approval and filing of a bond in the sum of $500 in the office of the clerk of this court, with full power and authority to execute the trusts declared in said last will and testament of said William Mulry as if she had been appointed by said deceased in his said last will and testament as such trustee ; that the aforesaid Winifred Mulry duly qualified as such trustee, and entered upon the discharge of her duties.

      VI. That the said "Winifred Mulry died intestate on or about the 2d day of April, 1894, and that the aforesaid trusts were not completed.
    VII. That on or about the 26th day of April, 1894, an order was entered in this court under the direction of Hon. Abbahah R. LaaveeNcb, one of the justices of this court, appointing the plaintiff herein testamentary trustee under the last will and testament of said William Mulry, deceased, in the place and stead of said Winifred Mulry, deceased.

      Michael J. Scanlan, for the appellant.

      Joseph H. Mahan, for the respondents.
   Per Odeiam :

Judgment affirmed, with costs, on the opinion of. INGRAHAM, J., delivered at Special Term.

Present — Van Brunt, P. J., O’Brien and Follett, JJ.

Judgment affirmed, with costs.

The opinion of Judge- INGeaham Atas as follows:

INGEAHAM, J. :

This action appears to have been brought for the purpose of having a judicial determination as to the powers and duties of the plaintiff under the order designating her as trustee under the trust declared in and created by the last will and testament and codicil thereto annexed of William Mulry, deceased.

All the facts alleged in the complaint having been admitted by the answers, the action was submitted upon briefs furnished by the counsel for the plaintiff and the guardian ad litem for the infant defendants.

Several questions are presented which are not discussed in the briefs submitted. It is proper at this time to pass upon one or two of the questions raised, as the contingency which will require an answer to the others may never happen. In the present condition of the authorities in this State, there seems to be some doubt as to the right of the court to appoint as a substituted trustee the beneficiary of the trust. It has been held by the Court of Appeals .that, where a trust is attempted to be created and the beneficiary, who is entitled to the beneficial interest in the trust, is created a trustee, no trust is, in effect, created, but that the person named as trustee and beneficiary takes the entire estate. (See Woodward v. James, 115 N. Y. 357; Greene v. Greene, 125 id. 512.)

It appears, however, that where’ others are interested as beneficiaries besides the trustee, a valid trust would be created. Thus in Woodward v. James (supra) the court says: “If then it be granted that as to her half of the income, the widow was not trustee, and took what was given to her by a direct legal right, it does not follow that her trust estate in the corpus of the property is in any manner destroyed, or that there is any the less a necessity for its existence. She can be trustee for the heirs, and that trust ranges over the whole estate, for the purpose of its management and disposition.”

In this case, however, none of the trustees named in the will of the testator was a beneficiary, and a valid trust was, therefore, created. One of the persons named to act as trustee died before the testator, and the other two persons named refused to qualify as executors or to act as trustees, whereupon letters of administration with the will annexed were issued to the widow of the deceased, who was a beneficiary of a portion of the income of the trust property, and upon a subsequent application to the court an order was granted substituting the widow as trustee of the trust contained in the will. The widow subsequently died, and upon application to the court the plaintiff, a daughter of the deceased and a beneficiary as to one-half of the ti’ust property, was substituted as trustee in her place.

It would appear that this case would come within the provision of 1 Revised Statutes (p. 730, § 68), that upon the death of the surviving trustee of an express trust, the trust, if then unexecuted, shall vest in the Supreme Court, with all the powers and duties of themriginal trustee, and shall be executed by some person appointed for that purpose under the direction of the court. And this appointment would be a designation, under the provision of that section, whereby the plaintiff was designated as the person to execute the trust under the direction of the court. This court held, at General Term, in the case of People ex rel. Collins v. Donohue (70 Hun, 325), that an order of the court designating a beneficiary to execute the trust was not void and could not be attacked collaterally.

The trust, with all the powers and duties of the original trusteés, is now vested in the court, and it is to be executed under its direction.

It seems to me immaterial to determine whether or not the plaintiff; has the legal title to the real estate, or whether it is in the heirs at law of the testator, or in the devisees; what is clear is, that the court is to execute the trust and has designated the plaintiff as its agent for that purpose.

The codicil materially changed the provision of the will as to the disposition of the trust estate. It is not difficult, however, to ascertain just what the testator intended by the execution of the codicil. By that codicil he gave the rest, residue and remainder of his estate to his trustees, in two equal shares or proportions, in trust to pay one-third of the net income of one share to his wife, and the remaining two-tliirds of the net income of such share to his son, the defendant, William P. Mulry, during his life; and to pay one-third of the net income of the other share to his wife during her life, and the balance of the net income of such share to his daughter, the plaintiff, during her life. And he also gave to his trustees full power of sale. No disposition is made, by the codicil, of the remainder of the trust estate; but by the fourth clause of the codicil he provided that, except so far as the original will was not inconsistent with the codicil, the said will and every part thereof was ratified and confirmed.

This trust created by the codicil was a valid trust and vested the title of the trust estate in the trustees; and no trustees having qualified under the will, the trust, I think, vested in the Supreme Court, as before stated. The court, in the appointment of the plaintiff, has vested her with all the powers contained in the original trust, except the power of sale, and she is, therefore, now in the position of a trustee under the will, whose duty it is to rent the property, and invest the personal property and receive the income, rents and profits thereof, and, after paying the necessary taxes and assessments and other charges, to divide the net income into two parts, retaining one for herself and paying over the other part to her brother, who is the other beneficiary.

There is no provision tliat by any possibility could be construed into an authority to pay the taxes or assessments on the property out of the principal. The clause in the original will, which provided that in case the rents, income and profits of his property should not be sufficient for any of the purposes to which the same might be applied as aforesaid, then the executors were authorized to use such portions of the principal as might be necessary for such purpose, does not apply to this clause, because it nowhere appears that the testator intended that the income should support either of his children in any specified manner, although any amount of the income should be paid to the children. All that the trustee was directed to pay to them was the net income, which is the gross income after deducting the proper charges, namely, taxes, repairs and other necessary charges and expenses.

As before stated, the codicil makes no disposition of the remainder after the death of the life tenants. By the original will, however, the remainder is disposed of, and, under the provision of the codicil before stated this provision in the original will, so far as it is legal, is confirmed by the codicil. I think it clear, however, that the provision in the will whereby, on the death of one of his children, the property was to be held in trust for the surviving child, is void as suspending the power of alienation for more than two lives in being at the time of the death of the testator, for the effect would be that each share would be held in trust during the lifetime of his wife, and of the two children, to whom the income was payable, and after the death of one child, during the lifetime of the surviving child, which would be three lives in being, and thus void. That clause being void, however, would not invalidate the other trust under which the property was held during the lifetime of the two children. Nor is it necessary now to determine to whom the property would go in the contingency of one child dying without issue. It seems now that one of the children is married and has issue, and that the other child, the plaintiff, is unmarried. There is no presumption that the plaintiff will die without leaving issue, and, in the event of that happening, the person or persons living at the time of her death who would then be entitled to the share held by the plaintiff and to the ownership of the remainder of this share could be then more properly determined. In the case of both children dying without issue the persons are clearly designated in the will to whom the remainder should then go.

I think the provision in the will allowing the- executors to pay over any portion of the principal of the estate to- the children was revoked by the codicil. Such a payment of the principal to the children is entirely inconsistent with the trust estate as created by the codicil, which, in express terms, provides that the whole of the net income of the trust estate shall be paid to the beneficiaries named therein during the lives of such beneficiaries. It would be clearly impossible to pay the whole income of the whole of this estate to the beneficiaries if a portion of the principal was paid to them.

It follows from what has been said that the power of sale is vested in this court, but, as in the order appointing the plaintiff she is expressly excluded from the exercise of that power, she can only exercise it upon obtaining further authority from the court. The power of sale contained in both the will and the codicil was not a mere naked discretionary power, but was given in connection with the trust estate as necessary for the proper performance-of the trust, so that in case the property in which the estate was invested produced no income, or for any other reason, it would appear to be for the benefit of the estate- that it should be sold, the trustees should have the power to sell it. It was thus the intention of the testator to vest this power of sale as a necessary incident to the performance of the trust by the trustees, and as such I think it passed to the substituted trustee. This is the- position taken in Lahey v. Kortright (132 N.Y. 455).

This, I think, disposes of all the questions presented, which it is necessary now to decide, and judgment is directed construing the will in accordance with this opinion. The question of costs can be deferred until settlement of judgment.