Berg's Estate, In re

• Decision Date: 21 September 1970
• Citation: 64 Misc.2d 197,314 N.Y.S.2d 634
• Parties: In re ESTATE OF Henry W. BERG, Deceased. Surrogate's Court, New York County
• Court: New York Surrogate Court

Page 634

314 N.Y.S.2d 634

64 Misc.2d 197

In re ESTATE OF Henry W. BERG, Deceased.

Surrogate's Court, New York County.

Sept. 21, 1970.

Albertson, Simmons & Butler, New Rochelle, for petitioner Trustee (Joseph L. Albertson, New Rochelle, of counsel).

Robert S. Groban, Jr., New York City, for beneficiaries.

S. SAMUEL DI FALCO, Surrogate.

Henry W. Berg died on September 22, 1938, a resident of the County of New York, leaving a will admitted to probate in this court on January 7, 1939. In this proceeding the trustee under article NINETEENTH of that will seeks the settlement of its account and, in addition, construction of article TWENTY-FIRST thereof in which are embodied the investment instructions of the testator. Paragraph TWENTY-FIRST authorized the retention by the designated fiduciary of investments held by the decedent at the time of his death without regard to whether they were then lawful investments. He then went on in the same article to 'authorize' his trustee to invest in a specified list of government, state and municipal bonds of the kind found in the portfolio he had theretofore maintained.

In this article of the will there is not to be found the semblance of a direction to the fiduciary as to the investment program it was to follow in the management of the affairs of the estate. The testator's 'authorization' to retain and reinvest in securities of the kind described constituted no more than the expression of a suggested course of investment action, but it fell far short of the exercise of a permissible restriction on any appropriate statutory authority applicable in addition or in the alternative to the management and control of investment by fiduciaries.

It has frequently been held that a testamentary provision authorizing without directing the course of the investment of estate funds must be construed as permissive, thus allowing the acquisition of other securities permissible under the statute in effect at the time such investments are made. (Matter of Sanford, Sup., 149 N.Y.S.2d 500; People ex rel. Oldroyd v. McDonnell, 1 Misc.2d 1055, 149 N.Y.S.2d 497; Matter of Kline, 21 Misc.2d 297, 193 N.Y.S.2d 24.) Concurring, as it does in this view, the court holds that the investment instructions of the testator expressed here in the TWENTY-FIRST article of his will permit the trustee to invest in such securities as are eligible for investment by trustees generally.

The petition asks the court to rule that trustee may invest as provided in EPTL 11--2.2. That request requires a further determination whether this pre-1967 trust is governed by EPTL 11--2.2 or by Personal Property Law § 21. Although both sections were originally almost identical, a recent amendment to the former (L.1970, Ch. 321) has wrought a substantial difference between them. The problem of applicability arises because section 1--1.5 confines the Estates, Powers and Trusts Law to 'the estates * * * of persons living on its effective date (September 1, 1967)', and section 14--1.1 (subd. (b), par. 2) says that any 'repealed statute (such as the Personal Property Law) shall continue to apply to any instrument to which it would have applied had it not been repealed, whenever, under 1--1.5, such instrument is not subject to the provisions of this chapter * * * because its creator was not living on the effective date of this chapter * * *.'

If we read only these two sections we should conclude that the death of this testator in 1938 would mean that the administration of the trust is governed by pre-1967 statutes. A closer reading of both statutes in the light of relevant court decisions leads, however, to a different conclusion.

Significant are the very first words in section 1--1.5: 'Unless otherwise stated therein, the provisions of this chapter apply to the estates, * * * of persons living on its effective date * * *'. (Emphasis added.) Thus we must look at the respective sections of the Estates, Powers and Trusts Law to determine whether they state explicitly or by necessary implication that they are intended to be applicable to estates and trusts existing in August 1967. Section 11--2.2(a)(1) reads: 'A fiduciary holding funds for investment may invest the same' as therein set forth. Thus it is the time of investment that is decisive and not the moment of death. Section 11--2.2 (and its predecessor, Personal Property Law, § 21) is not designed as an aid in the search for testamentary intent. Rather it is intended to prescribe rules for investment of trust funds which the Legislature provides as a guide for fiduciaries when the governing instrument does not prescribe its own rules. Ideas on sound investment policy change from time to time and our statutes have passed through many changes. (Matter of Hamersley's Estate, 152 Misc. 903, at p. 908, 274 N.Y.S. 303, at p. 309.) Even...