Chapal v. Stoll (In re Chapal's Will)

• Decision Date: 14 January 1936
• Citation: 269 N.Y. 464,199 N.E. 762
• Court: New York Court of Appeals Court of Appeals
• Parties: In re CHAPAL'S WILL. CHAPAL et al. v. STOLL et al.

269 N.Y. 464

199 N.E. 762

In re CHAPAL'S WILL.CHAPAL et al.

v.STOLL et al.

Court of Appeals of New York.

Jan. 14, 1936.

Proceeding in the matter of the application of George W. Olvany and another, as trustees under the will of Antonin Chapal, late of Nassau County, deceased, for the benefit of Francoise Naylor Hepworth, for certain instructions and for a construction of the will.From an order of the Appellate Division(245 App.Div. 818, 280 N.Y.S. 811), entered July 1, 1935, which modified and affirmed a decree of the Surrogate's Court construing the will, and instructing the testamentary trustees respecting their administration of parts of a trust estate, Claudia Chapal and others, substituted in the place of Francoise Chapal, deceased, appeal, and Francoise Naylor Hepworth and another, individually and as temporary administrators of the estate of Blanche Chapal, deceased, cross-appeal.

Order of the Appellate Division reversed, and decree of the Surrogate modified and affirmed.

Appeal from Supreme Court, Appellate Division, Second Department.

Stoll & Lynde, of New York City, for respondents and appellants Hepworth and others.

Edward B. Schulkind, of New York City, for appellants and respondentsClaudia Chapal and others.

Charles H. Stoll, Trustee in person, of New York City, for respondent stoll.

Ralph Herbert Wiener, of New York City, for respondent Hunt.

Otis T. Bradley, Logan Fulrath, Vermont Hatch, and Adrian D. Stevenson, all of New York City, amici curiae for Guaranty Trust Co. of New York and others.

LOUGHRAN, Judge.

This proceeding was brought for the construction of a will and for the instruction of trustees respecting their administration of parts of a testamentary trust estate.

Antonin Chapal, who died in July, 1928, divided his residuary estate into two equal parts which he devised and bequeathed to his executors in trust with directions in substance as follows: (1) To pay the income of one part to his wife, Blanche Chapal, during her life, and on her death to distribute three-fourths of the principal thereof to his daughter, Francoise, and one-fourth to his stepson, Robert Irving Chapal.(2) To pay the income of the other part to the testator's daughter, Francoise, during her life; on her death to distribute the principal thereof to her surviving issue per stirpes; and, in default of such issue, to distribute three-fourths of the principal to the testator's ‘heirs at law’ and one-fourth to his stepson.

No question arises in respect of the trust for the life of the testator's wife.On her death in 1931, that trust ended and the principal thereof vested accordingly.

What follows has reference only to the respective positions of the parties in interest under the trust for the life of the testator's daughter (now Francoise Naylor Hepworth).

The Surrogate ruled that the provision for the ‘heirs at law’ of the testator was ‘a gift to that class which should constitute his heirs at law if he had lived until the death of his daughter and died intestate immediately thereafter.’All parties accept that construction.The class so defined will be called for convenience the ‘heirs presumptive’ of the testator.

It appears that the appraised value of the trust was $598,641.28.Except for real estate carried at $35,750, the assets were personal property, including mortgages in which the trustees had invested pursuant to authority conferred by the will.From 1930 to 1933, inclusive, the average annual earned income was roughly $17,000.In 1934 income was substantially reduced, because through the foreclosure of mortgages the trustees acquired real estate which in part only has been productive.The trustees sought the directions of the Surrogate as to how in such a situation the balance was to be held even between opposing interests.

Instructions given were as follows: ‘The trustees shall set up separate accounts in their books for each separate parcel acquired as aforesaid, and such separate accounts shall be kept until such particular parcel is sold.If the income of a particular parcel is insufficient to pay the carrying charges thereof, the trustees are hereby directed to pay the deficiency from the principal of the trust estate and not from the income thereof.If the income of a particular parcel is more than sufficient to pay the carrying charges thereof, the trustees are hereby directed to exercise their own discretion and judgment with respect to distributing such surplus income entirely or to retaining the same or some part thereof to meet possible subsequent deficiencies.If such surplus exists in the case of a particular parcel as to which the trustees have theretofore taken or applied funds from the principal of the trust estate to pay deficiencies of income, the trustees are directed to reimburse the principal of the trust estate from such surplus income.Upon the sale of any particular parcel the trustees are directed to properly allocate as between principal and income the proceeds of such sale.’

Upon appeal by the heirs presumptive of the testator to the Appellate Division, that court in its opinion said that the carrying charges should be paid out of income (245 App.Div. 818, 819, 280 N.Y.S. 811), but in its order left the contrary direction of the Surrogate undisturbed, and thereby modified the decree only ‘by eliminating the provision that ‘upon the sale of any particular parcel the trustees are directed to properly allocate as between principal and income the proceeds of such sale’ and substituting therefor a provision that the proceeds shall be added to principal.'From that modification of the decree, Francoise Naylor Hepworth(the...