Farmers' Loan & Trust Co. v. Kip

• Decision Date: 26 May 1908
• Citation: 85 N.E. 59,192 N.Y. 266
• Parties: FARMERS' LOAN & TRUST CO. v. KIP et al.
• Court: New York Court of Appeals Court of Appeals

192 N.Y. 266

85 N.E. 59

FARMERS' LOAN & TRUST CO.

v.KIP et al.

Court of Appeals of New York.

May 26, 1908.

Appeal from Supreme Court, Appellate Division, First Department.

Action by the Farmers' Loan & Trust Company, as substituted trustee under the will of George Jones against Frances Coster Kip, William Bergh Kip, and others, for direction of the court as to the distribution of the proceeds of the sale of trust property. From a judgment of the Appellate Division (120 App. Div. 347,104 N. Y. Supp. 1092) affirming an interlocutory judgment of the Special Term (52 Misc. Rep. 407,102 N. Y. Supp. 137) appointing a referee, defendants Kip appeal, by permission, the Appellate Division certifying questions. Judgment affirmed.

George Jones died in the city of New York on December 13, 1886. He left no widow. His surviving heirs at law and next of kin were his three daughters, Rebecca Mason Jones, Frances Jones, and Margaret Smith; the defendant Daniel Butler Fearing, a grandson, who is the son of a deceased daughter; the defendant Lewis Quentin Jones, a grandson, being the son of a deceased son; and the appellant Frances Coster Kip (formerly Frances Coster Jones), a great-granddaughter, who is the granddaughter of the deceased son. At the time of his death George Jones owned a piece of real property situated in the city of New York and known as No. 70 Broadway. By his will he gave this property to his executor William Alexander Smith ‘during the life of the longest liver of my daughters, Frances Jones and Rebecca Mason Jones, in trust,’ to lease the same and pay over the net income thereof to his heirs at law above named in certain specified proportions. The will then provided:

‘At the death of the longest liver of my said daughters, Frances and Rebecca, I empower my executor to sell the said premises, number 70 Broadway, and I give and devise the proceeds thereof as follows:

‘One-fifth thereof to the appointees of my daughter Frances Jones, by deed or by will, and in default of such appointment, to her heirs at law.

‘One-fifth thereof to the appointees of my daughter Rebecca Mason Jones, by deed or by will, and in default of such appointment to her heirs at law.

‘One-fifth thereof to my daughter Margaret Smith.’

Another one-fifth was given to his grandson Fearing, subject to the condition that, in case of his death without lawful surviving issue before the death of the longest liver of the said two daughters, it should go to his appointees, or, in default thereof, to certain other persons. The remaining two-tenths were given to his grandson Lewis Quentin Jones and to his great-granddaughter, the appellant Frances Coster Kip, upon conditions practically identical in their import. The residue of the estate was given to the same persons and in the same proportions as the proceeds of the real property above mentioned, each of the daughters of George Jones receiving one-fifth absolutely.

Frances Jones never married. She died in the county of New York on April 15, 1906, leaving a will in which, after making certain specific bequests, she provided as follows: ‘Third: I give, devise and bequeath to the New York Life Insurance and Trust Company * * * and to its successors, all the rest, residue and remainder of my estate, real and personal, of which I shall die seized and possessed, or subject to my disposal by will, to have and to hold the same during the life of Frances Coster Kip, daughter of my nephew Alfred Renshaw Jones, now deceased, in trust and with power to the said corporation and its successors to collect and receive the rents, income and profits thereof, and to apply the said rents, income and profits to the use of the said Frances Coster Kip during her life. Upon the decease of the said Frances Coster Kip leaving issue her surviving, I give, devise and bequeath the said rest, residue and remainder of my estate, real and personal, to her issue absolutely.’

This action was brought by the plaintiff as substituted trustee under the will of George Jones, deceased, to obtain the directions of the court as to the distribution of the proceeds of the sale of the property No. 70 Broadway, the trust in which had been terminated by the death of said Frances Jones, who was the survivor of the two daughters whose lives measured the trust term. Meanwhile the property No. 70 Broadway was sold, and the trial court has found that the proceeds retained the character of real estate. The above-quoted provision in the will of the testatrix Frances Jones, by which she attempted to create a trust to continue during the life of Frances Coster Kip in the residue of her estate, including the share of the testatrix in the Broadway property, or its proceeds, over which she had held a power of appointment by deed or by will, was decided to be invalid in so far as it related to the Broadway property, because it suspended the power of alienation thereof for more than two lives in being. Frances Jones left debts amounting to $5,000; and an individual estate consisting of personalty which, independently of any part of the proceeds of the Broadway property, was valued at $381,907.69. The decision of the court at Special Term has been affirmed by the Appellate Division. The defendants Frances Coster Kip and her infant son, William Bergh Kip, have obtained leave to appeal to this court. The Appellate Division, in allowing the appeal, has certified the following questions for determination by this court: (1) Does the will of Frances Jones create a valid trust in one-tenth of the proceeds of No. 70 Broadway? (2) If said trust be held invalid, should the debts of Frances Jones be paid out of the share of the proceeds of No. 70 Broadway, as to which she had a power of appointment, instead of out of her individual estate? (3) If the said trust be held invalid, should the legacies given by the second clause of the will of Frances Jones be paid out of the share of the proceeds of No. 70 Broadway, as to which she had a power of appointment, instead of out of her individual estate?

Cullen, C. J., dissenting in part.Ernest P. Hoes, Frank L. Hall, and Fritz W. Hoeninghaus, for appellants.

Chas. F.

Brown and Frederick H. Man, for respondents.

WERNER, J. (after stating the facts as above).

The intricate questions presented upon this appeal have been considerably simplified by the able and illuminating arguments of counsel. These questions relate wholly to the testamentary disposition attempted to be made by Frances Jones of the remainder in an undivided one-fifth of the premises No. 70 Broadway, over which she had been vested with a power of appointment under the will of her father, the late George Jones. This latter will had created a trust for the benefit of the daughter Frances Jones in an undivided one-fifth share of the premises referred to, which was to continue during the life of the longest liver of the testator's daughters, Frances and Rebecca; and, upon the death of the survivor of these two, the one-fifth share which was the subject of the trust was to go to the appointees, ‘by deed or by will,’ of the testator's daughter Frances, and, in default of such appointment, to her heirs at law. The attempt of Frances Jones to execute by will the power thus conferred upon her has given rise to the questions at bar. In the residuary clause of her will the testatrix created a trust which, in addition to her own estate, expressly included all property subject to her disposal by will. This trust was to continue during the life of Frances Coster Kip, the daughter of a nephew of the testatrix, to whom the income was to be paid, and at her death the remainder was to go to her issue. As the trust created by the will of George Jones, which is concededly valid, suspended the power to alienate the corpus of the trust estate during the whole of two statutory lives, the principal question with which we have to deal is whether the trust attempted to be created by Frances Jones is valid in so far as it relates to the subject of the trust under her father's will, to wit, the property known as No. 70 Broadway. If, as to that property, the trust set up in the will of Frances Jones operates to suspend the power of alienation for another life, in addition to the two lives which measure the term of the trust created under the will of George Jones, it clearly contravenes the statutes against perpetuities, and is void. Real Property Law, Laws 1896, p. 565, c. 547, § 32. In support of the contention that the trust in the will of Frances Jones is void, in so far as it relates to No. 70 Broadway, the respondents refer to the statute, which provides that: ‘The period during which the absolute right of alienation may be suspended, by an instrument in execution of a power must be computed, not from the date of such instrument, but from the time of the creation of the power.’ Real Property Law, § 158. Measured solely by the standard prescribed by that section of the real property law, the period of suspension imposed by the two trusts under discussion is extended through three lives. The appellants concede that, in cases where a power can only be executed by will, the statute and arguments relied upon by the respondents are controlling, but they contend that these have no application where a power may be executed either by will or by deed, because, in the latter case, the period of suspension must be computed from the date of the execution of the power rather than from the time of its creation. This contention is based upon the provisions of the real property law relating to powers, which are substantially re-enactments of the earlier Revised Statutes. The first section of the article upon the subject of powers ordains that: ‘Hereafter the creation, construction and execution of powers, affecting real property, shall be subject to the provisions of this article.’ Real Property Law, § 110. In Cutting v. Cutting, 86 N. Y. 522, 535, the corresponding section of the ...