Farmers' Loan & Trust Co. v. Callan

• Decision Date: 22 November 1927
• Citation: 246 N.Y. 481,159 N.E. 405
• Parties: FARMERS' LOAN & TRUST CO. v. CALLAN et al.
• Court: New York Court of Appeals Court of Appeals

246 N.Y. 481

159 N.E. 405

FARMERS' LOAN & TRUST CO.

v.CALLAN et al.

Court of Appeals of New York.

Nov. 22, 1927.

Action by the Farmers' Loan & Trust Company, as substituted trustee under a trust deed, against Angele Irene Callan and others. A judgment of the Special Term settling the trustee's account was affirmed by the Appellate Division (218 App. Div. 832, 219 N. Y. S. 809), and the named defendant appeals.

Reversed as far as appealed from and judgment ordered.

See, also, 219 App. Div. 718, 219 N. Y. S. 810.

1. Trusts 140(3)

Intent of grantor as shown in description of class to take at life tenant's death must be given full effect. The intent of a trust grantor, as shown in the instrument of trust by the description of the class which is to take the trust property at the death of the life tenant, must be given full effect in such property distribution on the death of such life tenant.

2. Trusts 119

Interpretation of deed creating trust may be based on presumptions. In the interpretation of the terms of a trust, inference may be based on presumptions where a sounder foundation is lacking.

3. Trusts 112

Technical rules or artificial analysis may not defeat grantor's intention manifest in language of deed. Neither technical rules of construction nor artificial language analysis may defeat a trustor's intention, where such intention is manifest in the language of the instrument, but, where the grantor clearly discloses the sense in which he intended the words used should be understood, courts should construe them in no other sense, though such use be inartificial or even inaccurate according to the dictionary.

4. Trusts 140(3)

Trust deed providing that, should life tenant survive husband and children and die without exercising limited power of appointment, corpus should go to persons entitled thereto had grantor died possessed thereof, held to require ascertainment of takers as of life tenant's death. Under a trust deed granting certain property to trustor's wife for life and for distribution to issue of grantor on her death, and providing that, in the event of her death without leaving surviving children or their descendants and without her having exercised limited power of appointment as provided in the trust deed, the property should go to such persons as would have been entitled to it had the grantor died possessed thereof, held that the class entitled to such property upon the happening of such contingency was fixed as at the time of the life tenant's death, as against the contention that the class became fixed as at the time of the grantor's death.

Appeal from Supreme Court, Appellate Division, First Department.

John T. Loughran and Charles A. Buckley, both of New York City, for appellant.

George C. Austin, of New York City, for respondent.

LEHMAN, J.

Edward Stephen White executed a trust deed on or about March 29, 1882, whereby he transferred to trustees named in the deed an undivided one-half part of all his share and interest in the estate, property and effects of his father, Lewis J. White, who had died in the year 1875. The deed recites that the grantor had ‘intermarried with Bridget Hurley and has one child, fruit of said marriage, now living and is desirous of making provision for the support of his said wife and child and of any child or children hereafter to be born to him.’ To carry out this purpose, the grantor provided that the trustees should hold the trust fund during the lifetime of his wife, Bridget, and should apply to the use of or pay to the said Bridget the whole of the net income of said trust estate. He further provided in the trust deed that, upon the death of the said Bridget leaving any descendant or descendants of the grantor her surviving,the trustees should ‘pay over and distribute the capital of said trust estate to and amongst the children of the said party of the first part [the grantor] and any child or children of a child of said party of the first part who may have died in the lifetime of the said Bridget, in equal shares, per stirpes and not per capita.’ Bridget, the wife, died on November 4, 1923. The grantor had died intestate long before. His son and only child died in 1917 intestate and unmarried, leaving as his only heir at law and next of kin his mother, Bridget White. The plaintiff as substituted trustee under the trust deed has brought this action to account for its proceedings as trustee, and it asks for a judicial construction of the trust deeds and for a definition of the rights, shares, and interests of the parties defendant in the trust fund remaining in the plaintiff's hands.

The purpose of the grantor to provide for his descendants after the death of his wife has been thwarted by the circumstance that no descendant survived his wife. He provided for such contingency by a clause in the trust deed:

‘And in the event of the decease of the said Bridget without leaving any child or descendant of a deceased child of the said party of the first part her surviving, then, upon the death of the said Bridget, to pay over and distribute the capital of said trust estate and all net income thereon accrued, to such person or persons, being a descendant or descendants of the said Lewis J. White, the father of the said party of the first part, and in such shares as the said Bridget may, by her last will and testament, or instrument in the nature of a last will and testament executed in the presence of at least two subscribing witnesses, designate and appoint. And in default of such appointment, then, upon the death of the said Bridget without leaving any child or descendant of a deceased child of the said party of the first part her surviving, to pay and distribute the said trust estate, and all accrued net income thereof, to and amongst the same persons who would have been entitled thereto had the said party of the first part died possessed thereof a resident of the state of New York, and in the same proportions in which they would have been so entitled thereto.’

Angele Irene Callan, a sister of the grantor, survived his wife. She, together with her children and grandchildren, are the only living descendants of the grantor's father, Lewis J. White. By unambiguous language the grantor has expressed his intention that, if no descendants of his own survived at the time the life estate came to an end, the trust fund should be paid over to or distributed among the descendants of his father, from whom the grantor had received the property. He gave to his wife the power to choose the person or persons within the designated group who might share in the distribution of the estate, and to determine the portion which each should receive. He gave her no power to choose a beneficiary from outside that group. Bridget, the wife, died intestate. The power conferred upon her under the trust deed was never executed. The grantor's property must now under the terms of the trust deed be divided ‘among the same persons who would have been entitled thereto had the said party of the first part died possessed thereof a resident of the state of New York and in the same proportions in which they would have been so entitled.’

If the words, ‘among the same persons who would have been entitled thereto had the said party of the first part died possessed thereof.’ mean those persons who would have been entitled to the property if the grantor had died possessed thereof at the date when the life estate came to an end, then the purpose of the testator that the property should go to the descendants of his...