Fisk's Trust, In re

• Decision Date: 18 October 1960
• Citation: 27 Misc.2d 60,209 N.Y.S.2d 428
• Parties: In re FISK'S TRUST. Application of CHEMICAL BANK NEW YORK TRUST COMPANY as co-Trustee and Surviving Trustee, and of Josephine M. Kelly as Administratrix of the Estate of Ralph Q. Kelly, deceased co-Trustee, for the Judicial Settlement of the Final Account of Proceedings of the Trustees and Surviving Trustee of the Trust for the Benefit of Edith C. Fisk created by Trust Agreement dated
• Court: New York Supreme Court

209 N.Y.S.2d 428

27 Misc.2d 60

In re FISK'S TRUST.

Application of CHEMICAL BANK NEW YORK TRUST COMPANY as

co-Trustee and Surviving Trustee, and of Josephine M. Kelly

as Administratrix of the Estate of Ralph Q. Kelly, deceased

co-Trustee, for the Judicial Settlement of the Final Account

of Proceedings of the Trustees and Surviving Trustee of the

Trust for the Benefit of Edith C. Fisk created by Trust

Agreement dated February 10, 1903, made by Pliny Fisk, and

for a Judicial Determination of the persons entitled to the

Property of the Trust upon the death of Edith C. Fisk.

Supreme Court, Special Term, New York County, Part I.

Oct. 18, 1960.

Logan Fulrath, New York City, for petitioners.

Pell, Butler, Hatch, Curtis & Leviness, New York City (Andrew W. Bisset, New York City, Ronald R. Atkins, New York City, of counsel), for respondent First Pennsylvania Banking and Trust Co., as executor of the will of Eleanor Hepburn Fisk. Cravath, Swaine & Moore, New York City (Frank H. Detweiler, George J. Gillespie, III, New York City, of counsel), for respondents Gwendolyn Fisk Halleran and Wilbur Fisk.

Hays, Podell, Algase, Crum & Feuer, New York City (Benjamin Algase, Abraham L. Evans, Stanley B. Bernstein, New York City, of counsel), for respondent Samuel E. Witt.

John W. Boyd, New York City, for respondent Eleanor Fisk Noall.

Thomas J. Blake, New York City, for respondent Chemical Bank New York Trust Co. and Thomas J. Blake as executor of will of Dorothy Fisk Payne.

HENRY CLAY GREENBERG, Justice.

By this proceeding under Article 79 of the Civil Practice Act, the surviving co-trustees of an inter vivos trust seek an order (1) settling and allowing their final accounts; (2) directing payment of their statutory commissions; and (3) determining which persons are entitled to receive the corpus of the said trust as a result of the death of the last life beneficiary. No objections have been made to the trustees' account or the payment of commissions. Accordingly, the sole issue presented relates to the construction of that portion of the trust instrument which disposes of the corpus upon the termination of two successive life estates.

The trust in question is one of two which were established by an agreement dated February 10, 1903, as part of a property settlement incident to a divorce action then pending between the settlor, Pliny Fisk, and his then wife, Mary L. C. Fisk. By that agreement, Pliny Fisk transferred certain securities therein described (of the face value then of $215,000 in each trust) to co-trustees upon two separate trusts for the primary benefit of his then wife, and for the secondary benefit of each of their two daughters, Edith C. and Dorothy. The Trust Agreement (subject to provisions for the payment of income not to exceed $5,000 per annum to each daughter after attainment of majority even during their mother's lifetime) directed the trustees to pay the net income from both of the two trusts to the wife for her entire lifetime. Thus, from 1903 to the wife's death intestate on February 8, 1937, both trusts were administered in solido. The wife was survived by her husband, the settlor, who died on March 30, 1939.

Upon the death of the wife, the agreement designated the daughter, Edith C., as the second life income beneficiary of the trust established under Article I, and the daughter, Dorothy, as the second life income beneficiary of the trust established under Article II. Each trust similarly provided that upon the death of either daughter (occurring, of course, subsequent to the mother's death) the entire corpus of the affected trust was to go to her own descendants then surviving, and if none, then to the other daughter, or if she be not then surviving, then to others according to the remaining provisions for disposition of the corpus (set forth in full, infra). One daughter, Dorothy, died on July 10, 1957. She had no descendants and consequently the entire principal of the trust under Article II was paid over to her sister, Edith C., pursuant to the above-mentioned terms of the trust instrument. Edith C. subsequently died testate on May 17, 1959. She was not survived by any descendant of blood, but she was survived by an adopted son, George Edwin Fisk Adames, of full age and competence. Thus, the second remaining trust terminated and the corpus thereof became distributable under paragraph 'Fifth' of 'Article I' of the Trust Instrument. This provision, which the Court is now called upon to construe, provides as follows:

'Fifth: Upon the death of both the parties of the second and third parts (the wife, Mary, and daughter, Edith C.), whether the party of the first part shall then be living or not, to pay over the entire principal of said trust fund to the descendants of the party of the third part (Edith C.) then surviving, per stirpes and not per capita, share and share alike, and in the event that there shall then be no descendants of the party of the third part then surviving, then to pay over the entire principal to the party of the fourth part (Dorothy), or if the party of the fourth part be not then surviving, to the descendants of the party of the fourth part then surviving, per stirpes and not per capita, share and share alike; or in case there shall be no persons entitled to said fund under any of the foregoing provisions of this paragraph, then to pay over the entire principal of said fund to the party of the first part, or if he be not living, to such persons as shall then be entitled thereto under any Will of the party of the first part, or in case the party of the first part shall have died intestate, to such persons as shall then under the laws of the State of New York, be entitled thereto as part of the personal estate of the party of the first part.' (Emphasis added.)

As noted above, Edith C. died leaving only an adopted adult son, George Edwin, but no true lineal descendants. Although said adopted son has been made a party to this proceeding, he has not appeared herein nor has he at any time asserted the status of a 'descendant' of Edith C., nor claimed any right as such to receive the corpus of the trust in question under that portion of paragraph 'Fifth', supra, which designates 'descendants' of Edith C. as the first class of remainderman. Moreover, the law seems quite clear that this adopted son has no standing as a 'descendant' to assert a right to the corpus. Thus, Section 115 of the Domestic Relations Law provides:

'As respects the passing and limitation over of real or personal property dependent under the provisions of any instrument on the foster parent dying without heirs, the foster child is not deemed the child of the foster parent so as to defeat the rights of remainderman.'

This section was applied to 'descendants' in In re Upjohn's Will, 304 N.Y. 366, 378, 107 N.E.2d 492, wherein it was also said:

'The rule in this state declared in New York Life Ins. & Trust Co. v. Viele, 161 N.Y. 11, 20, 55 N.E. 311, 314, is that the limitation will be construed to designate only those related to the named ancestor by blood if 'there is nothing to the contrary to be found in the context of the instrument, or in extraneous facts proper to be considered'. In other words, in the absence of any indication of the testator's intent, it will be assumed that the testator did not envisage adopted children taking under the limitation.' 304 N.Y. at page 375, 107 N.E.2d at page 496.

In the case at bar, there is nothing in the trust instrument which can be construed as indicating an intent on the part of the settlor to include subsequently adopted children of his two daughters. The foregoing, coupled with the adopted son's failure to assert an interest, warrants the holding that he has no interest in the corpus of this trust under the provisions of the trust instrument.

Inasmuch as the daughter, Dorothy, predeceased her sister, Edith C., without descendants surviving, and the settlor had died intestate, that portion of paragraph 'Fifth' becomes operative which finally provides that the corpus is to go '* * * to such persons as shall then under the laws of the State of New York, be entitled thereto as part of the personal estate of the party of the first part [the settlor].'

The court is presented with the following constructions of the appearing parties:

I. The first construction is that advanced by the settlor's four natural children who are the issue of his second marriage to one Eleanor Hepburn Fisk, who died on April 4, 1949. These children are Eleanor Fisk Noall, Gwendolyn Fisk Halleran, Pliny Fisk, Jr. and Wilbur Fisk. They urge that the provision in question established contingent remainders whereby only those distributees of the settlor were to take who were alive upon the termination of the trust in 1959.

II. The second construction contended for viz., that vested remainders were created in those distributees alive at the settlor's death, is advanced by the estates of the settlor's other distributees who died prior to the termination of the trust in 1959. This group consists of the estates of the second wife, Eleanor Hepburn Fisk, and of the two aforementioned life beneficiaries, Dorothy and Edith C. The executors also contend that the provision in question must be construed as reserving a reversion to the settlor and that therefore the trust corpus vested in his distributees, alive at his death, by descent rather than by purchase under the trust instrument. If the construction of either (1) a vested remainder or (2) a reversion should be adopted, a subsidiary question would be presented as to whether the settlor's second wife can be considered a 'distributee' since the trust agreement was executed at a time when widows were not regarded as next of kin. See, e. g., Guaranty Trust Co. v. New York Trust Co., 1947, 297 N.Y. 45, 51, 74 N.E.2d 232, 234.

III. The third construction advanced, that a reversion was created, is by one Samuel E. Witt who asserts a claim...