In re Wilkin

• Decision Date: 21 November 1905
• Citation: 75 N.E. 1105,183 N.Y. 104
• Parties: In re WILKIN.
• Court: New York Court of Appeals Court of Appeals

183 N.Y. 104

75 N.E. 1105

In re WILKIN.

Court of Appeals of New York.

Nov. 21, 1905.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Proceeding for a judicial settlement of the accounts of Anna M. C. Wilkin, as trustee under the will of James Cunningham, deceased. From a judgment of the Appellate Division (91 N. Y. Supp. 1118,100 App. Div. 509), affirming a decree of the Surrogate's Court surcharging the account of the trustee, Charles E. Cunningham appeals. Reversed.

James Cunningham, a resident of the city of Rochester, died on the 15th of May, 1886, leaving several children, a large estate, and a last will and testament, by which, after providing for his other children, he made the following provision for his son Charles: ‘Ninth. I give, devise, and bequeath unto the executor of this my last will and testament, hereinafter to be nominated and appointed, the sum of $146,000, in trust, however, to be by him invested, and to be paid, together with the increase thereof, to my son, Charles E. Cunningham, or to his wife or children, at such time or times, in such sums, and in such manner as such executor may deem best for the interest of said Charles E. Cunningham. And I hereby authorize him, if from any cause he deems it best so to do, at any time after ten years from my death, to give the whole sum of this devise and bequest then remaining in the hands of such executor (if any part shall then remain), or any part thereof, in equal proportions to the children of said Charles E. Cunningham, then living, to whom, in that event, I give, devise, and bequeath the same.’ By the tenth clause he gave the residue of all his real and personal property absolutely to his four children, including the said Charles, to be divided between them, share and share alike. The thirteenth clause of the will is as follows: ‘In case my son, Joseph T. Cunningham, shall at any time prior to the full completion of the trust I have imposed upon him as executor of this will, for any cause cease to act as such executor, I hereby, in that event, nominate and appoint Anna M. Cunningham and Rufus K. Dryer to be and act as executors in his stead.’ By the last clause he appointed his son Joseph T. Cunningham as executor. The date of the will was February 9, 1883. Two codicils, one dated June 26, 1884, and the other November 12, 1885, made unimportant changes, which have no bearing upon the questions involved in this controversy.

Upon the probate of the will in June, 1886, Joseph T. Cunningham was appointed executor, and he administered the trust fund of $146,000 until February, 1898, when, upon his own petition, his letters were revoked and Anna M. Cunningham, who had in the meantime become by marriage Anna M. Wilkin, was appointed ‘trustee of the trust aforesaid,’ pursuant to the thirteenth clause of the will; the said Rufus K. Dryer, who is still living, having renounced his right to serve. The old trustee, after accounting, was discharged, and the trust fund was turned over to the new trustee, who paid the income to Charles until 1901, but during that year and the year following she paid him all the principal; the last payment of $130,000 having been made on the 14th of February, 1902. Thereupon she commenced this proceeding to account, making Charles, his wife, and their eight children parties. The wife and children appeared and opposed the allowance of any part of the principal so paid, on the ground that the trustee had no power to make such payments, and with full knowledge that in bad faith and with full knowledge that Charles, by reason of dissipation, was unfit to do business or have control of the fund. The surrogate overruled the objections and allowed all the payments, but upon appeal his decree was reversed by the Appellate Division upon the law and the facts. 90 App. Div. 324,86 N. Y. Supp. 360. On the second hearing no payment of principal was allowed, because the surrogate held that he was concluded by the judgment of the Appellate Division on the question of power, and for this reason he refused to admit any evidence as to the competency of Charles or the bad faith of the trustee. Both the trustee and the beneficiary appealed to the Appellate Division, where the decree of the surrogate was affirmed by a divided vote, and thereupon they appealed to this court. With the consent of all concerned $140,000 of the fund has been paid into court to await the final determination of this proceeding.James Breck Perkins, for appellant Wilkin.

Eugene Van Voorhis and Herbert Leary, for appellant Cunningham.

James M. E o'Grady, for respondent Cunningham and others.

John Desmond, for respondent Moran.

VANN, J. (after stating the facts).

As we read the ninth clause of the will, the first sentence creates a trust and the second a power in trust. Since the trust covers personal property only, it is not so restricted as a trust of real estate, for it may embrace ‘any purpose not unlawful, subject only to the law of perpetuity.’ Cochrane v. Schell, 140 N. Y. 516, 534,35 N. E. 971;Gilman v. Reddington, 24 N. Y. 12;Gott v. Cook, 7 Paige, 521. The trust has one purpose and the power another, and both involve the exercise of discretion by the trustee. The trust is to invest the sum in question and to pay it over, ‘together with the increase thereof,’ to Charles, or to his wife or children, ‘at such time or times and in such manner as such executor may deem best for the interest of the said Charles.’ There is the same right to pay over principal that there is to pay over income. Neither is to be paid unless the trustee deems it best for the interest of Charles. and the time and manner of paying either, as well as the person to whom either is to paid, whether to Charles, or to his wife, or to his children, are subject to the sound discretion of the trustee. There is no distinction between principal and interest, for the authority to pay the one is given by the same words which authorize the payment of the other. The object of the trust is ‘the interest of the said Charles,’ which is to be effected by the payment of principal, or interest, or both, but when, how, or, within the limits named, to whom, is intrusted to the judgment of the trustee. The power in trust is limited to the principal, and it could not be exercised until after the lapse of ten years from the death of the testator. It authorizes the trustee, after the expiration of that period, to divide the principal then left, if any, between the children of Charles in equal proportions, ‘to whom, in that event,’ as the testator finally says, he gives and bequeaths the same. The power contemplates that some part, or even the whole, of the principal, may be paid over pursuant to the trust before the time arrives when the power may be exercised; for the will speaks of the ‘whole sum’ of the bequest ‘then remaining, * * * if any part shall then remain.’ The power is of narrower range than the trust, for it is limited to the children as beneficiaries, whereas the trust extends to Charles and his wife, as well as his children. The power does not subvert the trust, or take...