Stevens v. Melcher

• Citation: 46 N.E. 965,152 N.Y. 551
• Parties: STEVENS et al. v. MELCHER et al.
• Decision Date: 20 April 1897
• Court: New York Court of Appeals

152 N.Y. 551

46 N.E. 965

STEVENS et al.

v.MELCHER et al.

Court of Appeals of New York.

April 20, 1897.

Appeal from supreme court, general term, First department.

Action by Charles G. Stevens and another against John L. Melcher and others for settlement of accounts as trustees under the will of Paran Stevens. From a judgment of the general term (30 N. Y. Supp. 625) modifying, and as modified affirming, a judgment entered on the report of a referee, all parties appeal. Modified.

George Zabriskie, for plaintiffs.

George Hoadly, for defendants Marietta R. Stevens, Union Trust Co. of New York, and others.

John S. Melcher, for Ellen S. Melcher.

HAIGHT, J.

This action was brought for an accounting by the trustees under the will of Paran Stevens with his executors, his widow, and remainder-men. Paran Stevens died in the city of New York on the 25th of April, 1872, leaving, him surviving, the defendant Marietta R. Stevens, his widow, and Ellen S. Melcher, the wife of John S. Melcher, Mary Fiske Stevens, now the wife of Arthur H. F. Paget, and Henry Leiden Stevens, his only children and heirs at law. He left a last will and testament in which he bequeathed to his widow the sum of $100,000, to be paid to her out of his estate as soon as practicable after his decease, and by the fifth clause thereof he gave and devised to Charles G. Stevens, of Clinton, in the state of Massachusetts, and George F. Richardson, of Lowell, in that state, and to the survivor of them, the sum of $1,000,000, in which should be included at its fair value the premises known as No. 1 Store, State Street Block, in the city of Bostom Mass., in trust, however, to hold, invest, and manage the same as a trust fund and estate for the benefit of his widow during her natural life, and to collect the income therefrom and pay the same over to her, and upon her decease to divide the principal of such fund among his children in equal proportions, the issue of any deceased child taking the share their parent would have taken if living. Legacies were given by other provisions of the will which are not material to this controversy. By the eleventh clause he directed that the residue and remainder of his estate, real and personal, should be divided by his executors into three parts, one of which parts he gave to trustees (naming them), in trust for his daughter Ellen, another part to trustees in trust for his daughter Mary, and the remaining part to trustees for the benefit of his son Henry. By the fourteenth clause he authorized his executors to make conveyance to the trustees of the several trust funds created in order to effect the division contemplated and provided for, and to erect the several trust estates. He further authorized and empowered his trustees of the several trust estates created by him to sell and convey any real estate that may at any time form part of such trust estate under their charge, respectively, and to reinvest the proceeds thereof in other real estate in the states of New York and Massachusetts, or in United States government or city or state securities, and hold the same upon the same trust and for the same purpose upon which the estate so sold was held. In the fifteenth clause he prohibited payments to the cestui que trust in anticipation, and required that such payments should only be made after the same had accrued and had been received by the trustees. He appointed his widow, Marietta R. Stevens, his son-in-law, John L. Melcher, and Charles G. Stevens, executors; and, upon the decease of either of the two last named, he appointed George F. Richardson as executor in such deceased executor's place. The provisions made in his will for his widow were to be in lieu of dower. The personal estate left by the testator amounted to the sum of $316,773.37, as shown by the appraisement, and included his interest in the partnership of Darling, Griswold & Co., as proprietors of the Fifth Avenue Hotel, in the city of New York, also his interest in the partnership of Weatherby, Chapin & Co., as proprietors of the Revere and Tremont Houses, in Boston, and also his interest, in the partnership of J. E. Kingsley & Co., as proprietors of the Continental Hotel, in the city of Philadelphia, which partnerships by the terms of the will were to continue for the benefit of his estate until the expiration of the terms of the several contracts of co-partnership. He also owned considerable real estate in the city of New York and elsewhere, including the interest in each of the hotel properties above mentioned.

A question having arisen with reference to the power of the executors, an action was brought in the supreme court for a construct of the will, which resulted in an adjudication that the executors were authorized to retain the hotel interests, and to continue so much of the interest as was invested therein, if they should so elect; that it was the intention of the testator to charge his real estate with the payment of the legacies bequeathed by him, and that it was his intention to permit the trustees of the several trusts created by him, including the trustees of the $1,000,000 left for the benefit of his widow, to accept real estate to be conveyed to them in satisfaction of such trust, and that his executors were authorized to satisfy any deficiency in the payment of the legacies caused by the retention of the hotel interests, or otherwise, from the real estate left by the testator, and that his executors may satisfy the same by procuring a sale, so far as necessary, of the real estate, under the charge of the legacies, and, so far as respects the $1,000,000 left in trust for the benefit of his widow, by conveying the necessary amount of real estate to her trustees at a valuation to be fixed and determined; there being included therein the premises known as No. 1 Store, State Street Block, on State street, in the city of Boston, Mass. At the time of the testator's death he was engaged in erecting, and had substantially completed, a building at the corner of Twenty-Seventh street and Fifth avenue, New York, known as the Stevens Apartment House, on which there was a considerable indebtedness, which, together with the legacies, would substantially exhaust the personal estate, leaving nothing out of which the $1,000,000 trust for the benefit of his widow could be set up, except out of the real estate. After a judicial construction of the will had been made, the widow accepted the provisions made for her in lieu of dower, and then, on the 28th day of October, 1873, entered into an agreement with the executors and her trustees, under which the executors conveyed to her trustees, to apply upon the $1,000,000 trust, the store known as No. 1 State Street Block, Boston, at $105,000, together with the premises known as the Stevens Apartment House, in the city of New York, a stable known as No. 3 East Twenty-Eighth street, and premises known as Nos. 228 and 230 Fifth avenue, in the city of New York, valued at the sum of $450,000, aside from the mortgages thereon, which, together with the Boston property, amounted to $555,000. Upon the Stevens Apartment House property there was a mortgage for the sum of $425,000, and upon the premises Nos. 228 and 230 Fifth avenue were other mortgages amounting to $140,000, making a total of $565,000. Henry L. Stevens died, unmarried, July 18, 1885, and Mrs. Stevens died after this judgment was entered, and the appeal herein on her behalf is prosecuted by the Union Trust Company, her executor.

The first controversy to which our attention is called arises with reference to the premises known as Nos. 228 and 230 Fifth avenue. Upon these lots were two dwelling houses which had been occupied for many years as residences, and on which the lease had expired on the 1st day of May, 1873. They were incumbered with mortgages to the amount of $140,000, and were valued at about the sum of $150,000. The houses were badly out of repair, and in that condition they were incapable of yielding a rent sufficient to pay the taxes and accruing interest on the mortgages. At that date Mrs. Stevens, the widow, took possession of the lots, and on the conveyance thereof to her trustees as a part of her trust estate she entered into a written contract with one Barbara Jones, in the name of the plaintiffs, as trustees (herself becoming one of the contracting parties), to erect upon the premises a new building corresponding with, and to be made a part of, the Stevens Apartment House, which they adjoined. At first the plaintiffs refused to become parties to the contract, or to execute the same, but finally, at the suggestion of counsel that it was necessary for the interest of the contractor that they should become parties to it, they agreed to do so on being indemnified by Mrs. Stevens against liability. Such guaranty was indorsed upon the contract and executed by her, and thereafter the contract was executed by the plaintiffs, and a new building was constructed at an expense of $130,000, and became an important part of the apartment house, and largely increased its revenue, and added to the value, at that time, of the premises, at least $90,000. The referee has found as facts that the plaintiffs did not consent to the tearing down of the old buildings upon the premises; that they disapproved of the same; that, upon learning of Mrs. Stevens' intention to improve the premises, they expressed their disapproval thereof, and endeavored to dissuade her from doing it, and objected to its being done on their account or responsibility; that she made such changes without any belief or expectation on her part that she had any legal claim for reimbursement; that it was done by her to increase the income from the premises, and of the apartment house adjoining thereto. Mrs. Stevens claims that the amount expended by her in constructing the new building, and making it a part of the apartment house, or at least so much thereof as added to the...