Tollis v. Wood

• Decision Date: 21 April 1885
• Citation: 99 N.Y. 616,1 N.E. 251
• Parties: TOLLIS v. WOOD and others, Trustees, etc.
• Court: New York Court of Appeals Court of Appeals

99 N.Y. 616

1 N.E. 251

TOLLIS

v.WOOD and others, Trustees, etc.

Court of Appeals of New York.

Filed April 21, 1885.

DANFORTH and FINCH, JJ., dissenting.

Flamer B. Candler, for appellants, W. P. Wood and others.

Edgar A. Turrell, for respondent, Samuel Tollis.

RUGER, C. J.

No serious dispute arose on the argument over the main questions of law involved in the controversy, and the following propositions may therefore be assumed as established for all the purposes of this discussion: (1) When a trust has been created by one person for the benefit of another, which provides for the payment of the income of the trust fund to the beneficiary, a judgment creditor of such beneficiary is entitled to maintain an action in equity to reach and recover the surplus income beyond what is necessary for the suitable support and maintenance of the cestui que trust and those dependent upon him. Code Civil Proc. §§ 1871-1879; Williams v. Thorn, 70 N. Y. 270;Graff v. Bonnett, 31 N. Y. 9;Craig v. Hone, 2 Edw. Ch. 570. (2) This rule applies as well when the income is derivable from a trust of personal property as that from real estate. Hallett v. Thompson, 5 Paige, 583;Williams v. Thorn, supra; section 57, art. 2, tit. 2, c. 1, pt. 2, Rev. St. p. 2182. (3) The disposition of such an income cannot be anticipated by the cestui que trust, or incumbered by any contract entered into by him providing for its pledge, transfer, or alienation previous to its accumulation. Section 63, Rev. St. p. 2182; Graff v. Bonnett, supra; Williams v. Thorn, supra; Scott v. Nevius, 6 Duer, 672. (4) The creditor of such a beneficiary acquires a lien upon the accrued and unexpended surplus income, or that subsequently arising from such fund, superior to the claims of general creditors or assignees of the cestui que trust, by the commencement of the action in equity to reach and appropriate it to the satisfaction of his judgment. Williams v. Thorn, supra. The trust fund in this case consisted of both real and personal property, and the will creating it expressly provided that the cestui que trust should have no power to anticipate the rents, income, or profits thereof.

The cestui que trust, although served with process in the action, suffered default, so far as he was individually concerned, but is defending as one of the trustees of the fund from which the income in dispute is derived. The following facts, among others, were found by the referee upon the trial, and, so far as they are supported by evidence, must be regarded as conclusively established in the consideration of this appeal: That Silas Wood died prior to the year 1852, leaving a last will and testament, whereby he devised certain real and personal property to his executors in trust, to pay the rents, income, and profits thereof to his son Wilmer S., for his use, but without any power of anticipation on his part; that the defendants are now the trustees of the said fund, the said Wilmer S. Wood having been duly appointed as such on the death of one of the original trustees on the twenty-first day of March, 1863; that the said William S., for a long time previous to the trial, had been entitled to and in the receipt of said income, and that the complaint in this action was served on said Wilmer on the twenty-seventh day of January, 1883; that the net income of said fund accruing to the said Wilmer S. between the said twenty-seventh January and the date of said report, December 4th, thereafter, was $4,159.86, and the amount paid personally to said beneficiary between said dates was $1,375; that during the same time the trustees paid, by the direction of the cestui que trust, $1,099.80, as interest upon a debt owing by him to one Robert Center, and the further sum of $708.82 for premiums upon life insurance policies held by said trustees upon the life of said Wilmer S., as security for an indebtedness of $27,000, owing by him to the trust fund, and they retained the further sum of $810 as interest upon such debt; that during the years 1880, 1881, and 1882 the average net income accruing to said Wilmer S. from the trust-estate was $4,833.01, and the average yearly payments to him, on account thereof, were $1,286.33, the balance of such income having been expended by the trustees annually in the payment of interest upon the debts before mentioned, and premiums upon said life insurance policies; that the said Wilmer S. Wood is 43 years of age, an unmarried man, and has no children or other person dependent upon him for support, and is a person of education and refinement, and of good social position; that he is a gentleman of leisure, inclined to extravagance, and unaccustomed to earn his own living; that he has no other means or income except that derivable from the trust fund; that he is a member of the Union and other clubs in New York, and associates with gentlemen of wealth and leisure; that he keeps no horses or valet, and lodges in furnished rooms in Forty-fifth street, residing there for six months, and with his sister at Newbury for the remainder of the year; that his father was a merchant in New York, and of good social position, and all of his relatives are persons of education and refinement, and of more or less wealth; that it was the intention of the trustees, in limiting the annual payments to said cestui que trust in the years 1880, 1881, and 1882, to confine his expenditures for support and maintenance to the sums advanced, and without supposing that they thereby derogated from the standing and position in society which the defendant Wilmer had always sustained; that in view of the facts above stated the sum of $1,500 annually is a proper sum for the proper support and maintenance of the said cestui que trust, and the income over that sum is surplus.

The recovery of a judgment by the plaintiff against the said Wilmer S. Wood, on March 4, 1881, for $970.60, damages and costs, and the due issue and return of an execution thereon unsatisfied. The referee directed a judgment, among other provisions, requiring the defendants to pay to plaintiff so much of the sum of $2,784.86 as might be necessary to satisfy his judgment, holding that such sum was unexpended surplus arising out of said income after the commencement of this action. This judgment was affirmed upon appeal to the general term, and from that affirmance the defendant have appealed to this court.

No question was raised on the argument by the appellant as to the correctness of any of the findings of fact or law, except that relating to the sum adjudged annually as a proper amount for the support of the cestui que trust, and the conclusion therefrom that all above that sum was surplus applicable to the payment of the claims of creditors. With reference to this finding it is now urged that there was no evidence to sustain it.

No question was raised on the trial as to the sufficiency of the plaintiff's evidence to sustain the action, and, so far as appears from the record, this question was made for the first time on the argument in this court. A request was, however, made to the referee to find that the whole of the income was necessary for the suitable support and maintenance of the cestui que trust in the manner in which he has been accustomed to live; and assuming that the appellants could properly raise the question argued upon a refusal to find as requested, we are of the opinion that the finding of the referee is amply sustained by the testimony.

The evidence showed that for the period of three years prior to the commencement of this action a sum considerably less than $1,500 per annum had been agreed upon between the beneficiary and the trustees, of whom he was one, as an adequate amount for his maintenance and support in the manner that his habits and position in society required. The circumstances also tended to show that this arrangement was intended to be continued indefinitely, inasmuch as the fixed charges thereby settled upon the income could only be relieved by payment of the debts upon which they accrued, and that, under the circumstances, was impracticable. The arrangement thus made amounted to a practical determination by the parties most interested in the question as to how much of the income they regarded as surplus, and furnishes strong, if not controlling, evidence as against those parties upon the questions of fact in dispute. Bryan v. Knickerbacker, 1 Barb. Ch. 427.

Evidence was also given by the defendant as to the amount and cost of the various items going to make up the expenses of living in New York to a gentleman in the position of Mr. Wood, and the referee could, from such evidence, by rejecting such expenses as he deemed fanciful, unnecessary, or extravagant, arrive at a reasonable and just conclusion as to the necessary cost of such living; and, indeed, we think that such evidence, aside from proof as to the actual cost of living to a party, is the best, if not the only competent, proof to be given on the subject. In Sillick v. Mason, 2 Barb. Ch. 79, the chancellor determined the amount necessary to be expended for the support of a gentleman and his wife in New York, upon his own judgment, and contrary to the opinion of the...