Judges: Maltbie, Avery, Brown, Jennings, Ells
Filed Date: 12/5/1940
Status: Precedential
Modified Date: 10/19/2024
In this case the trustees under the will of Friend A. Russ are seeking its construction and advice as to their duties. The relevant portions of the will are summarized in the footnote.1 In all, some *Page 657
thirty-seven questions are propounded in the reservation and many of these are predicated upon future *Page 658
contingencies which may never arise. Thus several questions are asked as to the right of the trustees *Page 659
to lease the premises referred to in the fourth article of the will, which the testator's wife is given *Page 660
the right to occupy but which, if she so elects in writing, are to be sold. She now occupies the premises and nothing in the record indicates that she does not intend to continue to do so. Several other questions concern the rights of the wife of the testator's son John under subdivision "C" of the ninth article; her rights are predicated upon her surviving his death, and whether she will survive or not of course cannot be known. It is not the function of this court to give advice as to contingencies which may never happen, where there is no apparent present need of so doing. Russell v. Hartley,
We are asked whether it is the duty of the trustees to insure the premises given to them in the fourth *Page 661
article against loss by fire, and, if so, whether the premium should be apportioned between the widow and the remaindermen. It is the duty of the trustees to exercise that care and prudence which an ordinarily prudent person would who was entrusted with the management of like property for another. Reiley v. Healey,
Most of the questions propounded arise under the ninth article of the will, and outstanding among them is the question whether the executors and trustees should set up separate trust funds out of the proceeds of each of which the gifts of income should be paid. The provisions of this article make it obvious that the testator was thinking primarily in terms of income. It is only when the specific gifts of income can no longer operate that his mind appears to have turned to the disposition of the fund or funds from which that income is to be derived. He clearly did not think through the method by which this purpose was to be accomplished. He undoubtedly had a more or less indefinite thought that the residuary estate should be divided into separate parts, with a view to producing the gifts of income he made to each of his beneficiaries. But it is noticeable that nowhere in this article is there any express direction that the executors or trustees shall set up separate trusts from which the income is to be paid; it is noteworthy that, in making the gifts to his wife and son, it is 30 per cent of the entire income which he gives, not the income of 30 per cent of the estate; and there are provisions which indicate that the thought he had was at best unformed. He clearly did not visualize certain results not consonant with his dominant purpose which might follow from a division of his estate into separate funds. Thus in the case of the gifts of income in subdivision "A" there can be no doubt that the testator meant that each of the persons named should get each year the exact sum given them, subject only to a possible reduction in the event "that the income of the entire estate should fall below $55,000." Yet it may be if a separate fund were created from the income of which each of *Page 663 the payments was to be made, a fall in the income of the fund might prevent full payment to the beneficiary, and, on the other hand, if the income of such fund should exceed the amount of the payment fixed, there is no provision in the will for the disposition of that excess; and in the case of the gifts to the wife and son of 30 per cent of "the entire net income," the amount which they would receive from a separate fund set up for each would almost surely fluctuate from year to year and it would be extremely difficult, if not impossible, for the trustees to set apart at the settlement of the estate an amount which would produce the income to which each was entitled. In both these provisions if the income from the portion set apart to provide for these gifts exceeds the amounts given, no specific provision is made for the disposition of the excess and it would be left to pass under the gift of "the entire remainder of said income" to the daughter.
The provisions of the eleventh article, as to which we are asked some questions, are significant with reference to the matter we are discussing. In that article the testator directs his executors to pay from his estate all transfer or inheritance taxes which may be imposed upon any "devise, legacy or annuity herein contained" and provides that they are not to be payable to or paid by any "devisee, legatee or annuitant herein named," and, further, that the trustees' commissions and expenses shall not be charges upon any of the "annuities or bequests hereinbefore mentioned but paid from my estate." In the portion of the will preceding the ninth article, aside from provisions concerning the cancellation of sums owed to him by his son and daughter by the application of collateral which he held, he makes a few relatively small bequests, one to a nephew and the others to persons apparently not related to him. It is very unlikely that he would intend *Page 664
to free these beneficiaries from the charges mentioned in the eleventh article but impose them upon the share of his estate which he gave to his wife, son and daughter. In determining whether the gifts to the "annuitants" should be reduced he speaks of the total "net income" of the estate, and similarly in the gifts to his widow and son he gives to each a percentage of the "entire net income." Again he expressly provides that the small "annuities" created by subdivision "A" of the ninth article should not bear those charges and it would not be natural for him expressly to exclude the small gifts to these "annuitants" but leave them to be met from the portion of his estate given to his wife, son and daughter. It is to be noted, also, that in subdivision "A" of the ninth article he refers to the "annuities" as "bequests." All the provisions by way of legacy or bequest before the ninth article would be at once payable and the commissions and expenses of the trustees under the trust, which may run on for many years, could not have been intended to be imposed upon them. Such commissions and charges would ordinarily be payable from income, not principal; Bridgeport-City Trust Co. v. First National Bank Trust Co.,
There is a significant phrase in the fourth paragraph of subdivision "C" where he speaks of the principal of the trust fund "represented by three-fifths of the income." Moreover, in the provision of the thirteenth article, where he gives the executors and trustees a broad discretion in "distributing my estate or in forming any of the several trust funds herein created," he adds "at such times as in their best judgment it is desirable to do so," and this indicates that the formation of separate trusts may have been regarded by him as optional rather than imperative. If the trustees can preserve the residue as a single trust, separating from it, when the time to distribute any portion of the estate comes, such portion as would be "represented" by the share of income which the testator has given to a beneficiary, the difficulties we have suggested would be obviated. See Gorham v. Gorham,
The testator's daughter Helene having died and her daughter Mary having predeceased her, leaving no issue and not having exercised the power of appointment given her as to the share of the estate represented by the income provided for her, the right to the share of the residue represented by the income which the granddaughter would have received had she survived the daughter was vested in the United Hospital Fund and the Griffin Hospital. Johnson v. Webber,
The Hospital Fund and the Hospital cannot be charged with the payment to the beneficiaries of the trust of income received upon the amounts so distributed, for that would clearly derogate from the nature of the gifts which the clear intent of the testator expressed in the will makes absolute. The present distribution of a portion of the principal will, however, not only decrease the amount of the income available for payments to the beneficiaries but would also, unless proper provision is made, directly affect the basis upon which the amount to be paid to the "annuitants" and the widow and son is to be determined. In making the provisions for these legacies, the testator clearly had in *Page 668
mind that the entire residue of his estate would continue in the trust and planned his scheme for the distribution of income accordingly. The relative amounts to be paid those who are to receive the income should not be affected by the present distribution of a portion of the fund. In order to give proper effect to the provision that if the total net income from the estate is not at least $55,000 the gifts to the "annuitants" should be reduced and in order to determine what is properly to be regarded as 30 per cent of the net income to be distributed to the widow and to the son, it is necessary that there be added to the income actually received from the estate after the distribution to the Hospital Fund and the Hospital a sum representing the income which would have been received had the portion distributed been retained as a part of the trust, and that the income of the fund be regarded as the total of the amount actually earned by the portion remaining and this additional sum. The amount of the latter should be determined by ascertaining the rate of income upon the portion of the fund remaining in the trust immediately after the distribution to the Hospital Fund and the Hospital, which would produce the income actually earned by the fund left in the trust and by applying that rate to the portion of the fund distributed as of that date. From the amount of the total income as thus ascertained should be deducted the actual charges of the trustee, increased by a sum representing any additional charges which would have been incurred had no portion of the fund been distributed, ascertained by a method similar to that by which the income to be added to that actually earned is fixed. After the deduction from the income so determined of the amount of charges so ascertained the balance will represent the total net income upon the basis of which is to be determined whether, as regards the *Page 669
"annuitants," the total net income of the trust is at least $55,000, and the share of the income actually earned to which the widow and son are entitled by virtue of the provision that they each receive 30 per cent of the total net income. The balance of the net income actually earned is then to be paid to the surviving granddaughter. The determination of the payments of income in this way does not run counter to the testator's intent as expressed in the will, but as nearly as may be effectuates the plan he had in mind. We applied a like method in First National Bank Trust Co. v. Baker,
Where distributors are appointed by a court of probate to divide an estate, they proceed upon the values determined by them as of the date of the distribution; and, in Chase National Bank v. Schleussner,
With reference to the gifts of income in subdivision *Page 670 "A" of the ninth article, we find nothing in the will which prevents the trustees from making payments to the beneficiaries without waiting until the end of the year to determine whether the income of the estate is at least $55,000, provided those payments be such that the total amount received by each beneficiary in any year does not exceed that to which he is entitled as determined by the annual income of the estate as a whole. In any year when the income falls below the amount stated as determined by the method above outlined, the amount of income specified for each surviving beneficiary is subject to a proportionate reduction.
The testator clearly expressed his intention in subdivision "C" as to the income given to his son. Thirty per cent of the entire net income not exceeding $25,000 is to be set apart for him each year and the sum so set apart is all that can be used or accumulated for him. So much thereof as the trustees deem necessary for his support and maintenance is to be paid to him and the remainder of the sum so set apart is to be retained by them and accumulated for him. In no event can more than $25,000 be set apart for him in any one year and only the unused portion of that sum can be retained and accumulated. Any part of the accumulation so made can be paid to him whenever the trustees deem it necessary for his support, without regard to the $25,000 limitation. The testator intended that any sums to which the son is entitled are to be paid to him, so that he, and not the trustees, would be in control of their expenditure. Bridgeport-City Trust Co. v. Beach,
We are asked certain questions as to the validity of the gift to the wife upon the son's death and of the gifts in remainder to his issue. Answers to these questions *Page 671
may become academic in certain respects if the wife does not survive her husband but it is pressed upon us that a failure to determine them will seriously interfere with the settlement of the estate of the granddaughter who has died, and as our decision will give to any unborn issue coming within the purview of the provisions all rights which they could claim, we have decided to answer the questions. Wilson v. D'Atro,
In the article of the will in question the testator twelve times uses the words "the wife of my son" or "the wife of my said son." The use of the word "the" in itself carries with it the implication of a reference to a definite person, and had the testator meant any wife his son might marry after the former's death he would have been more apt to say "a wife" or "any wife"; and the force of his use of the word "the" gathers weight from its repetition so many times. It appears in the agreed facts that the son had married his wife long before the death of the testator, that the testator was very fond of her and that he recognized her as having considerable ability in managing his son's affairs. It is certainly she whom he would naturally have in mind in making the provision in question. It is true that only in her case did the testator omit to give the name of a living beneficiary referred to in the will, but this fact is open to so many explanations that it affords little ground for a conclusion that he was not thinking of a particular person when he spoke of "the wife" of his son. In Beers v. Narramore,
The trustees made the last regular quarterly payment of income to the beneficiaries on February 9, 1939. The testator's daughter died on April 4th of *Page 674
that year. On that day the trustees had in their possession $9730.62 of income which they had collected from the investments of the estate, and $5369.35 of income had accrued on those investments but had not actually been collected. On February 27th of that year a dividend was declared on certain stock of the Consolidated Edison Company of New York, Inc., which was held by the trustees, payable on May 9, 1939, to stockholders of record on March 31, 1939. We are asked whether the estate of the daughter is entitled to receive any portion of these sums. The following facts are stated: "The trustees have never set aside nor appropriated any income to or for Helene Russ Warren other than the payments from income to her, but at the end of each year have paid over to her all income accruing for her benefit under the terms of the will. Neither have said trustees reserved or determined to withhold from her any part of said income that might otherwise be payable to her, because they deemed some part thereof unnecessary for her support, nor had they determined so to withhold from her any part of the income to be collected or to accrue between the dates of February 9, 1939, and May 9, 1939." These facts bring the case within the decision of Greenwich Trust Co. v. Shively,
In Bridgeport trust Co. v. Marsh,
The questions we have decided to answer are stated in the footnote.
Union & New Haven Trust Co. v. Watrous ( 1929 )
Bridgeport-City Trust Co. v. Alling ( 1939 )
Greenwich Trust Co. v. Shively ( 1929 )
Union & New Haven Trust Co. v. Sherwood ( 1929 )
Central Hanover Bank & Trust Co. v. Nesbit ( 1936 )
Holmes v. Connecticut Trust & Safe Deposit Co. ( 1918 )
Bridgeport Trust Co. v. Marsh ( 1913 )
Hills v. Travelers Bank & Trust Co. ( 1939 )
Bridgeport-City Trust Co. v. Beach ( 1934 )
WACHOVIA BANK & TRUST COMPANY v. Dodson ( 1963 )
Merchants Bank & Trust Co. v. New Canaan Historical Society ( 1947 )
Connecticut Bank & Trust Co. v. Brody ( 1978 )
Bankers Trust Co. v. Pearson ( 1953 )
Travelers Bank & Trust Co. v. Birge ( 1949 )
Auchincloss v. City Bank Farmers Trust Co. ( 1949 )