m SCHOOL OF LAW LIBRARY BY THE 3AME AUTHOR. A TREATISE ON SUSPENSION OF THE POWER OF ALIENATION, AND POSTPONEMENT OF VESTING, UNDER THE LAWS OF NEW YORK, MICHIGAN, MINNESOTA, AND WISCONSIN. IN ONE OCTAVO VOLUME. PRICE $4.50. For sale by all Laiv Booksellers. Sent, express prepaid, on receipt of the price by the publishers, BAKER, VOORHIS & CO., NEW YORK. A TREATISE UNDER THE NEW YORK REVISED STATUTES AND THE REAL PROPERTY LAW OF 1896 WITH AN APPENDIX CONTAINING A TABLE SHOWING THE SOURCES OF THE SECTIONS CITED, AND A TABLE OF COMPARATIVE TEXTS OF THE REVISED STATUTES AND THE REAL PROPERTY LAW BY STEWART CHAPLIN AUTHOR OF 'SUSPENSION OF THE POWER OP ALIENATION' NEW YORK : BAKER, VOORHIS & COMPANY 1897 T C COPYRIGHT, 1897, BY STEWART CHAPLIN. PREFACE. TRUSTS and powers, as they existed prior to the first of Janu- ary, 1830, were on that date abolished in New York, with some exceptions, when certain statutory provisions, codifying the law of these subjects, went into effect. Since that time, the courts, in several thousand reported cases, have filled in the outlines laid down in the statutes, and developed a system of law har- monious and nearly complete. On October first, 1896, the Real Property Law (L. 1896, Ch. 547) went into effect. This, in turn, repealed the earlier stat- utes, with a few exceptions, re-enacted most of them, in a changed form, and added some new provisions. Eighty-seven sections relating particularly to express trusts and powers embody more than three hundred changes, of which the greater part are trivial, some evidently change the law, and others, apparently without design, seem, as a matter of grammatical construction, to over- turn well-settled principles. The following pages include a con- sideration of these changes. o Although our statutes have deprived the general treatises on trusts and powers of much of their value for local use, there has been hitherto no attempt to present a systematic and detailed statement of the law of New York in this field. In the preparation of this book much assistance has been de- rived from the valuable notes of Professor Ames in his " Cases on Trusts," and the well-known articles by the same writer in the Harvard Law Review, and also from the able treatise of Mr. Farwell on Powers. Attention is called to the fact that in addition to the index and the usual tables of cases and statutes cited, there are also a table showing the sources of the sections cited from the Real Property Law ; a table of comparative texts, giving side by side the sec- tions of the Revised Statutes and the corresponding sections of the Real Property Law relating to express trusts and powers ; and a table of index topics. S. C. New York, January, 1897. PREFACE 3 TABLE OF CASES CITED 13 TABLE OF STATUTES CITED 41 APPENDIX 655 I. TABLE SHOWING SOURCES OF STATUTES CITED 655 II. TABLE OF COMPARATIVE TEXTS 659 TABLE OF INDEX TOPICS 681 INDEX . . 683 PART I. CHAPTEK I. INTRODUCTION 1 CHAPTER II. CREATION OF EXPRESS TRUSTS. (1) Who may Create 19-21 (2) Essential Elements 21-27 (3) The Trust Instrument 27-38 (a) Real Property 27-37 (&) Personal Property 37-38 (4) Delivery ' 38-54 (5) Consideration 54-67 VI CONTENTS. CHAPTER III. THE TRUSTEE. (1) Who may be , 68-76 (2) Appointment of Trustee 76-91 Introductory 76-78 (a) By Supreme Court 78-88 (Y) By Surrogate's Court 88-91 (c) By Third Party 91 (3) The Trustee's Title 91-125 (a) Legal and Equitable Title 91-105 (b) Trustee's and Executor's Title distinguished. . . 105-112 (c) Incidents and Results of Title 113-125 (4) The Trustee's Authority 126-134 (5) The Trustee's Duties 134-169 In general 134-138 Disinterestedness 138-141 Impartiality .141-144 Investments 144-157 Accounting 157-169 (6) The Trustee's Liability 169-215 In general 169-185 Bond, Sureties 185-195 Acts of Co-trustees 195-205 Costs and Security 205-211 Where the Trust is Yoid 211-215 (7) The Trustee's Rights 215-235 Commissions 215-231 Allowances for Expenses 231-235 (8) Renunciation 235-237 (9) Resignation 237-239 (10) Removal 239-245 CHAPTER IV. THE BENEFICIAKY. (1) Who may be 246-251 (2) How to be designated 251-257 CONTENTS. Vll (3) Beneficiary of Specific Share 257 (4) Tenancy 257-259 (5) Beneficiary's Eights 259-265 CHAPTER V. THE TRUST PROPERTY . . , 266 CHAPTER VI. THE TRUST TERM 272 CHAPTER VII. THE TRUST PURPOSE. (1) Real Property 282-307 Introductory 282-285 To Sell for Creditors 285-289 To Sell, Mortgage or Lease 289-292 To Receive and Apply Rents 292 To Receive and Accumulate 292-307 (2) Personal Property 307-311 CHAPTER VIII. RENTS, ISSUES AND PROFITS. (1) Corpus and Income Distinguished 312-320 (2) Deductions from Gross Income 320-329 In general 320-321 What deducted 321-323 What not deducted 323-329 (3) Method of Apportioning Deductions 329-337 (4) Apportioning Rents and Annuities 337-340 (5) From and to when computed 340-342 (6) Receipt of Rents 342-352 In general 342 Authority to Lease 342-350 Under Trusts to Lease 350-352 (7) Application of Rents 352-376 Vlll CONTENTS. CHAPTER IX. TRANSFER OF BENEFICIAL INTERESTS. Introductory 377-378 Under the Revised Statutes 378-385 Under the Real Property Law 385-386 CHAPTER X. CHARITABLE USES AND TRUSTS. Introductory 387-388 Prior to May 13, 1893 388-392 Since May 13, 1893 392-394 CHAPTER XI. ATTEMPTED EXPRESS TRUSTS. (1) Valid Express Trusts 395 (2) Trusts valid as Powers 395-396 (3) Passive Trusts 396-399 (4) Trusts valid as Charges 399 (5) Void Trusts 400-402 (6) Secret Trusts 402-405 (7) Void as to Third Parties 406 (8) Devolution of Title 406-409 CHAPTER XII. TERMINATION AND EXTINCTION OF TRUSTS . 410 PART II. CHAPTER XIII. THK LAW OF POWERS.. 421 CONTENTS. IX CHAPTER XIY. POWERS DEFINED AND CLASSIFIED 424 CHAPTER XV. THE CREATION OF POWERS. (1) Who may create 433 (2) Powers, hpw created 433-444 (3) The Legal Title 444-452 CHAPTER XVI. BENEFICIAL POWERS. (1) When they iiw>lve a fee 453-458 (2) When fee not involved 459-465 CHAPTER XVII. POWERS IN TRUST. (1) When Imperative 466-469 (2) When Discretionary 469-472 CHAPTER XVIII. THE DONEE OF THE POWER. In general 473-493 Executor as Donee 479-492 Charges, Assets 480-485 Executorial, trust or personal capacity 486-492 CHAPTER XIX. THE BENEFICIARY OF THE POWER 494 CHAPTER XX. THE PURPOSE OF THE POWER . . 502 X CONTENTS. CHAPTER XXI. THE EXECUTION OF POWERS. (1) Method, Scope and Time of Execution 508-524 (2) Two or more Donees 524-530 (3) Consent of Third Person 530-533 (4) Failure to recite Power 533-536 (5) Effect of a General Devise 536-539 (6) Disposition too Extensive 539-543 (7) Fraudulent Execution 543-550 (8) Defective Execution 550-553 (9) Default in Execution 553-554 (10) Void Execution 554 (11) Equitable Conversion 554-559 CHAPTER XXII. RELATION OF POWERS TO SUSPENSION 560 CHAPTER XXIII. POWERS OF REVOCATION. (1) Power to revoke a Power 566 (2) Power to revoke a Grant 566-567 (3) Power to revoke execution of Power 567-568 CHAPTER XXIV. TERMINATION AND EXTINCTION OF POWERS. . 569 PART III. CHAPTER XXV. THIRD PARTIES. (1) Creditors 578-590 (2) Beneficiary's Wife and Children 590-595 (3) Purchasers and Encumbrancers 596-602 (4) Remaindermen 602 (5) Dowress 602-604 CONTENTS. XI CHAPTER XXYI. JUDICIAL CONTROL 605 CHAPTER XXVII. THE STATUTE OF LIMITATIONS 611 CHAPTER XXVIII. SEPARABILITY 623 CHAPTER XXIX. CONFLICT OF LAWS 629 CHAPTER XXX. CONSTRUCTION. (1) Jurisdiction of the Supreme Court 636-640 (2) Jurisdiction of the Surrogate 640-641 (3) Res Adjudicata 641-642 (4) Principles of Construction 642-646 CHAPTER XXXI. APPLICATION OF STATUTES TO PERSONALTY . 647 TABLE OF CASES CITED. References are to pages. Aaron, Matter of, 235 Abramowitz v. Citizens' Sav. Bank, 47 Ackerman v. iSmott, 144 Ackermau v. Gorton, 457, 462, 465, 589 Adair v. Brimmer, 149, 150, 151, 174, 181, 196, 198,201, 202 Adams v. Adams, 42, 43, 81 Adams . Becker, 640 Adams t>. Perry, 355, 397, 400, 442, 499, 558, 623, 626, 627 Adsit v. Adsit, 449, 603 JEtna Nat. Bank v. Fourth Nat. Bank, 262 Ahern v. Steele, 115, 344, 349 Akin v. Kellogg, 603 Albany P. I. Co. v. Bay, 502, 512, 584 Albertson, Matter of, 320, 323 Albrecht v. Pell, 77, 410. 474 Aldrich . Funk, 100, 507 Alexander v. Alexander, 423 Alger v. Conger, 206 Alger v. Scott, 52, 53 Alkus v. Goettmann, 437 Allen, Matter of, 219, 229 Allen . Allen, 280, 563 Allen v. Cowan, 44 Allen . DeWitt, 513, 514, 520, 552, 559 Allerton v. Lang, 46, 60 Allport v. Jerrett, 520 American Bible Soc'y v. Stark, 465. Ames v. Downing, 139 Amory v. Lord, 75. 623 Anderson v. Anderson, 159, 638, 639, 640 Anderson v. Davison, 466, 517 Anderson v. Mather, 69, 94, 131, 285, 398, 511, 606 Anderson v. Thomson, 48 Andrews v. Whitney, 582, 593, 595 Annett v. Terry, 192 Anonymous, 163 Anonymous, 521 Anonymous v. Gelpcke, 123, 605 Ansticc v. Brown, 246 References are to pages. Anthony v. Harrison, 64, 65, 66 Anthony . Wood, 579 Antrobus v. Smith, 62, 63 Aplington, Matter of, 234 Appley, Matter of, 590, 591 Archer. Matter of, 233 Architectural I. W. v. City of B'klyn, 211 Arcularius . Geisenhainer, 96, 248 Armstrong v. McKelvey, 558, 572, 575, 576 Arnold v. Gilbert, 468, 559, 626 Arnoux v. Phyfe, 512, 514 Arthur v. Arthur, 297 Arthur v. Nelson, 155, 181, 228 Asche v. Asche, 28, 97, 247, 248, 418, 460, 555, 557, 603 Aspiuwall . Pirnie, 285. A. S. R. Co. v. Fancher, 263 Atty.-Gen. v. Guardian M. L. I. Co., 231 Atty.-Gen. . N. A. L. I. Co., Mat- ter of, 234 Atty.-Gen. v. North Am. L. I. Co., 231 Austin v. Munro, 125, 126, 128 Austin v. Oakes, 494, 519, 536, 541, 567, 568 Aymar, Matter of, 218 Ayrault, Matter of, 158, 159, 161 Babcock, Matter of, 321 Babcock, Matter of, 224 Bach, Matter of, 139, 183 Backer, Matter of, 286 Backes, Matter of, 309 Bacon v. Bacon, 23, 224 Baer, Matter of, 496, 499 Baier v. Baier, 238 Bailey, Matter of, 233, 234 Bailey v. Bailey, 278, 281, 410 Bailey v. Briggs, 523. 636, 638 Bain v. Matteson, 237, 487, 489, 491 Baird . Baird, 55, 65, 66 Baker, Matter of, 381 Baker v. Disbrow, 176 Baker 0. Lorillard, 540 XIV TABLE OF CASES CITED. References are to pages. Baker v. N. Y. Nat. Exch. Bank, 263, 264 Baldwin v. Isham, 148, 358, 363, 379 Baldwin v. Roche, 550 Baldwin v. Smith, 163, 641. Baldwin . Smith, 168 Banks v. Wilkes, 195, 198 Banning v. Gunn, 367 Barber v. Gary, 423, 517, 530, 532, 533 550 Barbour v. DeForest, 295, 298, 370, 375, 376 Barker 9. Crosby, 626 Barker v. Smith, 139 Barnard v. Crossman, 18, 73, 645, 646 Barnard v. Gantz, 20, 37, 66, 413 Barnes, Matter of, 172, 175, 176, 234 Barnes, Matter of, 341 Barnes v. Morgan, 268 Barrow v. Barrow, 341 Barry . Lambert, 30, 31, 37, 55, 154, 307 Barton v. Hosner, 446 Barton's Trust, 317 Bascom v. Albertson, 79, 388, 389, 632, 635 Bates v. L. M. Co., 7 Bates v. Underbill, 357 Bean v. Bowen, 295, 307, 626 Bean v. Tonnele, 614 Bear 9. Am. R. T. Co., 243 Beard, Matter of, 111, 224 Beard . Beard, 177, 223, 226, 227 Beardsley 9. Hotchkiss, 20, 302, 303, 352, 451, 561, 653, 654 Beaver v. Beaver, 21, 38, 42, 48, 51, 54, 67 Beaver . Beaver, 21, 48, 67 Becks. McGillis, 71. 506 Becker v. Lawton, 238 Bedell . Barnes, 206 Bedell . Carll, 40, 50 Beekman v. Bonsor, 24, 235, 236, 237, 354, 355, 397, 410. 487 Beekman v. Vanderveer, 262 Beeman v. Beeman, 14, 38, 267 Beer . Beer, 340 Beers v. Shannon, 125 Behrman v. Von Heyn, 532, 533, 601 Bell v. Hepworth, 183, 184, 268 Bell v. Warn, 461, 462 Bellinger 9. Shafer, 285, 323, 569 Belmont t>. O'Brien, 91, 130, 412, 424, 438. 503, 504, 561, 565 Beloved Wilkes' Charity, Me, 470 Bender y. Bender, 65 Bendheim v. Morrow, 134, 654 Benedict, Matter of, 183 References are to pages. Benedict v. Arnoux, 512, 545 Benedict v. Webb, 280, 408, 569, 570, 625, 628 Bennet v. Rosenthal, 442 Bennett v. Garlock, 93, 94, 98, 115, 247, 286, 292, 343 Bennett v. Goble, 210. 285 Benson, Matter of, 303, 341, 409 Bergen v. Bennett, 425 Bergen v. Valentine, 314, 329 Berger v. Duff, 477, 525 Berly v. Taylor, 255 Bernstein, Matter of, 238, 527 Berry, Matter of, 367 Bertholf t>. O'Reilly, 346 Berwick . Halsey, 172 Betts v. Belts, 18, 100, 223, 227, 318, 322, 327, 342, 345, 354, 410, 469, 494, 509, 556, 603 Bevan v. Cooper, 468, 483, 641 Bevier, Matter of, 230, 239 Beyea, Matter of, 618 Bick v. Murphy, 195 Bickerton v. Jaques, 50 Bidwell 9. Greenshield, 308, 321 Bierbaum, Matter of, 469, 487 Bigelow v. Tilden, 681 Bijur v. Bijur, 559 Billar v. Loundes, 7, 17 Bingham, Matter of, 165, 445, 480, 483, 517 Bingham v. Jones, 107, 490 Bingham v. Marine Nat. Bank, 114, 580 Binsse v. Paige, 235 Bird v. Merklee, 254, 387, 391 Bird v. Pickford, 560 Birley v. Birley, 549 Bishop v. Bishop, 285 Bissing v. Smith, 519 Black, Matter of, 310 Blake v. Blake, 224, 321 Blakeley v. Calder, 449 Blakeney, Matter of, 226 Blanchard v. Blanchard, 450, 504, 561, 564, 649 Blanck", Matter of, 143, 367 Blauvelt, Matter of, 459, 475, 485, 487, 489 Blauvelt, Matter of, 146, 148, 151 Blewitt v. Boorum, 43 Blewitt v. Olin, 123 Bliss v. Fosdick, 40, 137, 654 Bliss v. Johnson, 433, 473 Bliss v. Olmstead, 321 Bliss v. West, 21, 42, 55, 104, 357, 587 Bliven v. Robinson, 182 Bliven 9. Seymour, 26, 109, 258 TABLE OF CASES CITED. XV References are to page*. Bloodgood v. Bruen, 485 Bloomer v. Bloomer, 629 Bloomer . Waldion, 512 Bloomfield v. Ketclmm, 446 Blunt v. Syms, 233 Board of Missions v. Scovell, 641 Bockes v. Hathorn, 119, 204 Bodine . Edwards, 9 Boerum v. Schenck, 121, 139, 181, 494 Boese v. King, 284, 286 Bogart v. Van Velsor, 146, 147, 151 Bogert v. Hertell, 157, 492, 556, 559 Bolin, Matter of, 47 Bolton, Matter of, 138 Bolton, Matter of, 484, 485 Bolton v. De Peysler, 538 Bolton v. Jacks. 298, 2^9, 626 Bonillat'. Mestre, 111, 635 Bonnet, Matter of, 408 Bool v. Mix, 20 Boone v. Citizens' Sav. Bank, 47, 82 Booth v. Ammerman, 321, 332, 329 Booth v. Bapt. Church, 37, 250, 384, 409, 561 Bork v. Martin, 9, 33 Borst v. Corey, 123 Boscowitz v. Held, 544. 545, 597 Bostwick, Matter of. 367 Bostwick v. Atkins, 139 Bostwick v. Beach, 511, 552, 603 Bostwick v. Brown, 206 Bostwick v. Burnett, 286 Bonghton v. Flint, 612 Boulle v. Toinpkins, 183 Bouton v. Thomas, 99, 439 Bowden, In re, 622 Bowditch v. Ayrault, 496, 497 Bowdoin College v. Merritt, 116, 119 Bowers v. Smith, 636, 637, 638 Bowker v. Wells, 17 Bowman v. Tallman, 126, 128 Boyd, Matter of, 447 Bovd v. Schlessinger, 511 Boyle v. St. John, 199 Boynton v. Hoyt, 295 Boynton v. Laddy, 128 Boyse, In re, 405 Bradford . Mogk, 452 Bradhurst v. Bradhurst, 381 Bradley, Matter of, 171, 234 Bradley v. Amidon, 360, 362 Bradstreet v. Clarke, 512 Braman v. Bingham, 43 Bramhall . Ferris, 136, '410, 559, 587, 650 Brater v. Hopper, 83 Bratt, Matter of, 366 References are to pages. Bratmsdorf, Matter of, 321, 368 Brautigam . Escher, 233 Bremer v. Penniman, 406 Brennan v. Hall, 31 Brennan v. Lane, 183, 605 Brennan v. Willson, 124, 237, 238 Breton's Estate, In re, 62 Brevoort . Grace, 132, 346 Brevoort Brevoort, 449 Brewer, Matter of, 321, 357, 416, 605 Brewer v. Brewer (see Bremer v. Penniman) Brewster v. Power, 9 Brewster v. Striker. 24, 100 Briggs v. Davis, 104, 133, 247, 287, 289, 545 Bright v. Boyd, 328 Brill v. Tuttle, 5s! Brill v. Wright, 483 Brimblecom v. Haven, 320 Brink . Gould. 41 Brink v. Lay ton, 267, 558, 603 Brink v. Masterson, 559 Brittin v. Phillips, 605 Bromley v. Mitchell, 114 Bronson, Matter of, 270 Brooke v. Chappell, 406 Brookman . Kurzman, 644 Brown, Matter of, 485 Brown, Matter of, 191 Brown v. Blackman, 52 Brown v. Brown, 47 Brown . Cherry, 9 Brown . Clark, 37 Brown . Decker, 117 Brown v. P. L. & T. Co., 461, 652 Brown v. Harris, 267 Brown v. Knapp, 177, 603 Brown v. Richter, 624 Browne v. Amyot, 340 Browne v. Perris, 105 Browning v. Hart, 232 Bruce v. Lorillard, 220, 222 Bruen . Gillet, 178, 195, 196, 197 Brundage v. Brundage, 207, 316 Bruner v. Meigs, 498", 570 Brush v. Smith, 219 Bryan v. Knickerbacker, 295, 297 Bryant, In re, 470 Bryant . Thompson, 137, 410, 411 Buchau v. Rintoul, 164, 166 Buchanan v. Tebbetts, 564. Buckingham . Clark, 406 Buckland v. Gallup, 206 Buckley . Buckley, 99 Bucklin v. Bucklin, 57, 66, 82, 307 Budd v. Munroe, 202 Budd v. Walker, 36 XVI TABLE OF CASES CITED. Reftrences are to pages. Buffalo Cement Co. . McNaughton, 267 Buffalo L. T. & S. D. Co. v. Leon- ard, 654 Bulkley . Depeyster, 81 Bull, Matter of , 321 Bullard v. Benson, 341 Bullis v. Montgomery, 104 Bump v. Pratt, 40 Bunce v. Vander Grift, 500 Bundv v. Bundy, 75, 155, 362, 380, 444, 461. 465 Bunn v. Vaughsin. 81 Bunn v. Wintlirop, 44 Bunnell v. Gardner, 582, 583, 595 Bunner v. Storm, 526, 52? Burke, Matter of, 73 Burns v. Allen, 626 Bun-ill v. Boardman, 73 Burrill v. Shell, 236 Burritt v. Silliman, 80. 235, 236 Burtis v. Doughty, 250 Bushncll v. Drinker, 146, 257 Busk v. Aldam, 522 Butler, Matter of, 146, 179, 232 Butler v. B. & A. R. li. Co., 205 Butler v. Duprat. 308 Butler v. Green, 105, 559, 629, 635 Butler v. Jar vis, 211 Butler 0. Johnson, 135, 260, 515, 601, 615 Butler . State M. L. A. Co., 50, 82, 105, 2ii7, 307 Butler v. Trustees. 394 Butteifield, Matter of, 77, 563, 623, 626 Byrnes, Matter of, 107 Byrnes v. Baer, 25, 435, 445, 539 Caeca vo v. R. W. & O. R. Co., 210 Cady, Matter of, 242 Cager. Matter of, 455. 462 Cahill v. Brennan, 437 Cahill v. Russell, 435, 436, 483, 485 Cairns v. Chabert, 321, 322 Cairns e. Chaubert, 222, 328 Calhoun v. Millard, 615 Cambreleng v. Graham, 40 Cammann v. Cammann, 223. 322 Camp, Matter of, 182, 475, 613, 618 Campbell, Matter of, 640, 641 Campbell v. Beaumont, 110, 367, 462, 464 Campbell v. Foster, 587, 650 Campbell v. Johnston, 138, 447, 494, 511 Campbell *. Low, 77, 283, 284, 354, 498, 510, 567 Campbell v. Mackie, 228, 234 References are to pages, Campbell v. Purdy, 165 Campbell v. Stokes, 496, 497, 498, 499 Campbell v. Woodworth, 228 Canfleld v. Crandall, 559 Cant, Matter of, 151, 153 Card v. Meincke, 584 Carey v. Brown, 113 Carman, Matter of, 224 Carman v. Brown, 559 Carpenter, Matter of, 25, 77, 82, 307, '308 Carpenter v. Soule, 42, 52 Carroll v. Carroll, 485 Carroll i>. Conley, 526 Carter v. Board of Education, 213, 214, 408 Carver v. Richards, 549 Case v. Carroll, 138 Case v. Towle, 362 C:\shman v. Woo.!, 446 Casoni v. Jerome, 191 Cass v. Cass, 158 Castle v. Lewis, 579 Call in v. Trustees of Trinity Col- lege, 639 Caufield v. Davenport, 40, 50 Caulkins v. Bolton. 157 Cavin v. Gleason, Matter of, 263, 264 Chadwick v. Wilson, 398 Chamberlain . Chamberlain, 558, 632, 633 Chamberlain v. Taylor, 433 Chamberlain . Taylor, 99, 291, 441, 444, 557, 558, 600 Chambers v. Lancaster, 268 Champlin v. Haight, 97, 285 Champney 0. Blanchard, 50 Chapin v. Shafer, 20 Chapin v. Thompson, 289 Chapin v. Weed, 138 Chapman . Cowenhoven, 449 Chapman . Porter, 56 Chase, Matter of, 73, 476 Chatfield v. Hewlett, 234 Chauncey, Matter of, 361, 364, 365, 366, 383 Chester v. Jumel, 134 Chesterman v. Eylaud, 18 Children's Aid Soc'y v. Loveridge, 73 Chipman v. Montgomery, 625, 636, 638 Chism v. Keith, 93 Christie, Matter of (see Matter of Butterfleld) Christy v. Libby, 158 Church v. Howard, 104, 105 TABLE OF CASES CITED. XV11 References are to pages. Church v. Ruland, 405 Church of Redemption v. Grace Church, 391 Churchill 0. Churchill, 567 Cnwatal 0. Schreiner, 285, 501, 645, (546 City of Rochester, Matter of, 411, 480, 483, 559, 571 Clapp v Astor, 317, 318 Clapp D. Byrnes, 401, 406, 507, 601 Clapp v. Clapp, 219 Clapp Clapp, 183 Clark, Matter of, 90, 107 Clark, Matter of, 166 Clark, Matter of, 314, 524 Clark, Matter of, 45, 177 Clark v. Clark, 108, 1 12, 290, 383 Clark*. Clark, 196,3.0 Clark 0. Crego, 85, 441, 472 Clark r. Flint & P. M. R, Co., 141 Clark v. Fosdick, 114 Clarke, Matter of, 130, 606 Clarke v. Clarke, 321 Clarke v. Leupp, 17, 590 Clarkson v. Clarkson, 313, 317, 319 Clarkson v. De Peyster, 178 Clay v. Wood, 17 Clayton v. Wardell, 204 Clemens. Clemens, 623, 625 Clift v. Moses, 443, 448, 480, 481, 557 559 Clinch v. Eckford, 232 Cline 0. Sherman, 111, 197 Clinton, Matter of, 220, 226 Close v. Shute, 234 Clougu v. Clough, 40 Cluff v. Day, 170, 194, 224, 225 Clulow's Estate, 340 Clute, Matter of, 104 Clute 0. Bool, 381, 584, 649 Clute v. Gould, 208, 218, 223 C. N. Bank v. Strauss, 20 Coates v. First Nat. Bank, 117 Cochrane v. Schell, 16, 26, 275, 278, 304, 361, 39, 370, 372, 373, 374, 375, 378, 381, 382, 383, 624, 637, 643, 646, 649, 650 Cochrane v. Walker, 341, 365 Cockcroft v. Sutcliffe, 550 Cocks, Matter of, 198 Cocks v. Barlow, 75, 147, 182, 198 Cocks 0. Haviland, 196, 198, 201 Coffin, Matter of, 18 Cogswell D. Cogswell, 316, 320, 322, 324, 327, 332, 333 Cohen v. Cohen, 110 Cohn, Matter of, 235 Cohn, Matter of, 142, 241, 242 Coit v. Rolston, 95 References are to pages. Colburn . Morton, 139, 213, 544, 545 Cole 0. Terpentiing, 616 Coleman v. Beach, 431, 459, 469, 476, 487, 510, 520 Coleman v. Hiler, 267 Coleman 0. Manhattan B. I. Co., 599 Colie v. Jamison, 98, 286, 388 Collier v. Munn, 231 Collins, Matter of, 91, 384 Collins v. Hydorn, 120 Collister v. Fassitt, 17, 18 Col Iyer, Matter of , 48 Col Iyer, Matter of, 234 Colmau v. Barrel, 63 Colt v. Heard, 461 Colton v. Colton, 17 Colton v. Fox, 623, 645 Colton v. Graham, 64 Columbus Watch Co. v. Hodenpyl, 183 Colvin v. Young, 464 Commonwealth F. I. Co., Matter of, 179,234 Conger v. Ring, 485 Conklin, Matter of, 309 Conkling v. Davies, 412, 413 Conner, Matter of, 495 Conner v. Watson, 603 Conover v. Hoffman, 566 Constant v. Servoss, 642 Continental Trust Co. 0. Wetmore, 587, 094 Converse v. Sickles, 263 Cook v. Barr, 32, 34, 35 Cook v. Lowry, 175, 178, 219, 235, 295, 297, 337, 370, 374, 649, 650, 651 Cook v. Ryan, 479 Cooke v. Meeker, 340, 341 Cooke 0. Platt, 85, 101. 286, 441, 487, 489, 490, 491, 529 Cooke v. State Nat. Bank, 159 Cooper, Matter of, 307 Cooper 0. Burr, 44 Cooper 0. Cooper, 550. Cooper v. Whitney, 116 Corley 0. McElmeel, 600 Corn 0. Corn, 204 Cornell, Matter of, 135 Cornell 0. Cornell, 267, 359, 360 Comes 0. Wilkin, 468 Correll v. Lauterbach, 531, 550, 607 Corse 0. Corse, 124, 342, 344, 349 Corse 0. Leggett, 32 Coster 0. Lorillard, 11, 246, 258, 274, 285, 379, 381, 421, 441,626 Cottmau 0. Grace, 388, 555 XV1I1 TABLE OF CASES CITED. References are to pages. Cotton v. Burkelman, 479, 569 Coutant v. Servoss. 397, 512, 513 Covenhoven v. Shuler, 328 Cowen i\ Rinnldo, 350 Cowles v. Thompson, 234 Cox v. Schennerhorn, 221 Coyne v. Weaver, 104 Cozzens, Matter of, 151, 198, 201, 202 Crabb v. Young, 146, 169, 244 Crabtree v. Bramble, 577 Craig, Matter of, 77 Craig v. Craig, 23, 25, 148, 238, 295, 355, 370. 513 Craig v. Hone, 274, 582 Craighead v. Peterson, 425 Cram v. Cram, 327 Crandall v. Hoysrndt, 590 Crane v. Decker, 124 Crane v. Powell, 33. Cranston v. Plumb, 105 C raver v. Jermain, 131 Crawford, Matter of, 46, 47, 224 Crawshay, In re, 549, 550 Crise, Matter of. 21, 35 Crittenden v. Fairchild, 441, 444, 503 Crocheron . Jnques, 493 Croft v. Williams, 196, 197, 198, 200, 530 Cromwell v. Cromwell, 259 Cromwell . Kirk, 321, 322, 325, 326, 332, 336 Crooke v. Co. of Kings, 22, 142, 247, 248, 250, 410, 411, 451, 460, 469, 471, 474, 476, 477, 505, 522, 540, 644 Crooked Lake Nav. Co. . Kcuka Nav. Co., 513 Cross v. L. I. L. & T. Co., 314. Cross v. U. S. Trust Co., 78, 631, 633, 634, 635 Grossman, Matter of, 95, 369, 370, 374, 408, 651 Grouse v. Frothingham, 119 Crowe v. Brady, 48 Crozier v. Bray, 26. 401, 462 Cruger . Cruger, 24, 354 Gruger v. Douglas (See Cruger v. Cruger) Cruger v. Halliday, 237 Cruger v. Jones, 130 Cruger v. McLaury, 340 Cruiksliank v. Home for the Friend- less, 407, 408, 606, 651 Cullen v. Att'y-Gen., 405 Culross v. Gibbons, 239, 412, 626, 641 Cumberland Coal & Iron Co. v. Sherman, 181, 598 References are to pages. Gumming v. Williamson, 425, 502, 512 Cummins . Barkalow, 268 Cunningham . Davenport, 47, 49 Currin v. Fanning, 72, 641 Curry v. Powers, 21, 48, 52, 67 Curtis, Matter of, 96, 523 Curtis v. Engel, 584 Curtis v. Leavitt, 624 Curtis v. Smith, 610 Curtiss, Matter of, 222 Cushman v. Familj F. Soc'y, 123 Cushman v. Horton, 370 Cushman v. Thayer Mfg. Co , 45, 59 Cussack v. Tweedy, 564, 570 Cuthbert v. Babcock, 503 Cuthbert . Chauvet, 135, 379, 414, 419, 606 Cutting . Cutting, 422, 429, 431, 454, 522, 524, 588, 652 DaCosta v. Bass, 95 Dammert v. Osborn, 161, 257, 394, 630, 631, 633, 634, 635 Dana v. Murray, 506, 561, 564, 623 Darling v. Rogers, 103, 289, 423, 626 Dartnall, In re, 143 Daubeny v. Cockburn, 549 David, Estate of, 271 Davies v. Davies, 450 Davies v. N. Y. Concert Co., 119 Davis, Matter of, 96, 269. 270 Davis v. Davis, 48, 613, 618, 620 Davis 0. Kerr, 198, 200 Davis v. Stover, 232 Davis S. M. Co. v. Best, 157 Davoue v. Fanning, 138, 139 Day v. Roth, 29, 37, 56 Deansville Cemetery Ass'n, Matter of, 346 Bearing, Matter of, 242 De Barante v. Gott, 64, 554. 559 De Bevoise v. Sandford, 138 De Caumont v. Bogert, 46 Deckel mann, Matter of, 320, 321, 322, 323, 324, 325, 332, 333, 337 Decker & Tyson v. Miller, 204 Derouche v." Savetier, 613 Deegtin v. Wade, 455, 456, 464, 564 Degraw . Clason, 380, 584 Dekay, Matter of. 285 De Kay v. Irving, 100, 354, 624 Dela field v. Barlow, 440, 450, 500, 558 Delaneld v. Schuchardt, 148 Belafield*. Shipman, 258, 361, 370, 375, 496 DC Lamater v. McCaskie, 234 TABLE OF CASES CITED. XIX References are to pages. Delaney 0. McCormack, 85, 488, 553, 554, 65'i Delaney v. Van Aulen, 320, 361, 363. 364, 383 Delaplaine, Matter of, 205, 227, 234 Delaware, L. & W. R. R. Co. v. Gilbert, 183, 580 Delehanty v. St. Vincent's O. A., 500 Delmotte v. Taylor, 53 Demurest 0. Ray, 511 Denike, Matter of, 234 Denike v. Harris, 153 Dening v. Ware, 64 Denton, Matter of, 307 Denton v. Sauford, Matter of, 146, 147 Deo bold v Oppermann, 151, 175, 191, 193 Depew, Matter of, 226, 230 De Peyster, Matter of, 220, 222, 229 De Peyster v. Cleiidinins:, 80, 111, 285, 307, 559, 626, 653 De Pierres v. Thorn, 616 De Pierris, Matter of, 158 Deraismes v. Deraismes, 321 Deraismes v. Dunham, 107, 240, 242 De Russy, Matter of, 164 DespardV Churchill, 633 Devisne v. Mellish, 501 Devlin, Matter of, 341 Devoe . Van Vranken, 339 Dewey, Matter of, 320 DeWitt 0. Cooper, 321, 322 Dey Ermand, Matter of, 297, 369 Dias v. Brunei! 's Ex'r, 612 Diehl r. Lambart, 449 Diez, Matter of, 66 Dill v. Wisner, 15, 206, 207, 425, 435, 437, 483, 484, 638 Dillaye v. Com. Bank of Whitehall, 133 Dillaye 0. Greenough, 23, 100, 101, 252 Dillon v. Coppin, 62 Dinley 0. McCullagh, 21. 47, 53 Dissosway, Matter of, 180 Ditmars v. Smith, 76, 255, 268 Diven v. Lee, 150 Dixon, Matter of, 239 Dixon v. Storm, 196, 342, 503 Dodge v. St. John. 135, 192, 606 Dodge v. Stevens, 606 Dodge 0. Stevens. 139 Dodkin . Brunt, 78, 79 Dolan, Matter of, 121, 123 Dominick v. Michael. 20 Dominick v. Sayre, 466 Donaldson v. Donaldson, 59 References are to pages. Donovan . MacDowall, 328 Donovan v. Van De Mark, 23, 25, 100 Doolittle v. Lewis, 443, 478 Dorland v. Dorland, 492, 497, 520 Dorman v. Gannon, 612. Doubleday v. Newton, 627 Doud . Holmes, 149, 154 Douglas 0. Cruger, 27, 95, 130, 182, 379, 414, 416 Douglas 0. Yost, 233, 234 Douglass v. Ferris, 191 Douglass v. llazen, 462 Douglass v. Rowland, 192 Dow 0. Dow, 357 Dowd v. Tucker, 406 Downer 0. Church, 15 Downes v. Phoenix Bank, 612 Downing -c. Marshall, 24, 249, 267, 284, 349, 396, 421,422,441,506, 559 Downing v. Marshall, 233, 234 Downing 0. Marshall, 228, 323, 409, 485, 506, 557, 628 Drake 0. Drake, 472, 501, 643 Drake Green, 142 Drake 0. Paige, 445, 517, 520 Drake 0. Pell, 496 Drake 0. Price, 224 Draper 0. Harvard College, 635 Draper 0. Palmer, 299 DuBois 0. Brown, 172, 641 Dubois 0. Ray, 280 DuBois 0. Ray, 259, 646 Duchess of Kingston's Case, 120 Duclos v. Benner, 155, 156, 312, 314, 645 Duffy 0. Duffy, 450 Duffy 0. Duncan, 233 Duffy 0. Durant Land Improvement Co , 132 Duffy . Masterson, 35 Duke of Cumberland 0. Graves, 70, 411,420 Duncan 0. Duncan, 638 Duncan v. Jaudon, 202, 599 Dunham, Matter of, 190 Dunkel, Matter of. 219, 227 Dunning 0. Dunning, 159 Dunning 0. Ocean Nat. Bank, 80, 106, 107, 235, 236, 491, 621 Dnpre 0. Thompson, 37, 103, 401, 626 Durfee 0. Pomeroy, 280 Durland 0. Durland, 41, 51 Duryea 0. Mackey, Index. Duvall 0. E. E. L. Church, etc., 290, 291,352 Duvoll 0. Wilson, 62, 63 XX TABLE OF CASES CITED. References are to pages. Dyett v. C. T. Co., 285, 378, 419, 423 Dygert . Remerschnider, 55 Eager . Roberts, 219 Eagle v. Emmet, 313, 604 Earle . Earle, 75, 106, 107, 174, 186, 200. 201, 412 Easterly 0. Barber, 103 Ebling v. Dreyer, 131 Egerton's Admr's 0. Conklin, 479, 511, 519 Eisner 0. Curiel, 440 Elias, Matter of, 243 Elias v. Schweyer, 242 Elliott V. Horn, 69 Elliott v. Lewis, 233 El wood v. Deifendorf, 203 Emans v. Hickman, 310 Embree, Matter of, 654 Embury v. Conner, 346 Embury v. Sheldon, 93, 95, 247, 373 Emens v. St. John, 57(5 Emerson, Matter of, 224 Emerson v. Bleakley, 78, 82, 86 Emmons v Cairns, 10, 16 Ennis v. Brown, 397 Erwin v. Loper, 165, 436, 484, 557 Esty v. Clark, 501 Ettlinger v. P. R. & C. Co., 119, 267 Evans v. Jackson. 343 Everett v. Everett, 9 Everitt . Everitt, 109, 258, 275, 352, 556, 561 Fagan v. Strong, 210 Fairchild v. Edsou, 251, 254, 255 Fargo v. Squiers, 561 Parian v. Wiegel, 40 Farmer, In re, 30 Farmers' L. & T. Co. v. Eno, 490, 511 Parquharson v. Nugent, 222 Farrar v. McCue, 85, 124, 487, 652 Farwell v. Tweddle, 314, 329 Fay v. Halloran, 340 Fdloh 0. Hooper. 609 Fellows V Heermans, 25, 55, 376, 413, 419, 425, 434, 441, 566, 624 Fellows v. Longyor, 151, 157, 185, 202 Felt & Bell, Matter of, 207 Fernbacher, Mutter of, 110, 244, 641 Fernbacher v. Fernbacher, 242, 457, 459, 464 References are to pages. Ferrin v. My rick, 126, 128 Ferris o. Ferris, 153, 242, 243 Ferris v. Van Vechten, 263, 264 Ferry v. Stephens, 51 Fessenden v. Blanchard, 210 Field, Matter of, 132 Field v. Field's Ex'rs, 623, 625 Fiester v. Shepard, 641 Fincke 0. Fincke, 142, 342, 365, 504, 558 Finden v. Stephens, 233 Fink v. Cox, 53, 58, 61 Finley 0. Bent, 558 Finneru v. Hinz, 203 First P. S. of B., Matter of, 388 Fischer v. Langbein, 523 Fish, Matter of, 341 Fish v. Coster, 237, 489 Fish v. Klein, 70 Fisher, Matter of, 310 Fisher, Matter of, 290, 352 Fisher. Banta, 481, 555, 556, 558, 569 Fisher v. Fields, 32 Fisher . Fisher, 219, 232 Fisher v. Hall. 397 Fisher 0. Hubbell, 120, 123 Fithian, Matter of, 166, lfc-8 Fitzgerald v. Topping. 130, 131 Flagler . Schoeffel, 98, 104 Flagler 0. Wheeler, 104 Flanagan v. Flanagan, 110, 461 Fleck 0. Rau, 443 Fleet. Durland,449 Fleet v. Simmons. 193, 242, 478 Fleming . Bnrnham, 526, 527, 601 Flint . Bell, 263, 285, 288, 613 Flood . Cain. 40. Florence v. Sands, 364 Floyd v Carow, 408, 409, 475, 503 Foland . Dayton, 126, 128 Foley, Matter of, 400 Follett v. Badeau, 34, 138, 283 Foose. Whitmore, 17, 24 Foote . Bruggerhof, 160, 218 Foote 0. Bryant, 7, 9, 28. 391 Forbes 0. Halsey, 138, 139, 544 Ford 0. Ford, 630 Ford 0. Knapp, 328 Fonnnn 0. Whitney, 359, 360 Forster v. Hale, 32 Forster 0. Winfield, 406. 479 Forsyth 0. Rathbone, 296 Fosdick 0. Delatield, 78 Fosdick v. Town of Hempstead, 68, 252, 253, 390, 391 Foster, Matter of, 151, 172, 176, 182 Foster 0. Coe, 123, 308 Foster v. Elsley, 233 TABLE OF CASES CITED. XXI References are to pages. Fowler v. B. S. Bank, 48, 173, 263 Fowler v. Butterly, 47, 50 Fowler v. Ingersoll, 28 Fowler v. Lockwood, 232 Fowler v. Mutual L. I. Co., 343, 349 Fox, Matter of, 73, 433, 437, 480, 483, 559 Francis v. N. Y. and Brooklyn Elevated R. R. Co.. 46 Fraser v. Trustees, 556, 557, 644 Frazer, Matter of, 154. 310, 603 Frenr v. Pugsley, 522, 56 L Freeborn . Wagner, 464 Freeman v. Freeman, 172, 177, 218, 257 French, Matter of, 641 French v. Dauchy, 191 Friedman, Estate of, 604 Fritz v Fritz, 449 Frothingham, Matter of, 465, 532 Fuller v. Artmun, 66 Fuller v. Yates, 603 Fulton. Fulton, 44, 45, 50 Fulton v. Whitney, 140 Furman v. Coe, 17"), 360 Furniss v. Furniss, 605 Gadd, In, re, 470 Gage v. Gage, 640 Gage v. Gage, 9. Gallagher, Matter of, 67 Gallagher . Crooks, 501 Gallic v. Eagle, 450 Gano . McCiinn, 442 Gantert, Matter of, 165 435, 436, 437, 466, 468, 471, 480, 481,482, 483, 484, 628, 637 Gardner, Matter of, 437, 461, 463, 474 Gardner t>. Ogden, 158, 544 Gardner v. Rowe, 30 Garfield v. Hatmaker, 7, 9 Garlock v. Vandevort, 205, 637, 641 Garner v. G. L. I. Co., 50, 413 Garnsey v. Mundy, 412 Garnsey v. Rogers, 262 Garvey . McDevitt, 442, 506, 563, 564 Garvey v. N. Y. Life Ins. & Trust Co., 613 Gasquet v. Pollock, 369 Gearns v. Bowery S. B., 47 Geissler v. Werner, 135, 234, 328 Gelslon v. Shields, 251, 322, 471, 645 Genet v. Beekman, 584, 653 Genet v. Foster, 587 Genet v. Hunt, 247, 279, 417, 418, 428,431, 561, 565 References are to pages. Geoffrey v. Gilbert, 50 George, Matter of, 47 Gerard, Matter of, 229 Gerard v. McCormick, 202 Germond . Jones, 24, 99, 116, 445, 460 Gerould v. Wilson, 191, 192 Gerry, Matter of, 312, 313, 314, 315 Gersen v. lliuteln, 23, 95, 247, 520, 559 Getman v. McMahon, 461, 463 Geyer v. Snyder, 139 Gifford v. Corrigan, 14 Gifford v. Rising, 210, 249 Gilbert, Matter of, 159 Gilbert, Matter of, 263 Gilbert v. Gilbert, 9. Gilbert . North American Fire Ins. Co., 43 Gilbert v. Taylor, 621 Gilchrist v. Stevenson, 54, 103, 104, 182. 203, 263, 268 Giles' Estate, 641 Gilles v. Stewart, 183 Gillespie, Matter of, 110 Gillespie v. Biooks, 152, 176, 219, 332 Gilman . Gilman, 171, 179 Gilman v. Gilman, 234 Gilman v. Healy, 139 Gilman v. Healy, 298. 299 Gilman v. McArdle, 11, 13, 14, 37, 101, 102, 249, 309 Gilman v. Reddington, 109, 122, 247, 250, 255, 297, 307,* 370, 441, 497, 505, 649, 650 Gilman v. Tucker, 346 Gilmore v. Ham. 613. 617, 618 Girvin v. Hick man, 191 Gisborne . Gisborne, 470 G. L. & P. J. R. R. Co. v. N. Y. & G. L. R. R. Co., 130. 398 Glacius v. Fogel, 165, 198, 436, 484, 489 Gladding v. Follett, 469, 605 Glaskin v. Sheehy, 163 Gleason, Matter of, 243 Glover v. Hoi ley, 162,232 Goddard v. Pomeroy, 251 Goebel v. Iffln, 132 Goebel v. Wolf, 95, 247, 297, 300, 496, 497, 643 Goetz 0. Ballon, 454, 464 Goldsmid v. Goldsmicl, 549 Goldsmith v. Goldsmith, 7. 33 Goldsmith v Swift, 317. 319 Gomez i: Gomez, 344, 345, 348, 349, 522 Goodrich, Matter of, 219 XX11 TABLE OF CASES CITED. References are to pages. Goodrich v. Russell, 70 Gordon, Matter of, 286 Gott v. Cook, 25, 250, 294, 295, 306, 307, 354, 359, 370, 374, 381. 555 Gottberg 0. U. S. Nat. Bunk, 599 Gottsberger 0. Tavlor, 193 Gould v. Rutherfiird, 371, 375 Gourley 0. Campbell, 557, 558, 569 Govin v. de Miranda, 29, 35, 37. 39, 67 Graff v. Bonnett, 384, 587, 649, 650 Grating 0. Heilmann, 48 Graham 0. De Witt, 77, 559 Graham 0. Graham, 603 Graham 0. Livingston, 100, 440, 556 Graham 0. Read, 559, 638 Graham v. Van Duzer, 263 Grandin, Matter of, 618 Grandin v Hernandez, 42, 64, C6 Grangiac v. Arden, 51. 54 Grant v. Grant, 366, 371, 375, 559 Graves 0. Graves, 406 Graves v. Waterman, 379 Gray v. Barton, 40, 51 Gray v. Gray, 603 Gray 0. Parke, 142 Greason v. Keteltas, 343, 344, 348, 349 Green, Matter of, 270, 271 Green v. Dikeman, 285 Green 0. Green, 54, 80, 107 Green v. Hart, 50 Green v Howard, 501 Green v. Winter, 323 Greene, Matter of. 2K3 Greene v. Greene, 22, 26, 74, 75, 80, 627, 645 Greenland v. Wnddell, 82, 86, 239, 352, 487, 489, 490, 491, 496, 555, 556, 558, 652, 653, 654 Greenwood v. Marvin, 308 Greer 0. Chester, 97, 247, 297, 418, 623 Greer 0. Greer, 229 Greyston v. Clark, 638 Gridley 0. Gridley, 16 Griffen 0. Ford, 280, 380 Griffin v. Marquardt, 117 Griswold v. Griswold, 321, 341 Griswold 0. Perry, 517, 518, 606 Griswold v. Warner, 461 Groshon 0. Lyon. 158 Gross v. Moore, 251, 252, 406, 408 Grout, Matter of, 207, 234 Grout v. Van Schoonhoven, 104, 626 Grymes v. Hone, 46, 53, 59, 60 Gu'ion v. Williams, 268 Gunning 0. Carman, 332, 333, 336 References are to pages. Gurney, In re, 622 Guy V. Langdon, 14 Guy on v. Lewis, 536 Gwyer 0. Gwyer, 95 Haas 0. Kuhn, ( 459 Haas v. O'Brien, 286 Hackney v. Vrooman, 50 Haddow v. Lundy, 263 Hagenmeyer, Matter of, 310 Hagerty v. Hagerty, 99, 307, 624 Haggerty v. Duane. 145 Haight v. Brisbin, 190, 469 Haight v. Brisbin, 468, 471, 520 Haight v. Pine, 444 Haines 0. Meyer, 191 Hale v. Stewart, 289 Hall, Matter of, 77, 239, 442 Hall, Matter of, 198 Hall, Matter of, 49, 54 Hall v. Campbell, 225, 232 Hall n. Dusenbury, 234 Hall v. Erwin, 7 Hall 0. Hall, 224, 229 Hall 0. Hall, 70 Hall v. Mclaughlin, 520 Hall v. Richardson, 120 Hallett v. Thompson, 582, 584, 650, 653 Halsey v. Van Amringe, 234 Halsted v. Hyman, 151, 194 Ham v. Van Orden, 51, 53, 59, 248, 451, 649 Hamer v. Sidway, 24, 38, 262, 307, 613 Hamilton v. N. Y. Stock E. B. Co., 531 Hamlin v. Osgood, 291 Hammond, Matter of, 112 Hancox 0. Meeker, 143, 219, 265, 322, 468, 471, 520 Hancox v. Wall, 143 Handley 0. Wrightson, 501 Hannahs 0. Hannahs, 177 Harbeck, Matter of, 232 Harding 0. Glynn, 501 Hardt 0. Levy, 213 Harlow 0. Mi'lls, 172, 178 Harper 0. Chatham Nat. Bank, 447, 572, 573, 577 Harrington 0. Erie County Savings Bank, 139, 598 Harrington 0. Keteltas, 621 Harris, Matter of, 227 Harris 0. Am. Bible Soc'y, 404 Harris 0. Clark, 295, 297, 557, 623, 626 Harris 0. Clark, 40, 52, 53, 58 Harris 0. Ely, 354 TABLE OF CASES CITED. XXlll References are to pages. Harris v. Larkius, 118, 449 Harris v. Slaght, 404 Harris v. Strodl, 514. 517, 518, 599 Harrison v. Clark, 191 Harrison v. Clarke, 192 Harrison . Harrison, 250, 255, 258, 259, 290, 625, 626 Harrison v. U. T. Co., 243, 511, 651 Hart . Sansom, 609 Hartnett v. Wandell, 11, 91, 503 Harty . Doyle, 543 Harvey . Brishin, 26, 385, 444, 570, 589, 590, 604 Harvey . McDonnell, 119 Harvvard v. Hewlett, 234 Hasbrouck v. Blauvelt, 128 Raskin v. Teller, 178, 219 Hasler v. Hasler, 172, 234 Hatch v. Bassett, 266, 383, 411, 555 Hatch v. National Bank, 263 Hatfield v. Sneden, 604 Hathaway, Matter of. 153 Hathaway r. Hathaway, 23, 25 Hauselt v. Patterson. 103, 443 Haux v. Dry Dock Savings Institu- tion, 21, 48, 49 Havemeyer, Matter of, 148, 150, 242 Havemeyer v. Loeb. 234, 286 Havens, Matter of, 641 Havens v. Healy, 583 Haviland, Matter of, 364 Haviland v. Cocks, 381 Haviland v. Wiliets, 21 Hawley, Matter of, 18, 26, 89, 108, 158, 222 Hawley, Matter of, 120 Hawley v. James, 11. 100, 101, 213, 232. 274, 284, 285, 289, 291, 350, 351, 380, 407, 410, 441, 513,540, 626 Hawley v. James, 102 Hawley . James, 630 Hawley . Ross, 81, H3, 84 Hawley v. Singer, 222 Haxtun v. Corse, 102, 250. 290, 294, 370, 623 Hayden, Matter of, 364. 372 Hayden, Matter of, 223, 226, 229, 231 Hayden v. Wellington, 286 Haydock v. Stow, 530 Hayes . Kershow, 62 Hayes v. Pratt. 204 Hayncs v. McKee, 654 Haynes v. Sherman, 497, 623 Haywood v. Townsend, 190 Hazard, Matter of, 166 Heath v. Hewitt, 642 References are to pages. Heather's Estate, 234 Hecht, Matter of, 90, 107, 109, 111 Hedges v. Riker, 343, 345, 513 Hetrmans . Burt, 94, 100, 288, 290, 407, 441, 566 Heermaus . Ellsworth, 54 Heennans v. Robertson, 24, 26, 99, 143, 144, 285, 376, 407, 425, 441, 480, 504 Helck v. Reinheimer, 16 Hellenberg . District No. One, &c., 488, 510, 520 Henderson v. Henderson, 24. 26, 101, 280, 286, 343, 396, 442, 446, 450, 503, 504, 559, 563, 625 Hendricks v. Hendricks, 369 Hendricks v. Isaacs, 590 Henly v. Fitzgerald, 506 Hennessy D. Patterson, 451 Hepburn v. Hepburn, 149 Herbert v. Herbert, 127 Hermance v. Mead, 110 Heroy, Matter of, 482 Herrick, Matter of, 23, 626 Herrick, Matter of, 227 Herrick v. Grow, 511 Herrick v. ^Starkweather, 13 Herrington v. Robertson, 207 Herriott . Prime, 528, 569 Hesdra, Matter of, 481 Hess . Hess, 579 Hetzel v. Barber, 425, 453, 464, 513, 558, 569, 572, 574, 575 Hiles v. Fisher, 249 Hill v. Heermans, 268, 308; 437 Hill v. Hill, 308 Hill v. McDonald, 620 Hill v. Nelson, 219 Hillen v. Iselin, 423, 501, 515, 524, 540, 541, 561 Hills v. Peekskill Sav. Bank, 211 Hillyer*. Vandewater, 258, 385 Hiue v. Bowe, 286 Hirsh . Auer. 7, 25, 37, 267, 307 Hitchcock v. Linsly, 118 Hitchcock v. Peaslee, 110, 252, 253 Hitchcock D. Peaslee, 398 Hoag v. Hoag, 420 Hoagland . Trask, 125 Hoar v. Hoar, 48, 54 Hobson, Matter of, 98, 224, 361, 412 Hobson . Hale, 297, 384, 437, 557, 558, 630, 635 Hodges, In re, 470 Hodgman, Matter of, 265, 315 Hoes v. Halsey, 234 Hoffman, Matter of, 94, 96 Hoffman v. Penn. Hospital, 179 Hogan v. Curtin, 366 XXIV TABLE OF CASES CITED. References are to pages. Hogan v. Kavanaugh, 159 Hoge v, Hoge, 405 Hogle e. Hogle, 538 Holden, Matter of, 208, 233, 239 Holden v. N. Y. & E. Bank, 111, 155, 173 Holden v. Strong, 359, 469 Holdriije . Scott, 206 Holland v. Alcock, 13, 253, 254, 256, 309, 400. 471, 633, 638 Holland . Brown, 214 Holley v. S. G., 177 Hollingsworth v. Spaulding, 140 Hollis v. Drew Theo. Sem., 269, 634 Hollo way v. Headington, 61 Holly . Hirsch, 101, 426, 441, 466, 503, 504, 505, 516, 517, 642 Holmes. Oilman, 263, 26 i Holmes . Mead, 255, 388, 389, 395, 625, 626, 627, 653 Holmes v. Roper, 53, 58 Homestead Bank v. Wood, 123 Hone v. De Peystcr, 206, 207 Hone's Ex'rs v. Van Schaick, 500, 506, 540, 603, 624 Hood, Matter of, 173 Hood, Matter of, 107, 170, 225 Hood, Matter of (see Hood . Hood) Hood, Matter of, 165 Hood v. Hallenbeck. 174 Hood t>. Huyward, 187, 188, 192, 194, 244 Hood t>. Hood, 165, 168. 169, 187, 191, 194, 436, 485, 555 Hood . Hood, 107, 111, 112, 170, 194, 225 Hood Barrs v. Heriot, 379 Hooker t>. Ax ford, 406 Hooley v. Gieve, 172, 242 Hope 9. Brewer, 556, 563, 564, 631, 632, 634, 635 Hopkins, Matter of, 227, 228 Hopkins v. Kent, 92, 397 Hopkin's Trust, Be, 317 Hopper, Matter of, 76 Hopper v. Sage, 317 Horn. Matter of, 195 Horndorf v. Horndorf, 366 Horton . Cant well, 97, 248, 303, 369, 636, 640 Horton v. McCoy, 559 Hosack v. Blunt, 180 Hosack v. Rogers, 151, 234 Hosea v. Jacobs, 280 Hosford . Merwin, 9 Hotaling v. Marsh, 604 Hotchkiss v Elting, 100, 523 Houdayer, Matter of, 270 References are to pages. House v. Agate, 616 House v. House, 322 House v. Raymond, 153, 268, 355, 526, 530 Housman, Matter of, 144, 323, 326, 327, 331, 332 Hovenden v. Annesley, 620 Hovey v. Cliisolm, 471 How v. Earl Winterton, 622 Howard v. Leonard, 582, 592, 593 Howard v. Moot, 70 Howe, Matter of, 117 Howe, Matter of, 72, 250 Howoll v. Mills, 141 Howell v. Mills, 449 Rowland v. Clendenin, 96, 248, 408, 646 Howland . Heckscher, 213 Hoyt, Matter of, 295, 297, 623 Hoyt, Matter of, 128, 650 Hoyt, Matter of, 374 Hoyt, Matter of, 374, 625 Hoyt v. Cross, 405 Hoyt t. Hilton, 361 Hoyt v. Hoyt, 480, 483, 531 Hovt v. Jackson, 368 Hoyt v. Thompson, 600 Hubbard v. Gilbert, 9, 494 Hubbard v. Hubbard, 644 Hubbell v. Medbury, 114, 119, 138, 285, 613. 620, 621 Hubbell 9. Sibley, 620 Huestis, In re, 73 Hughes, Matter of, 635 Hughes 0. Hughes, 449 Huish's Charity, Re, 550 Hulburt, Matter of, 230, 234 Hull 9. Hull. 370, 410, 415, 487, 607, 624 Hull v. Mitcheson, 635 Hume fi. Randall, 428, 429, 455, 459 Htimfreville, Matter of, 230 Hun, Matter of, 324 Hungerford v. Cartwright, 13, 249 Hunt v>. Rou*manier, 425, 426 Hunter, Matter of, 468, 485 Hunter v. Hunter, 54 Hunter v. Hunter, 381 Huntington v. Gilmore, 53 Hurd v. Farmers' L. & T. Co., 308 Hurlburt 9. Durant, 217, 224, 265 Huss, Matter of, 635 Husted v. Cruikshank, 611 Husted v. Thomson, 611 Hatchings v. Baldwin, 519 Hatchings v. Miner, 14 Hutchins v. Van Vechten, 29, 32, 33, 34 Hutchinson v. Hutchinson, 33 TABLE OF CASES CITED. XXV References are to pages. Hutchison, Matter of, 135, 233 Button v. Benkard, 37, 422, 537, 538, 651, 652 Hyatt 0. Aguero, 528 Hyatt v. Allen, 317, 318, 319 Hyatt v. Clark, 425 Hyde v. Kitchen, 49 Hyland v. Baxter, 139, 360, 367, 368 Hynes v. Alexander, 159 I. & T. N. Bank v. Peters, 263 Ingalsbe v. Murphy, 161 Ingersoll, Matter of, 17, 403 Ingersoll, Matter of. 232 Ireland v. Corse, 228 Ireland v. Ireland, 74, 360, 363, 469, 591 Irish v. Nutting, 41 Irving v. De Kay, 102. 289, 624 Irving v. Rankine, 339 Iseuian v. Myres, 18 Jack v. Robie, 206. 207, 233 Jackson, Matter of, 224 Jackson 0. At water, 16 Jackson 0. Bouchin, 20 Jackson v. Edwards, 454, 457, 458, 474, 503 Jackson v. Hartwell, 68 Jackson v. Hotchkiss, 614 Jackson v. Jackson, 549 Jackson v. Jansen, 513 Jackson v. Sackett, 614 Jackson v. Tuttle, 600 Jackson v. 23d St. R. Co.. 41, 46 Jackson v. Wood, 42 Jacob, Matter of, 242 Jacobs, Matter of, 346 Jacot v. Emmett, 176 James, Matter of, 53, 61, 62, 63, 66, 110, 318 James, Matter of, 269, 270 James v. Beasley, 520, 626 James v. Cowing, 171, 308 James 0. James, 604 Jansen v. Cairnes, 623 Janssen v. Wemple, 441 Jarvis 0. Babcock, 25. 355, 356, 400 Jauncey v. Rutherford, 77, 285 Jefferys 0. Jefferys, 61 Jenkins 0. Young, 443 Jennings v. Conboy, 253, 421, 422, 429. 434, 435, 453, 504 Jennings v. Jennings, 623 Jervaise 0. Clark, 343 Jewett v. Miller, 138 lohnson v. Cornwall, 381 Johnson v. Fleet, 7 References are to pages. Johnson v. Lawrence, 107, 183, 217, 224, 641, 642 Johnson v. Wallis, 109 Johnson v. Williams, 59 Johnston v. Smith, 191. 192, 267 Johnston v. Spicer, 7, 25, 64 Jones, Matter of, 185, 229, 239 Jones, Matter of, 183, 321, 323 Jones 0. Butler, 243 Jones 0. Butler, 161, 243 Jones v. Felch, 340 Jones v. Hamersley, 640, 643 Jones v. Jones, 158, 245, 363, 495, 610, 631 Jones v. M. E. Sunday-School, 559 Jones v. Newell, 159, 368, 411, 460, 462 Journault v. Ferris, 233 Judd v. Warner, 150 Judge v. O'Connor, 148, 363 Judson v. Gibbons, 107 Kalm v. Brooklyn Trust Co., 379 Kahn v. Chapin, 139 Kane v. Astor's Ex'rs, 472, 513, 541 Kane v. Bloodgood, 12, 613 Kane v. Gott, 103, 274, 354, 359, 381, 555, 626, 649 Kavanagh, Matter of, 642 Kearney v. Cruikshank, 339, 383 Kearney . Miss. Soc'y of S. P., 448, 558 Keating v. Bruns, 341 Kedian v. Hoyt, 126, 139 Kekewich v. Manning, 51, 53, 60 Keleman, Matter of, 17, 255, 402, 403, 405 Keller 0. Ogsbury, 175, 513, 555 Kellett v. Rathbun, 177 Kellogg, Matter of, 219, 223, 226 Kelly 0. Kelly, 437 Kelly 0. Roberts, 14 Kelly 0. Scripture, 12 Kelly 0. West, 191, 479 Kelsey 0. Cooley, 267 Kelsey 0. Van Camp, 641 Kendall, Matter of, 327 Kendall 0. Case, 464 Kennedy, Matter of, 179 Kennedy 0. Hoy. 583, 623, 626, 627 Kennedy v. Porter, 37, 56 Kennedy 0. Strobel, 52 Kennedy 0. Town of Palmer, 635 Kenney 0. Pub. Ad'm, 40 Kent 0. Church of St. Michael, 122, 419 Kent 0. Hopkins, 500 Kenworthy. Matter of , 116,226 Kenvon 0. See, 606 XXVI TABLE OF CASES CITED. Kernoclian, Matter of, 316, 317, 318 Kernnchun . N. Y. E. 11. It. Co., 115 Kernochan v. Wilkens, 343, 350 Keteltas, Matter of, 148, 150, 151, 153 Keteltas v. Keteltas, 638 Keteltas v. Keteltas, 638, 643 Kia-h r. Grenier, 354 Kibler . Miller, 537 Kick, Matter of, 493 Kilburi) v. See, 487, 505 Killnme. Allen, 381, 626, 627 Kilpatrick v. Barron, 496, 575, 576, 601 Kilpatrick *. Johnson, 250,294,295, 361, 370. 375, 623, 624, 625 Kilpiu v. Ratley, 269 Kilroy t>. Wood, 583. 584 Kimhall v. Chappel, 531 Kimball v. Story, 501 Kimberly, Matter of, 259, 650 Kins? . Archbishop of Canterbury, '470 King v. Boys, 70 King . Donnelly, 236 King v. Mackellar, 148, 612 King v. Merchants' Exchange Co., 308 King v. Rnndle, 295, 297 King v. Talbot, 144, 148, 149, 150, '153, 160, 176. 177, 178, 179, 235 King v. Townshetul, 398 King v. Whaley, 267, 398 King's Estate, In re, 405, 406 Kingdon, In re, 568 Kingsland . Chetwood, 425 Kingsland v. Murray, 483, 517 Kingsland v Stokes, 291 Kinnan v. Guernsey, 588 Kinnier . Rogers, 253, 283, 428, 460, 479, 480, 502 Kip . Hirsh, 116, 285, 287, 410, 420 Kip's Adm'rs . Deniston, 195, 197 Kirby . Turner, 195, 198, 199 KirkV Kirk, 75, 78, 79 Kirsch e. Tozier. 119, 134, 136, 267 Kirwan, lie, 549 Kissain v. Dierkes, 133, 512, 517, 530, 532 Kitchen v. Lowery, 267 Knapp, Matter of, 128 Knapp v. Knapp, 503, 524 Knapp v. McGowan, 285, 587 Knickerbocker L. I. Co. v. Hill, 9, 442 Knight, Matter of, 172 Knight v. Lidford, 143, 317 References are to pages. Knight. Weatherwax, 397 Knoch v. Funke, 209 Knower v. C. N. Bank, 214 Knowlton v. Atkins, 37, 93, 497, 643, 646 Knox v. Jones, 100, 623, 630, 650, 654 Konvalinka v. Schlegel, 439, 603 Kortright v. Stoiminger, 111, 487, 491 Kurtz v Smither, 49 Kyle f. Kyle, 123 Lalmtut v. Delatour, 344 Lacey r. Davis, 148, 149, 151, 198, 201 Lahey v. Kortright, 88. 238, 239, 243. 426, 487, 491, 610 Lamb, Matter of, 323 Lamb i\ Lamb, 408, 643, 646 Laminer v. Stoddard, 6153 L'Amoureiix v. Van Renssdaer, 126, 130, 379 Lander v. Arno, 120 Landon v. Townshend, 120. 121 Landon v. Walinuth, 428, 601, 602 Lane v. Lewis, 70, 71, 77, 186, 242 Laney, Matter of, 183, 185 Lang, Matter of, 265 Lang v. Ropke, 280, 380 Lang T. Wilbraliam. 280 Langdon v. Astor's Ex'rs, 37 Langworthy v. Crissey, 51 Lapham, Matter of, 258, 649 Lawrence, Matter of, 185 Lawrence, Matter of, 314 Lawrence v. Cooke, 17 Lawrence v. Elliott. 235 Lawrence v. Embree, 328 Lawrence v. Farmer's L & T. Co., 513 Liwrence v. Fox, 14 Lawrence v. Harrington, 15 Lawrence v. Holden, 321 Lawrence 1). Lindsay, 376 Lawrence v. Lindsey, 2U9 Lawton v. Corlies, 643 Lay tin, Matter of, 327, 333 Laytin. Davidson, 217, 224 Leake . Robinson, 496 Leavitt, Est. of, 183, 243 Leavitt v. Pell, 423, 438, 474 Leavitt . Wolcolt, 641 Leavitt v. Yates, 213, 214, 233 Le Blanc, Matter of, 308 Ledrich, Matter of, 139, 380 Lee . Fernie, 549 Lee v. Horton, 118 Lee v. Simpson, 535 TABLE OF CASES CITED. References are to pages. Lee v. Tower, 303, 603. 629 Lefever v. Hasbrouck, 151 Le Fevre v- Toole, 4fO Leggatt, Matter of, 225 Leggett v. Dubois, 246 Lesrgett v. Firth, 436, 401, 462 Leggett v. G. N. R. Co., 120 Leggett v. Hunter, 87, 122, 132, 134, 237, 238. 419, 491, 525, 529, 653 Leggett v. Leggett, 641 Leggett v. Perkins, 23, 24, 25. 135, 246, 283, 342, 343, 345, 353, 354, 428, 513 Leinkauf, Matter of, 224 Leitch v. Wells, 124, 155 Lent, Matter of, 47 Lent v. Howard, 171, 228, 231, 414, 444, 446, 447, 4bl, 556, 557, 558 Leonard v. Am. B. H. M. Soc'y, 457, 459 Leonard v. Burr, 274, 275 Leonard v. C. S. N. Co., 479 Leonhard, Matter of, 263 Lesser v. Lesser, 437 Levey v. Bull, 587 Levin v. Ritz. 50 Levy v. Levy, 73, 79, 389, 623, 626, 635 Levy v. Levy, 95, 497, 498, 499 Levy's Accounting, 234 Lewis, Matter of, 97, 418 Lewis v. Smith, 516. 603 Lewis v. Watson, 195 Lichtenberg v. Herdtfelder, 446 Liudheim v. Manhattan R. Co., 114, 119 Lindo v. Murray, 485, 503, 516, 628 Lingke o. Wilkinson, 425 Linsly r. Bogert, 312 Litzenberger, Matter of . 196 Livingston, Matter of, 22, 170, 243, 498, 642 Livingston v. Freeland, 381 Livingston v. Gordon, 249, 360 Livingston v. Murray, 109, 110, 223, 456, 462, 464, 505 Livingston v. Tucker, 303 Locke v. F. L & T. Co., 29, 31, 37, 38. 55. 249, 258, 259, 266, 410, 411, 412, 414, 645 Locke v. Locke, 593 Locke 0. Mabbett, 587 Lockman, Matter of, 234 Lockman v. Reilly, 108, 112, 116, 26 3, 479 Lockwood v. Lockwood, 341, 367 Lockwood v. Mildeberger, 538 Loder v. Hatfield. 16, 616, 620 Lofthouse, In re, 470 References are to pages. Long v. Long, 188, 190, 191 Loop v. Northup, 192 Loos v. Wilkinson, 213 Lori Hard v. Coster. 274 Loring v. Palmer, 32 Losey v. Stanley, 74, 80, 93. 95. 130, 181, 132, 247, 324, 325, 337, 344, 345, 346, 367, 41!), 502, 606 Loucks v. Johnson, 40, 47 Lounsbury v. Purdy, 9 Lowenstein v. Flauraud, 27, 28 Lowery v. Erskine, 48, 50 Luce v. Burchard, 412 Luce v. Gray, 134 Luckey, Matter of, 142 Ludington's Petition, 286 Luers v. Brunjes, 181 Luhrs v. Eimer, 70 Lunt v. Lunt, 126 Lydon v. Met. El. R. Co., 574 Lyendecker v. Eisemann, 230 Lynch, Matter of, 341 Lynch T. Loretta, 250 Lynch v. M. E. R. Co , 161 Lynch v. Patchen, 485 Lyons, Town of, v. Chamberlain (see Town of Lyons v. Chamber- lain) Lytle v. Bcveridge, 138 McAllaster v. Bailey, 579 McAlpine v. Potter, 222, 224. 225, 227 McArthur v. Gordon, 32, 354, 359 Me Arthur v. Gordon, 130 McCabe v. Fowler, 174, 175, 201 McCabe v. O'Connor, 18 McCaffrey. Matter of, 342, 343. 344, 349, 429, 572 McCahilltJ. McCahill. 9, 34 McCann v. Randall, 609 McCarter, Matter of, 165, 180, 206, 262 McCarty v. Terry, 120, 559, 569 McCartney v. Bostwick, 9, 18 Maclay v. Robinson, 51 McClouth, Matter of, 641 McClure t> Woolley, 641 McComb, Me parte, 384 McComb. Matter of, 165, 437, 485, 514, 557 McConnell v. McCullough. 115 McCord, Matter of, 232 McCord v. Noyes, 50 McCormack . McCormack, 295, 297 McCorn v. McCorn, 481. 483 McCready v. Farmers' L. & T. Co , 159, 160, 161, 475 XXV111 TABLE OF CASES CITED. Rffererices are to pages. McCready v. Metropolitan Life Ins. Co., 435. 511. 516, 570, 627. 628 McDonald . O'Hara, 449, 450, 572, 576 McDonough v. Laughlin, 73 McDougal . Gray, 210 McDotigall, Matter of, 110 McElroy v. Albany Savings Bank, 47 McElroy v. Nat. Savings Bank, 47 McEvoy t>. Appleby, 583, 591, 593, 594 McEwen v. Brewster, 379 McGillivray, Matter of, 241, 242, 244 McGowan v. McGowan, 381 McGrath . Van Stavoren, 477 McGraw, Matter of, 556 McGregor v. McGregor, 71, 242 McGregor v. McGregor, 305, 450 McGregor v. McGregor, 204 Mcllvaine . Kadee, 20 McKee r. N. Y. Elevated R. R. Co , 598 McKee v. Weeden,'208, 220 McKenzie v. Harrison, 42 McKeown 0. Officer, 404 McLaren, Matter of, 220, 226 McLean v. Freeman, 411 McLean v. Ladd, 134, 149, 290 McLean. Macdonald, 114,450 McLean D. McLean. 411, 415, 469, 521 McLean v. Prentice, 214 McLoskey v. Reid. 436 McMahon v. Allen, 568 McMahon v. Harrison, 241, 242 McMurray v. McMurray, 544 McNeil v. Tenth National Bank, 45 McPhcrson t. Rollins, 14, 133, 130, 267, 412, 51 McPherson v. Smith, 543, 545 McRae v. McRae, 152 McSorley v. McSorley's Ex'rs, 213 McSprley v. Wilson, 381, 623, 625 Mabic v. Bailey, 47 Macaulay . Palmer, 614 Macdonald, Matter of, 148, 150, 201 Mack v. Kitsell, 123 Mack v. Mack, 50 Mack t>. M. & F. Sav. Bank, 47 Mackay p. Dennington, 320 MarkccliiHG v. Majoribanks, 548 Macomber v. Bank of Batavia, 102, 361.591 Macy v. Williams, 47 Magill v. McMillan, 93 Mahan, Matter of, 497 Mairs, Matter of, 172 References art to pages, \ Maitland . Baldwin, 522 ! Manahan v. Gibbons, 197 Mander . Low, 580 Mandeville . Reynolds, 181 Manice, Matter of, 219 Manice . Manice. 24, 93, 95, 100, 250, 255, 294, 295, 296, 297, 306, 371, 374, 375, 376, 410, 442, 468, 502, 503, 625, 626, 631, 633, 653, 654 Manier v. Phelps, 513 Mann v. Lawrence, 127, 225 Mann v. Whitbeck, 26 Manning v. Evans, 587 Manning v. Manning, 215 Mapes v. American Home Mission- ary Soc'y, 635 Mapes v. Tyler, 493 Markey v. Markey, 268 Marie v. Garrison, 37 Marquis Camden v. Murray, 470 Marsden's Trust, In re, 549, 550 Marsh v. Wheeler, 555. 550, 558 Marshall Lovelass, 70 Marshall v. Moseley (see Moseley v. Marshall). 337! 338. 339 Marshall . Wysong, 229 Martens, Matter of, 220, 327 Martin v. Funk. 14, 40, 47, 56 Martin v. Pine, 37, 96, 519, 628 Martin . Platt, 126 Marvel . Stone. 401 Marvin, Matter of, 209 Marvin v. Marvin, 9 Marvin. Smith, 411, 534 Marx v. McGlynn, 23, 25, 70, 246, 354 Mason, Matter of, 111, 217, 219, 220, 222, 224, 228, 322, 329 Mason . Jones, 259, 358 Mason v. Jones, 362 Mason v. Mason's Ex'rs, 250, 362, 381, 469 Mason v. Mason's Ex'rs, 294, 295, 296 Mason . Pomeroy, 114 Massie v. Watts, 158 Masterson v. Townshend, 383 Matson v. Abbey, 44, 50, 53, 54, 267, 621 Matteson v. Armstrong, 93, 101, 102, 303, 468 Mattkewson, Matter of, 219 Maxwell, Matter of, 172 Mayer. Hazard, 233, 234 Mayer v, Hellman, 286 Mayer v. McCune, 512 Mayor of N. Y. v. Stuyvesant, 477 Meacham v. Sternes, 216, 224 TABLE OF CASES CITED. XXIX References are to pages. Mead . Mitchell, 475 Mead v. Willoughby, 284 Meakings. Cromwell, 246, 423, 492, 493, 559 Mechanic's Bank, Matter of, 242, 267 Meek v. Devenish, 573 Meeker . Crawford, 153, 232 Meiggs P. Meiggs, 25, 54 Mellen v. Banning, 449. 450 Mellen v. Mellen, 449, 523, 572, 576, 601, 637, 639 Mercantile Deposit Co. v. Hunting- ton, 42, 43, 53 Merchant v. Merchant, 40 Merino . Munoz, 612 Merriam, Matter of, 640 Merrill . F. L. & T. Co , 308 Merriman . Utica B. L. S. K. Co., 445 Merritt v. Bartholick, 50 Merritt v. Seaman, 125 Merritt v. Scott, 287 Meserole, Matter of, 219 Meserole v Meserole, 280 Messengers. Casey, 516 Metcalfe, Mutter of, 641 Mickles v. Dillave, 328 Millard . Clark, 48, 49 Miller, Matter of, 321, 3>5, 332 Miller, Matter of, 616 Miller v. Crawford, 339, 340 Miller . Emans, 352 Miller v. Gilbert, 496, 498 Miller v. Knox, 268 Miller v. Macomb, 250 Miller. Miller. 592 Miller v. Smith's Ex'rs, 614 Miller v. Wright, 444, 450, 498, 504, 557 Mills v. Forbes, 211 Mills v. Hoffman, 160 Mills . Husson, 258, 384, 649, 650, 651 Mills v. Mills, 233 Mills v. Mills, 613 Mills e. Smith, 168, 257, 264', 265 Millspaugh v. Van Zaudt, 520 Milroy . Lord, 54 Miner, Matter of, 408 Miner v. Beekman, 328, 617, 618 Minturn, Matter of, 384 Minuse v. Cox, 519 Mitchell . Knapp, 367 M. L. Ins. Co. v. Woods, 518, 526 Moffat, Matter of, 222 Moffat v. Herman, IMO Moir v. Brown, 54, 124, 236 Moke v. Norrie, 75 References are to pages. Monarque v. Monarque, 122, 636, 637 Moucrief v. Ross, 447, 555 Monell v. Monell, 197 Monroe, Matter of, 140 Monson v. N. Y. S. & T. Co., 155, 156,312 Mont fort v. Montfort, 185 Montiirnani v. Blade, 41, 279 Mooers e. White, 70 Moore v. Am. L. & T. Co., 599, 601 Moore p. Appleby, 93, 120, 497 Moore v. Hegeman, 354, 643 Moore v. Moore, 506 Moorhouse i>. Hutchinson, 244, 262 Morey, Matter of, 211 Morgan, M:itt< j r of, 270 Morgan v. Hannas, 219 Morgan v. Masterson, 627 Morgan v. Morgan, 242, 243 Morgan . Moigan, 177, 178, 219 Morgan . Von Kohnstamm, 5b>7 Morgenstern. Matter of, 640 Monun, Matter of, 90 Morris. Matter of, 180 Morris, Matter of, 130, 132, 321, 325 Morris. Lindauer, 116 Morse . Morse, 23, 24,26, 100, 436, 449, 559, 576 Mortimer v. M. R. Co., 115 Morton v. Morton. 435, 649 Moseley v. Marshall (see Marshall v. Moseley), 322, 340 Moss . Cohen, 192 Moss v. Cooper, 406 Mott v. Ackerman, 248, 352, 397, 4S9, 490, 49i, 510, 520, 537, 561, 644, 651 Mott v. Richtmyer. 356, 399 Moulton v. de ma Carty, 595 Mount, Matter of, 224 Mowatt . Carow, 500 Moyer v. Mover, 7 Mullarky v. Sullivan, 643 Muller, Matter of, 367, 368 Million, Matter of, 183 Mulry v. Mulry, 74, 75, 80, 81,. 607 Mundy v. Munson, 603 Munro . Allaire, 114 Munson v. S. G. & C. R. R. Co., 138 Murphy, Matter of, 109 Murphy . Briggs, 214 Murphy v. Whitney, 278, 279, 649 Murray v. Charlick, 623 Murray v. Coster, 613, 615 Mutual L. I. Co. . Schwaner, 120 Mut, Life Ins. Co. of N. Y. v. Ship- man, 422, 503, 516 XXX TABLE OF CASES CITED. References are to pages. Mut. Life Ins. Co. of N. Y. . Ship- man, 534. 536 Myers, Matter of, 151, 170, 175, 201 Myers v. Bolton, 485 Myers v. Mut. L. I. Co., 536 Mygatt v. Wilcox, 126, 234 Mygatt v. Willcox, 234 Nanz v. Oakley, 196, 199 Nathan v. Hendricks, 499 Nat. Bank v. Levy, 44(i Nat. Bank of Newburgh v. Bigler, 183, 184 Nat. B. & D. Bank v. Hubbell, 214 Naylor v. Gale, 219 Nearpass . Newman, 27, 267 JSeilley, Matter of, 613, 615 Neilley . Neilley, 123 Nellis v. Nellis, 451 Nelson v. Cowing, 653 Nesmith, Matter of, 172, 176, 232, 303, 304 New v. Nicoll, 127 Newcomb v. Keteltas, 344 Newen, In re, 91 New England Trust Co. v. Eaton, 315 Newland, Matter of, 226 New Orleans v. Gaines's Adm'r, 116 Newton v. Bronson, 158, 477, 511, 530, 610 Newton v. Porter, 263 Nicoll v. Wai worth, 93, 410 Niles, Matter of, 201 , 202 Niles v. Stevens, 526 Niver . Crane, 9 Norling v. Alice, 115 Norton v. Mallory, 7 Noyes D. Blakeman, 126, 127. 379, 584 Noyes v. Turnbull, 183 N. T. Bank . Wetmore, 119, 120, 586, 636 N. Y. Dry Dock Co. v. Stillman, 398 N. Y. L. Ins. & T. Co. v. Living- ston, 538, 652 N. Y. & N. H. R. R. Co. v. Schuy- ler, 45 N. Y. & Oswego M. R. R. Co. v. Van Horn, 347 N. Y. Steam Co. v. Stern, 420 Oakley v. Oakley, 227, 360 O'Brien. Matter of , 215 O'Biien v. Barkley, 366 O'Brien v. Mooney. 97 O'Brien v. Weiler, 49 References are to pages. O'Connor v. Gifford, 171, 213, 214, 215, 309, 407 O'Connor v. Huggins, 479 O'Connor v. M. Bunk, 257 O'Connor v. Waldo, 133 Odd Fellows. &c. v. McAllister, 114 Odell, Matter of, 164 Odell, Matter of, 344 Odell, Matter of, 127, 368 Odell v. Youngs, 280, 531 O'Donoghue v. Boies, 130, 131 Officer v. Board of H. M., 492 O'Flynn v. Powers, 260, 494, 515 Ogden v. Murray, 222, 231 Ogden v. Smith, 285, 526 Ogdensburgh Bank v. Van Reusse- laer, 125. Ogilvie v. Ogilvie, 172 Ogsbury, Matter of, 270, 271 Ogsbury v. Ogsbury, 446, 556 O'Hara, Matter of, 7, 147, 243, 252, 254, 402, 403, 404, 405, 406 Oliver v. Frisbie, 139, 242, 478, 489 Oliver v. Piatt, 263 Olliffe v. Wells. 405 Olmsted v. Keves, 50 Onderdonk v. Molt, 636 Onderdonk v. On erdonk, 625 O'Neil, Matter of, 37 Onondaga T. & D. Co. v. Price, 101, 117, 268, 455, 503, 650, 654 Ormiston v. Olcott, 147, 195, 196 Orphan Asylum v. White, 24 Orr v. McGregor, 48 Osborne v. McAlpinc, 234 Otis, Matter of, 18 Otis v. Shants, 115 Ottman & Co. v. Cooper, 308 Owens, Matter of, 641 Oxley v. Lane, 280, 626, 637 Padgett v. Lawrence, 9 Paff v Kinney, 139, 615, 616 Page Jones v. Morgan, In re, 622 Paget v . Stevens, 243 Palmer, Matter of, 268 Palmer v. Dunham, 155 Palmer v. Horn, 500 Palmer v. Marshall, 450 Palmer v. Miller, 20 Palmer v Phoenix M. L. I. Co., 114 Palms v. Palms, 303, 623 Pares v. Pares, 550 Paret v. Keneally, 491 Parker v Foote, 614 Parkhurst v. Higgins, 66 Parker v. Linden, 481, 554, 557, 558, 572 Parkinson v. Parkinson, 321 TABLE OF CASES CITED. XXXl References are to pages. Parks v. Parks, 103, 352, 354, 355, 410, 624 Paton, Matter of, 491, 492, C45 Patrick, In re, 53 Patterson v. Ellis, 266 Patterson v. Patterson, 310 Patton v. Royal Baking Powder Co., 127 Paulcling v. Marvin, 198 Pauldiog v. Sharkey, 197 Payne v. Gardiner, 612 Pearson v. Amicable Co., 58 Pease v. Egan, 96 Pease u. Gillette, 618 Peck v Peck, 7 Peck v. Sherwood, 164, 247, 266, 325, 326, 330, 331, 335 Pell v. Folger, 17 Pendergast v. Greenfield, 159, 160, 161, 288 Pendleton v. Fay, 202 I'enfield v. Thayer, 44 Pennington v. Gittings, 46 People v. Am. L. & t. Co., 263, 599 People ca; rel. Short v. Bacon.287,579 People ex rel. Day v. Barker, 270 People ex rel. Gould v. Barker, 270 People ex rel. Pike v. Barker, 116 People v. Bd. of Excise, 123 People v. Bostwick, 43 People v. Chalmers, 192, 284 People ex rel. Darrow v. Coleman, 270 People ex rel. Caswell v. Comm'r of Taxes, 203 People ex rel. Campbell . Comm'rs of Taxes, 203 People ex rel. Leonard v. Comm'rs of Taxes, 313 People ex rel. Smith v. Comm'rs of Taxes, 18 People v. Conklin, 70 People ex rel. Cornell University v. Davenport, 328 People ex rel. Collins v. Donohue, 74, 119. 191, 192, 615 People v. Faulkner, 172 People v. Havnor. 346 People v. Justices. &c., 123 People v. Marshall, 605 People v. Merchants' Bank, 598 People v. Moores, 69 People u. Norton, 78, 140, 185, 192, 243 People v. O. B. of S. B. B. Co ., 494 People v. Powers, 251, 254, 256, 257, 309, 392 People v. Prescott, 125 People v. Remington, 289 References are to pages. People v. Scott, 445, 493 People v. ex rel. Adams v. Sigel, 124 People v. Simonson, 175 People D. Stock Brokers' Building Co., 399 People v. Townsend, 115 People v. Univ. L. Ins. Co., 126 People v. Van Buren, 180 Perkins, In re, 549 Perkins, Matter of, 641 Perkins v. Finnegan, 142 Perkins v. Stimmel. 188, 191 Perry, Matter of, 447 Perry v. Board of Missions, &c., 127 Persons v Snook, 24 Petrie, Matter of, 148 Petrie v. P. Ins. Co., 492 Petrie v. Petrie, 159, 160, 223, 260, 265 Peyser, Matter of, 177, 233, 235 Pfaler v. Raberg, 310 Pfeiffer v. Rheinfrank, 98 Pharis v. Gere, 18 Phelps' Ex'r v. Pond, 22, 280, 370, 380, 400, 558, 624, 632 Phillips v. Davies, 435, 520, 531, 644 Phillips v. Lockwood, 229. Phillips v. Phillips, 17, 18, 24, 25, 384 Phil son v. Moore, 105 Phipard v. Phipard, 37, 38 Phipps, Matter of, 270 I hcenix v. Livingston, 216, 220, 224, 232 Pickles v. Pickles, 550 Pickslay v. Starr, 21, 52, 53 Pierce v. Chamberlain, 341 Pierpont v. Patrick, 643 Pierrepont v. Edwards, 320, 364 Pierson v. Drexel, 21, 308 Pierson v. McCurdy, 613 Piffard, Matter of, 509 Pirn he's Case, 70 Pinckney v. Pinckney, 321 Pinson v. Ivey, 70 Piper v. Hoard, 7 Pittman v. Johnson, 23, 166, 206 Place, Matter of, 485, 524 Place v. Hay ward, 117 Platt v. Archer, 234 Platt v. Mickle, 501 Platt v. Moore, 319, 341 Pollock, Matter of, 314, 320, 329 Pollock v. Hooley, 443, 478, 489, 505, 536 Pond v. Comstock, 214 Pope v. Wliitcombe, 501 Popham v. Spencer, 123 Porter, Matter of, 152. 176 XXX11 TABLE OF CASES CITED. References are to pages. Portland v. Topham, 546, 548, 549, 554 Post, Matter of, 82, 107 Post v. Berichley, 139, 451, 544, 618 Post v. Hover. 24, 26, 259, 290, 626, 627, 636, 638, 646 Postley v. Clieyne, 75 Potter, Matter of, 500 Potter v. Dudeney, 572, 574, 577 Potter v. MeAlpine, 159. 295, 366 Potter v. Ogden, 166, 188, 194 Powell v. Demming, 205 Power v. Cassidy, 253, 254, 390, 391, 466, 471, 524, 557,558 Power v. Hathaway, 612 Power v. Speckman, 479 Powers, Matter of, 486, 484, 518 Powers v. Bergen, 132, 346, 367 Powers v. Powers. 341 Pray v. Hegeman, 116, 134, 370, 586, 641 Pray v. Hegeman, 261, 295, 298, 370, 376 Prentice v. Janssen, 449, 558, 572, 580 Prentiss v. Weatherly, 188 Prescott, Matter of. 183 President, &c. v. Merritt, 654 Price v. Holman, 17~>, 176, 177, 227 Price v. Mulford. 013 Price v. Price, 63 Prichard v. Thompson, 251, 253, 254, 400 Prindle v. Beveridge (see Lytle v. Beveridge) Pritchard v. Foulkes, 142 Proctor, Matter of, 314 Provost v. Provost, 410 Pruyn, Matter of, 160 Pryor v. Pryor. 549 Pullman v. Willets, 231, 233 Purdy v. Hayt, 280, 444, 626, 641 Purdy v. Lynch, 169, 196, 197 Purdy v. Wright, 100, 449, 450, 559, 569, 572 Putnam v. Ritchie, 328 Putney v. Fletcher, 142 Quackenboss v. Southwick, 87, 107, 242 Quackenbush v. Leonard, 138 Quin, Matter of. 172, 232 Quinn, Matter of, 233 Quinn v. Hardenbrook, 539, 646 Radley v. Kuhn, 274, 275, 297, 298, 304, 378, 380, 381, 382, 643 Ramsay v. DeRemer, 397 Ramsey v. Wamlell. 425, 437, 642 Randall, Matter of, 139 References are (o pages. Rapalje v. Hall (see Rapalje v. Nors- wortby's Ex'rs) Rapalje v. Norsworthy's Ex'rs, 176, 177 Rathbone v. Hooney, 97, 120, 131 Rath bun v. Rathbun, 42 Rauchfuss v. Rauchfuss, 448, 451, 559 Rawson v. Lampman, 397. Raymond v. Rochester Trust, &c, Co., 97, 418 Read v. Williams, 251, 252, 253, 254, 524, 557, 638, 640 Reading u. Haggin, 158 Reed, Matter of, 605, 654 Reed v. Lozier, 103 Reed v. Reed, 52 Reed v. Underbill, 267, 506, 558 Reeve v. Crosby, 73 Reeves, Matter of, 234 Reformed P. D. Church v. Brown, 391 Reid v. Sprague, 103 Reitz v. Keitz, 9, 620 Remington v. Walker, 155 Remington v. Walker, 159, 162 Reynal v. Thebaud, 315, 329, 335 Reynolds v. City Nat. Bank, 521 Reynolds v. Denslow, 502 Reynolds v. Reynolds, 321 Reynolds v. Sisson, 138, 175, 177 Rice v. Barrett, 297, 623 Rice v. Tonnele, 368 Rich v. Tiffany, 269, 404, 405 Richards v. Crocker, 602 Richards v. Moore, 623, 624 Richardson v. Richardson, 59 Richardson v. Sharpe, 519, 520 Richardson v. Thurber, 119 Ridden v. Thrall, 40, 46, 47, 53, 60 Rider, Matter of, 105, 545 Rider v. Mason, 381, 650 Ridgeley v. Johnson, 124 Rieben v. Hicks, 161 Riessner & Co. v. Colin, 119 Riggs v. Cragg, 312. 315, 641 Riker v. Cornwell, 408 Riker v. Curtis, 51 Riker v. Leo, 388, 644 Riker v. St. Luke's Hospital, 16, 17, 402 Riley, Matter of, 360, 362 Riley v. Diggs, 448, 559 Ring v. McCoun, 398 Risley v. Phenix Bank, 52 Roarty v. McDermott, 510, 536 Robbins v. Robbins, 9, 33 Robert v. Corning, 23, 25, 274, 275, 376, 506, 555, 556, 563 TABLE OF CASES CITED. XXX111 References are to pages. Robert v. Morgan. 360 Roberts v. Gary, 411, 572, 623 Roberts v. Ely, 615 Roberts v. Gordon, 577 Roberts & Co v. Buckley, 104 Robertson v. Sayre, 35, 117 Robins v. McClure, 409 Robinson, Matter of, 77, 185, 186, 235, 236, 237, 243, 410 Robinson v. Chem. Nat. Bank, 117, 232 Robinson v. Harkin, 622 Robison v. Robison, 21)7, 303, 372, 624 Rochester, Matter of City of (see City of Rocbester, Matter of). Roderigas v. E. R. S. Inst. , 479 Rodman v. Fincke, 144, 341, 342, 365 Roe, Matter of, 130, 606 Roe v. Vingut, 26, 296, 301/644, 646 Rogers, Matter of, 167 Rogers v. King, 158 Rogers v. Ludlow, 584, 588, 624 Rogers v. N. Y. & T. L. Co., 7, 23 Rogers v. Rogers, 75, 87, 130, 487, 607 Rogers v. Rogers, 91, 503 Rogers v. Rogers, 204 Rogers v. Squires, 193 Rogers v. Wendell, 127 Rogers Loco. &c. Wks v. Kelley, 25, 288 Romaine v. Chauncey, 593, 594 Roman Catbolic O. Asylum v. Strain, 47 Rome Exchange Bank v. Eames, 286, 624, 638 Roome v. Philips. 81, 490, 516, 529 Roos, Matter of, 365, 366, 371 Roosevelt, Matter of, 111, 216, 226 Roosevelt v. Land and River Imp. Co., 202, 598 Roosevelt v. Roosevelt, 367, 411, 471, 505, 650 Root v. Price, 125 Root v. Stuyvesant, 285, 540, 626 Roper's Trusts, In re, 470 Rorke v. McConville, 172 Rose v. Hatch, 22, 73, 74, 80, 252, 457, 459, 462. 545 Rose v. Rose, 149 Roseboom v. Mosher, 527, 528 Roseboom v. Roseboom, 26 Rosenburg v. Rosenburg, 21, 103, 412, 587, 588 Rosen field. Matter of, 483 Ross v. Roberts, 493, 497, 559 Rothschild u. Frank, 193 References are to pages. Royce v. Adams, 83, 84, 87, 89, 159, 239, 487, 507, 607, 609 Rover Wheel CD. v. Fielding, 286, " 291 Rudd v. Rudd, 376 Rugg v. Rugg, 73 Rumsey, Matter of, 166 Runyan v. Mersereau, 50 Ruppel v. Schlegel. 640 Ruppert v. U. M. I. Co., 50 Russack v. Tobias, 76 Russell v. Allen, 9 Russell v. Russell, 132, 514, 544 Rutherford, Matter of, 181, 203, 368 Ryalls, Matter of, 641 Ryan v. Rand, 126 Ryers v. Farwell, 103 St. John v. McKee, 234 Salmon v. Gibbs, 549 Salmon v. Stuyvesant, 285 Salsbury v. Parsons, 355, 584 Saltus, Matter of, 368 Saltus v. Saltus, 368 Sanders v. Soutter, 159, 641 Sands, Matter of, 183, 295, 370 Sanford v. Goodell, 278 Sanford v. Sanford, 47, 52 Sauter v. Muller, 367 Savage v. Burnham, 23, 103, 258, 280, 285, 291, 555, 556, 603,625, 626, 627 Savage v. Gould, 148 Savage v. Olmstead, 360, 361, 605 Savage v. Sherman, 160, 219, 234, 6CO, 642 Sawyer u. Cubby, 278, 279, 649 Sayles v. Best, 451, 589 Sayre v. Townsends, 9 Schaefer v. Henkel, 157 Schell, Matter of, 216, 228 Schenck v. Dart, 222 Schenck v. Ellingwood, 505, 512. 553 Schermerhorn v. Cotting, 31, 297 Schettler v. Smith, 280, 370, 376, 626 643 Schierloh v. Schierloh, 9 Schlegel v. Winckel, 165 Schluter v. B. S. Bank, 48, 71 Schmidt v. Eisetnan, 210 Schmittler v. Simon, 126, 174 Schneider, Matter of, 166 Schoener v. Lissauer, 617, 618 Scholey v. Mumford, 265 Scholle v. Scholle, 514, 559, 642, 643 Scholle v. Scholle, 141 Schoonhoven . Van Wyck, 313 Schott, Matter of, 174, 202 Schult v. Moll, 646 XXXIV TABLE OF CASES CITED. References are to payee. Sclmltz v. Griffin, 653 Schultze 0. Mayor, 9 Schutt v. Large, 412 Schwab. Cleveland, 115 Schweigert, Matter of, 640 Scofleld v. Churchill, 191, 193 Scott v. Harbeck, 48 Scott v. Nevins, 587, 650 Scott v. Rand, 104, 133 Scott v. Stebbius, 266, 483 Scovel v. Roosevelt, 313, 314 Seaman, Matter of, 95, 96, 271, 496, 497 Seaman v. Whitehead, 234 Sears, Matter of, 204 Secorw. Pendleton, 292 Secor v. Sentis, 228-, 229 Security L. I. & A. Co., Matter of, 221, 228, 231 Seebeck, Matter of, 343, 496, 497, 503. 504 Seeley . Jago, 572 Selden v. Vermilya, 16. 288, 412 Selleck. Matter of, 209, 219 Senior . Ackerman, 192 Seward v. Huntiugton, 260 Shangle . Hallock, 16, 17 Shannon v. Pentz. 601 Shannon v. Pickell, 516 Sharp, Matter of, 183 Sharp v. Pratt, 528 Sharpsteen v. Tillou, 513 Shaw v. Cordis, 315 Shaw v. Lawless, 233 Sheedy v. Roach, 40 Sheldon v. Chappell, 78 Sheldon v. Hoy, 125 Sheldon v. Sheldon, 613 Sheldon v. Sheldon, 183 Shepard v. Gassner, 24, 25 Shepard v. Patterson, 179 Sherman v. Burnham, 243 Sherman v. Parish, 160, 171, 181, 201, 203, 613 Sherry, Matter of, 605 Sherwood v. Am. Bible Soc'y, 22 Shields v. Klopf, 629 Shields v. Sullivan, 234 Shipman, Matter of, 110 Shipman, Matter of, 109 Shipman, Matter of, 163, 166 Shipman v. Rollins, 213, 255, 496, 558 Shirley v. Fisher, 550 Shook v. Goddard. 195 Shook v. Shook, 243 Shrader, Matter of, 640 Shumway v. Harmon, 559 Shuttleworth v. Winter, 53, 176, 178 References are to pages. Side v. Brenneman, 264 Sidenberg v. Ely, ; 22, 324 Siemon v. Schurck. 9 Siesel, Matter of, 164 Sillicku. Mason, 584, 591, 592, 593, 650 Simmons v. Burrell, 388, 638 Simonson v. Waller, 366, 631 Simpson v. English, 297 Simpson v. Moore, 317, 319 Skelton v. Scott, 291 Skillman, Matter of, 318 Skinner v. Quin, 350, 355, 502 Slack v. Wiggin, 181 Slade v. Van Vechten, 138 Slatter v. Carroll, 635 Sloan v. Birdsall, 21. 587, 624 Slocum, Matter of, 361 Slocum v. Barry, 206 Smillie v. Quinn, 5i07 Smith, In re, 153 Smith, Matter of, 234 Smith, Matter of, 242 Smith. Matter of, 24, 227, 266, 383, 411 Smith's Estate, 47 Smith v. Bowen, 36, 431, 441, 443, 444, 515, 5*4 Smith v. Buchanan, 220, 227 Smith v. Campbell, 302 Smith v. Central Trust Co., 234 Smith v. Central Trust Co., 16U Smith v. Chase, 447, 510 Smith v. Cornell, 324 Smith v. Dresser, 214 Smith v. Edwards, 26, 274, 275, 496, 625 Smith v. Farmer Typefounding Co., 572, 577, 654 Smith v. Felton, 233 Smith v. Floyd, 467, 468, 554 Smith v. Lawrence, 204 Smith v. Murray, 376 Smith v. Parsons, 301 Smith v. Ferine, 14 Smith v. Post, 266 Smith v. Robertson, 215, 412, 524, 555 Smith v. Rockefeller, 177, 205, 605 Smith v. Smith, 76, 367 Smith v. Smith, 408. 409 Smith v. Smith, 145 Smith v. Van Ostrand, 109, 110, 462 Smith's Ex'rs v. Wyckoff, 381 Smithcr, Matter of, 52 Sneed v. Sneed, 552 Solomons v. Kursheedt, 75 Somerset v. Earl Poulett, 621, 622 Sortore v. Scott, 160, 203, 243 TABLE OF CASES CITED. XXXV References are to pages. Sotheran v. Denning, 568 Soule, Matter of, 641 Southard v. Benner, 137 South Danvers Nat. Bank v. Ste- vens, 41 Sparman v. Keim, 20 Spear v. Tinkham, 328 Spears, Matter of, 448 Speidel ?>. Henrici, 614 Spelman v. Freedman, 288 Spencer v. Popham, 172 Spencer v. Spencer, 198 Spencer v. Strait, 461, 463 Sperb v. McCoun, 199 Spicer u Raplee, 135 Spies v. Boyd, 587 Spofford v. Pearsall, 160 Spooner, Matter of, 234 Sproule v. Bouclie, 317 Stafford, Matter of, 173 Stafford v. Roof, 20 Stagg v. Beekman, 285 Stagg v. Jackson, 165, 485, 556 Stamler's Estate, 376 Standard Sugar Refinery v. Dayton, 12 Stanfield, Matter of, 340, 341, 342, 383 Stanton, Matter of, 242, 243 Stanton v. King, 118, 127 Stark, Matter of, 146 Starr v. Starr. 436/503, 504, 644 Staunton v. Parker, 286 Stearns v. Allen, 174 Stehlin v. Stehlin, 477 Steinele v. Oechsler. 437, 641 Steinhardt v. Cunningham, 99, 286, 289, 290 Stephenson v. Short, 404 Sterricker v. Dickinson, 356 Stevens v. Hauser, 599 Stevens v. Melcher, 323, 325, 331, 332, 333, 334. 448 Stevens v. Miller, 97 Stevens v. Stevens, 46 Stevens v. Stevens, 448 Stevens v. Stevens, 192 Stevens v. Stevens, 149 Stevenson, Matter of, 107 Stevenson, Matter of, 164 Stevenson v. Lesley, 28, 93, 247, 255, 258, 280, 497 Steves u. Weaver, 575, 576 Steward, Matter of, 321 Stewart, Matter of, 503, 522 Stewart v. Chambers, 365, 366, 381 Stewart v. Hamilton, 435 Stewart v. Keating, 522, 538 Stewart v. McMartin, 285, 381 References are to pages. Stewart v. O'Donnell, 109 Stewart . Robinson, 183, 184 Stilwell. Matter of, 159 Stilwell v. Carpenter, 125 Stilwell v Doughty, 325, 336 Stokes v. Amerman, 125 Stokes v. Weston, 646 Stone v. Wood, 536 Storm, Matter of, 196 Storm v. Bennett, 132 Stout v. Betts, 244 Stout v. Rider, 202 Stowell, Matter of, 286 Strong v. Strang, 247, 361, 649 Strasburger, Matter of, 18 Straus, Matter of, 286 Straut, Matter of, 114, 119 Strong v. Harris, 159 Strong v. Wilkin, 474 Stryker v. Lynch, 449 Stuart v. Kissam, 592 Stuart v. Spaulding, 146, 156 Stubbs v. Stubbs, 177, 321 Stutzer, Matter of, 381 Stuyvesant. Matter of, 185 Suarez v. de Montigny, 133 Suarez v. Pumpelly, 477 Sullivan v. Remington S. M. Co., 209 Sullivan v. Sullivan, 449 Supple v. Lowson, 501 Supreme Council . Bennett, 501 Sutherland v. Bradner, 102 Sutherland v. Brush, 196, 198 Sutherland v. Northmore, 521 Sutton, Matter of, 555 Swain v. Bringeman, 622 Swaine v. Ferine, 336 Swan, Matter of, 460 Swan v. Produce Bank, 202 Swarthout v. Ranier, 457. 462, 523 Sweeney v. Warren, 422, 423, 479, 480, 484, 557, 558, 569, 601, 642 Sweet v. Geisenhainer, 248 Swett v City of Boston, 320 Swift, Matter of, 269 Swift v. Wheeler, 210 Syracuse Sav. B'k v. Holden, 2S3, 397, 444, 515, 516 Taber v. Willets, 576 Tabor v. Brooks, 470 Taft v. Marsily, 267 Taggart v. Murray. 250, 461, 521 Tallman v. Hoey, 53 Tallman v. Tallman, 280 Tatham v. Vernon, 64 Taylor v. Dodd, 480 Taylor v. Kavanagh, 654 XXXVI TABLE OF CASES CITED. References are to pages. Taylor v. Kelly, 56 Taylor v. Morris, 525. 528 Taylor v. Shuit, 196, 198 Tee v. Ferris, 406 Teed, Matter of, 269 Tempest v. Lord Camoys, 470 Temple v. Hawley, 20, 358, 420 Ten Eyck v. Witbeck, 36 Terrett v. Crombie, 116 Tern- v. Bale. 48, 584 Terry v. Wiggins, 26, 110, 367, 462, 645 Terwilliger v. Brown, 138 Terwilliger v. Ontario C. & S. R. R. Co., 425 Thaeher v. Hope Ceni. Ass'n, 615 Thatcher v. Candee. 123, 236, 237 Thayer v. Clark, 191 Thebaud v. Schermerhorn, 27, 410, 416, 417 Thomas, Matter of, 234 Thomas v. Evans, 321, 323,325, 326, 328 Thomas v. Fuller, 50 Thomas v. Pardee, 303 Thomas v. Snyder, 537, 539 Thomas v. Wolford, 461 Thompson, Matter of, 321 Thompson, Matter of, 365 Thompson v. Carmichael's Ex'rs, 570 Thompson v. Clendening, 649 Thompson v. Con way, 308 Thompson v. Hicks. 196, 198 Thompson v. Mott, 234 Thompson v. Simpson, 549 Thompson v. Thompson, 592 Thomson v. MacGregor, 191, 193 Thorn v. Coles, 555 Thome v. Heard, 622 Thorp v. Munro, 103 Thrasher v. Bentley, 284, 286 Thurber v. Blanck, 579 Tickel v. Quinn, 178, 440, 559 Tiemeyer v. Turnquist. 286 Tienken, Matter of, 93, 247, 248, 459, 496, 497, 498, 557, 558, 643 Tierney v. Wood, 98 Tiers v. Tiers, 625, 6v>6, 641 Tietjen, Matter of, 320 Tiffany v. Clark, 75, 138 Tilden, Matter of, 220, 228, 229 Tilden, Matter of. 169 Tilden v. Dows, 262 Tilden v. Fiske, 238 Tilden v. Green, 16, 24, 251, 252, 253, 254, 255, 256, 390, 469, 524, 623, 643 Tilford, Matter of, 381 References are to pages. Tillman v. Davis, 557, 558 Tillott, In re, 143 Tinkham v. Erie Railway Co., 72 Titus v. Weeks, 295 Tobias v. Ketchum, 23, 27, 100, 603 Tobias v. Mayor, 267 Todd v. Eighmie. 42, 64 Todd v. Monell, 13 Todd v. Union Dime Sav. Inst., 64, 66 Todd v. Vaughan, 309 Toles v. Adee, 620 Tolles v. Wood, 379, 582, 583, 586, 591. 593, 594 Tolman v. S. B. & K Y. R. R. Co., 209 Tompkins v. Moseman, 77, 89, 185, 186 Toms v. Williams, 247, 295, 646 Topham v. Portland, 546, 548, 549, 554 Toronto G. T. Co. v. C. B. & Q. R. R. Co., 151, 152 Toronto G. T. Co. v. C. B. & Q. R. R. Co., 23, 114 Tony v. Black, 65 Tousey, Matter of, 82, 83, 86 Towar v. Hale, 398 Towler v. Towler, 438. 469 Town of Lyons v. Chamberlain, 308 Town of Solon v. Williamsburgh S. B., 66 Townsend, Matter of, 47 Townsend v. Allen, 588. 631 Townsend v. Hubbard, 536 Townsend v. Mayor. 523 Townsend v. Rackham, 14, 15, 43, 134, 267 Townsend v. U. S. Trust Co., 314 Townsend v. Whitney, 188 Townshend v. Frommer, 93, 247, 248, 390, 423, 438, 442, 497, 498, 499 Tracy v. Tracy, 9, 33 Trask v. Annett, 192 Travis, Matter of, 341, 520 Trist v Child, 233 Trow v. Shannon, 38, 51 Trowbridge v. Horan, 116 Trowbridge v. Metcalf, 562, 630 Troy & A. H. R. Co. v. Smith, 202 Truax v. Slater, 43, 104 Truax v. Thorn, 600 Truslow, Matter of. 645 Trust Co. v. Hall, 313 Trust & Deposit Co. v. Pratt, 191 Trustees v. Kellogg, 110, 465 Trustees v. Ritch, 404, 405, 406 TABLE OF CASES CITED. XXXVll References are to pages. Trustees of Phillips Academy v. King's Ex'rs, 72 Trustees of Union College v. Wheel- er, 511 Tucker v. Ball, 95, 498 Tucker v. McDermott, 177, 207 Tucker v. Moreland, 69 Tucker v. Tucker, 26, 408, 443, 504, 624 Tugwell v. Hooper. 142 Turfler, Matter of, 222 Turner, Matter of, 357 Turner's Settled Estates, 549 Tweddell v. N. Y. Life Ins. & Trust Co., 298, 302,475 Tyson v. Blake, 109, 110 Ullman, Matter of, 624, 641 Ulster Co. Sav'gs Inst. v. Fourth Nat. Bank. 109 Underhill, Matter of, 167, 265 Underbill, Matter of, 618 Underhill v. Dennis, 76 Underhill v. Newburger, 232 Underwood v. Curtis, 22, 23, 449, 554, 555, 556, 5H3, 564, 626 Upson v. Badeau, 233, 451 Urann v. Coates, 32 U. S. Trust Co. v. Bixby, 173, 177 U. S. Trust Co. v. Black, 643 U. S. Trust Co. v. Roche, 116, 130, 132, 337, 498, 580 U. S. Trust Co. v. Tobias. 318 Utica Ins. Co. v. Lynch, 175, 177 Vail v. Vail, 23, 25, 100 Valentine, Matter of, 158, 165, 479, 485 Valentine, Matter of, 379, 586 Valentine, Matter of, 84, 89 Valentine v. Belden, 134, 479 Valentine v Duryea, 141 Valentine v. Schreiber, 129 Valentine v. Valentine, 137, 153, 233 Van Alen v. Am. Nat. Bank, 263 Van Axte v. Fisher, 497, 498, 505 Van Boskerck v. Herrick, 466 Van Brunt v. Van Brunt, 258. 280, 504 Van Camp v. Fowler, 94, 247 Van Camp v. Searle, 262, 611 Van Cott v. Prentice, 27, 37, 55, 101, 255,354,410, 411, 412 Vanderbilt, Matter of, 411,414, 415, 475, 504 Vanderbilt u. Schreyer, 66 Vanderheyden v. Vanderheyden, 232 Vanderveer v. McKane, 158 References are to pages. Vandervoort, Matter of, 485, 489, 520, 559 Vandevort, Matter of, 151, 480, 544 Van Emburgh v. Ackerman, 371 Van Epps v. Van Epps, 34, 36, 140, 242, 267, 379 Van Giessen v. Bridgford, 559 Van Heusen v. Radcliff, 117 Van Home v. Campbell, 110, 463, 464 Van Kleeck, Matter of, 234 Van Ness, Matter of. 248 Van Riper v. Baldwin, 60 Van Schoonhoven, Matter of, 86, 236, 237 Van Schuyver v. Mulford, 625, 626, 627 Van Sinderen v. Lawrence, 166 Van Slyke v. Bush, 127 Van Vechten v. Keator, 481, 489, 491, 557 Van Vechten v. Pearson, 644 Van Vechten v. Van Veghten, 102, 307, 359. 468, 559, 624, 625, 028 Van Vleck v. Lounsbery, 313 Van Voorhis v. Kelly, 118 Van Wagonen, Matter of, 76 Van Wei't, Matter of, 618 Van Wert v. Benedict, 537, 538, 567 Van Winkle v. Fowler, 435 Van Wyck, Matter of, 87, 527 Van Wyck v. Walters (see Van Wyck v. Walters) Van Wyck v. Watters, 174, 202 Varnum v. Taylor, 183 Vedder, Matter of (see Matter of Clark) Verdin v. Slocum, 24, 355 Vernon v.Vernon, 24, 25, 26, 100, 354, 436, 444, 446, 460, 603, 643, 646 Verplanck, Matter of. 258, 641 Vidal vl Girard's Ex'rs, 72 Vidvard v. Powers, 104 Viele v. Keeler, 503 Villers v. Beaumont, 63 Vincent v. Newhouse, 496, 555 Von Hein v. Elkus. 286 Von Hesse v. MacKaye, 37, 356, 412, 414 Von Sachs v. Kretz, 104, 613 Voorhis t;. Voorhis, 20 Wachter, Matter of, 41, 44, 54 Wadd v. Hazelton, 21, 67 Wade v. Hoi brook, 43, 53. 104, 268 Wadeu. Malloy, 322 Wadhams v. American Home Miss. Soc'y, 474 Wadsworth, Matter of, 242 Wads worth v. Wadsworth, 70 XXXV111 TABLE OF CASES CITED. References are to pages. Wager v. Wager, 644 Wager v. Wager, 159, 636, 637, 638, 639 Waggoner u. Walrath, 194 Wagner. Matter of, 160, 165, 641 Wagner v. Hodge, 121, 285 Wainwright v. Low, 77, 355, 356 Wait v. Cerqua, 601 Waldron v. Schlang, 520 Walke u. Hitchcock. 219 Walker v. Downer, 15 Wall t>. Kellogg's Ex'rs, 490 Wallace *. Berdell, 27, 43, 412 Wallace v. Castle, 12 Wallace v. Payne, (140 Walrath v. Handy, 636 Walsh v. Sexton, 46, 60 Walter v. Maunde, 501 Walton v. Howard, 234 Walton v. Stewart, 161 Wandesforde v. Carrick, 521 Wangner, Matter of, 558 Ward, Matter of, 48 Ward u. Ford, 218. 224 Ward v. Ward, 24, 100, 504, 623, 643 Waring, Matter of, 77, 82, 83 Warner v. Conn. Mut. L. I. Co., 534 Waruer v. Durant, 247, 497 Warner v. Jaffray. 288 Warren. Matter of, 317 Warren v. Leland, 42- Warren-Scharf Paving Co. . Dunn, 263 Warriner v. Rogers, 57 Washbon, Matter of, 357 Washbon v. Cope, 636, 641 Waterman v. Webster, 134. 598, 599 Waters v. Collins, 228. 412 Watkins v. Reynolds. 410, 498 Watson, Matter of, 640 Watt v. Watt, 425 Watts v. Shipman, 286, 308 Weaver u. Emigrant, &c., Sav. Bank, 48 Webb v. Sanford, 520 Weber v. Bridgman, 425 Webster v. Morris, 247 Weed v. Weed, 636, 638 Weekes u. Garvey, 207 Weeks, Matter of. 205, 228, 234, 339, 340 Weeks v. Corn well. 100, 291, 409, 644 Weetjen v. Vibbard, 119 Weinhaus, Matter of, 234 Welch v. Allen, 285 Welling v. Welling, 226 Wells, Matter of, 644 Wells v. Knight, 109, 321 Wells v. Seeley, 461, 559 References are to pages. Wells v. Wallace. 81, 84, 172 Wells v. Wells, 296 Wells v. Wells. 31, 556 Wendell v. Wadsworth. 64, 66 Westerfield v. Westerfleld, 223, 322 Westerlo v. De Witt, 40, 49, 50. 60 Western R. R. Co. v. Nolan, 118, 119 Westlake v. Wheat, 37, 54, 56 Weston, Matter of, 152, 169, 520 Weston v. Goodrich, 159. 639 Wetmore . Hegeman, 82 Wetmore v. Holsman. 513 Wetmore v. Kissam, 20 Wetmore v. Parker, 72, 233, 234, 387 Wetmore v. Porter, 116, 117, 118, 130, 599 Wetmore v. Roberts, 328 Wetmore v. Truslow, 75. 380, 582,650 Wetmore . Wetmore, 582, 584, 591, 592, 595 Wetmore . Wetmore, 594. Wheat v. Rice. 262 Wheate v Hall 569 Wheeler v. Reynolds, 7 Wheeler v. Ruthven, 179 Wheelwright v. Rhoades, 137, 321 Wheelwright v. Wheelwright, 177, 218 Whitaker v. Whitaker, 61. 63 White, Matter of, 644 White v. Carpenter, 9 White v. Hicks, 534, 535 White v. Howard, 251, 557, 629,630 635 White v. Miller, 18, 392 White v. Price, 36 Whitehead, Matter of, 89, 90, 185, 186 Whitehead v. N. Y. L. Ins. Co., 50 Whitford v. Laidler, 174 Whithorne v. Harris, 501 Whiting, Matter of, 270, 322 Whitlock v. Washburn, 426, 489, 525, 530, 535, 552 Whitney v. Martine, 148 Whitney v. Phrenix, 159, 177, 201, 314, 498 Whitney v. Whitney, 640 Whitson v. Whitson, 223, 320, 321. 322, 381, 384 Whittemore v. Beekman, 314, 331 Whittlesey v. Hoguet, In re, 244 Widmayer v. Widmayer, 107, 159, 229' Wietingv. Bellinger, 410 Wigand v. Dejonge, 243 Wiggins, Matter of, 242 Wiggins v. Howard, 18 Wilcox v. Gilchrist, 82, 251, 252 TABLE OF CASES CITED. XXXI X \Referencet are to pages. Wilcox v. Quinby, 321, 322 Wilcox v. Quinby, 520 Wild v. Bergen, 468, 520 Wilde v. Smith, 17 Wilder v. Ranney. 124, 321, 52.1, 526, 558 Wildeyu. Robinson, 83, 138 141, 224 Wiley, Matter of, 166 Willets, Matter of, 159, 224. 225, 226, 3P3 Willets v. Titus, 298, 299 Willets v. Willets, 16, 17, 403 Williams v. Conrad, 626 Williams v. Cox. 336 Williams v. Fitch, 14, 384, 406 Williams v. Freeman, 24. 503 Williams v. Freeman, 37 Williams v. Guile, 21, 40 Williams v. Haddock, 517 Williams v. Kiernan, 191 Williams u. Montgomery, 279, 352 Williams u. Thorn, 582, 591, 593, 594, 650 Williams v. Williams, 297 Williamson, Matter of , 321 Williamson v. Field, 497, 498 Willis v. Sharp, 126, 127, 183 Willis v. Sharp, 126, 127, 183 Willis v. Sharp, 126, 127 Willis v. Smyth, 47 Willson v. Law, 15 Willson v. Willson, 234 Wilmcrding v. McKesson, 176, 178, 196, 198, 200, 613 Wilson, Matter of, 73 Wilson v. Marion, 214 Wilson v. Odell, 295 Wilson v. Turner, 470 Wiltsie v. Shaw. 16. 483 Winona v. St. Paul Co., 70 Winthrop v. McKim, 267 Wirt, Matter of, 51, 53 Wise v. Murphy, 201, 257 Witzel v. Chapin, 25, 48 Woerz v. Rademacher, 9, 10, 286, 397, 424, 441, 512 Wolfe, Matter of, 152 Wolfe v. Wolfe, 381,384 Wood v. Blodgett, 210 Wood-y. Brown, 107, 108, 158, 240, 241, 244 Wood v. Keyes, 559 Wood v. Mitcham, 646 Wood v. Seward. 17 Wood v. Vandenburgh, 310 Wood v. Wood, 147, 149, 155, 356, 379, 503, 603, 632 Wood v. Wood, 632 Wood v. Wood, 416. References are to page*. Wood v. Young, 613 Woodgate v. Fleet, 249, 627 Woodgate v. Fleet, 250, 255, 626, 627 Woodruff, Matter of, 317 Woodruff v. Boyden, 140, 172, 268 Woodruff v. N. Y., L. E. & W. R. R. Co., 232, 233 Woodward v. James, II, 23, 26, 73, 74, 100, 102, 322, 323, 354, 411, 590 Worden v. Worthington, 125. Worrall v. Munn, 43 Worthington, Matter of, 227, 228, 242 Wortman v. Robinson, 47, 461 Wright v. Douglass, 7,30, 32, 34,406 Wright v. Dugan, 197, 203 Wright v. Miller, 462, 465 Wright v. Saddler, 70 Wright v. Syracuse, Ontario & N. Y. R. R. Co., 433, 473, 510, 536 Wright v. Tallmadge, 474 Wright v. Trustees, &c., 557 Wurtsfl. Jenkins, 204 Wyatt, Matter of, 326 Wyckoff v. Van Siclen, 177, 196, 620 Wyman v. Woodbury, 17 Wynehamer v. The People, 346 Yale v. Dederer, 379 Yates, Matter of, 109 Yates v. Burch, 211 Yates . Lyon, 20 Yates v. Yates, 284, 297 Yonkers Savings Bank v. Kinsley, 134 York Buildings Association v. Mac- kenzie, 545 Young, Matter of, 95, 496, 497 Young, Matter of, 232, 320, 321, 323, 325, 328, 332 Young v. Brush, 232 Young v. Heermans, 55 Young v. Overbaugh, 58 Young v. Purdy, 385 Young v. Young, 21, 41, 47, 51, 55, 57, 60, 63, 67 Youngs, Matter of, 234 Youngs v. Youngs, 286, 642 Zahrt, Matter of, 603 Zapp v. Miller, 321 Zebley v. F. L. & T. Co., 614, 618, 620 Zeiter v. Bowman, 267 Zilkiu v. Carhart, 139 Zimmerman v. Kinkle, 118, 193, 599 Zouch v. Parsons, 69 Zweigle v. Hohman, 620 The references are to pages. NEW YORK CONSTITUTION. 419. 419. 487. 240, 262, 487. 89. REAL PROPERTY LAW. $ 1. 28, 29, 257, 394, 419, 423. 2. 19, 68. 3. 19, 433. 4-7. 71. 23. 28. 24. 28. 25. 28. 26. 28. 27. ' 28, 101,277,542. 28. 28, 101. 29. 28. 30. 28. 274, 278. 31. 497, 499, 505, 553. 32. 273, 278, 279, 280, 295, 296, 297, 344, 390. 33. 294. 34. 294. 35. 294. 36. 294. 37. 294. 39. 272, 294. 40. 294. 44. 645. 46. 251, 645. 47. 274. 48. 373 49. 96. 50. 277, 294, 344, 348, 372, 390. 61. 250, 281, 293, 296. 297, 344, 348, 624. 52. 293. 53. 278, 368, 372, 374. 54. 279, 561. 56. 258. % 70. 6, 418. | 71. 6, 92. 94. 282, 388. | 72. 33, 94, 355, 396, 397, 418, 499. 73. 7, 282, 355, 396, 397, 418, 499. -75. 10. xlii TABLE OF STATUTES CITED. The references are to pagts. 7, 100. 230, 282, 283, 286, 289, 292, 304, 342, 344, 347, 348, 351, 385, 393. 305, 441, 443. 99, 100, 351. 390, 438. 439, 443, 443, 528. 581, 582, 585, 592, 594. 390, 434, 438, 441, 442, 443, 627. 92, 117. 96, 247. 97, 248. 97, 182, 248, 275, 374, 385, 418, 582, 585, 586. 377, 580, 598. 131, 275, 337, 346. 347, 374, 377, 598, 606. 345, 346, 347, 348, 606. 129, 606. 133, 598, 601. 272, 410, 498, 569, 650. 272, 287, 420, 569, 650. 77, 81, 83, 117, 170, 186, 188, 410, 478, 487, 52!>, 553, 606. 607, 609. 652, 653. 71, 87, 88, 238, 240, 243, 410, 478, 487. 529, 553, 608, 609, 651, 653. 257, 392, 400, 478, 606, 635. 6, 422. 424, 652. 390, 424. 425, 476, 525, 553. 427. 427. 427, 428, 502. 427, 428. 429. 427, 430, 444. 427, 430, 467, 502. 433. 425, 434, 561. 473. 473, 502. 473. 475, 502. 438, 476, 579, 580, 585, 597. 414, 458, 502, 566, 578, 579, 580, 585, 588, 597. 477, 502, 553. 444, 580. 412, 476, 504, 566. 454, 455, 457, 458, 461, 463, 585, 588, 652. 455, 457, 458, 459, 460, 461, 585, 588. 455, 457, 461, 585, 588. 455, 457, 458, 461, 585, 588. 454, 455, 457, 461, 585, 588. 454, 461. 475, 553. 475. 502. 466, 467, 468, 469, 471, 542, 543, 553, 554, 642. 468, 494, 495, 502, 548, 553. 468, 553, 579, 588. 468, 472, 476, 478, 495, 502, 542, 543, 503, 554. 468, 476, 478. 492, 554.. 468, 476, 553, 584, 588. 468, 550. 580, 585, 588. 508, 58. 524, 527, 529. 508, 539, 552. TABLE OF STATUTES CITED. xliii The references are to pages. 425, 507, 510, 552. 512, 553. 512, 553. 512, 553. 512. 532. 530. 510, 534, 536. 534, 537, 651. 539. 390. 561. 494, 561. 550. 543. 478, 487, 529, 554, 601, 606, 652, 653. 603. 603, 604. 28, 642. 27, 28. 22, 29, 64. 279, 561. 103. 510. 349. 510. 433, 599. 596, 597. 578, 580, 596, 597. 579, 596. 578. 597. 414, 521, 567, 597, 600. 137, 446. 322. 28, 36, 508. 36, 66. 29, 66. 66. 511. 413, 414. 523. 28. 71. 500. 418. REVISED STATUTES. 1 R. S. 730, $ 63. 378, 418, 419. 1 773, $ 1. 279, 296, 649. 1 773, 2. 81, 648, 649. 1 773, S 3. 250, 281, 296, 301, 305, 649. 1 774, 4. 305, 649. 1 774, 5. 305, 649. 2 56, S 1. 19, 20, 476. 2 56, 5. 435, 539. 2 57, | 4. 69, 71. 2 57, 5. 661. 2 65, 49. 401. xliv TABLE OF STATUTES CITED. The references are to pages. 2 R. S. 109, 55. 525, 526, 528, 529. 2 110, 58. 479. 2 135, 1. 578, 587, 597. 2 135. 6. 32. 2 137, g 1. 578, 596, 597. 2 137, | 2. 28. 2 137, 3. 579. CODE OF CIVIL PROCEDURE. 8. 180, 610. 9. 180. 69. 616. 74. 616. 184. 125. 217. 487. 316. 122. | 388. 615, 616, 617, 618, 620. 395. 622. S 396. 621. 401. 621. 402. 621. 404. 621. 410. 612. 414. 616. 449. 113, 157. 717. 609. 718. 609, 1241. 610. 1312. 211. 1326. 211. 1343. 211. 1351. 211. 1360. 211. 1473. 492. 1501. 433, 600. 1525. 113. 1533. 449, 654, note. 1772. 593. 1835. 205. 1836. 205. 1843. 572. 1866. 636, 638. 639. 1867. 639. 1871. 578, 581, 587. 1879. 582. 1910. 266. 1916. 492. 2226. 180. 2266-2292. 610. 2284. 180. 2285. 180. 2345. 69, 131, 609. 2346-2347. 69, 609. 2348. 131, 345, 348. 2388. 519. 2463. 587. 2472. 641. 2476. 509. TABLE OF STATUTES CITED. The references are to pages. 8 2481. 641. 2511. 76. 2514. 88, 90, 107, 158, 162, 168, 487. 2546. 164. 2553. 187, 188, 189. 2554. 187, 189. 2555. 180, 189, 610. 2557. 208. 2558. 209. 2559. 209. 2560. 209. 8 2561. 209, 233. 2562 209. | 2589. 209. 2599. 209. 2606. 163, 165, 187, 188. | 2607. 187. | 2608. 188. 2609. 188. | 2611. 509. 2H12. 70, 240. 2613. 489. 2624. 640. 2638. 240. | 2642. 525, 528, 529. 2643. 529, 587. 2692. 479. 2693. 479. 2694. 509. 2695. 478. 2703. 477, 478. 2712. 340, 485, 486. 2720. 338, 340. 2726. 162, 164, 485. 2727. 163, 165. 2728. 162, 163, 164, 165. 2729. 162, 167. | 2730. 162, 163, 167, 215, 217, 225, 228, 229. | 2731. 162, 167. 8 2733. 167. 2743. 167. 2744. 167. 8 2746. 167. 2749. 310, 482. 8 2749-2801. 468. % 2759. 482. 2802. 162, 168, 216, 217. 2802-2820. 166. 2803. 163, 164. 2804. 180. | 2805. 180. 2806. 180. 2807. 164, 165. 2808. 165. 8 2809. 163, 165. | 2810. 162, 218. 2811. 163, 164, 167, 218. 2812. 167, 168. 2813. 168. xlvi TABLE OF STATUTES CITED. The references are to pages. 2814. 163, 238. | 2815. 90, 185, 241. $ 2816. 185, 241. 2817. 70, 240, 244. 2818. 85, 86, 88, 89, 90, 185, 244, 410, 487, 609. 2819. 163, 166, 168. 2820. 158. 2932. 162. 8 3228-3279. 209. 3240. 208, 209. 3246. 205, 209. 3271. 209, 210. 3 3272. 210. 3279. 211. 3320. 193, 231. P 3334. 164. | 3347. 209, 211. PENAL CODE. 8 129. 433. 1 130. 433, 473. % 131. 433. 164. 66. SESSION LAWS. L. 1848, ch. 319. 405. L. 1858, ch. 314. 137, 446. L. I860, ch. 360. 269, 404, 405. L. 1881, ch. 654. Index. L. 1882, ch. 185. 77, 78, 82, 83, 84, 86, 89, 117, 157, 188 410, 606 652 653. L. 1883, ch. 65. 519. L. 1889, ch. 65. 148. L. 1892, ch. 516. 255. L. 1892, ch. 677. 64, 642. L. 1892, ch. 687. 72. L. 1892, ch. 688. 149. L. 1892, ch. 689. 68, 71, 150, 157, 159, 176, 185, 292, 295, 297, 305 L. 1892, ch. 690. 150. L. 1893, ch. 452. 97, 418, 585. L. 1893, ch. 696. 157. L. 1893, ch. 701. 256, 388, 392, 400, 478, 606, 635. L. 1894, ch. 448. 642. L. 1896, ch. 249. 231. L. 1896, ch. 272. 20, 125, 415, 474. L. 1896, ch. 572. 36. L. 1896, ch. 908. 203. L. 1896, ch. 908. 203. L. 1896, ch. 908. 322. ENGLISH STATUTES. 21 Hen. VIII., ch. 4. 528. 27 Hen. VIII., ch. 10. 3. 29 Car. II., ch. 3. 32. 11 Geo. II., ch. 19. 337. 4&5 Wm. IV., ch 9,9, 338, 339. EXPRESS TRUSTS AND POWERS EXPRESS TRUSTS AND POWERS. PART I. CHAPTER I. INTRODUCTION. I. History of uses and trusts. In a report submitted to the Legislature of New York, in connection with the draft for the revision of 1830, the revisers explained in the following terms the history of the then existing law of Uses and Trusts, and the system which they proposed as a substitute. 2. " The severe burthens and numerous restrictions which the feudal law imposed on real property are generally known. It was a system that could flourish only in a barbarous age and under a despotic government. It consulted solely the interests of the monarch and a landed aristocracy ; and to maintain their power, the real owners and cultivators of the soil were to be held in military bondage. If a nation was to advance at all in civilization and freedom, it was quite impossible such a system could be perpetuated ; and it was to relieve those who were groaning under its oppression, yet had not the means or power of procuring its direct repeal, that uses were first invented. 3. " An use (as uses existed previous to the Statute of Uses) may be defined a confidence reposed in the owner of lands, that he would permit another person to enjoy the possession, receive the profits, and direct the disposition. It was a device by which, while the formal title remained in one, the whole beneficial in- terest was vested in another. The success of this invention was, for a long time, doubtful. At an early day the courts of com- 1 2 INTRODUCTION. mon law held that uses were invalid ; in other words, that the beneficial owner had no estate or right whatever, but that the absolute property discharged from any trust was vested in the person having the legal title. The Court of Chancery, however, was more indulgent. The powers of that court were at that day administered by churchmen, and the interests of the Church in evading the statutes of mortmain required that uses should be favored. 4. " By the aid of Chancery, therefore, the legal owner was compelled to permit the person entitled to the use to enjoy the possession and profits, and was obliged to execute such convey- ances as he might direct. The distinction between legal and equitable estates was thus introduced, and uses, notwithstanding the constant opposition of the courts of law, became firmly established. The advantages of uses, as thus established, in mitigating the evils of the feudal system, were very great. The equitable estate was not liable to forfeiture for treason or felony, nor subject to the feudal burthens of wardship, marriage, etc. The power of disposition in the equitable owner was greatly enlarged, and the feudal restraints on alienation, to a considerable extent, eluded. The equitable owner, although the Statute of Wills was not yet in force, was even enabled to pass his property by devise, since his trustee was always com- pelled to execute such conveyances as he directed, whether to take effect during his life or after his death. 5- " On the other hand, uses were attended with many in- conveniences, and led to great abuses. They tended to defraud creditors, who had no remedy against, the equitable estate, and purchasers, whose conveyances or leases from the equitable owner the trustee could always avoid. They enabled the trustee, by conveying or submitting to a disseisin, and by other means, to defeat the rights of the beneficial owner ; and a frequent resort to equity became necessary, to compel him to perform the trust. And, in our judgment, above all, by separating the legal and equitable estate, and introducing two classes of rights over the same lands, governed by different rules, and subject to different jurisdictions, they rendered titles perplexed and obscure, and multiplied litigation. HISTORY OF USES AND TRUSTS. 6. " To remedy these and other alleged inconveniences, various statutes of partial operation were passed, previous to the statute 27 H. VIII., chap. 10, from which our Statute of Uses was borrowed. The last statute did not contemplate a partial reform, but was meant to reach the evils in its whole extent by abolishing the distinction between the title and the use, and converting, in all cases, the interest of the beneficial owner into a legal estate. 7- " This, which it is admitted by all was the principal in- tent of the Legislature, was, however, entirely defeated by the narrow construction of the statute, which the courts of law un- fortunately adopted. The statute declared, in substance, that whenever one person is seised to the use ' of another, the person so entitled to the use should also be entitled to the possession and legal estate ; and the judges, adhering to the letter, and overlooking the spirit of the law, decided that where successive uses are contained in a conveyance, it is the first use only which, in technical language, is executed by the statute. Thus, a grant to A, to the use of B, to the use of C, was held to vest the legal estate by force of the statute in B, while C retained the benefi- cial ownership in the same manner as if the statute had never been passed. In such cases, therefore, the whole effect of the law was to change not the estate, but the trustee. 8. " The consequences of this rigid construction are gener- ally known and still exist. Uses, under the name of trusts, were immediately revived and extended, and that separation of legal and equitable estates, which it was the main object of the Legis- lature to prevent, was perpetuated. It must not, however, be supposed that the Statute of Uses was entirely inoperative. It was, in fact, attended with important and durable consequences on the law of real estate. The statute did not abolish existing uses nor prohibit conveyances to uses in future. It only declared that both existing and future uses, as they arose, should become 1 The derivation of the technical term " use" from the Latin ad opus (Old French os or oes), and not from usus, is fully explained in Pollock and Mait- land's " History of English Law," p. 226. 4 INTRODUCTION. legal estates ; and the effects of thus permitting the creation of uses, were : " 1. As every deed capable of raising a use was, by force of the statute, rendered also capable of passing the legal estate, new forms of conveyances were introduced by which the title and the possession of lands were transferred without livery of seisin, which, at common law, was indispensable. " 2. The new modifications of property, which the increasing wants of society demanded, but which the genius of the feudal law forbade, were preserved by retaining uses, to which they owed exclusively their origin. " It must, therefore, be admitted that the Statute of Uses, although not productive of all the benefits intended, has been, to a considerable extent, salutary in its operation ; but to retain these advantages it is not at all necessary that uses should themselves be retained. 9. " To uses, even as they now exist, there are strong and, as they seem to us, unanswerable objections : " 1. They render conveyances far more complex, verbose, and expensive than is at all requisite, and they perpetuate in deeds the use of a technical language which, although intelligible to lawyers, is to the rest of the community a mysterious jargon. " 2. Where a conveyance to uses contains limitations intended to take effect at a future day, they may be entirely defeated by what is technically called a disturbance of the seisin in other words, by a forfeiture or change of the estate of the person seised to the use. "3. It is frequently very difficult to determine whether the uses in a conveyance are so created as to be executed by the statute, and whether a particular limitation is to take effect as an executed use, as an estate at common law, or as a trust. These difficulties are, and must continue, while uses are preserved, a constant source of litigation. 10. " It is to remove these serious inconveniences (and others not of trifling import might be added) that the revisers propose the entire abolition of uses, while by the new provisions which they have suggested, all the benefits admitted to flow from HISTORY OF USES AND TRUSTS. O the present system are retained and increased. By making a grant, without the actual delivery of possession or livery of sejsin, effectual to pass every estate and interest in lands (as is proposed in a subsequent article), the utility of conveyances deriving their effect from the Statute of Dses is superseded, and a cheap, in- telligible, and universal form of transferring titles is substituted in their place. The new modifications of property which uses have sanctioned are preserved by repealing the rules of the com- mon law, by which they are prohibited, and permitting every estate to be created by grant which can be created by devise. And this is the effect of the provisions in relation to expectant estates contained in the first article of this title. II. "It only remains to speak of trusts, as they now exist by law, and the changes in relation to them which the revisers propose. There are three classes of trusts, each requiring to be noticed : " 1. Where the trustee has only a naked and formal title, and the whole beneficial interest or right in equity to the possession and profits is vested in those for whose benefit the trust is created. " 2. Where the trustee is clothed with some actual power of disposition or management, which cannot be properly exercised without giving him the legal estate and actual possession. " 3. Trusts arising or resulting by implication of law. 12. " As to the first class, or formal trusts, it is plainly needless to retain them. They separate the legal and equitable estate for no purpose that the law ought to sanction. They an- swer no end whatever but to facilitate fraud, to render titles more complicated, and to increase the business of the Court of Chancery. They are, in truth, precisely what uses were before the Statute of Uses, and are liable to many of the same objections. Formal trusts we therefore propose to abolish by converting those which now exist into legal estates, and prohibiting their creation in future. This is substantially to carry the Statute of Uses into effect according to its original intention. 13. " The second class, or active trusts, as a late writer (Mr. Humphreys) has properly termed them, are recognized in 6 INTRODUCTION. every system of law, and their utility, under proper restrictions, is undeniable. They seem, indeed, indispensable to the proper enjoyment and management of property. The revisers, there- fore, propose to retain them, only limiting their continuance (for reasons stated in a subsequent note) and defining the purposes for which they may be created. 14. " As to implied trusts, they cannot be abolished, as their existence is necessary to the prevention of fraud. An im- portant change is, however, proposed, in preventing a secret re- sulting trust from being created by the act of the party claiming its benefit. This change (which is recommended also by other reasons) is indispensable if the other parts of the plan are adopted; since otherwise the prohibition to create formal trusts in future would be readily evaded, and they would continue in substance to exist, and in their worst form." 15. The Revised Statutes. In accordance with the views thus expressed, the following changes were effected by the Re- vised Statutes : 1 16. Uses and trusts abolished. " Uses and trusts con- cerning real property, except as authorized and modified by this article, have been abolished ; every estate or interest in real property is deemed a legal right, cognizable as such in the courts, except as otherwise prescribed in this chapter.'* Real Prop. L., 71. But it is to be noticed that in abolishing trusts, and powers, Real Prop. L., 110, the Legislature did not, and could not, abolish any inherent jurisdiction of the Supreme Court, in equity, over trustees. 17. Certain uses confirmed. " Every estate which is now held as a use, excuted under any former statute of the State, is confirmed as a legal estate." 7<#., TO. 18. Express trusts. Express trusts in real property, vest- 1 The wording of the present Real Property Law, which went into effect October 1st, 1896, and which does not differ materially from the revision in the sections cited, is here followed. IMPLIED, RESULTING, AND CONSTRUCTIVE TRUSTS. 7 ing the title in the trustee, may be created for " one or more" (the Revised Statutes said "any or either") of four (and only four) specified purposes. Id., 76 (post, 394). 19. Other attempted express trusts As to attempted trusts, not falling within the scope of the permitted classes, it was provided that they should, according to their nature, either (a) be void ; (5) if merely passive, transfer an absolute title to the proposed beneficiary ; or (c} take effect as valid powers in trust. (These dispositions are discussed post, Chap. XL) 20. Implied, resulting, and constructive trusts. The section relating to passive trusts, and the preceding sections of the same article, do not extend to the trusts arising or resulting by implication of law, whether classified as implied, resulting, or constructive. Real Prop. L. 73. Such trusts are illustrated and dealt with in the following cases : Foote v. Bryant, 47 N". Y. 544 (547) ; Johnston v. Spicer, 107 N. Y. 185 ; Billar v. Loundes, 2 Dem. 590 ; Goldsmith v. Goldsmith, 145 N. Y. 313 ; Hirsh v. Auer, 146 N. Y. 13 (19) ; Matter of Will of O'Hara, 95 N. Y. 403 ; Rogers v. N. Y. & T. L. Co., 134 "N. Y. 197 (214) ; Johnson v. fleet, 14 Wend. 176 ; Wheeler v. Reynolds, 66 N. Y., 227 (233-4) ; Hall v. Erwin, 66 N. Y. 649 ; Peck v. Peck, 110 N. Y. 64 (71) ; Piper v. Hoard, 107 N. Y. 73 ; Moyer v. Moyer, 21 Hun, 67 ; Wright v. Douglass, 7 N". Y. 564 ; Garfield v. Hatmaker, 15 N. Y. 475 ; Bates v. L. M. Co., 130 N. Y. 200 (205) ; Norton v. MaUory, 63 N. Y. 434. The term implied trusts is used in the law in two senses. In the first it refers to those which the law implies " from certain acts or relations of parties from which an intention to create a trust is supposed to exist" (Bispham's Equity, 78), and which are called also resulting or presumptive trusts (Id.} ; and those which " exist purely by construction of law without any actual or sup- posed intention that a trust should be created, but merely for the purpose of asserting rights of parties or of frustrating fraud" (Id.}, and which are therefore termed constructive trusts (Id.}. Thus, in one of the paragraphs above quoted from the reviser's report, it is said that " as to implied trusts, they cannot be abol- ished, as their existence is necessary to the prevention of fraud." 8 INTRODUCTION. In the second of the two senses above referred to, the term " im- plied trust" means a very different thing ; it refers to a case where the trust is not expressed in explicit terms, but where, from an inspection of all the words that are employed, it is evi- dent that an intention existed to create an express trust, and that what was said, or written, necessarily involves a trust. Thus, Perry, in his work on trusts, defines the term " implied trusts" in this sense, saying : " Implied trusts are trusts that the courts imply from the words of an instrument, where no express trust is declared, but such words are used that the court infers or im- plies that it was the purpose or intention of the parties to create a trust" ( 25). It is in this sense that our courts use the term when they say that an express trust may be implied. For exam- ple, one of the four authorized classes of express trusts in real property covers trusts " to receive and apply rents," etc. And if a will devises land to a trustee to apply the rents, etc., though it says nothing in terms about the receipt of rents, yet it is held that the direction to apply necessarily involves authority to re- ceive. Thus one essential feature of the trust is implied ; but the devise, thus construed, creates an express trust. All its terms have been ascertained from the expressions of its creator. 21. Grant to one, consideration paid by another. There was, however, one resulting trust that was abolished, with certain exceptions. On this point the Revised Statutes provided that " Where a grant for a valuable consideration shall be made to one person, and the consideration therefor shall be paid by an- other, no use or trust shall result in favor of the person by whom such payment shall be made ; but the title shall vest in the per- son named as the alienee in such conveyance, subject only to the provisions of the next section." \ R. S., 51. " Every such conveyance shall be presumed fraudulent, as against the creditors, at that time, of the person paying the consideration ; and where a fraudulent intent is not disproved, a trust shall result in favor of such creditors, to the extent that may be necessary to satisfy their just demands." Id., 52. " The provisions of the pre- ceding fifty-first section shall not extend to cases where the alienee named in the conveyance shall have taken the same as an absolute conveyance, in his own name, without the consent or GEANT TO ONE, CONSIDERATION BY ANOTHER. 9 knowledge of the person paying the consideration, or where such alienee, in violation of some trust, shall haye purchased the lands so conveyed, with moneys belonging to another person." Id., 53. 22. These provisions are now re-arranged as follows : " A grant of real property for a valuable consideration to one person, the consideration being paid by another, is presumed fraudulent as against the creditors, at that time, of the person paying the consideration, and, unless a fraudulent intent is disproved, a trust results in favor of such creditors, to an extent necessary to satisfy their just demands ; but the title vests in the grantee, and no use or trust results from the payment to the person pay- ing the consideration, or in his favor, unless the grantee either, " 1. Takes the same as an absolute conveyance, in his own name, without the consent or knowledge of the person paying the consideration, or, " 2. In violation of some trust, purchases the property so con- veyed with money or property belonging to another. " The purpose and scope of these provisions are explained in the following cases : Woerz v. Rademacher, 120 N. Y. 62 (67) ; Schierloh v. Schierloh, 148 N. Y. 103 ; McCartney v. Bostwick, 32 N. Y. 53 ; Siemon v. Schurck, 29 N. Y. 598 ; Marvin v. Marvin, 5.3 N. Y. 607 ; Everett v. Everett, 48 N. Y. 218 ; Foote v. Bryant, 47 N. Y. 544 (548) ; Lounsbury v. Purdy, 18 N. Y. 515 ; Niver v. Crane, 98 N. Y. 40 ; Garfield v. Hat- maker, 15 N. Y. 475 ; Schultze v. Mayor, 103 N. Y. 307 ; Rob- bins v. Robbing, 89 N. Y. 251 ; Brown v. Cherry, 57 N. Y. 645 ; Reitz v. Reitz, 80 N". Y. 538 ; Boric v. Martin, 132 N. Y. 280 ; Hosford v. Merwin, 5 Barb. R. 51 ; Tracy v. Tracy, 3 Bradf. 57 ; Brewster v. Power, 10 Pai. Ch. 562 ; Bodine v. Edwards, Id. 504 ; Russell v. Allen, Id. 249 ; Padgett v. Law- rence, Id. 170 ; White v. Carpenter, 2 Pai. Ch. 217 (238) ; Sayre v. Townsend, 15 Wend. 647 (649) ; Gage v. Gage, 83 Hun, 362 ; McCahill v. McCahill, 71 Hun, 221 (11 Misc. 258) ; Hubbard v. Gilbert, 25 Hun, 596 ; Knickerbocker L. 1. Co. v. Hill, 3 Hun, 577 ; Gilbert v. Gilbert, 2 Abb. Ct. App. Dec. 256. The sec- tions above quoted have no application where the trust is ex- pressly reserved in and by the grant, or is declared by another 10 INTRODUCTION. instrument, thus relieving it from the effect of a secret trust. Woerz v. Rademacher, 120 N. Y. 62. 23. Implied and resulting trusts bona-fide purchaser. It was also provided that " an implied or resulting trust shall not be alleged or established, to defeat or prejudice the title of a purchaser for a valuable consideration without notice of the trust." Real Prop. L. 75. 24. In general. Such were the most marked features of the new system adopted in 1830. The revision also introduced many other provisions, elaborating the details of the scheme, and dealing with the rights of the beneficiaries' creditors in surplus rents and profits ; the nature of the trustee's title ; the nature of the beneficiary's right to enforce the trust ; the title, and the right of disposition, of the creator of the trust in the property, subject to the trust ; the nature arid scope of the beneficiary's power to transfer his rights (and, under the present law, in cer- tain cases, to extinguish the trust by release) ; the rights of cred- itors of the trustee and of bona fide purchasers ; the restrictions imposed on the trustee (and later, the authority of the court in certain cases to permit sale or mortgage, and of the trustee to lease, sometimes without, and sometimes with, the permission of the court) ; the protection of persons paying money to the trus- tee in good faith ; the duration of the trust term and its cessa- tion ; the devolution of the estate ; the resignation and removal of the trustee and the appointment of successors (and later, the standing of a trust for religious, educational, charitable, or benevolent purposes, where the beneficiaries are indefinite and uncertain) ; the suspension of the absolute power of alienation, and special provisions relating to trusts for accumulation. 25. Powers. The existing law of powers was also abro- gated, and a new code of law on that subject adopted, which is fully considered in later chapters. Post, 529, el seq. 26. Personal property. All these provisions related in terms to real property.. A few brief sections dealt specifically with certain similar features relating to personalty, and to a cer- EXPRESS TRUST DEFINED. 11 tain extent in terms rendered the statutes affecting real property applicable to personalty. The courts in a long series of deci- sions have established the principle that in general the provisions affecting trusts and powers apply by analogy to personal prop- erty ; bat to this principle there are important exceptions. Post, Chap. XXXI. 27. The real property law. The Real Property Law, which went into effect on October 1st, 1896, follows closely the scheme of the Revised Statutes. It repeals the old provisions, and substitutes others which embody a very large number of petty changes in phraseology. Some of the changes, while probably not intended to alter the law, seem open to a charge of introducing uncertainty. Others incorporate recent statutes in- tended to alter the law, while still others appear to introduce alterations in the law for the first time. 28. The revisers' report. The courts have frequently re- ferred to the report of the revisers of 1830 for light in constru- ing the provisions of the Revised Statutes. Coster v. Lorillard, 14 Werid. 263 (297, 327) ; Hawley v. James, 16 Wend. 60 (131) ; Hartnett v. Wandell, 60 N. Y. 346 (355). 29. Express trust defined. An express trust in real or personal property exists when the legal title is vested in one per- son, subject to a duly expressed obligation, resting upon him and enforceable in equity alone, 1 to deal with the same in some law- ful and defined manner, for the benefit of another. 2 1 For a consideration of the question of jurisdiction in any cases in the courts of law to award damages against the trustee for breach of his duty, on the theory that the trust involves a contract on his part to perform it, see and compare 1 Lewin on Trusts, p. 16 ; Professor Ames's articles in 5 Harv. L. Rev. 389, and 1 Id. 1 (9, 10) ; the passage quoted below, 30, note 1, from Pollock and Maitland's " History of English Law ;'' the remarks of Judge Rapallo in Oilman v. McArdle, 99 N. Y. 451 (461, 462) ; also post, 374, 730 ; 2 Perry on Trusts, 843. * As to cases where the trustee himself has an individual interest in the property held in trust, or its iucome. or proceeds, see Woodward v. James, 115 N. Y. 346 (357), and post, 115, et seq. 12 INTRODUCTION. 30. Express trust distinguished from (a) Common law liability. If one person has the mere cus- tody or management of personal property, but the general legal title and beneficial ownership is in another, there is no technical trust. The term trust is sometimes applied to such cases, but only to indicate a fiduciary relationship in reference to the prop- erty. See Kane v. Bloodgood, 7 Johns. Oh. 90 (111). Illus- trations are found in the case of factors, Wallace v. Castle, 14 Hun, 25 ; Standard Refinery v. Dayton, 70 N. Y. 486 ; Kelly v. Scripture, 9 Hun, 283 ; auctioneers ; other agents to sell : agents to buy, to collect, to pay out, and others, as classified by Professor Ames in his " Cases on Trusts," pp. 27, 28, where numerous New York cases are cited. On the other hand, if one is merely obligated to pay to another a certain amount of money (not a specified fund) there is still no trust at all. He is a mere debtor. Such a situation exists when one makes a general de- posit in a bank. He is the creditor of the bank and entitled to draw an equal sum, but not to draw the same money, arid has no claim on any fund representing, even theoretically, the same money. The money deposited becomes the absolute property of the bank. The same distinctions may arise where real property is trans- ferred. For example, if A puts his land in charge of B, as A's agent to care for it, there is no trust. 1 So if A transfers the title 1 " The germ of agency is hardly to be distinguished from the germ of an- other institution which in our English law has [i.e., at the early period under discussion] an eventful future before it, the ' use, trust, or confidence. ' . . . Now, in few, if any, of these cases [i.e., a conveyance by a crusader to an- other, to the use of the former's wife and children during his absence ; a con- veyance of a house to the borough community to the use of the Franciscan friars, the law of whose being forbade them to own anything, etc.] can the ad opus [see ante, 7, note] be regarded as expressing the relation which we conceive to exist between a principal and an agent. It is intended that the ' feeoffee to uses ' (we can employ no other term to describe him) shall be the owner or legal tenant of the land, that he shall be seised, that he shall bear the burdens incumbent on owners or tenants, but he is to hold his rights for the benefit of another. Such transactions seem to have been too uncommon to generate any definite legal theory. Some of them may have been enforced by the ecclesiastical courts. Assuredly if the citizens of London had mis- appropriated the lands conveyed to them for the use of the friars, they would have known what an interdict meant. Again, in some cases the feoffment EXPRESS TRUST DISTINGUISHED. 13 to real or personal property to B, and B thereupon agrees to pay to A a specified sum annually for life, or to furnish A with a com- fortable support, this is a mere personal contract. B owns the property absolutely, and is at liberty to sell it and spend the pro- ceeds as he chooses. If he fails to perform his contract, he is liable for damages. But if the legal title to real or personal property is transferred by A to B, merely for the duly expressed purpose that he shall receive the rents thereof and apply them to A's use, an ex- press trust exists, and if B fails to perform his duty, A can pro- ceed in equity for an accounting. In the latter case, B holds the title in his capacity of trustee ; in the former, in his indi- vidual capacity. Oilman v. McArdle, 99 N. Y. 451 ; Todd v. Monett, 19 Hun, 362 ; Hungerford v. Cartwright, 13 Hun, 647 ; Herrick v. Starkweather, 54 Hun, 532. l might perhaps be regarded as a ' gift upon condition,' and in others a written agreement about the occupation of the land might be enforced as a covenant. But at the time when the system of original writs was taking its final form ' the use ' had not become common enough to find a comfortable niche in the fabric. And so for a while it lives a precarious life until it finds protection in the ' equitable ' jurisdiction of the chancellors. If in the thirteenth cen- tury our courts of common law had already come to a comprehensive doctrine of contract, if they had been ready to draw an exact line of demarcation between ' real ' and ' personal ' rights, they might have reduced ' the use ' to submission and found a place for it in their scheme of actions ; in particular, they might have given the feoffor a personal, contractual, action against the feoffee. But this was not quite what was wanted by those who took part in these transactions ; it was not the feoffor, it was the person whom he desired to benefit (the cestui que use of later days), who required a remedy ; and, moreover, a remedy that would secure him not money compensation, but the specific enjoyment of the thing granted. ' The use ' seems to be accomplish- ing its manifest destiny when at length after many adventures it appears as 'equitable ownership.'" 2 Pollock and Maitland's "History of English Law," 226, 229, 230. 1 The distinction is well illustrated also by a comparison of the two cases of Oilman v. McArdle, supra, and Holland v. Alcock, 108 N. Y. 312, both re- lating to provisions to procure the saying of masses. They are criticised by Professor Ames in his luminous article on the Tilden Will Case in 5 Har. L. Rev. 389. Still, disregarding the dicta in the opinion in the former case, the decisions may be found harmonious in this, that in the Holland case, there was a bequest to a trustee in trust to employ the legacy in paying for masses, and the provision was held invalid because it violated what was, under our law as it then stood, the essential requirement of a defined and living bene- ficiary to enforce the trust, the willingness of the trustee to perform it not sufficing ; while in the Oilman case the decision sustaining the disposition 14 INTRODUCTION. So where A turns over money or other property to B for the benefit of C, a third party, if no title passes out of A, the transfer raises no question of a technical trust. If title does pass, the ex- istence of a trust depends on the nature of the transaction. If B takes title merely for the duly expressed purpose that he shall receive and apply the income thereof to the use of C, this in- volves an express trust, for the very property itself is affected by the agreement and becomes the property not of B individually, but of B as trustee, for the use of C. In such a case C can en force the performance of the trust in equity. But if the agree- ment is that the money or other property shall belong to B, but that he shall pay certain specified sums to C, this is a mere per- sonal obligation. Upon breach thereof, C, not being the bene- ficiary of a trust, has no standing in equity ; and not being a party to the agreement, cannot sue for damages at law. Though in this latter case, if A was under a liability to C, and made the agreement with B for the purpose of satisfying that liability, C, the third party, may sustain an action at law against B. Town- send v. Rackham, 143 N. Y. 516 ; Clark v. Howard, 150 N. Y. 232 ; Guy v. Landon, 84 Hun, 218 ; Lawrence v. Fox, 20 N.Y. 268 ; Williams v. Fitch, 18 N. Y. 546 ; Gifford v. Corrigan, 117 K Y. 257 ; Martin v. Funk, 75 N. Y. 134 ; Smith v. Ferine, 121 N. Y. 376 (384) ; Hutchings v. Miner, 46 N. Y. 456 ; Kelly v. Roberts, 40 N. Y. 432 (438), and cases cited. If the person who makes the personal agreement embodies it in a form which itself constitutes property, as if he gives back a mortgage to A, to secure the performance of his agreement for C's benefit, here A, as mortgagee, holds the mortgage in trust for C, if such was the intent, McPherson v. Rollins, 107 N. Y. 316 ; but if it was not so intended, but was, for example, intend- ed to be of a, testamentary character, and revocable, to secure really rested on the view that the decedent had, in his lifetime, paid another person in advance, upon a mere contract that the latter would procure the saying of masses. " The intention, manifestly, was that the title to the money should pass to the defendant in consideration of his promise that he would expend an equivalent sum in the designated masses, and this was the substance of the contract." (Oilman case, p. 462.) In that view, there being no obligation to employ the fund for the denned purpose, but merely a per- sonal promise, on consideration, to spend a like amount to accomplish that purpose, there would be no trust. EXPRESS TRUST DISTINGUISHED. 15 payments to C after A's death, unless earlier revoked, A would not hold it in trust. Townsend v. jRackham, 143 N. Y. 516. In contrast with the transactions just discussed, the owner of personal property, delivering it to B for the benefit of a third party, may part with title himself and yet not make B either a trustee or an absolute owner. For example, if the owner wishes to make a gift of personal property to C, and to vest title direct- ly in him, he may, with that intent, make the delivery to B merely as the representative of the donee. Thereupon the donee acquires title, and may bring suit against the holder, who is a mere custodian for him. So even in the case of real property, A's deed to C may be delivered to B as the grantee's representa- tive. 1 Post, 93. 31. (b) Fiduciary capacity. The term "trust" is frequent- ly employed, in a loose way, in connection with mere fiduciary relations, and the term " fiduciary" is sometimes construed to refer, in given instances, solely to technical express trusts. Thus, the provision of the United States Bankruptcy Act (R. S. 5117, 33) exempting from discharge debts created while acting in a " fiduciary character," referred to cases of technical trusts actually and expressly constituted, and did not include those im- plied by law from contract relations. Lawrence v. Harrington, 122 N. Y. 408 (412) ; and cases there cited. Ames's " Cases on Trusts," 2ded., p. 28. 32. (G) Charge on property. The fact that property is trans- ferred subject to a charge, as of debts or legacies, does not ren- der the transferee a trustee. The charge merely diminishes pro tanto his beneficial interest. So far as his title goes, over and above the charge, it is purely beneficial. The remedy of the creditor or legatee, as against that property, is to enforce the charge. Downer v. Church, 44 N. Y. 647 (651) ; Dill v. Winner, 88 N. Y. 153 (158) ; Walker v. Downer, 55 Hun, 75 ; 1 An absolute transfer of property by a debtor to a creditor in payment of the debt, the amount of which is not definitely ascertained, and an agreement by the creditor to pay back an amount equal to the surplus, if any, over and above the actual debt when ascertained, does not render the creditor a trustee. Willson v. Law, 112 N. Y. 536. 18 INTRODUCTION. Jackson v. Atwater, 19 Hun, 627 ; Emmons v. Cairns, 3 Barb. R. 243 (244) ; ShangU v. Hallock, 6 App. Div. 55 (62). Of course a legacy in trust may itself be charged on the land if testa- tor has expressed that intent. Wiltsie v. Shaw, 100 N. Y. 191. 33- (^ Personal charge. Where, as in the case of a devise or bequest, some payment, as of a legacy to a third person, is imposed upon the person who takes title, there is still no trust. On accepting the gift he assumes the obligation to pay. But this is merely a personal obligation, and does not involve his doing any act relating to the specific property for the benefit of another. Gridley v. Gridley, 24 N. Y. 130 ; Loder v. Hat- field, 71 N. Y. 92(97). 34. (e) A use. This is explained by the revisers in the por- tion of their Report above quoted. See also Helck v. Reinheimer, 105 N. Y. 470, and Pollock and Maitland's " History of English Law, as quoted ante, 30, note. 35- (/) A power in trust. The chief distinction here is that in a valid express trust the trustee is vested with the legal title, while a power in trust does not require any title in the person exercising the power. Of all the purposes for which a trustee might, before the Revision of 1830, be vested with the legal title to real property, only four specified classes now remain (see post, 394). All other trust purposes in respect to real property, so far as they are active in character, are now to be effected by means of a power in trust if the acts directed can lawfully be thus carried out, the title meanwhile remaining in the donor of the power, or in his grantees, heirs, or devisees, subject to the execution of the power. For a discussion of the distinction, see Tilden v. Green, 130 N. Y. 29 (53) ; Cochrane v. Sehell, 140 N. Y. 516 (531) ; Selden v. Vermilya, 3 N. Y. 525 (536) ; and post, Chap. XIII., et seq. S^. (g] A precatory trust exists where there is a disposition of property, coupled with an expression of deeire as to its use. Hiker v. St. Luke's Hospital, 35 Hun, 512 ; aff'd 102 N. Y. 742 ; Willets v. Willets, 103 N. Y. 650 (opinion given in 20 EXPRESS TRUST DISTINGUISHED. 17 Abb. N. C. 471). In Professor Ames's " Cases on Trusts" there is an exhaustive collection of cases, classified by jurisdictions, where the question was whether the given instruments created a trust or an absolute gift. They are there arranged under the fol- lowing heads : (1) Not a trust (p. 82) ; (2) beneficial gift subject to a trust obligation in favor of a third party (pp. 87-89), citing (gift to a wife for life, " for the support of herself and her chil- dren' ') Billar v. Loundes, 2 Dem. 590 ; also Collister v. fassitt, 7 App. Div. 20 ; but compare Pell v. Folger, 68 Hun, 443 ; Shangle v. Hallock, 6 App. Div. 55 ; (3) same, save that the obligation was merely moral, not legal (pp. 89-91), citing (residuary bequest to S. : "It is my desire and request that S. shall watch over arid care for my friend W. , and see that at no time is she allowed to suffer or want for the necessaries of life") Wilde v. Smith, 2 Dem. 93 ; also Lawrence v. Coofo, 104 N. Y. 632 ; Clark v. Leupp, 88 N. Y. 228 ; Hiker v. St. Luke's Hospital, 35 Hun, 512 ; affi'd 102 N. Y. 742 ; (4) object indefinite, words precatory, no trust (pp. 93, 94), citing Matter of Keleman, 126 N. Y. 73 ; also Wyman v. Woodbury, 86 Hun, 277 (282) ; (5) object indefi- nite ; words mandatory ; trust ; but the intended trust, being for indefinite objects, ineffective, citing Willets v. Willets, 103 N. Y. 65C ; Matter of Ingersoll, 131 N. Y. 573 ; (6) subject, object, and mode of distribution clearly defined ; words mandatory ; trust (pp. 97, 98) citing Phillips v. Phillips, 112 N. Y. 197 ; (7) subject, object, and mode of distribution clearly defined ; words merely precatory ; no trust (pp. 98, 99), citing Wood v. Seward, 4 Redf. 271 ; Bowker v. Wells, 2 How. Pr. n. s. 150 ; also Matter of Keleman, 126 N. Y. 73 ; Clay v. Wood, 91 Hun, 398 ; (8) discretion given as to mode of distribution among per- sons of defined class ; words mandatory ; trust (pp. 99-101), Col- ton y. Colton, 127 U. S. 300 ; (9) discretion given as to mode of distribution among persons of defined class; words precatory .; no trust (pp. 101-103), citing Foose v. Whitmore, 82 N. Y. 405. Where the question is whether a gift or devise is absolute, and the expressed wishes or desires of testator are mere suggestions, or the gift is subject to an imperative direction creating a trust or charge, the rule is, first,that if the expression of desire so de- pends on the discretion of the general devisee as to be incapable of execution without superseding that discretion, there is no trust 2 18 INTRODUCTION. or charge ; and second, if it is so definite as to amount and sub- ject matter as to be capable of execution by the court, there is or is not a trust or charge according to the testamentary intention. Phillips v. Phillips, 112 N. Y. 197 (204) ; Collister v. Fassitt, 7 App. Div. 20. A devise " to A for him to hold for the benefit of his chil- dren, if he so elects," has been held to create a trust, the elec- tion referring not to his choice to hold absolutely or as trustee, but to his choice to accept or renounce the trust. Barnard v. Grossman, 54 Hun, 53. 37- (fy Executorship. The distinction between an express trust and an executorship is more fully discussed later on (post, 156, et seq.] ; but, in brief, it may here be said that in the first place an executor as such has no title to real property, and indeed nothing at all to do with it unless he needs to have it sold to raise funds ; arid, in the second place, as to personal property, while an executor has title, in a sense, it is a different kind of title from that required in an express trust ; it is a title given him by the law to enable him to settle up the estate, while a trustee's title, under a will, is derived from the will itself through an express or implied bequest of property to him in trust. 38. (i) Guardianship, committee of lunatic, etc. The dis- tinction in point of title is obvious, and is illustrated in Matter of Strasburger, 132 N. Y. 128 ; People ex rel. Smith v. Comm'rs of Taxes, 100 N. Y. 215 ; McCabe v. (? Connor, 4 App. Div. 354 ; Matter of Hawley, 104 N. Y. 250 (261) ; Pharis v. Geer, 110 N. Y. 336 ; Matter of Otis, 101 N. Y. 581. 39- (j) Special statutory trusts may be created or permitted by the Legislature, as in the case of Shaker trusts, White v. Mil- ler, 71 N. Y. 118 ; cemetery trusts, L. 1894, chap. 658 ; in City Chamberlain, Chesterman v. JEyland, 81 N. Y. 398 ; in Board of Education, Belts v. Betts, 4 Abb. N. C. 317 (404, 405) ; in Surrogate, Matter of Coffin, 36 Hun, 236 ; Supervisor, Ise- .man v. Myres, 26 Hun, 651. 40. (k) Trusts created by decree, as where a decree requires a .fund to be deposited in court. Wiggins v. Howard, 83 N. Y. 613. 41. (1) Pure trust. See McCartney v. Bostwick, 32 N. Y. 53. CHAPTER II. CREATION OF EXPRESS TRUSTS. (1) Who may Create a Trust. 42. Statutory provisions. " A citizen of the United States is capable of holding real property within this State ..." Real Prop. L. 2. " A person other than a minor, an idiot, or person of unsound mind, seised of or entitled to an estate or interest in real property, may transfer such estate or interest." Real Prop. L. 3. Thus, within the scope of its powers and charter purposes, a corporation may create a trust e.g., by an assignment for the benefit of creditors. Bishop on " Insolvent Debtors," 3d ed., 117. " All persons except idiots, persons of unsound mind and in- fants may devise their real estate, by a last will and testament, duly executed. ..." 2 R. S. 56, 1, as amended L. 1867, chap. 782, 3. " Every male person of the age of eighteen years or upwards, and every female of the age of sixteen years or upwards, of sound mind and memory, and no others, may give and bequeath his or her personal estate, by will in writing." 2 R. S. 60, 21, as amended L. 1867, chap. 782, 4. 43. Aliens. Under the foregoing provisions, aliens, in so far as capable by statutes applicable to the particular case, of holding lands, may (it seems in all cases) grant or devise the same in trust. (As to cases in which aliens may hold, grant, and devise land in New York, see as to the period prior to Octo- ber 1st, 1896, the statutes collected in Birdseye's R. S. [1st ed.], p. 2517 et seq., and L. 1893, chap. 207, and for the present laws, see post, 110.) They are under no disability in holding or disposing of personal property. 20 CREATION OF EXPRESS TRUSTS. 44. Infants By grant. In spite of the exclusion of in- fants by the foregoing statutory provisions from the class of those who may alien land, an infant's executed grant of land in trust is not void, but voidable, as in the ordinary case of an ab- solute conveyance by an infant, and will generally be deemed ratified, and thus become just as valid and effectual as the convey- ance of an adult unless disaffirmed by the infant when he arrives at age, or within a reasonable time thereafter. Beardsley v. Hotchkiss, 96 N. Y. 201 (211), where, however, the trust was solely for the infant' sown benefit, and was in fact ratified by sub- sequent acts. See also Temple v. Hawley, 1 Sandf. Ch. 153 ; Dominick v. Michael, 4 Sandf. R. 374 ; Wetmore v. Kissam, 3 Bosw. 321 ; Mcllvaine v. Kadel, 3 Robt. 429 ; Jackson v. Bouchin, 14 Johns. R. 124 ; Voorhis v. Voorhis, 24 Barb. R. 150 ; Palmer v. Miller, 25 Barb. R. 399 ; Tyler on Infancy, Chap. V. In general, a trust deed, voidable on any ground, is not ratified by the affirmative acts of the creator while he is in ignorance of its character and of the essential facts, and supposes that he is ratifying something else. Barnard v. Oantz, 140 N. Y. 249 (258). 45. Infants By parol. The rules as to the ratification or disaftirmance of an infant's acts in creating a trust of personal property, are those applicable to his absolute dispositions. Beardsley v. Hotchkiss, 96 N. Y. 201 (211) ; Sparman v. Kein, 83 N. Y. 245 ; Bool v. Mix, 17 Wend. 131 ; C. N. Bank v. Strauss, 137 N. Y. 148 : Stafford v. fioof, 9 Cow. 626 ; Cha- pin v. Shafer, 49 N. Y. 407 ; Totes v. Lyon, 61 N. Y. 344. 46. Infants By devise. An infant's devise of land is void, the exclusion of infants from the statutory grant of testa- mentary power over land being absolute. 2 R. S. 56, 1, as amended L. 1867, chap. 782, 3. 47. Infants By bequest. See ante, 42. 48. Married women. Under the present law married women are under no disability in reference to the disposition of their property, real or personal. Domestic Rel. Law, 20, 21. ESSENTIAL ELEMENTS OF A TRUST. 21 49. Beneficiary as creator of trust. If the creator of the trust is also the beneficiary or a beneficiary, this fact does not per se render the trust void. Bliss v. West, 58 Hun, 71 (74), afFd 132 N. Y. 589 ; Sloan v. Birdsall, 58 Hun, 317 (321) ; Rosenburg v. Rosenburg, 40 Hun, 91. As to the rights of his creditors to reach the trust fund in such a case, see post, 710. 50. Trustee as creator of trust. The owner of property may create, or furnish evidence of, a valid trust by duly declar- ing that he holds the same in trust for another. Post, 63, et seq. (2) Essential Elements of a Trust. 51. Essentials of express trusts. The requirements which the law recognizes or imposes in the constitution of an express trust 1 are : 52. () An intent to create a trust, Beaver v. Beaver, 117 N. Y. 421 (428) ; Pierson v. Drexel, 11 Abb. N. C. 150 ; Mat- ter of Crise, 2 Con. 59 ; Pickslay v. Starr, 149 N. Y. 432 ; Haviland v. Willets, 141 N. Y. 35 ; Haux v. Dry Dock Sav- ings Institution, 2 App. Div. 165 ; Dinley v. McCullagh, 92 Hun, 454 ; or, if reliance is placed upon proof of a declaration of trust, then it is equally essential that an intent to make such a declaration appear. Beaver v. Beaver, 137 N". Y. 59 (65) ; Wadd v. Hazelton, 137 N. Y. 215 ; Young v. Young, 80 N. Y. 422 ; Curry v. Powers, 70 N. Y. 212 (219). But proof of an intention to transfer title to a donee or a trustee does not show any intent to declare a trust ; and an intent to declare a trust is not an intent to transfer the title. In the nature of things the two intents are entirely different and inconsistent (post, 106). The presence of the intention is a question of fact, Haux v. Dry Dock Savings Institution, 2 App. Div. 165'; though of course the facts admitted or proved in a given case may be such as to render it a conclusion of law that an intention did ( Williams v. Guile, 117 N". Y. 343 [347] ; PicMay v. Starr, 149 N. Y. 432) or did not (Wadd v. Hazelton, 137 N. Y. 215 [220]) exist. 1 See the definition of an express trust, ante, 29. 22 CREATION OF EXPRESS TKUSTS. And the intent must be actual ; a trust procured through duress, fraud, or undue influence, or emanating from a person who is mentally incompetent, is of course invalid. Matter of Living- ston, 34 N. Y. 555 (570-573). 53' (^) Specified property, to be held in trust ; (c) a trustee and (d) a beneficiary. P helps' x'r. v. Pond, 23 N. T. 69 (77) ; Green v. Green, 125 N. Y. 506 (510) ; Rose v. Hatch, 125 N. Y. 427 (431) ; Sherwood v. American JBible Society, 4 Abb. Ct. App. Dec. 227. These three, as providing an estate to be held, a person to hold it, and a person for whom it is held, are some- times, as in the cases above cited, spoken of as the elements essential to the very conception of a trust, and without which it could not, in the nature of things, exist. 54. (e) A deed 1 or conveyance containing fit expressions is necessary to eftect the creation of a trust inter vivos in real prop- erty, though a declaration of trust may be proved by any writing subscribed by the declarant ; while trusts of personal property may be created or declared by deed, or any writing, or orally ; and a trust of either real or personal property may be created by will. Post, 64 et scq. 55- C/) The vesting of title in the trustee, effected by deliv- ery, either actual or constructive, of the property affected (ex- cept that when a trust is declared, the property remains with the declarant, the title shifting from him individually to himself as trustee). Post, 63, et seq. 56. (g) A certain term. Underwood v. Curtis, 127 N. Y. 523 (538) ; CrooTee v. County of Kings, 97 N. Y. 421 (436). Post, Chap. VI. 57- (^) Certain purposes, if the trust is of real property, as to which four are prescribed as the only ones authorized (post, 394; compare, however, post, 513 et seq. relating to the charitable, &c., trusts now authorized), omission to designate 1 Notice the omission by Real Prop. L. 208, of the words "and sealed," which occurred in the section which it supersedes. ESSENTIAL ELEMENTS OF A TRUST. 23 one or more of which is fatal. Dillaye v. Greenough, 45 IS". Y. 438. But trusts in personal property may be created for any purpose not in itself illegal. Post, 414. But even in the case of personal property, one particular purpose (the accumula- tion of income) is specifically authorized and limited by statute, and in creating such a trust, the provisions of the statute must be complied with. Post, 413. 58. (i) Authority to receive rents and profits must be con- ferred in the trust instrument in order to establish certain testa- mentary trusts in real property. Post, 146. 59. Non-essentials. Whether a written instrument is re- quired or is employed though not requisite, or the trust is duly created orally, no particular phraseology is necessary, if the words used convey and embody the due and lawful intent. Thus : (a) The word " trustee" need not be used, Morse v. Morse, 85 K Y. 53 (60) ; Gersen v. Rinteln, 2 Dem. 243 ; its absence does not negative the intent to create a trust, nor does its presence indicate conclusively the existence of such an intent, Hathaway v. Hathaway, 37 Hun, 265 ; Bacon v. Bacon, 4 Dem. 5 ; nor the word " trust," Morse v. Morse, 85 N". Y. 53 (60) ; cf. Rogers v. N. Y. & T. L. Co., 134 N. Y. 197 (213). (5) The conveyance or will need not contain a grant or devise, in so many words, to the trustee in order to give him title, if the duties imposed are such as to render title essential for their performance. Underwood v. Curtis, 127 N. Y. 523 (537) and cases cited below. Thus it may be implied from a direction to receive the rents, pay expenses of the estate, and apply the net rents. Marx v. McOlynn, 88 N". Y'. 357 (375) ; Savage v. Burnham, 17 N. Y. 561 (568) ; Underwood v. Curtis, 127 "8. Y. 523 (537) ; Toronto G. T. Co. v. G. B. & Q. R. R. Co., 123 N. Y. 37 (44) ; Woodward v. James, 115 N. Y. 346 ; Robert v. Corning, 89 N. Y. 225 (236) ; Morse v. Morse, 85 N. Y. 53 (60) ; Dono- van v. Van De Mark, 78 N. Y. 244 ; Tobias v. Ketchum, 32 N. Y. 319 (327) ; Leggettv. Perkins, 2 N. Y. 297 (305) ; Mat- ter of Herrick, 32 State Rep. 1032 (1035) ; Craig v. Craig, 3 Barb. Oh. 76 (94) ; Vail v. Vail, 4 Pai. 317 (328). See Pitt- man v. Johnson, 35 Hun, 38 ; aff'd 102 N. Y. 742. Precatory 24 CREATION OF EXPRESS TRUSTS. words may suffice for this purpose. Phillips v. Phillips, 112 N. Y. 197. See Manice v. Manice, 43 N. Y. 303 (387). And even when it is " convenient and reasonably necessary," Ward v. Ward, 105 N. Y. 68 (74) that the title be in him, the intent to give it to him may be inferred, and so, even though there be in form a devise to the beneficiary, if nevertheless an intent to vest title in the trustee appear. Leggett v. Perkins, 2 N. Y. 297 (305). But where there is no express devise to trustees and also no actual necessity for vesting the title in them, no trust will ever be inferred. Persons v. Snook, 40 Barb. R. 144 (156) ; Will- iams v. Freeman, 98 N. Y. 577 (580, 584) ; Orphan Asylum v. White, 6 Dem. 201 (204) ; Heermans v. Robertson, 64 N. Y. 332 (343) ; Henderson v. Henderson, 113 N. Y. 1 (11) ; Post v. Hover, 33 N. Y. 593 (599) ; loose v. Whitmore, 82 N. Y. 405 (406) ; Manice v. Manice, 43 N. Y. 303 (364) ; Germond v. Jones, 2 Hill, 569. And, on the other hand, there may be, in words, a grant or devise to a trustee, and yet, an intent displayed in the entire instrument, that he shall not take title will control, so as to give him a mere power. Thus, a devise of property to A, followed by a devise of the same property to trustees with power to sell, and invest the proceeds for A's benefit for life, does not confer title in the land on the donees of the power or cut down A's interest from a fee to a life interest. A takes in fee subject to the power to sell and invest. Vernon v. Vernon, 53 N. Y. 351 (362). (c) The term of duration of the trust deed need not be defined in the form of an express description. It is enough if it can be definitely ascertained from the nature of the provisions found throughout the deed or will. Matter of Smith, 131 N. Y. 239 (246). (d) The beneficiary need not be desig- nated by name. It is enough if he is designated with such defi- nitenees that he would be entitled, as a right, to enforce in equity the performance of the trust. Tilden v. Green, 130 N. Y. 29 (53). On this subject, see post, 365, et seq. (e] And in gen- eral, no particular verbal formula is required. Morse v. Morse, 85 N. Y. 53 (60) ; Vernon v. Vernon, 53 N. Y. 351 (359) ; Shep- ard v. Gassner, 41 Hun, 326. See also Cruger v. Cruger, 5 Barb. R. 225 (238) ; Verdin v. Slocum, 71 N. Y. 345 ; Hamer v. Sidway, 124 N. Y. 538 (550) ; Downing v. Marshall, 23 N. Y. 378 ; Beekman v. Bonsor, 23 N. Y. 298 (314) ; Brew- ESSENTIAL ELEMENTS OF A TRUST. 25 ster v. Striker, 2 N. Y. 19 (36) ; Leggett v. Perkins, 2 N. Y. 297 (305) ; Jarvis v. Bdbcock, 5 Barb. R. 139 (144) ; Craig v. Craig, 3 Barb. Ch. 76 (94-97) ; Vail v. Vail, 4 Pai. 317 (328) ; Gott v. Cook, 7 Pai. Ch. 521 (536 etseq.) 24 Wend. 641 ; Dono- van v. Van DeMark, 78 N. Y. 244 ; Matter of Carpenter, 131 N. Y. 86 ; Hirsh v. Auer, 146 N. Y. 13 (19). Thus a gift of " full control" for designated purposes for which a trust may be created, for a duly designated beneficiary, and for a duly limited term, creates a trust and vests title in the trustee. Hathaway v. Hathaway, 37 Hun, 265. All the details of the trustee's powers and duties need not be enumerated, such as to collect dividends, assign securities, sell stock, reinvest proceeds, etc., if general terms, such as sell, convert, collect, etc., are used. Fellows v. Heermans, 4 Lans. 230 (240). As to implied authori- ty to receive rents, see post, 146. (f) No notice to the bene- ficiary is requisite to the creation of a trust. Rogers^ Locomo- tive etc. Works v. Kelly, 88 N". Y. 234 (238) ; Witzel v. Chapin, 3 Bradf. 386. Upon delivery it becomes irrevocable (unless power to revoke is reserved), even though the beneficiary has no notice. Meiggs v. Meiggs, 15 Hun, 453 (457). So the de- livery may be made to a third person (post, 93), and no notice to the trustee is essential to the creation of the trust. 1 Perry on Trusts, 105. 60. Essentials, when implied. So essential expressions may be implied. That is to say, while an express trust, as already stated, is one which is set forth, or "expressed," in words, the words required for that purpose need not in express terms create a trust by that name nor employ expressly any technical terms appropriate to the creation of a trust. It is sufficient if the provisions that are expressed are such as necessarily do imply a tnist. Ante, 59. Shepard v. Gassner, 41 Hun, 326 ; Hatha- way v. Hathaway, 37 Hun, 265, cited 134 N. Y. 214 ; Marx v. McGlynn, 88 N. Y. 357 (376) ; Vernon v. Vemon, 53 N. Y. 351 (359) ; Johnston v. Spicer, 107 N. Y. 185 ; fiyrnes v. Baer, 86 N. Y. 210(219-220) ; Robert v. Corning, 89 N. Y. 225(237) ; Leggett v. Perkins, 2 N. Y. 297 (305). See Phillips v. Phil- lips, 112 N. Y. 197 (204). Where provision is made by will for a widow (executrix), and also for others, in the rents of land, 26 CREATION OF EXPRESS TRUSTS. and the question is whether she is vested with the title to all, in trust, the fact that she is given " one half the income of the whole estate," instead of all the income of one half the estate, is important as an indication that some one was to lease and man- age the whole, pay charges, and distribute rents, and in such a case full " control" being also given to the testatrix, a trust was implied. Woodward v. James, 115 N. Y. 346 (356). 6l. Essentials, when not implied. Essential expres- sions will not x however, be implied, if the trust be a void trust. There is no such anomaly in the law as a trust raised by construc- tion only to be destroyed in the moment of its creation. Smith v. Edwards, 88 N. Y. 92 (102). See Woodward v. James, 115 N. Y. 346 (357) ; Henderson v. Henderson, 113 N. Y. 1 (11) ; Bliven v. Seymour, 88 N. Y. 469 (477) ; Mann v. Witbeck, 17 Barb. K. 388 (392). See Greene v. Greene, 125 N. Y. 506. Compare Cochrane v. ScheU, 140 N. Y. 516 (527). Nor will a trust be implied if a power in trust will serve for the purposes set forth. Post v. Hover, 33 N. Y. 593 (601) ; Heermans v. Rob- ertson, 64 N. Y. 332 (343) ; Tucker v. Tucker, 5 N. Y. 408. But if the trust is expressed, the fact that a power would serve will not invalidate the trust. Morse v. Morse, 85 N. Y. 53 (60). And so also the court will be disinclined to imply a trust where the result would be to invalidate another part of the will by mak- ing it illegal in combination, and so requiring it to be severed and annulled. If, by refusing to create a trust by implication, the entire scheme of the will can be maintained, and all parts made valid, this course is strongly preferred. Roseboom v. Rose-' loom, 81 N. Y. 356 (359) ; and cases cited. See also Terry v. Wiggins, 47 N. Y. 512 (517) ; Crosier v. Bray, 120 N. Y. 366 (375) ; Roe v. Vingut, 117 N. Y. 204. And further, as the mere absence of the word " trustee" does not vitiate a trust, so its mere presence does not create one. Matter of Ilawley, 104 N. Y. 250 (261). And a power to sell land and hold the pro- ceeds in trust does not create a trust in the land. It is a mere power as to the land. The trust attaches only to the proceeds. Harvey v. Brisbin, 50 Hun, 376, see s. c. 143 N. Y. 151 ; Vernon v. Vernon, 53 N. Y. 351 (362). THE TRUST INSTRUMENT. 27 62. General rule. Subject to these principles, the whole matter may be summed up by saying that it is sufficient if the intention to create a trust which would be valid under the Stat- ute can be fairly collected from the expressions of the instru- ment ; and that what is implied in the language used is, as in other cases, deemed to be expressed. See ante, 20. Tobias v. Eetchum, 32 N". Y. 319 (327). (3) The Trust Instrument. 63. Introduction. An express trust may be created by will, or inter vivos. In the latter case, it may be created or rendered capable of proof in either one of two methods : The person who holds the title may (1) transfer it to a trustee to hold in trust for the transferror or for some third person ; or may (2) " declare" that he himself holds it in trust. In the first of these cases, he transfers it to another person ; while in the other he effects a transfer from himself individually to himself as trustee or fur- nishes evidence that it is as trustee that he holds title. The various features of this subject will now be discussed. In real property, the transfer is effected by deed (or will), but a declara- tion of trust may be proved by other writings ; while in personal property no writing at all is required (except in trusts created by will). (a) Real Property. 64. Conveyance, when required. " An estate or inter- est in real property, other than a lease for a term not exceeding one year, or any trust or power, over or concerning real property, or in any manner relating thereto, cannot be created, granted, assigned, surrendered, or declared, unless by act or operation of law, or by a deed or conveyance in writing [for illustrations of express trusts created by deed, see Douglas v. Cruger, 80 N. Y. 15 ; Near pass v. .Newman, 106 N. Y. 47 ; Wallace v. Berdell, 97 N. Y. 13 ; T/iebaud v. Schermerhorn, 30 Hun, 332 ; Van Cott v. Prentice, 104 N. Y. 45 ; Button v. Benkard, 92 N. Y. 295 (299)], subscribed by the person creating, granting, assign- ing, surrendering or declaring the same, or by his lawful agent {Lowenstein v. Flaurand, 82 N. Y. 494], thereunto authorized by writing." Real Prop. L., 207. (The Act relating to as- signments for the benefit of creditors, authorizes execution by an 28 CREATION OF EXPRESS TRUSTS. attorney in fact " duly authorized." Lowenstein v. Flaurand, 82 N. Y. 494. Bishop on Insolvent Debtors, 3d ed. p. 164.) 1 65. Conveyance, when not required. " But this section [just quoted] does not affect the power of a testator in the disposi- tion of his real property by will (for illustrations, see fow- ler v. Ingersoll, 127 N. Y. 472 ; Asche v. Asche, 113 N. Y. 232 ; Stevenson v. Lesley, 70 N. Y. 512) ; nor prevent any trust from arising or being extinguished by implication or operation of law (Foots v. Bryant, 47 N. Y. 544 [547] ; and ante, 20), nor any declaration of trust from being proved by a writing subscribed by the person declaring the same" Real Prop. L., 207. 66. Definition Real property Estate. " The terms ' real property ' and ' lands,' as used in this chapter [Real Prop- erty Law], are coextensive in meaning with lands, tenements, and hereditaments." Real Prop. L., 1. See also Id. 240, 280. And " the terms ' estate' and 'interest in real property,' include every such estate and interest [i.e. , in real property], free- hold [denned Real Prop. L., 23, 24], or chattel [denned Id.'], legal or equitable, present or future [defined Id., 25-29], vested or contingent [defined Id., 30]." Real Prop. L., 205. 67. Definition Conveyance. " The term * conveyance,' as used in this article [i.e., on Conveyances and Mortgages], in- cludes every instrument, in, writing, except a will, by which any estate or interest in real property is created, transferred, assigned, or surrendered." Real Prop. L., 205. " The term ' conveyance ' [i.e., as used in the article on Re- cording] includes every written instrument by which any estate or interest in real property is created, transferred, mortgaged or assigned, or by which the title to any real property may be affected . . . except a will," etc. Real Prop. L, 240. 1 " Every grant or assignment of any existing trust in lands, goods, or things in action, unless the same shall be in writing, subscribed by the party making the same, or by his agent lawfully authorized, shall be void." 2 R. 8. 137, 2. 1 Perry on Trusts, 79, and cases there cited. CREATION AND DECLARATION DISTINCTION. 29 " A grant in fee or of a freehold estate, must be subscribed [omitting the words " and sealed" contained in 1 R. S. 738, 137, for which this section was substituted by the Real Prop- erty Law] by the person from whom the estate or interest con- veyed is intended to pass, or by his lawful agent. If not duly acknowledged before its delivery, according to the provisions of this chapter, its execution and delivery must be attested by at least one witness, or, if not so attested, it does not take effect as against a subsequent purchaser or encumbrancer until so acknowl- edged." Real Prop. L. , 208. As to acknowledgment, see Real Prop. L., 242. 68. Statute not retroactive. " This chapter [Real Prop- erty Law] does not alter or impair any vested estate, interest, or right, nor alter or affect the construction of any conveyance, will, or other instrument which has taken effect at any time before this chapter becomes a law." Real Prop. L., 1. 69. Creation and declaration Distinction. Theoreti- cally speaking, an express trust is created when the owner, by a legal conveyance transfers title to another, upon a valid trust ; it is declared when, by any method recognized by the law, the holder of the legal title admits that he holds in trust. In one case, the transfer of title is the creative act ; in the other, there is no transfer of title, but a mere furnishing of legal evidence of an existing trust (as in Govin v. de Miranda, 140 N. Y. 474 [477]). Practically, however, this distinction may or may not correspond to the actual situation in a given case. For it often happens, in a given case, that a declaration does, in fact, con- stitute the creative act (as in Locke v. F; L. & T. Co., 140 !N. Y. 135) ; for whenever one who holds the legal and equitable title, and also enjoys the beneficial interest, wishes not only to create a trust for the benefit of another, but also to be himself the trus- tee, his most natural and convenient method is to declare that he holds the land on a specified trust. And in no case is it necessary to go behind a valid written declaration, made by one who was appa- rently a beneficial owner, to see whether or not there was in fact a pre-existing trust. Hutchins v. Van Vechten, 140 N. Y. 115 (120). As said by the court in Day v. Roth, 18 N. Y. 448 (453), dec- 30 CREATION OF EXPRESS TRUSTS. larations of trust " are not [i.e., not in all cases] to be regarded as admissions of some antecedent fact in relation to the subject, but are to be looked upon and received as constituting the very trust which they acknowledge. The doctrine of equity is that by their own force they impress the fund with a peculiar char- acter, and hence they are receivable on the same grounds as a precise and formal agreement." This statement is made in a case where it did not appear, prior to the declaration, whether the declarant held a particular fund in trust or was merely a debtor. But the distinction may be of vital consequence, as where, ac- cording to some authorities, the declarant has no right to create a trust in the property, and where the declaration can only be sus- tained on the theory that it furnishes evidence of an existing trust. Thus, after an owner has made a general assignment, for the benefit of creditors, of property which, so far as existing evi- dence goes, is his absolutely, and has thereby parted with the title, he cannot create a trust therein in himself for other par- ties by using the form of a declaration ; yet it has been held that he may, by declaring that he held it in trust at the time of the assignment, furnish evidence which, if believed, will with- draw it from the assignment. Gardner v. Rowe, 2 Sim. & Stu. 346 ; aff'd 5 Russ. 258 ; In re Farmer, 18 Nat. Bank. Reg. 207 (216), both cited in Ames's " Cases on Trusts" (179-181), where also some doubt seems to be thrown on their soundness. Com pare Wright v. Douglass, 7 N. Y. 564. In Barry v. Lambert, 98 N. Y. 300, an executor made a dec- laration that a certain portion of a fund invested in a mortgage, held by him as executor, ill reality belonged to a third party and not to the estate. It was held that while an executor has no authority to create an original liability on the part of the estate or bind it by a new contract, yet he has power to transfer prop- erty of the estate for the purposes of his trust, and therefore any act of his which has this effect is within his authority and binds the estate ; that accordingly a declaration embodying the actual fact, of a right of the third party to the share in question, consti- tuted a valid declaration of trust. " Such a declaration could in no just sense be said to create any liability against the estate." " The arrangement shown by such a declaration, instead of creat- ing a liability against the estate, would simply have the effect of DECLARATION LEGAL TITLE. 31 protecting the party advancing the money from an unjust claim of ownership on the part of the executors, by reason of the form in which the securities for the loan were taken." The two classes of declaration are also there mentioned those where, in fact, the owner thereby intends to divest himself of beneficial ownership and create a trust, and those where one already hold- ing in trust avows the fact ; the court say that an unequivocal declaration in due form, plainly implying that the declarant in- tends to divest himself of his interest in the property, and to hold it thereafter for the use and benefit of another, is all that is re- quired to create a trust even as against the owner. " But when the legal title is in one party and the equitable ownership in an- other, it is only necessary for those facts to appear, in order to constitute the holder a trustee for the benefit of the other" (p. 307). But a declaration by A, that certain property held by him is not his, but is held in trust for B, while admissible on B's behalf, as against A's heirs or representatives, or any one claiming under A, cannot be used by A as against C, who claims that it was held by A as trustee for C. It is only admissible as a declaration by A against his own interest, and can only be used accordingly. Brennan v. Hall, 131 ]ST. Y. 160. Compare with Barry v. Lambert, supra. 70. Declaration Legal title. In declaring a trust, the legal title remains in the settlor. He now avows that he holds in a different capacity, but it is not essential to the validity of the trust that the property should be formally transferred by him as an individual to himself " as trustee." Thus, in a case of shares of corporation stock, a declaration that the settlor " dedicates and sets apart . . . all the income and dividends . . . in trust for," etc., is valid, though there is no transfer of the stock on the books of the company to the holder as trustee. " He held the legal title to the stock, but necessarily held it, from the date of his declaration, as trustee for the beneficiaries." Locke v. F. L. & T. Co., 140 N. Y. 135. 1 As to the general principle that a gift of income or rents carries the bene- ficial interest in the corpus, see Wells v. Wells, 88 N. Y. 323 (331) ; Sc/iermer- horn v. Cotting, 131 N. Y. 48 (59). 32 CREATION OF EXPRESS TRUSTS. 71. Declaration Conveyance Mere writing. It will be noticed that the statute above quoted, 64, first provides that no trust in land shall be declared, unless by act or operation of law, or by a deed or conveyance in writing, and then goes on to say that this provision " does not . . . prevent . . . any declara- tion of trust from being proved by any writing subscribed by the person declaring the same." These two provisions, the rule and the qualification, appeared as two distinct sections in the Re- vised Statutes. The explanation of this apparent discrepancy is stated by the Court of Appeals (Hutchins v. Van Vechten, 140 N. Y. 115) as follows : " The English statute on this subject (29 Car. II., chap. 3) in its essential features was enacted in this State by the Act of February 26th, 1787, the twelfth section of which provides that ' all declarations or creations of trusts of any lands shall be manifested and proved by some writing signed by the party entitled by law to declare the trust. ' Thus the law stood for about forty years, until the general revision of the statutes, when it was changed and made to read as follows : . . . [quoting 2 R. S. 135, 6, being the first part of the present statute, ante, 64, requiring a deed or conveyance in writing]. After the revision a trust of the character claimed by the plaintiff in this case could not be created or established except by a deed or conveyance in writing. But by chap. 322 of the Laws of 1860 the Legis- lature restored the law to its original condition by an amendment to the seventh section [being the latter part of the present sec- tion, ante, 64], substantially providing that a declaration of trust in lands might be proved by any writing subscribed by the party declaring the same. It is not necessary now to procure a deed or a formal writing intended for the purpose in order to prove the trust, but letters or informal memoranda signed by the party, and even admissions in a pleading in another action be- tween other parties, if signed by the party with knowledge of its contents, will satisfy the requirements of the statute, if they contain enough to show the nature, character, and extent of the trust interest. (Forster v. Hale, 3 Vesey, Jr., 696 ; Fisher v. Fields, 10 Johns. 494 ; Wright v. Douglass, 7 N. Y. 564 ; Cook v. Barr, 44 Id. 156 ; Loring v. Palmer, 118 U. S. 321 ; 2 Story, Eq. Jur. 972 ; Me Arthur v. Gordon, 126 N. Y. 597 ; Urann v. Coates, 109 Mass. 581.)" Also Corse v. Leggett, 25 Barb. R. 394. WHEN NO WRITING REQUIRED. 33 In the Hutchins case (140 N. Y. 115) the evidence showed (1) a power of attorney to one P., given by the alleged trustee, defendant, to sell the land ; (2) a letter written and signed by de- fendant to P., referring to the power and stating : " Whatever is realized you will understand that it belongs to Waldo Hutchins and myself, jointly and equally, and any further instructions Mr. Hutchins may give you you may comply with" ; (3) another paper, unsigned, but wholly in the defendant's handwriting, de- scribing the land. There were also other letters written by de- fendant. The court add : " It is not necessary to the plaintiff's case to show that the trust was created by or originated in a writing. The statute enacts a rule of evidence and is satisfied if the trust is manifested or proved by a writing, however it originated, whether by parol arrangement or otherwise." Crane v. Powell, 139 N. Y. 379 ; Ilutchinson v. Hutchinson, 84 Hun, 482 ; Hutchins v. Van Vechten, 140 N. Y. 115. The defendant in this latter case held the record title, but in fact he and the plain- tiff's testator were interested therein as tenants in common. It was not, therefore, one of the four express trusts authorized by statute, but one arising under what is now Real Prop. L. 72 : " Every person, who, by virtue of any grant, assignment or de- vise, is entitled both to the actual possession of real property, and to the receipt of the rents and profits thereof, in law or equity, shall be deemed to have a legal estate therein, of the same quality and duration, and subject to the same conditions, as his beneficial interest' ' (except as to certain trusts existing on Janu- ary 1st, 1830). 72. When no writing required. Although a writing is requisite to prove a declaration of trust in land, yet if the person who holds land under an oral agreement sells the land, and then makes an oral declaration of the trust, and subsequently uses the proceeds to buy other land, the oral declaration will impress the trust upon the proceeds, and enable the beneficiaries to trace the same into the land last purchased and fasten the trust upon that. Tracy v. Tracy, 3 Bradf. 57. Compare JSork v. Martin, 132 N. Y. 280 ; bobbins v. bobbins, 89 N. Y. 251 ; Goldsmith v. Goldsmith, 145 N. Y. 313. 3 34 , CREATION OF EXPRESS TRUSTS. 73. Declaration Mere writing Illustrations. The de- cisions dealing with alleged declarations made while the Revised Statutes were still unamended by the Laws of 1860, above referred to, of course recognize the necessity of some conveyance, though the declaration itself, contained therein, need not take on the form of a grant e.g.> it might be contained in the reciting part of a conveyance. Wright v. Douglass, 7 N. Y. 564 (569) ; Van Epps v. Van Epps, 9 Pai. Ch. 237. But during the period preceding the original revision, and also since the amend- ment effected in 1860, by which a deed or conveyance became no longer requisite, there have been illustrations of valid declarations resting merely on writings other than grants. Thus, in an action brought to establish a trust, the proof consisted in a verified answer of the defendant, in an action previously brought against him by a third party, which contained allegations tending to show the trust contended for. The court says : " It is no longer required that trusts should be proved by some deed or conveyance creating or declaring them ; but they may be proved by any writing subscribed by the party. The statute does not require that the writing should be inter paries ; but within the letter and spirit of the law, any writing subscribed by the party will be sufficient if it contain the requisite evi- dence. I, therefore, entertain no doubt that the alleged trust in this case could be proved by the answer of the defendant, which was given in evidence, if it was sufficiently manifested in the an- swer." Cook v. Barr, 44 N. Y. 156. It was there held not to be sufficiently manifested. So in Hutchins v. Van Vechten (140 N. Y. 115), above referred to, where the writings were a power of attorney, and letters signed by the defendant. Many other illustrations are collected in 1 Perry on Trusts, 82. But though a mere writing suffices, nothing less will answer. In the case of real property there must be a writing. Follett v. Badeau, 26 Hun, 253 (256) ; McCahiil v. McCahill, 71 Hun, 221 ; e. c. 11 Misc. 258. Numerous English and American cases are cited in Ames's " Cases on Trusts," p. 178, note, illustrat- ing the various permissible forms in which a declaration may be evidenced. 74. Declaration Other essentials. Although a mere dec- DECLARATION OTHER ESSENTIALS. 35 laration, written and subscribed, is a sufficient evidence of a trust, yet the declaration, to be thus effective, must be legally sufficient in its contents. Matter of Crise, 2 Con. 59. Thus, where a lessee of land made oral admissions that he was erecting buildings thereon " for the benefit of A," and that he had received some money from A, this was held insufficient as a declaration that he held the lease in trust for A. Duffy v. Masterson, 44 1ST. Y. 557. So, an admission by defendant that two certain mortgages were given by him for the accommodation of plaintiff, to enable the latter to borrow money, does not show that defendant holds the land itself in trust for plaintiff. " The writing must show that there is a trust and what it is, and failing in this, it is in- sufficient." Cook v. Barr, 44 K Y. 156. "The evidence [where real property is involved] must all be in writing with- out resorting to parol evidence, even to connect different writings together ;" oral testimony, in the case of land, is not " admissi- ble to supply any defects or omissions in the written evidence ;" in such case r " to give effect to the trust would be, in truth, to repeal the Statute of Frauds." Id., p. 161, citing authorities. So, where A bought land, and, to defraud his creditors, took title in name of B, who was ignorant that this was done, and after A's death B quitclaimed the property to C, a stranger, for no consideration save C's promise that if any of A's heirs should turn up in distress C would help them to the extent of one or two hundred dollars, this promise of C does not constitute a dec- laration of trust to raise any legal or equitable title to the land in A's heirs. This was a suit by the heirs to recover the value of the lots from C. On the facts in the case cited, A had never had any title which he or his heirs could have enforced against B. Robertson v. Sayre, 134 N. Y. 97. It should, however, be added that a formal declaration that certain specified property, held by the declarant, is not his at all, but belongs to a person named, is not defective for indefiniteness. Enough is said to show who is the real owner. Gomn v. de Miranda, 140 N. Y. 474. But such a case must be distin- guished from a mere acknowledgment that money belonging to another has been received and may be withdrawn by the latter at any time. Such a statement, if contemplating not a fund to be held, actually or theoretically, till called for, but a liability 36 CREATION OF EXPRESS TRUSTS. to pay an equivalent sum, sets forth a mere indebtedness for the amount named, and not a trust. Budd v. Walker, 113 N. Y. 637. 75. Summary. Arising out of the distinction between creat- ing and declaring trusts comes this difference : So long as one is seeking only to prove that a trust does exist in real property, he may rely solely on any relevant writings signed by the alleged trustee ; but if he cannot prove its existence by declarations, and seeks by other means to prove specifically the original transfer to the present holder, upon a trust, he must produce a convey- ance (or will) creating it. 1 76. Recording. " A conveyance of real property, within the State, on being duly acknowledged by the person executing the same, or proved as required by this chapter [Real Property Law], and such acknowledgment or proof duly certified when required by this chapter, may be recorded in the office of the clerk of the county [Register in certain counties] where such real estate is situated. Every such conveyance not so recorded is void as against any subsequent purchaser in good faith and for a valuable consideration, from the same vendor, his heirs or de- visees, of the same real property or any portion thereof, whose conveyance is first duly recorded." Real Prop. L., 241. The bearing of this provision on voluntary deeds of trust and declara- tions of trust is illustrated in the following cases : Ten Eyck v. Wiibeck, 135 N. Y. 40 ; Van Epps v. Van Epps, 9 Pai. Ch. 237 (240, 273) ; Smith v. Bowen, 35 K Y. 83 ; White v. Price, 39 Hun, 394 (397) ; aff'd 108 N. Y. 661. As to place of record, see also Real Prop. L., 240, and compare L. 1896, chap. 572, 2. 77. Incorporation by reference. In trusts created by will, the validity of attempted incorporation of other papers, by refer- ring to and identifying them, sometimes comes in question. This topic belongs properly in the general field of the law of 1 Other principles apply in the case of trusts raised by the law, for the pre- vention of fraud, as, for example, where the custodian of funds invests them in land and takes the title in his own name. In such a case the trust would not be an express trust. Ante, 22. PERSONAL PROPERTY. 37 wills. The leading case on the subject is now Booth v. Baptist Church, 126 N. Y. 215, with which compare the cases there cited, and also and particularly Brown v. Clark, 77 N. Y. 369. Also an article by Eugene D. Hawkins, 29 Albany L. J., p. 484. As to references in deeds to outside instruments, see Dupre v. Thompson, 8 Barb. R. 537. A power to appoint a remainder according to directions contained in another paper separate from the will is not valid. Martin v. Pine, 79 Hun, 426 (430) ; Langdon v. Astor's Exr's, 16 N. Y. 26 ; Williams v. Free- man, 83 N. Y. 569 ; Matter of O^ Neil, 91 N. Y. 516. But where the power is created by deed, see Van Cott v. Prentice, 104 N. Y. 45. (b) Personal Property. 78. In general, the distinction between the creation of a trust by transfer of title to another in trust, and the declaration of a trust in property to which the declarant holds the title, is the same, whether the property is real or personal. Accordingly, a number of the cases already cited to illustrate that distinction in reference to real property dealt, in fact, with personal prop- erty. But in one important respect there is a striking difference. For while a trust in real property must be created by deed or conveyance (or will), except that a declaration of trust may be proved by any writing subscribed by the declarant, etc., trusts in personal property may be created or declared by deed ( Westlake v. Wheat, 43 Hun, 77), by will, by any writing, or orally. Oilman v. McArdle, 99 N. Y. 451 ; Barry v. Lambert, 98 N. Y. 300 ; Marie v. Garrison, 13 Abb. N. C. 210, 214, 270, 307 ; Phipard v. Phipard, 55 Hun, 433 ; with which com- pare Von Hesse v. MacKayc, 62 Hun, 463 ; s. c. 136 N. Y. 114 ; Kennedy v. Porter, 109 N. Y. 526 (547) ; Oovin v. de Miranda, 140 N. Y. 474 ; Locke v. F. L. <& T. Co., 140 N. Y. 135 (141) ; Knowlton v. Atkins, 134 N. Y. 313 (314) ; Day v. Roth, 18 N. Y. 448 ; Eirsh v. Auer, 146 N. Y. 13 (19). Accordingly, if a deed under seal is used, the seal is immaterial, and it may be revoked, if the power to re- voke at all exists, by an instrument not under seal. Barnard v. Gantz, 140 N. Y. 249 (258). A debtor may, with the assent of the creditor, declare a trust in a fund in his hands, to 38 CREATION OF EXPRESS TRUSTS. the amount of the debt, and in lieu thereof, and thereupon he becomes not a debtor, but a trustee. Hamer v. Sidway, 124 N. Y. 538 (550). In trusts of personal property, while a written instrument is not required, it is necessary, as in the case of real property, that the statements and facts relied on should show clearly the intent to declare a trust and what that trust is. " It would introduce a dangerous instability of titles if anything less [than proof of intention, beyond a reasonable doubt] was re- quired, or if a voluntary trust inter vivos could be established in the absence of express words, by circumstances capable of an- other construction, or consistent with a different intention." Beaver v. Beaver, 117 N. Y. 421 (428) ; Beeinan v. Beeman, 88 Hun, 14. (4) Delivery. 79. Where title is transferred. In order to effect a vol- untary transfer of title, whether in trust or not, there must be (a} an intent to give, beneficially or in trust (ante, 52), and (b) delivery. If in a given case the requisite intention is estab- lished, then the sufficiency of the donor's acts, as found, to con- stitute legal delivery is a question of law. Trow v. Shannon, 78 N. Y. 446 (452). 80. Under declarations of trust. The foregoing princi- ples apply to voluntary transfers of title from one person to an- other. If a trust is declared, so that the same person who for- merly held, or appeared to hold, in his own right, now avowedly holds in trust, the act has involved and could involve no transfer of title to a third person, except the theoretical transfer from himself as an individual to himself as a trustee ; but the follow- ing principles apply : The intention to declare a trust is essential (ante, 52) ; but no delivery is required. In the nature of the case there can be none. Locke v. F. L. & T. Co., 140 N. Y. 135 (141) ; see Phipard v. Phipard, 55 Hun, 433. The very point is that the same person continues in possession. But the analogous point has been raised whether, if a formal declaration is made, under seal, that declaration itself should not be delivered to some one, like any deed ; or if mere writings are relied on, whether they should not be transmitted to some one or DELIVERY. 89 in some way published. If the declarations are merely oral, no question can be raised, because they must perforce be addressed to some one. A soliloquy would hardly answer. The question just stated would apply to a declaration of trust in personal as well as in real property, if the declaration relied on was in fact in writing. In another form the question is, whether it will suffice to produce a writing sufficient in form, which was re- tained .by the declarant and never in any way published to any one else. In Gomn v. de Miranda, 76 Hun, 414 (419), s. c. 79 Hun, 286, it is said that "in no case has it ever been held as yet that a party may, by transferring his property from one pocket to another, make himself trus- tee. In every case where a trust has been established, the party creating it has placed the evidence thereof in the custody of another, and has thereby shown that it was intended to be a completed act." And the court there held that an instrument which it was assumed would have constituted a sufficient declara- tion of trust, if it had been delivered or placed in the hands of some one else, failed for lack of such delivery. And the court refer to and distinguish the case of Gomn v. de Miranda, 140 N. Y. 474 (where a declaration of trust was upheld although never delivered to any one), as follows : That a distinction exists between cases (of which that last cited is an instance) where the holder of property declares that he is not the owner, but merely holds in trust for the owner (in which case no delivery or other publication of the declaration need be shown), and cases (of which Govin v. de Miranda, 76 Hun, 414, is an instance) where the holder merely declares that he holds in trust, thereby attempt- ing to transfer title from himself individually to himself in trust (in which case it is said that the declaration, if in writing, must be placed in the custody of another in order to effect the change of title). It is believed that this distinction, as concerns the necessity of delivery of a declaration of trust, has not been raised in any other j^ew York case than thart last cited. It would have seemed that as no delivery of the property itself, either actual or constructive, is requisite to the validity of a declaration of trust, and as the declaration is merely evidence as against the declarant, an undelivered or unpublished declaration would still be evidence (of greater or less weight, according to circumstances). It is 40 CREATION OF EXPRESS TRUSTS. clear that no delivery (in a technical sense) is required ; and it is not clear why the particular fact of showing or handing the writ- ten declaration to another person should be adopted as the sole evidence that it was intended to be a completed act. It would have seemed, for example, that a formal acknowledgment before a notary ; or careful retention of the declaration for a long period among valuable and frequently inspected papers ; or a subse- quent endorsement, signed by the declarant, after a long period, that the original declaration had been duly observed by him and was to be carried out, etc., might be some evidence for consid- eration on the question of whether it was a completed and sol- emn act. And such is believed to be the law. 1 81. In testamentary trusts. If a trust is created by will, no delivery of anything is of course required. The death of the owner involves a shifting of title to somebody, and the will desig- nates who that person shall be, and whether he shall take bene- ficially or in trust. 82. Delivery Inter vivos and causa mortis. In exam- ining the cases on the subject of voluntary transfer of title, it is to be noticed that the delivery required to perfect the gift is the same whether it be a gift inter vivos or a gift causa mortis Bedell v. Carll, 33 N. Y. 581 (585) ; Gray v. Barton, 55 N. Y. 68 (72) ; Harris v. Clark, 3 N. Y. 93 (113) ; (for further illus- trations of gifts causa mortis, see Ridden v. Thrall, 125 N. Y. 572 (575) ; Westerlo v. De Witt, 36 N. Y. 340 ; Williams v. Guile, 117 N. Y. 343 ; Caufield v. Davenport, 75 Hun, 541 ; Loucks v. Johnson, 70 Hun, 565 ; Kenney v. Public Adrn., 2 Bradf. 319 ; Merchant v. Merchant, Id., 432 ; Cambreleng v. Graham, 79 Hun, 247 ; Hood v. Cain, 78 Hun, 378 ; Parian v. Wiegel, 76 Hun, 462 ; Bliss v. Fosdick, 86 Hun, 162) ; and also that gifts may be made either directly to a beneficial donee, or to a donee in trust, and in either case the delivery required is of the same nature. Bump v. Pratt, 84 Hun, 201 ; note, 6 Abb. N. C. p. 447 ; Clough v. Clough, 117 Mass. 83 ; Sheedy v. Roach, 124 Mass. 472 (475) ; Loucks v. Johnson, 70 Hun, 565. The author- 1 See the discussion in Martin v. Funk, 75 N. Y. 134 (142). DELIVERY. 41 ities relating to delivery in gifts inter vivos and gifts causa mor- tis, and whether beneficial or in trust, may therefore be consid- ered together, as having an equal bearing on the requisites of delivery in the case of gifts in trust. Where the theory relied on is that of delivery in trust, the delivery must be made to the trustee, or to some person for him, and not to the beneficiary as such. This point would seem to have been overlooked in the discussion of a trust in Durland v. Durland, 83 Hun, 174 (176). After title has actually passed by delivery to a trustee, the mere fact that the property subsequently comes back into the custody of the donor is immaterial. Matter of Wachter, 16 Misc. 137. 83. Delivery, what constitutes The leading principle is, that the delivery " must be such as to vest the donee with the control and dominion of the property [according to its nature], and to absolutely divest the donor of his dominion and control." Jackson v. Twenty-third Street R. Co., 88 N". Y. 520 ; Young v. Young, 80 K Y. 422 ; Montignani v. Blade, 145 N". Y. Ill (126) ; Brink v. Gould, 7 Lans. 425 ; Irish v. Nutting, 47 Barb. 370. Under a general assignment for creditors, see South Dan- gers Nat. Bank v. Stevens, 5 App. Div. 392 ; Bishop on In- solvent Debtors, 3d Ed., pp. 168, 291, 435. Among the cases below cited to illustrate the requisites of de- livery as applied to different forms of property, there are some which it may be difficult to reconcile with recognized principles. But there is one test which will suffice in any given case of vol- untary transfer. For the delivery, actual or constructive, must always be such as to put the donee or grantee (beneficial or in trust) in a position where he needs no help from equity as against the donor, to complete the transfer of title. If the delivery is such as to answer that requisite, it is sufficient to establish a valid transfer. See post, 86, 99 et seq. The nature of the property in question is often such that a physical delivery of the property itself into the hands of the donee is impossible ; in other cases, while possible, it would not be reasonably feasible ; in still others, though delivery of the thing itself be feasible, delivery of something else in its stead may, in accordance with principles to be discussed, be allowed. 42 CREATION OF EXPRESS TRUSTS. Carpenter v. Soule, 88 N. Y. 251 (257) ; Beaver v. Beaver, 117 ]ST. Y. 421 (428) ; McKenzie v. Harrison, 120 N. Y. 261 (265- 266). But in all cases the delivery, to suffice, must be such as to completely transfer the dominion and control of the property, according to its nature, from the donor to the donee. Beaver v. Beaver, 117 N. Y. 421 (429). If the donee, at the time of the gift, already has the custody of the property in question, no physical transfer to him of that property itself is possible or requisite. Mercantile Deposit Co. v. Huntington, 89 Hun, 465. 84. Delivery Real property. The term gift, or gift in trust, commonly refers to personal property, though it is some- times used in relation to voluntary conveyance of land. Adams v. Adams, 21 Wall. 185 (191). Real estate may be conveyed with- out consideration to a volunteer, and if the transaction is com- pleted, so that no further act on the part of the grantor is re- quired to perfect the grantee's dominion, the absence of consid- eration is, as in a gift of personalty, immaterial. In this case, the delivery called for to effect a voluntary transfer is delivery of a conveyance. Compare Adams v. Adams, 21 Wall. 185 (191). A seal, though not essential to entitle an instrument affecting land to record, Grandin v. Hernandez, 29 Hun, 399 (402) ; Todd v. Eighinie, 4 App. Div. 9, is, except in the case of estates less than freehold, Warren v. Leland, 2 Barb. R. 613, essential to the pass- ing of the legal title. Jackson v. Wood, 12 Johns. R. 73 ; Todd v. Eighmie, 4 App. Div. 9. Attention is called to the omission from 208 of the new Real Property Law, of the words relating to a seal in conveyances of a freehold. Execution of a trust deed by both grantor and grantee, and record, raise a presump- tion of delivery, though on the grantor's death it is found among his papers. Bliss v. West, 58 Hun, 71 ; aff'd 132 N. Y. 589. And where the grantor in a trust deed, and also the beneficiary, sign, seal, and acknowledge before a proper officer, who signs as witness a clause reciting delivery, and the grantor records it, these acts may constitute delivery. Adams v. Adams, 21 Wall. 185 ; Rathbun v. llathbun, 6 Barb. R. 98. " If both parties be present, and the usual formalities of execution take place, and the contract is to all appearances consummated, without any con- ditions or qualifications annexed, it is a complete and valid deed." DELIVERY. 43 4 Kent Comm. 456. In Mercantile Deposit Co. v. Huntington, 89 Hun, 465 (470), it is held that where a deed of gift of per- sonal property is found in the possession of the donee, at the donor's death, this raises a presumption of delivery. If a trust deed is once delivered, it is not invalidated by being left in the possession of the grantor. Wallace v. Berdell, 97 N. Y. 13 (22 et seq.}, nor by any subsequent acts indicative of ownership over the property by the grantor. Id., 21-25. Nor are statements made by the creator of a trust, prior or subsequent to its creation, and not part of the res gestce, competent to prejudice the title of the trustee. Truax v. /Slater, 86 N. Y. 630. Nor any omission on the part of the trustee to perform his duties. Wallace v. Berdell, 97 N. Y. 13. Upon delivery, as between the parties, the title passes, and the effect of the delivery cannot be impaired in a suit by subsequent creditors involving merely the question whether the trust was or was not constituted, by any mental reservation or oral condition attached to the delivery by the grantor which would be repug- nant to the terms of the deed. Wallace v. Berdell, 97 N. Y. 13 (24, 25). Delivery of the deed may be made to a third person, on behalf of the trustee, and the trust may thus be constituted, although the trustee knew neither of the delivery of the deed nor of its designation of him as trustee. Adams v. Adams, 21 Wall. 185 (192 and cas. cit.) ; ante, 59. A trust created by deed, or otherwise inter vivos, cannot, as a will may, operate to bring with- in the trust after acquired property of the transf error. Wade v. Holbrook, 2 Iledf. 378. The fact that a deed is recorded is not conclusive of its delivery. Towmend v. Rackham, 143 N. Y. 516 ; Gilbert v. North Amer. Fire Ins. Co., 23 Wend. 43. The delivery of a deed conveying real estate, or an interest therein, or an agreement for the sale thereof, cannot be made to the grantee or other party thereto conditionally, or in escrow, and when delivered to a party, the delivery operates at once and the condition is unavailable. Gilbert v. North American Fire Ins. Co., 23 Wend. 43 ; Worrall v. Munn, 5 N. Y. 229 ; Braham v. Bingham, 26 N. Y. 483 ; Wallace v. Berdcll, 97 N. Y. 13 ; Peo v. Bostwick, 32 N. Y. 445. But the rule is otherwise as to instruments not in any way relating to or affecting real estate, arid not requiring a seal for their validity, and so even though a seal be actually, but unnecessarily, attached. Blewitt v. Boorum, 44 CREATION OF EXPRESS TRUSTS. 142 N. Y. 357. As to mortgages of land, see Matson v. Abbey, 141 N. Y. 179 ; affg 70 Hun, 475. 85. Delivery Tangible chattels. Here the property it- self may be delivered. But to a certain extent the delivery may, even in this case, be constructive. Thus the following acts of the donor have been upheld as sufficient : (a) The owner of property, being present with the donee in the house where it was, and the room where most of it was, pointed out to the donee what was in sight, and said, " 1 give you this property, and all I have bought to-day," and went away and left it in the absolute control of the donee. The house was occupied by the donee and her husband, and they continued to use the property in the same house. Allen v. Cowan, 23 N. Y. 502. (b) A man and woman lived in the same boarding-house, and he maintained and treated her as a daughter, and both had access to the room in which he had a trunk. Being about to go away, and being in another room of the house, he said to her, " My trunk upstairs, and what is in it I give to you ; there is enough in it to take care of you a spell." He went away, and returned in a few days, and occupied the room, and used the trunk and clothes as usual, until he died a short time thereafter. The woman took the trunk and contents after his death, and it then contained a passbook in a savings bank. This was held to be a valid gift, as against the public administrator. Penfield v. Thayer, 2 E. D. Smith, 305 ; cited 23 N. Y. p. 505. See also Cooper v. Burr, 45 Barb. R. 9 (33). These authorities seem somewhat extreme, and there were elements of hardship which may have influenced the deci- sions. The fact that in some sense the donee was in each case in possession at the time of the gift may also have played some part. See also Matter of Wackier, 16 Misc. 137. (c) The question of whether chattels capable of manual delivery may be validly given by delivery of a deed of gift, without de- livery of the chattels, has been much discussed. Professor Arnes, in his " Cases on Trusts," p. 130, says in a note, " A deed of gift of a chattel vests the title in the donee without delivery" (of the chattel), citing many English and several American cases, in- cluding Bunn v. Winthrop, 1 Johns. Ch. 329, and Fulton v. Fulton, 48 Barb, 581 (590). In Bunn v. Winthrop, supra, one DELIVERY. 45 Marston executed and delivered to one Winthrop, as trustee, a deed by which, after granting to the trustee certain premises in trust, he gave to Mrs. Curry " so much of his furniture and house- hold goods, then in his house, as she could think sufficient toward furnishing a house in a genteel style," and all the residue of his furniture and household goods to May Bunn Marston. He con- tinued in possession of the chattels named until his death, three years later. This was held to be a valid gift. In Fulton- v. Ful- ton, 48 Barb. 581 (590), the property in question consisted of promissory notes, and they were delivered ; but the court laid down the general proposition that " where a gift inter vivos is perfected by delivery of possession of the thing, or delivery of a deed of gift, it is complete," etc. This doctrine is assumed as correct in Matter of Clark, 16 Misc. 405 (413), where, however, the deed itself was not delivered, and the donor remained in possession of the chattels. 86. Delivery Stock certificates. (a) Here the certificates themselves may of course be delivered, and should properly be endorsed in the usual form. Transfer on the books of the corpora- tion is not essential to perfect the gift. 1 The assignment, power, and delivery pass the equitable tit leas bet ween the donee and the corporation, and the legal and equitable title as between the donor and donee, and put the donee in a position to compel the corporation to make the transfer. Cushman v. Thayer, 70 N. Y. 365 (371), and cas. cit. ; N. Y. & N. H. R.R. Co. v. Schuyler, 34 N. Y. 30 (80) ; McNeil v. Tenth National Bank, 55 Barb. R. 59 ; 46 N. Y. 325. (b) Delivery of a deed of transfer of a portion of the shares represented by a certificate retained by the donor, the deed containing a power to effect a transfer, passes the equitable title as between donor and donee. It is to be noticed that in this case some further act is required on the part of the donor, if transfer can only be effected on production of the certificate. This form of gift has nevertheless been sustained, in cases of gifts mortis causa, where the further act is to be done not by the donor but by his representatives, and the latter have been held to be trustees for the donee by operation of law 1 Ames' " Cases on Trusts," 3d ed., p. 155, note. 46 CREATION OF EXPRESS TRUSTS. to make the gift effectual. Grymes v. Hone, 49 N. Y. 17 (22). Compare Matter of Crawford, 113 N. Y. 560 (567) ; and see Pennington v. Gittings (Md.), cited and discussed by Professor Ames, " Cases on Trusts," 2d ed.. p. 155, note, and see post, 101. (c) Delivery of certificates of stock without written as- signment or power to transfer is sufficient, though the stock is, by the by-laws, transferable only on the books of the corpora- tion by the registered holder or his attorney. Walsh v. Sexton, 55 Barb. 251 ; Allerton v. Lang, 10 Bosw. 362 ; Midden v. Thrall, 125 N. Y. 572 (577). And here also the representatives of the donor have been held to be trustees for the donee to effect a transfer. Allerton v. Lang, 10 Bosw. 362. See post, 101. (d) Delivery of deed of gift, containing no power to transfer, should, according to Professor Ames (" Cases on Trusts,' 1 p. 155, note), also suffice, but he finds no authorities on the point. ( / / sion of the book as authority to pay, see Gearns v. Bowery 8. B., 135 N. Y. 557 ; Abramowitz v. Citizens' Savings Sank, 17 Misc. 297.) Or he may declare that he holds the same as trus- tee for a designated beneficiary, in which latter case a trust is thereby* created. Matter of Lent, 1 Misc. 264. (b) He may make the deposit in the name of the beneficiary, and deliver the passbook ; title then vests irrevocably in the donee. Matter of Crawford, 113 N. Y. 560 ; Matter of Townsend, 5 Dem. 147. See " Michael Smith for Mary Smith," Smith's Estate, 17 Abb. N. C. 78. In such a case, even delivery of the book has been held not necessary. Matter of George, 1 Con. 241. No- tice subd. g, post, (c) As to a deposit in the joint names of donor and donee, and delivery of the book to the latter, see Mack v. M. & F. Savings Bank, 50 Hun, 477. As to deposit in joint names, with no delivery, but an oral declaration of trust, see Matter of Lent, 1 Misc. 264. But the mere fact of a deposit by A in the name of " A or B," with no delivery of the book to B, does not establish a gift. Matter of Bolin, 136 1ST. Y. 177. (d) A deposit by a husband in the joint names of himself and wife is prima facie a gift to the wife in case she survives. Ro- man C. 0. A. v. Strain, 2 Bradf. 34. Compare Brown v. Brown, 23 Barb. R. 565 ; Young v. Young, 80 N. Y. 422 (431) ; Wortman v. Robinson, 44 Hun, 357 ; aff'd 113 N. Y. 678. So with a deposit payable to the " husband or wife or the survivor." McElroy v. Albany Savgs. Bank, 8 App. Div. 46 ; McElroy v. Nat. Savgs. Bank, 8 App. Div. 192. See also Sanford v. Sanford, 45 N. Y. 723 ; s. c. 58 N. Y. 69 ; Fow- ler v. Butterly, 78 N. Y. 68 (72). (e) A deposit "in trust" for a designated beneficiary may constitute a valid declaration of trust, and place the. title in the depositor as trustee. See particularly the recent case of Cunningham v. Davenport, 147 N". Y. 43, and subd. g, post. Also Macy v. Williams, 55 Hun, 489 ; aff'd 125 N. Y. 767 ; Martin v. Funk, 75 N. Y. 134 ; Boone v. Citizens' Savings Bank, 84 N. Y. 83 (86) ; Mabie v. Bailey, 95 N. Y. 206 ; Willis v. Smyth, 91 N. Y. 48 CREATION OF EXPRESS TRUSTS. 297 ; Scott v. Harleck, 49 Hun, 292 ; Anderson v. Thomp- son, 38 Hun, 394 ; Schluter v. B. &. Bank, 117 N. Y. 125 (129) ; Fowler v. B. S. Bank, 113 K Y. 450 ; Witzel v. Chapin, 3 Bradf. 386 ; Terry v. Bale, 1 Dem. 452 ; Matter of Collyer, 4 Dem. 24 ; Crowe v. Brady, 5 Redf. 1 ; Weaver v. Emigrant, etc., Sav. Bank, 17 Abb. N. C. 82. The test lies in the intent with which the deposit is made. Compare Haux v. Dry Dock Savings Institution, 2 App. Div. 165 with Grafing v. Heilmann, 1 App. Div. 260 ; Millard v. Clark, 80 Hun, 141. (/*) Subsequent declarations of the depositor that he "has given," or present words of gift, such as " 1 hereby give," are ineffectual to constitute a gift without delivery. Hoar v. Hoar, 5 Redf. 637. But where A deposits in his own name the money of B, pursuant to the latter' s request, and on the understanding that it is to be held solely for B, this renders A, by legal con- struction, a trustee. Davis v. Davis, 86 Hun, 400. See also Lowery v. Erskine, 113 N. Y. 52 (58). Delivery of donor's check on a savings bank, payable after his death (invalid gift, see post, 91), and contemporaneous deliver/ of the bank book intended only to assist the donee of the check in secur- ing the money thereafter, the donor reserving the right to inter- est and control of the book, is insufficient. Curry v. Powers, 70 N. Y. 212. So with a deposit by A, in the name of B, where A signed in his own name the request to the bank to receive the deposit and declaration of assent to the by-laws, and the by-laws were such as to give complete dominion to the holder of the book, which was retained by the depositor. Beaver v. Beaver, 117 N. Y. 421 ; s. c. 137 N. Y. 59. Nor could the facts in the Beaver case sustain the transaction as a declaration of trust, for no intent to declare a trust appeared ; for this purpose proof of intent to give does not help out the theory of a declaration, and is, in fact, inconsistent with it. See post, 106. As to invalid gifts of bank deposits, see also Matter of Ward, 2 Redf. 251 ; Orr v. McGregor, 43 Hun, 528. (g) Where one deposits money in a savings bank in his own name "as trustee," or " as guardian, " or " in trust" for another person designated, the form of the deposit does not conclusively establish a trust. The rule in such a case is that even if the depositor re- tains the bank book, and gives no notice to the beneficiary, DELIVERY. 49 yet if the depositor dies before the beneficiary, leaving the trust^ account open and unexplained, a trust is established. If the intent can be strengthened by acts and declarations of the de positor in his lifetime, amounting to publication of his intent, a more satisfactory case is made out ; but this is not absolutely es- sential, in the absence of explanation, where he dies leaving the trust account existing. But while the depositor is alive he may deny his intention to create a trust or to give the money to the person named, and may thus frustrate any attempt, based on the mere form of the deposit, to fasten a trust upon it, even though he offer no explanation of his reasons for opening the deposit in the form adopted. And he may, even after the death of the person named, have the deposit transferred to his own name. Cunningham v. Davenport, 147 N. Y. 43. Compare Hyde v. Kitchen, 69 Hun, 280. The same principle applies where one makes a deposit directly in the name of another, except that there the form of deposit might be weaker evidence of intent to create a trust or make a gift, even where the depositor dies first, leaving the account unexplained, than where the deposit assumed in terms the form of a trust. Cunningham v. Davenport, supra, p. 47. And even where the tiust form is adopted, and the trus- tee dies first, evidence of contemporaneous facts and circum- stances constituting res gestce, may be admitted to show that the real motive of the depositor was not to create a trust. Id., and Haux v. Dry Dock Savings Institution, 2 App. Div. 165 ; Hyde v. Kitchen, 69 Hun, 280. Compare the case of a deposit by A in tjie name of B " subject to the control of A." Mil- lard v. Clark, 80 Hun, 141. And even if a trust is thus in fact created, evidence is admissible to show that the beneficiary duly accepted other property from the trustee in lien of such deposit, though the deposit still stood in form as in trust. See 0' Brien v. Weiler, 68 Hun, 64, aff'd 140 N. Y. 281. 88. Delivery Certificates of deposit. The fund repre- sented may be given by delivery of the certificate, either endorsed, Westerlo v. De Witt, 36 N. Y. 340 (345) ; or unendorsed. Mat- ter of Hall, 16 Misc. 174. See Kurtz v. Smither, 1 Dem. 399. And so a fund belonging to A, placed in the hands of B, an in- dividual, for custody and investment, represented by B's receipt 4 50 CREATION OF EXPRESS TRUSTS. held by A, may be given to B. its custodian, by delivery to him of his own receipt. Champney v. Blanchard, 39 N. Y. 111. See also Professor Ames's note, " Cases on Trusts," 2d ed., p. 156. 89. Delivery Insurance policies. Compare Olmstead v. Keyes, 85 N. Y. 593 ; Whitehead v. N. Y. Life Ins. Co., 102 N. Y. 143 ; Geoffroy v. Gilbert, 5 App. Div. 98 ; Bickerton v. Jaques, 28 Hun, 119 ; Ruppert v. U. M. I. Co., 7 Robt. 155 ; McCord v. Noyes, 3 Bradf. 139 ; Garner v. Germania L. I. Co., 110 N". Y. 266 ; and note, 17 Abb. N. C. p. 21. Fow- ler v. Butterly, 78 N. Y. 68 ; Lowery v. Erskine, 113 N. Y. 52 ; Ames's " Cases on Trusts," 2d ed., p. 139, note. As- signment by the person insured in his own name of the pay- ment to become due at his death, may be effected by a de- livery of a written instrument under seal. Matson v. Abbey, 70 Hun, 475 (477) ; affi'd 141 N. Y. 179. If A takes out a policy payable to B, in trust for C, and delivers it to B, he can- not thereafter have the company insert a new trustee. Butler v. State M. L. A. Co., 55 Hun, 296 ; aJFd 125 N. Y. 769. ' 90. Delivery Other choses in action. If represented or embodied in written instruments, as bonds, promissory notes, etc., they maybe given by manual delivery thereof, even though neither endorsed nor assigned in writing ; thus : Bond and mortgage. Westerlo v. De Witt, 36 N. Y. 340 (345) ; Hackney v. Vroornan, 62 Barb. 650. And a gift of the bond (or note) carries the mortgage. Green v. Hart, 1 Johns. R. 580 ; Runyan v. Mersereau, 11 Johns. R. 534 ; Thomas v. Fuller, 68 Hun, 361. And in Caufield v. Davenport, 75 Hun, 541, it is held that if the intent is proved, a delivery of the mortgage (the in- cident) will carry the bond (the principal), distinguishing Mer- ritt v. Bartholick, 36 N. Y. 44. Judgment. Mack v. Mack, 3 Hun, 323. Promissory note of a third party. Westerlo v. DeWitt, 36 N. Y. 340 (345) ; Bedell v. Carll, 33 N. Y. 581 ; Fulton v. Fulton, 48 Barb. 581 (592.) In Thomas v. Fuller, 1 As to creation of a trust by an infant beneficiary under a policy, in the proceeds to be received upon the death of the insured, see the peculiar case of Levin v. Ritz, 17 Misc. 737. DELIVERY. 51 68 Hun, 361, the donor held the note of a third party, which the donee had assumed and agreed to pay, and to secure which the donee had executed and delivered to the donor a mortgage on land. It was held that a delivery of the note to the donee as a gift also discharged the mortgage. Also Langworthy v. Crissey, 10 Misc. 450, and cases there cited. Lottery ticket. Grangiac v. Arden, 10 Johns. R 293. Bonds. Trow v. /Shannon, 78 N. Y. 446. When invalid. Young v. Young, 80 N. Y. 422. But the mere registration of bonds by the owner in the name of another, without delivery, is insufficient. Matter of Crawford, 113 N. Y. 560. In Young v. Young, 80 N. Y. 422 (440) there is a bare suggestion that a remainder in a chattel might per- haps be created and given by the donor's carving out a life estate for himself and transferring the remainder to Ihe donee directly by delivery of a deed of gift, and this suggestion seems to meet with a certain degree of approval in Durland v. Durland, 83 Hun, 174. Compare Matter of Wirt, 5 Dem. 179. If the chose in action is not represented by a tangible evidence of ownership, as the right of a depositor to draw against a bank of deposit, a debt owing from the donee to the donor, a contingent estate in expectancy (Ham v. Van Orden, 84 N. Y. 257 [269, 270]), etc., other forms of delivery must of course be permitted. " It is upon legal and equitable principle clear that a person sui juris acting freely, fairly, and with sufficient knowledge ought to have, and has it in his power to make, in a binding and effec- tual manner, a voluntary gift of any part of his property, whether capable or incapable of manual delivery, whether in possession or reversionary, or howsoever circumstanced." Kekewich v. Manning, 1 DeG. M. & G. 187 ; Biker v. Curtis, 17 Misc. 134 (136) and cases cited. Thus : Debts. A creditor may make a gift to the debtor of the claim by delivering a receipt (Gray v. Barton, 55 N. Y. 68 ; Beaver v.' Beaver, 117 N. Y. 421 (428, 429), or by endorsing, upon a contract binding the donee to pay money to the donor, a receipt (Ferry v. Stephens, 66 N. Y. 321) ; or, it has been held, by directions to a book-keeper, to credit the debtor on the creditor's books, a loose memorandum to that effect, and notice to the debtor (see Maclay v. Robinson, 91 Hun, 630) ; or a mortgagee may give to the mortgagor even a part of 52 CREATION OF EXPRESS TRUSTS. the debt represented by the mortgage by delivering a receipt for that amount to the mortgagor (Carpenter v. Soule, 88 N. Y. 251) ; or by delivering a duly executed release. Kennedy v. Strobel, 77 Hun, 96. So where A holds funds belonging to B, the lat- ter may give them to A by delivering a receipt. So if a cred- itor procure a note from the debtor payable to a third party, and deliver it to the latter, Reed v. Heed, 52 N. Y. 651, it is a valid gift ; so if he take the note payable to himself and the donee jointly, the presumption is that donor intends the donee to have the note after donee's death. Sanford v. Sanfoi'd, 45 N. Y. 723 (doubted 2 Kedf. 254-, but cited 113 N. Y. 58, and dictum to the same effect 55 N. Y. 630). Ante, 87 (c) and (d). In Brown v. Blackman, 71 Hun, 356, where a father bought a bond and mortgage, and took the assignment in the name of his daughter and had it recorded ; and delivered the bond, mort- gage, and assignment to a third party to hold under a revocable trust for the daughter ; and later took from the daughter a receipt for the amount of the mortgage, in satisfaction of the proposed trust, it was held that this constituted a gift to the daughter of the bond and mortgage, the assignment of which stood recorded in her name. It will be seen that the father delivered nothing at all to the daughter directly. The decision might be supported on the theory that such delivery was unnecessary because the re- corded assignment already stood in the daughter's name, and de- li very had already been made to the trustee for her benefit ; and that the taking of the receipt, which accepted the gift in lieu of the trust provision, abrogated the trust and left the bond and mortgage in the custody of the third party as a mere holder thereof on behalf of the donee. 91. Deposits in bank. Delivery of donor's own check on a bank of deposit, payable at a future day, does not per se per- fect a gift. Curry v. Powers, 70 N. Y. 212 ; Matter of Smither, 30 Hun, 632 ; Harris v. Clark, 3 N. Y. 93 (110). 'Though if accepted it would be binding on the maker. Id. But as to a gift of a check and an oral assignment to the donee of the por- tion of the fund represented, see Itisley v. Phenix Bank, 83 N. Y. 318 ; Alger v. Scott, 54 N. Y. 14 ; and dissenting opin- ion of Earl, C. ; Pickslay v. Starr, 149 N. Y. 432 (438) ; BriU v. DELIVERY. 53 Tuttle, 81 N. Y. 454 ; Tollman v. Hoey, 89 N. Y. 537. ' In Pickslay v. Starr, 149 N. Y. 432 (438) it is said that the delivery of donor's own check completes the gift inter paries ; but there it had in fact been cashed by the donee. Compare Dinley v. McCullagh, 92 Hun, 454. As to gift of a check drawn by a third party, see Matter of James, 146 N. Y. 78 (95). Other methods of delivery may sometimes suffice, as of bonds, by placing them in a locked box, affixing the name of the donee, giving to the donee the key, and depositing the box in a bank ; semble, if intent to give is shown. Shuttleworth v. Winter, 55 N. Y. 624. And all choses in action may, it seems, be given by delivery of a deed of gift, Matson v. Abbey, 70 Hun, 475 (477) ; aff'd 141 N. Y. 179 ; Wade v. Holbrook, 2 Redf. 378. See Mercantile Deposit Co. v. Huntington, 89 Hun, 465. Thus, four sums of money were owing to one who assigned them by deed with power to sue for the debts and give receipts. A schedule enumerated the debts, names of debtors, and dates of four bills of sale held as security. The deed contained no ex- press assignment of the bills of sale or the goods conveyed by them, and nothing but the deed was delivered. This was held a good gift as against donor's executors, who had meanwhile col- lected ; as to the liability of the donor, if living, quaere. In re Patrick, L. R. (1891) 1 Ch. 82. See also Grymes v. Hone, 49 N. Y. 17 (22) ; and^, 101. 92. Invalid delivery is illustrated in the following cases re- lating to bond and mortgage : Matter of Wirt, 5 Dem. 179 ; carriage, horses, furniture : Delmotte v. Taylor, 1 Redf. 417 ; Huntington v. Gilmore, 14 Barb. 243. Delivery of the donor's own note as an executory gift is invalid. Harris v. Clark, 3 N. Y. 93 (113) ; Fink v. Cox, 18 Johns. R. 145 ; Holmes v. Eoper, 141 JST. Y. 64. 1 In connection with these and other cases cited, the distinction is to be ob- served between a voluntary equitable assignment, made by one possessing the legal title, and insufficient to transfer the dominion (Tollman v. Hoey, supra, ; Alger v. Scott, 54 N. Y. 14), and a voluntary assignment by one who holds only an equitable title, but gives all he has so as to transfer to the donee the same dominion, according to the nature of the title, and as against third par- ties, which he himself had (Kekewich v. Manning, 1 Deg., M. & G. 176, 199 ; Ham v. Van Orden, 84 N. Y. 257 ; Ridden v. Thrall, 125 N. Y. 572, 577). 54 CREATION OF EXPRESS TRUSTS. 93. Delivery to third person for the donee is sufficient. Moir v. Brown, 14 Barb. R. 39 (44, 45) ; Gilchrist v. Steven- son, 9 Barb. R. 9 (13) ; Hunter v. Hunter, 19 Barb. R. 631 ; Matter of Hall, 16 Misc. 174 ; and thereupon goes into effect, though the donor die before delivery to the donee personally. Matter of Hall, 16 Misc. 174 (180), and cases cited. And de- livery may be made by an agent of the owner. But in such a case the owner is not bound by the terms of a receipt taken with- out authority by the agent. Thus, where A intended to deposit property with B, reserving his own control and power to resume, but proposing, in case of financial disaster, that it should then be held in trust for A's children ; and A's agent, in delivering to B, took back a receipt stating merely that the property was held in trust for A's children, it was held that this did not create a trust as against A. Meigys v. Meiggs, 15 Hun, 453. 94. Donor's admission of delivery is admissible to prove the nature of the acts in question. Grangiac v. Arden, 10 Johns. R. 293 ; Matter of Wackier, 16 Misc. 137 ; but is re- buttable, Hoar v. Hoar, 5 Redf. 637. 95. Acceptance by the donee is essential, but is presumed if beneficial. Beaver v. Beaver, 117 N. Y. 421 (429) ; Matson y. Abbey, 70 Hun, 475 ; aff'd 141 N. Y. 179. Acceptance by a trustee may be inferred from his conduct. Green v. Green, 4 Redf. 357. 96. Notice by trustee to debtor. If a claim is assigned in trust, the trustee, in order to protect his right to collect, must notify the debtor of the assignment. Heermans v, Ellsworth, 64 N. Y. 159. (5) Consideration. 97. Introductory. If an owner of property, real or per- sonal, wishes to part with his interest in it, he may adopt any one of four methods (Milroy v. Lord, 4 DeG. F., and J. 264 [besides a disposition by will] ) : (a) He may sell it to a purchaser for value. This case may or may not involve a trust. West- CONSIDERATION. 55 lake v. Wheat, 43 Hun, 77 (80). Bispham on Equity, 66. For ordinarily, when property is sold, it is transferred to the purchaser as beneficial owner ; but if desired, the seller may, in- stead of transferring it to the purchaser, declare that he holds it in trust for a designated beneficiary, or may transfer it to the purchaser in trust for another ; or to some other person in trust for the purchaser or a third party, etc. But the distin- guishing feature of this class is the payment of a valuable con- sideration, (b) He may transfer it, without consideration, direct- ly to a donee as a gift, (c) He may transfer it, without consid- eration, to a donee in trust for the benefit of a third party. (d) He may, without consideration, declare that he 'himself holds it in trust. In all these cases, one essential element in the devolution of ownership is an intent to sell (or exchange), to give, or to create, or declare a trust, as the case may be ; a sec- ond essential is, in declarations of trust, an unequivocal and final declaration (Barry v. Lambert, 98 N. Y. 300 [306 and cas. cit.]), or in all the other cases a delivery. 1 The first of the four classes just mentioned involves a valuable consideration. The last three are, as the term is, voluntary. In all cases of trusts, if the transfer or declaration is such as to intentionally and completely divest the transferror individually of dominion over the property, and to vest the absolute domin- ion in the transferree, or (in the case of a declaration of trust) in the declarant as trustee, then the transaction is complete and valid regardless of the absence of consideration. For the fact that a gift, or gift in trust, or declaration of trust, whether of real or personal property, if otherwise complete, is " voluntary," and without consideration, has, in the absence of fraud, no effect on its validity. Baird v. Baird, 145 N. Y. 659 (666) ; Van Cott v. Prentice, 104 N. Y. 45 (52) ; Bliss v. West, 58 Hun, 71 (75) ; aff'd 132 N. Y. 589 ; Young v. Young, 80 N. Y. 422 (437) ; Young v. Heermans, 66 N. Y. 374 (381) ; Locke v. F. L. & T. Co., 140 E. Y. 135 (141) ; Dygert v. Remerschnider, 32 N. Y. 629 (650). Compare Fellows v. Heermans, 4 Laris. 230 (241). 1 See, however, the cases where a note is taken, or deposit made, etc , in the joint names of donor and donee, and there is no delivery. Ante, % 87 (c) and (d). 56 CREATION OF EXPRESS TRUSTS. 98. Declarations of trust. In reference to declarations of trust, it is true that the Court of Appeals, in Day v. Roth, 18 N. Y. 448 (453), said that " a person in the legal possession of money or property, acknowledging a trust, becomes from that time a trustee, if the acknowledgment is founded on a valuable or meritorious consideration." And the same dictum is to be found in other cases. Chapman v. Porter, 69 N. Y. 276 (279) ; Kennedy v. Porter, 109 N. Y. 526 (547). But Taylor v. Kelly, 5 Hun, 115, and Westlake v. Wheat, 43 Hun, 77, proceed on the theory that no consideration is required to establish a declaration of trust if otherwise complete. The very numerous New York cases relating to deposits by one person, in a savings bank, of his own money, in his own name, " in trust" for another, and sup- porting them as valid declarations of trust, if so intended, lead inevitably to the same conclusion and appear to establish it as a general doctrine beyond controversy. Martin v. Funk, 75 N. Y. 134, and cases cited, ante, 87. The text writers all unite in laying down the same principle that the only question is whether the declaration has in other respects been completed with full intent, and as a final disposition ; and that if so, the absence of consideration is immaterial. 1 Lewin on Trusts, pp. 67, 68 ; Underhill on Trusts, 43 ; 1 Perry on Trusts, 96. And Pro- fessor Ames, in his " Cases on Trusts," p. 125, cites more than forty English and American cases to the same effect. There can be no doubt of the soundness of the doctrine, and the dicta above mentioned are probably to be understood to refer to the fact that neither transfers nor declarations, if defective, can be rendered perfect or enforced as against the alleged creator or declarant, unless based on consideration. Post, 99. See also 1 Am. Law Mag. 96. 99. Defective transfer Consideration. For it may chance that the transfer or declaration, though intended to be effectual, is legally defective in some particular, or is purely executory, so that the complete dominion over the property involved has not in fact been shifted or the trust capacity has not been actually assumed, as proposed, and the transferror or declarant may refuse to remedy the defect or render the gift executed. In such a contingency the bearing of the presence or absence of considera- CONSIDERATION". 57 tion upon the right of the transferee or beneficiary to compel the transferror or declarant to remedy the defect becomes of vital consequence. For such relief must, of course, be sought in equity. And it is well established that equity will grant such relief against the owner in favor of those only who have given a consideration and not in favor of mere volunteers. 1 Perry on Trusts, 100 ; Bispham on Equity, 66. Warriner v. Rogers, L. R. 16 Eq. 340 (348). The reason of the rule is this : that if the owner has chosen legally to divest himself of personal dominion over the property, even without consideration, or to finally and formally acknowl- edge that he holds in trust, the other party, in the nature of the case, has no need to call on equity to compel the owner to do anything further to complete the transaction ; on the facts as- sumed the owner has already done all necessary acts, and the transaction, so far as he is concerned, is closed, and his beneficial interest is gone. But if some essential act on his part has been omitted, the result is that, no matter what his intention was, he has not divested himself of dominion or beneficial interest ; and if no consideration has passed, he is still owner in all senses as much as he ever was. His defective attempt to transfer or to declare a trust is of no more force than a voluntary executory promise to give (2 Blackst. Comm., 441, 442) ; and if equity were to com- pel him to complete the defective transfer or declaration, or carry out his promise, it would be forcibly taking away from him his own property and giving it to another. In other words, in a vol- untary transfer or declaration of trust, unless everything is done, nothing is done. Young v. Young, 80 N. Y. 422 (437). But if a consideration has been given, the case is different, for here he is only compelled to rectify his own failure to perfect the dominion of the purchaser, who has, by payment, and by the de- fective transfer, become equitably entitled to full control. Young v. Young, SO N". Y. 422 (437). In the peculiar case of Bucklin v. Bucklin, 1 Abb. Ct. App. Dec. 242, it is held that a mortgage voluntarily given to a trustee, as mortgagee in trust, is executed, and that a resort to equity to foreclose it does not in- volve any attempt to complete the gift, but merely calls for as- sistance in cutting off the mortgagor's right of redemption. See post, J03. 58 CREATION OF EXPRESS TRUSTS. The principles already discussed apply to the case of an execu- tory promise, enforcement of which is sought at law, as in the case of a donor's promissory note transferred to the promisee without consideration. The donee cannot maintain a suit there- on, as the note constitutes a mere promise not binding in law. Harris v. Clark, 3 N. Y. 93 (113) ; Fink v. Cox, 18 Johns. K. 145 ; Holmes v. Roper, 141 N. Y. 64. 100. First exception. An apparent exception exists in the case of a parol gift of land, where the donee, on the faith of the gift, enters into possession and makes substantial and permanent improvements. Here equity will sustain the title of the donee, as if based upon a valuable consideration ; and this is so even though the rents received by the donee while in possession ex- ceed his entire outlay. Young v. Overbaugh, 145 N. Y. 158. In that case, however, the action was in ejectment against the donee in possession ; in other words, it was not a case where the donee was resorting to equity to secure aid in perfecting a defec- tive gift. 101. Second exception. Another exception, or, rather, a case lying outside the principles above stated, exists where the transf error has done all that he needs to do or can do to make the transfer perfect, and has parted with his dominion ; but there still remains something to be done by a third party before the transferree is established in all respects in the position of an owner with full possession and control in his own name. In such a case the donee may have to resort to equity for relief, not against the transferror, because there is nothing more for him to do, but against the third party. The fact that such a resort to equity is necessary does not indicate that the transfer is incomplete as be- tween the two original parties, and accordingly the presence or absence of consideration is immaterial. Pearson v. Amicable Co., 27 Beav. 229 ; an extract from the opinion of Lord Romilly being given in Ames's " Cases on Trusts, " p. 139, note. " Where there is a contract only, or an imperfect gift, which requires some other act to complete it on the part of the assignor or donor, the court will not interfere to require anything else to be done by him. The intermediate cases alone are difficult of solution. CONSIDERATION. 50 The question is in every case, has there been a declaration of trust, or has the assignor performed such acts that the donee can take advantage of them without requiring any further act to be done by the assignor ; and, if the title is so far complete that this Court is not called upon to act against the assignor, it will assist the donee in obtaining the property from any person who would be treated as a trustee for him." Donaldson v. Donaldson, Kay, 711 (718). Thus, "in the case of an assignment of the equitable interest in stock standing in the names of trustees, the deed of assignment passes the whole equitable interest of the donor, and the donee may go with that deed to the trustees, and say, transfer to me the interest in this sum of stock ; and I think that in such a case it would not even be necessary to make the donor a party to a suit to enforce the gift," Jet., p. 719, the opinion being given in full in Ames's "Cases on Trusts," p. 147 ; where Ham v. Van Or den, 84 N. Y. 257, and Johnson v. Williams, 63 How. Pr. 233, are cited to the same point. In Cushman v. Thayer Mfg. Co., 76 N". Y. 365, 1he owner of cor- poration stock gave it to B, by delivering the certificate bearing an assignment and power to transfer on the books. The court sustained a suit by B against the corporation to compel it to transfer the stock to B and issue a new certificate. " That the transfer was without a moneyed consideration can make no dif- ference, as it was otherwise valid. . . . The delivery of the cer- tificate as between the owner and assignee, with the assignment and power endorsed, passes the entire legal and equitable title in the stock. ..." Id. pp. 370 371. There are a few cases where the courts have sustained an action by a donee against the executors of a deceased donor, to compel them to do some act to complete his legal title or to aid in its enforcement. Thus, in Grymes v. Hone, 49 N. Y. 17, where the owner of stock executed and delivered a deed of assignment of it, with a full power of attorney to effect a transfer on the books, but died without delivering the certificate, it was held that the donee might maintain an action against the donor's repre- sentatives to compel the production of the certificate and the transfer of the stock on the company's books. Compare this case with the overruled case of Richardson v. Richardson^ L. R. 3 Eq. 686, where the owner of certain promissory notes attempt- 60 CREATION OF EXPRESS TRUSTS. ed to transfer them by an assignment, sealed and delivered, but did not endorse them, and apparently did not deliver them. This was sustained on the theory of a valid declaration of trust. But that theory and decision are erroneous. Young v. Young, SO N. Y. 422 (439). In Allerton v. Lang, 10 Bosw. 362, where the donor delivered a stock certificate, but without written assign- ment or power of attorney, a suit similar to that in Grymes v. Hone, supra, was entertained ; this Allerton case is cited with approval in Ridden v. Thrall, 125 N. Y. 572 (577), where the court say : " The general rule in England and in this country, and particularly in this State, is that any delivery of property which transfers to the donee either the legal or the equitable title is sufficient to effectuate a gift ; and hence it has been held that the mere delivery of non- negotiable notes, bonds, mortgages, or certificates of stock is sufficient to effectuate a gift, >5 citing also, among other cases, Walsh v. Sexton, 55 Barb. R. 251. Such a delivery would undoubted!}' authorize an action against the corporation to compel a transfer. There is no doubt some lack of agreement among the earlier cases as to just what is needed to complete the gift (absolute or in trust), but there can be no doubt that it is now the settled doctrine that no suit can be sustained in equity against the donor or those who merely stand in his shoes to enforce the perform- ance of any act requisite to complete the title, which the donor could and should have done at the time of the original transfer. This principle sustains all transfers of equitable titles where the donee is thereby put in a position to enforce his rights without proceeding in equity to compel further acts on the part of the donor (Perry on Trusts, 68, 102), and would sustain the re- marks quoted from Ridden v. Thrall, supra, in their full scope. Thus, if the holder of a note drawn to his order by a third person delivers it, without endorsement, to a donee, the latter, though taking only an equitable title, may sue the maker of the note at law. Westerlo v. De Witt, 36 N. Y. 340 (345) ; Van Riper v. Baldwin, 19 Hun, 344 ; aff d 85 N. Y. 618. This principle is also harmonious with Kekewich v. Manning, 1 De G., M. & G. 176 (199), where the owner of an equitable future interest transferred it, thereby transferring all she had an CONSIDERATION. 61 equitable title. Afterward, coming into the legal title, she was held to be a trustee thereof for the donee. In cases not falling within the scope of these exceptions, and where the transfer is defective, the presence or absence of con- sideration is controlling on the question of equitable relief against the transferror to make the gift complete. 102. " Valuable " and "good" consideration. It is, therefore, necessary, in cases of defective transfer or declaration, to determine what sort of consideration it is that will entitle the other party to relief in equity as against the transferror or de- clarant, to compel him to cure the defects. This must be valu- able, as distinguished from good or meritorious consideration. For example, if one makes a defective gift to his own child, or a defective voluntary transfer to a trustee, or a defective voluntary declaration of trust for its benefit, the donee has no more stand- ing in equity to compel him to duly complete the gift or con- stitute the trust than a stranger would. Matter of James, 146 N. Y. 78 (94) ; Whtidkerv. Wkitaker, 52 N. Y. 3G8. The prin- ciple is the same, whether the case is one of a mere executory promise, or an attempted transfer or declaration intended to operate in presenti, but failing through some defect. " It has been said that there are exceptions, and that they stand upon special grounds, such as the interference of courts of equity in favor of settlements upon a wife and child for whom the party is under a natural and moral obligation to provide. But although the doctrine in favor of such exceptions has been maintained by highly respectable authorities, yet it must be now deemed entirely overthrown by the weight of more recent adjudication, in which it has been declared that the court will not execute a voluntary contract, and that the principle of the court to with- hold its assistance from a volunteer applies equally whether he seeks to have the benefit of a contract, a covenant, or a settle- ment." Story, Eq. Jur. 433. Fink v. Cox, 18 Johns. R. 145, andcas. cit. ; Je/erysv.Jefferys, 1 Or. & Ph. 138 (141) ; Hollo- way v. Headington, 8 Sim. 324. " The same rule is applied to imperfect gifts not testamentary, inter vivos, to imperfect voluntary assignments of debts and other property, to voluntary executory trusts, and to voluntary 62 CREATION OF EXPRESS TRUSTS. defective conveyances." Story, Eq. Jur., 793 #, >/ 987. Antrdbus v. Smith, 12 Yes. 39 (43). Thus, in Duvoll v. Wil- son, 9 Barb. R. 487, an owner, in consideration of natural love and affection, executed a deed which contained a covenant against incumbrances. In fact, the premises were subject to a mortgage. It was held that the grantees could not maintain an action against the grantor to compel payment of the mortgage. The distinction taken was that the consideration was sufficient to support a deed or executed contract, but did not render obliga- tory a promise, executory agreement, or covenant. In Dillon v. Coppin, 4 Myl. & Craig, 647, a father, by deed, had con- veyed certain freehold estates, for the benefit of his daughter, and by the same deed also transferred certain East India stock, and shares in an insurance company. By the East India charter, stock could only be transferred by an entry in the books in a par- ticular form ; and the shares in the insurance company were also, by the articles of the company, to be transferred at the office of the company only. A bill was filed, after the father's death, by some of his children to set aside the deed, so far as it purported to convey the East India and insurance stock. The transfer of the stock by the deed was held defective, and the deed in that regard inoperative and void, the consideration of love and affec- tion not being such as in equity to cure the defect found. Bis- pbam, in his " Principles of Equity," says, 69 : "It was de- cided by Sugden, when Lord Chancellor of Ireland, that the meritorious consideration of blood was sufficient to set the court in motion for the purpose of enforcing an executory trust. But this decision was not followed in England ; and the doctrine must be considered as settled the other way, so far as that coun- try is concerned. ... In New York there is a dictum that a meritorious consideration would be sufficient" (citing Hayes v. Kerahow, 1 Saridf. Ch. 261) ; but that case was criticised and disapproved in Duvoll v. Wilson, 9 Barb. R. 487 (492), and the contrary doctrine is now well established. Matter of James, 146 N. Y. 78 (94). In Re Breton 'g Estate, L. R. 17 Chan. Div. 416, Breton, intending to give his wife certain furniture, plate, etc., on several occasions handed her papers describing the same, and stating that he " hereby" gave them to her. It was held that the gifts were defective for want of delivery. " But in CONSIDERATION. 63 truth, . . . whether a wife or a stranger be the object of the gift, it is manifest from the transaction, taken by itself, that the alleged donor was mistaken as regards the proper and legal mode of effectuating that which he intended to do." In Price v. Price, 14 Beav. 598, the court says : "It is true that Lord Thurlow, in Colman v. Sarrel, 1 Ves. Jr. 50, says : ' Whenever you come into equity to raise an interest by way of trust, there must be a valuable consideration, or, at least, what a court of equity calls a meritorious consideration, such as payment of debts or making provision for a wife or child.' This, if taken literally, is, I think, inaccurately stated, because, if the relation of trustee and cestui que trust be clearly established, the court will act upon it, although there was no consideration at all ; but if it be meant by this passage that instruments import- ing a gift are considered in a different point of view when there is a meritorious consideration than when there is none at all, or, in other words, that a voluntary gift by a man to his creditors or to his wife or child is to be regarded on different principles from one to a stranger, I am unable to discover on what principle such a proposition can properly rest ; nor can 1 find it supported by any of the decided cases." In Lewin on Trusts, 3d ed. p. 95 et seq., quoted in 1 Perry on Trusts, 4th ed. p. 109 et seq., note, it is said that " It is clear that an agreement founded on meritorious consideration will not be executed as against the settlor himself. Antrobus v. Smith, 12 Ves. 39. Indeed, relief in such a case would offend against the security of property ; for if a man im- providently bind himself by a complete alienation, the court will not unloose the fetters he hath put upon himself, but he must lie down under his own folly. Villers v. Beaumont, 1 Yern. 101. But if the court interpose where the act is left incomplete, what is it but to wrest property from a person who has not legally parted with it ? Another observation that suggests itself is, that during the life of the settlor the ground of the meritorious con- sideration scarcely seems to apply," etc. This doctrine is well settled in New York. Young v. Young, 80 N. Y. 422 (437) ; Matter of James, supra Whitaker v. "Whitaker, supra / Du- voll v. Wilson, supra. Of course, if " marriage" is relied on as consideration, there is an important distinction between an existing marriage relation, 64 CREATION OF EXPRESS TRUSTS. which is insufficient in the present connection, and the procuring of a marriage by the grantor with the grantee, in reliance upon the attempted or promised transfer. Here the proposed trans- ferree, having married the proposed grantor on the faith of his undertaking, can compel the completion of it. De Barante v. Gott, 6 Barb. R. 492 ; Johnston v. Spicer, 107 N. Y. 185. And on the general subject see an article on " Formation and Validity of Voluntary Trusts," by Simon Greenleaf Croswell, in 18 Am. L. Rev. 379. It has been suggested that a defective voluntary trust might stand upon a different footing from a defective voluntary gift, in that the acceptance of the trust by the trustee might serve as a consideration. But, as already seen, no such distinction is recog- nized by the courts. Anthony v. Harrison, 14 Hun, 198 (215), aff'd 74 N. Y. 613 ; Cotton v. Graham, 2 So. West Rep. 647 ; Dening v. Ware, 22 Beav. 184 ; Tatham v. Vernon, 29 Beav. 604. 103. Defective transfer Seal. If a conveyance inter vivos is relied on to prove the creation of a trust in real property, the seal has heretofore of course been essential to the passing of legal title. 1 R. S. 738, 137 ; L. 1892, chap. 677, 13. Todd v. Eighmie, 4 App. Div. 9. (As to this, notice Real Prop. L., 208, which went into effect October 1st, 1896, and which omits the reference to a seal which was found in the former law.) And its absence, when required at all, would appear to constitute such a defect, in the case of a voluntary transfer, as to preclude any assistance from equity to perfect it. See Wendell v. Wads- worth, 20 Johns. R. 659 (662) ; Grandin v. Hernandez, 29 Hun, 399 ; Todd v. Union Dime Savings Inst., (20 Abb. N. C. 270, note), 118 JST. Y. 337, s. c. 128 *N. Y. 636. But if a seal, whether in the given case requisite or not, is in fact present, but the transaction is in other respects defective, it remains to be considered whether the presence of the seal on the instrument is so far conclusive of the receipt of consideration by the transf error as to entitle the transferree to relief in equity against the trans- ferror, under the principles already discussed. At common law, the general rule was that a seal was conclusive evidence of con- sideration. 1 Anthony v. Harrison, 14 Hun, 198, aff'd74N. Y. 1 " It has often been said that a seal imports a consideration, as if a consid- CONSIDERATION. 65 613. The New York Revised Statutes (2 R. S. 406, 77) modified this rule to some extent by making a seal upon an in- strument presumptive evidence of a consideration in a suit (or counterclaim) based thereon. See the summary of this section in the " Appendix" submitted to the Legislature in January, 1876, by the commissioners to revise the statutes, as printed in Throop's Code, edition of 1879, p. 734. In 1877 this provision was further modified, and appeared as 840 of the Code of Civil Procedure, which is as follows : " A seal upon an executory in- strument, hereafter executed, is only presumptive evidence of a sufficient consideration, which may be rebutted, as if the instru- ment was not sealed." The purpose of this change and the meaning of the new phraseology are explained, though somewhat ambiguously, by Mr. Throop, in a note to this section, in his edi- tion of the Code, which concludes as follows : " The only cases where a seal should be conclusive are those saved [which means excluded] by the word ' executory ' in this section, such as re- leases," etc. As to its collusiveness in releases, see Torry v. Black, 58 N. Y. 185 (190). In the absence of any recognized definition of the precise term " executory instrument," it may perhaps be assumed that the adjective has the same meaning as in the term "executory contract," where it refers to the fact that something yet remains to be done before the transaction cov- ered by the contract is concluded. See Bender v. Bender^ 88 Hun, 448 ; Baird v. Baird, 81 Hun, 300, aff'd 145 N. Y. 659. If this be so, then an imperfect transfer being in effect nothing more than an agreement to perform the intended act, is executory in the sense of this statute, and accordingly the seal would appear not to be conclusive of consideration. Baird v. Baird, 145 N. Y. 659 (665) ; Anthony v. Harrison, 14 Hun, eration were as essential in contracts by specialty as it is in the case of parol promises. But it is hardly necessary to point out the fallacy of this view. It is now generally agreed that the specialty obligation, like the Roman stipu- latio, owes its validity to the mere fact of its formal execution." "The framers of the New York statute, 2 Rev. Stat. 406, 77, seem not to have discriminated between the failure of an expected consideration, and the ab- sence of a consideration. By making the seal ' only presumptive evidence of a sufficient consideration which may be rebutted,' they not only let in an equitable defence at law, but also abolished gratuitous sealed obligations altogether." Professor Ames, in 9 Harv. L. Rev. 49, and 53 note. 5 66 CREATION OF EXPRESS TRUSTS. 198 (215), aff'd 74 N. Y. 613 ; Parkhurst v. Higgins, 38 linn, 113. Thus, if one make a gift to another of the donor's own bond, this, being executory, and a mere promise, is incomplete as a gift regardless of the presence of the seal. Matter of James, 146 N. Y. 78 (94). So with the case of a mortgage. Baird v. Bawd, 145 N. Y. 659. Compare Bucklin v. Buck- lin, 1 Abb. Ct. App. Dec. 242 (247). And see 1 Perry on Trusts, 111. As to the effect in equity of the delivery of an instrument purporting to convey land, but not sealed, see Wen- dell v. Wadswo-rth, 20 Johns. R. 659 (662) ; Grandin v. Her- nandez, 29 Hun, 399 ; Todd v. Union Dime Savings Inst., 118 N. Y. 337, s. c. 128 N. Y. 636 ; Barnard v. Gantz, 140 N. Y. 249 ; Town of Solon v. Williamsburgh Savings Bank, 114 N. Y. 122 (134). A seal is not necessary in a will. Mat- ter of Diets, 50 N. Y. 88. 104. Defective transfer Recital of consideration. This will not suffice as a basis for equitable relief, where the defec- tive transfer or executory obligation is in fact voluntary, for the recital of the consideration clause may, it seems, be rebutted. Baird v. Baird, 145 N. Y. 659 (665) and cases there cited. Anthony v. Harrison, 14 Hun, 198 (209), aff'd 74 N. Y. 613 ; Vanderbilt v. Schreyer, 91 N. Y. 392 (399) ; Parkhurst v. Higgins, 38 Hun, 113. But see the peculiar case of Bucklin v. Bucklin, 1 Abb. Ct. App. Dec. 242 (247) ; and Fuller v. Art- man, 69 Hun, 546, correctly decided, but not on the ground stated, which is not supported by the authorities on which it relies, all of which relate to executed, not executory, instruments. 105. Defective acknowledgment. No conveyance can be recorded unless acknowledged or proved. Real Prop. L. , 241- 243 ; Penal Code, 164. But acknowledgment or proof is not essential to pass the title, legal and equitable. How far equity could intervene in such a case to compel a voluntary grantor to acknowledge the deed has not been passed on. 106. Defective gift not a valid declaration. As above stated, a voluntary attempted transfer, either as a direct gift or as a gift in trust, fails if there is not a complete delivery suffi- CONSIDERATION. 67 cient in itself to pass the title. In such cases an attempt has frequently been made to sustain the defective gift on another theory, namely, as a declaration of trust. If, it has been claimed, there was an evident intention to transfer, and if the giver be- lieved that his acts were sufficient to, and did, transfer, and if, unfortunately, his intention was frustrated by defective delivery, so that in fact he still retained title, his intention should receive effect by construing his acts as a declaration that he held in trust ; in that case, delivery not being necessary, the difficulty would be removed. To this claim it has been answered that an intent to give is not a declaration that the owner holds in trust ; it is, instead, a declaration that he does not intend to hold at all, either in trust or otherwise. Beaver v. Beaver, 137 N. Y. 59 (65). And such is now the well-settled rule. If one makes a defective gift, beneficial or in trust, of real or personal property, the courts cannot turn it into something entirely different, and hold him to something he never intended. Wadd v. Hazelton, 137 N. Y. 215 ; Young v. Young, 80 N. Y. 422 ; Beaver v. Beaver, 137 N. Y. 59 ; s. c. 117 N. Y. 421 ; Curry v. Powers, 70 N. Y. 212 (219) ; Matter of Gallagher, 1 App. Div. 65. In the same way, if he makes a defective declaration, it cannot be deemed a valid transfer of title. The particular intent and the corresponding act must concur. Beaver v. Beaver, 137 N. Y. 59. In Govin v. De Miranda, 79 Hun, 286 (compare the cases of the same name, 140 N. Y. 474 ; 79 Hun, 329 ; 140 N. Y. 662 ; 76 Hun, 414 ; and 9 Misc. 684) the foregoing prin- ciple seems to have been carried to an extreme, the court re- fusing to sustain the theory of a declaration, though it was in writing and stated that the writer held the certificates " as the trustee" for the other party. See ante, p. 39. CHAPTER III. THE TRUSTEE. (1) Who may be a Trustee. 107. Introductory. The only provisions of law bearing on the capacity of any natural person to be the trustee of an express trust are such as affect it indirectly. Thus, a trustee of land must have the legal title, and if any one is debarred by law from holding the legal title to land in this State, it follows that he cannot be the trustee of an express trust in real property. Real Prop. L., 2. There are also provisions, hereafter to be considered, which give the courts authority to remove persons from the office of trustee, under certain circumstances, but their bearing on the present question is also indirect, as they relate rather to the right to continue to act as trustee than to the capacity to become such. There is a class of artificial persons that is, corporations which cannot be trustees unless specially so em- powered in their charters, or by way of necessary incident to the powers and rights given, the reason for which is that, being artificial, and existing only under a special grant of life and powers, they can neither acquire property nor exercise functions except in accordance with the limited laws of their being. Jack- son v. Hartwell, 8 Johns. R. 422 ; Fosdick v. Town of Hemp- stead, 125 N. Y. 581 (590, 593, et seq.) ; Fowler, Char. Uses, 116. Trust companies are by special act authorized to act ,as trustees. Banking Law, L. 1892, chap. 689, 157, 163 ; 1 Birds. R. S. 2d ed., pp. 229, 231. For other illustrations, see Fowler, Char. Uses, 117, 118. All other persons married women, infants, lunatics, drunkards, non-residents, illiterates, irresponsible persons may have title vested in them in trust. So with " religious persons" who have renounced the world. 1 Perry on Trusts, 57. As to insolvent persons, see Id., 58. WHO MAY BE A TRUSTEE. 69 The question, as to some of these, whether they should be al- lowed to continue as trustees, is discussed under the head of * ' Removal of Trustees, ' ' post, 344 et seq. 108. Infant. As already stated, infancy does not interfere with the vesting of title in trust. An infant trustee who ought to convey will be compelled to do so by the court, and the deed of conveyance is executed by its guardian. Anderson v. Mather, 44 N. Y. 249 (261). I R. L. 148, 7, now repealed. This principle of the law was continued in the Revised Statutes (2 R. S. 194, 167), and is now found in Code C. P., 2345- 2347, which apply also to trustees who are lunatics, idiots, or habitual drunkards. And accordingly, if an infant trustee ought to convey, and does convey, it follows that he cannot afterward disaffirm his act as he might in regard to a conveyance of his own property. Zouch v. Parsons, 3 Burr. 1801 ; Elliott v. Horn, 10 Ala. 348 ; Tucker v. Moreland, 10 Pet. 67 ; People v. Moores, 4 Den. 518. Infancy may, however, be ground for re- moval of the trustee and the substitution of a competent person. 109. A married woman may, and frequently does, act as trustee of real and personal property, however the trust may be created and irrespective of the character of the trust. no. Alien Real property. In reference to aliens, the prior statutes (collected in the first edition of Birdseye's R. S., p. 2518, et seq., and also L. 1893, chap. 207, relating to a certain class of non-resident aliens) have been repealed by the Real Property Law, 300, which went into effect October 1st, 1896, except that the former provision in 2 R. S. 57, 4 relating to devises to aliens was left standing. This provides that " every devise of any interest in real property to a person who, at the time of the death of the testator, shall be an alien, not authorized T)y statute to hold real estate, shall be void. The interest so de- vised shall descend to the heirs of the testator ; if there are no such heirs competent to take, it shall pass, under his will, to the residuary devisees named, if any there be competent to take such interest." By the common law, as in force in New York prior to the 70 THE TRUSTEE. statutory regulation, an alien might take land by purchase (using the word purchase in its broad meaning as including all titles except such as are acquired by descent or by mere operation of law), and the title so acquired would be good except as against the State. Hall v. Hall, 81 N. Y. p. 134 ; 2 Kent, Comm. 54 ; People v. ConHin, 2 Hill, 67. This general rule was not changed by the Revised Statutes except in the single case pro- vided for by 2 R. S. 57, 4, supra ; Hall v. Hall, supra, in which the whole subject is elaborately discussed. See also Wads- worth v. Wadsworth, 12 N. Y. 376 ; Wright v. Sadler, 20 N. Y. 320 ; Mooers v. White, 6 Johns. Ch. 360 ; reviser's note, 2d ed. Rev. Stat, Vol. V., p. 366 ; Goodrich v. Russell, 42 N. Y. 177 ; Luhrs v. Eimer, 80 N. Y. 171. As to the bearing of the alienism of the trustee, see Marx v. McGlynn, 88 N. Y. 357 (376) ; Duke of Cumberland v. Graves, 7 N. Y. 305 ; Lane v. Lewis, 4 Dem. 468 ; Howard v. Moot, 64 N. Y. 262. In cases- where land could be vested in trust in an alien able to hold except as against the State, here, upon office found, the land would vest in the State, subject, in one sense, to the trust that is, the trust would theoretically still exist, but there was no legal method of enforcing it against the State. Pimbe's Case, Moore, 196. Cruise, " Uses," 47. If, however, the State then grants the land to a stranger, the obstruction disappears, and, the trust still existing, the rights of the beneficiary may be en- forced. Winona v. St. Paul Co., 26 Minn. 179 ; Pinson v. Ivey, 1 Yerg, 296 ; Marshall v. Lovelass, Cam. & Nor. 217 (these and other citations on this point being derived from Ames's "Cases on Trusts," p. 215, note). In King v. Soys, Dyer, 283 b, plaintiff enfeoffed A, an alien, and B, to the use of himself, etc. On office found, as to one half, " the Queen shall have the moiety by her prerogative to her own use, and the other use in this moiety is gone forever. " Also Fish v. Klein, 2 Mer. 431. A testamentary trustee may be removed by the surrogate on any ground which would require the refusal of letters testamen- tary to one named as executor in a will. Code C. P., 2817. One of these grounds is that the executor is an alien not resident in New York. Code C. P., 2612. Accordingly, if a testa- mentary trustee is an alien and not resident in New York, he may WHO MAY BE A TRUSTEE. 71 on this ground be removed by the surrogate and a successor ap- pointed. Lane v. Lewis, 4 Dem. 468. It is to be noticed that 2 R. S. 57, 4, relates only to devises, and has no bearing on grants. A grant of land to an alien in trust, therefore, even apart from other statutes, would still give title to the trustee except (in cases where the right of the State is not also cut off) as against the State, and subject, perhaps, in a given case, to the power of the Supreme Court to remove him as an " unsuitable person." Real Prop. L., 92. The Real Property Law (which went into effect October 1st, 1896) did not repeal the provision, 1 R. S. 57, 4, relating to devises to aliens, quoted ante, p. 69. But it repealed the other acts relating to an alien's right to take and hold land, and substi- tuted therefor the new sections 4, 5, 6, and 7, concerning the scope of which, as compared with the laws repealed, attention is called to a letter in the Daily Law Journal of October 14th, 1896. See also Real Prop. L., 294, and Mr. Birdseye's note to these sections in his second edition of the Rev. Stat., p. 2602. in. Alien Personal property. Alienage per se does not disqualify one as a trustee of personalty. See Beck v. McGillis, 9 Barb. R. 35. But alienage and non-residence constitute ground for removal, as to which see ante, 110. Citizenship in another State of the Union is not alienage. McGregor v. McGregor, 3 Abb. Ct. App. Dec. 92. Bouvier's Law Diet, " Alien." And where a trustee holds a trust fund here, and removes to another State where she is incapable (e. g., as being a married woman) to be a trustee, yet, the fund remaining here, her change of resi- dence does not divest her title, and the trust can be enforced here. Schluter v. B. S. Bank, 117 N. Y. 125 (130). 112. Corporation. There are several senses in which a cor- poration may become a trustee. See ante, 107. (a) It may by special legislative grant be empowered to act as trustee of express trusts, and to hold title as trustee to real and personal property ; examples may be found in the charters of trust companies ; and to such companies broad powers in this field are now given by the Banking Law. L. 1892, chap. 689, Art. IV. ; Birdseye's R. S., 2d ed., p. 229, et seq. (b) It may, where at all authorized 72 THE TRUSTEE. to acquire title, take subject to the payment by it of legacies, annuities, etc. In Matter of Howe, 1 Pai. Ch. 214, testator bequeathed $4000 to St. George's Church, in trust to invest and pay the income to A for life, and thereafter to use the income for church purposes. Chancellor Walworth held that " wher- ever property is devised or granted to a corporation partly for its own use and partly for the use of others, the power of the cor- poration to take and hold the property for its own use carries with it, as an incident, the power to execute that part of the trust which relates to others." In Currin v. Fanning, 13 Hun, 458, testator devised land to Manhattan College in trust to receive the rents and apply to the use of the college, on condition that out of the rents it pay to testator's widow an annuity of $1500 a year for her life. The devise and subordinate trust were both sus- tained, and it was held that a corporation authorized to take and hold real and personal property may take and hold subject to the execution by it of a subordinate trust for a purpose in itself out- side its charter powers. See also Perry on Trusts, 44 ; Trus- tees of Phillips Academy v. King's Executor, 12 Mass. 564 ; Vidal v. Girard, 2 How. (II. S.) 127 ; compare Tinkliam v. Erie -Railway Company, 53 Barb. R. 393. The present statute (Gen. Corp. L., 11) provides that " every corporation as such has power, though not specified in the law under which it is in- corporated. ... 3. To acquire by grant, gift, purchase, de- vise, or bequest, to hold and to dispose of such property as the purposes of the corporation shall require, subject to such limita- tions as may be prescribed by law." The previous act (2 R. S. 57, 3), providing that " no devise to a corporation shall be valid unless such corporation be expressly authorized by its charter, or by statute to take by devise, " has not been repealed. That section relates only to the power of a corporation to take by devise at all ; if a corporation is authorized so to take, this section did not at- tempt to limit i\\Q purpose for which a devise might be received, and so is consistent with the decisions above cited. Currin v. Fanning, 13 Hun, 458 (468). (c) A corporation of a religious, charitable, benevolent, etc., character, in one sense holds all its property in trust. But in legal contemplation it is an absolute owner, holding outright and with full beneficial title according to its restricted and special nature. Wetmore v. Parker, 52 N. Y. WHO MAY BE A TRUSTEE. 73 450 (460). Post, 506. This sort of a trust, therefore, if so it may be called, has no bearing on express trusts. Upon the sub- ject of corporations as trustees, see 1 Perry on Trusts, 42. 113. United States State. A devise of land to the United States Government for the purpose of discharging a certain fed- eral debt cannot be sustained under the law of New York. The testamentary capacity given by our statutes can be exercised only in respect to natural persons and such corporations as are author- ized by the law of New York to take by devise. Matter of Fox, 52 N. Y. 530. Neither the United States nor a State, as a po- litical corporation, can take and hold property in trust for a charity, under the law of New York. Levy v. Levy, 33 N. Y. 97 (123), appealed to U. S. Supreme Court, see Tucker, p. 149 ; but appeal withdrawn, Id., and p. 150. Compare Burrill v. Boardman, 43 N. Y. 254 (263), and see 1 Perry on Trusts, 41. 114. Witness to will. A devise to one intrust is not affect- ed by the fact of his being a witness to the will. He has no per- sonal interest at stake. Nor does the fact that as trustee he will receive commissions, or a specified sum in lieu of commissions, alter the case. His commissions are not a legacy, but are pay- ment for services rendered ; and the same principle applies where he is offered as a witness to prove due execution, etc., though not a subscribing witness. McDonough v. Loughlin, 20 Barb. R. 238 ; Matter of Wilson, 103 N. Y. 374(376) ; Chil- dren's Aid Soc'y v. Loveridge, 70 N. Y. 387 (392) ; Rugg v. Rugg, 83 N. Y. 592 ; Reeve v. Crosby, 3 Redf. 74 ; Barnard v. Grossman, 54 Hun, 53 ; Matter of Chase, 41 Hun, 203 ; see 23 State Reporter, 441 ; In re Huestis, 23 Weekly Dig. 224 ; Mat- ter of Burke, 5 Redf. 369. 115. Beneficiary as trustee. " It is undoubtedly true that the same person cannot be at the same time trustee and bene- ficiary of the same identical interest. To say that he could would be a contradiction in terms as complete and violent as to declare that two solid bodies can occupy the same space at the same instant." See Woodward v. James, 115 N. Y. 346 ; Rose v. Hatch, 125 N. Y. 427 (431, 432). The rule that a trust will 74 THE TRUSTEE. not fail for lack of a trustee has perhaps an (apparent) exception in the case where property is left to A. in trust to receive and use the income for his own benefit for life. He cannot act as trus- tee for himself. Therefore there is no trustee. But the court will neither itself administer nor appoint another trustee to ad- minister the trust. For there is no valid trust. To make a valid trust, the trustee and beneficiary must be different people. Therefore in the case supposed, A, being entitled to possession, rents, and profits, takes an absolute estate for life. Rose v. Hatch, 125 N. Y. 427 (431, 432) ; Mulry v. Mulry, 89 Hun, 531 (539) ; Greene v. Greene, 125 N. Y. 506 (512). But this result is doubt- ed in Losey v. Stanley, 147 N. Y. 560 (568, 569), where the question is said to be an open one. 1 But at any rate the fact that the court appoints a sole beneficiary to be sole trustee will not extinguish the trust. Losey v. Stanley, 147 N. Y. 560 (568) ; Mulry v. Mulry, 89 Hun, 529 ; People ex rel Collins v. Dono- hue, 70 Hun, 317 (325). If, as to a portion of the income, the trustee is also beneficiary, and therefore, as to that portion is not trustee, but takes what is given him by a direct legal right, it does not follow that his trust estate in the corpus of the property is in any manner de- stroyed, or that there is any less a necessity for its existence. He can be trustee for the other beneficiaries, and that trust ranges over the whole estate for the purpose of its management and disposition. Woodward v. James, 115 N. Y. 346 (357). Compare Ireland v. Ireland, 84 N. Y. 321. And where several trustees are named, one of whom is also a beneficiary, there is no attempt to unite in the same person the office of trustee and the interest of beneficiary. He can act free- ly as to other beneficiaries than himself, and as to his interest the 1 Perhaps the decisions cited, and the doubt expressed in Losey v. Stanley, supra, may be reconciled thus, that a grant or devise to a person to hold in trust for himself, to receive and apply the rents to his own use, etc., where it is clear that the grantor or testator looked not so much at the establishment of the trust, in some legal form, as at the vesting of both title and beneficial interest in the person named, would be void as a trust ; but that if it appears that his first and chief purpose is to constitute a valid trust, in any event, and the appointment of the beneficiary to be the trustee is a subordinate and inci- dental feature, appointment might be regarded as void, and the trust itself sustained. Compare post, % 121. WHO MAY BE A TRUSTEE. 75 others can exorcise the necessary judgment and control. Bun- dy v. Bundy, 38 N. Y. 410 ; Wetmore v. Truslow, 51 N. Y. 338 ; Postley v. Cheyne, 4 Dem. 492 ; Cocks v. Barlow, 5 Redf. 406 ; J/0& v. Norrie, 14 Hun, 128 (132) ; Mulry v. Mulry, 89 Hun, 531. And although the trustees other than the beneficiary may die or decline to act, the court has power to supply their place, or, if need be, or if it choose to do so, to take upon itself the execution of the trust, so far as it ought not to be executed by the trustee who is also beneficiary. If, instead of appointing a new trustee, it exercises itself all the discretion reposed any- where, it may then direct the performance of the resulting mere- ly formal acts by the trustee who is a beneficiary. Rog- ers v. Rogers, 111 N. Y. 228 (237 et seq.} ; and see Amory v. Zord, 9 N. Y. 403 (412). Compare J&rk v. Kvrk, 137 N. Y. 510 (515). And where several trustees are named, and one of them is sole beneficiary, and they are directed on the written re- quest of the beneficiary to pay and deliver the entire trust fund to her in absolute ownership, and she alone qualifies and acts, it has been held that she may execute a written declaration of her election to take the estate absolutely, and may thus acquire the absolute ownership. Solomons v. Kursheedt, 3 Dem. 307. This conclusion would hardly appear to be inevitable as a rule. But if the property is left to several persons as trustees, and they are also the equal and sole beneficiaries of the trust, and are vested with the remainder after the trust in equal shares, here their various titles and interests as trustees, beneficiaries, and remaindermen merge and give them the fee in possession. Greene v. Greene, 125 N. Y. 506 (510). A beneficiary who is also one of two or more trustees cannot, as beneficiary, hold her co-trustees liable for a loss of the trust fund where she is equally responsible with them for negligence resulting in the loss. Earle v. Earle, 93 N. Y. 104 (117, 118). The rule prohibiting a trustee from dealing with the trust estate to his own benefit, without the knowledge and assent of the beneficiary, applies to a case where one of several trustees, who is also one of the bene- ficiaries, with his co-trustees sells and conveys trust property to himself or to another for his benefit, and such a sale may be re- pudiated by the other beneficiaries. Tiffany v. Clark, 58 N. Y. 632. 76 THE TRUSTEE. 116. Relative of beneficiary. The court, in appointing a trustee to fill a vacancy, may select, according to circumstances, a person not related to the beneficiary, or a relative e.g., the beneficiary's father. Smith v. Smith, 3 Dem. 556. See Rus- sak v. Tobias, 12 Civ. Pro. R. 390 (398). 117. Creator of trust as trustee. In the case where the owner of property duly declares that he holds it in trust for an- other (a subject discussed ante 63 et seq.), he thereby consti- tutes himself a trustee. 118. Relative of judge. It has been held that while it is inappropriate, it is not unlawful, for the court to appoint as guard- ian ad litem for an infant, or committee of a lunatic, a near rela- tive of the judge making the order or decree. Matter of Van Wagonen, 69 Hun, 365 ; Matter of Hopper, 5 Pai. Ch. 489 ; Underbill v. Dennis, 9 Pai. Ch. 202. As to the clerk of the Surrogate's Court, see Code, 2511. 119. Sheriff. It has been held that a valid express trust may be created by an assignment by a judgment debtor to the sheriff holding attachments against his property, in trust to pay the same. Ditmarsv. Smith, 3 App. Div. 57. (2) Appointment of Trustee. 120. Introductory. As already stated, one of the essential elements of a trust is the trustee. But this statement calls for careful examination to determine its exact meaning. The trus- tee may be named in the deed or will creating a trust of real or personal property. In case of a declaration, the declarant is necessarily pointed out as the trustee. If the trust is of person- alty, and created by parol, either the words or acts of the creator may designate him. There are, however, numerous contingen- cies in which trustees are appointed by the court or by persons other than the settlor. In cases where the court appoints, the rule regulating the nec- essary parties to a proceeding for appointment of a trustee has differed from that applying to a case of removal. For in a pro- ceeding simply for the appointment of a trustee to execute trust APPOINTMENT OF TRUSTEE. 77 duties and powers, for the faithful performance of which security is always required, it has been a matter of discretion with the court, to whom notice should be given ; and the appointment made is always open to review on the application of any party interested, who was not informed of the proceedings leading to the appointment. Matter of Robinson, 37 N. Y. 261 ; Tomp- Tcins v. Moseman, 5 Redf. 402 (405) ; Lane v. Lewis, 4 Dem. 468 (472). But notice is now required in case of appointment by the Supreme Court under Real Prop. L., 91, and L. 1882, chap. 185. Where there is a trust for one life, the remainder to be conveyed by the trustee as the life beneficiary shall by deed appoint, and both beneficiary and trustee have died ; but there is a paper purporting to be an appointment, and the court ap- points a successor to convey as therein directed ; the person en- titled in case of default in appointing, not having been a party to the proceeding to appoint a successor, may bring ejectment against the grantee of the new trustee, and attack the validity of the paper purporting to be an appointment. The fact that the trustee conveyed by order of court does not affect the plaintiff's rights. Wainwright v. Low, 132 N. Y. 313. If it appears that a trust or power in trust in question is not a valid express trust, or power, or, if valid in its creation, that it has expired, the court will not appoint a new trustee. Matter of Butterfield, 133 N. Y. 473 ; Matter of Craig, 1 Barb. R. 33 ; Matter of Rail, 24 Hun, 153 ; Campbell v. Low, 9 Barb. R. 585 (594) ; Albrecht v. Pell, 11 Hun, 127 (128) ; Jauncey v. Rutherford, 9 Pai. Ch. 273 (279, 280). But it is sufficient if a prima facie case is made out of the existence of a trust and is not conclusively disproved. The appointment does not conclude the question whether such a trust does exist, but merely furnishes a person to enforce and protect it if it exists. Matter of Carpen- ter, 131 N. Y. 86 (87) ; Matter of Waring, 99 N. Y. 114 (117). And it has been held that if the trust term has expired, and noth- ing remains but to distribute the personalty to those entitled under the trust instrument, the proper course is for the Surro- gate to direct that distribution by the executor or administrator of the deceased trustee, at any rate, in a case where the fund has been mingled with the trustee's own property, and does not exist as a distinct fund. Graham v. De Witt, 3 Bradf. 186. But 78 THE TRUSTEE. see L. 1882, chap. 185. The parties to a given litigation may be estopped by their conduct from objecting to the standing of a successor, as having been appointed without due authority. Emerson v. Bleakley, 2 Abb. Ct. App. Dec. 22 (27). The ex- ecutor of a deceased trustee has no standing to question the appointment of a new trustee. Fosdick v. Delafield, 2 Redf. 392. And a trustee cannot, in order to deny his liability to ac- count, attack the regularity of proceedings leading to his own appointment, after utilizing it to obtain the property as trustee ; and his sureties are likewise estopped. People v. Norton, 9 N. Y. 176. (a) Appointment by tlie Supreme Court. 121. If no trustee designated. Where it is said that a trus- tee is an essential element in a trust, the meaning is not that a trustee must be specifically named in the instrument creating the trust, nor that if named he must be living, or willing or able to act, when the trust goes into effect. The meaning is that the idea of a trust necessarily implies a person to execute the terms of the trust. It is a familiar principle that a trust otherwise valid will never be allowed to fail for lack of a trustee. Shel- don v. Chappel, 47 Hun, 59. In such a case the Supreme Court has inherent power to appoint a trustee. Cross v. U. IS. Trust Co., 131 N. Y. 330 (350) ; Kirk v. Kirk, 137 N. Y. 510 (515) ; Dodkin v. Brunt, L. R. 6 Eq. 580. It is not, therefore, strict- ly essential that any trustee be named or designated in the deed or will. But in order to constitute an express trust, it is essen- tial that the provisions be such as to render a trustee necessary to carry them into effect. In the Cross case (supra), a testamentary trust was under consideration ; the will had appointed the de- fendant corporation as trustee ; the court says : " It may be doubted whether the corporate powers conferred upon the trus- tee in this case are broad enough to authorize it to execute a trust created as this was. The want of corporate capacity in the trus- tee to act would not be fatal to the trust. The proper court would riot allow the trust to fail because the trustee is disabled, but would appoint a new one," citing Perry on Trusts, 4th ed. 38. This is merely a dictum. It is also true that in a certain sense a trustee had been appointed. Still, the appointment, as APPOINTMENT BY THE SUPREME COURT. 79 trustee, of a corporation, an artificial person whose powers and capacities did not enable it to act as such trustee, comes very close in principle to the omission of any specific appointment whatever. In Kirk v. Kirk, 137 N. Y. 510, the testator de- vised land to his wife for life, and provided that on her death the surrogate should appoint " two commissioners" to divide and allot shares, among testator's issue, and hold certain of the shares in trust to receive the rents, etc., for the respective bene- ficiaries. In this action for partition, on a motion to compel purchasers at a sale under the interlocutory judgment to complete their purchase (no " commissioners" and no trustee having ever been appointed), it was held, on appeal, that " the Supreme Court has inherent power to execute a trust, and in the absence of a trustee it may, and will, take upon itself its execution. It appears from the record that it has undertaken the discharge of this duty in the present case. The trustee, when appointed, will be the successor of the court in the administration of the trust," etc. Compare Bascom v. Albertson, 34 N". Y. 584, at p. 596, where a devise in trust to five persons to be appointed by the Supreme Court of Vermont was held invalid, the court saying that the gift could not vest at testator's death for lack of any trustee then named, and therefore the absolute ownership was unduly suspended (p. 596). But on pp. 591, 592, the court, in the course of discussion on another point, say : " It does not follow, from this proposition, that where there is a valid trust for ascertained beneficiaries, it will be permitted to fail for want of an original trustee ; for, in such a case, Chancery will supply the defect in the exercise of its ordinary jurisdiction over trusts in general." In Levy v. Levy, 33 N. Y. 97 (102), in a portion of the opinion of the court concurred in by apparently only three judges, it is said : " There being a sufficient declaration of the use, and a certain beneficiary ascertained, the presence or absence of a trustee in the limitation will make no difference, for equity will not allow a gift to fail for want of a trustae. . . . There can be no valid trust unless there be a certain donee or bene- ficiary whom the law will recognize ; and if there be, the use will not be defeated, though no trustee be named, or the trustee named be, in law, incapable of taking. " The same view is adopted and expressly settled in Dodkin v. Brunt, L. R. 6 Eq. 580. 80 THE TRUSTEE. 122. Upon death, before term begins, of person named as trustee. The discussion under the preceding paragraph applies with even greater force to this case. 123. If trustee named is beneficiary. If the sole trustee named in the trust instrument is also the sole beneficiary, it has been said that no trust is imposed. Rose v. Hatch, 125 N. Y. 427(431, 432) ; Greenev. Greene, 125 N. Y. 506 (512) ; Mulryv. Mulry, 89 Hun, 531 (539). But in a very recent case the point is regarded as an open one. Losey v. Stanley, 147 N. Y. 560 (568, 569). See ante, 115. Also compare ante, 115, 121. 124. In case of renunciation. There is no general statute providing for either renunciation by a trustee as such or the ap- pointment of a trustee in the place of one who renounces. The power of appointment, however, exists in the Supreme Court. 1 In Burritt v. Silliman, 13 N. Y. 93, it is held that if land is devised to one in trust he cannot be compelled to accept title ; that if he renounces or disclaims, in appropriate manner, the re- sult is simply that title is not in him. So much for the principle that he may renounce. In Dunning v. Ocean National Bank, 61 N. Y. 497, a will appointed one Jennings as sole executor, and also devised land to him in a distinct capacity as sole trustee. As executor he renounced. As trustee " the evidence or find- ings in the present case are quite sufficient to establish the fact that Jennings never did, and never intended to, accept the trust." About ten years after probate of the will the plaintiff " was duly appointed by the Supreme Court a trustee to carry out the trusts; 1 ' This suit was one that could be brought only by a trustee as such. " Until the appointment of the plaintiff by the Supreme Court, on the 28th of September, 1869, as trus- tee in the place of Jennings, there was no party legally existing in whom a right of action vested." Judgment in favor of plain- tiff was affirmed. In De Peyster v. Clendining, 8 Pai. Ch. 295 (310), the court says that " although all the trustees named in the will have declined the trust, this court will not permit a devise 1 As to what acts constitute sufficient basis for assumption that a trustee has accepted the trust, see Green v. Green, 4 Redf. 857. APPOINTMENT BY THE SUPREME COURT. 81 in trust which is valid in other respects to fail for want of a trus- tee. . . . The trust devolves upon the court ; and the decree must direct the appointment of a new trustee in the place of those who have declined to execute the power in trust." (Aff'd 26 Wend. 21, sub nom. Bulkley v. De Peyster.) See also Eoome v. Phillips, 27 N. Y. 357 (363) ; Adams v. Adams, 21 Wall. 185 (191) ; Mulry v. Mulry, 89 Hun, 529 (539). 125. Upon death during term." On the death of the last surviving or sole trustee of an express trust, the trust estate shall not descend to his heirs nor pass to his next of kin or personal representatives ; but in the absence of a contrary direction on the part of the person creating the same, such trust, if unexe- cuted, shall vest in the Supreme Court, with all the powers and duties of the original trustee, and shall be executed by some person appointed for that purpose under the direction of the court, who shall not be appointed until the beneficiary thereof shall have been brought into court by such notice in such manner as the court or a justice thereof may direct." Real Prop. L., 91. The original statute (1 R. S. 730, 68), for which this is a substitute, did not contain the words " next of kin," and a ques- tion arose under it which led to an additional statute which still stands unrepealed. It may, therefore, be appropriate to exam- ine the question in relation to its bearing on the section above quoted, considered alone. In Hawley v. fioss, 7 Pai. Ch. 103 (107) it is held that if there was any doubt that the original statute (1 R. S. 730, 68), taken only in the connection in which it stood in the revision, was in- tended to apply to trusts of personal as well as of real estate, it was made applicable (in certain cases) to personalty by 1 R. S. 773, 2, which provides that in certain respects limitations of future or contingent interests in personal property shall be sub- ject to the rules prescribed in 1 R. S. 718-750 in relation to future estates in land. To the same effect is Weils v. Wallace, 2 Redf. 58 (62) decided in 1871. In 1867, however, in Bunn v. Vaughan, 1 Abb. Ct App. Dec. 253 (256), it was distinctly held that 1 R. S. 730, 68 did not apply to trusts of personalty, which, on the death of the trustee, devolved upon his personal 6 82 THE TRUSTEE. representative. To the same effect are Emerson v. Bleakley, 2 Abb. Ct. App. Dec. 22 (27) ; BucUin v. Bucldin, 1 Abb. Ct. App. Dec. 242 (252) ; Boone v. Citizens' Savings Bank, 84 K Y. 83 (87) ; Wetmore v. Hegeman, 88 N. Y. 69 (72) ; Butler v. State M. L. A. Co., 55 Hun, 296 (301) ; aff'd 125 N". Y. 769. But the rule of devolution in trusts of personal property was assimilated to 1 R. S. 730, 68, by L. 1882, chap. 185, which is as follows : " Upon the death of a surviving trustee of an express trust, the trust estate shall not descend to his next of kin or personal representatives ; but the trust, if unexecuted, shall vest in the Supreme Court, with all the powers and duties of the original trustee, and shall be executed by some person ap- pointed for that purpose under the direction of the court. But no person shall be appointed to execute said trust until the bene- ficiary thereof shall have been brought into court by such notice and in such manner as the court may direct." L. 1882, chap. 185. Matter of Waring, 99 N. Y. 114 (117) ; Butler v. State M. L. A. Co., 55 Hun, 296 (301) ; aff'd 125 N. Y. 769 ; Mat- ter of Carpenter, 131 N. Y. 86 (87) ; Wilcox v. Gilchrist, 85 Hun, 1 (12). This covers the case of an assignee under a gen- eral assignment for creditors. Matter of Tousey, 2 App. Div. 569. But it has been held that the latter statute (L. 1882, chap. 185) relates only to the case of a technical trust as distinguished from the case of duties imposed upon an executor as such, in which latter case, upon the death of the executor before distribu- tion the property passes to and is to be distributed by the ad- ministrator, with the will annexed of the original testator. Matter of Post, 2 Con. 243 ; compare Greenland v. Waddell, 116 N. Y. 234 (242). See, further, the discussion of execu- torial as distinguished from trust duties, post, 156 et seq. ; 598 et seq. Each of the statutes above referred to spoke in terms only of the case of the death of " the surviving trustee of an express trust," or " a surviving trustee," and did not in terms refer to the contingency of the death of a sole trustee ; but at least two cases, one in the Court of Appeals and one in Chancery, proceed on the theory that under these statutes a successor to a deceased sole trustee may be appointed. Matter of Waring, 99 N. Y. 114 (117), where the reference to the statute as 81 of article 2, APPOINTMENT BY THE SUPREME COURT. 83 etc., is a misprint for 68. Hawley v. Ross, 7 Pai. Ch. 103. Compare also Royce v. Adams, 123 N. Y. 402, where it is held that Code C. P., 2818, providing for appointment by the sur- rogate's court of a successor to a sole trustee who has died, or resigns, etc. , covers also the case where several trustees die, or resign, etc. See also Matter of Tousey, 2 App. Div. 569. These decisions have now been embodied in the new section (Real Prop. L., 91) above quoted, but L. 1882, chap. 185, has been left unrepealed and unamended. In regard to the power of the Supreme Court to " appoint a trustee" under the foregoing statute, 1 R. S. 730, 68 (and by implication the same remark applies to the foregoing L. 1882, chap. 185, and certainly to Real Prop. L., 91), it has been said, in a unanimous opinion of the General Term for the First Department (by way of dictum), that no such power exists. " Upon what theory the said Andrews" (who appeared, by ad- mission, to have been in fact appointed trustee in place of a de- ceased testamentary trustee, p. 245) " is called a testamentary trustee throughout the whole of these proceedings we do not un- derstand. He was not appointed by the will of anybody [com- pare the definition of a testamentary trustee in Code C. P., 2514, subd. 6] ; but the trust in the will of Mrs. Hopper hav- ing devolved upon the Supreme Court upon the death of the trustee named therein, the court, pursuant to the provisions of the Revised Statutes (1 R. S. 730, 68), could only appoint Andrews as a person to execute the same under its direction, there being no power in the court to appoint a new trustee upon the death of a surviving trustee. It is only in a case where the trustee has resigned or is removed that the statute gives the court power to appoint anew trustee" (the latter reference being to 1 R. S. 730, 71). firater v. Hopper, 77 Hun, 244 (246) ; also Wildey v. Robinson, 85 Hun, 362 (364). This view that 1 R. S. 730, 68, and L. 1882, chap. 185, merely vest the trust in the court, to be executed by a person to be appointed for that purpose, as an agent of the court, and not as a " trustee," ap- pears to conflict with the result in Matter of Waring, 99 N. Y. 114, already referred to. There the court below (see 21 Weekly Dig., 120, and statement of facts, 99 N. Y. p. 115) had ap- pointed a " trustee" in the place of a deceased trustee. On ap- 84 THE TRUSTEE. peal, the Court of Appeals recite (p. 117) the application " for the appointment of a trustee in his" (the deceased trustee's) " place to execute said trust." " The application is made under 81 of article 2, title 2, chap. 1, part 2, of the Revised Statutes" (misprint for Id., 08), " which vests in the Supreme Court any unexecuted express trust in real estate upon the death of the sur- viving trustee, and authorizes the appointment by it of some per- son to complete its execution. Similar provisions as to personal property are contained in chap. 185, Laws of 1882. . . . The facts referred to were, however, sufficient to authorize the court to determine that an apparent legal trust was created in the prop- erty described by the conveyances and agreements referred to, and that some of its objects remained unperformed at the time of the death of William E. Waring. These facts authorized the appointment of a trustee by the court below. . . . The order of the Special and General Terms should be modified by striking out so much thereof as attempts to adjudicate upon the extent and validity of the trust, if such provisions there are, and as thus modified should be affirmed" (thus in terms affirming the ap- pointment by the court below of a trustee). The same construc- tion was given to these statutes in 1871 in Wells v. Wallace, 2 Redf. 58 (62) ; and in 1884 by Surrogate Coffin in Matter of Valentine, 3 Dem. 563. So also in Ilawley v. Ross, 7 Pai. Ch. 103. There a sole trustee had died, and the chancellor, after construing 1 R. S. 730, 68, says : " The trust which W. James held by virtue of this bond at the time of 'his death devolved on this court and not upon his executors. The bond should there- fore be delivered to the register or to the general guardian of the infants for their use, so that he may get a new trustee appointed to receive the first payment," etc. In Roycev. Adams, 123 N. Y. 402, testator devised and bequeathed all his property to his executors upon certain trusts. Before the estate had been settled all the executors and trustees resigned. The plaintiffs were ap- pointed as successors to the trustees both by the Supreme Court and by the Surrogate's Court. The question at issue was whether these successors had authority to execute a power of sale con- tained in the will. This was a case where, as stated hereafter, successors to the resigned trustees might be appointed by the Supreme Court (under 1 R. S. 730, 71) and by the Surrogate's APPOINTMENT BY THE SUPREME COURT. 85 Court (under Code C. P., 2818). The question now under dis- cussion as to the power of the Supreme Court to appoint a trus- tee to succeed a deceased trustee was not directly presented, but the Court of Appeals say : "It is familiar law that upon the death of an original'trustee the trust devolves upon the Supreme Court, and it has jurisdiction to appoint new trustees to execute the trust." Compare ClarTc v. Orego, 51 N. Y. 646 ; aff'g 47 Barb. 599. In Delaney v. McCormack, 88 N. Y. 174, the will gave a power to the executors to sell land and distribute the pro- ceeds. They all died. An action was brought for construction of the will and appointment of a trustee. The court below deter- mined that it had jurisdiction to appoint a new trustee, and made an appointment, and decreed that plaintiff was entitled to the proceeds after payment of liens. The judgment was affirmed by the General Term (25 Hun, 574), the court saying : " The executors who had the power were dead. The execution of the power devolved upon a court of equity. It is never permitted that a valid trust shall fail of execution for the want of a trus- tee." On appeal, the Court of Appeals unanimously affirmed the judgment, saying (p. 182) that as the power was general, and in trust, and imperative, u a further provision, reaching the emer- gency of the death of the grantees, becomes applicable. It is enacted ( 102) [of Powers] that the provisions of 66-71 of article 2, relating to express trusts, shall apply to powers in trust, and section sixty-eight of that article confers upon the court, upon the death of the surviving trustee, his powers and duties," etc. This opinion does not in so many words approve the act of the court below, in appointing a trustee, but it does affirm the judgment which did so, adding, " We discover, therefore, no error in the disposition on the case." In Farrar v. McCue, 89 N. Y. 139, one trustee died, and then the two others resigned. The court says : " Death and resignation took away the trustees. The court properly appointed successors." Here, it is true, the power to appoint successors to those who resigned may have been a sufficient basis for the action of the court. In Cooke v. Platt, 98 N. Y. 35, there was a power of sale, in trust, in the execu- tors. They were removed by the court, and a " receiver" was appointed to sell. The court says : " The power of sale was a power in trust, which, though discretionary, could, on the death 86 THE TRUSTEE. or removal of the executors, be executed under the discretion of the court, by ^trustee appointed for that purpose" (citing 1 R. S. 730, 71, relating to removal, and 1 R. S. 734, 102, making 1 R. S. 730, 66-71 applicable to powers), and they held that the " receiver," as appointed in this instance, could not sell. In Greenland v. Waddell, 116 N. Y. 234, the capacities of trustee and executor were distinct. Y. R. Boerum was sole surviving executor and trustee. Boerum resigned as trustee and Mrs. Bush was appointed by the Supreme Court as trustee in his place. She executed a deed under which plaintiff claimed title. On the facts of the case it was found that Mrs. Bush had individually acquired the complete title to the land, and could, therefore, elect to take and convey the land in spite of the power to sell re- maining in Boerum as executor. The question of the appoint- ment of a successor to a deceased trustee was not, therefore, presented. In Emerson v. Bleakley, 2 Abb. Ct. App. Dec. 22 (27), the court refers incidentally to 1 R. S. 730, 68, as " the provisions of the statute giving the title to a trustee to he ap- pointed by the court." In Matter of Van Schoonhoven, 5 Pai. Ch. 559 (560), Chancellor Walworth says : " The sixty-eighth sec- tion of the article relating to uses and trusts (1 R. S. 730) only authorizes the appointment of a new trustee where the only sur- viving trustee happens to die," etc. See also Matter of Tousey, 2 App. Div. 569. 126. Death of one, leaving survivor. The Real Property Law ( 91) gives power to the Supreme Court to appoint a suc- cessor upon the death of a sole or last surviving trustee. Also L. 1882, chap. 185. This provision does not cover a case where one of several dies. (Compare post, 636 et seq.) The terms of 2818 of the Code, relating in general to surrogates' courts, are broader, providing that where one of two or more testamen- tary trustees dies, a successor shall not be appointed except where such appointment is necessary in order to comply with the ex- press terms of the will, or unless the same court (surrogate's) or the Supreme Court shall be of the opinion that the appointment of a successor would be for the benefit of the cestui que trust. And in any case where, of two or more trustees, the sole surviv- ing, or sole acting trustee is also a beneficiary, the court may ap- APPOINTMENT BY THE SUPREME COURT. 87 point an associate. For the survivor cannot, as to his own bene- ficial interest, continue to act, and there is, in fact, as to such in- terest, a complete vacancy. Rogers v. Rogers, 111 N. Y. 228 (238). But the Court may, if it sees fit, itself exercise the neces- sary discretion called for in reference to the management of the trust, and may direct the mere formal acts decided upon to be done by the sole trustee. Id. On the general subject of this section, see also 597 post. 127. Upon resignation or removal. When a trustee re- signs or is removed, the power of the Supreme Court to appoint a successor is governed by Real Prop. L., 92 : " The Supreme Court has power, subject to the regulations established for the purpose in the general rules of practice : " 1. On his application by petition or action, to accept the resignation of a trustee, and to discharge him from the trust on such terms as are just. "2. In an action brought, or on a petition presented, by any person interested in the trust, to remove a trustee who has vio- lated or threatens to violate his trust, or who is insolvent, or whose insolvency is apprehended, or who for any other cause shall be deemed to be an unsuitable person to execute the trust. "3. In case of the resignation or removal of a trustee, to ap- point a new trustee in his place, and in the meantime, if there is no acting trustee, to cause the trust to be executed by a re- ceiver or other officer under its direction. This section shall not apply to a trust arising or resulting by implication of law, nor where other provision is specially made by law, for the resigna- tion or removal of a trustee or the appointment of a new trustee." This section applies only to express trusts (Id.) and to powers in trust. Real Prop. L., 162. Leggettv. Hunter, 19 N. Y. 445 (459) ; Itoyce v. Adams, 123 N. Y. 402 ; In Matter of Van Wyck, I Barb. Ch. 565. As to the general power of the Su- preme Court under this section, see also Quacfcenboss v. South- wick, 41 N. Y. 117. A trustee's petition to the court to be " relieved" from the trust, and permission by order of court, and discharge, constitute a resignation, under this section, author- izing an appointment of a successor, and in such case the court acts under its statutory authority, and not in pursuance of its 88 THE TEUSTEE. general equity jurisdiction. Lahey v. Kortwright, 132 N. Y. 450 (458). The order appointing a successor to a trustee who has resigned need not define in terms his powers in order to give him all the powers possessed by his predecessor. It is sufficient if the purpose appears from the record to substitute him as trus- tee under the will, and to have him thereupon derive his powers from that instrument. Lahey v. Kortwriglit, 132 N. Y. 450 (458). 128. Resignation or removal of one of several. In case of the removal or resignation of any trustee, even though others remain, the Supreme Court has power, under Real Prop. L., 92, supra, to appoint a successor ; and see also the reference to the Supreme Court in the statute quoted below, 129. (b) Appointment by Surrogate's Court. 129. Statutes. Section 2818 of the Code of Civil Proce- dure provides as follows : " When a sole testamentary trustee dies or becomes a lunatic, or is, by a decree of the Surrogate's Court, removed or allowed to resign, and the trust has not been fully executed, the same court may appoint his successor, unless such an appointment would contravene the express terms of the will. Where one of two or more testamentary trustees dies or becomes a lunatic, or is by decree of the Surrogate's Court removed or allowed to resign, a successor shall not be appointed except where such appointment is necessary in order to comply with the express terms of the will, or unless the same court or the Supreme Court shall be of the opinion that the appointment of a successor would be for the benefit of the cestui que trust. Unless and until a successor is appointed the remaining trustee or trustees may proceed and execute the trust as fully as if such trustee or trustees had not died, become a lunatic, been removed or resigned. Where a decree removing a trustee or discharging him upon his resigna- tion does not designate his successor, or the person designated therein does not qualify, the successor must be appointed and must qualify in the manner prescribed by law for the appoint- ment and qualification of an administrator with the will annexed," Prior to 1884, 2818 was confined to the case of the death, APPOINTMENT BY SURROGATE'S COURT. 89 resignation, or removal of a sole testamentary trustee ; but it was held that the language of the whole section showed that it was the intention to provide for a case where all the testamentary trustees died or resigned, and that there was no purpose to con- fine it to the case of a sole testamentary trustee." Royce v. Adams, 123 N. Y. 402 (404). And the mere fact that a person named in a will is called a trustee does not bring him within the jurisdiction of the Surrogate's Court unless he is in fact a testa- mentary trustee under some technical express trust. Matter of Hawley, 104 N. Y. 250 (261). It is to be noticed that under this statute the power to appoint a new trustee is given to the Surrogate's Court only in case of the death, lunacy, resignation, or removal of a testamentary trustee. The cases of vacancy caused by renunciation, failure of the will to name a trustee, or death before the will goes into effect of a person named as trus- tee, are not covered. And the " Surrogate's Court is a creation of the statute, of inferior and limited jurisdiction. Those claim- ing under the decree of a surrogate must show affirmatively his authority to make it, and the facts which gave him jurisdiction." Matter of Hawley, 104 N. Y. 250 (262). The Surrogate's Courts, as such, are mentioned and continued in the present Constitution of New York, but they and the surrogates only " have the juris- diction and powers which the surrogates and existing Surrogate's Courts now possess until otherwise provided by the Legislature." (Article VI., 15.) The power of the Surrogate's Court to ap- point a successor to a deceased testamentary trustee originated with the Code of Civil Procedure, 2818, in 1880, prior to which time the power resided exclusively in the Court of Chan- cery, and later in the Supreme Court. The act of 1882, chap. 185, however, provided for the devolution of the trust upon the Supreme Court, in all cases of personal property trusts. In 1884, however, 2818 was re-enacted, with some changes, thus establishing the concurrent jurisdiction of the Surrogate's Court, in cases of testamentary trusts. See the discussion in Matter of Valentine, 3 Dem. 563. Concerning the method of appointing successor by the Surrogate's Court, notice to par- ties, bond, etc., see Tompkins v. Moseman, 5 Redf. 402 ; Matter of Valentine, 3 Dem. 563 ; Matter of Whitehead, 3 Dem. 227. 90 THE TRUSTEE. 130. Testamentary trustee Definition. " The expres- sion ' testamentary trustee ' includes every person, except an executor, an administrator with the will annexed, or a guardian, who is designated by a, will, or by any competent authority, to execute a trust created by a will ; and it includes such an execu- tor or administrator, where he is acting in the execution of a trust created by the will, which is separable from his functions as executor or administrator." Code C. P., 2514, subd. 6. This section defines the term as used in chap. 18 of the Code, relating to Surrogate's Courts. (Code C. P., 2514, first sen- tence.) This chapter covers 2818, relating to appointment of a successor by a Surrogate's Court. If the offices of the execu- tor or administrator and trustee are not separable, the trustee is not a " testamentary trustee" under 2818. Matter of Clark, 5 Redf. 466. But in Matter of llecht, 71 Hun, 62, this distinc- tion appears to be overlooked ; for the executor-trustee having died, and an administrator with the will annexed having been appointed to succeed him, it was held that the " trust was an- nexed to the office of executor," but that nevertheless a new trustee should be appointed by the surrogate to carry out the trust. But 2815 of the Code requiring security from testa- mentary trustees in certain special cases there specified does not cover those appointed as successors. Matter of White/lead, 3 Dem. 227 (231, 232). An interesting point relating to the scope of the term testamentary trustee, in the statute authorizing the appointment of a successor by the surrogate, is treated in Matter of Morian, 1 Con. 503, where testator had insured his life in favor of A, and on the same day executed his will, ap- pointing A executor, and directing him to distribute the pro- ceeds of the policy to persons named, and still on the same day A agreed to hold said fund in trust and dispose of it as prescribed in the will. Thereafter testator died, and A qualified as execu- tor. It was held that he thereby became a testamentary trustee, and that on his death the surrogate had power to appoint a suc- cessor. The term testamentary trustee may be restricted in its application to the very persons named in the will, excluding successors. Matter of Whitehead, 3 Dem. 227 (231, 232). If a general annuity is given, charged on land devised, and the devisees and annuitant sell the land, and the devisees turn over to THE TRUSTEE'S TITLE. 91 the executor a fund sufficient to raise the annuity, the executor does not become a testamentary trustee as to this fund, and is not accountable as such. He is the mere agent of the devisees. (He would, as to the annuitant, appear to be a trustee, though not under the will. This is not involved in the case cited.) Matter of Collins, 144 N. Y. 522. (c) Appointment by Third Party. 131. A creator of a trust may delegate to a trustee named by him (or to other persons) the power to appoint a co-trustee or to fill vacancies. Compare Hartnett v. Wandell, 60 N. Y. 346 ; Rogers v. Rogers, 4 Redf. 521. But authority to surviving trus- tees to appoint a successor to a deceased associate does not invali- date a deed executed by the survivors without choosing such suc- cessor. Belmont v. O'Brien, 12 N. Y. 394 (405). A person having a fiduciary power of appointing a trustee cannot appoint himself to the position. Inre Newen, (1894) 2 Ch. 297 (309). (3) The Trustee's Title. (a) Legal and Equitable Title, 132. The revisers' purpose. In their report to the Legis- lature, the revisers of 1830 called attention to the evils which arose from separating the legal and equitable title in the case of uses and later of trusts, and placing the legal title in the trustee and the equitable title in the beneficiary. (See ante, 4, 5.) And they proposed to remedy this defect in the law and effect a vesting of the whole title in some one, in every case, by provid- ing (1) that if a trust was passive, the entire title, legal and equitable, should vest in the beneficiary, free of the trust ; (2) that if it was active, but not for any purpose requiring title in the trustee, the title should vest in those otherwise entitled, subject to the execution of the trust as a power ; and (3) that if it was active, and fell within any of the classes requiring and authoriz- ing title in the trustee, he should have it all, legal and equitable, subject only to the right of the beneficiary to compel him, in equity, to carry out the trust. See s\$>o post, Chap. XI. 133. The revised statutes. Accordingly, it was provided, by the Revised Statutes, in reference to the active express trusts 92 THE TRUSTEE. thereby authorized, that " every express trust, valid as such, in its creation, except as herein otherwise provided, shall vest the whole estate in the trustees, in law and in equity, subject only to the execution of the trust. The persons for whose benefit the trust is created shall take no estate or interest in the lands, but may enforce the performance of the trust in equity." 1 R. S. 729, 60. 134. The real property law. In 1896, however, the Legis- lature repealed the provision just quoted, and enacted the follow- ing substitute : " Except as otherwise prescribed in this chapter, an express trust, valid as such in its creation, shall vest in the trustee the legal estate, subject only to the execution of the trust, and the beneficiary shall not take any legal estate or interest in the property, but may enforce the performance of the trust." Real Prop. L., 80. Whether the revisers of 1896 intended to revert to the theory of a separated title, it might be difficult to say. Such an intention would constitute the only justification for the change in phraseology. It may perhaps be supposed that they relied on another provision of the statute to counteract any such view. For 71 of the Real Property Law provides that " every estate or interest in real property is deemed a legal right, cognizable as such in the courts, except as otherwise prescribed in this chapter." If this was their view, the result is that while the revision of 1830 got rid of separate titles by vesting them both in the trustee, the revision of 1896 attempts to get rid of them by killing out the equitable title entirely. Considering the extremely difficult nature of the questions involved, the compli- cations that have heretofore arisen from legislative attempts to deal with them, and the fact that the meaning of the repealed section had, in the course of sixty years, become settled, the change is unfortunate. Whether any change of substance has, or has not, been thus introduced, is at present necessarily some- what uncertain. The law as it stood prior to October 1st, 1896, will now be considered. 135. Title in trustee essential. Unless the legal title is vested in the trustee there can be no express trust. Hopkins v. Sent, H5 N. Y. 363. THE TRUSTEE'S TITLE. 93 136. " Whole estate in law and in equity." (Under the present statute, the trustee has " the legal estate.'') The term " whole estate" does not mean that the trustee must necessarily hold the land in fee. It refers to the classification of estates as legal or equitable, and gives both to the trustee ; it does not refer to the classification of estates as estates for life, estates in fee, etc. The meaning of it is that while a trustee may hold an estate in trust either for a term measured by a life, or two lives, or may in certain cases hold a fee in order to enable him to fulfil the purposes of a trust requiring a fee in him, Bennett v. Gar- lock, 79 N. Y. 302 (317) (as, for example, a trust to sell to pay debts), yet in either case, while the trust lasts and he continues to hold, he has, at any given time, the " whole estate in law and in equity." Knowlton v. Atkins, 134 N. Y. 313 (317); Matter of Tienken, 131 N. Y. 391 (401) ; Losey v. Stanley, 147 N. Y. 560 (568) ; Moore v. Appleby, 36 Hun, 368 ; affi'd 108 N. Y. 237 ; Embury v. Sheldon, 68 N". Y. 227 (234) ; Townshend v. Frommer, 125 N. Y. 446 (455, 468) ; Bennett v. Garlock, 79 N. Y. 302 (317 et seq.} ; NicJiol v. Walworth, 4 Den. 385 ; Ste- venson v. Lesley, 70 N. Y. 512 (516, 517) ; Chism v. Keith, I Hun, 589 ; Manice v. Manice, 43 N. Y. 303 (363, 364) ; Magill v. McMillan, 23 Hun, 193 ; Matteson v. Armstrong, II Hun, 245 (249). In cases where the purposes of the trust require a fee in the trustee, as in the example just mentioned, he then, of course, holds the " whole estate" in the same sense in which any owner in fee holds the whole estate, Bennett v. Garlock, 79 N. Y. 302 (320), but subject to the performance of the trust. In cases where he holds not a fee but an estate for the life of one or of two persons, he then has the " whole estate" in the same sense in which any tenant for life (whether for his own life or pur autre vie) holds the whole estate, but still subject to the perform- ance of the trust. The term of a trust estate for a life or two lives may be further modified in character in that it may be limited to cease upon the earlier lapse of a specified period, as, for example, " during the lives of B and C, but not beyond the term of ten years ;" or " until the expiration of ten years, or the earlier decease of B and C." In this case, also, the trustee, while the trust continues, has the " whole estate" in the same 94 THE TRUSTEE. sense as a person to whom such an estate is given beneficially and not in trust, would hold the whole estate. In all these cases the trustee holds the whole of the estate which has been given him, and holds it all both as a legal estate and as an equitable estate. But what the estate is, which has been given him that is, whether for life, or in fee, etc., is another question, to be deter- mined according to thetermsot the grant or devise. These mat- ters are briefly stated here for their bearing on the meaning of the term "whole estate." The different kinds of estates that may be given in trust, whether for life, or in fee, etc., will be considered more fully hereafter in the chapter on the Trust Term. 137. Trustee's estate is subject to the trust. It is to be noticed here, that although the trustee has the " whole estate in law and in equity," in the sense already discussed, he holds it " subject to the execution of the trust," and that while the bene- ficiary has no " estate" whatever, he has the right to " enforce the performance of the trust in equity." Bennett v. Garlock, 79 N. Y. 302 (320) ; Anderson v. Mather, 44 N. Y. 249. This right will be considered more fully hereafter, partly in this chap- ter, in its aspect of a qualification of the power and rights of the trustee, and partly in the chapter on " The Beneficiary." Transfers of property in trust are subject to the application of the Taxable Transfer Act. Matter of Ho/man, 143 N. Y. 327. See post, 382. 138. Trust invalid on its face. If a trust is void on its face, no title vests in the trustee. Heermans v. Burt, 78 N. Y. 259 (264) ; see s. c. 64 N. Y. 332 ; see 523, et seq. 139. Trust Remainder after. " The preceding section [that is, Real Prop. L., 71, quoted above, 134] shall not pre- vent any person, creating a trust, from declaring to whom the real property, to which the trust relates, shall belong, in the event of the failure or termination of the trust, or from granting or devising the property, subject to the execution of the trust. Such a grantee or devisee shall have the legal estate in the prop- erty, as against all persons, except the trustees and those lawfully claiming under him." Real Prop. L., 72. Van Camp v. THE TRUSTEE'S TITLE. 95 Fowler, 59 Hun, 311 ; affi'd 133 N. Y. 600 ; Losey v. Stanley, 147 N. Y. 560 ; Matter of Young, 145 N. Y. 535 ; Em~bury v. Sheldon, 68 N. Y. 227 ; Matter of Grossman, 113 N. Y. 503 (509) ; Manice v. Manice, 43 N. Y. 303 (307, 308) ; Levy v. Levy, 79 Hun, 290 ; Tucker v. Ball, 1 Barb. R. 94 ; Gersen v. Rinteln, 2 Dem. 243 ; note, 18 Abb. N. C. 297 ; Coit v. Rol- ston, 44 Hun, 548 ; DaCosta v. Bass, 48 Hun, 3J. The former provision concluded with the word them, which is now changed to him. 140. Absolute, defeasible or contingent remainder. The remainder thus permitted may be either absolute or defeasi- ble (Matter of /Seaman, 147 N. Y. 69), vested or contingent ; thus a trust during the life of A, remainder to B in fee ; or, a trust during the life of A, and if at A's death B be then living, then to B in fee. Or, the creator of the trust may vary the form, and grant or devise an estate beneficially to B, subject to a trust for A ; thus, " I devise my land to X in trust to receive the rents and profits and apply them to the use of A, for his life, and subject to said trust, I devise said lands to B in fee." This latter form. is from one point of view preferable. For if a re- mainder be granted or devised, limited on a prior estate (whether in trust or not) it is often difficult to determine, as a matter of construction, whether it was intended as a vested or a contingent remainder. If, however, a vested estate be in fact intended, then an outright grant or devise merely subject to the trust, often furnishes a more simple form of expressing that intention with clearness. (Even though, in this form, an intention to have the property vest at once is clear, yet, as it does not effect a present vesting in possession, it may of course still be open to dispute, whether it is vested absolutely, or vested subject to being divest- ed on the happening or non-happening of some subsequent event.) As to these two forms, see Goebel v. Wolf, 113 N. Y. 405 (413, 415). A remainder after a trust estate may be sold, devised, mortgaged, and in all respects dealt with, like any other remain- der. Gwyer v. Gwyer, 5 A pp. Div. 161 ; Douglas v. Cruger, 80 N. Y. 15 (18). Where a contingent remainderman of an estate on which there is a mortgage, is compelled in order to protect his contingent es- 96 THE TRUSTEE. tate against loss through foreclosure, to advance the money to pay off the mortgage, and it subsequently turns out, by the fail- ure of the contingency, that he had no estate in the property, he is entitled to be subrogated to the rights of the mortgagee, for reimbursement from the land, as against those who benefited by his payment. This is so though the precedent estate is held in trust, and the time has not yet arrived when, by the terms of the trust, there is an absolute direction to sell. The land held in trust may be sold under decree of foreclosure to satisfy the claim of the remainder- man. Pease v. Egan, 131 N. Y. 262. As to the bearing of the taxable transfer act on the right of succession to a contingent or defeasible remainder limited on an express trust, see Matter of Curtis, 142 N. Y. 219 ; note, 24 Abb. N. 0. 365 ; Matter of Davis, 149 N. Y. 539 ; Matter of Seaman, 147 N. Y. 69 ; Matter of Hoffman, 143 N. Y. 327. 141. Remainder in beneficiary. The beneficiary of an ex- press trust may also be the grantee or devisee of a remainder limited on the estate of the trustee, as, for example, in the case of a devise to A, to receive and apply the rents and profits to the use of B, during the latter's minority, remainder to B in fee. Martin v. Pine, 79 Hun, 426. So if the instrument creating the trust grant or devise the remainder to another, the beneficiary may buy it in, and so become the remainderman. So, no doubt, the creator of the trust may grant or devise a remainder to the beneficiary, limited on a trust which is to continue throughout the latter's life, so that on his death the estate, being thus re- lieved of the trust, would sink into and become part of A's estate and pass to his heirs or devisees. See Howland v. Clendenin, 134 N. Y. 305 (310).' In all these cases, his estate in remainder, whether vested or contingent, absolute or defeasible, is unaffect- ed in any manner by the fact that he is also the beneficiary of the precedent trust estate. It is alienable, devisable and de- scendible, according to its nature, like an estate in possession. Real Prop. L. , 49 and 81. And on the other hand, the fact that 1 A.S to Howland v. Clendenin, supra, compare Arcularius v. Geisenhainer, 3 Bradf. 64, and other cases bearing on the subject in 359, post. THE TRUSTEE'S TITLE. 97 the beneficiary is also the remainderman does not in any manner affect the validity of the trust. He is interested in both estates, but he is vested with the title to only one of them, and there is no merger. Raymond v. Rochester Trust etc. Co.) 75 Hun, 239 ; Greer v. Chester, 62 Hun, 329 ; atf'd 131 N. Y. 629 ; Asche v. Asche, 113 N. Y. 232 ; Matter of Lewis, 3 Misc. 164. Under L. 1893, eh. 452, and the present 83 of the Real Property Law, a beneficiary under a trust to receive and apply rents and profits, who is also entitled to the remainder, may release his in- terest under the trust and effect a merger of the trust estate in the remainder. See further as to remainders, post, 359. 142. Remainder in trustee. A creator of a trust may also grant or devise a remainder to the trustee, limited on the trust. Raihbone v. Hooney, 58 N. Y. 463. Or, he could grant or de- vise the land to the trustee, subject to the execution of the trust. In either case, the trustee would take title in two capacities, hold- ing the trust estate as trustee, and the other estate as an indi- vidual. And while he could not, as stated later, mortgage the trust estate (except under certain circumstances), yet a mortgage given by him would bind his remainder. Raihbone v. Hooney, 58 N. Y. 463. So a conveyance by a trustee, though void as regards the trust estate, may be valid as affects hia personal inter- ests, if any. Champlin v. Haight, 7 Hill. 245 (248). 143. Trust Reversion. " Where an express trust is creat- ed, every legal estate and interest not embraced in the trust, and not otherwise disposed of, shall remain in or revert to, the person creating the trust or his heirs." Real Prop. L., 82. This provision as to a reverter to the creator of the trust or his heirs, appears to relate, in its two alternatives, to the two methods of creating trusts by deed (or declaration) or by will. If by deed, the estate not transferred remains in the creator of the trust ; if by will, it reverts to his heirs. It appears to be clear that the 11 heirs" in whom the reversion would thus vest are the persons who are such at the death of the testator, and not those who would be such if he had died later at the time when the rever- sion becomes an estate in possession. O* Brien v. Mooney, 5 Duer, 51 (54). See Stevens v. Miller, 2 Dem. 597 ; Hor- 7 98 THE TRUSTEE. ton v. Cantwell, 108 N. Y. 255 (268), In addition to a " rever- sion" proper, this section also covers the case of a " possibility of reverter." That is, even where a fee is granted, as, in trust to sell and pay debts, yet there is a possibility that after the debts are all paid some of the property will remain, in which case it belongs to the creator of the trust. Colie v. Jamison, 4 Hun, 284 (286). 144. " Whole estate" Qualification. When the statute provides that the trustee shall have the legal estate, it expressly confines the provision to express trusts. That is, the beneficiary shall not have an equitable title but merely an equitable interest. Bennett v. Garlock, 79 N. Y. 302 (320). It does not mean that one who owns land, but has only an equitable title, the legal title being in another under an implied or resulting trust, cannot con- vey his equitable title to a trustee, giving the latter the same right the grantor or devisor had to get in the legal title. In such a case the grantee or devisee in trust would receive only the equitable title. Thus, compare the case of a trust of personalty, where a bond and mortgage were executed to A who really held them in trust for B. B legally transferred his interest in them to C in trust. Here on A's death, while her administratrix with the will annexed had a legal right to receive payment, and dis- charge the debt, in equity the proceeds belonged to C, the trus- tee. Matter of Hobson, 61 Hun, 504, aff'd 131 N. Y. 575. See Tierney v. Wood, Ames' " Cases on Trusts," p. 182. 145. To trustee and his heirs. A grant or devise to a " trustee, his heirs, executors, administrators and assigns," refers to the quality of the estate, and does not convey anything to the heirs, or render the trust estate descendible. Flagler v. Schoeffel, 40 Hun, 178. But it may prima facie give the trustee the fee in trust, Bennett v. Garlock, 79 N. Y. 302 (317). Compare Pfeijfer v. Eheinfrank, 2 App. Div. 574. 146. Title Gift of rents, when essential. " A devise of real property to an executor or other trustee, for the purpose of sale or mortgage, where the trustee is not also empowered to re- ceive the rents and profits, shall not vest any estate in him ; but THE TRUSTEE'S TITLE. 99 the trust shall be valid as a power, and the real property shall descend to the heirs, or pass to the devisees of the testator, sub- ject to the execution of the power." Real Propert} 7 L., 77. Chamberlain v. Taylor, 105 N. Y. 185 (191) ;. Steinhardt v. Cunningham, 130 N. Y. 292 ; Buckley v. Buckley, 11 Barb. R. 43 (78) ; Bouton v. Thomas, 46 Hun, 6 ; Germond v. Jones, 2 Hill. 569 (573). As to personal property, see Hagerty v. Hag- erty, 9 Hun, 175. This statute relates to the first and second of the four classes of permitted express trusts in land, but it omits reference to a trust to lease, included in the second class. By its terms, it re- fers only to devises, and not to grants, in trust. The general purpose of this distinction between deeds and wills seems to have arisen from the necessities of the case where a debtor proposes to make an assignment for the benefit of cred- itors. For unless he could transfer the title to the assignee, there would, at least in general, be no protection against attachments and levies. A power to sell would seldom, if ever, serve the purpose. But where he proposed to make a disposition by will, for the same purpose, no such necessity for transferring title to a trustee would exist. After his death his property must be mar- shalled, and all debts must be paid in due order. Therefore a power would serve every purpose. It was accordingly provided, by the statute, that while he might create an express trust by deed, vesting title in the trustee, for the purpose of sale, to pay any existing debts, or of sale, mortgage or lease to pay those that were a charge on the land, yet a devise for sale or mortgage should not vest title, unless such an intent was made complete by empowering the trustee to receive the rents and profits. Heermans v. Robertson, 64 N. Y. 332 (342). Though such was the general purpose, the statute, by its terms, applies to all tes- tamentary trusts to sell or mortgage, whether intended for the payment of debts only or of annuities or other legacies. The third and fourth classes are, by the terms of the statute, " to re- ceive the rents and profits of lands, and apply them," etc. ; and " to receive the rents and profits of lands, and to accumulate the same," etc. Thus, authority to receive rents and profits is essen- tial in trusts to sell or mortgage, when they are created by will ; no such requirement as to trusts to lease is found in terms 100 THE TRUSTEE. in the statute ; and trusts to apply, and trusts to accumulate, must be such as to give to the trustee, either in terms or by necessary implication, authority to receive the rents and profits, and this, whether the trust be created by deed or will. See Hawley v. James, 16 Wend. 60 (114) ; Keal Prop. L., 76, 77 ; Purdy v. Wright. 44 Hun, 239 ; Weeks v. Comwell, 104 N. Y. 325 (339) ; Hotchkiss v. Siting, 36 Barb. 38 ; Graham v. Liv- ingston, 7 Hun, 11 (13). The words " rents and profits" need not be used, nor specific authority to receive the same conferred in terms. The intention to empower the trustee to receive them may be inferred, as, by a devise to the trustee with direction to "apply the rents and profits to the use of," etc. Here the devise, and the direction, necessarily involve the right to receive. Knox v. Jones, 47 N. Y. 389 (398). (But compare Hawley v. James, 16 Wend. 60 (114-115), with Id. (151-155).) Woodward v. James, 115 N. Y. 346 ; Morse v. Morse, 85 N. Y. 53 (59) ; Don- ovan v. Van De Mark, 78 N. Y. 244 ; Dillaye v. Greenough, 45 N . Y. 438 (444) ; Tobias v. Ketchup 32 N. Y. 319 (328) ; Ward v. Ward, 105 N. Y. 68 (74) ; DeKay v. Irving, 5 Den. 646 (651) ; Vail v. Vail, 4 Pai. 317 (328) ; Betts v. Betts, 4 Abb. N. C. 317 (385) ; but see Manice v. Manice, 43 N. Y. 303 (363). But the authority, express or implied, to receive the rents and profits must be actual, and not merely incidental and illusory. Heermans v. Burt, 78 N. Y. 259 (267). Authority to rent, lease, repair, and insure, pay taxes and assessments, and pay over one third of the net income to a beneficiary creates an express trust and gives title to the trustee. Tobias v. Ketchum, 32 N. Y. 319. But authority to sell and invest may not imply power to receive in- come, and so does not involve a trust. Vernon v. Vernon, 53 N. Y. 351 (357, 358). A direction that the property shall " re- main under the control of my executor during the minority of " A," an infant, does not create a valid trust. There is no authority to receive rents and profits, no direction as to disposi- tion of rents and profits, and no specification of the manner of carrying on any trusts or any purpose. Aldrich v. Funk, 48 Hun, 367 (375). And although the authority to receive rents and profits is necessary to create an express trust, and the fact that such authority is given indicates that a trust was intended, Brewster v. Striker, 2 N. Y. 19, yet this indication is not con- THE TRUSTEE'S TITLE. 101 elusive. The purpose for which they are given (and the term), must also be within the statute. Holly v. Hirsch, 135 N. Y. 590. Thus a power to receive rents, amalgamate them with the corpus, and divide the gross bulk as principal, is not an express trust. Cooke v. Plait, 98 N. Y. 35 (39). A devise in trust, to receive rents and profits, where there is no direction to apply them to the use of beneficiaries or accumulate them, is not valid as an ex- press trust. Holly v. Hirsch, 135 N. Y. 590 (594) ; Dillaye v. Greenough, 45 N. Y. 438 (444). A trust to receive rents, and to pay over annual sums to beneficiaries, is not valid as a trust unless the payments are to be made from rents or income. To receive the rents, and pay out from corpus will not answer. Hen- derson v. Henderson, 113 N. Y. 1 (10, 12). And the implica- tion of a trust, from authority to receive income, does not have the same force where the property is personal, as where it is real. Onondaga Trust <& Deposit Co. v. Price, 87 N. Y. 542 (547). So a mere power of sale, with authority to receive the rents and profits prior to actual sale, is not in itself enough to constitute an express trust. For here the essential element of vesting title in the trustee is lacking. Matteson v. Armstrong, 11 Hun, 245. 147. Future trust Title. Where a trust is created to go into operation infuturo the trustee, of course, acquires no estate in possession, until the future period designated. Hawley v. James, 16 Wend. 60 (115 et seq. 151) ; see Van Cott v. Pren- tice, 104 N. Y. 45 (55) ; and Real Prop. L., 27, 28 ; Oil- man v. McArdle, 99 N. Y. 451 (459). So, a trust instrument delivered inter vivos may merely direct, as to the period after the grantor's death, that the property be held as directed in a sealed paper also delivered, but only to be opened at the grantor's death. Van Cott v. Prentice, 104 N. Y. 45 (55). Such a trust differs from a trust created by will, in that the latter does not go into effect, and no title passes to the trustee, until the testator's death, and in the meantime the will is revocable ; while in the case supposed, the deed goes into effect, and becomes binding, upon delivery of the deed, and the title (to the future estate), vests in interest at once in the trustee, though it does not vest in possession until the grantor's death ; and in the meantime it is 102 THE TRUSTEE. irrevocable (unless a power of revocation is reserved, see post, 685, et seq.}. Oilman v. McArdle, 99 N. Y. 451 (459). 148. Trust deed Does not relate back. Where a trust instrument is void, a second one executed subsequently, and in- tended to cure its defects does not relate back to the original date and cut out a lien on the creator's property which has attached intermediate the creation of the two trusts. And where a trust instrument is void on its face, it cannot, in an action brought for that purpose, be reformed so as to affect the lien as above. See Sutherland v. Bradner, 116 N. Y. 410. 149. When trustee jointly interested. As to rents and income, a trustee may be jointly interested with the beneficiary, having part of the use and income for himself and also holding in trust for the support and education of another, etc. Macom- 1>er v. Bank of Batavia, 12 Hun, 294. The trust ranges over the entire estate ; but subject to the trust for the other person, his own personal interest is absolute. Woodward v. James, 115 N. Y. 346. 150. Trust in future proceeds. A created a trust in all of certain property, for the life of B. On B's death the trustee was to sell the land, pay legacies, and divide the surplus into four shares, two of which he was to hold in trust for C's life. It was held, that between B's death and the time of actual sale there was no trust. See Matteson v. Armstrong, 11 Hun, 245. 151. Trust partly illegal. Even though the trust instru- ment may attempt to create an illegal as well as a legal trust, yet, if the latter is separable from the former, it is sufficient to sustain the grant or devise to the trustee of an estate commen- surate with the legal trust, without reference to the one illegally attempted. This was the principle laid down and applied by the Court of Chancery in Hawley v. James, 5 Pai. 320 (458, 459), and though the appellate court deemed it inapplicable in that case, it did not then disapprove the principle, and later approved and followed it. Irving v. DeRay, 9 Pai. 521 (527, 528). See also Van Vechten v. Van Veghten, 8 Pai. 104 (119-120) ; Haxtun THE TRUSTEE'S TITLE. 103 v. Corse, 2 Barb. Ch. 506 (519) ; Kane v. Gott, 24 Wend. 641 (666) ; Darling v. Rogers, 22 Wend. 483 ; Parks v. Parks, 9 Pai. 107 (118), aff'd, N. Y. Commercial Advertiser, Jan'y 3, 1843 ; Dupre v. Thompson, 4 Barb. 279. 152. Trustee's title subject to debts and liens. The trust estate in the hands of the testamentary trustee is of course liable to any amount required to pay testator's debts, to the same extent as if devised beneficially. Rosenburg v. liosentmrg, 40 Hun, 91 ; Reed v. Lozier, 48 Hun, 50 ; see 23 Abb. N. C. 20 ; Thorp v. Munro, 47 Hun, 246. And he is required, to the extent of the property devised, to satisfy mortgages thereon, without calling on testator's executors, who are ultimately liable only for a deficiency on foreclosure. Real Prop. L., 215 ; Hauselt v. Patterson, 12 1 N. Y. 349. And the trustee's title is also subject to a lease executed before the creation of the trust, Gilchrist v. Stevenson, 9 Barb. R. 9 (16), and the trustee is en- titled to sue for and collect the rent. Ryers v. Fanvell, 9 Barb. R. 615 (617). 153. Title in trust Estoppel to deny. If one holds property under a grant or devise such as might have been con- strued to give him beneficial ownership, but long treats the prop- erty as held in trust, under the deed or will, for another, he is, by his own acts and construction estopped from dealing with it as his own. Easterly v. Barber, 65 N. Y. 252. And his as- signee or vendee with notice stands in the same position. Reid v. Sprague, 72 N. Y. 457. 154. Lapse of share Effect on title. If a trust is created to pay rents to certain persons designated, share and share alike, and one of them dies before the trust instrument goes into effect, the lapse as to his share does not affect the title of the trustee as to the remaining shares. Savage v. Burnham, 17 N. Y. 561 (575). 155. After vesting, what does not impair. When title has once vested irrevocably in the trustee, the grantor, or the heirs of the devisor, have of course no further control over the trust estate, except as the same may have been reserved in the 104 THE TRUSTEE. trust instrument. Thus, he cannot affect the land by mortgage (if the trust deed is recorded) except as to his reversion, if any. Briggs v. Davis, 21 N. Y. 574. Nor can he, after creating in his lifetime a trust for a term which extends beyond his own life, dispose of the same property by will, except as to the remain- der after the first trust. And this is so even though the will was executed before the first trust was created, but went into effect after it. Matter of Clute, 80 N. Y. 651. But where a deed of trust covers all the grantor's property, a subsequent will creating a trust may nevertheless have some scope. For the deed cannot, as a general proposition, cover after acquired property, while the will does, and if there be any such property, it would be affected by the provisions of the will. Wade v. Holbrook, 2 Redf. 378. Nor can the trustee do any act in contravention of the trust. Thus, he cannot, contrary to the trust, reconvey to the creator thereof. Gilchrist v. Stevenson, 9 Barb. 9 (15) ; Briggs v. Dams, 20 N. Y. 16, s. c. 21 N. Y. 574 ; Scott v. Rand, 115 Mass. 104, s. c. 118 Mass. 215. The trust, therefore, cannot be escaped from. Thus, after title passes, the fact that an existing policy of insurance is continued in the name of the grantor, does not rebut the trustee's title. Bliss v. West, 58 Hun, 71 (74), aff'd 132 N. Y. 589. Also ante, end of 82. Nor will any subsequent events invalidate the title once validly transferred. Roberts & Co. v. Buckley, 145 K Y. 215 (228). So where title has once passed to the trustee, it cannot be defeat- ed by declarations of the creator of the trust, that he knew, in purchasing the property in question from plaintiff, that he was then insolvent, such declarations having been made to another creditor, after ordering the property but before the delivery and before the assignment. Vidvard v. Powers, 34 Hun, 221 ; Truax v. Slater, 86 N. Y. 630. As to subsequent declarations by the creator of the trust see also Von Sachs v. Kretz, 72 N". Y. 548 ; Bullis v. Montgomery, 50 N. Y. 352 ; Flagler v. Wheeler, 40 Hun, 125 ; Flagler v. Schoeffel, 40 Hun, 178 ; Church v. Howard, 79 N. Y. 415 (419) ; Bliss v. West, 58 Hun, 71, aff'd 132 K Y. 589 ; Coyne v. Weaver, 84 N. Y. 386 (392). The deed cannot be reformed at the request of the beneficiary. Grout v. Van Schoonhoven, 1 Sandf. Ch. 336 (340). So in case of a will, the tmst is or is not valid at testator's death. If not, it can- TRUST AND EXECUTORSHIP DISTINGUISHED. 105 not be validated by subsequent acts of the executor. If it is valid, subsequent acts cannot invalidate it. Sutler v. Green, 65 Hun, 99 (111). On the other hand, a devise of land, in trust, does not go into effect until testator's death. Prior to that time, he may not only revoke the devise, but may dispose of the land and thus leave nothing for the devise to act on. If he sells the land, the proceeds do not, at his death, pass to the trustee. Phil- son v. Moore, 23 Hun, 152. Where A takes out a policy of insurance on his life, payable to B in trust for C, the fact that the insured has possession of it gives no right to the company to alter it at his request. Butler v. State M. L. A. Co., 55 Hun, 296 (302), aff'd 125 K Y. 769. The result would be the same even if the trustee consented. Id. (301). A sale by a. trustee, for an inadequate price, cannot be set aside by the court on mo- tion made by the creator of the trust. Matter of Rider, 23 Hun, 91 (93). Though it seems that his interest in having his pur- poses carried out might be such as to sustain a regular action by him against the trustee and purchaser, based on allegations of collusion. Id. See 36 Hun, 23. Cranston v. Plumb, 54 Barb. R. 59. As to cases where admissions of a trustee are admissible and binding on the estate, see Church v. Howard, 79 N. Y. 415 (419). As to their effect on a co-trustee, see cases cited, Id., pp. 418-419. The trustee, on appointment, becomes entitled to all muniments of title. Thus, where a mortgagor paid the amount of the mortgage and took back an assignment of it to be held merely as a muniment of title, and died, and his heir deeded the land to a trustee, the latter, and not the executor of deceased is entitled to the possession of the mortgage. Brown v. P err is, 23 Abb. N. C. 226. (b) Trust and Executorship Distinguished. 156. Whether trustee or executor. Where a will im- poses upon an executor special duties, in reference to personal property, over and above the bare settlement of the estate, the question frequently arises whether testator has actually created a technical express trust, and confided its execution to the same person who is also executor, so as to impose on him two distinct capacities, or has merely intended to enlarge the scope of the executor's duties, to be performed by the executor as such and 106 THE TRUSTEE. not as a technical trustee. In the latter case, the duties in ques- tion are said to be merely executorial in their nature ; to be per- formed by the executor virtute officii, and to be enforced accord- ingly ; while in the other case, they are distinct from the execu- torial office, and are personal, and are to be enforced on the theory of an express trust. 1 The real question involved is, whether, in a given case, there are in effect two distinct per- sonalities that of executor and that of trustee their merger in one individual being immaterial and accidental ; or whether there is an executor only, and no trustee ; the executor acting as such in all matters, but with enlarged powers, duties, and responsi- bilities. The question, of course, so far as an express trust, as distinguished from a power in trust, is concerned, only arises where tne property involved is personal. It cannot be anv part of an executor's duties, regarded either as inherent or as enlarged by the terms of the will, to take title to land under a devise in trust. If land be devised to an executor in trust, he must take it in a distinct capacity as trustee. Thus, in such a case, he is succeeded not by an administrator with the will annexed, but by a trustee ; the administrator succeeds merely to the executorship. Dunning v. Ocean Nat. Bank, 61 N. Y. 497. An executor as such, however, may hold a power in trust, which will devolve on his successor in the executorship. See post, 604. 1 The line of distinction j ust stated is of ten.blurred by the fact that even the latter class of cases may, under the terms of the will, fall into three groups namely, (a) cases where the two distinct capacities are intended to go along together as long as they exist, so that whoever is the executor, or adminis- trator, at any given time, shall, by virtue of that fact, be also the trustee, and (6) cases where the two capacities are so far distinct that when a vacancy occurs the court may, or may not, in its discretion, appoint the same person to both positions, and where, even if it does appoint the same person, it ap- points him to fill each vacancy by a separate provision. A test of this latter distinction is furnished when, at the death of the executor, the question arises whether the administrator with the will annexed, appointed by the surrogate to succeed the executor, becomes, merely by virtue of his letters of adminis- tration, the successor of the trustee also, or whether he must also be appointed by the same court or the Supreme Court as trustee. Earle v. Earle, 93 N. Y. 104 (109). (c) A third group exists where the trust capacity belongs solely to the first appointee as an individual, and to nobody else, so that if he refuses to act, or dies, or is removed or resigns, the trust ceases, and there can be no successor at all. The questions raised in a given case, therefore, are, first, whether a techni- TRUST AND EXECUTORSHIP DISTINGUISHED. 107 157. Attached to executorial office. Where the execu- tion of a trust is confided to executors as such, and if they take out letters, they thereby also accept the trust. Earle v. Earle, 93 N. Y. 104 (110). And they cannot be removed from the trusteeship save by revocation of their letters testamentary. Wood v. Brown, 34 N. Y. 337 ; Matter of Hood, 98 N. Y. 363 ; Matter of Hood, 104 N. Y. 103. And such revocation does effect a removal in both capacities. Johnson v. Lawrence, 95 N. Y. 154 (164) ; Matter of Hood, 98 N. Y. 363. Compare Code C. P., 2819. The trust, upon the removal, resignation, or death of an executor, or his failure to qualify, devolves on the other executor, if any, otherwise upon an administrator with the will annexed of the original testator. Earle v. Earle, 93 N. Y. 104 (108) ; Matter of Clark, 5 Redf. 466 ; Binghamv. Jones, 25 Hun, 6 (10) ; Matter of Stevenson, 3 Pai. 420. Com- pare Matter of Hecht, 71 Hun, 62. L. 1882, ch. 185. Matter of Post, 2 Con. 243 (247). Code, 2514, subd. 6. 158. Separable. When the trust is not attached to the office of executor, the person named may renounce the executor- ship and accept the trust, or renounce the trust and accept the executorship. Dunning v. Ocean Nat. Sank, 61 N. Y. 497 ; Green v. Green, 4 Redf. 357 ; Judson v. Gibbons, 5 Wend. 224 (228) ; and may, if he has accepted both positions, be removed from one, and allowed to retain the other. Quackenboss v. South- wick, 41 N. Y. 117 ; Deraismes v. Dunham, 22 Hun, 86 ; Wood v. Brown, 34 N. Y. 337 (342), and cases cited ; Wid- mayer v. Widmayer, 76 Hun, 251 ; Code C. P., 2688. As to the different methods of enforcing payment, as against an exec- utor, or against a testamentary trustee, see Matter of Byrnes^ 2 Con. 522. cal trust does or does not exist (a subject discussed post, 160, 161) ; and, second, if such a trust exists, whether it is, as the saying is, " attached to the executorial office," so as to go with it into the hands of successors, or is per- sonal to the trustee so as to pass, if it passes at all, to a new trustee as such. On this latter point, the general test is based on the distinction between trusts involving confidence in the discretion of the trustee as such, and trusts not involving the exercise of discretion, and given to the executor as such, and not as a matter of personal confidence. Earle v. Earle, 93 N. Y. 104. The distinction between these various classes and subdivisions is often obscure. 108 THE TRUSTEE. 159. Basis of distinction. The testator may, of course, to a large degree, decide for himself and set forth in terms whether given duties not necessarily executorial shall be imposed on the executors virtute officii, or on the same individuals personally, in a distinct trust capacity. If his purpose is not clearly expressed, two points are of special importance in solving the difficulty : (1) the kind of title given, or required, for the performance of the " trust" duties ; and (2) whether the two sets of duties are concurrent or successive. 160. The title given or required. Every executor is in a certain sense a trustee, for he deals with the property of others confided to his care. But he is not a trustee in the sense in which that term is used in equity. To constitute a " testamen- tary trustee' ' in a technical sense, it is necessary that some ex- press trust be created by the will ; merely calling an executor a trustee does not make him such. Matter of Hawley, 104 N. Y. 250 (261). The proper duties of an executor are to collect in the personal property ; turn it into cash, except as otherwise directed by the will, or by statute in special cases ; to effect the sale of land in certain cases covered by statute ; to pay debts, and legacies, and distribute the residue, if any. Wood v. Brown, 34 N". Y. 337 (339). Under legacies, payable by the executor, are included legacies payable in annual instalments, or annuities, where there is merely a gift thereof to the annuitant, or a direc- tion to the executor to pay them, without devising or bequeath- ing to the executor the property from which they are to be paid. Clark v. Clark, 147 N. Y. 639 (644-). In order to enable him to perform these duties, an actual title is required, for he must be enabled to endorse paper held by testator, bring suits, sell prop- erty, and do other acts involving ownership. Now the title executors need for these purposes, they derive not, like legatees, under a bequest given by the will, but directly from the law, which clothes them, by virtue of their appointment to the office, with a peculiar and purely legal title adapted to the end to be attained, and having no further scope or force. Lockman v. Reilly, 95 N. Y. 64 (72). A trustee, on the other hand, derives his title exclusively from the terms of the will, which must, either ex- pressly or by implication, bequeath the property to him, subject TRUST AND EXECUTORSHIP DISTINGUISHED. 109 to the trust. Id. In other words, to constitute an executor a technical trustee, the will must give the property to him as a legacy, to hold in trust. If there are two or more executors, and their only title is such as the law gives to an executor, as such, to perform the purely executorial duties imposed on him by law or by the will, either of them may act separately, without the others ; but if the property has, expressly or by implication, been bequeathed to them, in trust, then their title is entirely dif- ferent, being that of legatees (in trust), and being full joint own- ers, under the bequest, they must, in general, all join. An executor, deriving his title by force of the local law, can sue, upon claims resting wholly in his representative character, only in jurisdictions where he has taken out letters ; Ulster Co. Sav- ings lust. v. Fourth Nat. Bank, 8 N. Y. Supp. 162 ; Stewart v. O'Donnell, 2 Dem. 17 ; Johnson v. Wallis, 112 N. Y. 230 ; while a trustee, deriving his title directly by bequest, under the will, is recognized everywhere as an owner, entitled to bring suit. Further illustrations may be found in a note in 26 Abb. N. C., p. 309 ; Bliven v. Seymour, 88 N. Y. 469 (477) ; Tyson v. Blake, 22 N. Y. 558 ; Oilman v. Eeddington, 24 N". Y. 9 (18) ; Liv- ingston v. Murray, 68 N. Y. 485 ; Eoeritt v. Everitt, 29 N. Y. 39 (72, 77) ; Matter of Shipm.an, 53 Hun, 511 (513) ; Wells v. Knight, 5 Hun, 50 ; Smith v. Van- Ostrand, 64 N. Y. 278 ; Matter of Tates, 99 N. Y. 94 ; Matter of Murphy, 144 N. Y. 557. It is, however, true that mere words of bequest do not neces- sarily turn an executor into a trustee. A bequest to executors to pay debts and legacies, might hardly, without more, be taken as indicating even an intention to vest in them any other title than the law would give them as executors. It is probably only when some duty other than the mere collecting of assets, and payment of debts and legacies is imposed, or when they are to hold prop- erty for a longer period than the mere prompt settlement of the estate would in itself require, that the question of a technical trust would arise. See Matter of Hecht, 71 Hun, 62. Where testator gives to a third party the use of certain prop- erty for life, and does not vest the title thereto in the executor in trust, and the property is such that it may be enjoyed without possessing the corpus, here the executor holds the corpus as 110 THE TRUSTEE. executor, and in the same capacity pays over the income. The legatee for life is in such cases entitled to custody on giving a bond, but not otherwise. Matter of McDougall, 141 N. Y. 21 ; Tyson v. Blake, 22 N. Y. 558 ; Livingston v. Murray, 68 N. Y- 485 ; Smith v. Van Ostrand, 64 N. Y. 278 (282) ; see 2 Perry on Trusts, 547 ; Matter of GilUspie, 17 Abb. N. C. 340. Ex- cept that if he is himself the executor, he need not give security. In such case the custody is theoretically not transferred. Estate of Shipman, 23 Abb. N. C. 101 ; 53 Hun, 511. For a case where the right of the life tenant to custody was established by a decree which, after the fund had been lost, was modified by re- quiring security, see Hitclicock v. Peaslee, 145 N. Y. 547. In somewhat similar cases, testator may vary the result by either bequeathing the property to the executor, expressly or by impli- cation, upon a technical trust ; or, on the other hand, he may confide the custody of the corpus to the legatee for life, with right to use the same, with remainder over ; such provisions are not inconsistent, Smith v. Van Ostrand, 64 N". Y. 278 (281) ; the legatee is then, during life, a trustee of the corpus, for the remainderman, and is entitled to the custody without giving a bond. And this is still so though the life tenant is given condi- tional power of consuming the principal, e.g., so far as necessary for his support. He is still trustee of the property for the re- mainderman, in so far as not thus needed. Smith v. Van Os- trand, 64 N. Y. 278 ; Flanagan v. Flanagan, 8 Abb. N. C. 413 ; Matter of Fernbacher, 17 Abb. N. C. 339 (and cases cited in 141 N. Y. 27) ; Matter of James, 146 N. Y. 78. So a life es- tate in real property may be devised, with power in the devisee to sell, and consume the proceeds so far as needed for support, with a valid remainder over of what may be left. Terry v. Wig- gins, 47 .N". Y. 512. If the power of disposition were absolute, the devisee of the life estate would take a fee. (Post, 565.) So in personal property, if the absolute and unlimited power of dis- position both during life and by will is given to the first legatee, a remainder over of what may be left is repugnant and void, and the primary gift is absolute and charged with no trust. Camp- bell v. Beaumont, 91 N. Y. 464 ; Trustees v. Kellogg, 16 N. Y. 83 ; Van Home v. Campbell, 100 N. Y. 287 (299) ; ffermance v. Mead, 18 Abb. N. C. 90 ; Cohen v. Cohen, 4 Redf. 48. TRUST AND EXECWOBSHIP DISTINGUISHED. Ill 161. Duties concurrent or successive. In cases where special duties are imposed on the executor, and it is difficult to determine whether or not it was intended to impose them upon him in a distinct capacity as trustee, and to make him a legatee of the property affected, in trust, it may sometimes be of assist- ance to consider whether the duties in question, and the ordinary executorial duties, are concurrent or successive. For while, if they are concurrent, the difficulty is not removed, yet if they are obviously and necessarily successive, so that, as to the property in question, the executorial duties are first to be completely per- formed, before it is to be turned over by the executor as such, to himself as trustee, it is generally clear that the intention was to have him hold, in the latter capacity, as a legatee on a techni- cal trust. There are cases where the duties of the executor are to be first completely performed ; thereupon, he is to turn the fund over to himself to hold distinctly as trustee. It is in such cases, in view of the entirely distinct nature of the successive capacities, that double commissions are allowed, first to the executor, as such, and then to the trustee, as such ; and the cases on that point, cited post, 314, furnish many illustrations of the presence or absence of these successive capacities. Also Matter of Hood, 98 N. Y. 363 ; Matter of Beard, 77 Hun, 111 (113). Now in such case, when the severance has been effected, there can, there- after, arise no question as between two capacities. Thereafter, the executor, as such even if his official existence still continues for any other purpose has nothing to do with the trust fund ; and the trustee is such only, and nothing else, so far as concerns that fund. Cline v. Sherman, 144 N. Y. 601. And in case of a vacancy, the proper course is, to secure the appointment not of an administrator with the will annexed, but of a trustee, to suc- ceed to the trust. Holden v. N. Y. & E. Bank, 72 N. Y. 286 ; Matter of Roosevelt, 5 Redf. 601 (622) ; Matter of Mason, 98 N. Y. 527 (535) ; Bonilla v. Mestre, 34 Hun, 551 ; KortrigU v. Storminger, 49 Hun, 249 ; Matter of HecTit, 71 Hun, 62. Though where there is any doubt involved, the new appointee should be constituted both trustee and administrator with the will annexed, so that he may act in both capacities. De Pey- ster v. Clendining, 8 Pai. Ch. 295 (310), aff'd 26 Wend. 21. 112 THE TRUSTEE. Thus far we have considered the case where executorial and trust duties were successive in that the executor was to entirely settle the whole estate before turning anything over to himself to hold distinctly in trust. But there are other cases, where the trust relates only to certain portions of the estate, in which the executor, before completing his executorial duties as to other portions, may set off the trust fund, turn it over to himself in trust, and effect a complete devolution as to this separate fund. In such cases, the same principles apply. After such separation and transfer, the executorial duties have ceased, as to the fund in question, and the trustee holds as such, and not as executor. So it may happen that one is first to act as trustee, as to a given duty, as, to pay an annuity as trustee, while a certain trust lasts, and then, when the general trust has ceased, to continue to per- form that particular duty, as, to pay the annuity, as executor. Clark v. Clark, 147 N. Y. 639 (644). Now in these classes of cases, where one set of functions have ceased, and the other have begun, either as to the whole estate, or as to a fund in question, the trust is, thereafter, separate an 1 distinct from the executorial office. Matter of Hood, 98 N. Y. 363. The executor always takes a certain title, and has certain duties, at first ; and in order to have a set of duties personal to the trustee, as legatee in trust, and not merely attached to the duties of the executorial office, there must always come a time when the one ceases and the other begins. Lockmcm v. JReilly, 95 N. Y. 64 (72) ; Mat- ter of Hammond, 92 Hun, 478 (481). Of course it often hap- pens, where the functions are thus separable, that there are some trust functions to be performed before the separation. It also often happens that though for the time being they are thus at- tached, the will contemplates a future separation. Afterward, and when the time comes for a distinct and separate trust, there must be a further devolution, either to the same or to a differ- ent person, as trustee. Of course the testator may so frame his will as to provide that in any event the same person must exer- cise both functions, either in one capacity, or in two capacities, or even that the trust function, as such, shall absolutely cease if the person named in the will ceases to be executor. INCIDENTS AND RESULTS OF TITLE. 113 (e) Incidents and Results of Title. 162. Nature of the title. It is of the first importance to notice that the trustee's title is of a twofold character. (1) He is vested with the entire title. (2) That title is " subject to the execution of the trust." On these two principles hang all the laws affecting his powers, duties, liabilities and rights. Thus, so far as the mere legal title goes, the trustee stands, toward out- siders, and in matters not openly involving the presence or effect of the trust, in the same position as that of any other owner. But in his relations with the beneficiaries, and in all matters in which the trust itself is an element, his title is qualified, circum- scribed and colored by the fact that it is " subject to the trust." 163. Parties. Striking illustrations of the distinction just stated, are furnished by the authorities which discuss the ques- tion of parties, and determine when the trustee is to sue or be sued alone, and when the beneficiaries are proper or necessary parties. A detailed examination of this branch of the law of procedure would not fall within the scope of the present book, but, in brief, the following principles are established : " The general rule is, that in suits respecting trust property, brought either by or against the trustees, the cestuis que trust as well as the trustees are necessary parties. Story's Eq. PI., 207. To this rule there are several exceptions. One of them is, that where the suit is brought by the trustee to recover the trust prop- erty or to reduce it to possession, and in no wise affects his rela- tion with his cestuis que trust, it is unnecessary to make the lat- ter parties." Carey v. Brown, 92 U. S. 171. Hill on Trusts, pp. 274, 545, classifies the various cases. In Ames' " Cases on Trusts," 261 et seq., there is an elaborate classification and cita- tion of English and American authorities. Also Foster's Fed. Prac., chap. 3 ; Story, Eq. PI., chap. 4 ; 2 Perry on Trusts, chap. 29. 164. Illustrations and qualifications. Without entering upon a general discussion of the subject, attention may be called to the illustrations below referred to, and also to the provision of the Code of Civil Procedure ( 449) that " every action must be prosecuted in the name of the real party in interest, except 8 114 THE TRUSTEE. that ... a trustee of an express trust . . . may sue, without joining with him the person for whose benefit the action is prose- cuted." The term trustee of an express trust is here used in a very broad sense, for in addition to its usual technical meaning, the same section defines it as including a person with whom or in whose name a contract is made for the benefit of another. This provision is permissive. It does not forbid an action by beneficiaries, or by beneficiaries and trustee together, in cases where such a course would, in the absence of the statute, be ap- propriate or permissible. Hubbell v. Medbury, 53 N. Y. 98 (102-3) ; compare Clark v. Fosdick, 118 N. Y. 7 (12). Within the principles above stated, and in view of the trustee's legal title, it is he who is the person to sue for specific performance of defendant's agreement with him to buy land, Munro v. Allaire, 2 Cai. Cas. 183 ; bring suit to reduce trust property to posses- sion, or subject it to his control, Matter of Straut, 126 N. Y. 201 ; sue to recover past damages to realty to which he holds title, Lindheim v. Manhattan Railway Co., 68 Hun, 122 ; McLean v. Macdonald, 2 Barb. R. 534 ; and where a trustee is a resident of New York, he stands like any other resident in re- spect to his right to sue a foreign corporation here, under 1780 of the Code. Palmer v. Phoenix M. L. 1. Co., 84 N". Y. 63 (67). When a suit in which a trustee appears as a party is based on his ownership of a res, it follows that being the owner, the ques- tion of his " capacity" whether personal or representative is often immaterial. Bromley v. Mitchell, 155 Mass. 509 ; Odd Fellows &c. v. McAllister, 153 Mass. 292 ; Mawn v. Pomeroy, 151 Mass. 164. Thus, where he sues to recover trust property, or damages for conversion, he sues in his own right (in one sense, and from a legal point of view), as the legal owner. To- ronto &c. Co. v. C. B. & Q. <&c. Co., 123 N. Y. 37. Therefore, in such a case he may (unlike an executor, Palmer v. Phosnix M. L. L Co., 84 N. Y. 63 (67), cf. 70 N. Y. 81) sue out of the jurisdiction where the will was proved, without having it proved where he sues, or securing any new authority for the purpose. He can, like any owner, prove his title in the action. (Id.) Compare Bingham v. Marine Nat. Bank., 112 N. Y. 661. (As ito whether this rule is qualifed where it might inure to injury of domestic creditors, see Toronto &c. Co. v. C. B. <& Q. &c. Co., INCIDENTS AND RESULTS OF TITLE. 115 supra.") The trustee of an express trust of land stands in the same position as the testator, in regard to right to sue for con- tinuing damage to the land. Even in a case where a purchaser from the testator would for any reason be in a less favorable position than his grantor, a trustee is not for any such purpose to be held a purchaser. He represents all the rights of the testator. Mortimer v. M. R. Co., 129 N. Y. 81 (84-5). See Kernockan v. N. Y. E. R. E. Co., 128 N. Y. 559. If one buys property from a trustee, he cannot defend an action for the price on the ground that he, as a party to the trust agreement, was drawn into it by fraud. He is not sued as a member of the trust arrangement, but as a purchaser of property. Thus, where a corporation and its creditors make a *' liquidation agreement," under which trus- tees are appointed, who thereafter as trustees sell property to one of the creditors and take his promissory note, in an action on the note, by the trustees, a defence alleging that defendant was in- duced to become a party to the agreement by fraudulent repre- sentations of the corporation, its agents, officers and directors, and asking that the agreement be set aside and cancelled as to him, is demurrable. This is no reason why he should not pay for the property he bought. Otis v. Shants, 128 N. Y. 45. So it is the trustee and not the beneficiary, who is subject to liability for any nuisance for which a beneficial holder of the same title would be liable. Schwab v. Cleveland, 28 Hun, 458 ; Norlingv. Allee, 10 N. Y. Supp. 97 ; 13 Id. 791 ; 131 N.Y. 622 ; People v. Townsend, 3 Hill, 4:79 ; Ahem v. Steele, 115 N. Y. 203. And one who holds possession adversely to him may thus acquire title against him, and the beneficiaries, and others inter- ested in the property, under the same circumstances in which he would thus gain title by adverse possession if the trustee's estate had been held beneficially and not in trust. Bennett v. GarlocJc, 79 N. Y. 302 (319-320). For numerous authorities relating to the trustee's liability on burdens incident to ownership, see Ames' " Cases on Trusts," 279, and note. 1 And taxes should be as- 1 Where one brings a suit in equity to compel defendant to convey to him land alleged to be held by defendant as trustee for plaintiff, and plaintiff is defeated, he has not, under 1525 of the Code of Civil Procedure, a right to a second trial. That section does not apply to such a case. McConnell v. McCullough, 47 Hun, 405. 116 THE TRUSTEE. sessed against the trustee as such. Tax Law, 32. See post, 285. Trowbridge v. Horan, 78 N. Y. 439 ; Matter of Ken- worthy, 63 Hun, 165. See People ex rel. Pike v. Barker, 86 Hun, 283. In short, in cases falling within the foregoing prin- ciples, the trustee, whether plaintiff or defendant, stands as the representative of the beneficiaries, Wetmore v. Porter, 92 N. Y. 76, in so far as concerns the estate held by him. Pray v. liege- man, 98 K Y. 351 (361) ; Kip v. Hirsh, 103 N. Y. 565 (569- 570). As to suits to foreclose a mortgage on trust property, see Lockman v. Reilly, 95 K Y. 64 ; U. S. Trust Co. v. Roche, 116 N. Y. 120 (130). Under the diverse citizenship clause of the Federal judiciary act, it is the citizenship of the trustee, if he is the proper party, and not that of the beneficiary who is not a party, which deter- mines the right to sue in the federal courts. New Orleans v. Gaines, 138 U. S. 595 (606) ; Morris v. Lindauer, 54 Fed. R. 23. But if a trustee refuses to sue (even if only on the ground that as he is a citizen of the same State as defendant, he must sue, if at all, in a State Court, which he declines to do) the bene- ficiary may not only bring suit himself, but, if he is a citizen of another State, he may, by virtue of that fact, sue in the federal courts. For, as he, instead of the trustee, is the party, it is his citizenship that counts. Bowdoin College v. Merritt, 63 Fed. R. 213. On the other hand, it follows, from the fact that a trustee holds the title not beneficially, but in trust, that his wife ac- quires no right to dower. Germond v. Jones, 2 Hill. 569 (573) ; Terrett v. Crombie, 6 Lans. 82, aff'd 55 N. Y. 683 ; Cooper v. Whitney, 3 Hill, 95.' The trustee's will, whether general, or referring to the trust property in particular, cannot pass any title (unless in execution of a " power" to do so), because upon the trustee's death the title, if the trust continues, vests in survivors, 1 In New York, no question concerning dower right in the widow of a beneficial owner of the fee in possession, where the legal title is in a trustee, can arise, because ne such equitable title exists, under express trusts. If the trust is such as to give the trustee a fee, his title is the only title there is, the beneficiary having a mere right to enforce the performance of the trust. If the trustee holds less than a fee, the same thing applies as to that estate, and as to the remainder, it is not an estate in possession. INCIDENTS AND RESULTS OF TITLE. 117 or, by statute, in the Supreme Court. Real Prop. L., 91 ; L. 1882, chap. 185. And so also in a suit by the beneficiaries against him to enforce the performance of the trust, he cannot set up his title in defence ; Real Prop. L., 80 ; and an assign- ment by him of " all his property," does not carry to the as- signee the property held in trust, Brown v. Decker, 21 Hun, 199 ; 1 Perry on Trusts, 345. If the facts are such that legal title to trust property passes to the assignee for creditors of the trustee, e.g., where it has been converted by the trustee and in- vested by him personally in his own name, the assignee's title is subject to the trust, if the trust property can be clearly traced into particular property which he holds, but not otherwise. 1 Perry on Trusts, 345 ; Ames' " Cases on Trusts," 393, cit- ing (among other cases) Matter of Howe, \ Pai. Ch. 125, 128 ; Griffin v. Marquardt, 17 N. Y. 28 ; Van Hensen v. Radcliff, 17 N. Y. 580 ; Coates v. First Bank, 91 N". Y. 20. While an actual beneficial owner, who makes a nominal transfer of prop- erty, to keep it out of the hands of creditors, or takes title to property purchased by him, in the name of a third party, for the same purpose, is left without remedy against the nominal grantee who refuses to reconvey to him, Robertson v. Say re, 134 N. Y. 97, yet if a trustee does the same thing, for the same purpose, he may maintain a suit to recover the property for the benefit of the trust estate from the nominal grantee. Place v. Hay ward, 117 N. Y. 487 (496) ; Wetmore v. Porter, 92 N. Y. 76. His successor may sue where his predecessor might if still acting, even if the right relied on is a title nominally in the predecessor as trustee. As he held as trustee, the individual personal capacity that happens to be behind the official title is immaterial. Thus, a successor may sue for conversion of a note or check drawn to his predecessor. Robinson v. Chemical Nat. Bank, 86 N. Y. 404, and if the note or check is drawn to one trustee, it belongs to all, and also to successors. Id. Where one of the trustees has illegally transferred trust stock to pay a personal debt, the trustees, including the one who thus acted wrongfully, may themselves as trustees sue to set aside the transfer. Onondaga T. & D. Co. v. Price, 87 N. Y. 542 (549-50). So where trustees give an illegal bond against public policy, and use funds of the estate as collateral to secure their 118 THE TRUSTEE. surety, they are not, in their trust capacity, in pari delicto, and may sue for cancellation of the bond, and recovery of the col- lateral, in the interest of the trust estate. They are acting mere- ly as representatives of innocent persons, and equity may prop- erly aid them. Zimmerman v. Kinkle, 108 N. Y. 282 (287). So where trust property is wrongfully converted, the trustee as such, though he had personally been in collusion with the defend- ant therein, may sue to recover the assets or for conversion ; the wrongful taker is responsible to the guilty trustee, as well as to the beneficiary. Wetmore v. Porter, 92 N. Y. 76 ; Lee v. Hor- ton, 104 N. Y. 438. Such being the position of the trustee, it follows that the beneficiary, having no title, cannot represent the trust estate as against third parties in a suit respecting the res. Western It. It. Co. v. Nolan, 48 N. Y. 513. Thus, he cannot, in his right as beneficiary, maintain a suit to partition the estate held in trust. Harris v. Larkins, 22 Hun, 488 ; and in a suit against a trus- tee, in ejectment, a beneficiary not in possession need not be made a party. Van Voorhis v. Kelly, 31 Hun, 293 (297). So in a suit against the trustee to recover for services rendered to the trust estate. Stanton v. King, 8 Hun, 4, aff'd 69 N. Y. 609. A decree for partition, obtained by a beneficiary as such, as plaintiff, would not estop a trustee though a party to the suit. Harris v. Larkins, 22 Hun, 488 ; though if the theory of the action was that the trust was invalid, and its extinguishment was sought, the result would be otherwise, if all parties were before the court. Id., p. 490. But where, in a suit by one of several beneficiaries against the trustee, the point is that a defendant has filed and passed his account, and holds a specific fund belonging to plaintiff, under the surrogate's decree (apparently on the theory that the trust as to plaintiff and her share has been termi- nated by her attainment of her majority) and that he has refused to account to plaintiff, and has threatened to bring a suit for construction, and that no such suit is necessary a demurrer for lack of parties in failing to bring in the other (infant) beneficia- ries is improper and will be overruled. Hitchcock v. Linsly, 17 Hun, 556 ; compare 36 Hun, 405. And where a claim exists for accrued income, against a trustee who has been removed, or against the estate of a deceased trustee, it is the beneficiaries, INCIDENTS AND RESULTS OF TITLE. 119 and not the successor of the trustee, who should sue. People ex rel. Collins v. Donohue, 70 Hun, 317 (324) On the other hand, where a suit is not of the class already illus- trated, and falls within the general rule relating to parties, the beneficiary as well as the trustee is a necessary party. Matter of Straut, 126 N. Y. 201, and cases cited. 165. Trustee's refusal to sue. But when a suit is such that it should^ under the principles already stated, be brought by the trustee, there are contingencies in which the beneficiaries may nevertheless proceed themselves as plaintiffs in his stead. Thus, if the trustee refuses on demand, to sue. JV. T. Bank v. Wet- more, 124 N. Y. 241 (251) ; Richardson v. Thurber, 104 N. Y. 606 ; Dames v. N. T. Concert Co., 41 Hun, 492 ; Western R. R. Co. v. Nolan, 48 N. Y. 513 ; see Harvey v. McDonnell, 113 N. Y. 526 ; C. Riessner & Co. v. Cohn, 22 Abb. N. C. 312 ; Weetjan v. Vibbard, 5 Hun, 265, and cases cited ; see Hub- bell v. Medbury, 53 N. Y. 98 (102) ; Bowdoin College v. Mer- ritt, 63 Fed. R. 213, and cases cited. Or if a request to the trus- tee to sue would be futile. Ettlinger v. P. R. and C. Co., 142 N. Y. 189. But in a suit by the beneficiary based on the trus- tee's refusal to sue, the general nature and purpose of the pro- ceeding must be the same as if the trustee were suing. One beneficiary, for example, cannot base upon the trustee's refusal to sue on behalf of all the beneficiaries, a right to sue for his own personal advantage, in hostility to the scheme of the trust which contemplates the benefit of the others also. Grouse v. Froihing- ham, 97 N. Y. 105 (113 dt, seq.}. And it must be made clear that the demand on the trustee was to bring a suit for the same purpose as that for which the suit in question is brought, and on behalf of the same parties. Lindheim v. Manhattan Railway Co., 68 Hun, 122. So if, being a party, the trustee refuses to appeal, it is his duty to allow the beneficiary to use his name for a review of an adverse judgment. Bockes v. Hathorn, 78 N. Y. 222 (227). The refusal to sue may be inferred from his conduct in effecting a gross breach of trust and incapacitating himself from effectively prosecuting a suit to reinstate the beneficiaries in their rights. Kirsch v. Tozier, 63 Hun, 607 (611), aff'd 143 N. Y. 390 (397). In all such cases, the trustee must be made a 120 THE TRUSTEE. party defendant. N. T. Bank v. Wetmore, 124 N. Y. 241 (251). 166. When bound by decree. If beneficiaries, when proper parties, are duly brought in, though infants, and duly repre- sented, they are as much bound by a decree as adults. Matter of Hawley, 100 N. Y. 206 ; Mutual L. I. Co. v. Schwaner, 36 Hun, 373 (377-8), aff'd 101 K Y. 681 ; compare Moore v. Ap- plely, 36 Hun, 368, aff'd 108 N. Y. 237. A trustee is, of course, bound like other litigants, by the rule of res -adjudicata in a case where he was duly and properly made a party. Mc- Carty v. Terry, 7 Lans. 236 (240). But in order that a trustee be bound by a prior decree, he must have been a party as trus- tee, in the prior suit. Fisher v. Hubbell, 7 Lans. 481 (485) ; see 65 Barb. R. 74. A judgment against one as an individual is not an estoppel in a subsequent suit by or against him as trustee. Rathbone v. Hooney, 58 N. Y. 463 (467). And a former judg- ment in favor of a trustee as such, is not a bar to an action against him personally. Hall v. Richardson, 22 Hun, 444 (446), aff'd 89 N. Y. 636. A former judgment concludes a party only in the character in which he was sued, and therefore a judgment for or against a trustee, executor, administrator, or assignee as such, does not preclude him, in a different cause of action affect- ing him personally from disputing the findings or judgment though the same questions are involved. Collins v. Hydorn, 135 N. Y. 320 (324), citing Wells on Res Adjud., p. 16, 21 ; Rathbone v. Hooney, 58 N. Y. 463 ; Landon v. Townshend, 112 N. Y. 93 ; Bigelow on Estop., 5th ed., pp. 130, 131 ; 2 Black on Judgments, 536 ; 2 Phill. on Evid., 3d ed., pp. 8, 9, ch. 1, 1, sub. 1 ; Duchess of Kingston's Case, 2 Smith's L. C., p. 792 ; Leggett v. G. N. R. Co., L. R, (1 Q. B. Div.) p. 606 ; Lander v. Arno, 65 Maine, 26. Of course a judgment in rem is conclusive against all the world. Collins v. Hydorn, 135 N. Y. p. 326. It may be true, however (and is quite consistent with the foregoing statements) that although a trustee may not have been named as such in the pleadings and judgment in the prior suit, yet he may as such be bound by the result, if it in fact appeared on the face of the proceedings in the prior suit that he was there a party in his representative capacity. But INCIDENTS AND EESULT8 OF TITLE. 121 unless it so appears, the judgment is not binding on him as trus- tee, in a subsequent suit. Landon v. Townshend, 112 N. Y. 93 ; s. c. 129 N. Y. 166 (174-5). The case of Wagner v. Hodge, 34 Hun, 524, aff'd 98 N. Y. 654 without opinion, is not contra. What was really decided in the latter case related to the rights of a bonafide purchaser of real estate. The judge in the court below, in the course of his remarks, said that probably the rights of the assignee were cut off by the judgment in foreclosure in that case ; but the effect of such judgment was not there directly de- cided. Any implication that the trustee would be estopped by a decree in a suit to which he was made a party only individu- ally, is disapproved in Landon v. Townshend, 129 N. Y. 166 (175-6). 167. As between trustee and beneficiary The principle of res adjudicate also applies as between the trustee and the beneficiary. Thus, where one of several beneficiaries brought an action against the trustee, to set aside a sale made by the trus- tee under a, power, at which the trustee himself had individually bought in the property, a judgment was entered in favor of de- fendant, and no appeal was taken. Subsequently, at the suit of other beneficiaries a different result was reached and a resale of the entire property was ordered. But the first beneficiary being bound, in regard to the share then held by him, and represented in the first suit, by the judgment then entered, though erroneous, could not, as to that share, participate in the benefits acquired by the others in the second suit ; as to other shares, however, acquired by the first plaintiff, subsequent to the first judgment, he would not be estopped, as he had, in respect to them, merely stepped into the shoes of the persons from whom they were ac- quired by him. Boerum v. Schenck, 41 N. Y. 182. -/. 168. Res adjudicata Unborn persons. Unborn persons may be bound by a decree, Matter o/Dolan, 88 N. Y. 309 (321), even where no provision is made for them. The cases in which this rule applies, and the principles involved, are well illustrated in a recent case, where plaintiff's testator, A, left his land to trustees on a valid trust with a valid power of sale. To a part of this land he had no record title, the deed to him having been 122 THE TRUSTEE. lost and never recorded. His grantor, B, had died leaving all her land in trust for her three children for their respective lives, remainder on the death of each to his then living issue per stir- pes. A's trustees brought an action to compel the execution and delivery of a deed of the land actually conveyed by B to A, and they made B's trustee, her three children and only heirs, and also all her grandchildren, defendants. Their prayer was grant- ed and a deed executed and delivered. A's trustees had pre- viously agreed with C to convey the land to him, and after obtaining record title under the decree tendered him a deed which he refused on the ground that the decree was not binding on such grandchildren of B, yet unborn, as might be living at the death of any of B's children. It was held, that the pro- ceeding was one in rem / that all the persons in esse who might have any interest, beneficial or in trust, in B's estate, being parties, and representing the entire title, the judgment would be conclusive on after-born persons ; that while those in esse could not by any conveyance in pais cut off the rights of after born grandchildren, a decree finding that the land in question did not form part of B's estate, and that neither those in esse nor those after born could have any interest in it, would be con- - elusive agains.t those after born ; that while, if the land had actually passed under the will of B, the court could not change or extinguish the title without properly providing for the pro- tection of future interests of unborn persons, yet in this case no such provision was possible or called for, as the decree estab- lished the absence of any interest of such afterborn persons in the property. Also, where an action for construction of a will is not a proper one for that purpose, and rests only on the con- sent of the parties to the form, it cannot bind unborn persons ; but here the action was proper for the purpose sought. The title in A's trustees was held good, and C was compelled to take. Kent v. Church of St. Michael, 136 N. Y. 10. See also Leggett v. Hunter, 19 N. Y. 445 (460-63) ; Oilman v Reddington, 24: N. Y. 9 (20) ; Monarque v. Monarque, 80 N. Y. 320. 169. Jurisdiction of city court. By sec. 316, subd. 3 of the Code of Civil Procedure, it was formerly provided that INCIDENTS AND RESULTS OF TITLE. 123 " The (City) Court (of New York) has not jurisdiction of an action commenced against an executor or administrator in his representative capacity. But this subdivision does not prevent the court from continuing an action against an executor or ad- ministrator, or from substituting an executor or administrator in place of a defendant in an action in a case where it is prescribed in this act that a continuance or substitution may be made." This subdivision was construed in Peo, v. Justices, 81 N. Y. 500. It specifically referred only to executors and administrators, and not to trustees as such. And by L. 1889, ch. 441, it was re- pealed. The City Court of New York has no jurisdiction of an equitable action, Blewitt v. Olin, 13 State Rep. 76 ; though it may entertain equitable defences in actions at law, not involv- ing any affirmative relief. Mack v. KitseU, 20 Abb. N. C. 293. See also Cushman v. Family F. Socy., 28 State Rep. 757 ; s. c. 36 Id. 85f> ; Homestead Bank v. Wood, 1 Misc. 145 ; Peo. v. Bd. of Excise, 3 State Rep. 253. 170. Trustee both plaintiff and defendant. The same person may be a trustee of two distinct estates, and thus be act- ing in two distinct capacities, both representative ; as to the matter of parties in such cases, compare Neilley v. Neilley, 23 Hun, 651, reversed, 89 N. Y. 352 ; Matter of Dolan, 88 N. Y. 309 (321) ; Borst v. Corey, 16 Barb. 136. And where he is an executor, there, if he as trustee has a claim against himself as executor, no suit lies, but the surrogate passes on the claim. Neilley v. Neilley, 89 N. Y. 352 ; Kyle v. Kyle, 67 N. Y. 400 (408) ; Fisher v. HuUell, 1 Lans. 481 (484) ; s. c. 65 Barb. 74. See also Popham v. Spencer, 4 Redf. 399. 171. Counterclaim Offset. But a defendant sued on a claim against him individually, cannot assume to himself a double capacity, arid set off a debt owed to him as trustee by the plain- tiff. Foster v. Coe, 4 Lans. 53 (57). 172. Trustees act jointly. Trustees must all join in bring- ing an action on behalf of the trust estate, Anonymous v. Gelpcke, 5 Hun, 245 (255) ; and if any refuse to join, they must be made defendants, Thatcher v. Candee, 4 Abb. Ct. App. Dec. 387 ; and also in every conveyance, lease, sale, agreement to 124 THE TRUSTEE. sell, etc., relating to land. Wilder v. Ranney, 95 N. Y. 7 (11, 12) ; Leitch v. Wells, 48 N. Y. 585 (601) ; Ridgeley v. Johnson, 11 Barb. R. 527 ; Brennan v. Willson, 71 N. Y. 502 ; Moir v. Brown, 14 Barb. R. 39 (45) ; and, in general, in giving receipts, Ridgeley v. Johnson, supra; Moir v. Brown, supra. And an attempted disclaimer by one, who has accepted the trust, and his attempted release of title to the other, does not enable the latter to give a good title. Brennan v. Willson, 71 N. Y. 502. But in selling personal property, one trustee may, it is said, give a good title to a bona fide purchaser. Wilder v. Ranney, 95 N. Y. 7 (12) ; and even as to land, the trust instrument may of course confer power upon a majority to act. Crane v. Decker, 22 Hun, 452. Even though the trust instrument effects an equitable conversion of land, the actual sale and conveyance must nevertheless be made by all the trustees, for in respect to that feature the property vested in them is still land, and must be sold and conveyed as such. Wilder v. Ranney, 95 N. Y. 7 (12). In People ex rel. Adams v. Sigel, 46 How. Pr. 151, it is held that one of two trustees might, under certain peculiar circumstances, on receiving the money secured by a mortgage held by the trustees, execute a satisfaction piece. Where trustees are given an estate to be divided and set off into shares, and another person is appointed a trustee of one of such shares, the general trustees, if empowered to lease, may lease the entire estate, before division, and there is no occasion for the joining of the trustee of the separate share, not yet set up. After division that separate share will be subject to the lease. Corse v. Corse, 144 N. Y. 569. Even though one of several trustees disclaims the trust, yet if he has once accepted, he must join in a conveyance with the others, unless he has been allowed by the court to resign, or has been removed. Brennan v. Will- son, 71 N. Y. 502. Where there are possible objections to the full title of a trustee, arising out of resignations, or renuncia- tions, of co- trustees or predecessors, the difficulty may be obvi- ated by having all past and present trustees, and all persons pos- sibly interested, unite in the conveyance. Farrar v. McCue, 89 N. Y. 139 (146). 173. Trustee How designated. Where suit is brought INCIDENTS AND EE8ULTS OF TITLE. 125 against a defendant designated "as trustee," and the form of the complaint, the substantive averments, and the form of the judgment demanded characterize the action as against him in his representative capacity only, and the cause of action is such as could lie against him only as an individual, the complaint will not stand, on demurrer, and cannot at that point be viewed as if intended to be a claim against defendant individually. Aus- tin v. Munro, 47 N. Y. 360. On the other hand, if the word u as" is omitted, while it has sometimes been held (Merritt v. Seaman, 6 N. Y. 168, 172 ; Sheldon v. Hoy, 11 How. Pr. 11 ; Warden, v. Worthington, 2 Barb. R. 368 ; Root v. Price, 22 How. Pr. 372 ; Ogdensburgh Bank v. Van Rensselaer, 6 Hill, 240) that without that word after the name of the party the term " trus- tee," " executor, "etc. (see Code C. P. 1814), is bat&desoriptio person, and gives him only a personal or individual charac- ter in the action, yet it is nevertheless true that the frame and averments and scope of the complaint may be such as to affix to him a representative character in the litigation. Beers v. Shan- non, 73 N. Y. 292 (297) ; Stilwell v. Carpenter, in Mem. 62 N. Y. 639, reported in full in 2 Abb. N. C. 238. See also Peo- ple v. Prescott, 3 Hun, 419 ; Hoagland v. Trask, 48 N. Y. 686. See ante, 166. 174. Assignment to successor. Where an order directs a removed trustee to pay a balance found against him to his suc- cessor, A, that successor may assign his rights thereunder, and the funds represented thereby, to a subsequent successor, B, and the latter may procure and enforce judgment. /Stokes v. Amerman, 121 N. Y. 337. 175. Successor as creditor of predecessor. L. 1840, ch. 80, as amended, providing that a wife might insure her husband's life for her benefit, but giving creditors of husband the benefit as to excess over $500 in any year, in premiums, paid by him, covered the case of a defaulting trustee who had been ordered by the court to pay a specified sum to his successor. The successor, by due proceedings, might acquire a right to security from the fund when it should become payable at the death of the insured, and bring suit while the insured is still living. /Stokes v. Amer- man, 121 N.Y. 337. See Dom. Eel. L , 22. 126 THE TRUSTEE. (4) The Trustees Authority. 176. In general. The trustee has implied authority to do many acts in the management of the trust property. In gen- eral, as legal owner, he is authorized to deal with the estate as if he held it beneficially, but in so far only as is consistent with the purposes for which he holds it, the best interests of the beneficiaries, the special requirements of the trust instrument, and the provisions of the statutes and the principles of the law. The trust instrument may also confer special authority upon him which he would not otherwise possess. Such authority, when it takes on the form of a technical trust power, is covered by the discussion of powers (post, Chap. XIII. et seq.). 177. To contract. The general rule is that the trustee has no power to charge the trust estate by his executory contracts, unless authorized to do so by the terms of the trust instrument. Upon such contracts he is personally liable, and the remedy is against him personally. Kedian v. Hoyt, 33 Hun, 145 ; 54 Hun, 540 ; Lunt v. Lunt, 8 Abb. N. C. 83, and cases cited in brief of appellant. The rule is the same as in the case of execu- tors and administrators and receivers. The ground of the rule is thus stated in Schmittler v. Simon, 101 N. Y. 554, 114 N. Y. 176 : " Neither executors nor administrators have power to bind the estate represented by them, through an executory contract, having for its object the creation of a new liability, not founded upon the contract or obligation of the testator or intestate. ' ' They take personal property as owners, and have no principal behind them for whom they can contract. " The title vests in them for the purposes of administration, and they must account, as owners, to the persons ultimately entitled to distribution. In actions upon contracts made by them, however they may describe themselves therein, they are personally liable." Also, Noyex v.Blakeman, 6 K Y. 580 ; Ferrin v. Myrick, 41 N. Y. 315 (319) ; Mygatt v. Wilcox, 45 N. Y. 306 ; Bowman v. Tollman, 2 Robt. 385 ; Willis v. Sharp, 113 N. Y. 586 ; s. c. 115 N. Y. 396 ; s. c. 124 N. Y. 406 ; Martin v. Platt, 51 Hun, 429 ; Poland v. Dayton, 40 Hun, 563; Austin v. Munro, 47 1ST. Y. 360; Ryan v. Rand, 20 Abb. N. C. 314 ; Peo. v. Univ. L. Ins. Co., 30 Hun, 142 ; L Amoureux v. Van Rensselaer, 1 Barb. Ch. 34 (38) ; THE TRUSTEE'S AUTHORITY. 127 Patton v. Royal Baking Powder Co., 114 N. Y. 1 (4). See Mat- ter of Odell, 1 Con. 91. It follows that if the trustee personally contract for the erection of buildings upon the trust property, mechanics' liens are void. Herbert v. Herbert, 57 How. Pr. 333. 178. Same Qualified. It is, however, to be noticed, that if necessary repairs are made, or work done or other services rendered, for the trust estate, the trustee may properly pay for the same, as well as pay taxes, etc., out of available funds of the estate ; or out of his own funds, in which case he has an equitable lien on the trust property for reimbursement, Rogers v. Wendell, 54 Hun, 540, with interest. Mann v. Lawrence, 3 Bradf. 424. If, instead of paying voluntarily, he is sued indi- vidually, and compelled to pay, he has the same equitable lien. New v. Nicott, 73 N. Y. 127 (131). This being so, it follows that yet another method may be adopted. " When a trustee is authorized to make an expenditure and he has no trust funds, and the expenditure is necessary for the protection, reparation, or safety of the trust estate, and he is not willing to make him- self personally liable, he may by express agreement make the expenditure a charge upon the trust estate. In such a case he could himself advance the money to make the expenditure, and he would have a lien upon the trust estate, and he can by ex- press contract transfer this lien to any other party who may upon the faith of the trust estate make the expenditure.' ' New v. Nicott, 73 N. Y. 127 ; Noyes v. BlaJceman, 6 N. Y. 567. See Stanton v. King, 8 Hun, 4, aff'd 69 N. Y. 609 ; see also Willis v. Sharp, 113 N. Y. 586 ; s. c. 115 N. Y. 396 ; s. c. 124 N. Y. 406 ; Perry v. Board of Missions, etc., 102 N. Y. 99 ; Van Slyke v. Bush, 123 N. Y. 47 (51). But to effect a transfer of the trustee's equitable lien, an express contract to that effect is essential, and it is not sufficient that the other party, in doing work or making expenditure, did so in reliance upon his own assumption that the estate would be liable, Rogers v. Wendell, 54 Hun, 540 (547), nor that it was understood between him and the trustee that payment was to be made by the trustee out of the estate. Stanton v. King, 8 Hun, 4 (5), aff'd 69 N. Y. 609. While, on the other hand, the mere intention to look to the trust estate for compensation, or the assumption that it alone would 128 THE TRUSTEE. be liable, would not, in the absence of an express contract charg- ing the estate and releasing the trustee personally, interfere with the right to hold the trustee individually. Foland v. Dayton, 40 Hun, 563. A transfer of liability to the estate, by an agree- ment, may be established as other agreements are allowed to be proved. Id. In view of the foregoing principles, if a suit is to be brought against the trustees as such, or against them as individuals, the decision as to which course to adopt should be clearly settled, and the complaint drawn flatly according to the scheme decided on. While the mere addition of the words " as trustee," after the name of defendant where the complaint alleged individual liability, might be regarded as merely descriptive of the person, and judgment authorized against him individually, yet if the form of the complaint, and its substantive averments, and the form of the judgment demanded, characterize the action as against the defendant in his representative capacity, the action cannot, on demurrer, and in the absence of allegations showing that the estate was in fact expressly charged, be converted into one against the trustees individually.. Austin v. Munro, 47 K Y. 360. See ante, 166, 173. It has been suggested, that inasmuch as services rendered, or goods sold, necessary for the trust estate, are ultimately to be paid for from the estate, it would seem to follow that while, in the absence of express contract charging the estate, an action would lie only against the trustee, yet if he were insolvent, or by fraud rendered recovery against himself unavailing, an equita- ble cause of action would thereby be created against the estate. Ferrin v. Myriclc, 41 N. Y. 315 (325). If a trustee fraudulently induces orte entitled to payment to accept worthless securities, there is a remedy in equity against the estate. See Has- ~brouck v. filauvelt, 9 Hun, 200. As to a claim of lien by an attorney representing a beneficiary, see Matter of Hoyt, 5 Dem. 432. As to the lien of counsel for a trustee upon a fund recovered, and on papers, etc., see Matter of Knapp, 85 N. Y. 284 (297) ; Austin v. Munro, 47 N. Y. 360 ; Ferrin v. Myrick, 41 N. Y. 315 ; Bowman v. Tollman, 2 Robt. 385 ; Boynton v. Laddy, 50 Hun, 339. THE TRUSTEE'S AUTHORITY. 129 179. To grant easements. A trustee, having the legal title, has power to grant an easement over the trust estate, to continue during the term of the trust, where such a grant is war- ranted by the circumstances. At least, so it is said in Valen- tine v. Sckreiber, 3 App. Div. 235 (239). Where the power is derived from, when the trust is merely, as in that case, to re- ceive and apply rents, it might be difficult to say. But the trustees there had also a general power of sale, and this seems to furnish a more satisfactory ground for sustaining the grant. (Id. 239-40.) 180. To compromise. A trustee, in the absence of statu- tory provisions, has power to compromise claims against the trust estate ; but he acts at his peril ; to protect himself, he may apply to a court of equity for its advice and approval. See note, 5 Abb. N". C. 346. 181. Acts in contravention of trust Sec. 85 of the Real Property Law, which is now substituted in place of 65 of the Statute of Uses and Trusts, as amended, provides that " If the trust is expressed in the instrument creating the estate, every sale, conveyance or other act of the trustee, in contravention of the trust, except as provided in this section, shall be absolutely void. The Supreme Court may, by order, on such terms and conditions as seem just and proper, authorize any such trustee to mortgage or sell such real property, or any part thereof, when- ever it appears to the satisfaction of the court that it is for the best interest of such estate, or that it is necessary and for the benefit of the estate, to raise funds for the purpose of preserving and improving it ; and whenever the interest of the trust estate in any real property is an undivided part or share thereof, the same may be sold, if it shall appear to the court to be for the best interest of such estate." Notice of the application for leave to sell or mortgage is also provided for in 87 of the Real Prop. Law. But under the decisions prior to the amendments, it was held that the only acts which are forbidden are those which are in contravention of the given trust in question ; that for some purposes, as to raise money to pay taxes and so avoid a tax sale, the trustee might, with the approval of the court, mortgage the 9 130 THE TRUSTEE. land ; and whether it is or is not in contravention is a question to be decided by the court. 17. S. Trust Co. v. Roche, 116 N. Y. 120 ; see Cruger v. Jones, 18 Barb. 467, explained in U. S. Trust Co. v. Roche, supra, p. 128 ; Matter of Clarke, 59 Hun, 557 ; Matter of Roe, 119 N. Y. 509 ; Fitzgerald v. Topping, 48 N". Y. 438 (444) ; I? Amoureux v. Van Rens- selaer, 1 Barb. Oh. 34 (37) ; Wetmore v. Porter, 92 N". Y. 76 ; Matter of Morris, 63 Hun, 619, 133 1ST. Y. 693, as to which see Losey v. Stanley, 147 N. Y. 560 (572-73). The power in the court to authorize a sale or mortgage, only applies to raising a fund necessary to improve or preserve the trust property. It does not authorize a sale for the purpose of reinvesting the proceeds in another form. The " improvement" referred to relates to the land, and not to the total trust estate. The statute does not cover an attempt to merely utilize the pro- ceeds of the land to better advantage. It forms an exception to the general line of the trustee's duty, and it is intended to meet emergencies. As a rule, the property is considered safer if allowed to remain as land, and the court can only authorize a sale or mortgage for the necessary preservation or improvement of the lands held by the trustee. Matter of Roe, 119 N. Y. 509 ; Matter of Morris, 63 Hun, 619, 133 N. Y. 693. Where a trust instrument gives the power to sell or mortgage, a sale or mortgage, in accordance with its terms, is, of course, not in contravention of the trust. Belmont v. O" 1 Brien, 12 N". Y. 394 ; McArthur v. Gordon, 51 Hun, 511 (126 N. Y. 597). (As to implied power to mortgage, see Rogers v. Rogers, 111 N. Y. 228, 238.) Where land is conveyed to a grantee " as 'trustee" and " to his successors and assigns forever," and the grant is absolute, and contains no limitation on the power to con- vey, and no disclosure of the nature or object of the trust, a gran tee from the trustee takes a good title to the land. G. L. & P. J. R. Co. v. N. T. & G. L. R. Co., 134 N. Y. 435. Apart .from the cases where, by proper proceedings, a valid authoriza- tion may be secured from the court, a trustee whose conveyance or mortgage would under the statute be void, cannot render it valid by securing an order or decree of court directing it. ^Douglas v. Cruger, 80 N. Y. 15 (18) ; Losey v. Stanley, 147 .]. Y. 560 ; Cruger v. Jones, 18 Barb. 467 ; CPDonoghue v. THE TRUSTEE'S AUTHORITY. 131 Boies, 92 Hun, 3. But 85 does not divest the court of its power over the legal estate of infants, whether holding bene- ficially or as trustees, expressly conferred by 2 R. S. 194, sec. 167, for which 2345 et seq. of the Code is now substituted. Anderson v. Mather, 44 "N. Y. 249 (261) ; Losey v. Stanley, 147 N. Y. 560 (573) ; Cramer v. Jermain, 17 Misc. 244. (As to the effect of a decree of foreclosure of a mortgage given by a trustee who was also remainderman, and who was sued individ- ually, upon the beneficiaries, see Rathbone v. Hooney, 58 N. Y. 463, 467). The trust instrument may authorize a sale or mort- gage if directed or approved by the court ; but even in such a case, as well as where the authorization of the court is required by statute, the matter must be brought directly before the court for consideration, and directly passed on. The mere fact that in a suit involving the trustee's title, the trustee consents to dis- continuance of the action and releases the other party from all demands, and thereupon the court dismisses the complaint, does not constitute an authorization by the court of the trustee's abandonment of his claim, in contravention of the trust. Fitz- gerald v. Topping, 48 N. Y. 438 (444). 182. What may be sold or mortgaged. The statute (Real Prop. L., 85) empowering the court to authorize a trus- tee to sell or mortgage the trust estate, applies only to the estate vested in the trustee. If, therefore, the trust is to receive and apply rents for a legal term, in which case the trustee is vested merely with an estate for that term, and is not vested with the fee, it is only the trust estate, and not the fee, which may be sold or mortgaged under the section above cited. If the re- mainder is vested in infants or other incompetent persons, whose interests require a sale or mortgage, proceedings to that end must be taken under the Code provisions ( 2348 et seq.) (or under a special act of the Legislature. Ebling v. Dreyer, 149 N. Y. 460). Compare CPDonoghue v. Boies, 92 Hun, 3. If the remainder is vested in adults, who are not incompetent, it cannot be sold or mortgaged at all without their consent. Even in the case of incompetent persons, the inherent power of the court, apart from statutory authority, to manage and control, is confined to personal property, and the income of realty. In so 132 THE TRUSTEE. far as Matter of Morris, 63 Hun, 619, aff'd 133 N. Y. 693, may conflict with these principles, it is erroneous. Losey v. Stanley, 147 N. Y. 560 ; Brevoort v. Grace, 53 K Y. 245 ; Matter of Field, 131 N. Y. 184. So also the case of Duffy v. Durant Land Improvement Co., 78 Hun, 314, evidently pro- ceeds upon an erroneous theory. Compare U. S. Trust Co. v. Roche, 116 N. Y. 120. Quite distinct from the questions just discussed is the acknowledged power of the court to enforce and protect trusts or to establish and enforce rights of property be- tween parties to a litigation. Losey v. Stanley, 147 N. Y. 560 (570-71) ; Goebd v. Iffla, 111 N. Y. 170. Even the legislature (except in cases of necessity, arising from the infancy, insanity, or other incompetency of those in whose behalf it acts) has no power to authorize, by special act, the sale of private property for other than public uses, without the consent of the owner. This principle applies where the property is held in trust. Powers v. Bergen, 6 N. Y. 358 ; Russell v. Russeil, 36 N. Y. 581 (586). But in case of such a necessity it may do so, even though contingent future rights of unborn children be involved. Leggett v. Hunter, 19 N. Y. 445 (460), and cases cited. 183. Remedy in equity. And if an invalid transfer is at- tempted, the fact that the trustee is responsible for damages' does not deprive the beneficiary of his right to sue in equity for the cancellation of the deed. In order to oust the equitable remedy, the legal remedy must be as practical and efficient to the ends of justice and its prompt administration as the remedy in equity. Storm, v. Bennett, 91 Hun, 302. Such a transfer defeats the trust pro tanto, and equity may always be appealed to to pre- vent the destruction of the trust. Id. 184. Limited authority. A trustee has no general power of disposition of the trust estate, but must derive such power from the instrument creating the trust, or, in special circum- stances, such power may be implied. But where there is a des- ignation of the conditions upon which the trust estate is to be sold, if at all, the trustee is not authorized to convey any title ex- 1 But see ante, 29, note 1. THE TRUSTEE'S AUTHORITY. 133 cept in the manner provided for in the trust instrument. Thus, if the trust instrument authorizes a sale upon the consent of the beneficiary, that consent is essential to the validity of a sale to a party with notice. O* Connor v. Waldo, 83 Hun, 489 ; Suarez v. da Montigny, 1 App. Div. 494 ; so if the consent of the grant- or of any other person is required. Kissam v. Dierkes, 49 K Y. 602. See post, 622 ct seq. ; 641 et seq. If a sale, conveyance, or other act of the trustee would be valid under certain circumstances, and otherwise would be in contravention of the trust, false recitals in an instrument attempt- ing to effect it, stating that such circumstances do exist, are immaterial. It is the fact, and not the recital of it, that counts. Briggs v. Dams, 20 K. Y. 15 ; s. c. 21 N. Y. 574 ; Scott v. Rand, 115 Mass. 104 ; s. c. 118 Mass. 215. 185. Personal property. The trustee of personal prop- erty, with full power to manage and control it, may sell the same, even to a party with notice, and give good title. There is nothing in the terms of such a trust that renders a sale a con- travention thereof ; nor is the purchaser in such case responsible for the due application by the trustee, of the proceeds of the sale. Dillaye v. Com. Bank of Whitehall, 51 N". Y. 345. The same result would be reached if the sale were in contraven- tion of the trust, but the purchaser had no actual or constructive notice, and paid value. Id. Real Prop. L. 88. 186. Unauthorized satisfaction piece. Where a mort- gage is executed to one as trustee, in order, as there expressed, to secure payments to a beneficiary during a specified term, the mortgagee cannot during the term assent to a satisfaction of the mortgage, or execute a valid satisfaction piece, not even, it seems, for an adequate consideration. By its terms the mortgage is to be security not only for the payment of the money, but to remain such security for the payment of money at specified times during the specified term. The trustee has no power to vary its terms nor to receive payment in anticipation. In case of default the trustee might foreclose, under the express authority given in the mortgage, but such action would result in some form in the sub- stitution of other security for the proceeds. McPherson v. 134 THE TRUSTEE. Rollins, 107 K Y. 316 ; Kirsch v. Tozier, 143 N". Y. 390 ; compare Luce v. Gray, 92 Hun, 599 ; Townsend v. Itackham, 143 N. Y. 516 ; Waterman v. Webster, 108 K Y. 157 ; Bend- heim v. Morrow, 73 Hun, 90. See ante, pp. 14, 15, 50, 66, &nd post, 380. 187. Unauthorized waiver So the trustee has no author- ity to waive the estoppel of a former judgment, and thus pre- judice the beneficiaries appearing and insisting on the estoppel. Pray v. Hegeman, 98 K Y. 351 (362). 188. Unauthorized interference. A trustee has no author- ity as such to change or control the legal or equitable rights of the beneficiaries by his voluntary action (except as he may be given power by the trust instrument to increase or decrease shares, etc.). Chester v. Jumel, 125 N. Y. 237 (253). 189. When statute inapplicable. When, instead of being trust real estate, in the sense of being property devised or granted to the trustee by the trust instrument, or bought by him under authority to invest in realty as such, the real estate in question is otherwise acquired by the trustee, as, for example, by his foreclosure of a mortgage held in trust, or by his unau- thorized investment of trust funds in land, here his title, and power to convey or mortgage, are unrestricted by the statutory provisions, and he may execute a valid mortgage or give a good title. Leggett v. Hunter, 19 K Y. 445 (457-58) ; Valentine v. Belden, 20 Hun, 537 ; McLean v. Ladd, 66 Hun, 341 ; Yonkers Savings Bank v. Kinsley, 78 Hun, 186. And a title secured through foreclosure of such a mortgage is a good title. McLean v. Ladd, supra. If the act of the trustee in investing funds in lands is unauthorized, the beneficiary may of course hold him liable for breach of his duties. (Id.} As to following trust funds into property in which they have been improperly invested, see post, 375. As to technical powers in trust con- ferred upon trustees, see post, Chap. XIII. et seq. (5) The Trustees Duties. 190. In general. The duties of the trustee flow from sev- eral sources. First, is the trust instrument, creating the particu- THE TRUSTEE'S DUTIES. 135 lar trust, and defining its purposes. Next, are the statutes im- posing certain duties on those who accept a trusteeship. And, finally, the general principles of the law cover the whole field of his obligations in connection with the given trust. It is the duty of the trustee to regulate his acts according to the legal provisions of the trust instrument. ' ; The trustee must apply the trust fund according to the instructions of its author. . . . The relation of the donor and trustee, the power of the former and the duty of the latter, are precisely what they were by the common law/' Leggett v. Perkins, 2 K Y. 297 (SOY). He must obey orders of the court. Dodge v. St. John, 96 N. Y. 260 (263). It is his absolute and positive duty to defend the life of the trust whenever it is assailed, if the means of defence are known to him or can with diligence be discovered. Cuthbert v. Chauvet, 136 K. Y. 326 (332) ; Geissler v. Werner, 3 Dem. 200 ; Matte)' of Hutchinson, 84 Hun, 563. It is against his duty either to serve an offer of judgment declaring the trust void, or to allow judgment by default by failing to answer, or to waive the defence of the statute of limitations. Spicer v. Raplee, 4 App. Div. 471 (476) ; Sutler v. Johnson, 111 K Y. 204 (212). The statute enjoining any act on his part which will defeat the trust, embraces defaults and other omissions of duty as well as open and avowed acts of hostility. Cuthbert v. Chauvet, 136 K Y. 326 (332). In general, a voluntary trustee, acting not gratuitously, but for compensation, is bound to exercise that degree of diligence which persons of ordinary prudence are accustomed to use in their own affairs. This duty extends to all the interests com- mitted to his charge ; and his whole conduct in the management of the trust, when called in question, is to be considered in view of the powers which he may exercise in the protection, recovery, and application of the assets and the general management of the trust. He may be chargeable with a devastavit as well by reason of his neglect as his intentional omission or actual misappropria- tion or positive fraud. The law exacts not only good faith, but reasonable care and due diligence, and he is liable for any loss resulting from a breach of duty to those interested in the trust. Matter of Cornell, 110 K Y. 351 (357). It is also the trustee's duty to retain the trust estate in his own name and under his 136 THE TRUSTEE. own control, and not turn it over to the beneficiaries, JBram- hall v. Ferris^ 14 ~N. Y. 41 (47), except, of course, in cases where the trust is created for the purpose of paying annuities, &c. The trustee has no rignt to discharge a mortgage constituting part of the trust estate, unless it has in fact been paid, or, if given to secure not the payment of a lump sum, but of succes- sive sums, e. g. an annuity, until the period for such payments has elapsed and the conditions have been complied with. And if a subsequent purchaser of the land, or a subsequent mortgagee, has actual or constructive notice of the true facts, such a mortgage, so improperly discharged, may be reinstated, at the suit of the beneficiaries. Rirsch v. Tozier, 143 N. Y. 390, aff'g 63 Hun, 607 ; McPherson v. Rollins, 107 N. Y. 316. See ante, 186. And a recital in a recorded mortgage, that it is given as security for the payment of sums of money to a third party, during a specified term, not yet expired, is sufficient notice of a trust. (Cases cited supra.} And it seems that such a mortgage does not merely put a subsequent purchaser or mortgagee on inquiry as to whether or not it has been validly discharged, but that it is a security which cannot be discharged at all until the term of the payments secured by it has elapsed, and that the trustee has no power to accept a premature payment, or to vary the trust security, at all events when the beneficiaries are minors. j&irsch v. Tozier, supra, p. 396-97. "An executor, administrator, receiver, assignee, or other trus- tee, may, for the benefit of creditors, or of others interested in real property held in trust, disaffirm, treat as void, and resist any act done or transfer or agreement made in fraud of the rights of any creditor, including himself, interested in such estate or property ; and a person who fraudulently receives, takes, or in any manner interferes with the real property of a deceased per- son, or an insolvent corporation, association, partnership, or in- dividual, is liable to such executor, administrator, receiver, or other trustee for the same, or the value thereof, and for all damages caused by such act to the trust estate. A creditor of a deceased insolvent debtor, having a claim or demand exceeding one hundred dollars against such deceased, may, for the benefit of creditors or others interested in the real property of such de- ceased, disaffirm, treat as void, and resist any act done or con- THE TRUSTEE'S DUTIES. 137 veyance, transfer or agreement made by such deceased in fraud of the rights of any creditor, including himself, and may main- tain an action to set aside such act, conveyance, transfer, or agreement, without having first obtained a judgment on such claim or demand ; but the same, if disputed, may be established on the trial. The judgment in such action may provide for the sale of the premises or property involved, when a conveyance or transfer thereof is set aside, and that the proceeds thereof be brought into court or paid into the proper surrogate's court to be administered according to law." Real Prop. L., 232. See L. 1858, Ch. 314, as amended. Southard v. Benner, 72 K Y. 424. Also Birdseye's R. S. (2d ed.), p. 1342 ; Bishop on Insolvent Debtors (3d ed.), 156 et seq. 191. Undue diligence. There is, however, such a thing as undue diligence. The very fact that the trustee is acting in a representative capacity, which lays on him the burden of stand- ing by the trust and exhausting all proper means of protecting the beneficiaries, also requires that if the beneficiaries do not want a given form of protection, and are satisfied with a given status of affairs, and see in it their best interest, and if the sub- ject is one where the law does not interfere with the exercise of their option, here the trustee, divested, in essence, of any true representative capacity, is not called upon to insist on his course in disregard of their views, and in such a case the court may even refuse to give him any standing in the matter. Thus, while it is the right and duty of trustees to have the will con- strued by the court, in case its meaning or the validity of its pro- visions is doubtful, yet where the question raised concerns con- flicting rights of different persons, and they acquiesce in the decision of the Supreme Court, the trustees cannot be said to be " aggrieved," and so, an appeal by them only, to the Court of Appeals, will be dismissed because the appellants have no inter- est. Bryant v. Thompson, 128 N. Y. 426, with which com- pare Bliss v. Fosdick, 76 Hun, 508 (510), aff'd, 144 N. Y. 706. Under a similar principle, the trustee should not carry his loyalty to the trust so far as to antagonize the law. Thus, it is no part of his duty to attempt to benefit the estate by evading taxation. Wheelwright v. Rhoades, 28 Hun, 57 (58) ; Valentine v. Valen- tine, 3 Dem. 597. 138 THE TRUSTEE. P 192. Moral duty. Though a devise fails to charge the de- visee with a legal trust, yet the terms of the will may be such as to impose on the devisee the moral duty of acting as if its injunctions were legally binding on him. Follett v. Badeau, 26 Hun, 253 (258). Disinterestedness. 193. General principles. It is the duty of the trustee, or a donee of a trust power, in his dealings with the trust property, to look solely to the best interests of the beneficiary, and to re- 'frain from seeking personal advantage. It is one of the great rules of law that all contracts made by a trustee, or fiduciary, in which he is personally interested, are invalid at the election of the party he represents. The value of the rule lies to a great extent in its stubbornness and inflexibility. Its rigidity gives it one of its chief uses as a preventive or discouraging influence, because it weakens the temptation to dishonesty or unfair dealing on the part of the- trustee, by vitiating, without attempt at dis- crimination, all transactions in which he assumes the dual char- acter of principal and representative. The intrinsic fairness of the given transaction is immaterial. Munson v. 8., G. tfe C. R. It. Co., 103 N. Y. 58 (73 et sey.) ; Davoue v. Fanning, 2 Johns. Ch. 252. He must not, either directly or indirectly, buy trust property for himself. Tiffany v. Clark, 58 K Y. 632 ; Ter- williger v. Brown, 44 N. Y. 237, and cas. cit. ; Forbes v. Halsey, 26 N. Y. 53 (65) ; Case v. Carroll, 35 N. Y. 385 ; Jewett v. Miller, 10 N. Y. 402 ; Chapin v. Weed, Clarke Ch. 464 ; Slade v. Van Vechlen, 11 Pai. 21 ; Campbell v. Johnston, 1 Sandf. Ch. 148 ; Reynolds v. Sisson, 78 Hun, 595 ; Quacken- bush v. Leonard, 9 Pai. 334 ; compare De Bevoi.se v. Sand- ford, Hoff. Ch. 192 (Wildey v. Robinson, 85 Hun, 362, takes a less pronounced view, p. 365) ; not even where, while holding an equity of redemption as trustee, he is individually the owner of the mortgage ; on foreclosure, he may not buy in the equity for himself. Hubbell v. Medbury, 53 N. Y. 98 ; nor may he reap any personal benefit from a sale which he could and should have prevented in the interest of the estate. Lytle v. Bever- idge, 58 K Y. 592 (606) ; compare Matter of Bolton, 71 Hun, 32 ; nor trade and bargain, in his own interest, with the bene- DISINTERESTEDNESS. 139 ficiary. Post v. Benchley, 48 Hun, 83 (89) ; as to this, see Geyer v. Snyder, 140 !N". Y. 394 ; Davoue v. Fanning, 2 Johns. Oh. 252 (266-67) ; Matter of Randall, 80 K Y. 229. If the trust is one under which the beneficiary's interest is assignable, and he is an adult and stands on an even footing with the trus- tee, it is said in Matter of Ledrich, 68 Hun, 396, that he may settle with the trustee, and assign his interest to the latter. In this case, however, he had evidently ratified the transaction by acquiescence. The same principles apply not only in case of valid trusts, but also on settlements and accountings with trus- tees under trusts adjudged void. Colburn v. Morton, 1 Abb. Ct. App. Dec. 378 (385), citing numerous authorities on the gen- eral subject. 1 194. Voidable, not void. A personal purchase by the trus- tee is not, however, void, but merely voidable at the election of the beneficiary. Dodge v. Stevens, 94 K. Y. 209 (215) ; Har- rington v. Erie Co. Savings Bank, 101 K. Y. 257 (264) ; Boerum v. Schenck, 41 1ST. Y. 182, and note, p. 200 ; Forbes v. Halsey, 26 K". Y. 53 (65) ; Bostwick v. Atkins, 3 N. Y. 53. And laches may bar the right to object, Geyer v. Snyder, 140 N. Y. 394 (402) ; Kahn v. Chapin, 84 Hun, 541 ; Harring- ton v. Erie County Savings Bank, 101 1ST. Y. 257. Other cases illustrating the general principle are : Paffv. Kinney, 1 Bradf. 1 ; Ames v. Downing, 1 Bradf. 321 ; Zilkin v. Carhart, 3 Bradf. 376 ; Oliver v. Frisbie, 3 Dem. 22 ; Matter of Bach, 2 Con. 490 ; Barker v. Smith, 1 Dem. 290 ; rebate on pur- chases, Kedian v. Hoyt, 33 Hun, 145 ; sale by trustee individ- ually to infant beneficiary, Hyland v. Baxter, 42 Hun, 9 (16) ; buying in tax title, Gilman v. Healy, 49 Hun, 274. Nor can the trustee purchase for his own benefit property which, although not the subject of the trust, is connected with it in this, that a sale thereof, for less than its value, will diminish the trust fund e.g., where testator bequeaths his personal property in trust, and also, aside from the trust, leaves real estate encumbered by a mortgage securing his bond ; and the trustees, at a foreclosure 1 As to the method by which a trustee, if authorized, may effect a convey- ance to himself, of trust property, see 2 Perry on Trusts, 602 w. 140 THE TRUSTEE. sale, personally buy in the land at less than its full value, and thus a deficiency judgment results, payable out of the personal estate held in trust. Fulton v. Whitney, 66 N. Y. 548. So where the trustee of a junior mortgage buys in the property personally, on a gale under the prior mortgage, at a figure insuffi- cient to produce funds sufficient to cover the mortgage he holds in trust. The duty to make the sale produce as much as possi- ble, and the personal interest to buy at the lowest figure, are inconsistent. Van Epps v. Van Epps, 9 Pai. Ch. 237 (241). It does not follow that the trustee loses the amount of his bid ; in the Yan Epps case he was allowed to hold the property as security for that amount only, unless he should elect fully to indemnify the trust estate by paying the whole amount of the principal and interest due upon the bond and mortgage which he held in trust (p. 242) ; in Fulton v. Whitney, supra, it was found as a fact that the actual value of the property was greater than the price paid, and that the excess would more than satisfy the mortgage and indemnify the trust estate. The court found the trustees chargeable with the difference between what they paid on the purchase and the actual value, with interest. (On this point of the extent of the trustee's liability, and the method to be adopted to protect all rights, all the cases cited on the general obligation of the trustee to refrain from dealing person- ally with the trust estate may be consulted ; also People v. Norton, 9 1ST. Y. 176, 180 et seq., and a note, 41 N. Y. p. 201.) So also, where a judgment creditor executes a declaration that he holds the judgment in trust for the joint benefit of himself and another, he cannot, on execution sale thereunder of the debtor's property, buy it in for his own benefit, and if he does so is liable to the beneficiary for the pro rata share of its real value after subtracting the amount actually paid. Woodruff v. Boyden, 3 Abb. N. C. 29. If, however, the sale of property outside the trust can have no bearing on the trust, the relation of the trustee to his bene- ficiaries constitutes no reason why he should not buy in person- ally property in which the beneficiaries as such have no interest, even though it form part of the same estate of another part of which he is the trustee. See Ilollingsworth v. Spaulding, 54 N. Y. 636 ; Matter of Monroe, 142 N. Y. 484 (490). And IMPARTIALITY. 141 if a trustee has also a personal interest in property affected by the trust e.g., where he is individually a joint owner, while it is true that this fact alone does not entitle him to buy in the property at a sale, yet if he applies to the court for leave to bid, and cites in all parties interested, the decree in his favor will enable him to acquire a good title. Scholle v. Scholle, 101 N. Y. 167. But the formal leave to buy, which is usually granted to parties in a foreclosure or partition sale, and inserted in the judgment, does not suffice to enable the trustee to buy for himself. Id. (172 and cas. cit.). So it has been held that a trustee may buy in personally, claims held by third persons against those who are beneficiaries of the trust, Clark v. flint & P. M. R. Co., 5 Hun, 556 ; but whether he may enforce them for more than the amount actually paid by him, quaere. Id. An agreement between trustee and beneficiary that the former shall receive extra compensation for the performance of his regular duties is void for want of consideration. Wildey v Robinson, 85 Hun, 362. It would seem that if a person named as trustee does not assume the office, and duly renounces, there is no objection to his doing acts for his own benefit, which, had he been trustee, would have been voidable. (See Valentine v. Duryea, 37 Hun, 427.) 195. Infant beneficiary. Where the beneficiaries are in- fants, or otherwise incompetent to protect and watch over their own interests as against the trustee, he is held to even stricter accountability than under the general rules. Howell v. Mills, 53 N. Y. 322. Impartiality. 196. General principles. It is a general, if not invariable, feature of express trusts, that conflicting interests are to a greater or less extent confided to the care of the trustee. And as between such conflicting interests he is invariably and strictly required to act fairly and impartially. The conflict may exist between the beneficiaries on the one side, and on the other the creator of the trust who retains the reversion, or his heirs or next of kin ; or between the several beneficiaries ; or between bene- ficiaries and remaindermen, and no doubt may arise in many 142 THE TRUSTEE. other forms. The duty of the trustee in such cases is illustrated and discussed in various parts of this book, under the heads of In- vestments, Application of Rents, Removal of Trustee, Execution of Powers, etc. In general, it may be laid down in sweeping terms that as between various interests existing under the trust scheme, and entitled to depend on him for protection, he must not " take sides ;" in determining on any given course which may result to the benefit of one class and the detriment of an- other, he must be guided by the simple purpose of doing justice (Matter of Luckey, 4 Redf. 95) ; if his determination is to be based on the existence or non-existence of given facts, he must not wilfully disregard the facts, or omit reasonable efforts to ascertain them. 197. To a large degree the creator of the trust may confer discretion upon the trustees, but an uncontrolled and arbitrary discretion is not favored by the courts, and will not be presumed, Crooke v. County of Kings, 97 N. Y. 421 (443-44) ; and even where it exists, it can never be broad enough to warrant capri- cious, wanton, groundless, or dishonest conduct on the part of the trustee. See post, Chap. XVII. Thus, a trustee must not act as attorney for one beneficiary, as against another, at any rate in matters affecting the trust, nor for any other person whose interests placed in his charge are hostile to those of the trust. Such a course constitutes ground for his removal. Mat- ter of Cohn, 78 N. Y. 248. And it also invalidates the relation of attorney and client thus attempted, in so far as it might be set up to the disadvantage of the beneficiaries e.g., in a con- troversy over the matters involved, the trustee when called on to produce letters received from his client, or testify to communi- cations, cannot, nor can the client, set up the professional priv- ilege as against the beneficiaries. Pritchard v. Foulkes, C. P. Cooper's Chan. Rep. 1837-38, p. 14 ; Tugwell v. Hooper, 10 Beav. 348 ; Kerr on Discovery, 125. The' trustee must not allow himself to occupy any position conflicting with his duties to the trust. Putney v. Fletcher, 148 Mass. 247 ; Perkins v. Finnegan, 105 Mass. 501 ; Gray v. Parke, 155 Mass. 433 ; Drake v. Green, 10 All. 124. He must not capriciously delay a sale directed. Fincke v. Fincke, 53 N. Y. 528 (535). Nor IMPARTIALITY. 143 postpone or accelerate it for the purpose of compromising the respective rights of either trust beneficiaries or remaindermen. Heermans v. Robertson, 64 N. Y. 332 (339). The terms of the trust may impose upon him the duty of paying special attention, or giving precedence, to certain interests over others. But in so far as different interests exist, and in so far as they do extend, it is his duty to bear in mind that he occupies his position not for his own benefit, but for that of others ; not to contravene the purposes of the trust, but to effectuate them ; not to do injustice to any, but to do justice to all. 1 198. As between beneficiary and remainderman. The trustee, in selecting securities for investment, making authorized outlays, deciding when and how to sell trust property, and doing other acts which may involve an increase in income, at the ex- pense of the remainderman, or vice versa, must act fairly as between the two, and give no unjust advantage to either. But in so far as the nature of his duties or the terms of the trust instrument vest him with discretion, the court will not interfere, so long as he is acting in good faith and without intent to injure either of the parties interested for the benefit of the other. Hancox v. Wall, 28 Hun, 214 (see Hancox v. Meeker, 95 N. Y. 528) ; Kniqht v. Lidford, 3 Dem. 88 (93) ; Heermans v. Rob- ertson, 64 N". Y. 332 (339) ; 2 Perry on Trusts, 539. And the trust instrument may make it the duty of the trustee to seek the interest of the beneficiary at the expense of the remainderman. Thus, testator may direct the trustee to apply to the use of the beneficiary not only all the income, but any part, and if need be all, of the principal. Matter of Blanck, 5 Dem. 301. Where testator gives property to a trustee with an absolute trust for con- version, and with a discretion as to the time at which the con- version shall take place, if from any cause whatever, arising from the discretion and judgment of the trustee, the conversion is delayed, then, as between life tenant and remainderman, the former is not to be prejudiced by this delay, but is to have the 1 A remainderman, even though his interest is small, is entitled to full in- formation as to what the trustee is doing in matters that may affect him. In re Dartnall (1895), 1 Ch. 474. And so is the beneficiary. In re Tillott (1892), 1 Ch. 86. 144 THE TRUSTEE. same benefit as if the conversion had taken place within a reason- able time from the death of the testator, which is usually fixed at twelve months from that period. Rodman v. Fincke, 68 N. Y. 239 (244). It is said that if the grantee of a power is authorized to defer a sale, and does so for the special benefit of the beneficiary of the trust, in spite of contemplated depreciation of the corpus, a sinking fund should be reserved from the rents to cover the depreciation. Matter of Housman, 4 Dem. 404. But it is believed that such cases must be decided largely on their own facts, and in connection with a proper application of the prin- ciple calling for a due regard to the fair interests of all con- cerned, as they may appear. Heermans v. Robertson, 64 N. Y. 332 (339). Investments. 199. General principles. There is no statute prescribing the securities in which a trustee must invest his funds. 1 The matter is controlled by the principles laid down in the leading case of King v. Talbot, 40 N. Y. 76. " The doctrine of that case may be summarized as follows : In England, trustees were bound to invest in the public debt, or in loans secured by the pledge of real estate. This rule was not a part of the common law, applicable to this State as a colony, and is binding on our courts only so far as it rests on the fundamental principles of equity. The underlying principle in the administration of trusts is the duty of the trustee to be faithful, diligent and prudent. He must act with such diligence and prudence, in the manage- ment of the trust, as, in general, prudent men of discretion and intelligence in suck matters, employ in their own like affairs. " This necessarily excludes all speculation, all investments for an uncertain and doubtful rise in the market, and, of course, every- thing that does not take into view the nature and object of the trust, and the consequences of a mistake in the selection of the investment to be made." The fact that the trust instrument en- trusts to the discretion of the trustee the investment of the estate, 1 Except where the trustee is a trust company, as to which see the Banking Law, Art. IV.; Birdaeye, R. S., 3d ed., p. 230. * See also Ackerman v. Emott, 4 Barb. R. 626. INVESTMENTS. 145 in no Tvay affects the trustee's duty or responsibility. This was the case of a trust for infants, providing that the estate should be placed at " interest" for their maintenance. The first requi- site, therefore, was security; the second, interest; and the third, the retention of power to recall the fund for delivery to the infants at majority. Therefore, no investment would be proper which involved hazard, or which contemplated by its terms that the principal was not to be returned at all. " The moment the fund is invested in lank, or insurance, or railroad stock, it has left the control of the trustees," " and the terms of the investment do not contemplate that it ever will be returned to the trustees." " The trustees shall not place the fund where its safety and due return to their hands will depend upon the tiuiccegs of the business in which it is adventured, or the skill and honesty of other parties entrusted with its conduct ; and it is in the selection of the securities for its safety and actual return, that there is scope for discretion and prudence. ..." The opinion in the foregoing case was read by Woodruff, J. All the judges concurred in the result. Murray, Grover, Dan- iels, and James, JJ., stated that they " thought it a settled prin- ciple of law in this State, that a trustee, holding trust funds, for investment for the benefit of minor children, must invest in Gov- ernment or real estate securities, and that any other investment would be a breach of duty, and the trustee would be personally liable for any loss." To this formulation of the rule, Hunt, Ch. J., Mason and Lott, JJ., are given as contra. Brief discus- sion of the general rule is found also in a few early cases, now to be cited, as well as in later ones to be considered hereafter. In 1820, Chancellor Kent, in his opinion in Smith v. Smith, 4 Johns. Ch. 281 (284), says : " I have no doubt that is a wise and excellent general rule, that a trustee loaning money, must require" adequate real security, or resort to the public funds. . . . Pos- sibly, there may bo cases in which the taking of personal security would exonerate the trustee, if that security was selected with discretion, and according to the practice of the testator, in like cases. ... I am not, however, prepared to say whether any, and if any, what exceptions, may exist to the general rule on this point." In 1829, in Haggerty v. Duane, 1 Pai. Ch. 321 (323), Chancellor Walworth, in directing a fund, the ownership 10 146 THE TRUSTEE. of which was in dispute, to be paid into court, also directed the assistant register to put it out at interest on bond and mortgage, or invest it in the public stock. In 1848, in Bogart v. Van Velsor, 4 Edw. Ch. 718 (722), the court say : "Aft A general rule, executors and trustees are not warranted in lending money of the estate on mere personal security, . . . because other and better, as Government stocks, and mortgages of real estate, are accessible to them as a means of safe investment." A trustee's duty in regard to investments is continuous. It is not enough to discharge him from liability that the investment was safe when made. The value or security of mortgaged prem- ises, for example, may decline, and if payment of interest is de- layed, the trustee is put on notice and must act promptly. Mat- ter of Sutler, 1 Con. 58. Matter of Stark, 15 N". Y. Supp. 729. But if there is a sudden and unexpected decline, owing, for ex- ample, to a general financial panic, the trustee would not be liable for the loss. Matter of JBlauvelt, 2 Con. 458 (470). If the trus- tee makes proper investments, and is not guilty of negligence in their retention, he is not personally liable for subsequent depre- ciation. Crabb v. Young, 92 N. Y. 56 (68) ; Stuart v. Spauld- ing, 30 Hun, 21 (28). 200. Propriety of, may be res adjudicata. A decree passing on and approving the accounts of trustees, including given investments, will, while it stands, estop the parties to that pro- ceeding from raising the same question. Matter of Denton v. Sanford, 103 N. Y. 607 (613, 614) ; Bushnell v. Drinker, 5 Redf. 581. Of course subsequent events may lay a basis for a new question as to the propriety of continuing those investments. 201. Mortgage on land. Even though the trust instru- ment in terms confine the trustees to investment in mortgages on " unincumbered" real estate, unpaid taxes on the land are not an ineumbrance within the sense of that provision. Crabb v. Young, 92 N. Y. 56 (69). " In lending money even on mort- gage of real estate, a degree of care is necessary, which, if omit- ted, will render executors or trustees personally liable. They are bound to use ordinary care to ascertain that the title of the mortgage is valid, and that the value of the property at the time INVESTMENTS. 147 of the loan is such as will, in all probability, be an adequate security for the repayment, with the interest, whenever the money shall be called in." The proper rule is " not to lend more than from one half to two thirds of the value of the prop- erty mortgaged." Bogart v. Van Velsor, 4 Edw. Ch. 718 (722). The land, a mortgage on which may properly be taken as security, must, as a general rule, be land in New York State. " Investments beyond the jurisdiction of the court should not be sustained unless in very rare and exceptional cases, and under very unusual and peculiar circumstances." Such an investment " will not be upheld by us as a general rule, and never unless in the presence of a clear and strong necessity, or a very pressing emergency." " We do not hesitate, therefore, to recognize and declare as the general rule that the trustee who invests beyond the jurisdiction does so at the peril of being held responsible for the safety of the investment." Ormiston v. Olcott, 84 N. Y. 339 (343, 344) ; Matter of Denton v. Sanford, 103 N. Y. 607 (612) ; Matter of O'Hara, 62 Hun, 531 ; Cocks v. Barlow, 5 Redf. 406. " But this rule relates only to voluntary investments by the trustee, having the fund in his hands and full opportunity and freedom of choice, and does not govern a case where, by the act of the testator, a foreign investment has been made ; nor a case where, without the fault of the executor, the assets have been transmuted into a debt which can only be secured and saved by taking a foreign security. Ormiston v. Olcott, 84 N. Y. 339 (344). Nor a case where, on proper sale by the trustee of land lying without the State, he is obliged to accept part payment in the shape of a purchase money mortgage on the same land. Matter of Denton v. Sanford, 103 N. Y. 607 (613). And if the testator direct an investment in land, out of New York State, the court may, with the consent of all parties having either vested or contingent interests, authorize the purchase of land in another place ; and the court may assent to such a change, or any change, of securities on behalf of infants within its jurisdic- tion. Wood v. Wood, 5 Pai. 596 (600). And even in trusts such that the trustee must hold the corpus invested, and not pay it over to the beneficiary, he may invest it by loaning it to the beneficiary on the security of a bond and 148 THE TRUSTEE. mortgage on real estate. In such a case the beneficiary, as mort- gagor, figures as a mere third party, like any mortgagor. Judge v. O'Connor, 70 Hun, 384 ; Baldwin v. Isham, 25 Hun, 560. So lie may, it has been held, loan it to one vested with the remain- der after the trust, on a mortgage thereof. Delafield v. Schu- chardt, 2 Dem. 435. But such a mortgage would appear, in gen- eral, to be a highly unsatisfactory security. 202. Second and third mortgages. Trustees are generally not justified in loaning on the security of a second or third mort- gage. Lacey v. Davis, 4 Redf. 40iJ (408) ; King v. Mackellar, 109 N. Y. 215 (221) ; Whitney v. Marline, 88 N. Y. 535 (540) ; Matter of Havemeyer, 3 App. Div. 519 (524). Such an invest- ment may in certain cases be proper, but is not favored. Mat- ter of Blauvelt, 2 Con. 458 (470). Savage v. Gould, 60 How. Pr. 234 ; Matter of Petrie, 5 Dem. 352. 203. Government securities Meaning. In King v. Tal- lot, 40 N. Y. 76, Woodruff, J., aays (p. 84), that in that par- ticular case he does not deem it necessary to determine whether the English rule of investment referred to ante, 199, should, by precise analogy, be deemed to prohibit here investments in any other public debt than that of the State of New York. In Matter of Macdonald, 4 Redf. 321, it appears that the surrogate had previously directed executors to invest funds in United States government registered bonds. Surrogate Ransom inci- dentally approved of United States bonds in Matter of Keteltas, 1 Con. 468 (471), but only on the supposed authority of King v. Talbot, supra. Many cases illustrating such investments are found post, 419, and there is, of course, no doubt whatever that by a long settled and general practice, often in evidence before the courts without eliciting any disapproval, United States bonds have gained recognition as a proper form of investment, if, indeed, as seems highly doubtful, there ever was any sound reason for thinking them outside the scope of the rule. See also Craig v. Craig, 3 Barb. Ch. 76 (100). By L. 1889, ch. 65, it is provided that " it shall be lawful for executors, administrators, guardians and trustees and others holding trust funds for invest- ment to invest the funds so held by them in trust in bonds or INVESTMENTS. 149 stocks of any of the cities of this State issued pursuant to the authority of any law of this State." 204. Purchase of land is not an authorized form of invest- ment of trust funds. See Doud v. Holmes, 63 N. Y. 635. But it may be authorized by the trust instrument. See Wood v. Wood, 5 Pai. 596. And where land subject to a mortgage, and also personal property, are given to the trustee upon the same trust, the personal property might perhaps, in certain cases, be invested in the land by paying off the mortgage. Hep- burn v. Hepburn, 2 Bradf. 74. Where a trustee improperly in- vests in land, he nevertheless acquires a legal title, and is the only necessary party defendant to an action to foreclose a mort- gage on the land, which he assumed. The purchaser at the fore- closure sale gets a good title. The persons entitled to the money which was used by the trustee in making the purchase have, as against him, a right to have the property adjudged to be theirs, or they may require the trustee to account for the money thus misapplied. They cannot have both remedies. McLean v. Ladd, 66 Hun, 341. And as the property did not belong to the testator, as land, the absence of a power, under the will, to exe- cute mortgages, does not negative the trustee's power to mort- gage such land. Id. It is not proper for a trustee to use trust funds in building a house on land held in trust. Rose v. Rose, 6 Dem. 26. Compare Stevens v. Stevens, 80 Hun, 514. And where the trust estate consists of land granted or devised to the trustee by the trust instrument, he is, of course, required to retain it, in the absence of any power conferred on him to sell it. 205. Corporation stock. Stock of private corporations, whether for railroad, mercantile, banking, manufacturing, min- ing, or other purposes, is not an allowable security for the invest- ment of trust funds. King v. Talbot, 40 N. Y. 76 ; Adair v. Brimmer, 74 N. Y. 539 ; Lacey v. Davis, 4 Redf. 402. Sec. 54 of the Stock Corporation Law provides that " no person holding stock in any corporation as ... trustee, unless he shall have voluntarily invested the trust funds in such stock, shall be personally subject to liability as a stockholder ; . . . and the estates and funds in the hands of such . . trustees shall be 150 THE TRUSTEE. liable in the like manner and to the same extent as the testator ... or person interested in such trust fund would have been, if he had been living and competent to act and held the same stock in his own name, unless it appears that such . . . trustee volun- tarily invested the trust funds in such stocks, in which case he shall be personally liable as a stockholder." Diven v. Lee, 36 N. Y. 302. As to the scope of this section, examine its context. Mr. Birdseye (R. S., 2d ed., p. 198 and 231) calls attention to the omission from 52 and 162 of the Banking Law, of former provisions relating to liability of a trustee as a holder of bank or trust company stock, and doubts whether the case is covered by the section above quoted. See also 42 of the Insurance Law. 206. Corporation bonds- " It is not necessary for the de- cision of this case, and I am not prepared to say, that an invest- ment in the bonds of a railroad, or other corporation, the pay- ment whereof is secured by a mortgage upon real estate, is not suitable and proper, under any circumstances. If the real estate is ample to ensure the payment of the bonds, I do not, at pres- ent, perceive that it is necessarily to be regarded as inferior to the bond of an individual, secured by mortgage." Opinion of Woodruff, J., King v. Talbot, 40 N. Y. 76 (90). Compare Matter of Havemeyer, 3 App. Div. 519 (523). In Judd v. Warner, 2 Dem. 104, it was held that bonds secured by a mort- gage on a railroad were not an authorized form of investment. Also Matter of Keteltas, 1 Con. 468. In any event bonds of a mining company, nominally secured by a mortgage on land of the most speculative value, requiring a large outlay to make it available, and capable of use only in carrying on a business of a hazardous and uncertain nature, are not an allowable form of investment. Adair v. Brimmer, 74 N. Y. 539 (551). As to bonds of a city railroad, see Matter of Macdonald, 4 Redf. 321 ; of a horse railroad, see Judd v. Warner, 2 Dem. 104. 207. Investment in trade. The employment of trust funds by the trustee in trade, or as loans to persons engaged in such business, or in the prosecution of mercantile, commercial, or manufacturing enterprises, or speculative adventures, has been uniforinily condemned as illegal and as constituting a devastavit. INVESTMENTS. 151 Deoboldv. Oppermann, 111 N. Y. 531 (538) ; Matter of Cozzens, 2 Con. 622. So with investment in the business of stockbrokers ; or in call loans. Matter of Myers, 131 N. Y. 409. Or in specu- lative or illegal transactions, fellows v. Longyor, 91 N. Y. 324 (328). 208. Personal security. A trustee may not invest moneys of the estate on mere personal securities, as promissory notes, even though the maker is the owner of valuable realty and con- sidered perfectly responsible. Lefever v. Hasbrouck, 2 Dem. 567 ; Bogart v. Van Velsor, 4 Edw. Ch. 718 ; Matter of Foster, 15 Hun, 387 ; Lacey v. Dams, 4 Redf. 402 ; Matter of Cant, 5 Dem. 269 ; Matter of Keteltas, I Con. 468 ; Matter of Blauvelt, 2 Con. 458 (468) ; Hosack v. Rogers, 9 Pai. 461 (468) ; Halstead v. Hyman, 3 Redf. 426 (429) ; Matter of Van- devort, 8 App. Div. 345. 209. Investment for trustee's benefit. Any employment of trust funds for the individual benefit of a trustee (as, their deposit with sureties on the trustee's bond, to secure the sureties) is forbidden by the rules of equity, and constitutes a devastavit, authorizing the removal of the trustee, and the reclamation of such funds from any one receiving them with notice. Deobold v. Oppermann, 111 N. Y. 531 (538). To this same class belong cases where trustees, having first made unauthorized investments, make others in the hope of protecting and bolstering up the first, and thus relieving themselves from liability. Adair v. Brim- mer, 74 N. Y. 539 (552, 553) ; Lacey v. 'Davis, 4 Redf. 402 (405 and 408). 210. Continuing existing investment. The general rule is, that " except upon emergency, to protect the fund from depre- ciation, or to convert wasting securities to those of a permanent character, or investments in securities not authorized by law into such as are allowed, trustees may not sell or vary specific securi- ties given in trust, nor securities left by a testator, in which he has himself invested the funds." 1 Perry on Trusts, 466 ; Toronto G. T. Co. v. C. B. & Q. E. E. Co., 64 Hun, 1 (8), affd 138 N. Y. 657. But it is " a settled principle that trustees 152 THE TEUSTEE. are not justified, in the absence of express or implied directions in the will, in continuing an investment permanently, made by the testator, which they would not be justified themselves in making." 1 Perry on Trusts, 465. The rule does not relieve trustees from converting wasting securities into those of a per- manent character, and converting investments, which are not authorized by law, into such as are authorized by law. Where a trustee receives securities not authorized, as shares of railroad stock, and the instrument creating the trust neither empowers, nor forbids, a sale, he has the right to sell the same, for the pur- pose of reinvesting the proceeds in such securities as he is author- ized by law to invest in. Toronto G. T. Co. v. C. B. < Q. R. R. Co., 64 Hun, 1 (9, 10), aff'd 138 N. Y. 657. " Whether it is the absolute duty of the trustee in such case to sell the secu- rities, and whether, in case he does not sell them and loss ensues, he can be held liable for such loss, it is not now necessary to de- cide." Id., p. 10. See McRaev. McRae, 3 Bradf. 199 (206). But it would appear to be his clear duty to do so if there were reasonable grounds for anticipating or fearing depreciation. In cases where a trustee is by the trust instrument authorized to sell securities, and the question is as to the best time to sell, and the securities received by him are of an unauthorized character, and it is difficult to decide whether it is wiser to sell at once or to hold for a time, the trustee is justified in relying on a memoran- dum of advice left by testator, to the effect that these securities are to be "held firmly." Matter of Weston, 91 N. Y. 502 (508). And if the trust instrument authorizes him to sell secu- rities, and those he receives are of an unauthorized character as bank or insurance stock then it is his duty, and he is required, to convert them into securities authorized by law. Gillespie v. Brooks, 2 Redf. 349 (360). But in such a case he will not be held liable for loss resulting from failure to reinvest, unless he has acted negligently or in bad faith. Matter of Porter, 5 Misc. 274 ; Matter of Wolfe, 1 Con. 102. And even though a will in terms directs the trustees not to sell securities, yet its other provisions, as, for example, a direc- tion to divide the estate into portions, and at designated periods to pay over respective shares, may render it essential to sell securities in order to comply with all the provisions of the will INVESTMENTS. 153 when read together. Meeker v. Crawford, 5 Redf. 450 (464). And if a life estate in certain land is given to one, beneficially, and all the rest, residue and remainder of the real and personal property to trustees, to divide, invest, etc.; here, though the remainder after the life estate is thus included in the trust, it does not necessarily follow that that remainder must be sold and the proceeds invested. House v. Raymond, 3 Hun, 44 (50). If a retiring trustee has been charged with certain securities as "cash," and a successor charges himself with the same, as " cash," he becomes responsible for the form of investment as if he had made it himself. Matter of Hathaway, 80 Hun, 186. 211. Rules varied by trust instrument. The creator of a trust may designate how investments may be made, and what security may be taken, and may even dispense with all security. Denike v. Harris, 84 N. Y. 89. Or he may direct to what ex- tent real estate security must exceed in value amounts loaned on it, Ferris v. Ferris, 2 Dem. 336, where it was held that the direction " real estate to exceed in value by 50 per cent the amount loaned thereon," authorized a loan up to 66$- per cent of the value of the land. Or he may give discretion to the trustees in the selection of securities, but this will not absolve them from the usual requirements, unless set forth in unmistakable lan- guage. King v. Talbot, 40 N. Y. 76 ; Matter of Cant, 5 Dem. 269 ; Matter of Keteltas, \ Con. 468. A direction in a trust instrument to invest " in New York mortgages, or State stocks, or United States stocks,' ' does not indicate an order of preference which should be followed by the trustee. It indicates the vari- ous classes of securities among which he should select those that will give the best results. Valentine v. Valentine, 3 Dem. 597. Discretion conferred upon a trustee as to form of investment, does not warrant a corrupt selection of securities. If a bribe is accepted, to select certain securities, the trustee must not only make good the fund, but must account, it has been held, for the amount of the bribe. In re Smith (1896), 1 Ch. 71. 212. Mingling with other funds. A trustee may not mingle trust funds with his own money, and invest them in com- mon, and require the beneficiary to accept an undivided interest 154 THE TRUSTEE. in the investment. Doud v. Holmes, 63 N. Y. 635. But a trustee may properly consolidate distinct trust funds, held for different beneficiaries, in a given investment, for the mutual benefit, and though the security is nominally taken by him as trustee for one estate, it is competent for him to make a declara- tion of trust in favor of the other beneficiary whose funds are also included in it. Barry v. Lambert, 98 N. Y. 300. Thus, an executor holding $6,000 in trust, added to it $1,800 given to him for investment by A, a stranger to the trust, and $200 of his own money, and with the total procured a mortgage to him- self as executor for $8,000. The facts being shown, A's rights in the mortgage and its proceeds were protected, and the execu- tor held as a trustee for A as to the $1,800. Barry v. Lambert, 98 N. Y. 300. So an individual seeking an investment of his own funds, and also holding $380 of another person's money for investment, combined the two funds and invested them in one mortgage taken to himself individually, and, the facts appearing, was held as a trustee, to the extent of the $380. Matter of Frazer, 92 N. Y. 239 (248). 213. Investment of separate portions. It is sometimes essential to the validity of a trust, to provide that the estate shall be divided, at least theoretically, into distinct shares or sub- shares. Thus, where the estate is to be held in trust for one life, and thereafter for several beneficiaries, in each case for life, it is essential to direct the division of the estate, at the end of the first life, into as many distinct shares as there are lives to measure the trusts, so that each given portion of the estate shall be held in trust for no more than two lives in all. No direction for physical division is required ; all that is requisite is that the in- tent to have the estate contemplated as theoretically divided into separate parcels or portions should appear. (Chaplin on Suspen- sion of the Power of Alienation, sec. 179 et seq.) Sometimes, in cases where the terms of the trust are not such as to render such a direction essential, the trust instrument does nevertheless direct the division of the estate into separate parts. In still other cases, though the trust instrument is silent on the subject of division, the trustees do in fact effect a division, and allot cer- tain property to the account of each beneficiary. In connection INVESTMENTS. 155 with division of trust property in these various cases, the follow- ing principles have been established. 214. If no direction to separate. If one creates a testamen- tary trust in a part of his property (e.g., $25,000), the executors- trustees have no right, in ,the absence of formal consent by adult beneficiaries, to set apart specific securities to constitute the trust fund, and release the remainder of the estate from liability to make good any depreciation or loss of earning capacity in the fund thus reserved. But consent by an adult beneficiary would bind him. Leitch v. Wells, 48 K Y. 585 (599) ; Wood v. Wood, 5 Pai. Ch. 596. In the former case, the securities which the trustees attempted to set apart were bank stock, which was per se an illegal form of investment. This fact figures to some extent in the statement of the decision (pp. 606, 607), but the case appears to be an authority for the general proposition even in the absence of this feature. Such is the ruling in Arthur v. Nelson, 1 Dem. 337, where testator gave a large part of his estate to trustees, to hold in equal one eighth parts, in trust for separate beneficiaries. It was held that they could not bind the beneficiaries by an appropriation of certain existing securities to the respective eighths. As to a separation at request of the bene- ficiaries, see Palmer v. Dunham, 53 Hun, 637. 215. If separation directed. If the trust instrument directs the investment of separate portions of the fund, each by itself, it is, of course, the duty of the trustees to comply. Bundy v. Bundy, 38 N. Y. 410 ; Holden v. N. Y. & E. Bank, 72 N. Y. 286 ; Remington v. Walker, 99 N. Y. 626. 216. Separation required, but omitted. If a trustee should, but does not, separate his securities, and constitute distinct funds, it is held that a given beneficiary, as against the general trust estate, can only claim his proportionate share of interest at the average rate earned by the entire fund. Duclos v. Benner* 136 N. Y. 560. See the peculiar case of Monson v. N. Y. S. & T. Co., 140 N. Y. 498. 217. Appreciation and depreciation. If a separation is properly made, each beneficiary must thereafter, of course, look 156 THE TRUSTEE. only to his own respective fund for his income. If the income increases, he receives it ; if it falls off, he cannot call on the other distinct funds to make him good. Stuart v. Spaulding, 30 Hun, 21 (28). If, however, no apportionment has been effected, then he may or may not gain by an increase, or lose by a decrease, in the value of the general securities of the estate, according to cir- cumstances. Tliuh, in Duclos v. Benner, 136 N. Y. 560, the beneficiary who claimed a portion of a gain in value of certain investments not set apart as her share, was herself a trustee and herself had the entire management and control of the estate, and herself neglected to appropriate the securities in question for her own fund ; and further, she did not base her claim on the point now under consideration, but on the theory that these securities had been so set apart which fact was found against her. She was held not entitled to share in the increase. On the other hand, in Monson v. N. Y. 8. & T. Co., 140 N. Y. 498, testa- tor directed the trustees to set apart several trust funds of $20,000 each for his daughters, and gave the balance of the residuary estate to his sons. No division was in fact made. The daugh- ters were not trustees. The value of the trust estate increased, and the daughters claimed a proportionate share of the increase, as income. This was allowed, on the ground that in the absence of a division, the trustees " must be deemed to have made such allotment proportionately in all of the securities in which the estate was invested under the provision in the will for continuing the investments of the testator if in the judgment of the execu- tor consistent with the safety of the estate." " As long as the whole estate was thus kept, each party in fact owned his or her proportionate share of the income from and the principal of each security." It was urged that if losses had been suffered by depre- ciation, the daughters would nevertheless have insisted on their right to a fund of $20,000 each before the brothers should have anything. The court declined to pass on this point, merely say- ing that in the case supposed there would, of course, be a very different state of facts, and that the apportionment of losses would have to be decided in the light of the facts as they should then appear.' Still another question is presented in cases where 1 See a discussion of tbis case in 7 Harv. L. Rev., p. 490. ACCOUNTING. 157 a given trust fund has been invested in designated securities, which have thereafter increased in value, and the increase is claimed by the life beneficiary as against the remainderman. This question will be considered hereafter. Post* 418, 419. 2l8. Usurious investment. If a guardian loans money of his ward to a third person, with notice of the trust, and takes back a bond and mortgage for the full amount, and also receives personally a bonus from the borrower, this does not constitute usury as against the ward, and his subsequent suit on the bond does not constitute such a ratification as to render him a party to the usury, fellows v. Longyor, 91 IS". Y. 324. The princi- ples on which this case are decided would appear to make it gen- erally applicable to all cases of express trust, but the court de- clined to pass on that question, saying (p. 332) that " while there may be trusts of such a character that an illegal and usurious loan of the funds belonging to them will render the securities taken therefor void," the case in hand is not such a case. See post, 247, 283. 219. Securities naming trustee individually. It has been decided in relation to an executor, that if he loans money of the estate on a bond and mortgage running to him as an individual, and dies, the right of action thereon accrues solely to his per- sonal representative, and not to his successor in the representa- tion of the estate of the original testator. Caulkins v. Bolton, 98 N. Y. 511 (31 Hun, 458). But as to trustees compare L. 1882, oh. 185 ; Code C. P., 449 ; Schaefer v. Henkel, 75 N. Y. 378 ; Bogerl v. Hertell, 4 Hill, 492 (505). 220. Investments by trust company. The charter of a trust company may authorize the investment of trust funds in securities other than those in which individual trustees must in- vest. One such instance is referred to and discussed in Davis S. M. Co. v. Best, 30 Hun, 638. The general statutory pro- vision is given in the Banking Law (L. 1892, ch. 689, 158, 159, as amended L. 1893, ch. 696 ; Birdseye's R. S., 2d ed., pp. 229, 230). Accounting. 221. Jurisdiction. The Supreme Court in equity has in- herent and general jurisdiction over proceedings for the account- 158 THE TRUSTEE. ing of any trustee. The Legislature has conferred on certain other courts a limited jurisdiction in the same field, as, on the County Courts, in cases of general assignments for creditors (a subject not here discussed) and on the Surrogate's Courts in certain cases of testamentary trusts. This jurisdiction of the Surrogate's Court is purely statutory. " The provisions of this title [Title VI., Chap. XV III., of the Code, relating to Testa- mentary Trustees] apply to a trust created by the will of a resi- dent of the State, or relating to real property, situated within the State, without regard to the residence of the trustee, or the time of the execution of the will." Code C. P. 2820. Mat- ter of Hawley; 104 N. Y. 250 (263). The Supreme Court, on the other hand, may compel a trustee found here to account, even though the trust property, personal or real, is situated with- out the State. The proceeding relates not so much to the land as to the conduct of the trustee in relation to it. Reading v. Hoggin, 58 Hun, 450 (454) ; Massie v. Watte, 6 Cranch. 148 ; Newton v. Branson, 13 1ST. Y. 587 ; Gardner v. Ogden, 22 N. Y. 327 ; Jones v. Jones, 8 Misc. 660. In the construction of the chapter of the Code relating to Sur- rogate's Courts, the term " testamentary trustee, includes every person, except an executor, an administrator with the will an- nexed, or a guardian, who is designated by a will, or by any competent authority, to execute a trust created by a will ; and it includes such an executor or administrator, where he is acting in the execution of a trust created by the will, which is separable from his functions as executor or administrator." Code C. P. sec. 2514, subd. 6. See Matter of Valentine, 1 Dem. 491, see 71 Hun, 611. In the case of such testamentary trustees, the two courts have concurrent jurisdiction over proceedings for accounting, but if proceedings have been begun in one, the other will not act, unless some special reason exists. Cass v. Cass, 61 Hun, 460 ; Rogers v. King, 8 Pai. Ch. 210 ; Groshon v. Lyon, 16 Barb. R. 467 ; Wood v. Brown, 34 N. Y. 337 ; Christy v. Lilly, 5 Abb. Pr. R. (n. s.) 192 ; Vanderveer v. McKane, 25 Abb. N. C. 105 ; Matter of Ayrault, 81 Hun, 107, aff'd 146 N. Y. 389 ; Matter of De Pierris, 79 Hun, 279. And when complete relief can be obtained in the Surrogate's Court, the Supreme Court may, in its discretion, decline, on that ACCOUNTING IN THE SUPREME COURT. 159 ground, to entertain an action for an accounting ; but it still has jurisdiction to entertain it, Wager v. Wager, 89 N. Y. 161 (168) ; Strong v. Harris, 84 Hun, 314 (316) ; and so in case of a general assignment for creditors, Hynes v. Alexander, 2 App. Div. 109. But if the same person is both executor and testamentary trustee, he might account in one capacity in one court, and in the other capacity at the same time in the other. But such a course is improper. Whitney v, Phcenix, 4 Redf. 180. See Reming- ton v. Walker, 21 Hun, 322. For a general discussion of the jurisdiction of the Supreme Court in matters over which the Surrogate has been given jurisdiction, whether in accountings, removal of trustees, or other matters, see Weston v. Goodrich, 86 Hun, 194 ; Anderson v. Anderson, 112 N". Y. 104 ; San- ders v. Soutter, 126 N. Y. 193 ; Cook v. State Nat. Bank of Boston, 52 N. Y. 106 ; Boyce v. Adams, 123 IS". Y. 402 ; Hogan v. JZavanagh, 138 N. Y. 417 ; Dunning v. Dunning, 82 Hun, 462, aff'd 147 N. Y. 686 ; Widmayer v. Widmayer, 76 Hun, 251 ; Matter of Stilwell, 68 Hun, 406 (410). Where trustees hold property on distinct trusts for separate beneficiaries, it is appropriate, and the most convenient and orderly course, for them to keep the accounts separate, and deal with them as sepa- rate trusts, and they may account separately as to each share. Matter of Willets, 112 N. Y. 289 (295). A provision in the trust instrument relieving the trustee from the necessity of accounting is nugatory and void as against the policy of the law. Matter of Gilbert, 2 Con. 390 ; Potter v. McAlpine, 3 Dem. 108 (127, 128). Jones v. Newell, 78 Hun, 290, is not believed to be in any way inconsistent with these authorities. 1 (a) In tJie Supreme Court. 222. Equity has general jurisdiction to entertain a suit for an accounting by a trustee, whether appointed by will or not. Petrie v. Petrie, 7 Lans. 90 (95) ; Matter of Ayrault, 81 Hun, 107, aff'd 146 K Y. 389 ; McCready v. Farmers' Loan & Trust Co., 70 Hun, 394 ; Pendergast v. Greenfield, 127 K Y. 23. Where A is debtor and B creditor, and A assigns personal 1 As to the supervision of the courts over a trust company acting as trustee, and jurisdiction to require it to account, see the Banking Law ; Birdseye's R. S., 3d ed., pp. 229, 230, 158. 160 THE TKUSTEE. property in trust to C to receive, apply on debts, including that to B, and to account, the relation between B and C is not that of debtor and creditor. The fact that C has approved a state- ment furnished by B showing the amounts received and paid out by him, and the balance on hand, does not create an " account stated." It does not even admit that B has any interest in it. The proper action for B is, not to recover on an " account stated," but for an accounting, and to compel the trustee to exe- cute the trust. Pendergast v. Greenfield, 127 N. Y. 23. In an action for an accounting in equity, all persons interested must be made parties. Petrie v. Petrie, 7 Lans. 90 (95) ; Sortore v. Scott, 6 Lans. 271 ; King v. Talbot, 40 N. Y. 76. If objection is made to a lack of necessary parties, they may then be brought in. Sherman v. Parish, 53 N". Y. 483. ' Or they may apply for leave to come in. McCready v. farmers' Loan & Trust Co., 70 Hun, 394. A beneficiary is not entitled to a jury trial in a suit in equity against the trustee for an accounting. Pen- dergast v. Greenfield, 127 IS". Y. 23. If after judgment in an action for construction of a will creating a trust, a third party purchases the share of a party to the suit, the court has jurisdic- tion to make him a party to the accounting of the trustees, and to compel him to abide the result of the accounting and restore any excess above what he was entitled to. Savage v. Sherman, 87 N. Y. 277. As to ratification of an account, after majority, by an infant party not bound by the decree, see Mills v. Hoff- man, 92 K Y. 181. Although equity will not assume jurisdiction of an action for an accounting by executors, disconnected from the enforcement of a trust, unless for special reasons assigned and established, Foote v. Bruggerhof, 66 Hun, 406 (417), yet the facts that the same persons are also trustees, and that the fund is to be ac- counted for in both capacities, and that a construction of the will is sought, constitute such reasons. Id. (418). For an agree- ment, pending accounting, to adjust and settle the respective rights of all parties, see Spofford v. Pearsall, 138 N. Y. 57. As to the effect of a settlement out of court, see Matter of Pruyn, 141 K Y. 544 ; Matter of Wagner, 119 N. Y. 28 ; 1 See also Smith v. Central 2'ruat Co., 7 App. Div. 278. ACCOUNTING IN THE SURROGATE'S COURT. 161 Rieben v. Hicks, 4 Bradf. 136. A trustee cannot, when called on to account, set up the invalidity of the trust deed on the ground that the parties thereto were infants. Jones v. Butter, 30 Barb. 641 ; s. c. 20 How. Pr. 189 (reversed 5L N. Y. 658, on the ground that assuming the validity of the trust, plaintiff was not a beneficiary thereof, and therefore could not maintain the action). Compare Walton v. Stewart, 16 N. Y. Supp. 38, aff'd 129 N. Y. 667. The accounting in the Supreme Court, as in the Surrogate's Court, may be either voluntary, McOready v. Farmers 9 Loan & Trust Co., 70 Hun, 394 ; Matter of Ayrault, 81 Hun, 107, aff'd 146 N. Y. 389 ; or compulsory, Pendergast v. Greenfield, 127 N. Y. 23. In other words, the suit for an accounting may be brought either by the trustee himself or by any other person interested. Where a court of equity has jurisdiction over the parties and the subject-matter in a suit brought for one purpose, it may re- tain it generally in order to do complete justice between the parties, and afford all necessary and adequate relief in the matter before it, and avoid a multiplicity of actions and useless expense. Lynch v. M. E. R. Co., 129 N. Y. 274 (279) ; Dammert v. Oslorn-, 140 N. Y. 30 (45). Under this principle, it has been held that where a mortgagee who brings a foreclosure action is also the trustee of the property affected by the mortgage, and all the proper parties are before the court, he may, under proper allegations in the answer, be required to account to the benefi- ciaries of the trust, and allow, as an offset to the amount due on the mortgage, the amount which as trustee he is found liable to pay over to them. Ingalsbe v. Murphy, 84 Hun, 181. In the case cited, the trustee had been appointed such under the will of the deceased mortgagor, which also constituted him guardian of the beneficiaries. It does not appear that as trustee he was a party. The decision seems to proceed upon the theory that by appropriating or withholding a portion of the trust property, the trustee had become indebted to the defendants in an unascer- tained amount which could be determined by an accounting. (b) In Hie Surrogate's Court. 223. There are two main classes of accounts voluntary and 11 162 THE TRUSTEE. compulsory. Each of these may be either intermediate (i.e., merely filed in court for purposes of information, Code C. P., 2514, sub. 9) or final (i.e., in connection with a proceeding to cite in the parties and have the account passed on and settled and so made final, so far as it goes, upon the parties bound by the decree, Code C. P., 2514, sub. 8 ; Glover v. Holley, 2 Bradf. 291 ; Remington v. Walter, 21 Hun, 322, 326). The term " final" is not generally used in the statute, which refers to the decree, in such a proceeding, as a " judicial settlement." In the following classification, the cases are cited according to the particular class and subdivisions illustrated, but they fre- quently apply also to the corresponding subdivision in the other main class. 224. Voluntary accounting. (1) An Intermediate volun- tary account may be filed at any time. Code C. P., 2802. Concerning the contest of such an account, compare Code C. P., 2728, with 2726 as to accounting by an executor having a power of sale, and post, 225. (2) Judicial settlement. There are five cases in which there may be a voluntary petition for judicial settlement, (a) The testamentary trustee may petition annually for a judicial settlement. The manner of so accounting and the proceedings are the same as in the case of executors ; the decree thereon is appealable ; it allows commissions, etc. ; it lias the same effect as the decree or judgment of any other court of competent jurisdiction on the final settlement of such accounts, etc. Code C. P., 2802. (J) He may also petition for judicial settlement when one year has expired since the probate of the will, or when the trusts, or one or more distinct trusts, created by the will, have been or are ready to be fully executed. Code C. P., 2810. This account may be final merely in the sense of the voluntary annual account and settlement, or, where a trust has ended, it may involve an actual winding up and final dis- , position for good and all. Under this class the trustee presents a petition, and a citation is issued. Code C. P., 2810. As the 'Code stood, prior to recent amendments, 2810 just cited .provided that 2729, 2730 and 2731 (relating to the voluntary accounting of an executor), should apply to this proceeding. But those three sections, together with 2932, have been re- ACCOUNTING IN THE SURROGATE'S COURT. 163 pealed, and their substance, somewhat modified, now appears as 2728. But the reference in 2810 has not heen corrected to correspond. This voluntary proceeding for judicial settle- ment might be begun (after one year, etc.), though in the meantime a proceeding for compulsory accounting had been in- stituted. The two proceedings would then be consolidated. So it was provided in 2728, incorporated by reference into 2809. That subject is now covered by 2727. But 2809, though not corrected, referred not only to original 2728, but also to orig- inal 2727. This furnishes a feature distinct from that pre- sented by the other changes in section numbers elsewhere re- ferred to. (c) The testamentary trustee may at an}- time volun- tarily petition for judicial settlement of his account and for leave to resign. Code C. P., 2814, 2819. (d) The executor or administrator of a deceased testamentary trustee may voluntarily account and procure a judicial settlement as to the trust property which has come into his possession. Code C. P., 2606. As to consolidation with a proceeding for compulsory accounting in such a case, see Matter of Shipman, '82 Hun, 108. (e) An ex- ecutor having a power of sale which has been executed may vol- untarily petition for a judicial settlement. Code C. P., 2728 ; .Baldwin v. Smith, 3 App. Div. 350 (352). 225. Compulsory accounting. (I) Intermediate. " Upon the petition of a person interested, absolutely or contingently, in the estate or fund in the hands of a testamentary trustee, or in the application thereof, or of the income or other proceeds thereof, the surrogate may, in his discretion, make, at any time, an order requiring a testamentary trustee to render an interme- diate account" (i.e., to file one, without a proceeding to judicially settle it). Code C. P., 2803. ' If contest over an intermediate account is not expressly authorized, it has been said that the account may, in some cases, be made the subject of objection and inquiry. Glaskin v. Sheehy, 2 Dem. 289. Provision for contest was made in the original 2730, incorporated into 2810, by reference. That provision is now in 2728, but the 1 As to the surrogate's power to direct an intermediate account, of his own motion, see Redfield on Surrogate's Courts (5th ed.), 744. 164 THE TKUSTEE. reference to it in 2811 is not corrected. But see Buchan v. Rintoul, 70 N.Y. 1 (4) ; Kedf. Sur. Prac. p. 746 ; and compare 2728 with 2726, sub. 4, relating to an executor holding a power of sale. As to surrogate's power sua sponte to appoint a referee to examine an intermediate account, the court held, in Buchan v. Rintoul, 70 N". Y. 1, that such power existed under L 1870, ch. 359, 6 (applying to New York County, now superseded by the general provision in Code C. P., 2546). There is, however, this difference between that law and the pres- ent one. That applied to " any accounting," while 2546 is confined to " a special proceeding." And see Matter of De Itussy, 14 N. Y. Supp. 177, aff'd 128 JS T . Y. 619 ; Matter of Siesel, 2 N. Y. Supp. 704. A compulsory accounting on peti- tion, whether intermediate or not, is a special proceeding. Code C. P., 3334. But a voluntary intermediate accounting seems not to be such. Id. The surrogate may, under 2803, require an account, under a prayer for general relief, in a petition praying specifically for relief of another character. Matter of Odell, 52 Hun, 88 ; Peck v. Sherwood, 56 N. Y. 615. (2) Ju- dicial settlement, (a] The Surrogate's Court may compel a judicial settlement of the trustee's account : "1. Where one year has expired, since the will was admitted to probate. 2. Where the trustee has been removed, or, for any other reason, his powers have ceased. 3. Where the trusts, or one or more distinct and separate trusts, created by the terms of the will, have been executed, or are ready to be executed ; so that the persons beneficially interested are, by the terms of the will, or by operation of law, entitled to receive any money or other per- sonal property from the trustee." Code C. P., 2807. Matter of Stevenson, 77 Hun, 203 (207). Also, under Code C. P., 2726, the Surrogate's Court may from time to time compel a judicial settlement of the account of an executor or administra- tor, where he has sold, or otherwise disposed of, any of the decedent's real property, or the rents, profits, or proceeds thereof , pursuant to a power contained in the decedent's will, where one year has elapsed since letters were issued to him. This section, however, does not render the proceeds of sale personal assets in the executor's hands, to be accounted for as such, or make them applicable as personalty to the payment of debts. Though they ACCOUNTING IN THE SURROGATE'S COURT. 165 are to be accounted for, Matter of Valentine, 1 Misc. 491(493), see 71 Hun, 611, they retain their character of real property. Matter of McComb, 117 K Y. 378 ; Matter of Bingham, 127 K Y. 296. See post, 603. If, however, the power conferred on the executor is broad enough to effect a conversion, or to warrant a sale for the payment of debts if necessary, then, by force of the instrument, the converted fund, or proceeds, become chargeable as assets in the hands of the executor, for which he must account as such. Stagg v. Jackson, 1 K Y. 206 ; Glacius v. Fogel, 88 N". Y. 434 ; Hood v. Hood, 85 N. Y. 561 ; Erwin v. Loper, 43 K Y. 521 ; Mat- ter of Gantert, 136 N". Y. 106. In such case, the proceeds are to be included in any account, whether voluntary or compulsory, and whether intermediate or on petition for judicial settlement. Any person beneficially interested in the execution of any of the trusts ; or any person in behalf of an infant so beneficially interested ; or a surety in the trustee's bond given as prescribed in the title covering the section cited, or the legal representative of such a surety, may present a petition for a judicial settlement, etc., as prescribed in 2807. Code C. P. , 2808. The proceed- ings are regulated by 2808 et seq. Upon such a petition, a cita- tion must issue, save that if the account of the trustee has been judicially settled within a year before the petition is presented, the surrogate may, in his discretion, entertain, or decline to en- tertain, the petition. Code C. P., 2808. Matter of Me Carte/', 94 X. Y. 558. A judicial settlement purporting to terminate the accounts, and wind up the trust, presumptively embraces all matters for which the trustee is liable to account. If new facts exist, calling for a further accounting, they should, in a subse- quent petition, be alleged. Matter of Hood, 90 JS". Y. 512. By 2809, the sections 2727 and 2728 are rendered applicable to this proceeding. By an amendment of 1893, these incorpo- rated sections were consolidated, and now constitute the lat- ter part of present 2727 ; but the reference to them in 2809 was not changed to correspond. They are construed in Matter of Wagner, 119 X. Y. 28 ; Campbell v. Purdy, 5 Redf. 434 ; Schlegel v. Winded, 2 Dem. 232. (b) The executor or administrator of a deceased testamentary trustee may be re- quired to account. Code C. P., 2606. Under this section, the surrogate's power is precisely the same as if the deceased trustee 166 THE TEUSTEE. had been removed in his lifetime, and had been called upon to deliver up the assets. Matter of Clark, 119 N. Y. 427. But as to consolidating such a proceeding with a voluntary proceed- ing to account, see Matter of Shipman, 82 Hun, 108. The application for an accounting may be made immediately upon appointment of the executor or administrator. Matter of Wiley, 119 N. Y. 642. Further cases under this section are : Matter of Fithian, 5 Dem. 305, aff'd 44 Hun, 457; Potter v. Ogden, 136 N. Y. 384. The surrogate has no power to require an ac- count from the executor of a trustee who had been appointed by the Supreme Court as successor of a testamentary trustee. Matter of Hazard, 51 Hun, 201. As to allowing a supple- mental account, see Matter of Schneider, 1 App. Div. 39. 226. Both executor and trustee. Where the same person is executor and testamentary trustee, and resigns or is removed, in both capacities ; in either case, proceedings upon the petition for the resignation or removal, as the case requires, of the testa- mentary trustee, and for the judicial settlement of his account, may be taken, as prescribed in Title VI. (Code C. P., 2802- 2820), in connection with, or separately from, the like proceed- ings upon the petition for the revocation of the letters, as the surrogate directs. Code C. P., 2819. In other cases, pro- ceedings taken by or against him, as prescribed in Title VI., do not affect him as executor or administrator, or the creditors of, or persons interested in, the general estate. Code C. P., 2819. And the settlement of his account as executor does not bar a claim against him as trustee. Pittman v. Johnson, 35 Hun, 38 (41), aff'd 102 N. Y. 742. 227. Co-trustees. One trustee may call his co-trustee to account. See Buchan v. Rintoul, 70 N. Y. 1. Matter of Rumsey, 18 N. Y. Supp. 402. 228. Scope of jurisdiction. On a settlement in the surro- gate's court, of the accounts of a testamentary trustee, that court has no authority to enter upon the hearing and determination of any collateral and incidental disputes involving the right or title of either of the claimants to an interest in the estate. Van Sin- ACCOUNTING IN THE SURROGATE'S COURT. 167 deren v. Lawrence, 50 Hun, 272, save under its limited and in- cidental power to construe the will. Post, 754 (&). Compare Code C. P., 2743, 2811, 2812 ; Matter of Underkill, 117 N". Y. 471 ; Matter of fiogers, 2 Con. 139. 229. Other statutes rendered applicable. Attention has already been called to the fact that the Article of the Code deal- ing with Testamentary Trustees refers to and incorporates cer- tain other sections relating to executors, and that while the latter have been renumbered, the references thereto have not been cor- rected. The same statement applies to most of the following sections referred to in 2811 as generally applicable to accountings by a testamentary trustee namely, 2734-2737, inclusive ; 2739-2741, inclusive ; 2743, 2744, 2746. These sections, as originally referred to, related to the following matters : 2734 related to vouchers. (That number now belongs to a section re- lating to distribution of the personal property of a married woman. The section on vouchers is now 2729.) 2735 related to the examination of the accounting party. (That subject is now covered by 2729. There is no present 2735.) 2736, 2737, referred to compensation. (That subject is now covered by 2730. There are no present 2736, 2737.) 2739, 2740 referred to the determination of claims by or against the account- ing party, and the effect of the statute of limitations thereon. (These subjects are now covered by 2731. There are no pres- ent 2739, 2740.) 2741 related to an allowance for property lost without fault. (This subject is now covered by 2729. There is no present 2741.) 2743 related to decree for distribu- tion and payment. (This reference has not been disturbed, and is correct.) ^744 related to decree for delivery and assignment of property in lieu of money value. (This has not been dis- turbed, and is correct.) 2746 related to decree for payment of the distributive share of an infant. (This section has been amended, but still covers the same subject.) 2811 also pro- vides for an affidavit to be annexed to each account, and in that connection referred to, and with certain modifications incorpo- rated, the provisions of 2733. (The section thus numbered now refers to " advancement ;" the affidavit in question is now provided for in present 2729.) 168 THE TRUSTEE. 230. Controversy over right to share. "Upon a judicial settlement of the account of a testamentary trustee, a controversy which arises, respecting the right of a party to share in the money or other personal property to be paid, distributed, or delivered over, must be determined in the same manner as other issues are determined. If such a controversy remains undeter- mined, after the determination of all other questions upon which the distribution of the fund, or the delivery of the personal prop- erty depends, the decree must direct that a sum, sufficient to satisfy the claim in controversy, or the proportion to which it is entitled, together with the probable amount of the interest and costs, and, if the case so requires, that the personal property in controversy, be retained in the hands of the accounting party ; or that the money be deposited in a safe bank or trust company, subject to the surrogate's order, for the purpose of being applied to the payment of the claim, when it is due, recovered or set- tled ; and that so much thereof, as is not needed for that pur- pose, be afterwards distributed according to law." Code C. P., 2812. 231. Parties. The parties to be cited in proceedings for judicial settlement are specified in the sections already cited, under the respective subdivisions. The term " person inter- ested" is defined in Code C. P., 2514, subd. 11. Hood v. Hood, 85 N. Y. 561 (579). Residuary legatees are not called on to verify the regularity of proceedings on accounting by an executor-trustee as against those interested in a trust fund, not cited, where they receive merely their own, and the fund is after- ward wasted by the executor-trustee. Mills v. Smith, 141 JN. Y. 256. 232. Effect of decree." A decree, made upon a judicial settlement of the account of a testamentary trustee, as prescribed in this title, or the judgment rendered upon an appeal from such a decree, has the same force, as a judgment of the Supreme Court to the same effect, as against each party who was duly cited or appeared, and every person who would be bound by such a judgment, rendered in an action between the same par- ties." Code C. P., 2813. See also 2802, 2819. Bald- THE TRUSTEE'S LIABILITY. 169 win v. Smith, 91 Hun, 230 ; see 3 App. Div. 350 (352). If the account is based on prior accounts, the decree covers all. Matter of Tilden, 98 N. Y. 434 (441). The recitals of due ser- vice, in the decree, upon parties not appearing, or upon infants, are not conclusive. It is for the trustee to see to it that the proofs of due service are preserved. Hood v. Hood, 85 N. Y. 561 (578, 579). 233. Procedure. The procedure in proceedings relating to the accounting of a testamentary trustee, is in general regulated by the provisions and practice applicable to executors ; it consti- tutes a branch of the law of Surrogates' Courts ; and is fully treated in Mr. Redfield's well-known work on that subject. (6) The Trustee's Liability. General Principles. 234. General rule. The trustee is, of course, held strictly accountable for a due performance of the duties, and due exer- cise of the powers incident to his position, and a diligent obedi- ence to the law and the orders of the court. He is required to use good judgment, to display integrity and impartiality, and to make no use of his position for personal advantage. 235. Same Qualified. The trust instrument, however, may by its terms relieve him to some extent from the strict accountability which would otherwise exist, and if he is thus ex- pressly released from liability except for wilful misconduct, he cannot be held responsible for the results of his mere improvi- dence or carelessness. Crabb v. Young, 92 N. Y. 56 (65, 66). It is also true, that even apart from such release by the trust in- strument, the court is inclined to regard with leniency the mere mistakes of a trustee who has acted in perfect good faith. Id. (66) ; Purdy v. Lynch, 145 N. Y. 462. And in a doubtful case, where it is difficult for the trustee to decide how to act (e.g., whether to retain or convert certain securities in which the testa- tor had invested the funds), he is justified in acting on a memo- randum of advice given to him by the testator for his guidance. Matter of Weston, 91 N". Y. 502. 170 THE TRUSTEE. 236. Devastavit. Where a trustee invests the trust fund in his own business, or loans it to other persons for use in business, or employs it in the prosecution of mercantile, commercial, and manufacturing enterprises, or speculative adventures, the act constitutes a devastavit. Matter of Myers, 131 N". Y. 4-09. Where the same person is both executor and trustee, and is chargeable with a devastavit, relating to the trust fund, the ques- tion whether he committed the same as executor or as trustee is to be determined according as the trust is attached to the ex- ecutorial office, or is personal and distinct. Matter of Hood, 98 N. Y. 363 ; Matter of Hood, 104 1ST. Y. 103 (107) ; Cluff v. Day, 124 N. Y. 195 (201). See post, 264 et seq. Although the trust instrument is silent on the subject, those who claim in remainder under it are interested in the manage- ment of the estate, and the trustee of the life estate owes them certain duties which a court of equity may enforce. He stands, in respect to these duties, as a trustee for the remaindermen ; this is an implied and not an express trust. If he is guilty of any species of waste calculated to materially injure or destroy the value of the estate in remainder, it is perfectly competent, and in truth is the constant practice in this country as well as Eng- land, for the remainderman to resort to the prompt and effica- cious remedy afforded by an action for an injunction. In such an action a court of equity might require security of the trustee for the due performance of those duties which the law casts upon him in respect to the preservation of the trust estate. Matter of Livingston, 34 N. Y. 555 (567, 568). But the re- mainderman's right to protection is based not upon the express trust under which the trustee holds title for the use of the bene- ficiaries, but upon the implied trust which the law raises in favor of any remainderman against any life tenant in possession. Id. The statute (Real Property L., 92) authorizing the removal of a trustee for violation of his trust, etc., " in an action brought or on a petition presented, by any person interested in the trust" does not therefore authorize a suit or proceeding for his removal, by a remainderman. He is not interested in the trust i.e., the express trust. Id. A trustee is not obliged to take legal steps to get possession of property which may have belonged to testator and, if so, be- THE TRUSTEE'S LIABILITY. 171 longs to the trust, unless he has evidence to support his claim ; if the question is problematical, and he is advised that he has no ground of action, by competent counsel, and acts in good faith, he is not chargeable as for a devastavit. O" 1 Conner v. Gifford^ 117 N. Y. 275 (278). See further the following sections. 237. Unauthorized sales. If a trustee sells trust property without due authority derived either from the trust instrument or from the court, he is personally liable for damage resulting to the estate or fund. See James v. Cowing, 82 N. Y. 449 (455 et seq.\ 238. On covenants. See post, 464. 239. Delay in investing. It is the duty of trustees holding funds for investment to use due diligence to keep them invested. Some time usually elapses before investments can be made, and in charging a trustee with interest, six months from the time the money was received, is usually allowed as a reasonable time. After a reasonable time, trustees are prima facie liable for in- terest. Lent v. Howard, 89 N". Y. 169 (180), and cases there cited ; Matter of Bradley, 1 Con. 106. In some cases, as where there is a specific direction to invest in certain govern- ment securities, which could be purchased on the market at any time, even less leeway for investment should be allowed. Oil- man v. Oilman, 2 Laus. 1 (5). If an action properly lies against all the trustees, as, to compel a proper investment of trust funds, and the payment of arrears of interest, where all are chargeable, an action against a survivor only, omitting the representatives of deceased trustees against whom the one sued would have an action over, is objectionable, and while it might, as an act of discretion, be dismissed, it should be allowed to stand over, that all parties may be brought in and the entire controversy settled in the one suit. Sherman v. Parish, 53 N. Y. 483. 240. Delay in paying. So where the trustee holds funds which it is his duty not to retain but to pay over at once, and he wrongfully deposits them and leaves them on deposit, the same 172 THE TRUSTEE. liability arises. HarUw v. Mitts, 58 Hun, 391, aff'd 128 N. Y. 650 ; Matter of Knight, 21 Abb. N. C. 388. 241. Delay in selling. Where an executor is given a per- emptory power to sell certain real estate and with the proceeds pay off a mortgage on other land devised in trust, his conduct in delaying a sale, and refusing proper offers, may be such as to render him liable for the interest on the mortgage from the date when he could and should have sold. Matter of Quin, 1 Con. 381. 242. Improper investments but no loss. If improper in- vestments have not in fact resulted in loss, and the securities have again been converted into cash, the trustee's liability arising out of the original illegal investment thereupon ceases ; he is not liable for future loss of the same fund, except on new grounds. Matter of Foster, 15 HUH, 387 (394). 243. Deposit in own account. A deposit of trust funds in his individual account, renders him liable for any loss that en- sues ; Matter of Nesmith, 140 N. Y. 609 (616) ; 1 Perry on Trusts, 443, and cases there cited ; Matter of Barnes, 140 N. Y. 468 (472) ; whether it is thus merged with his own money or not. 1 Perry on Trusts, ubi supra. But if, instead of de- positing funds to his own account, a trustee deposits them in bank (when a deposit is proper) in a separate account, as trustee, he is then relieved of liability for loss. People v. Faulkner, 107 N. Y. 477. This case relates to a surrogate who received funds under an order made pursuant to statute, and deposited them in a private bank to his account as surrogate. The same rule applies in such a case and in the case of trustees. Id. , pp. 488, 489. Also, Matter of Maxwell, 1 Con. 230. For cases illustrating the mingling of trust and personal funds, see Hooley v. Gieve, 9 Abb. N. C. 8 ; Woodruff v. Boy den, 3 Abb. N. C. 29 ; Ilasler v. Hasler, 1 Bradf. 248 ; Ogilvie v. Ogilvie, 1 Bradf. 356 ; Berwick v. Flalsey, 4 Red! 18 ; Freeman v. Freeman, 4 Redf. 211 ; Rorke v. McConmlle, 4 Redf. 291 ; Matter of Mairs, 4 Redf. 160 ; Spender v. Popham, 5 Redf. 425 ; Du- Bois v. Brown, 1 Dem. 317 ; Wells v. Wallace, 2 Redf. 58 ; THE TRUSTEE'S LIABILITY. 173 Matter of Stafford, 11 Barb. R. 353 ; Estate of Hood, Tucker, 396 ; U. S. Trust Co. v. Bixby, 2 Dem. 494. 244. Deposits Drafts Liability of bank. A bank in which trust funds are deposited as such, may be chargeable for the unlawful acts of the trustee ; as, for example, where a trustee deposited funds in his name " as trustee,'' in a bank of which he was the president, and the active and controlling manager ; he individually owned stock of the bank, which was worthless ; he was heavily indebted to the bank in a sum exceeding the trust deposit ; his own pecuniary means were exhausted ; under these circumstances, he transferred the bank stock from himself indi- vidually, through a dummy, to himself as trustee, at par, and as trustee checked out the par value thereof from the trust fund and deposited it to his personal credit in the bank. In a suit by the trustee's successor to have the transfer of stock set aside as fraudulent, and for an adjudication declaring the amount of the deposit in the trust account, which was transferred to the trustee's personal account, to be a valid claim against the bank, the latter was held liable. kk The knowledge of Gansori [the trustee] as an individual or as an executor was not imputable to the bank merely because he was its president, but because when it acted through him as president, in any transaction where that knowl- edge was material and applicable, it acted through an agent who al that very time had a knowledge of facts which gave a char- acter to the transaction as fair and justifiable, or the reverse, and whose duty it was to make that knowledge known to its princi- pal." The result would have been the same if another person had been the acting agent of the bank, and such agent had ac- quired the knowledge in question from the trustee or from other sources. Holden v. N. Y. & Erie Bank, 72 N. Y. 280. Where a deposit by one, in a bank, as trustee for another, con- stitutes a trust, it is the depositor, and not the bank, that is the trustee. Thus, if the beneficiary sues the wrongful recipient of the deposit, who has withdrawn it from the bank, he thereby ratifies the act of the bank in so paying it, which would not be the case if the bank were the trustee, and had paid the money to the wrong person. Fowler v. B. S. Bank, 113 N. Y. 450. 174 THE TRUSTEE. 245. Trustee's acceptance. Where a trustee accepts a draft drawn on him by a beneficiary entitled to draw, and after his name both as drawee and as acceptor, the mere word " trus- tee" appears, and the draft does not direct payment from a specific fund named, the trustee is personally liable as acceptor. Schmittler v. Simon, 101 N. Y. 554. And where the construc- tion of the terms of the draft are doubtful, so that it is not clear whether it directed payment from a specified fund, or called for payments generally arid authorized the drawee to reimburse him- self from the fund named, the latter view will, in the interest of a bonafide holder of the paper, for value, be adopted, and the acceptor be held personally liable. Id. and s. o. 114 N. Y. 176. But if it appear that the drawer and the acceptor used and un- derstood the terms employed as a direction to pay only ff"om the trust fund, and the liability of the acceptor as existing only as to his representative capacity, and the payee was aware of these facts, then the terms of the draft, being fairly open to either meaning, may be read in accordance with this understand- ing. Schmitiler v. Simon, 114 N". Y. 176. See also Hood v. Hallenbtck, 7 Hun, 362 ; Stearns v. Allen, 25 Hun, 558 ; Whitford v. Laidler, 94 N. Y. 145. Compare cases cited in Abb. Trial Ev. 402, note 9. 246. For acts of agent. If a trustee improperly entrusts assets to an agent who loses or squanders them or otherwise produces loss, the trustee is liable. Matter of Schott, Tucker, 337. Compare McCdbe v. Fowler, 84 N. Y. 314 ; Earle v. Earle, 93 N. Y. 104 (112) ; Adair v. Brimmer, 74 N. Y. 539 (564), and post, 247, 249, 250, 281. 247. Usury. Neither trustee nor trust estate is liable for the unauthorized act of an agent in taking usury on a loan, for his own benefit and without the knowledge or assent of the trus- tee. Van Wyck v. Waiters, 81 N. Y. 352 (355), affirming 16 Hun, 209 sub nom. Van Wyck v. Walters. (As to usury taken by co-trustee or by sole trustee, see post, 283.) 248. Executory contracts. This subject is discussed under that of the trustee's authority to charge upon the trust estate the THE TKUSTEE'S LIABILITY. 175 expense of repairs, services, etc., rendered on his order for the estate. Ante, 177 et seq. post, 281. 249. Loss by theft. The trustee, in the absence of negli- gence, is not liable to make good funds stolen from him. Fur- man v. Coe, 1 Cai. Gas. 96. 250. Custody of securities. A trustee is not a guarantor for the safety of the trust securities. If he exercises due judg- ment and caution in leaving them in the custody of a proper per- son, he is not liable for misappropriation by the depositary, which there was no reason to anticipate.. McCabe v. Fowler, 84 N. Y. 314. Except as affected by the new statutes, in refer- ence to charitable, etc., trusts, it is not the province of the attor- ney-general to bring an action against trustees based on waste, misapplication of the estate, or any malversation in office. Peo- ple v. Simonson, 126 N". Y. 299 (304). Where power is given to an executor to sell land at any time within a term named, and in the mean time he is to have the possession and income bene- ficially, and the circumstances are such as to furnish ample security, on his accounting, to legatees who are to be paid from the proceeds of sale, equity will not entertain an action to re- strain him from cutting and selling timber from the land. It seems that such an act is in execution of the power, and turns the timber, as sold, into funds in his hands as executor. But if wrongful, he will be held liable on his accounting. Keller v. Ogsbury, 121 N. Y. 362. 251. Liability for interest. If a trustee holds funds which can and should be invested, and through fraud, or mismanage- ment or other breach of trust, he does not invest them, or invests them in his own business, or that of others, or in commercial or manufacturing enterprises or speculative ventures, he will be charged with interest, as a general rule. Price v. Holman, 135 N. Y. 124- ; Matter of Barnes, 140 N. Y. 468 (471); Cook v. Lowry, 95 N. Y. 103 (113) ; Reynolds v. Sisson, 78 Hun, 595 ; or, at the option of the beneficiary, with the profits earned, Utica Ins. Co.v. Lynch, 11 Pai. 520 ; Matter of Myers, 131 N. Y. 409 ; Deobold v. Oppermann, 111 N. Y. 531 (538) ; 176 THE TRUSTEE. King v. Talbot, 40 N. Y. 76 (86) ; Wilmerding v. McKesson, 103 N. Y. 329. l But the beneficiary cannot have rests, at selected periods, so as to claim profits when they exceeded inter- est, and interest when it exceeded profits. If profits have first exceeded interest, and then there has been actual loss, if the beneficiary claims profits he can only recover net profits for the entire period. Baker v. Disbrow, 18 Hun, 29, aff'd 79 N. Y. 631. And where the trustee has made separate unauthorized invest- ments of separate parts of the fund, the beneficiary's right to elect applies to each investment by itself, so that, according as his interest may appear, he may approve some and accept the profits, and reject others and insist on legal interest. King v. Talbot, 40 N. Y. 76 (91) ; compare Matter of Porter, 5 Misc. 274 ; and he may so elect even during the pendency of the trust. Gillespie v. Brooks, 2 Redf. 349 (360). And a beneficiary is not required to keep watch of all the trustee's acts, so as to be pre- pared at once to protest in case of improper investments. It is the duty of the trustee, and not of the beneficiary, to attend to the investment of the estate. Matter of Foster, 15 Hun, 387 (393). But it may be the beneficiary's duty, if he proposes to object to the trustee's failure to invest small sums, to find and call to his attention suitable opportunities for investing the same. Rapalje v. Norsworthy's Exrs., 1 Sandf. Ch. 399 (405). And the mere fact that the trustee deposits trust moneys with his own, or uses them in his own business, does not necessarily ren- der him liable for interest, as, for instance, where the funds are too small to make it practicable to invest them, or where the trustee may be called on at any moment to pay over the fund to the beneficiary. In order to make him liable for interest there must be superadded a breach of trust ; a neglect or refusal to invest the funds at the time or in the mode which the trust in- strument or the law itself has pointed out. Rapalje v. Nors- worthy*s Exrs., 1 Sandf. Ch. 399 (404) ; Jacot v. Emmett, 11 Pai. Ch. 142 (145) ; Price v. Holman, 135 N. Y. 124 (133) ; Matter of Barnes, 140 N. Y. 468 ; Matter of Nesmith, 140 N. Y. 609 (615-17) ; Shuttleworth v. Winter, 55 X. Y. 624 1 As to the rate of interest to be allowed on trust funds by trust companies when acting as trustees under a court appointment, see the Banking Law, L. 1892, Ch. 689, 160 ; Birdseye's R. S. (3d ed.), p. 230. THE TRUSTEE'S LIABILITY. 177 (631) ; Matter of Clark, 16 Misc. 405. As to whether, in de- ciding whether a trustee had in his hands a fund large enough to call for investment thereof, it is permissible to take into account the fact that he held several entirely distinct trust funds which, if combined, would have afforded such a gross sum, see Rapalje v. Norsworihy's Exrs., 1 Sandf. Ch. 399. In a case where a trus- tee has made use of the funds, but no breach of trust is involved, he will be charged with interest if it be proved that he has earned interest. Rapalje v. Norsworthy's Exrs., 1 Sandf. Ch. 399 (404). As to liability for interest, see also note to Kellett v. Rathlmn, 4 Pai. Ch. 102 (109), Banks' Annotated Ed. If when rents and income are due and payable, the beneficiary volun- tarily leaves them in the trustee's hands, they do not draw inter- est. Jffolley v. .,4 Edw. Ch. 284 (286). If a penalty is incurred, owing to the negligent failure of the trustee to pay taxes when due, and is paid by him, he cannot be credited therewith on his accounting. Stubbs v. Stubbs, 4 Redf. 170. If commissions are prematurely withdrawn by the trustee, he is chargeable with interest thereon. Matter of Peyser, 5 Dem, 244 (247) ; Wheelwright v. Wheelwright, 2 Redf. 501 ; Matter of Freeman, 4 Redf. 211 (215); U. S. Trust Co. v. Bixby. 2 Dem. 494. But see Wyckoff v. Van Siden, 3 Dem. 75. But not solely on that ground, if they had then been actually earned. Beard v. Beard, 140 N. Y. 260 (265, 266) ; Price v. Holman, 135 N. Y. 124; Whitney v. Phoenix, 4 Redf. 180 (195). If commissions which have been earned, but not allowed, are in good faith withdrawn by the trustee, under an assump- tion that he is entitled so to do, this mere fact, in the absence of any resulting loss to the estate, is not ground for charging him with interest thereon. Beard v. Beard, 140 N. Y. 260 (266). 252. Rate of interest. It is only in extraordinary cases that the trustee is charged with compound interest. Price v. Holman, 135 N. Y. 124 (133, 134). For instances of such charges, see Hannahs v. Hannahs, 68 N. Y. 610 ; Brown v. Knapp, 79 N. Y. 136 (145) ; Tucker v. McDermott, 2 Redf. 312 ; Morgan v. Morgan, 4 Dem. 353 (356) ; Smith v. Rocke- feller, 3 Hun, 295 ; Reynolds v. Sisson, 78 Hun, 595 (598) ; ITtica Ins. Co. v. Lynch, 11 Pai. Ch. 520. In King v. Talbot, 12 178 THE TRUSTEE. 40 N. Y. 76, it was held that in case of bad faith or wilful fail- ure of duty, the highest rate of interest should be imposed, but where, as in that case, a mistake occurs in investing funds, but the trustee acted honestly and in good faith, the rate of interest to be charged rests in a discretion which permits the considera- tion of all the circumstances, which show that substantial justice can be done to the cestui que trust, by allowing a less rate. Ac- cordingly, following the English rule in such cases, of charging four per cent where the legal rate was five, the court charged the trustee six per cent, the legal rate in New York being then seven per cent. See also Shuttleworih v. Winter, 55 N. Y. 624 ; Haskin v. Teller, 3 Redf. 316 (323.) In Clarkson v. De Peyster, Hopk. Ch. 424 (426), it was said that the English rule of " equitable interest" at one per cent less than the legal rate, had never been adopted in this State. But the court in King v. Talbot, supra, say that there is nothing in Clarkson v. De Pey- ster, supra, that affects the soundness of their adoption of the English rule. To the same effect appear to be Wilmerding v. McKesson, 103 N. .Y. 329 (341) ; Bruen v. Gillet, 115 N. Y. 10 (21). In cases where there has been an active breach of trust, resulting in loss, but the circumstances are not sufficiently aggra- vated to call for compound interest, legal interest is commonly charged, but each case must depend to a considerable degree on its own circumstances, as affected by the degree of wrongdoing, the probable actual loss, the personal profits, if any, realized by the trustee, etc. Cook v. Lowry, 95 N. Y. 103 (114) and cases there cited ; Morgan v. Morgan, 4 Dem. 353 (356) and cases there cited. Where there is wilful neglect, as, a default in pay- ment of taxes when the trustee has sufficient funds of the estate to pay them, he is personally liable to the estate for the amount of the resulting interest payable on the tax. Ticket v. Quinn, 1 Dem 423 (432). In Harlow v. Mills, 58 Hun, 391, aff'd 128 N. Y. 650, an administrator, who was allosved, by those entitled, to receive payment for certain land sold, and whose duty it was to pay over the proceeds at once, deposited the fund in a bank, and left it there two months. The bank failed. The administra- tor, who had received the money not as such, but individually, and under an implied contract, was for that reason held liable, not only for the lost fund, but for interest at the legal rate, the fact that THE TRUSTEE'S LIABILITY. 179 he did not hold as trustee, executor, or administrator being held to distinguish the case from King v. Talbot, supra. As to rate of interest, see also Matter of Commonwealth F. I. Co., 32 Hun, 78, and cases there cited ; Oilman v. Gilman, 2 Lans. 1. In a case of mere neglect to invest, without bad faith, only simple interest will be charged. Matter of Kennedy, 2 Con. 216, which see for a general discussion of the principles to be pursued in charging a trustee with simple or with compound interest ; or with profits ; or making no charge. But even in a case of mere neglect to invest, compound interest may sometimes be allowed, as where a will directs the trustee to deposit income in a savings bank to accumulate, and he fails to do so ; here he will be charged with the interest he might have received from a bank, which involves semi-annual rests. Shepard v. Patterson, 3 Dem. 183. Compare Matter of Butler, 1 Con. 58 (80). 253. Interest against estate. In regard to liability for interest, a distinction exists between claims against a trustee indi- vidually, as in the cases just considered, and claims against the estate itself, as where a legatee demands interest on a legacy, the payment of which has been deferred. In the latter case the legatee is a creditor, and entitled to legal interest regardless of whether the estate was or was not able to pay the legacy when due, or whether it has, or could have, earned legal interest on the legacy or not. Hoffman v. Penn. Hospital, 1 Dem. 118 ; Wheeler v. Ruthven, 2 Redf. 495, see s. c. 74 N. Y. 428. 254; Summary proceeding to compel payment or de- livery. " Where a person is entitled, by the terms of the will, to the payment of money, or the delivery of personal property, by a testamentary trustee, he may present to the surrogate's court a written petition, duly verified, setting forth the facts which entitle him to the payment or delivery, and praying for a decree, directing payment or delivery accordingly ; and that the testamentary trustee may be cited to show cause, why such a decree should not be made. If the petitioner is so entitled, only upon the happening of a contingency, or after the expiration of a certain time, he must show in his petition, that his right to the money or other property has become absolute. Upon the pres- 180 THE TRUSTEE. entation of the petition, the surrogate must issue a citation ac- cordingly." Code C. P., 2804. " Upon the return of a cita- tion, issued as prescribed in the last section, if the testamentary trustee files a written answer, duly verified, setting forth facts, which show that it is doubtful, whether the petitioner's claim is valid and legal, and denying its validity or legality, absolutely or upon his information and belief, a decree must be made, dis- missing the petition, without prejudice to an action in behalf of the petitioner for an accounting ; otherwise, the surrogate must hear the allegations and proofs of the parties, and must make such a decree in the premises, as justice requires. In a proper case, the decree may require the testamentary trustee, who is unable to deliver personal property to which the petitioner is entitled, to pay the value thereof." Code C. P., 2805. " Where it appears, upon the presentation of a petition as pre- scribed in the last section but one, that a decree, made pursuant to the prayer thereof, might affect the rights of other persons, with respect to the estate or fund held by the testamentary trus- tee, the citation must also be directed to those persons. Where that fact appears, upon the return of the citation, or upon the hearing, and it also appears presumptively that the petitioner is entitled to a decree, all the persons, whose rights may be so affected, must be brought in by a supplemental citation, before a decree is made." Code C. P., 2806. The denial of valid- ity, etc., is essential to a dismissal. Matter of McCarter, 94 X. Y. 558 (562). 255. Contempt proceedings. If the trustee refuses or neglects to pay over money or perform any other acts duly directed by the court, he may be subjected to proceedings to punish him for contempt. Matter of Dissosway, 91 N. Y. 235 ; Hosack v. Blunt, 11 Pai. Ch. 603 ; Code C. P., 8, 2555, by fine or imprisonment, or both, Code C. P., 9, and 2266 et seq., and in particular 2284, 2285. Matter of Mor- ris, 45 Hun, 167 ; Moffat v. Herman, 116 N. Y. 131 ; Peo- ple v. Van Buren, 136 N. Y. 252. See also post, 728. 256. Release from liability. Where a trustee has become liable to the beneficiary for wrongful acts, the latter may in TUB TRUSTEE'S LIABILITY. 181 certain cases relieve the trustee from liability (e.g., for unauthor- ized investments), though while the trust continues, the bene- ficiary may reconsider, and may, as to the future, call for a strict performance of legal obligations. Sherman v. Parish, 53 N. Y. 483 (491, 492) ; Boerum v. Schenck, 41 N. Y. 182 ; Arthur v. Nelson, 1 Dem. 337 ; see post, 280. Thus, if a trustee, at a sale of trust property, himself buys it in, with the consent of the beneficiary, who receives the proceeds with intent to ratify the transaction, the latter cannot demand a resale. Boerum v. SchencTc, 41 N. Y. 182 (193, 194). But if the beneficiaries are incompetent to waive their rights (e.g., through lunacy), or if they accept the proceeds under an explicit understanding that they reserve their right to avoid the sale, they are not estopped. Id. In such case a resale may be ordered, but it will not accrue to the benefit of one beneficiary who is estopped, either by actual ratification or by the effect of a judgment establishing the orig- inal sale as to him and standing unreversed. Id. Even as to him, if he has subsequently succeeded to the rights of others not estopped, he may, as to such rights, share in the benefit of the new sale. Id. Concerning acquiescence by a beneficiary in a breach of trust, and its effect as an estoppel, and the method of arranging the equities on a resale, see reporter's note, citing many authorities, in 41 N. Y., p. 200. A beneficiary is not estopped by the mere fact of giving a receipt in full, from show- ing that in fact the full amount payable has not been paid. Matter of Rutherford, 5 Dem. 499 ; also see Matter of Wiggin, 1 Dem. 568. And in order to establish such ratification or con- firmation, it must appear that the party confirming labored under no disability ; that the confirmation was a deliberate act ; that there was no false suggestion or reservation ; that the beneficiary was made aware of all the material circumstances of the case, and knew that the law entitled him to impeach the transaction in a court of equity. Luers v. Brunjes, 5 Redf, 32 (41 et seq.} ; Cumberland Coal cfe Iron Co. v. Sherman, 30 Barb. 553 ; Adair v. Brimmer, 74 N. Y. 539. It would appear that these cases fall within the class where the beneficiary would not be bound by notice possessed by his attorney or other representative in general matters connected with the trust. Mandeville v. Reynolds, 68 N. Y. 528 (540). A beneficiary may, however, if 182 THE TRUSTEE. these conditions are complied with, release the trustees, or may release a part of them, and hold the others as to their pro rata share of the liability. Cocks v. Barlow, 5 Redf. 406 (412). But it is to be remembered that under trusts to receive and accu- mulate, the beneficiaries, being necessarily infants, while the term continues are never sui juris / and that under trusts to re- ceive and apply rents or income, the beneficiaries, even if other- wise competent, are expressly disabled by statute to transfer their rights, by assignment or otherwise, Real Prop. L., 83, and that this provision cannot be evaded by the mere device of conniving at a misappropriation or other breach of trust by the trustee, by adopting the form of a ratification or waiver. Ex- press statutory provisions intended for the very purpose of pro- tecting the beneficiary even as against his own desire to control the property, cannot be nullified by any theory of estoppel. Douglas v. Cruger, 80 N. Y. 15 (20) ; see Bliven v. Robinson, 83 H un, 208 (209). As to the effect of a decree of a competent court, in closing the door to further disputes over the trustee's liability, see the subjects of Accounting ; Construction ; and Parties. 257. Liability after discharge. If a trustee invest in un- authorized securities, and turns the same over to his successor, and is discharged, he nevertheless continues liable for losses until the funds can be reinvested in proper securities. Matter of Foster, 15 Hun, 387 (393). And further, it does not follow that because a trust has terminated, the liability of the trustee to account, and to make good any loss for which he is responsible, ceases at the same time. A trustee cannot discharge himself except by order of the court, or, the trust having ended and the property vested beneficially, the consent of competent bene- ficiaries. GUchrist v. Stevenson, 9 Barb. 9 (15) ; Matter of Camp, 126 N. Y. 377 (388 et seq.}. 258. Continuing testator's business. As already seen, the creator of a trust may give to the trustees a wider field for investment than that otherwise prescribed by the law. He may thus authorize them to carry on a business with the funds of the estate. In so far as they thus act distinctively as trustees of a THE TRUSTEE'S LIABILITY. 183 separate trust fund, it would appear that their personal liability and that of the fund, under contracts entered into by them in the course of the business, would be regulated by the principles, already considered, governing the matter of any contract made by a trustee for the benefit of the estate. Thus, where a trustee is authorized by will to make a contract binding the estate, and does contract in that form, he is not personally liable. This principle has been applied to a trust to continue a business. Noyes v. Turnbull, 54 Hun, 26, aff 'd 1 30 IS". Y. 639. If one of several trustees in such a trust dies, resigns, or is removed, he ceases to be liable on future contracts made by the other trustees, for such trustees are not partners in any proper sense. Such is the rule, in any event, where the other party is put on notice that he has withdrawn. Id. Most frequently, however, the duty, or authority, to conduct a business is conferred on executors, in their capacity as such, or as donees of a power, and not distinctively as trustees. Such cases do not fall within the scope of the present discussion ; but for the light they may throw upon formal trusts for a similar purpose, the authorities are here collected. Willis v. Sharp, 113 N. Y. 586 ; Willis v. Sharp, 115 N. Y. 396 ; Stewart v. Robinson, 115 N. Y. 328 ; Matter of Mutton, 145 N. Y. 98 ; Bell v. Hepworth, 134 K". Y. 442 ; Columbus Watch Co. v. Hodenpyl, 135 K Y. 430 ; Mat- ter of Jones, 37 Hun, 430, aff'd 103 N. Y. 621 ; Delaware, L. & W. R. R. Co. v. Gilbert, 44 Hun, 201, aff'd 112 N. Y. 673 ; Clapp v. Clapp, 44 Hun, 451 ; Johnson v. Lawrence, 95 N. Y. 154 (163) ; Matter of Bach, 2 Con. 490 ; Matter of Laney, 50 Hun, 15 ; Brennan v. Lane, 4 Dem. 322 ; Matter of Sharp, 5 Dem. 516 ; Gilles v. Stewart, 2 Dem. 417 ; Matter of Sands, 1 Con. 259 ; Boulle v. Tompkins, 5 Redf . 472 ; Mat- ter of Prescott, Tucker, 430 ; Varnum v. Taylor, 59 Hun, 554 ; Nat. Bank of Newbiurgh v. Bigler, 83 K. Y. 51 (57) ; notes in 21 Abb. N. C. 70 ; 17 Abb. K. C. 172 ; 9 Abb. K C. 8 ; Matter of Benedict, 13 Abb. N. C. 67 ; Estate of Leavitt, 28 Abb. N. C. 457 ; Sheldon v. Sheldon, 84 Hun, 422. Where C and H enter into a partnership agreement which authorizes the surviving partner to continue the partnership business for a fixed term of years after the death of either, the question whether this is in effect a testamentary provision with- 184 THE TRUSTEE. out the statutory formalities of execution, and so void ; and also whether its effect is to suspend unlawfully the alienability and absolute ownership of personal property of the estate thus tied up for that term in the business, were said, in Sell v. Hepworth, 134 N". Y. 442 (447) (citing Hat. Bank of N. v. Bigler, 83 N. Y. 51) to have been then open in the Court of Appeals. The court then proceed, in the Bell case, to state, first, that if the agreement was valid, its effect would be to leave in the business, during the term of years, the amount which the deceased mem- ber had in it at the time of his death ; that this would practically amount to a loan of that amount to the survivor, for that term, subject to the gain or loss of the business ; that the survivor would be the sole owner and manager of the business and prop- erty, and the decedent's estate would not, beyond the amount thus continued in the business, be liable for new debts ; that the estate would thus have an investment in the business, and, as in the case of other investments having a fixed term of years in which to mature, the executors could sell, or otherwise dispose of it, in the course of due administration, whenever opportunity offered. The value of the asset, but not its disposability, would be affected by the terms of its investment. Two features of this treatment of the question are to be noticed : First, that the court preface it by the statement that " it may be remarked," etc., treat it as a hypothetical case not necessarily before them, and go on to say that in the case in hand other considerations render the validity or invalidity of the contract unimportant ; and, sec- ondly, that the remarks just summarized deal only with the ques- tion of suspension of ownership, and not at all with that relating to the invalidity of the agreement as being in effect a testamen- tary disposition not duly executed. The views expressed, how- ever, as to suspension of ownership, though thus obiter, appear to be based on sound reasoning. A third point to be noticed is, that in the case in hand neither the agreement, nor the will, either authorized or directed the executors of decedent to take any part in the conduct of the business, or to represent his estate in carrying it on, nor had they done so, thus not raising the questions, similar to those stated, vvhich would arise in a differ- ent and perhaps more perplexing form if such had been the facts. Bell v. Hepworth, 134 N. Y. 442. Compare Stewart v. THE TRUSTEE'S BOND. 185 Robinson, 115 N". Y. 328, and other cases cited in the Bell case. Also Matter of Laney, 50 Hun, 15, aff'd 119 N. Y. 607. The Trustee's Bond. 259. In the supreme court. The statutes do not require a trustee, appointed by the original trust instrument, to give a bond before entering on his duties. (But see Code C. P., 2815.) Nor is a bond required by any statute, where a trustee is appointed by the Supreme Court. 1 But where there are in- fants, security is held to be indispensable, unless the clerk of the court is appointed, who has already given security as clerk. Matter of Jones, 4 Sandf . Ch. 615 (616). And in Matter of Rob- inson, 37 N. Y. 261 (264), it is said that security is always re- quired on appointment of a trustee by the court. Also People v. Norton, 9 N. Y. 176 ; Tompkins v. Moseman, 5 Redf . 402 (405). But such requirement does not appear to be strictly essential. Matter of Stuyvesant, 3 Edw. Ch. 299 ; Fellows v. Longyor, 91 N. Y. 324 (bottom of p. 331) ; unless there are infant bene- ficiaries. Matter of Jones, 4 Sandf. Ch. 615. In the case, however, of certain assignments for the benefit of creditors, a bond is required by statute. Bishop on Insolvent Debtors (3d ed.), p. 408. 260. In the surrogate's court. The statute affecting tes- tamentary trustees provides for security in cases where it might be required from one named as executor ; Code C. P., 2815, 2816 ; Montfort v. Montfort, 24 Hun, 120 ; and in no other cases, Matter of Lawrence, 6 Dem. 342 ; but these sections apply only to trustees named in the will, and not to those appoint- ed by the court. Matter of Whitehead, 3 Dem. 227 (231-232). But 2818, of the Code, authorizing the appointment by the sur- rogate of a successor to a testamentary trustee deceased, removed, etc., provides also that " where a decree removing a trustee or discharging him upon his resignation does not designate his suc- cessor, or the person designated does not qualify, the successor must be appointed and must qualify in the manner prescribed 1 As to Trust Companies as trustees, however, see the Banking Law (L. 1892, chap. 689, Birdseye's R. S., pp. 229, 230). 186 T11E TRUSTEE. by law for the appointment and qualification of an administrator with the will annexed." Though this portion of the section ap- plies in terms only to cases of resignation or removal, it is settled that it must not be construed to relieve those appointed to fill vacancies caused by death or lunacy, from the necessity of giv- ing security. Matter of ~Whitehead, 3 Dem. 227 ; Tompkins v. Moseman, 5 Redf. 402. This section also applies in terms only to the case where the appointment is not made by the same de- cree which creates the vacancy to be filled ; Lane v. Lewis, 4 Dem. 468 (472). But see Matter of Whitehead, supra. It was said in Matter of Robinson, 37 N. Y. 261 (264), that in such cases security is always in fact required ; but in the Surro- gate's Court it has been held that it is not strictly essential, in such cases, to require security. Lanev. Lewis, 4 Dem. 468 (473). In Tompkins v. Moseman, 5 Redf. 402 (405), the following rule is laid down : "In looking into the course and practice of the late Court of Chancery, which had jurisdiction of all cases relating to trusts, it will be found that it was the practice to require a bond of a new trustee appointed in place of one who had died or been removed, and which practice is followed by the present Supreme Court in the exercise of equity powers ;" and it is held that the Surrogates' Courts should follow the same rule. To the same effect is Matter of Whitehead, 3 Dem. 227 (233). 261. Parties. Where a bond is required, it is discretionary with the court, to whom notice shall be given. Tompkins v. Moseman, 5 Redf. 402 (405) ; Lane v. Lewis, 4 Dem. 468 (472). But compare Real Prop. L., 91. 262. Devastavit. Where trust funds have been wasted by the trustee, and the life beneficiary (a co-trustee) is also charge- able for the loss, the court, instead of requiring a deposit of an equal sum, may accept a bond secured by satisfactory mortgage, and bearing no interest, to insure the payment of the principal to the remaindermen on the death of the life beneficiary. The loss of interest constitutes a contribution of the life beneficiary to make good the loss. In the case cited the trustees seem to have held in their capacity as executors. Earle v. Earle, 93 N. Y. 1.04. THE TRUSTEE'S BOND 187 263. Sureties of testamentary trustees. Prior to the enactment of the Code of Civil Procedure, there were two modes of proceeding to enforce the liabilities of sureties of an executor or administrator : (1) Under 2 R. S. 116, 19, providing that whenever an executor or administrator shall refuse or omit to perform any decree made against him by the surrogate, for ren- dering an account, or upon final settlement, or for the payment of a debt, etc., the surrogate might cause his bond to be prose- cuted ; this provision has been repealed ; (2) Under L. 1837, ch. 460, 63, 64, providing for the docketing of certificates of surrogates' decrees, arid issuing an execution thereon (now 2553, 2554, of the Code) ; and 65, providing that on the return of the execution unsatisfied, the surrogate, on application, should assign the bond to the person in whose favor the decree was made, for the purpose of being prosecuted (now replaced by 2607 of the Code, which differs somewhat in its terms). These two remedies were held to be cumulative and not inconsistent under the former no execution being required, while under the latter, after return of execution unsatisfied, the bond was to be assigned, and prosecuted by the assignee. Hood v. Hood, 85 N. Y. 561 (572). But under both statutes a decree against the executor was a prerequisite to proceedings against the surety. Many of the earlier decisions relate to these statutes and are based on the distinctions mentioned. 264. Same Present statutes. The present statutes pro- vide, that after execution against the property of a testamentary trustee, executor, etc., has been returned wholly or partly unsat- isfied, an action to recover the sum remaining uncollected may be maintained upon his official bond, by and in the name of the person in whose favor the decree was made. Code, 2607. This section supersedes L. 1837, ch. 460, 65, but does not re- quire an assignment of the bond. There is no cumulative pro- vision corresponding to 2 R. S. 116, 19. Hood v. Hayward, 124 N. Y. 1 (9). The form of remedy and the procedure, after the trustee's death, has also been changed. 2606 of the Code provides, that where a testamentary trustee dies, " the Surro- gate's Court has the same jurisdiction, upon the petition of his successor, or of a surviving executor, administrator, or guardian, 188 THE TRUSTEE. or of a creditor, or person interested in the estate, or of a guard- ian's ward, to compel the executor or administrator of the de- cedent to account, which it would have against the decedent if his letters have been revoked by a surrogate's decree" (as to which, see Code C. P., 2608-2609 ; Long v. Long, 142 N. Y. 545 ; Hood v. Hayward, 124 N. Y. 1 ; Prentiss v. Weatherly, 68 Hun, 114, atf'd 144 N. Y. TOT). Matter of Fithian, 44 Hun, 45T ; Perkins v. Stimmel, 114 N". Y. 359. Such executor or administrator may also account voluntarily for any of the trust property which has come to his possession. Code C. P., 2606. The same section then provides that : " With respect to the lia- bility of the sureties in, and for the purpose of maintaining an action upon the decedent's official bond, a decree against his executor or administrator, rendered upon such an accounting has the same effect as if an execution issued upon a surrogate's de- cree against the property of decedent had been returned unsatis- fied during decedent's lifetime." Under this provision, it is the decree of the surrogate on this accounting, and not the return of an execution unsatisfied, which establishes the devastavit of the original trustee and lays the basis for all action against the sure- ties, Potter v. Offden, 136 N. Y. 384 (390) ; and as the section relates only to a rule of evidence as to proof of the devastavit, it applies though the bond was given before this section became a law. Id. Therefore, if a testamentary trustee is alive, a decree must be procured, and execution must be issued and returned unsatisfied, before suit can be brought on the bond ; but if he has died, before these steps are taken, a decree on accounting, against his personal representatives, showing a devastavit, and absence of assets, lays the basis for action on the bond. Upon this point compare 2606, above quoted, with L. 1882, eh. 185 ; Real Prop. L., 91, 265. Remedy on the decree On the bond. When a de- cree is entered, and a transcript has been docketed (Code, 2553), it becomes a Ken on the trustee's real estate (Code, 2553). It was held in 18T8, in Townsend v. Whitney, T5 N. Y. 425 (for a change in the statute, see the end of this paragraph), that the docketing of the decree did not merge it ; the docket did not make it a judgment ; that before docketing, the persons in THE TRUSTEE'S BOND. 189 whose favor it was rendered might, in various cases, enforce it against the trustee personally, in contempt proceedings, one of these cases being " where the delinquent is ... a testamentary trustee, and the decree relates to the fund or estate . . . ' (Code, 2555) ; that after the decree was docketed, the persons in whose favor it was docketed had two remedies against the trus- tee or his property, to enforce payment ; one by attachment in contempt proceedings, in the Surrogate's Court, and another by execution based on the docket ; that the two remedies were not inconsistent, but concurrent, or cumulative, and they might both be pursued until the decree had been complied with ; and that after execution had been returned unsatisfied, action lay on the bond, against the trustee and the sureties ; and this, in turn, was not inconsistent with the continued right to proceed by attach- ment ; even when judgment had been entered in an action on the bond, the right of execution thereon was also cumulative, and the parties entitled to payment were still entitled to pursue their remedies upon the decree as well as upon the judgment on the bond ; and that even if the sureties, or one of them, effected payment of the judgment on the bond, this did not satisfy the de- cree, so far as concerned the rights of such surety, for on payment, he became subrogated to the rights of those whom he had paid, and if the judgments themselves were completely extinguished by the payment, as to which quaere, he had the right to have the decree assigned, either to himself, or to some other person desig- nated by him, and might enforce the same by attachment, in contempt proceedings against the trustee, either in his own name as assignee, or in the name of the original creditors. In regard to the foregoing principles as laid down in the Whitney case, it should be noticed, that at the time of that decision (1878) the Act of 1837, ch. 460, 63, 64, as amended by L. 1844, ch. 104, 2, was still in force, and provided that execution should be issued on the docketed certificate " in the same manner as though it was a judgment of the Court of Common Pleas." But two years later this law was repealed, and 2553 and 2554 of the Code took its place, on this point, providing that " the docket- ing of such a decree has the same force and effect, the lien there- of may be suspended or discharged, and the decree may be as- signed or satisfied, as if it was such a judgment ;" and that a 190 THE TRUSTEE. decree directing the payment of a sum of money into court, or to one or more parties, may be enforced by execution against the property of the party directed to make the payment ; that execu- tion shall be issued by the surrogate, or by the clerk of the Surro- gate's Court, etc. As to these statutory provisions, see Matter of Dunham, 1 Con. 323 (329). The fact that a bond duly executed by sureties and delivered to the principal was never filed in court, is immaterial. Haywood v. Townsend, 4 App. Div. 246. 266. Sureties Remedy against in equity. If the situa- tion in a given case renders it possible to proceed in the Surro- gate's Court to secure a decree, and in the proper case to issue execution, and then to bring action at law, against the sureties on the bond, these steps must be taken ; this principle applies to testamentary trustees, as well as to executors, over both of whom the surrogate has jurisdiction. No suit will lie, either at law or in equity, to charge the sureties, until the proper basis has been laid by such proceedings in the Surrogate's Court, and when they have been taken the action will be only at law. Haight v. Brisbin, 100 N. Y. 219. In cases not covered by the statutes, and where, accordingly, no steps can be taken in the Surrogate's Court to lay a basis for proceedings against the sureties, and wherever relief is called for and there is no remedy at law, a suit will lie in equit} 7 . In such case, instead of bringing an action at law on the bond, a suit should be brought in equity, setting up the facts establishing the specific need of the intervention of equity, and bringing all necessary parties before the court. Haight v. Bris- lin, 100 N. y. 219. It is believed that the foregoing statement of the form of action in equity, against the sureties of a testa- mentary trustee, applies only to cases where, from the nature of the particular case, no accounting can be procured, either in the Surrogate's Court or in equity ; if any case should arise, where, while no accounting was practicable in the Surrogate's Court under the statutes regulating its jurisdiction, an accounting might first be had in equity, it is believed that such accounting would still be regarded as a prerequisite, by analogy, Long v. Long^ 142 N. y. 545 (553), to an action on the bond, even in the case of a testamentary trustee ; for it is a general principle, THE TRUSTEE'S BOND. 191 entirely apart from the Code provisions relating to testamentary trustees, and applicable generally to all trustees, that no action can be brought on a trustee's bond, to recover against the sure- ties, until a settlement of the trustee's account has been procured except in certain cases where such a course is impracticable. And this is equally true though the bond contains no provision for an accounting before suit. French v. Dauchy, 134 N. Y. 543 ; Hood v. Hood, 85 N. Y. 561 ; Long v. Long, 142 N. Y. 545 (553) ; Perkins v. Stimmel, 114 N. Y. 359. But if, in the case of either testamentary or other trustees, the matter is not regulated by statute, and if an accounting either cannot be had, or, for special reasons, is utterly unnecessary and useless, it may be dispensed with. Long v. Long, 142 N. Y. 545 (553- 554) ; Douglass v. Ferris, 138 N. Y. 192 (201) ; Girvinv. Hick- man, 21 Hun, 316 ; Hainesv. Meyer, 25 Hun, 414 ; Williams v. Kiernan, 25 Hun, 355 ; Trust c& Deposit Co. v. Pratt, 25 Hun, 23. But where, as in tbe case of testamentary trustees, an ac- counting is by statute made a condition precedent to an action on the bond, the statute must control. Long v. Long, 142 N. Y. 545 (553). 267. Sureties are privies of trustee, and, in the absence of fraud or collusion, are bound by valid decrees and orders made in a proceeding to which he is a party, by a court having juris- diction over the administration of the estate, although they are not themselves parties, and have no notice ; (administrator) Deo- lold v. Oppermann, 111 N. Y. 531 ; (executor) Scofieldv. Church- ill, 72 N. Y. 565 (570) ; Hood v. Hood, 85 N. Y. 561 (579) ; (administrator) Thayer v. Clark, 4 Abb. Ct. A pp. Dec. 391 ; (adm'r c. t. a.) Casoni v. Jerome, 58 N". Y. 315 (322) ; (adm'r) Gerould v. Wilson, 81 N. Y. 573 (583) ; (adm'r) Harrison v. Clark, 87 N. Y. 572 ; (adm'r) Johnston v. Smith, 25 Hun, 171 ; (adm'r) Kelly v. West. 80 N. Y. 139 (146) ; (guardian) Matter of Brown, 72 Hun, 160 (164). The reason is, that their bond is conditioned on the trustee's obedience to the order of the court ; the justness and correctness of the order is immate- rial. But if not thus conditioned, the rule is otherwise. See Thomson v. MacGregor, 81 N". Y. 592 (597) ; Gerould v. Wil- son, 81 N. Y. 573 (584) ; People ex rel. Collins v. Donohue, 70 192 THE TRUSTEE. Hun, 317 (321). The decree may be impeached by the sureties for fraud or collusion in the procurement thereof. Annett v. Terry, 35 N. Y. 256 ; Douglass v. Howland, 24 Wend. 35 (55). Trustees are estopped to deny the regularity of proceedings under which they secured possession of the trust property. Peo- ple v. Norton, 9 N. Y. 176 (179) ; Johnston v. Smith, 25 Hun, 171 (177) ; Dodge v. St. John, 96 N. Y. 260. But if, in an action brought for the purpose, a general assignment is declared void, the assignee's sureties are not liable for the default of their principal to account. People v. Chalmers, 60 N. Y. 154, where the principle there applied is said not to apply to the liability of sureties of an administrator in case of revocation of letters ; but it would seem to apply to any case of express trust adjudged void ab initio. In determining the liability of sureties on a trustee's bond, substance is regarded, rather than form, and mere techni- cal errors in the bond are no defence where the purpose and in- tended application are clear. (Adm'r) Oerould v. Wilson, 81 N. Y. 573. So with mere technical irregularities in other pro- ceedings. Harrisons. Clarke, 20 Hun, 404. Sureties are liable for interest on the principal sum payable, from the date of the decree fixing the trustee's liability. Hood v. Hayward, 124 N". Y. 1 (21 et seq., dissenting opinion, adopted on this point by the majority of the court, see top of p. 12). The death of a surety does not, it is said, relieve his estate of liability for the principal's after-management of the trust. See Stevens v. Ste- vens, 2 Dem. 469. Such death does not furnish a basis for an application by a party interested, that the trustee be required to give a new bond, or provide a new surety. Id. As to the re- quirements relating to " qualification" of the sureties on the bond of a testamentary trustee, see Tra&k v. Annett, 1 Dem. 171. As to amount of security, see /Senior v. Ackerman, 2 Redf. 302. As to liability of sureties, to pay a fine imposed on the trustee for contempt, see Loop v. Northup, 59 Hun, 75. The right of the beneficiary to recover from the sureties may be lost by laches in proceeding against the trustee personally and by allowing claims to accumulate against him for many years without demand. People ex rel. Collins v. Donohue, 70 Hun, 317 (323). It is held in Moss v. Cohen, 16 Misc. 108, that the sureties on a bond given to induce the trustee to misappropriate the trust fund THE TRUSTEE'S BOND. 193 are not liable, in a suit thereon by such trustee, Daly, Ch. J., dissenting. 268. Sureties Default of trustee before bond given. Where there is a breach of trust before the bond is given, and the bond is conditioned for the faithful performance of duty and also for obedience to orders of the court, the sureties are liable, on the trustee's failure to obey an order directing the trustee to make good the antecedent default. (Executor) Scofield v. Church- ill, 1% N. Y. 565 ; (special adm'r) Gottsberger v. Taylor, 19 N. Y. 150. The reason is, that the order, which is made after execution of the bond, is disobeyed, and thus the case is brought within the terms of the bond ; so that if a bond be confined to future breaches of trust, and omit reference to orders of court, sureties are not liable for the principal's failure to obey an order, directing him to make good a breach of trust occurring before the bond was given. (Receiver) Thomson v. MacGregor, 81 N. Y. 592. And knowledge on the part of plaintiff that a breach had been committed before the bond was given, and a conceal- ment of that fact from the sureties when they went on the bond, would estop him from holding them liable for such breach. Rothschild v. Frank, 16 Misc. 621. 269. Sureties Trust estate as collateral. It is contrary to the policy of the law for the trustee to pledge or transfer the trust assets to his sureties to secure them in case they are called on to respond for his default ; such a transaction is illegal, and gives the sureties no rights in such assets, as against the benefi- ciaries or the trustees. Deobold v. Oppermann, 111 N. Y. 531 (537) ; Zimmerman v. Kinkle, 108 N. Y. 282 ; Fleet v. Sim- mons, 3 Dem. 542. Bat sureties may thus acquire good legal title as against third parties, as for example, where the assets were notes, and the surety brought suit against the maker. Rogers v. Squires, 98 N. Y. 49. And under 3320 of the Code, a trustee required by law to give a bond as such, may include as a part of his lawful expenses such reasonable sum, not exceed- jng one per cent, per annum upon the amount of such bond, paid his sureties thereon, as the court by which, or the ju'lge by whom he is appointed, allows. 13 194 THE TRUSTEE. 270. Sureties When not fiduciary. Before an account- ing, the position of a surety, it has been held, is not such as to interfere with his buying up claims the enforcement of which will diminish the trust funds. See Halstead v. Hyman, 3 Bradf. 426. 271. Sureties Executor also trustee. Where the duties imposed on an executor, though they are outside of the mere set- tlement of the estate, and are of a trust character, are not intend- ed to be regarded as separable and distinct, and the intent is that they shall be performed by him as executor, they fall within the scope of the executor's bond, and for their faithful performance his sureties are liable. Cluff v. Day, 124 N. Y. 195. When the intent is, that the executorial duties shall precede, and be closed, and the trust duties shall thereafter be performed in a distinct capacity as trustee, yet, until the trust has by decree been thus severed, and the executor relieved and discharged, as such, from further liability for the trust fund, the sureties on the executor's bond remain liable for his faithful performance of all duties. Id. Potter v. Ogden, 136 N. Y. 384 (391). But when, in such case, a severance has been effected, and the execu- tor, as such, no longer holds the trust funds, it seems that the sureties on his bond as executor are no longer liable for his acts in relation to the trust. Id. On the foregoing statements, see also Hood v. Hood, 85 N. Y. 561 ; s. c. 98 N. Y. 363 ; 104 N. Y. 103. 272. Sureties Release of one. All the parties interested may, by the use of appropriate terms, effect a release of one surety, and yet hold the other liable, but only to the extent to which \\\& pro rata liability would have existed, under the doc- trine of contribution, if no release had been executed. Hood v. Hayward, 124 N. Y. 1 (12 et seq., dissenting opinion, adopted on this point by the majority of the court, see top of p. 12). As to the effect of suing both sureties and entering judgment against one only, compare Waggoner v. Walrath, 24 Hun, 443, aflFd 92 K Y. 639. 273. Sureties Release by surrogate. Sureties of testa- mentary trustees may be released by the Surrogate's Court, on ACTS OF CO-TRUSTEES. 195 their petition, from responsibility for future breaches of the con- dition of the bond. The necessary proceedings are set forth in 2600, 2601 of the Code. Shook v. Goddard, 2 Dem. 201 ; Bick v. Murphy, 2 Dem. 251 ; Lewis v. Watson, 3 Redf. 43. 274. Beneficiary as surety. Where it appears, on an ac- counting by a testamentary trustee, that a certain distributive share of the fund is payable to a person who is in fact a surety on the bond of such trustee's predecessor, the surrogate has no authority to direct the trustee to hold back such distributive share until the liability of such surety has been ascertained. Matter of Horn, 7 App. Div. 89. Acts of Co-trustees. 275. Analogous to co-executors. In view of the numer- ous decisions concerning the responsibility of an executor for the acts of his co-executor, it is important to establish the exact rela- tion they bear as authorities upon the responsibility of a techni- cal trustee for the acts of his co-trustee. The subject was briefly discussed in Ormiston v. Olcott, 84 !N". Y. 339 (346), where it is said that " it is not disputed that the rule applicable to executors, as such, is that each is liable only for his own acts, and one can- not be made responsible for the negligence or waste of another, unless he in some manner aided or concurred therein. . . [Citing authorities.] It is claimed, however, that the rule is more stringent where executors are also trustees. . . . The authorities in this State do not justify the distinction sought to be made. . . . [Citing authorities.] There would be neither wisdom nor justice in a rule which would practically end in mak- ing a trustee a guarantor of the diligence and good faith of his associates, and hold him responsible for acts which he did not commit and could not prevent." To the same effect are the de- cisions in Banks v. Wilkes, 3 Sandf. Ch. 99 ; Kirby v. Turner, Hopk. Ch. 309 (330) ; Kip's adm\s v. Deniston, 4 Johns. 24, in which the trustees were such only, and not also executors. u We have lately held that one executor (and I think the rule is the same with other trustees) is responsible for his own acts and not for those of his associate," etc. Bruen v. Gillet, 115 N". Y. 10 (14). Under these and other authorities, therefore, the cases 196 THE TRUSTEE. relating to executors may here be cited in reference to trus- tees. 1 276. General rule. Each trustee is liable only for his own acts, and is not responsible for the negligence or waste of a co- trustee. Ormiston v. Olcott, 84 K Y. 339 (346) ; Nanz v. Oak- ley, 120 N". Y. 84 (88-89) ; Wilmerding v. McKesson, 103 K. Y. 329 ; Cocks v. Haviland, 124 N. Y. 426 ; Taylor v. Shuit 4 Dem. 528. 277. Rule explained. The statement in the rule, that " a trustee is liable only for his own acts," calls, however, for care- ful examination. " Where one executor or trustee receives the funds of the estate, and either delivers them over to his associate or does any act by which the funds come under the sole posses- sion and control of the latter, and but for which he would not have received them, the executor or trustee is liable for the loss sustained in consequence of such action" (if the same was un- necessary). Bruen v. Gillet, 115 N. Y. 10 (14) ; Croft v. Wil- liams, 88 K Y. 384 (387) ; Adair v. Brimmer, 74 N. Y. 539 (561) ; Thompsons. Hicks, 1 App. Div. 275 ; Matter of Litzen- lerger, 85 Hun, 512 ; Clark v. Clark, 8 Pai. 152 (160) ; Suther- land v. Brush, 7 Johns. Ch. 17 (23) ; Matter of Storm , 28 Hun, 499 ; Dixon v. Storm, 5 Redf. 419 ; Wyckoff v. Van Siclen, 3 Dem. 75. And he does thus " receive and deliver over," in the sense of the foregoing rule, if the funds are deposited to joint account and then drawn by the co- trustee on a check signed by both, where there is no necessity for drawing, Bruen v. Gillet, 115 N". Y. 10 (16). But compare Purdy v. Lynch, 145 !N". Y. 462. But where, on testator's death, the securities in question were in his house, and upon the appraisal his widow, an executrix and trustee, produced them, and after the appraisal the other executor took them away, arid misappropriated them, it was held that they were never in her custody as executrix and 1 But the fact that each executor by himself has powers -which as among trustees must be exercised jointly, may often introduce a distinction, when the question is whether a given trustee did or did not constructively participate in the wrongdoing of another, as where he joined, of necessity, in some act which resulted in bringing assets into the sole custody of his associate. ACTS OF CO-TKUSTEES. 197 trustee, and were never delivered by her to her co-trustee, in such a sense as to render her liable for his wrongdoing. Wriyht v. Dugan, 15 Abb. N". C. 107 (118-119). And if a trustee, to avoid expensive litigation, personally redeems securities thus wrongfully pledged by his co-trustee, without his co-operation, he may, if his course was reasonably prudent, and he acted in good faith, be credited with the advance on his accounting. Id., p. 120. Where "trustees do a purely formal act in which both must join in order to effectuate the purposes of the trust, and the result is to bring trust money into the hands of one, this is not a receipt by one, and a delivery over to the other, such as to render the one who never in fact had the money liable for the acts of the one who did. The former was essentially passive. Thus, where trustees have a power of sale of land, it is necessary that both should join in executing it. If on delivery of the deed the con- sideration is paid to one, these facts alone do not render the other liable. Graft v.. Williams, 88 K. Y. 384 (390) ; Kip's Adm'rs v. Deniston, 4 Johns. 24 (26). So one trustee is not liable for waste of a fund turned over to his co-trustee under a decree of a competent court. Gline v. Sherman, 144 N. Y. 601. So, if a check for the purchase price is, in such a case, given to one trustee, and he merely endorses it over to another, who cashes it and misappropriates the proceeds, the former is not liable, as his act was a formal one necessary for the purpose of obtaining possession of the purchase money from the pur- chaser. Paulding v. Sharkey, 88 !N". Y. 432. So where there are very numerous claims to be paid from a fund deposited in the joint names, and all unite from time to time in drawing and turning over to one trustee, who took charge of the payments, sums reasonably and necessarily called for at that time for actual or contingent payments. Purdy v. Lynch, 145 N. Y. 462. So, where trustees join in signing a receipt, while this \$>prima facie evidence that both received the money, Monell v. Monell, 5 Johns. Ch. 283 (294 et seq.) ; Manahan v. Gibbons, 19 Johns. 427 (440), yet the presumption may be rebutted, Paulding v. Sharkey, 88 N". Y. 432 ; see Bruen v. Gittet, 115 N. Y. 10 (16). But it has been held, that if stock stands in the name of two trustees, A and B, and both unite in executing a power to C, a third party, to effect a transfer to a purchaser, and the pro- 198 THE TRUSTEE. ceeds thereby come into the hands of B, A is liable for misap- propriation by B. Spencer v. Spencer, 11 Pai. Ch. 299 (SOS- SOS). But if all the trustees unite in rendering a joint account, by which it appears that the property was received by them all, this is an admission of joint action and joint liability ; Glacius v. Fogd, 88 N. Y. 434 (442-444) ; Dams v. Kerr, 3 App. Div. 322 (327, 329) ; Lacey v. Dams, 4 Kedf. 402 ; but such a conclu- sion may be rebutted. Taylor v. Shuit, 4 Dem. 528 (530) ; Lacey v. Davis, 5 Redf. 301. But if the account shows, and the decree determines that a certain fund is in the hands of one of the trustees, this does not determine that it got there proper- ly. The beneficiary may still show that the other trustees had been negligent in paying it over to him. Thompson v. Hicks, 1 App. Div. 275. And " the mere fact that one of two or more executors or trustees is passive and does not interfere with the act of his co-executors in taking possession of the property and collecting moneys of the estate, will not charge him with liability for waste by them." Cocks v. Haviland, 124 N. Y. 426 ; (and also on same facts, Matter of Cocks, 1 Con. 347, and Cocks v. Barlow, 5 Redf. 406) ; Croft v. Williams, 88 N. Y. 384 (388) ; Wilmerding v. McKesson, 103 N. Y. 329 (339-340) ; Adair v. Brimmer, 74 N. Y. 539 (567) ; Banks v. Wilkes, 3 Sandf. Ch. 99 ; Kirby v. Turner, Hopk. Ch. 309 ; Sutherland v. Brush, 7 Johns. Ch. 17 (22) ; Matter of Cozzens, 2 Con. 622 ; Mat- ter of Hall, 5 Dem. 42 ; Lacey v. Davis, 5 Redf. 301. This principle applies where A and B, as executors, hold assets of the estate, deliverable to an infant beneficiary of whom they and C are also guardians, and where they turn them over to C alone, as guardian ; as guardians, A and B have never had possession ; C, as guardian, was the only guardian who had them in his cus- tody ; it was proper for the executors to pay to one guardian, so that A and B are not liable as executors for the default of C ; (to the same effect is Paulding v. Marvin, reported in note, 3 Redf. p. 365) ; nor are they liable as guardians, for as such they never had possession and were merely passive. Kirly v. Turner, Hopk. Ch. 309 (330). Nor is this result changed by the fact that all three guardians gave a bond in the usual form, with a condition that they should in all things faithfully dis- charge the duty of guardians according to law. The bond did ACTS OF CO-TRUSTEES. 199 not vary their obligations. Their rights and duties are defined by law, and their duties were the same after the bond had been given as they would have been had no bond existed. Though the bond is joint and several, it only renders them jointly liable for joint acts, and severally for their several acts, but what acts are joint, and what several, are matters determined by principles of law and not by the bond. Kirby v. Turner, Hopk. Ch. 309 (331 et seq.}. To a similar effect is Nanz v. Oakley, 120 N. Y. 84, where A and B were administrators of an intestate of whom A was sole next of kin. They joined in the required adminis- trator's bond, and C also executed it as surety. On the default of B, without any participation by A, it was held that an action would lie on behalf of the assignee of A's individual inter- est, against 0. The fact that A was on the bond did not stand in the way of his holding C liable for the sole default of A's co- administrator. So also, a trustee may, suing as such, and on behalf of the trust estate, recover from the sureties on a bond given by himself and a co-trustee, for the default of the co-trus- tee. Sperb v. McCoun, 110 N. Y. 605 (610) ; Boyle v. St. John, 28 Hun, 454. Sperb v. McCoun, supra, decided in 1888, left open the question of the right of a trustee personally entitled to the funds misappropriated, to sue the sureties on his and his co-trustee's bond, for the default of the latter, but as above stat- ed, this was settled in 1890, in Nanz v. Oakley, supra. This distinction, however, between affirmative acts, such as receiving and then paying over to the associate which render him liable for the acts of the latter ; and the mere fact of being passive, as where he simply does not interfere when his associate originally receives property or collects money from others, and does not insist on having it placed under joint custody in which case he is not liable for the acts of the co-trustee ; this distinction calls for qualification. For there are circumstances under which he may be passive, and yet become liable. Thus : 278. Liable though passive. The freedom of a trustee from liability for the acts of his associate, where the former is merely passive in allowing him to get in and hold the trust es- tate, is subject to this qualification ; that if he has any reason to apprehend that his associate may be guilty of negligence or waste 200 THE TRUSTEE. if allowed to receive or hold the property, or if, when the latter has received it, he might, by the exercise of proper care have prevented misapplication known to him to be intended or in progress, then he is liable. For in such a case he is in reality something other than passive. His own negligence, or wilful disregard of duty, becomes an element in his conduct. Davis v. Kerr, 3 A pp. Div. 322 (328) ; EarU v. Earle, 93 N. Y. 104 (113). 279. What constitutes negligence. The mere poverty of the co-trustee does not per se charge the trustee with no- tice of any probable wrongdoing. " He [the co-trustee] was poor, and hampered by lack of means, and Croft [the trustee] undoubtedly knew and realized the fact ; but that is not enough. It does not follow that because a man is poor and needs money that he will, therefore, embezzle trust funds or steal an orphan's inheritance. Honest poverty is quite as worthy of trust as honest wealth. The testator selects his executors for himself , and where he has placed his confidence, even if the chosen trustee be poor or insolvent, it is not for the associate executors to withhold theirs, the situation being unchanged, unless some misapplication is threatened or manifest." Croft v. Williams, 88 N. Y. 384 (389). But where a co-trustee invests moneys realized from the estate, in his own business, with the knowledge of the trustee, in hostility to the terms of the will relating to investment, his associate is liable for loss ; even if he had had no actual knowl- edge that the firm was using the funds, he was chargeable with negligence in failing to find out, as the facts he did know put him on notice. Wilmerding v. McKesson, 103 1ST. Y. 329 (337). The mere omission of a trustee to see that the co-trustee who holds the funds has invested them properly, does not, per se, sub- ject him to liability. " The rule of liability does not go so far as to charge an executor having none of the funds of an estate in his possession or under his control, with the consequences of the neglect or failure of his co-executor to make the disposition by investment or otherwise of the subject of the trust pursuant to the direction of a will where the latter has the entire fund in his hands and assumes its management, unless there is some reason to suspect that he has or may fail to execute the will in that re- ACTS OF CO-TKUSTEES. 201 spect." Cocks v. Haviland, 124 K Y. 426 (431). But there is one difficult question which now and then appears on the sur- face, where a trustee has apparently been merely passive, and yet is held responsible for the default of a co-trustee, because negligent in that he would have discovered the wrongdoing if he had himself used due care, made proper inquiries, etc. Thus, " mere passiveness will not furnish an adequate excuse, or any ground for relief in equity for the consequences of administrative acts by her co-administrator. She could not rely on him to man- age affairs and then claim to have been relieved from the per- formance of her legal duty. . . . Mrs. Miller was bound to inform herself with respect to the affairs of the estate," etc. But in fact in that case, the plaintiff beneficiary was the same person who, as trustee, remained passive, and then tried to hold her co-trustee accountable. Matter of Niles, 113 1ST. Y. 547. But the same principle has been applied where that feature did not exist. Matter of Myers, 131 N. Y. 409 (420). Compare Matter of Cozzens, 2 Con. 622 (627). For further cases of neg- ligence, see Whitney v. Phcsnix, 4 Redf . 180 ; Matter of Mac- donald, 4 Redf. 321 ; Zaceyv. Davis, 4 Redf. 402 ; s. c. 5 Redf. 301 ; Wise v. Murphy, 5 Redf. 365. 280. Waiver of liability. A beneficiary in some cases, where he has known of the negligence or improper conduct of a trustee, and has acquiesced therein, may be estopped from there- after holding the co-trustee liable for the results, where the lat- ter did not actively participate hi the wrongful acts. Sherman v. Parish, 53 1ST. Y. 483 (492) ; Earle v. Earle, 93 K Y. 104 (117). See also ante, 256, 279. 281. Trustee's agent. The foregoing principles apply to cases where only the co-trustees were to be considered. But if a third person, not a trustee, be entrusted by them with property of the estate, they may become responsible for his wrongful acts, for he is their agent. Earle v. Earle, 93 ST. Y. 104 (112) ; Adair v. Brimmer, 74 N. Y. 539 (564). On the subject of a trustee's liability for the default of an agent employed in good faith, and entrusted with securities, under circumstances raising no cause for suspicion, compare McCdbe v. fowler, 84 N. Y. 202 THE TRUSTEE. 314 ; Matter of Schott, Tucker, 33T ; Adair v. Brimmer, 74 1ST. Y. 539 (554) ; Matter of Niles, 113 N. Y. 547. Ante, 246, 247. As to waiver, acquiescence and ratification, see ante, 256, 279, 280. 282. Notice to one affects both. If property be trans- ferred by one trustee who knows that he has no title, to the other who has no personal knowledge, as security for a loan from the estate to the former, the knowledge of the transferrer will be imputed to the transferree, so that the real owner may recover from the latter even though, in absence of such notice, he could not recover. Troy & A. H. JR. Co. v. Smith, 11 N. Y. Supp. 261 ; s. c. 33 State Rep. 203. But where this same transaction subsequently came before the Surrogate's Court, on an account- ing of the trustees, the trustee who loaned the money and took the note was held personally liable, because he actively partici- pated in the appropriation of the fund by the co-trustee to his personal use. Matter of Cozzens, 2 Con. 622. And compare Roosevelt v. Land & River Imp. Co., 11 Misc. 595, aft'd 38 K". Y. Supp. 242. 283. Usury taken by one. If one trustee loans trust funds on mortgage, and receives a usurious bonus, this does not pre- vent foreclosure, if the other trustee did not participate in tak- ing usury. Van Wyck v. Walters, 16 Hun, 209 (aff'd sub nom. Van Wyck v. Waiters, 81 N. Y. 352, where it was held that none of the trustees knew of the usurious bonus, which was taken and retained by their agent) ; Stout v. Rider, 12 Hun, 574. And even if a sole trustee, or all of several trustees, should make a usurious loan of funds known to the borrower to be trust funds, and there is no agreement as to the usurious payment with the beneficiary, the result is the same. Fellows v. Longyor, 91 N". Y. 324. And the words " trustee," " executor," " guard- ian," etc., in the securities given, show that the borrower had notice of the rights of the beneficiaries, and the nature of the fund loaned. Pendleton v. fay, 2 Pai. 202 ; Budd v. Munroe, 18 Hun, 316 ; Duncan v. Jaudon, 15 Wall. 165 ; Swan v. 'Produce Bank, 24 Hun, 277 ; Gerard v. McCormick, 130 N. Y. 261 (267) ; Fellows v. Longyor, 91 N. Y. 324 (331) and cases ACTS OF CO-TRUSTEES. 203 there cited. And if one trustee assents to a loan from the estate to a co-trustee, on a mortgage, which provides for a rate of interest allowed by law at the execution thereof, but exceeding the legal rate subsequently established by law, he may be held liable to the extent of the agreed rate, for failure to collect the interest, although if the application were based on his misconduct in as- senting at all to a loan to a co-trustee, it seems that he would not be held liable for more than legal interest. Matter of Ruther- ford, 5 Dem. 499 (507). As to usury taken by an agent, see ante, 247, 281. 284. Trustees as defendants. An action in equity based on a breach of trust will lie against a trustee and the represen- tatives of a co-trustee who has died since the breach charged, as joint defendants. Sortore v. Scott, 6 Lans. 271 (276). And such an action, brought against a surviving trustee only, is defec- tive for lack of parties, if defendant, though responsible to the plaintiff for the wrongful act of the deceased trustee, is entitled to any remedy over against the representatives of the latter, or if, as trustee, he is entitled to recover from such representatives for the benefit of the estate. Sherman v. Parish, 53 K. Y. 483. Compare Gilchrist v. Stevenson, 9 Barb. R. 9 (16). 285. Liability for taxes. Where one trustee had sole cus- tody and control of personal property, the co-trustee was not tax- able, under 1 R. S. 389, merely because he too had title. Peo- ple ex rel. Caswell v. CommSr of Taxes, 17 Hun, 293. See ante, 164 ; People ex rel. Campbell v. CommSrs of Taxes, 38 Hun, 536. Compare the provisions of the Tax Law (L. 1896, Chap. 908), 8, 32. 286. Admissions of Trustee, as to his wrongful acts, if made so as to constitute a part of the res gestce, may, it has been said, be admitted in evidence in favor of the co- trustee, against the beneficiary, in a suit in equity for an accounting. Wright v. Dugan, 15 Abb. N. C. 107 (121) ; compare Elwood v. Deifen- dorf, 5 Barb. R. 398 (407) ; Finnem v. Hinz, 38 Hun, 465. 287. Suit by one. Where there is pressing need to bring suit, on behalf of the estate, as, to enforce a lien, and one or 204 THE TEUSTEE. more of the trustees will not join, the other or others may bring the suit. Bockes v. Hathorn, 78 N. Y. 222 (226) ; and in such a case, the sole plaintiff may throughout act independently, even in taking an appeal, without renewing his request to the others to join. Id. As to his right to appeal alone, if the others had joined with him as plaintiffs, but refuse to join in appealing, gucere. Id., pp. 225-226. 288. Default of one. If one trustee is served with original process and fails to appear, and the cause, after appeal, is re- mitted for farther hearing, he cannot then relitigate a question affecting the estate and already finally decided against his co- trustee on the appeal. Clayton v. Wardell, 2 Bradf. 1 (5-7). 289. Trustee suing Co-trustee. One trustee may sue an- other to prevent a wasting of the estate. Bockes v. Hathorn, 78 K Y. 222 (226) ; Wurts v. Jenkins, 11 Barb. R. 546. As to the exclusive jurisdiction in equity to entertain a suit by one trustee against another to recover an indebtedness of the latter to the trust estate, see the cases relating to co-executors. Rogers v. Rogers, 75 Hun, 133 ; McGregor v. McGregor, 35 N. Y. 218 ; Smith v. Lawrence, 11 Pai. Ch. 206 ; Decker da Tyson v. Mil- ler, 2 Pai. Ch. 150 ; Wurts v. Jenkins, 11 Barb. E. 546. 290. Agreement that one shall control. The question of whether an agreement between trustees that one of them shall retain control is unlawful, is referred to, but not passed on, in Corn v. Corn, 4 Dem. 394 (398). It is clear that as against the beneficiary the agreement itself could have no binding effect to relieve either from a liability which would otherwise exist. Hayes v. Pratt, 147 U. S. 557. 291. Security by insolvent. In cases where one of several testamentary trustees might be required by the surrogate to give security for faithful performance of duty, on the ground of in- solvency, he cannot be relieved from doing so by showing that a co-trustee is solvent and responsible. Matter of Sears, 5 Dem. 497. 292. Right to retain counsel. As a general proposition, COSTS AND SECURITY. 205 one of several trustees has as much right as the others to retain counsel to represent the estate in litigation ; and if one does so, it is generally inappropriate for the others to retain other coun- sel in the same work, arid the charges of the latter will not be al- lowed on accounting. But there are exceptions to this rule. Matter of Delaplaine, 19 Abb. N. 0. 413 (420), aff'd 45 Hun, 225 ; Matter of Delaplaine, 1 Con. 1 ; Matter of Weeks, 5 Dem. 194. Costs and Security. 293. Costs in actions. " In an action, brought by or against an executor or administrator, in his representative capacity, or the trustee of an express trust, or a person expressly authorized by statute to sue or to be sued, costs must be awarded, as in an action by or against a person, prosecuting or defending in his own right, except as otherwise prescribed in sections one thou- sand eight hundred and thirty-five and one thousand eight hun- dred and thirty-six of this act ; but they are exclusively charge- able upon, and collectible from the estate, fund, or person repre- sented, unless the court directs them to be paid, by the party personally, for mismanagement or bad faith in the prosecution or defence of the action." Code C. P., 3246. The 1835, 1836, above referred to, relate to actions against executors and administrators in their representative capacity. For the general rule regulating costs in special proceedings, see post, 294. Where a trustee's action for construction of the trust instru- ment is frivolous, or in bad faith, Powell v. Demming, 22 Hun, 235, or baseless and unnecessary because the questions are pend- ing before another court having jurisdiction, Garlock v. Vande- vort, 128 N". Y. 374 (379), or is intended to delay payment to per- sons clearly entitled, Sm^th^ T . Rockefeller, 3 Hun, 295, costs may be imposed on him personally. So where, pending a suit brought by him as trustee, he voluntarily disburses trust funds, and thus leaves the estate without means to pay a judgment for costs, it has been held that he may be charged with them personally. Butler v. B. & A. R. R. Co., 21 Hun, 99. But in a similar case, where a trustee claimed the amount sued for by plaintiff, and was by interpleader made defendant, and judgment for costs was finally entered against him as trustee, and it appeared that 206 THE TRUSTEE. pending the suit he had voluntarily disbursed the funds, a mo- tion to charge him personally was denied, and the case last cited was criticised and not followed, on the ground that such an act does not show " mismanagement or bad faith in the prosecution or defence of the action." Jack v. Robie, 48 Hun, 181. A trustee is personally chargeable with costs where he brings a suit concerning a subject-matter with which he has no concern. Dill v. Wisner, 23 Hun, 123 (see on appeal, 88 N. Y. 153). So, where he prosecutes an unsuccessful appeal to relieve him- self of personal liability, Pittman v. Johnson, 35 Hun, 38 (42), aff'd 102 ~N. Y. 742 ; or takes an appeal without merits, Matter of McCarter, 94 N". Y. 558 (562). For other illustrations, see Matter of Schneider, 1 App. Div. 39. And where he might sue individually, the fact that he does sue in a representative capacity does not relieve hitn of personal liability. Bedell v. Barnes, 29 Hun, 589 ; BucTdand v. Gallup, 105 K Y. 453 ; Bostwick v. Brown, 15 Hun, 308 ; Holdrige v. Scott, 1 Lans. 303. Where he must sue as trustee the statute applies. Hone v. JJePeyster, 106 N. Y. 645. In such a case, and where costs are to be charged personally, a special direction by the court to that effect is required, and a mere dismissal of the complaint, upon the plaintiff trustee's failure to appear, does not carry with it such a legal implication of mismanagement or bad faith as will charge him personally with costs. And to secure an order so charging him, there should be a specific application, on notice, in order to allow him to repel the charge of mismanagement or bad faith. SLocum v. Barry, 38 N". Y. 46. If a trustee sues as such, and is defeated, and there is no direc- tion charging him personally with costs, defendant may not enter judgment and issue execution against him personally for the costs. Plaintiff is only liable to the extent of the trust fund. Alger v. Conger, 17 Hun, 45, aff'd 79 K Y. 633. Where the question is whether a trustee is liable as such, or personally, for costs, the judgment to that effect is final unless subsequently re- versed or set aside by a direct proceeding for that purpose, and it cannot be attacked collaterally, as by a petition to charge the costs otherwise than as directed in the judgment. Hone v. DePeyster, 106 N. Y. 645. The case of Slocum v. Barry, 38 N. Y. 46, is not inconsistent with this principle, for there the COSTS AND SECURITY. 207 trustee failed to appear at the trial " and judgment was entered on default, without a trial, hearing or investigation on the merits. The court consequently was not and could not be possessed of the facts upon which the claim of mismanagement or bad faith was founded, and under these circumstances the court was of the opinion that a motion was necessary. This is not disputed in the case of Hone v. DePeyster, 106 N. Y. 645, where there was a trial. " That case merely holds that it was the duty of the trial court [where a trial takes place] to determine the question." Jack v. Robie, 48 Hun, 181. See Weekes v. Garvey, 4 N. Y. Supp. 891. The question of charging the trustee as such, or personally, with costs, may be reviewed by the Appellate Divi- sion, but with its discretion, in an equitable action, the Court of Appeals will not, as a rule, interfere. Dill v. Wisner, 88 K. Y. 153 (162) ; Herrington v. Robertson, 71 N. Y. 280 (284). Com- pare Brundage v. Brundage, 60 N. Y. 544 (552). The foregoing authorities relate to the question of whether the charge of costs is to be against the trustee personally or as trus- tee. But this differs from the question whether, on his account- ing as trustee he shall be allowed to credit himself with such pay- ment as against the estate. As between the parties to the action, the judgment is conclusive according to the authorities above cited. " But that principle decided nothing in regard to this as- signee's liability to those for whom he is trustee. They were not parties to the judgment against him, and are not bound by its terms." They had no opportunity to show that he was per- sonally liable, and, if the estate was solvent, the adverse party in the action was not interested to do so. " But now the persons interested in the estate are heard for the first time. They have a right to charge that the assignee was guilty of misconduct." Matter of felt <& Bell, 52 Hun, 60 ; Tucker v. McDermott, 2 Redf. 312. So conversely it has been held that if, in a suit brought against a trustee individually, on a personal contract made by him for the benefit of the estate, but where he was liable only individually because he had not by special contract charged the estate, judgment for costs is entered against him in- dividually, he may on his accounting credit himself with the payment, provided it is not then shown affirmatively that he showed mismanagement or bad faith. Matter of Grout, 15 208 THE TEUSTEE. Hun, 361. Where costs are allowed to a trustee, who appears personally, to be paid by the adverse party, he is entitled to re- tain them ; so, if he retains an attorney, the costs allowed to him belong to the attorney, as at least a part of his compensation, and it is said that if he chooses to give part of them to the trustee he may do so ; the circumstance is suspicious, but in the absence of facts showing that the trustee had employed an incompetent at- torney, to enable him to effect such an arrangement, or had other- wise prejudiced the interests of the estate to forward his own, the beneficiaries cannot object. The costs have not come out of their pockets. Clute v. Gould, 28 Hun, 348. It would seem, however, that such a transaction ought to put the trustee to his proof to remove the suspicion. If costs are ordered paid from a fund in the hands of a trus- tee, only part of which belongs to the trust, the trust fund is only to be charged with its proportionate share. McKee v. Weeden, 1 App. Div. 583. 294. Costs Special proceedings. " Costs in a special proceeding, instituted in a court of record, or upon an appeal in a special proceeding, taken to a court of record, where the costs thereof are not specially regulated in this act, may be awarded to any party, in the discretion of the court, at the rate allowed for similar services, in an action brought in the same court, or an appeal from a judgment taken to the same court, and in like manner." CodeC. P., 3240. Extra allowances are made in actions only not in special pro- ceedings. But where in a special proceeding a trustee is a party, the court has inherent right to allow his expenses including coun- sel fees, though not " as costs," but not the counsel fees or other expenses of other parties. A guardian representing infants hav- ing only a contingent or reversionary interest in the fund, cannot be allowed even any of his expenses, in a special proceeding. Matter of Holden, 126 K Y. 589. In the Chapter on Surro- gates' Courts, the Code provides ( 255T) that " except where special provision is otherwise made by law, costs, awarded by a decree, may be made payable by the party personally, or out of the estate, or fund, as justice requires; ..." Under this sec- tion, the principle regulating a review by the Appellate Division COSTS AND SECURITY. 209 of a decision below, in respect to its effect in charging a trustee as such or personally with costs, does not apply. The subject is, under 2557 of the Code, left to the discretion of the surrogate, and his decision cannot be reversed even by the Appellate Divi- sion, except for abuse of discretion. Matter of Selleck, 111 K Y. 284 (290) ; Matter of Marvin, 11 Abb. Pr. (K S.) 97, 101. The costs on appeal are determined by the Appellate Court. Lawrence v. Lindsey, 70 K. Y. 566.' 295. Security for Costs. " In an action brought by or against an executor or administrator, in his representative capac- ity, or the trustee of an express trust, . . . the court may, in its discretion, require the plaintiff to give security for costs." Code C. P., 3271. This section just quoted, and 3246, quot- ed ante, 293, are entirely independent. Section 3246 relates to the awarding and enforcement of the payment of costs, and 3271 to security for costs. The two are not to be construed together. On an application under 3271 to require plaintiff, a trustee, to give security for costs, the fact that he could not, under 3246, and on the facts shown, be personally charged with costs, lias no bearing. Even though not personally chargeable, it may be proper for him, as plaintiff, to give security. Decisions to the contrary are overruled. Tolman v. /S. B. <& N. Y. R. R. Co., 92 N". Y. 353. In suits by or against an executor, it has been held that this section only applies where he was an original party, and not to cases where he later became a party in a suit revived after the death of his testator. Sullivan v. Remington S. M. Co., 27 Hun, 270. But even in such a case, the court has, apart from the statute, inherent power to require security for costs, e.g., as a condition of allowing an action to be continued against the executor of the original defendant. Knock v. Funke, 28 Abb. 1 As to costs in the Surrogate's Court, see (1) when a matter of right, Code C. P., 2558 ; (2) as to amount, Code C. P., 2559, 2561 ; (3) allowance on accounting for counsel fees, etc.. Code C. P., 2562 ; (4) costs on proceeding to compel trustee to renew bond, Code C. P., 2599 ; (5) costs on appeal, Code C. P., 2558, 2560, 2589, 3240 ; (6) 3228-3279 relating to awarding and enforcing payment of costs, fixing the amount of costs, and security for costs, apply only to actions in the Supreme Court, City Court of N. Y. and the County Courts, and not to proceedings in the Surrogates' Courts, Code C. P., 3347, subd. 13. 14 210 THE TRUSTEE. N. C. 240. In determining whether to order security or not, the court takes into account the circumstances of the given case, Bennett v. Goble, 43 Hun, 354 ; Fessenden v. Blanchard, 48 Hun, 350 ; Gifford v. Rising, 48 Hun, 128 (130) ; Fagan v. Strong, 19 Civ. Pro. R. 88 ; Caccavo v. R. W. & 0. R. Co., 59 Super. Ct. 129, and will not exercise its discretion against a trustee unless there are reasonable grounds therefor, and it is not usual for an appellate court to interfere with a refusal to exercise the discretionary power. Fessenden v. Blanchard, 48 Hun, 350 ; Schmidt v. Eiseman, 26 N. T. Supp. 766. Under 3268 and 3269, security for costs may be demanded from a non-resi- dent plaintiff. A non-resident trustee might be compelled to give security for costs, under these sections, although the court might not require it under 3271. See Gifford v. Rising, 48 Hun, 128 ; McDougal v. Gray, 15 Civ. Proc. R. 237. Security may, under 3271, be required after judgment against the plain- tiff trustee has been entered and he has appealed. Gifford v. Rising, 48 Hun, 128. If defendant has been guilty of laches in not applying before judgment entered, it does not necessarily estop him from having security for costs of the appeal. Id. But if the delay is excusable, the court may even at that point in the pro- ceedings require security for costs already accrued as well as for costs of the appeal. Wood v. Blodgett, 49 Hun, 64 (66). Under the sections relating to non-resident plaintiffs, the right to secu- rity being absolute, no notice of application for the order need be given, except that, in case of delay, and where, accordingly, the requirement of security, so far as relates to the costs before final judgment, is discretionary, plaintiff is entitled to notice. Id. Hut under 3271, relating to trustees, where the granting of an order is always discretionary, notice is required in all cases. Id. / Swift v. Wheeler, 46 Hun, 580. It is also to be noticed that under 3271, application must be made to the court, while in other cases the order may be made by the court or by a judge. Code, 3272 ; Wood v. Blodgett, 49 Hun, 64 (66). 296. Security on appeal. " Where an appeal is taken, as prescribed in title second [Appeal to the Court of Appeals] or fourth [Appeal to Appellate Division] of this chapter, the court, in or from which the appeal is taken ; or, where an appeal is WHERE THE TRUST IS VOID. 211 taken as prescribed in title third [Appeal to the Supreme Court from an inferior court] or fifth [Appeal from a final determina- tion in a special proceeding] of this chapter, the court, to which the appeal is taken ; may, in its discretion, make an order, upon notice to the respondent, dispensing with or limiting the security, required to stay the execution of the judgment or order appealed from, as follows : " 1. Where the appellant is an executor, ad- ministrator, trustee, or other person acting in another's right, the security may be dispensed with or limited, in the discretion of the court." CodeC. P., 1312. This section does riot apply to the security to perfect the appeal, which must be given on ap- peal to the Court of Appeals, Code C. P., 1326, and cannot be dispensed with. Architectural Iron Works v. City of Brook- lyn, 85 N. Y. 652. And on other appeals, no security for costs is required, to perfect them. Code C. P., 1343, 1351, 1360. If, however, the trustee, instead of seeking to have the security dispensed with or limited, gives security and is defeated on ap- peal, the lack of assets in the estate will not avail as a defence to an action on the undertaking, which must be paid by those execut- ing it, whether the trust fund suffices or not. Yates v. Burcli, 87 N. Y. 409. And in order to secure relief from giving secu- rity, the applicant must show that he is protecting another's right. If in reality he is acting to subserve his personal inter- ests, he must give security. Butler v. Jarvis, 117 N. Y. 115. A trustee's lack of assets would be a good ground for limitation of security, in a proper case. Mills v. Forbes, 12 How. Pr. 466. As to the proper court to which to apply, under 1312, see Hills v. Peekskill Savings Bank, 95 N. Y. 675. The mere pendency of an appeal by a trustee does not stay execu- tion, if he has neither given security nor procured an order dis- pensing with it. Matter of Morey, 6 Dem. 287. The Code provisions affecting security for costs in actions apply to special proceedings. Code C. P., 3279. But not in Surrogates' Courts, Code C. P., 3347, subd. 13. Where the Trust is Void. 297. General principles. If an attempt is made to create a trust, and it is afterward held void, the question is presented how far the tnistee is liable for his acts in distributing corpus or 212 THE TRUSTEE. income, or doing other acts, called for by the trust instrument. Although not apparently referred to by the courts, it is obvious that there is a sweeping distinction between the cases where the creator of the trust was competent to transfer the property to the trustee, and, when the question of liability arises, is still living, and no other rights of subsequent purchasers from him, or of his creditors, have arisen ; and cases where he was not competent, or where his creditors or subsequent purchasers have acquired right to or against the property, or where the trust was created by will, or if by deed where he has died, and where accordingly his heirs, next of kin, or residuary devisees or legatees are en- titled to the property in case the trust is invalid. As to the first class, it must be clear that the creator of the trust himself could not personally seek to charge the trustee with acts which he had directed him to do, even though the title had never vested in the trustee under a valid trust. But where other persons raise the question of liability on the theory that, the trust being void, the property is theirs, or that they have rights in it, or it is raised by or on behalf of the person who attempted to create it, on the theory of his incompetency, or of fraud, duress, or undue influ- ence, the question presented is quite different. " Upon the accounting of the trustees after the trust had been declared void, it would seem to be rather a startling proposition that they were to be indemnified for all payments made in good faith before such declaration. ... It would seem generally as if a trustee acted, in carrying out the trust, at the peril of being able to maintain its validity when called upon. Trustees are favorites with courts of equity, and for that very reason they can at all times apply to the court to be informed as to their duty, or as to the validity of the trust which they have undertaken to carry out. Having this right, where their title to the funds depends upon the validity of the trust, as evidenced upon the face of the instrument, it is not too much to say to a trustee under such circumstances, if there be the least possible doubt of the validity of your title, bring the parties who might be inter- ested in that question into court, and there have a judicial deter- mination of its validity, and that determination will be a perfect protection for all your acts. If a trustee in a case involving any doubt chooses to go on and carry out the provisions of the trust, WHERE THE TRUST IS VOID. 213 he has but himself to blame in case of disaster." O* Conner v. Gifford, 117 N. Y. 275 (281-282), explaining Hawley v. James, 16 Wend. 60. Compare Carter v. Board of Education, 68 Hun, 435 (439), aflfd 144 N. Y. 621. And even where the in- validity of the trust depends on extrinsic facts, e.g., mental in- capacity of the creator of the trust, or duress or fraud in procur- ing its execution, it would appear that the same liability would exist, in the absence of a determination by the court. But where a judgment directs payments, and they are made accordingly, the fact that in a subsequent action the provision relating to them is held void does not render the trustees liable. Shipman v. Rol- lins, 98 N. Y. 311 (331). In Leavitt v. Totes, 4 Edw. Ch. 134 (205), the court held, that the trust being void, as being con- trary to law, the trustees had no claim to salary or compensation though allowed by the terms of the deed. But it was held that whatever money had been expended in the keeping and preserva- tion of the property or in the management of it with a view to its safety, while the title was in dispute, including reasonable clerk hire, the keeping of accounts and the expense of employ- ing agents to look after the property when necessary, should be paid out of the property, and be allowed to the trustees under the head of just allowances. Also Colburn v. Morton, 1 Abb. Ct. App. Dec. 378 (389) ; Loos v. Wilkinson, 113 N. Y. 485 ; and see Hardt v. Levy, 79 Hun, 348. Compare McSorley v. McSorley's Ex*rs, 4 Sandf. Ch. 414 ; Howland v. HecJcscher, 3 Sandf. Ch. 519. For a collection and review of authorities on this general subject, see Bishop on Insolvent Debtors, pp. 349 et seq. General Assignments. There are cases in which a trustee is protected for acts done in good faith under an instrument creat- ing the trust, and before such instrument has been declared in- valid ; for example, an assignee under a general assignment for the benefit of creditors ; for in such case, if the assignee pays money to bonafide creditors of the assignor, in accordance with the terms of the assignment, he will be protected, provided he does it in good faith and before any other creditor has obtained a lien upon the money ; all that can be said is, if the assignment be declared void, that the assignor paid certain of his creditors, in- directly, and through the agency of the assignee, at a time when, 214 THE TRUSTEE. but for the assignment, he had the right to do it directly. Nat. B. & D. Bank v. HubMl, 117 N. Y. 384 (397) and cases there cited ; Wilson v. Marion, 147 N. Y. 589 ; Pond v. Comstock, 20 Hun, 492, afFd 87 N. Y. 627 ; Knower v. C. N. Bank, 124 N. Y. 552 ; McLean v. Prentice, 34 Hun, 504. For a discus- sion of this principle, see Carter v. Board of Education, 68 Hun, 435 (439), aff'd 144 N. Y. 621. See on this general subject, Bishop on Insolvent Debtors, pp. 34:9etseq. But if the property in question belonged not to the assignor but to a third party, the assignee is not protected as to payments thereof made by him in good faith without notice. His good faith cannot divest the real owner's title. Nat. B. & D. Bank v. Hubbell, 117 N. Y. 384 (397). In Smith v. Dresser, 35 Beav. 378 ; L. R. (1 Eq. Cas.) 651, the invalidity consisted in the fact that though on the face of the deed it was alleged that the necessary three fourths of the creditors had consented, in reality, as investigation would have revealed, such was not the fact, and the trustee was not allowed to retain the costs and expenses he had incurred in good faith prior to the commencement of the action. This case is cited with apparent approval in O 1 Conner v. Gifford, 117 N. Y. 275 (282), and attention is there called to the fact that the trust deed was not void on its face. The point was, however, not passed upon. See Leavitt v. Yates, 4 Edw. Ch. 134 (215). In Wilson v. Marion, 147 N. Y. 589, it was held that though a general assignment be void on its face, a purchaser from the as- signee at public sale is not necessarily chargeable with notice. 298. Bona fide purchaser. Where a deed of land is pro- cured by fraud, a subsequent purchaser from the fraudulent grantee, in good faith and without actual or constructive notice takes a good title as against the original grantor. Holland v. Brown, 140 N. Y. 344 ; Murphy v. Briggs, 89 N. Y. 446. 299. Void power. Bona fide purchaser. In certain cases the law may actually annul and render void a power contained in a will, regular on its face, and only impeachable by proof of extrinsic facts making the statute applicable. In such a case, the power being void, even a bona fide purchaser for value cannot acquire a good title from the donee ; e.g., where after execution THE TRUSTEE'S RIGHTS. 215 of a will containing a power of sale, a child was born to testator, under circumstances such as to give the entire estate to the child, but the donee of the power sells to a bona fide purchaser, the child's rights are not diminished. But if the purchaser has paid off an incumbrance, he retains a lien for the amount so paid. Smith v. Robertson, 89 N. Y. 555. See end of 524. 300. Estoppel. Parties may be estopped by acquiescence or neglect, from objecting to payments made by a trustee under a void trust. 0" Conner v. Gifford, 117 N. Y. 275 (283, 284) ; Matter of O'Brien, 45 Hun, 284 (290). Even though a trust may be admittedly void, yet advantage can be taken of the fact only by parties interested in some capacity in the property, and then only by the proper procedure and at the proper time. Thus laches may bar a creditor's right to attack an executor's dis- posal of the estate according to the terms of a void trust. 0' Con- ner v. Gifford, 117 N. Y. 275 (284). (7) The Trustee's Rights, (a) Commissions. 301. Historical. The office of trustee, as well as that of executor and administrator, was originally deemed purely hon- orary, and no compensation by way of commissions was allowed. Such was held to be the settled law of New York, in 1815, by Chancellor Kent, in Manning v. Manning, 1 Johns. Ch. 527 (534). In 1817 the Legislature passed an Act allowing the Court of Chancery, on the settlement of the accounts of guardians, executors and administrators, to make a reasonable allowance to them for their services over and above their expenses. (L. 1817, chap. 251.) The court thereupon adopted a rule tixing the per- centages to be allowed. (3 Johns. Ch. 630.) With the changes effected by the revision, it became necessary, or was deemed de- sirable, to make this principle specifically applicable to the surro- gates. Accordingly, L. 1828, 2J Meeting, ch. 21, par. 240, repealed the Act of 1817, ch. 251, the repeal to take effect De- cember 31st, 1829 ; while by 2 R. S. 93, 58, which took effect January 1st, 1830 (now 2730 of the Code), corresponding pro- vision was made for the allowance by surrogates, of commissions to executors and administrators, in terms following substantially 216 THE TRUSTEE. the former Chancery rule. It will thus be seen that the power was given by statute to the Court of Chancery, in 1817 ; and that this statute was replaced, January 1st, 1830, by an Act confer- ring it upon the surrogates ; and that both these statutes, so far as their express terms went, omitted specific mention of trus- tees. The next step came in 1842, when Chancellor Wai worth (Meacham v. ISternes, 9 Pai. 398) held that Chancery, proceed- ing on the analogy of the law affecting executors and adminis- trators in Surrogates' Courts, should allow to trustees of express trusts the same fixed compensation for services by way of com- missions. And such has since continued to be the rule. Pho&- nix v. Livingston, 101 N". Y. 451 (450) ; Matter of Schell, 53 N. Y. 263 (266). At that time the Court of Chancery still re- tained exclusive control over all trustees. But by L. 1850, ch. 272, surrogates were given jurisdiction over the accountings of that class of trustees known as " testamentary trustees." And L. 1866, ch. 115, provided that on such accounting the surro- gates should allow the same compensation for services by way of commission as was allowed by law to executors and administra- tors. The Laws of 1880, ch. 245, 1, subd. 2 (3), and Id. 2, repealed 2 R. S. 94, 66, with its amendments, including L. 1850, ch. 272, and L. 1866, ch. 115, but provisions relating to testamentary trustees are now found in chap. 18, Title VI., of the Code. Specific statutory provisions for allowance of com- missions to testamentary trustees, however, appear to have been omitted from the time of the repeal in 1880, until they were in- serted in 1885 by amendment to 2802 of the Code. Even now it might seem doubtful whether the statutory provisions specifically coverall contingencies, but this consideration is of no importance, inasmuch as it has been uniformly held that the surrogates have implied authority by analogy, like the Supreme Court, to allow the same commissions to testamentary trustees as are allowed by law to executors and administrators. The analogy is broken, by three specific statutory provisions relating respectively to general assignments for the benefit of creditors, to trustees of insolvent debtors, and to " deeds or trusts" to sell real or personal prop- erty for the benefit of creditors. See post, 324. For a full discussion and statement of the law, see Matter of ffoosevelt, 5 Kedf. 601 ; cited and fully approved by the Court of Appeals, COMMISSIONS. 217 in Laytin v. Davidson, 95 N. Y. 263 (267) ; also, Matter of Mason, 98 N". Y. 527 (534, et seq.) ; HurTburt v. Durant, 88 N. Y. 121 ; Johnson v. Lawrence, 95 N. Y. 154. 302. The present statutes. " On the settlement of the account of an executor or administrator, the surrogate must allow to him for his services, and if there be more than one, apportion among them according to the services rendered by them respec- tively, over and above his or their expenses : For receiving and paying out all sums of money not exceeding one thousand dol- lars, at the rate oi five per centum. For receiving and paying out any additional sums not amounting to more than ten thou- sand dollars, at the rate of two and one half per centum. For all sums above eleven thousand dollars, at the rate of one per centum. In all cases such allowance must be made for their necessary ex- penses actually paid by them as appears just and reasonable. If the value of the personal property of the decedent amounts to one hundred thousand dollars or more, over all his debts, each executor or administrator is entitled to the full compensation on principal and income allowed herein to a sole executor or admin- istrator, unless there are more than three, in which case the com- pensation to which three would be entitled must be apportioned among them according to the services rendered by them respec- tively, and a like apportionment shall be made in all cases where there shall be more than one executor or administrator. Where the will provides a specific compensation to an executor or ad- ministrator, he is not entitled to any allowance for his services, unless by a written instrument filed with the surrogate, he re- nounces the specific compensation. Where successive or differ- ent letters are issued to the same person on the estate of the same decedent, including a case where letters testamentary, or letters of general administration, are issued to a person who has been previously appointed a temporary administrator, he is en- titled to compensation in one capacity only, at his election, ex- cept that where he has received compensation in one capacity he is entitled to the excess, if any, of the compensation allowed by law, above the sum which he has already received in the other capacity." Code C. P., 2730. Code C. P., 2802, relating to the annual accounts of a testa- 218 THE TRUSTEE. mentary trustee, provides that " the surrogate before whom such accounting may be had shall allow to the trustee or trustees the same compensation for his or their services, by way of commis- sion, as are allowed by law to executors and administrators, be- sides their just and reasonable expenses therein ; and also the additional allowance provided for in section twenty-five hundred and sixty-two of this act." As to trusts for creditors, see post, 324. Provision for commissions may be covered by Code C. P. , 2810, relating to accounting of a testamentary trustee, " when one year has expired since the probate of the will, or when the trusts, or one or more distinct and separate trusts, created by the will, have been, or are ready to be, fully executed." As to the meaning of the uncorrected section references found in 2810, 2811, see ante, 224, 229. Trustees are not required to part with the fund on which commissions are chargeable, until the latter are paid. Wheelwright v. Wheelwright, 2 Redf. 501 ; Matter of Aymar, 5 Dem. 428. But commissions must be ap- plied in liquidation of a debt of a trustee to the estate, free- man v. Freeman, 4 Redf. 211 (215) ; and in liquidation of claims against the trustee for losses resulting from negligence, etc., Ward v. Ford, 4 Redf. 34 (39). 303. On what allowed In general. Trustees are entitled to commissions for receiving and paying out all moneys which constitute the corpus of the estate, and any additions thereto from increase of any kind, and thus the receipts upon which com- missions are to be computed can never exceed the gross amount of the estate and its actual income ; and the moneys paid out upon which commissions may be computed are the moneys paid out of the estate for debts, expenses of administration and to legatees or other beneficiaries, which appear to diminish the estate as it exists in the hands of the trustees and pass out of and away from the estate. Where there are distinct trusts under the same in- strument, commissions may be computed on each separately, even though no actual separation of funds, into distinct lots, has been in fact effected. Clute v. Gould, 28 Hun, 348 (see 4 State Rep. 708) ; Foote v. Bruggerhof, 66 Hun, 406 (420). But in. any given trust, they are computed on the amount received or paid out by all the trustees, and not on the sums received and COMMISSIONS. 219 paid out by each. Brush v. Smith, 1 Dem. 477 (479). The allowance of commissions may be denied on the ground of gross negligence or other misconduct of the trustee. Cook v. Lowry, 95 N. Y. 103 (114) ; Matter of Matthewson, 8 App. Div. 8 ; Clapp v. Clapp, 49 Hun, 195 ; Morgan v. Morgan, 4 Dem. 353 ; Zager v. Roberts, 2 Redf. 247 ; Gillespie v. Brooks, 2 Redf. 349 (368). If a trustee does not act, he cannot have commissions. Walke v. Hitchcock, 5 Redf. 217 ; Matter of Manice, 31 Hun, 119. But see Matter of Dunkel, 5 Dem. 188 (192). But the right to commissions is not lost by keeping the accounts in a confused condition leading to expense in putting them in proper shape. Hill v. Nelson, 1 Dem. 357 (364). Com- missions are to be computed as of date of settling, not the date of tiling, the account, and according to the law then in force. Naylor v. Gale, 73 Hun, 53 ; Savage v. Sherman, 87 N. Y. 277 (283), approving the disposition below, 24 Hun, 307 ; Haskin v. Teller, 3 Redf/316. Compare 319, post. 304. On annual income. Commissions are allowed on an- nual income, when the trustee is required to keep funds invest- ed, and to receive and pay out the income annually ; if he does receive it, and renders an account thereof to the beneficiary, and pays over the net balance. Matter of Mason, 98 N. Y. 527 (535) ; Hancox v. Meeker. 95 N". Y. 528 (538, et seq.) ; Matter of Allen, 96 N. Y. 327. So where he renders annual accounts to the court, or where he is required or permitted to state his ac- count with annual rests. Id. ; Morgan v. Hannas, 13 Abb. Pr. (N. S.) 361 ; Matter of Kellogg, 7 Pai. 265 ; Fisher v. Fisher, 1 Bradf. 335 ; Matter of Meserole, 36 Hun, 298 ; Matter of Goodrich, 35 Hun, 299, note. And in all these cases, commis- sions on income are computed on each occasion at the full rate on the first $1000, 2 per cent for receipts and 2 per cent for payments, etc. ; Matter of Kellogg, 1 Pai. 265 (268) ; Matter of Mason, 98 N. Y. 527. But computations cannot be allowed more frequently than annually. Thus, if a trustee receives, ac- counts to the beneficiary, and pays over, each month, he cannot be allowed each month to subtract five per cent on the first $1000, etc. The total amount of income for the year must be taken as the basis. Matter of Selleck, 111 N. Y. 284 (292, et seq.). 220 THE TRUSTEE. 305- On accumulations. Even annual computations at the full rate might not be allowed if the trustee received income to accumulate, or which he was allowed to accumulate, for several years, and then paid over a gross sum. Matter of 'Mason , 98 N. Y. 527 (536). 306. On land. Where trustees hold land for a designated term, the beneficial remainder being vested in others (or where, it is assumed, practically the same situation exists under a some- what different form where the beneficial fee is granted or devised subject to the estate of the trustees), the trustees are not entitled to commissions except on proceeds realized by actual sale of the land under power conferred on them by the trust instrument. If it is not sold, the trustees cannot be said to have " received and paid out money." Phcenix v. Livingston. 101 N. Y. 451 (456, et *eq.~} ; Matter of Clinton, 16 Misc. 199 ; Matter of McLaren, 6 Misc. 483. A different view of this matter is taken in Matter of Martens, 16 Misc. 245. But property may be real estate in actual fact, but personalty in contemplation of equity, as where land on which trustees hold a mortgage is bid in by them on foreclosure sale ; in such a case it appears that commis- sions may be allowed. Matter of DePeyster, 4 Sandf. Ch. 511 (514) ; Pkanix v. Livingston, 101 N. Y. 451 (457). So no commissions are allowed to executors having a power to allot and partition, which they in fact exercise. Bruce v. Lorillard, 62 Hun, 416 (419). Nor where, land being devised subject to a power of sale, the donees of the power join, from mere caution, and unnecessarily, in deeds of partition among the owners. Mat- ter of Tilden, 44 Hun, 441 (445). But where there was a direc- tion to convert land, and hold in trust, and ultimately pay over the proceeds, and no sales were made, the remaindermen prefer- ring to take it as land, and it was deeded to them and they gave receipts as for cash received, it was held that commissions should be allowed. Smith v. Buchanan, 5 Dem. 169. Where land representing trust and other funds is sold by the trustee, and the other funds are distributed by him, he has no claim on the trust estate for a commission on those other funds. McKee v. Wee- den, 1 App. Div. 583. 307. On incumbrances. Where trustees sell property sub- COMMISSIONS. 221 ject to ineumbrances upon it, they are not entitled to commis- sions upon the amount of the incumbrances. For in that class of cases, the incumbrances themselves do not represent any pay- ment to the trustee, but the purchaser receives the property sub- ject to the incumbrance. 1 But it has been held that where a trustee, in order to effect a sale of incumbered property, binds himself to pay it off and discharge it, and does, in fact, pay off the mortgage, and thereupon receives payment from the purchaser for the total value of the property unincumbered, he is entitled to commissions on this total sum received. Matter of Security L. L c& A. Co., 31 Hun, 36 (39), aff'd 95 N. Y. 654. This rul- ing is apparently based on the view that the situation presented was the same as if the trustee had originally received the prop- erty unincumbered and had sold it for value and then had used a part of the purchase price to pay unsecured debts for which the trust estate was liable. Where a trustee advances money to pay taxes on lands held by him in trust, and afterward reim- burses himself from the proceeds of sale of the same lands, he is not allowed commissions upon the amount thus paid for taxes, for in that case, if commissions were allowed, he w r ould receive double commissions upon the same sums of money passing into his hands, for he would then have commissions upon the original and the final disbursement of the moneys, and also upon their advancement for the payment of taxes and their subsequent reim- bursement out of the proceeds. This differs from the case of an advance to pay off a mortgage and a reimbursement of the ad- vance out of the proceeds of the sale of the land thus freed from incumbrance. For in such case, the trustee receives only one commission on the total amount received in payment for the un- incumbered property, one half for receiving that total, and one half on paying over the proceeds, these proceeds being thus paid out partly to himself as a reimbursement and partly on final dis- position of the balance, in accordance with the terms of the trust. Matter of Security L. I. & A. Co., 31 Hun, 36 (39-40), aff'd 95 N. Y. 654. 308. On securities not sold. In the case of executors, no 1 Matter of Security L. I. & A. Co., 31 Hun, 36, aff'd 95 N. Y. 654 ; contra, Cox v. Schermerhorn, 18 Hun, 16, 222 THE TRUSTEE. commissions are allowed on shares of corporate stock, etc., re- ceived and turned over to legatees under a specific bequest. Schenck v. Dart, 22 N. Y. 420 (424). See Hawley v. Singer, 5 Dem. 82 (84) ; Farquharson v. Nugent, 6 Dem. 296. This case is analogous in some respects to that of a bequest of stock to trustees to hold, and at the end of the trust term to turn over in specie to a legatee. But in Cairns v. Chaubert, 9 Pai. 160, it was held that where an executor, instead of calling in the money upon good and collectible bonds and mortgages, transfers such securities to a third person for the use of the legatees, with their assent, he is entitled to the same commissions as if he had actually received and paid over the money, or invested it as directed by the will. Compare Hawley v. Singer, 5 Dem. 82 (87). This case is to be distinguished from Schenck v. Dart, supra, in that there the assets were specifically bequeathed, while here they were not ; and it is stated by the court in Bruce v. Lorillard, 62 Hun, p. 426, that in the Cairns case the executors had the power, and it would have been their duty, to sell the securities, but for the consent of the parties interested. The Cairns case is like that of a trustee in that the latter would have full power to sell ; but unlike in that it would not generally be his duty to convert good bonds and mortgages into cash. In Matter of De Peyster, 4 Sandf. Ch. 511, it is held that a trustee is entitled to commissions on securities, though he transfer to the beneficiaries the identical ones he originally received ; and this ruling is cited with approval in Matter of Mason, 98 N. Y. 527 (536) ; and referred to in Ogden v. Murray, 39 N. Y. 202 (203) ; see also Matter of Moffat, 24 Hun, 325 ; Matter of Cur- tiss, 15 Misc. 545 (552) ; Me Alpine v. Potter, 126 N. Y. 285 ; Matter of Turfler, 24 N. Y. Supp. 91 ; Matter of Hawley, 104 N. Y. 250. 309. On legacies and annuities. Commissions are provid- ed for before legacies from the '-trust fund are paid ; out of the net surplus then remaining for distribution, legacies payable there- from are to be drawn. Therefore the legacy itself is not to be diminished by subtraction from it of a pro rata share of the com- missions ; though if, after allowing for commissions, the fund remaining for distribution were insufficient to supply the specific COMMISSIONS. 223 sums called for by the will, this result would constitute an in- direct charge of commissions pro Tata on such legacies. Wester- field v. Westerfield, 1 Bradf. 198. The same rule should be ap- plied to annuities that is, where a certain sum named is to be paid annually. Cammann v. Cammann, 2 Dem. 211 (212) ; Whitson v. Whitson, 53 N. Y. 479. In such cases the estate must bear the burden of commissions for receiving and paying out the income. Id. But where the use of a fund, even of specified amount, is left to a beneficiary for life, or the fund is given to trustees to pay over the income for life to a beneficiary, the case is different, and the life beneficiary receives his income less commissions thereon. Whitson v. Whitson, 53 N. Y. 479 ; Cammannv. Cammann, 2 Dem. 211 (212) and cases there cited ; CLute v. Gould, 28 Hun, 348. Compare Petrie v. Petrie, 7 Lans. 90 (96). But, if it is a bequest for life, he may, on giv- ing adequate security, receive it himself, so as to enjoy the in- come free from commissions. Livingston v. Murray, 68 N. Y. 485 (493). 310. On investment and re-investment. It is only on the original receiving and ultimate paying out of corpus or income, that commissions are computed. Thus, the trustee cannot have commissions on a given amount every time he pays it out in re- turn for investment securities, or receives it again on selling those securities, nor on all payments and receipts in the conduct of a business carried on as trustee. In one sense, in such cases, he pays it out and receives it again, but not in the sense intended by the statute. Matter of Ilayden, 54 Hun, 197 (205), (aff'd 125 N. Y. 776) ; Matter of Kellogg, 7 Pai. Ch. 265 ; Beard v. Beard, 140 N. Y. 260 (265), and cases there cited. 311. Commissions on commissions are not allowed ; for example, where commissions are allowed for the services of a de- ceased trustee, and are directed to be paid over by the present trustee, the latter cannot have a commission on the sum thus paid out. Beits v. Beits, 4 Abb. N. C. 317 (438). 312. On losses restored. It has been held, that if the neg- ligence of the trustee results in a loss which he is required to, 224 THE TRUSTEE. and does, make good, commissions may be allowed on such amount, as if it had never been lost. Matter of Mount, 2 Redf . 405. Also on debts due to the trustee, and paid to him from the fund. Id. ; Matter of Carman, 3 Redf. 46 (50) ; Meacham v. Sternes, 9 Fai. Ch. 398. See also Ward v. Ford, 4 Redf. 34 (39). 313- O illegal payments made by the trustee, no commis- sions are allowed. Matter of Hobson, 61 Hun, 504 (aff'd 131 N. Y. 575). 314. Double commissions. Where the same person acts both as executor and as trustee under a will, he may, or may not, receive full commissions in each capacity, according to the appli- cation of the following principles. To entitle the same person to commissions as executor and as trustee, the following ele- ments must exist : (1) The will must provide either in express terms or by fair intendment, for the separation of the two func- tions and duties, one duty to precede the other and to be per- formed before the latter is begun, or substantially so performed ; and must not provide for the co-existence continuously and from the beginning of the two functions and duties. And where the will does so provide for the separate and successive capacities, then that of trustee must also be actually entered upon and the performance of its duties begun, either (2) by a real severance of the trust fund from the general assets, or (3) by a judicial decree which wholly discharges the executor, either in terms or by legal effect, and leaves him acting and liable only as trustee. John- son v. Lawrence, 95 N. Y. 154 (162) ; Laytin v. Davidson, 95 K Y. 263 ; Me Alpine v. Potter, 126 N. Y. 285 ; Hurlburt v. Durant, 88 N. Y. 121 (127) ; Cluff v. Day, 124 N. Y. 195 (203) ; Matter of Crawford, 113 N. Y. 560 (568) ; Matter of WilUts, 112 N. Y. 289 (296) ; Phoenix v. Livingston, 101 N. Y. 451 ; Matter of Mason, 98 N. Y. 527 ; Hall v. Hail, 78 N. Y. 535 ; Drake v. Price, 5 N. Y. 430 ; Matter of Leinkauf, 4 Dem. 1 ; Bacon v. Bacon, 4 Dem. 5 ; Matter of Emerson, 59 Hun, 244 ; Matter of Bdbcock, 52 Hun, 510 ; Matter of Jacknon, 32 Hun, 200 ; Blake v. Blake, 30 Hun, 469 ; Wildey v. Rob- inson, 85 Hun, 362 ; Matter of Beard, 77 Hun, 111 (com- COMiMISSIONS. 225 pare Matter of Hood, 98 N. Y. 363 ; s. c. 104 K Y. 103, as reviewed in Cluff v. Day, 124 N. Y. 195, 201-202). It has been held that where the executor is not, under the foregoing rule, entitled to double commissions, he is entitled, on final accounting as executor, to receive full commissions then, without waiting to complete his duties as trustee. Mann v. Lawrence, 3 Bradf. 424 (426). This appears to be erroneous ; for the very theory on which double commissions in such a case are refused, is that all the duties throughout are to be performed by the executor as such, so that there can be no point prior to the ultimate account- ing at which he can be said to have accounted as executor, and completed his executorial duties. Where the right to double commissions exists, one half of the second full commission may be allowed for "receiving," when the executor duly pays the fund over to himself as trustee, the other half to be allowed when he accounts for it as paid out. Matter of Willets, 112 N. Y. 289 (297). The final sentence of 2730 of the Code (formerly 2738), prohibiting double commissions " where successive or different letters are issued to the same person," does not apply to the case of the same person acting in distinct capacities as executor and as trustee under a will. Hall v. Campbell, 1 Dem. 415 (420), and the cases above cited concerning double commis- sions. 315. On sums of $100,000 or over. 2730 of the Code, allowing full commissions for' each trustee (not exceeding three) where the estate amounts to $100,000 or more, applies only where the sum on which commissions are, on a given occasion, to be computed, amounts to $100,000 or more. Thus, the fact that the principal sum exceeds $100,000, while warranting double or treble commissions for receiving and paying out that princi- pal, does not warrant such allowance for receiving and paying out the income thereof, unless the income itself, on which com- missions are to be computed, amounts to $100,000 or more. Matter of Willets, 112 N. Y. 289 (298). Also McAlpine v. Potter, 126 N. Y. 285 (292). But if the income itself, which is accounted for, does amount to $100,000, full commissions arj3 allowed for each trustee not exceeding three, and whether the income be derived from real or personal property. Matter of 15 226 THE TRUSTEE. Leggatt, 4 Redf. 148. The same provision also lias, as to corn- missions on corpus, no application to a case where there are three trustees, who resign before completing their duties. Matter of Hayden, 54 Hun, 197 (205-206), aff'd 125 N. Y. 776 ; see Welling v. Welling, 3 Dem. 511 ; Matter of Kenworthy, 63 Hun, 165. As to the case where one of two trustees dies during the term, see Matter of Newland, 7 Misc. 728 ; Welling v. Welling, 3 Dem. 511. The question of whether or not an estate is worth $100,000 is, for the purpose of estimating commissions, to be determined by a valuation at the time of the accounting. Mat- ter of Bldktney, 1 Con. 128. The question presents difficulty only where there are securities, not converted into cash. But in such case, no commissions are allowed until they are so convert- ed, or are turned over to those entitled, at a fixed valuation, and it would seem, therefore, that the cash received for them, if cashed, and the actual amounts paid out in cash, or on agreed valuations, should be taken as the basis of computation. And it has been held that property, though not subject to commissions till actually converted, is to be counted in, at its estimated value, in determining whether or not the total estate amounts to $100,000. Matter of Clinton, 16 Misc. 199 ; Matter of McLaren, 6 Misc. 483. The question whether in any case principal and income may be added together to make up the $100,000 is also considered in Matter of Blakeney, 1 Con. 128. As to a' case where, of several executors named, one qualifies, receives full commissions, and dies, and then another qualifies, see Matter of Depew, 6 Dem. 54. 316. When to be taken. The commissions of trustees are to be allowed on the settlement of their accounts, and the gen- eral rule is that they cannot be legally taken before. Beard v. Beard, 140 N. Y. 260 (265) and cases there cited. There are exceptions to this rule. Thus, although the statute indicates no division of the commissions, which should apportion one half to the receiving and the balance to the paying out, the courts have allowed it in proper cases, so as to allow one half, on accounting, though the fund still remains in the trustee's hands. Matter of Kellogg, 1 Pai. Ch. 265 (267-268) ; Matter of Willets, 112 N. Y. 289 (297) ; Matter of Roosevelt, 5 Redf. 601. Another COMMISSIONS. 227 exception exists where the trustees settle with the beneficiaries and pay over the residue or income of the estate. There they may first deduct and retain their commissions without waiting for a judicial settlement of their accounts. Beard v. Beard, 140 N. Y. 260 (265). And also, if the trustees at the time of taking their commissions had actually earned them, and took them acting in good faith and honestly believing that they were entitled to take them, and did not thereby cause any damage or injury to the estate, they cannot be held liable for interest there- on on the sole ground that they took them prematurely. Beard v. Beard, 140 N. Y. 260 (265-266) citing Price v. Holman, 135 N. Y. 124. ' And if the property " received," consists of securi- ties which were received as such by the trustee, and are still in his hands, half commissions, based on estimated value, are not allowed, for such " receiving." When they are converted into money, or turned over to and accepted by the beneficiaries in pay- ment, commissions may then be allowed. Mo Alpine v. Potter, 126 N. Y. 285. Where a trustee pays out the entire income, annually, witho'ut reserving commissions, it has been held that the same may be allowed to him to be subtracted from future income. Oakley v. Oakley, 3 Dem. 140 (144). 317. When assignable. On grounds of public policy an assignment by a trustee, of his commissions, before they are ascer- tained and liquidated in the manner prescribed by law is void. Matter of Worihington, 141 N. Y. 9. But see Matter jvf Hop- kins, 32 Hun, 618 ; aff'd 98 N. Y. 636. 318. Apportionment of commissions, among several ex- ecutors, is provided for in certain instances in 2730 of the Code, and the effect of that provision is illustrated in many cases. Betts v. Beits, 4 Abb. N. 0. 317 (437) ; Matter of Delaplaine, 19 Abb. 1ST. C. 413, aff'd 45 Hun. 225 ; Matter of Harris, 4 Dem. 463 ; Smith v. Buchanan, 5 Dem. 169 ; Matter of Dun- Ttel, 5 Dem. 188. Also cases cited ante, 314, 315. 319. Provision in trust instrument. If the trust instru- ment is silent on the subject of commissions, the foregoing rules 1 With Beard v. Beard, supra, compare Matter of Herrick, 12 N. Y. Supp. 105 (109-110), aff'd as Matter of Smith, 131 N. Y. 239. 228 THE TRUSTEE. apply ; but it may of course provide for an allowance to the trus- tee in addition to commissions, or in lieu of them. Downing v. Marshall, 1 Abb. Ct. App. Dec. 525 (547) ; Waters v. Collins, 3 Dem. 374 ; Secor v. Sentis, 5 Redf. 570 ; Lent v. Howard, 89 N. Y. 169. In such case, see as to election between such provision and legal commissions, 2730 of the Code. Thus, if the will provides for "reasonable compensation," the testator thereby confides the adjustment of a proper allowance, in the given case, to the courts. Matter of Schell, 53 N. Y. 263 (266). For the allowance made under this ruling, see Matter of Schell, 4 Hun, 65. But where, as in a general assignment, extra com- pensation cannot be provided for, a provision for a " just and reasonable" compensation will, in aid of the assignment, be con- strued to refer to legal commissions. Campbell v. Woodworth, 24 N. Y. 304. An agreement by a trustee not to claim commis- sions is binding. Matter of Hopkins, 32 Hun, 618, aff'd 98 N. Y. 636. Compare the remarks of the court in Matter of Worthington, 141 N". Y. 9. After the right to commissions has vested, it cannot be affected by subsequent legislation. Matter of Security L. I. & A. Co., 31 Hun, 36 (38), see 95 N. Y. 654. Compare end of 303, ante. The mere fact that the will gives a legacy to the trustee does not defeat his claim to commis- sions unless it appears that it was intended to be in lieu thereof. Matter of Mason, 98 N. Y. 527 (533) ; Campbell v. Mackie, 1 Dem. 185. If the will allows to a trustee a given percentage on " all moneys collected by him," he is restricted, so far as this clause goes, to " collections" in the popular sense ; it does not cover all " receipts." Ireland v. Corse, 67 N. Y. 343. The term " debts collected" has been held to cover money received from the United States in payment of the principal of govern- ment bonds. Matter of Tilden, 44 Hun, 441 (444). It is pro- vided by 2730 of the Code that " where the will provides a specih'c compensation to an executor or administrator he is not entitled to any allowances for his services, unless by a written instrument filed with the surrogate, he renounces the specific compensation." No time is fixed within which election must be made, nor is there any provision authorizing a retraction, after the instrument is once filed. Matter of Weeks, 5 Dem. 194 (200). But the right to elect may be lost by laches. Arthur v. COMMISSIONS. 229 Nelson, 1 Dem. 337 (347). Though the will provides for extra compensation for the trustee's services, his removal from the office deprives him of the right to that compensation. Wid- mayer v. Widmayer, 76 Hun, 251 (255). On the construction of various testamentary provisions relating to commissions, see Greer v. Greer, 5 Red! 214 ; Matter of Tilden, 44 Hun, 441 (446). If the will expressly provides that no compensation shall be allowed, trustees who choose to act cannot have commissions Secor v. Sentis, 5 Redf. 570 ; Matter of Gerard, 1 Dem. 244. But such a construction of the will, unless perfectly clear, is not favored. Marshall v. Wysong, 3 Dem. 173. 320. " Same Compensation" Meaning. The effect of a statute (or rule) that trustees shall receive the " same compensa- tion" as executors, does not mean that when the same persons are both executors and trustees, they are to receive commissions in both capacities on the same fund at the same time. Hall v. Hall, 78 N. Y. 535. 321. To each trustee. The law permits compensation to each of several trustees who serve to the end of the trust, with out regard to the actual trouble or labor to which they have been put. Matter of Allen, 96 N. Y. 327. Compare Code C. P., 2730. 322. On resigning. Where a trustee resigns, before the end of the trust, he cannot insist on compensation, as of course ; its allowance is discretionary, and if he receives it at all, the fix- ing of the amount by the court, within the statutory limits, con- stitutes one of the terms or conditions of his discharge, and the decision of the court within those limits is not subject to review in the Court of Appeals. Matter of Allen, 96 N. Y. 327. (Com- pare Matter of Hayden, 54 Hun, 197 (204), aff'd 125 N. Y. 776.) Matter of DePeyster, 4 Sandf. Ch. 511 ; Matter of Jones, 4 Sandf. Ch. 615 ; Phillips v. Lockwoocl, 4 Dem. 299. In this connection, the cases last cited should be compared with those elsewhere considered ( 316) laying down the rule that a trustee is not required to wait till he has both " received and paid out" before he can have any commissions, but may be 230 THE TRUSTEE. allowed half for " receiving," and need only wait for the other half until he has "paid out." As to the rule of allowances where there are successive trustees, see Matter of J)epew, 6 Dem. 54. 323. On removal. The fact that a trustee is removed does not necessarily imply moral delinquency ; there are cases, and they are probably not infrequent, where commissions are allowed to a trustee upon removing him. See LyendecJcer v. JE/isemann, 3 Dem. 72. Compare ante, 303. If, after the surrogate has denied an application to remove a trustee, he accounts, and is allowed commissions, and then the surrogate's original decree refusing to remove him is reversed on appeal, the remedy is by appeal from the allowance of commissions, and not by motion. Matter of Humfremlle, 8 App. Div. 312. If a testamentary trustee pays over all the income to the beneficiary, and does not reserve commissions, and is then removed and turns over the trust securities to his successor, the surrogate has no jurisdiction to direct the successor to pay commissions to him. Matter of Bevier, 17 Misc. 486. 324. Trusts for creditors. (a) General assignments. These constitute one class of express trusts, and so far as concerns real estate, they come directly within the terms of subdivision 1 of 76 of the Real Property Law, relating to the first class of express trusts, to sell real property for the benefit of creditors. But the subject of commissions in connection with general as- signments is regulated by a special provision of the Act relating to general assignments, to the effect that the assignee shall re- ceive a commission of 5 per cent, on the whole sum which comes into his hands. Under this provision, it has been held that it refers to money actually received and not to the whole estate covered by the assignment. Matter of Hulburt, 89 N. Y. 259. In so far as the subject of general assignments is regulated by special statutes not applicable to express trusts in general, it is unnecessary to consider it in detail here, as it is fully covered by the discussion in the 3d edition of Bishop on Insolvent Debtors, where the special subject of commissions is treated at pages 351 and 557. (b) Trustees of Insolvent Debtors under Rev. Stat. ALLOWANCE FOR EXPENSES. 231 At page 584 of the same work is a statement of the law regard- ing commissions of trustees of insolvent debtors appointed under the Revised Statutes, who also are entitled to commissions at the rate of 5 per cent, on the whole sum which shall have come into their hands, (c) Deed or trust to sell for creditors. "Any trustee, under a deed or trust to sell real or personal property for the benefit of creditors, shall be entitled to and allowed, upon an accounting hereafter had, the same commissions as an assignee for the benefit of creditors." L. 1896, ch. 249, 1. 3 2 5- Other trustees. As already stated, it is the general rule that trustees are entitled to receive the same compensation as that allowed by law to executors and administrators. It has been dimly suggested in some cases that there might possibly be exceptions to this rule in the case of trustees of express trusts, but no instance of any such exception, other than those covered by the statutes referred to in the preceding section, has been found, and the rule may be considered settled in respect to such trustees unless some very exceptional and extraordinary circum- stances should show that it svould be inequitable to apply it to them. But in regard to other classes of trustees, while the same rule generally applies, there are exceptions in certain cases aris- ing out of the express provisions of particular statutes. On this point the following cases may be consulted. Receiver of Mbnfed Corporation. Receiver of Insolvent Insurance Company. Mat- ter of Security L. I. & A. Co., 31 Hun, 36 ; see 95 N. Y. 654 ; Code of Civil Procedure, 3320 ; Attorney -General v. Guard- ian M. L. I. Co., 93 N. Y. 631 ; Attorney- General v. Worth American L. I. Co., 89 N. Y. 94. Trustees of an unincorpo- rated company, where the persons in control constitute themselves trustees. Ogden v. Murray, 39 N. Y. 202. (b) Allowance for Expenses. 326. General expenses. Although a trustee is confined strictly to legal commissions as compensation for his own services, and cannot receive any additional allowance for his work, how- ever meritorious and extraordinary it may be ; Collier v. Munn, 41 N. Y. 143 ; Matter of Hay den, 54 Hun, 197 (203), see 125 N. Y. 776 ; Pullman v. Wittets, 4 Dem. 536 (but compare Lent 232 THE TRUSTEE. v. Howard, 89 N. Y. 169 ; Matter of Young, 17 Misc. 680) ; Matter of Mo Cord, 2 App. Div. 324 ; and cannot, as a general rule, employ others, at the expense of the estate, to perform work such as can fairly be expected from himself (Matter of Ilarbeck, 81 Hun, 26, aff'd 145 N". Y. 648, where an item of $100 a year for a book-keeper was disallowed), yet there are many cases, where the duties are onerous, or where they are of such a charac- ter as to fall outside the fair scope of what is to be required of the trustee, or where they call for special skill and training, in which he may employ clerks, book-keepers, agents, attorneys, and others to assist him ; and he is also allowed for all disbursements necessary for the protection of the estate. Dams v. Stover, 58 N. Y. 473 ; Young v. Brush, 28 N. Y. 667. Thus the trust fund must bear the expenses of its administration, as expenses of litigation, though the trust instrument is silent on the subject ; and travelling expenses. Woodruff v. N. Y. L. E. & W. R. R. Co., 129 N. Y. 27 (30, 31) ; compare Matter of Ingersoll, 6 Dem. 184. So with proper charges for office rent and office expenses ; Matter of Nesmith, 140 N. Y. 609 (617) ; and the salary of a clerk ; Hawley v. James, 16 Wend. 60 (284) ; Meeker v. Craw- ford, 5 Redf. 450 (464) ; Hall v. Campbell, 1 Dem. 415 ; Fish- er v. Fisher, 1 Bradf. 335 ; Matter of Butler, 1 Con. 58 ; Clinch v. Eckford, 8 Pai. Ch. 412 ; Vanderheyden v. Van- derheyden, 2 Pai. Ch. 287 ; (compare Fowler v. Lockwood, 3 Redf. 465) ; the charges of an accountant ; Matter of Quin, 1 Con. 381 ; Underbill v. Newburger, 4 Redf. 499 ; or of an agent, where the duties do not require the exercise of the trus- tee's own discretion or of a power lodged solely in him. Glover v. Ilolley, 2 Bradf. 291. An agent so employed, to collect rents, has no power to endorse, in the trustee's name, a check drawn to the order of the trustee, and such endorsement is ineffectual. Robinson v. Chemical Nat. Bank, 86 N. Y. 404. If he may employ an agent at all, he may employ in that capacity the crea- tor of the trust ; Browning v. Hart, 6 Barb. R. 91 ; or the beneficiary ; Phcenix v. Livingston, 101 N. Y. 451 (455) ; or one indebted to the estate, in which case the value of the latter' s services is a proper counterclaim in any action to recover the debt. Davis v. Stover, 58 N. Y. 473. The point that the em- ployee is indebted to the trustee, as trustee, but that his claim ALLOWANCE FOR EXPENSES. 233 is against the trustee personally (see ante, 177 et seq.), and that if he brought suit himself, the defendant in his suit would not be the same person (in point of capacity) as the plaintiff in the suit against him, is not there discussed, though it was raised. See Smith v. Felton, 43 N. Y. 419. And the trustee may, it seems, in certain cases avail himself of the assistance of a lobby- ist. Duffy v. Duncan, 32 Barb. R. 587, aff'd, without comment on this point, 35 N. Y. 187. But compare Mills v. Mills, 40 N. Y. 543 ; Trist v. Child, 21 Wall. 441. But a direction to trustees, in the will, to appoint and employ a specified person as their attorney, agent, etc., does not entitle that person to compel them to employ him. Foster v. Elsley, L. R. 19 Oh. D. 518 ; Shaw v. Lawless, 5 Cl. & F. 129 ; Finden v. Stephens, 2 Phill. 142. ' 327. Counsel fees. And where it is proper for a trustee to employ counsel to advise him, or to represent him iji an action or special proceeding, or attend to other affairs requiring legal knowledge or experience, he will be allowed his payments for such services, so far as proper and reasonable. Woodruff v. JV. Y. Z. K & W. R. E. Co., 129 N. Y. 27 (30, 31) ; Doug- las v. Yost, 64 Hun, 155 ; Matter of Holden, 126 N. Y. 589 ; Matter of Hutchinson, 84 Hun, 563. But where the services are such as constitute part of the work for which the commis- sions are allowed, and can be done by a layman, or where they are not required at all, he should not be allowed for counsel fees. Matter of Quinn, 16 Misc. 651 ; Pullman v. Willets, 4 Dem. 536 ; Matter of Peyser, 5 Dern. 244. And counsel fees, wh'ere allowed, are not confined to the statutory costs. Douglas v. Yost, 64 Hun, 155 ; Wetmore v. Parker, 52 X. Y. 450 (466) ; Downing v. Marshall, 37 N. Y. 380 ; Matter of Bailey, 47 Hun, 477 ; see Code C. P., 2561. As to allowances beyond those fixed by statute, for services in connection with an account- 1 Other authorities illustrating allowances for expenses are : Leavitt v. Yates, 4 Edw. Ch. 134 (205-206) ; Elliott v. Lewis, 3 Edw. Ch. 40 (42) ; Valentine v. Valentine, 3 Dem. 597 ; Upson v. Badeau, 3 Bradf. 13 ; Journault v. Ferris, 2 Dem. 320 ; Brautigam v. Esclier, 2 Detn. 269 ; Mayer v. Hazard, 49 Hun, 222 ; Blunt v. Syms, 40 Hun, 566 ; Jack v. Robie, 48 Hun, 181 ; Matter of Archer, 23 Supp. 1041. 234 THE TRUSTEE. ing, see Seaman v. Whitehead, 78 N. Y. 306 ; Harward v. Hewlett, 5 Redf. 330 ; and an elaborate review of the authorities in Matter of Smith, 2 Con. 418 ; for a general discussion of allowances in Surrogate's Courts, see 1 Con. Appendix, p. 563 ; Matter of Colly er, 1 Con. 546. The general rule is that a trus- tee's claim in his account, for counsel fees, or other expenses, cannot be allowed until he has in fact paid 'them. The allow- ance is made on the theory of reimbursement for necessary ex- penditures. Matter of Bailey, 47 Hun, 477 ; Matter of Spooner, 86 Hun, 9. But the question of the propriety of allowing coun- sel fees, and their amount, may arise in such a form that the court may properly pass on it before actual payment, deferring any credit to the trustee, until payment shall have been made by him. Douglas v. Yost, 64 Hun, 155 (161) ; Matter of Atfy. General v. North Am. L. Ins. Co., 91 N. Y. 57 (61) ; Down- ing v. Marshall, 37 N. Y. 394 ; Wetmore v. Parker, 52 N. Y. 466 ; Oilman v. Oilman, 6 T. & C. 211 ; aff'd 63 N. Y. 41 ; Matter of Barnes, 140 N. Y. 468. Inasmuch as the trustee is individually liable for counsel fees,- and other expenses incurred in managing and protecting the estate, Mygatt v. Wilcox, 45 N. Y. 306 (309), the attorney, or other creditor, not being a party to the proceedings in which the amount to be allowed to the trustee is determined, is not bound thereby, and may enforce his claim for any balance justly due, against the trustee indi- vidually. Mygatt v. Wilcox, 1 Lans. 55 ; not referred to on appeal, s. c. 45 N. Y. 306.' 'Other cases illustrating allowances for counsel fees are: Matter of Dela- plaine, 1 Con. 1 ; Matter of Weeks, 5 Dem. 194 ; Matter of Van Kleeck, 2 Con. 14 ; Matter of Bradley, 1 Con. 106 ; Hosier v. Easier, 1 Bradf. 248 ; Walton v. Howard, 1 Dem. 103 ; Campbell v. Mackie, 1 Dem. 185 ; Thompson v. Mott, 1 Dem. 32 ; Savage v. Sherman, 87 N. Y. 277 (285) ; Osborne v. McAlpine. 4 Redf. 1 ; Matter of Hulburt, 89 N. Y. 259 ; Matter of Thomas, 5 Abb. N. C. 354: Havemeyer v. Loeb, Id., 338 ; Matter of Youngs, Id., 355, note ; Matter of Weinhaus, Id., 355 ; Matter of Smith, 26 Abb. N. C. 56 ; Matter of Apling- ton. Id., 69 ; note, 28 Abb. N. C. 371 ; Heather's Estate, 15 Abb. N. C. 194 ; Matter of Denike, 21 Abb. N. C 289 ; Platt v. Archer, 13 Blatch. 351 ; Levy's Accounting, 1 Abb. N. C. 177 ; Matter of Lockman, 4 Abb. N. C. 173 : Hal- sey v. Van Amringe, 6 Pai. Ch. 12 ; Mayer v. Hazard, 49 Hun, 222 ; Matter of Grout, 15 Hun, 361 ; Matter of Commonwealth F. I. Co , 32 Hun, 78 ; Mat- ter of Reeves, 48 Hun, 606 ; Hosack v. Rogers, 9 Pai. Ch. 461 (462-466) ; Cowles v. Thompson, 1 Redf. 490 ; floes v. Halsey, 2 Dem. 577 ; tit. John v. McKee, 2 Dem. 236 ; Willson v. Willson, 2 Dem. 462 ; Chatfield v. Hewlett. 2 Dem. 191 ; Shields v. Sullivan, 3 Dem. 296 ; Oeissler v. Werner, 3 Dem. 200 ; Mead v. WillougJiby, 4 Dem. 364 ; Smith v. Central Tr. Co., 4 Dem. 75 ; Hall v. Dusen- bury, 38 Hun, 125 ; Close v. Shute, 4 Dem. 546 ; DeLamater v. McCaskie, 4 RENUNCIATION. 235 328. Interest. When a trustee advances his own money for expenses and payments called for by the trust, he may, in proper cases, be allowed interest, but never in cases where at the time of making such advances he has trust income in hand, not bear- ing interest. Cook v. Lowry, 95 N. Y. 103 (115) ; King v. Talbot, 40 N. Y. 76. 329. On accounting. As to the general principles govern- ing the items credited to a trustee on his accounting, see ante, Accounting. See also Resignation ; Renunciation ; Costs ; Re- lease ; Estoppel. (8) denunciation. 330. Right to renounce. A person named as trustee cannot be vested with an estate against his will. If, before accepting the trust, he renounces, no estate passes to him. Burritt v. Silliman, 13 N. Y. 93 ; Matter of Robinson, 37 N. Y. 261. The execution of the trust then devolves on the Supreme Court, and it is its duty to appoint a person to carry out the trust. If possibly a nominal title vests in the meantime in the trustee it is merely by way of fiction to preserve the trust from failure, and has no Other bearing. Dunning v. Ocean Nat. Bank, 6 Lans. 296 ; aff'd 61 N. Y. 497. Bee post, 334. 33 ! Presumptions. If nothing to the contrary is shown, it may be assumed that the person named accepted the trust, and became vested with title. Dunning v. Ocean Nat. Bank, 61 1ST. Y. 497 (502) ; Burritt v. Silliman, 13 N. Y. 93. On the other hand, if he is appointed both as executor and as trustee under a will, and renounces as executor, under the statute, this fact is some evidence of his refusal to act as trustee. Dunning v. Ocean Nat. Bank, 61 .N. Y. 497 (502) ; Beekman v. Bonsor, 23 N. Y. 298 (304-305). 332. Form. In earlier times, it was the practice to require the renouncing trustee to execute a release to his associate trus- tees, or to execute a deed of disclaimer. Dunning v. Ocean Dem. 549 ; Natter of Aaron, 5 Dem. 362 ; Matter of Cohn, 5 Dem. 338 ; Mat- ter of Peyser, 5 Dem. 244 ; Binsse v. Paige, 1 Abb. Ct. App. Dec. 138. 236 THE TRUSTEE. Nat. Bank, 61 N. Y. 497 (502) ; Burritt v. Silliman, 13 N. Y. 93 (96). If he is named as sole trustee, he cannot, of course, release, Dunning v. Ocean Nat. Bank, supra, and even though he have associates, a distinct written disclaimer, acknowledged so as to be capable of being read in evidence without further proof, is sufficient and appropriate ; and need not purport to convey an estate ; Burritt v. Silliman, 13 N. Y. 93 (97-98) ; arid even this formality is not essential, if it clearly appear, that in fact he declined to act ; Dunning v. Ocean Nat. Bank,, 61 N". Y. 497 (502) ; Beekman v. Bonsor, 23 N. Y. 298 (304-305) ; as, for instance, where he had not accepted the trust, and for more than twenty years omitted to claim the office, and permitted others to perform its duties without challenge. Matter of Robinson, 37 N. Y. 261 (263). 333- When to be made. Before the trust instrument goes into effect that is, before the death of the testator, or the deliv- ery of the trust deed there is nothing to renounce, and an at- tempted renunciation is void. Staunton v. Parker, 19 Hun, 55 (60). And, on the other hand, an attempted renunciation after the trust has once been accepted, and title has vested, comes too late, and is also void. Thatcher v. Candee, 4 Abb. Ct. App. Dec. 387. 334. Results. If a sole trustee renounces, or if all of sev- eral trustees renounce, it has been said that the title vests nomi- nally in them all, and the execution of the trust devolves on the court until it appoints a successor. King v. Donnelly, 5 Pai. 46. But if any such title vests, it is a mere dry trust ; there is in the meantime no person in whom a right of action on behalf of the trust vests, and therefore the running of the statute of lim- itations is suspended. Dunning v. Ocean Nat. Bank, 61 N. Y. 497 (503). If one of two or more trustees renounces, the estate vests in the others ; Matter of Van Schoonhoven, 5 Pai. 559 ; Moir v. Brown, 14 Barb. 39 (45) ; Burritt v. Sheil, 2 Barb. R. 457 ; with all the powers and duties belonging to all (unless the intention of the creator of the trust appears by the instrument to be otherwise, or is such as to authorize, and the facts are such as to call for, an appointment by the court to till the vacancy). RESIGNATION. 237 Leggett v. Hunter, 19 K Y. 445 (456). If, by the trust instru- ment, trustees are vested with a discretion, personal to them- selves, and not pertaining to any one who should fill their office, and they all renounce (or resign, or are removed, or die, or if for any reason others succeed to their position), the right to exercise the discretion does not pass to their successors, Beekman v. Bonsor, 23 N. Y. 298, 303, 305, 318 (which is cited merely to this point, and not for its assumption that the discretion there given to the original appointees was per se valid) ; if, however, the discretion relied on is not that of the trustees named, but of any one who shall fill their office, it passes to successors. Fish v. Coster, 28 Hun, 64 (66), aff'd 92 N. Y. 627 ; Bain v. Mat- teson, 54 N. Y. 663. See ante, 156, et seq. 335- Retraction. The statute provides for retraction of re- nunciation by an executor but where a trustee as such, as dis- tinct from the executor, renounces, he may not retract, and can become a trustee only by virtue of a new appointment by the court. Matter of Van Schoonhoven, 5 Pai. Ch. 559. But if the trusteeship becomes vacant, and he then applies to be ap- pointed, the court would be inclined to appoint him in pursuance of the expressed desire of the creator of the trust. Matter of Robinson, 37 N. Y. 261 (263). (9) Resignation. 336. Right to resign. Where a trustee has not duly re- nounced, and the title has once vested in him, either as sole trus- tee or jointly with other trustees, he cannot of his own motion sub- sequently resign or renounce, and even an attempted conveyance or release by him of all his title to his co-trustee will not divest him of title. He can only be relieved of the trust by the order or decree of a court of competent jurisdiction ; Brennan v. Will- son, 71 N. Y. 502 ; Thatcher v. Candee, 4 Abb. Ct. App. Dec. 387 ; or, in given cases, in the manner prescribed in the trust instrument. Cruger v. Halliday, 11 Pai. Ch. 314. And if the trust exists under a general assignment, the fact that he has not given the required bond leaves matters in this condition : title has vested in him, so far that the other trustees cannot convey without him, but as, until bond given, his trust is a mere dry one, 238 THE TRUSTEE. he cannot unite to render a deed sufficient. Brennan v. Will- son, 71 N. Y. 502. 337- Power of Court. The provisions of the Constitution conferring general jurisdiction in equity upon the Supreme Court do not operate as a prohibition on laws conferring similar jurisdiction on the Surrogate's Courts, as, for example, to accept the resignation of a testamentary trustee. Matter of Bernstein, 3 Redf. 20. The authority of the Surrogate's Courts is found in 2814 of the Code, and that of the Supreme Court, apart from the inherent equity jurisdiction, in Real Prop L., 92. 338. Grounds. It is discretionary with the court whether to entertain or dismiss an application for leave to resign. If it is entertained, it is for the court to determine whether sufficient reasons exist for granting the petition. The following reasons have been made the subject of special comment on such applica- tions : That the trustee's personal interests are inconsistent with his relations to the trust ; Becker v. Lawton, 4 Dem. 341 ; that he is too busy with his personal affairs ; Baier v. Baier, 4 Dem. 162 ; that he intends to remove from the United States ; Til- den v. Fiske, 4 Dem. 357. A provision in the trust instrument, bearing on the subject, will be given weight on the question of granting leave to resign ; Tilden v. Fiske, 4 Dem. 357 ; as will also the fact that the beneficiaries object. Baier v. Baier, 4 Dem. 162. 339- Separable trusts. Where there are separable trusts, distinctly constituted and established, a trustee of all may be allowed to resign as to some, and continue as toothers. Craig v. Craig, 3 Barb. Ch. 76 (100-101). 340. Form of proceeding. A trustee who applies to the Surrogate's Court for leave to resign must, of course, do so by petition. Under Real Prop. L., 92, he may proceed by peti- tion or action. Under 1 R. S. 73, 69, for which this is a sub- stitute, no specific mention was made of an action, but it was held, nevertheless, that an action would lie. Leggett v. Hunter, 19 N. Y. 445 (460) ; Lahey v. KortrigU, 132 N. Y. 450 (458). REMOVAL. 239 The question whether a given proceeding is began by bill or peti- tion has a bearing on the matter of allowances to parties. Mat- ter of Holden, 126 N. Y. 589 (591-592). A trustee who pro- cures permission to resign must pay the costs of the petition and of the appointment of a successor. Matter of Bevier, 17 Misc. 486(490) ; Matter of Jones, 4 Sandf . Ch. 615 ; Matter of Dixon, 50 St. Rep. 629. The same rule applies where he is removed. Id. 341. Effect on power in trust. Where the same person is trustee and executor, his resignation and discharge as trustee, and the appointment of a successor as such, do not take from him or give to the successor a power of sale held by him as executor. Greenland v. Waddell, 116 N. Y. 234 (243). Where a power to sell land is given to several testamentary trustees, as such, and all resign, it seems that the successors appointed by the surrogate under 2818 of the Code succeed to the power (if not personal and confidential in the original ones) although that statute applies to the resignation, etc., of a sole trustee. It covers also the case of resignation of several. But in such a case, the Supreme Court can certainly appoint successors who take the power to sell, under its general equity jurisdiction. Royce v. Adams, 123 N. Y. 402. 342. Invalid trust. If the trust in question is invalid, there is nothing to resign from, and the court has no jurisdiction in the premises. Matter of Hall, 24 Hun, 153. 343. Transfer of title. An order on the trustee's petition, relieving him from the trust, and directing that he should not interfere further with the same, and appointing a new trustee, with all the original powers ; but not requiring the former to convey to the latter, does not, it seems, transfer the legal title to the new trustee. Culross v. Gibbons, 130 N. Y. 447 (451, 453, 454). A decree relieving the trustee, and appointing a suc- cessor, vests the title in the latter upon his receiving a convey- ance pursuant to the decree. Lahey v. Kortwright, 132 N. Y. 450 (454). As to the necessity of a conveyance, see post, 727. (10) Removal. 344. Grounds, in the Supreme Court. "The Supreme Court has power, subject to the regulations established for the 240 THE TRUSTEE. purpose in the general rules of practice : . . . In an action brought, or on a petition presented, by any person interested in the trust, to remove a trustee who has violated or threatens to violate his trust, or who is insolvent, or whose insolvency is ap- prehended, or who for any other cause shall be deemed to be an unsuitable person to execute the trust." Real Prop. L., 92. This section, covering also the provisions as to resignation, does not apply to a trust arising or resulting by implication of law, nor where other provision is specially made by law, for the resigna- tion or removal of a trustee, etc. Id. It is only in cases of ex- press trusts also, that equity can remove the trustee. Wood v. JBrown, 34 N. Y. 337 ; Deraismes v. Dunham, 22 Hun, 86. If there be any other ground for removal of the trustee of an ex- press trust, beyond those covered by the statute, under the in- herent jurisdiction of equity, it still exists, under Article VI., 1, of the Constitution. 345. Grounds, in the Surrogate's Court. By 2817 of the Code it is provided that a testamentary trustee may be re- moved, on petition, in three cases : (1) " Where, if he was named in a will as executor, letters testamentary would not be issued to him, by reason of his personal disqualification or incompetency." (The cases thus referred to are found in 2612 of the Code, and exist where the executor is " incapable in law of making a con- tract ; under the age of twenty-one years ; an alien not an in- habitant of this State ; or who shall have been convicted of an infamous crime : or who, on proof, is found by the surrogate to be incompetent to execute the duties of such trust by reason of drunkenness, dishonesty, improvidence or want of understand- ing. ... A surrogate, in his discretion, may refuse to grant let- ters testamentary or of administration to a person unable to read and write the English language." And by 2638, a person named as executor may not receive letters (unless he gives a bond) where it is objected that his circumstances are such that they do not afford adequate security to the creditors, or persons interested in the estate, for the due administration of the estate ; or where it is objected that though a citizen of the United States lie is not a resident of tin's State ; as to the latter objection, if a citizen, he may qualify without a bond, if he has an office within the State REMOVAL. 241 for the regular transaction of business in person, and if the will expressly provides that he may act without giving security. As to these provisions relating to a bond, see 2815, 2816, providing that, on petition, security may also be required by the surrogate from a testamentary trustee " in a case where a person so named as executor can entitle himself to letters testamentary, only by giv- ing a bond ; but not otherwise.") (2) " Where, by reason of his having wasted or improperly applied the money or other prop- erty in his charge, or invested money in securities unauthorized by law, or otherwise improvidently managed or injured the prop- erty committed to his charge, or by reason of other misconduct in the execution of his trust, or dishonesty, drunkenness, im- providence, or want of understanding, he is unfit for the due execution of his trust. " (3) " Where he has failed to give a bond, as required by a decree, made as prescribed in the last two sec- tions [ 2815, 2816] ; or has wilfully refused, or without good cause neglected, to obey, a direction of the surrogate, contained in any other decree, or in an order, made as prescribed in this title ; or any provision of law, relating to the discharge of his duty." It accordingly appears that the authority of the Supreme Court is broad enough to include all the cases specified in rela- tion to Surrogate's Courts, even apart from the added force of the legislative declaration embodied in the latter provisions, as to the propriety of removal on such grounds in particular. Wood v. Brown, 34 N. Y. 337 (341). But possibly it may not be true, conversely, that the authority of removal in the Surro- gate's Courts is as broad as that existing in equity. It has, however, been held that the words " misconduct" and " incom- petency" in the statute relating to general assignments for cred- itors were broad enough to confer on the county judge a power of removal for any cause equal to that possessed by a court of equity. Matter of Colin, 78 N. Y. 248. 346. Illustrations. The following grounds have been con- sidered by the courts in connection with applications to remove trustees : moral delinquency, McMahon v. Harrison, 10 Barb. 659 ; unnecessary and frivolous litigation ; wasteful depletion of the estate, Matter of McGillivray, 138 N. Y. 308 ; gambler, 242 THE TRUSTEE. McMahon v. Harrison, 10 Barb. 659 ; bad investments, Mor- gan, v. Morgan, 3 Dem. 612 ; Ferris v. Ferris, 2 Dem. 336 ; Matter of Havemeyer, 3 App. Div. 519 ; Matter of Stanton, 1 Con. 108 ; insolvency, Morgan v. Morgan, 3 Dem. 612 ; Van Eppsv. VanEpps, 9 Pai. 237(240) ; negligence, Fernbacher v. Fernbacher, 4 Dem. 227 ; Matter of Mechanic's Bank, 2 Barb. R. 446 ; improvidence, McGregor v. McGregor, 3 Abb. Ct. App. Dec. 92 ; Matter of Cady, 36 Hun, 122, aff'd 103 N. Y. 678 ; lack of understanding, McGregor v. McGregor, 3 Abb. Ct. App. Dec. 92 ; drunkenness, Matter of Cady, 36 Hun, 122, aff'd 103 N. Y. 678 ; friction between trustee and beneficiary, Deraismes v. Dunham, 22 Hun, 86 (88) ; lack of fidelity, Mat- ter of Cohn, 78 IS". Y. 248 ; Matter of Smith, 2 Con. 152 ; Mat- ter of Havemeyer, 3 App. Div. 519 ; Fernbacher v. Fernbacher, 4 Dem. 227 ; insanity, Matter of Dearing, 4 Dem. 81 ; Mat- ter of Wadsworth, 2 Barb. Ch. 381 ; Matter of Worthington, 141 N. Y. 9 (11) ; friction between co- trustees, Quackenboss v. Southwick, 41 N. Y. 117 ; Oliver v. Frisbie, 3 Dem. 22 (27) ; Deraismes v. Dunham, 22 Hun, 86 ; misuse of funds, Mat- ter of McGillivray, 138 N. Y. 308 (313) ; Matter of Have- meyer, 3 App. Div. 519 ; Fleet v. Simmons, 3 Dem. 542 ; Mat- ter of Wiggins, 29 Hun, 271 ; Matter of Stanton, 1 Con. 108 ; Fernbacher v. Fernbacher, 4 Dem. 227 ; Hooley v. Gieve, 9 Abb. N. C. 8 (15) ; non-resident alien, Lane v. Lewis, 4 Dem. 468 ; (" alien, not resident of State," defined, McGregor v. McGregor, 3 Abb. Ct. App. Dec. 92) ; pecuniary irresponsibility, Van Epps v. Van Epps, 9 Pai. Ch. 237 (240) ; Morgan v. Morgan, 3 Dem. 612 ; use of trust funds to secure trustee's sureties, Fleet v. Simmons, 3 Dem, 542 ; trustee acting as counsel for interests inconsistent with the trust, Matter of Cohn, 78 N. Y. 248 ; violation of directions in the will, Matter of Havemeyer, 3. App. Div. 519 ; fraud, Matter of Jacob, 5 App. Div. 508 ; the fact that the trustee has by wrongful acts placed himself in a position where his interests and those of the trust are antagonistic, Eiias v. Schweyer, 17 Misc. 707 ; the fact that the trustee has voted on stock, a majority in which is held by the trust estate, to make himself an officer and to derive other personal advan- tages, thereby, under an agreement with the minority, disfran- chising in effect the stock held in trust, Elias v. Schweyer, 17 EEMOVAI. 243 Misc. 707 (compare Matter of E lias, Id., 719, dealing with the nullity of an election thus secured by a trustee) ; the fact that the trustee makes a personal claim of ownership in the assets, under a contract made between him and testator when the latter's mental capacity was doubtful, and insists upon receiving all bene- fits thereunder, Matter of Gleason, 17 Misc. 510. 347. When no removal. It is not every mistake or neglect of duty or inaccuracy of conduct which will induce courts of equity to remove a trustee. The acts or omissions must be such as to endanger the trust property, or to show a want of honesty, or of proper capacity, or of reasonable fidelity. Thus the mere fact of investments unauthorized by law, and of such a character as to subject the trustee to personal liability in case of loss, does not necessarily draw with it the penalty of removal. Matter of O'Hara, 62 Hun, 531 (535) ; Morgan v. Morgan, 3 Dem. 61 2 ; Ferris v. Ferris, 2 Dem. 336. For the additional features ren- dering removal proper, see Matter of Stanton, 1 Con. 108. As seen in the statute relating to removal of testamentary trustees, ante, 345, there are certain cases where removal may be avoided by giving a bond. Morgan v. Morgan, 3 Dem. 612 ; Estate of Leavitt, 28 Abb. X. C. 457. 348. Form of removal proceedings. These may, under the statute, Real Prop. L., 92, be instituted by petition or by action, Harrison v. U. T. Co., 144 N. Y. 326. Concerning the general equity jurisdiction over such proceedings, see People v. ^Norton, 9 N. Y. 176 (178) ; Lahey v. Eortright, 132 N. Y. 450 (458) ; jurisdiction of the now extinct superior city courts. Paget v. Stevens, 143 N. Y. 172. As to necessary parties, as petitioners and respondents, in proceedings for removal, consult Bear v. Am. R. T. Co., 36 Hun, 400 ; Jones v. Butler, 51 N. Y. 658 ; s. c. (on new trial) 11 Hun, 413 ; Sherman v. Burnham, 6 Barb. 404 ; Shook v. Shook, 19 Barb. 653 ; In re Robinson, 37 N. Y. 261 (264) ; Sortore v. Scott, 6 Lans. 271 (275) ; Matter of Livingston, 34 N. Y. 555 (568-569). Bill of Particulars. The defendant trustee is not entitled to a bill of particulars of the charges against him on points within his own knowledge, espe- cially when they are not known to plaintiff. Wigand v. De- jonge, 18 Hun, 405. 244 THE TRUSTEE. 349. Remaining trustee as " successor." The term "successor" may, in proper cases, include a remaining trustee, in whom the interest previously in the one removed has vested. Hood v. Hayward, 124 N. Y. 1 (9). 350. Executor as trustee. One acting both as executor and as trustee, in distinct capacities, may be removed from one, and continue to act in the other. Wood v. Brown, 34 N. Y. 337 (342). 351. Res adjudicata. A decree denying removal may be res adjudicata so far as a new application is based on facts oc- curring prior thereto. Ordbb v. Young, 92 N. Y. 56 (65). 35 2 - Jurisdiction on appeal. Where application for re- moval is made to a surrogate, under 2817-2818, the decision rests in the discretion of the surrogate if there is any evidence to support it ; an affirmative decision is reviewable by the Appel- late Division, but if there is any evidence to sustain the decision, it is not reviewable in the Court of Appeals. Matter of Me Gil- livray, 138 N. Y. 308. An order of the General Term affirm- ing an order of Special Term, reviving against his executors a special proceeding instituted against a discharged trustee, and pending at his death, was not appealable to the Court of Ap- peals. In re Whittlesey v. Hoguet, 66 N. Y. 358. 353- Effect of appeal. The effect of a decree of removal and appointment of a new trustee is not affected by the pendency of an appeal therefrom. Matter of Fernbacher, 17 Abb. N. C. 339 ; Stout v. Betts, 74 Hun, 266. 354. After removal. As to a proceeding by beneficiary to compel payment of income received before removal, see Moor- house v. Hutchinson, 4 Dem. 362. | _ 355- Foreign trustee. The court here may, in a proper case, arid with the parties before it, remove a trustee appointed under the will of a testator who lived in another State and which REMOVAL. 245 has not been proved here. Jones v. Jones, 8 Misc. 660. See post. Chapter XXYI. 356. Transfer of title. As to the necessity of a conveyance, from the trustee removed, to his successor, see ante, 343 ; and post, 727. CHAPTER IY. THE BENEFICIARY. (1) Who may be a Beneficiary. 357. In general. Infants, married women, persons of un- sound mind, spendthrifts, persons inexperienced in business mat- ters, all those whose interests would presumably be safer in the hands of a trustee than in their own such are the ones for whom express trusts are usually created. 1 But the beneficiaries of such a trust need not belong to any of these classes. Leggett v. Per- kins, 2 K Y. 297 (308-309). A valid express trust may be cre- ated for the benefit of persons of full age, under no disability, and possessed of capacity to manage their own affairs. 358- Aliens. So, too, the cestuis que trust may be aliens. The policy of the law which, except under certain limitations, prohibits aliens from holding title to land, is to have the title in the hands of citizens who owe allegiance to the government and can be called upon to discharge the duties of citizenship. This policy is not violated by devises to citizens, in 'trust for alien beneficiaries. The citizen trustee takes the title to the land, and pays over to the alien beneficiary the net income, which is per- sonal property. Marx v. McGiynn, 88 N. Y. 357 (376). See also Meakings v. Cromwell, 5 N. Y. 136. In Leggett v. Dubois, 5 Pai. Ch. 114, however, where an alien purchaser, for the pur- pose of evading the law, took title in the name of a citizen, in trust to pay off a mortgage, etc., out of income if practicable, otherwise from proceeds of a sale, and in such case to turn over the surplus to the alien, there is a dictum to the effect that the State would be entitled to the surplus. With this compare An- 1 See for a history of the successive changes in the statute bearing on this point. Coster v. Lorillard, 14 Wend. 265 (321 and 330). WHO MAY BE A BENEFICIARY. 247 stice v. Brown, 6 Pai. Ch. 448, where lands were conveyed to a citizen in trust to sell, and pay a debt owing to an alien, and the trust was held valid. 359. Remainderman as beneficiary. Some trusts do, and some do not require an absolute fee in the land in the trustee. Ante, 139. Bennett v. GarlocTc, 79 N. Y. 302 ; Embury v. Sheldon, 68 N. Y. 227 (234) ; Oilman v. Reddington, 24 N. Y. 9 (15-16) ; Goebel v. Wolf, 113 N. Y. 405 ; Matter of Tienken, 131 N. Y. 391 (401, 404) ; see also Toms v. Williams, 41 Mich. 552 (566). If they do, no remainder can be limited thereon. Bennett v. Garlock, 79 N. Y. 302 (320) ; Briggs v. Dams, 21 N. Y. 574. If they do not, a remainder may be limited, or the estate may be granted or devised subject to the trust, the legal title vesting in the grantee or devisee as against all persons ex- cept the trustees and those lawfully claiming under him. Real Prop. L., 81 ; Losey v. Stanley, 147 N. Y. 560 ; Embury v. Sheldon, 68 N. Y. 227 ; Goebel v. Wolf, 113 N. Y. 405 (413) ; Oilman v. Reddington, 24 N. Y. 9 (15, 16) ; Stevenson v. Les- ley, 70 N. Y. 512 ; Matter of Tienken, 131 N. Y. 391 ; Genet v. Hunt, 113 N. Y. 158 (172-173) ; see Townshend v. Frommer, 125 N. Y. 446 (466) ; Van Camp v. Fowler, 59 Hun, 311, aff'd 133 N. Y. 600. The remainderman, or person vested with the es- tate subject to the trust, may be the same person who is also beneficiary under the trust. Embury v. Sheldon, 68 N. Y. 227 (234) ; Stevenson v. Lesley, 70 N. Y. 512 (516) ; Asche v. Asche, 113 N. Y. 232 ; Goebel v. Wolf, 113 N. Y. 405 ; Strang v. Strang, 4 Reclf . 376 (379) ; Gersen v. Rinteln, 2 Dem. 243 (245). See also remarks of Earl, J., in Groove v. County of Kings, 97 N. Y. 421, at p. 447. The present beneficial interest, and the title to the future estate in remainder, in the same person, do not merge. Asche v. Asche, supra. And so also in personal prop- erty. See Warner v. Durant, 76 N. Y. 133 ; Greer v. Ches- ter, 62 Hun, 329 (332), aff'd 131 N. Y. 629. And instead of having the present estate in the trustee, with a remainder in an- other, the trust estate may be itself a remainder limited on a precedent estate. Ante, 147. See Peck v. Sherwood, 56 N. Y. 615 ; Webster v. Morris, 66 Wis. 366. And the tenant of such preceding estate may be the same person named as beneficiary 248 THE BENEFICIARY. under the future trust. See remarks of Earl, J., in Crooke v. County of Kings, 97 N. Y. 421, at p. 447. So a trust for the life of a beneficiary may exist with power in the beneficiary to dispose by grant or devise of the remainder limited on the trust estate. Mott v. Ackerman, 92 N". Y. 539 ; see Crooke v. County of Kings, 97 N. Y. 421 (434, 447). So, too, subject to the trust term, the benaficiary of the present trust may be a trus- tee of the remainder for some other person. See remarks of Earl, J., in Crooke v. County of Kings, 97 N". Y. 421, at p. 447. So during the trust term the beneficiary may become vested with the remainder as the heir, devisee or grantee of the original re- mainderman, as where, under a trust for A, for life, with re- mainder to B, B dies, leaving A his only heir. Asche v. Asohe, 113 N. Y. 232 (237) ; see Real Prop. L., 83. Undoubtedly a testator, without violating any rule of law, could give an estate to trustees, with directions to collect the income and pay it over to a beneficiary, and upon the death of the latter, the trust to sink into, and become a part of the estate of the beneficiary. But in the case below cited, the court state that " so far as we know, no will, which in express terms has so disposed of prop- erty, has been brought to the attention of the courts,' ' and inti- mate that the fact that such a provision is very unusual militates against such a construction in a case where that intent is not ex- pressed. Howland v. Clendenin, 134 N. Y. 305 (310). But see Arcularius v. Geisenhainer, 3 Bradf. 64 ; Sweet v. Geisenhainer, Id., 114, aff'd 25 Barb. R., 403. A beneficiary may acquire a future contingent estate expectant upon his own death without issue. Ham v. Van Orden, 84 N. Y. 257 (269) ; Norton v. Cantwell, 108 N. Y. 255 (266). 360. Beneficiary of one share may be a remainderman as to another share in the same corpus. Matter of Van Ness, 5 Dem. 464. 361. Reversioner as beneficiary." Where an express trust is created, every legal estate and interest not embraced in the trust, and not otherwise disposed of, shall remain in or revert to the person creating the trust, or his heirs. " Real Prop. L., 82. See Matter of Tienken, 131 N. Y. 391 (401, 404) ; Towns- WHO MAT BE A BENEFICIARY. 249 hend v. Frommer, 125 N. Y. 446 (455) ; Woodgate v. Fleet, 44 N. Y. 1 (18 et seg.). It is evident that these heirs might be the same persons who were also beneficiaries under the trust ; or they might be the trustees of the trust ; or they might be stran- gers to the trust. 362. Creator of trust as beneficiary. An express trust may be created for the benefit of its creator, and is valid except as to creditors. 1 Locke v. F. L. & T. Co., 140 N. Y. 135 (141) and cases there cited. Ante, 115. A vital distinction, how- ever, exists between a transfer of property in trust for the benefit of the creator of the trust, and an absolute transfer to a person who, in consideration thereof, agrees to support the transferrer, or to pay him an annuity, etc. In the latter case, no trust exists. Ante, 30 (a). Hungerford v. Cartwright, 13 Hun, 647 ; Gif- ford v. Rising, 51 Hun, 1 ; s. c. 55 Hun, 61 ; the Gifford cases being qualified, but not on this point, by the result of the deci- sion in Hiles v. Fisher, 144 N. Y. 306, relating to " estates by the entirety." 363. Corporations. Some authorities seem to indicate that a trust to receive and apply income to the use of a corporation might be created for a term of two lives, but this would necessi- tate such a reading of the statute as to include corporations within the term " person," and at best the nature of a charitable cor- poration is such that no trust of that kind for its benefit is called for, or serves any purpose, and in case of doubt as between a gift of income, carrying the principle, and a perpetual, and therefore void, trust, the former is preferred. Locke v. F. L. <& T. Co., 140 N. Y. 135 (147). Compare Livingston v. Gordon, 84 N. Y. 136 ; 93 N. Y. 644 ; Downing v. Marshall, 23 N. Y. 366. But a corporation may be a beneficiary of a trust to sell, mortgage or lease to pay legacies, etc. ; or to sell to pay debts ; or under many trusts of personal property, or under a power ; except in so far as inability may arise from the terms of its charter, includ- ing the statutes affecting its capacity. A charitable corporation may take a devise or bequest on condition that it shall pay cer- 1 As to which see post, 710 ; Oilman v. McArdle, 99 N. Y. 451, 457. 250 THE BENEFICIARY. tain annuities created by the will, if only these payments are to be made solely from the income, or, in case of deficiency, from the principal, of the property so devised or bequeathed, and are not to be drawn in any event from its own other property. Al- though it is not created for the purpose of paying annuities to individuals, it is allowed to take property for its own purposes, and the fact that property so taken is subject to certain deduc- tions merely makes it less valuable, but is not an objectionable feature. The corporation takes less than if the property were unincumbered, but such as it does take, over and above the an- nuities, it takes for its charter purposes. The effect is the same as if the property were left to others in trust, to pay the income to beneficiaries, with remainder to the corporation. Either method of accomplishing the result may be adopted. Booth v. Bapt. Ch., 126 N. Y. 215 (245) ; Matter of Howe, 1 Pai. Ch. 21-1. Ante, 112 (b). 364. After-born children A trust may be so framed that children born after the creation of the trust may become benefi- ciaries thereof. Woodgate v. Fleet, 64 N. Y. 566 (571) ; Hax- tun v. Corse, 2 Barb. Ch. 506 (517) ; Harrison v. Harrison, 36 N. Y. 543 (546) ; see Crooke v. County of Kings, 97 N. Y. 421 (438-439) ; Oilman v. Reddington, 24 N. Y. 9 (13, 14, 20). Special provision is made by statute for such cases in trusts for accumulation. Eeal Prop. L., 51, subd. 2 ; 1 R. S. 773, 3 ; Mason v. Mason's Ex'rs, 2 Sandf. Ch. 432, aff'd 2 Barb. R. 229 ; Manice v. Manice, 43 N. Y. 303 (376) ; Kilpatrick v. Johnson, 15 N. Y. 322 (325) ; Haxtun v. Corse, 2 Barb. Ch. 506 (518). See Gott v. Cook, 7 Pai. Ch. 521, aff'd 24 Wend. 641. The law will not assume that any person is too old to have children born in future. Miller v. Macomb, 26 Wend. 229 (234) ; Taggart v. Murray, 53 N. Y. 233 (239). Gray, Rule against Perpetuities, 215. A trust to receive and apply in- come " to A and his heirs," has been construed as a trust to apply the income to A, with remainder in the corpus to A's heirs at his death. Burtis v. Doughty, 3 Bradf. 287. Member of religious order. So a trust may be created for the benefit of a member of a religious order who has taken a vow of poverty, Lynch v. Loretta, 4 Dem. 312. Illegitimate children. A trust HOW TO BE DESIGNATED. 251 may be created for the benefit of illegitimate children. Gelston v. Shields, 78 N. Y. 275. Posthumous children.- -~R&d. Prop. L., 46. See Id., 292. (2) How to 1)6 Designated. 365. Introductory. Down to the year 1893, there was a general rule, applying, with certain special statutory exceptions, to all express trusts, whether created for charitable or other pur- poses, and governing the degree of definiteness with which the beneficiaries must be designated. In 1893 an act was passed which, so far as concerns dispositions of property for charitable, benevolent, religious and educational uses, changed this rule. That statute, again, which applied to both real and personal prop- erty has, so far as concerns real property, been superseded by the provisions of the Real Property Law of 1896. The estab- lished general principles will first be considered, regardless of these statutes. Prior to May 13, 1893. 366. Designation of beneficiary. In every valid express Irust there must be a definitely ascertained beneficiary, who can insist on its enforcement. Read v. Williams, 125 N. Y. 560 (568) ; Wilcoxv. Gilchrist, 85 Hun, 1 (12) ; Prichardv. Thomp- son, 95 N. Y. 76 ; Tilden v. Green, 130 N. Y. 29 ; Fairchild v. Edson, 77 Hun, 298 ; Gross v. Moore, 68 Hun, 412, aff'd 141 N. Y. 559 ; Goddard v. Pomeroy, 36 Barb. R. 546. The same principle applied prior to the Acts above mentioned ( 365), to devises and bequests in trust for charitable purposes. Tilden v. Green, 1 130 N. Y. 29 (45) ; People v. Powers, 147 N. Y. 104 (109). Thus, apart from those statutes, the scheme is fatally de- fective where the beneficiaries are " such incorporated societies organized under the laws of the State of New York or the State of Maryland, having lawful authority to receive and hold funds upon permanent trusts for charitable or educational uses" as the executors 'might select, Prichard v. Thompson, 95 N. Y. 76 ; or indigent evangelical churches and ministers in the Southern section of the Union, White v. Howard, 46 N. Y. 144 (163) ; 1 For a valuable discussion of the Tilden case, see an article by Professor Ames in 5 Harv. L. Rev. 389. 252 THE BENEFICIARY. or such charities as the executors may prefer, Matter of O" 1 Hara, 95 N. Y. 403 (418) ; or where the property was to be disposed of as the executor pleased, but not for his own benefit, Gross v. Moore, 68 Hun, 412, aff'd 141 N. Y. 559 ; or for orphan chil- dren in general, Rose v. Hatch, 125 N. Y. 427 (433) ; or a be- quest in trust to purchase shoes for poor children attending the parochial schools of St. Paul's R. C. Church, Brooklyn, Matter of CPHara, 95 N. Y. 403 (417) ; or, to a town in trust in per- petuity for the benefit of the poor of the town, at any rate if not confined to those for whose support the town is under a statutory liability, Fosdick v. Town of Hempstead, 125 N. Y. 581. So with a devise and bequest to trustees, to procure the incorpora- tion of an institution to maintain a library and promote scientific and educational objects, and to convey to it all or a part of the property, unless for any reason they should deem such a course inexpedient, and in that case to apply it to such charitable, edu- cational or scientific purposes as would in their judgment render it most widely and substantially beneficial to the interests of man- kind, Tilden v. Green, 130 N. Y. 29 ; or a bequest to such char- itable institutions and in such proportions as the executors, by and with the advice of a person named, should choose and desig- nate. Read v. Williams, 125 N. Y. 560. To the same effect are cases where an instrument purports to create a trust, but names no beneficiary ; thus, an antenuptial agreement constitut- ing A the trustee of the real and personal property of B, and giving A the " entire and sole management, direction and con- trol thereof," but naming no beneficiary and expressing no pur- pose to be carried out, fails to create a valid trust. And the court cannot save it by arbitrarily assuming that it must have been intended that the creator of it should be the beneficiary. Dillaye v. Greenough, 45 N. Y. 438 (444 et seq.) ; Wilcox v. Gilchrist, 85 Hun, 1 ; compare Hitchcock v. PeasUe, 89 Hun, 506. But if, instead of thus conveying land in trust, and nam- ing no beneficiary and no purpose, one conveys an estate coupled with a power to sell, or do any lawful act, but names no bene- ficiary or purpose, the latter disposition is valid. The distinction is that in the former case there is a direct disclaimer that the transfer is for the benefit of the transferee ; it is in trust, but for whom, or for what, is left uncertain ; while in the latter case, HOW TO BE DESIGNATED. 253 the absence of any mention of a third person indicates that the person to whom an estate is conveyed, not in trust, is -to exercise the power for his own benefit. Jennings v. Conboy, 73 N. Y. 230 (234). A further distinction exists in the case of a bequest of personal property to one for life "in trust," followed by a remainder to another. In such a case the fact that the bequest is given "in trust," naming no beneficiary, is not necessarily fatal ; for a life tenant of personal property is always, in a sense, a trustee for the remainderman, and so the bequest may be sus- tained as a beneficial one in the legatee for life, and the words " in trust" be read as referring to his duty of preserving the property for the remainderman. Hitchcock v. Peaslee, 89 Hun, 506. In any case of trust, or trust power, the beneficiary is duly designated if he can be definitely ascertained by an inspection of the entire instrument. Kinnier v. Rogers, 42 N. Y. 531 (537). A bequest to executors in trust, " for the purpose of having prayers offered in a Roman Catholic church, to be by them selected, for the repose of my soul and the souls of my family, and also the souls of all others who may be in purgatory," fails to comply with the requirement of an ascertained beneficiary. Holland v. Alcock, 108 N. Y. 312. It is true that in Power v. Cassidy, 79 N. Y. 602, the court went so far as to sustain a be- quest to executors " to be divided by them among such Roman Catholic charities, institutions, schools, or churches in the City of New York," as the majority of the executors should decide upon. That decision was based on the principle that a valid trust power to select and appoint among a class may be given by a trust instrument, if it so defines the class that its members are capable of definite ascertainment by the court, and may insist on the enforcement of the trust, and that equity may enforce the same, or, in default of a selection, may decree an equal distribu- tion among all the beneficiaries. Holland v. Alcock, 108 N. Y. 312 ; Prichard v. Thompson, 95 N. Y. 76 (82) ; Read v. Wil- liams, 125 N. Y. 560 (568) ; Tilden v. Green, 130 N. Y. 29 (45). Even under that principle a distinction must be drawn be- tween cases where, as in Power v. Cassidy, the appointment and designation, when once made, is final, the appointees there- upon taking the property once for all, and those where, as in Fosdick v. Town of Hemp&tead, 125 N. Y. 581 (592), the bene- 254 THE BENEFICIARY. ficiaries were " the poor" of a certain town, and where the trus- tee has a perpetual right to designate and re-designate, according to personal choice, so that he may give income to A on one day, and refuse to give to him the next week under precisely the same state of facts. How far this latter case would apply to ordinary trusts to receive and apply income to such members of a well- defined class, or such of certain designated individuals, during a legal term, as the tsustee may from time to time deem most needy, may not perhaps be entirely clear. But it is believed that such cases are in their turn clearly distinguishable from that involved in the Fosdick case. For in that case, " the poor" of a town constituted, per se, a highly indefinite class the membership of which could never be ascertained on any rational basis (unless, perhaps, where the term could be construed, in a given case, to mean those supported, or assisted, by the town, as paupers). It is certainly unobjectionable to provide for the shifting of the use, from one to another, among well-defined beneficiaries, in the discretion of the trustee. And in .Power v. Cassidy, supra, stress is laid on the fact that it was quite practicable to ascertain all the institutions, in New York City, of the class described ; and it was also true that all answering to the description were interested, and competent, to see to the enforcement of the trust. In Matter of CTHara, 95 N. Y. 403 (418) the court say, however, that the application of the doctrine in Power v. Cos- sidy (also explained in Prichard v. Thompson, 95 N. Y. 76 and in People v. Powers, 147 N. Y. 104, 111, 112), is to be confined within its own essential limits. And the mere power to desig- nate, select and appoint among an indefinite class does not cure the invalidity. Holland v. Alcock, 108 N. Y. 312 ; Tilden v. Green, 130 N. Y. 29 (45) ; Read v. Williams, 125 N. Y. 560 (568-569) ; Fairchild v. Edson, 77 Hun, 298. A careful distinction is to be drawn between a trust proper, to be exercised for indefinite beneficiaries, and a direct devise or bequest to a charitable corporation to be used for all or some of its charter purposes contemplating the benefit of indefinite per- sons. In the latter case there is no trust. The corporation re- ceives the property as owner. Bird v. MerTdee, 144 N. Y. 544. The principle that the beneficiaries must be designated does not mean that they must all be specified by name. Indeed, a HOW TO BE DESIGNATED. 255 trust may be created for the benefit of such persons as may here- after answer to a given description, Oilman v. Reddington, 24 N. Y. 9 (13) ; Harrison v. Harrison, 36 N. Y. 543 ; Wood- gate v. Fleet, 64 N. Y. 566 (571) ; until the persons indicated become ascertainable, there can, of course, as to them, be no trust, and if none become ascertainable during the trust term, the trust fails. But a trust so constructed as to begin, if ever, within the time permitted, for persons who shall within that time answer to a duly definite description, is valid, Holmes v. Mead, 52 N. Y. 332 (343 el seq.} : Shipman v. Rollins, 98 N. Y. 311 (328-329) ; Harrison v. Harrison, 36 N. Y. 543. So the fact that both the beneficiary and the trustee are ignorant of the exist- ence, during the term of a prior estate, of the trust in question, is immaterial. Van Coti v. Prentice, 104 N. Y. 45 (56) ; Berly v. Taylor, 5 Hill, 577 (585) and cases there cited. And there is no limit to the allowable number of beneficiaries, Woodgate v. Fleet, 64 N. Y. 566 (571) ; Manice v. Manice, 43 N. Y. 303 (386) ; Stevenson v. Lesley, 70 N. Y. 512 (516) ; and no objec- tion to a shifting succession of beneficiaries, during the legal term of the trust, Holmes v. Mead, 52 N. Y. 332 (343 et seq.). If the beneficiaries of a trust are not designated with sufficient cer- tainty, it is immaterial whether the trust instrument attempts to vest the title to the property in the trustees, or gives to them a mere power in trust. Tilden v. Green, 130 N. Y. 29 (53-54). And to render a power in trust valid, the same certainty as to the beneficiary must exist as in the case of a trust. Id., p. 65. But an absolute gift to an individual, coupled witli a mere request to dispose of it in favor of an indefinite class, if ~bona fide in- tended to leave him free to do so or not as he chooses, is valid. Fairchild v. 'Edson, 77 Ilun, 298 ; Matter of Keleman, 126 N. Y. 73. Ante, 36 ;post, 520, which see also for a later de- cision in a suit involving the Edson will. An assignment in writing of personal property, to pay the assignor's debts, is a valid express trust, and the particular persons interested as beneficiaries may be ascertained by parol evidence. Ditmars v. Smith, 3 App. Div. 57.' 1 By L. 1892, ch. 516, applying to cases where a person desires, during his lifetime, to promote public welfare by founding and endowing a public library, 256 THE BENEFICIARY. 367. Willingness of trustee to designate. The valid! ty or invalidity of a trust does not depend on the competency and willingness of the trustee to carry it out. Holland v. A Icock, 108 N. Y. 312 (322) ; People v. Powers, 147 N. Y. 104 (109) ; Tilden v. Green, 130 X. Y. 29. On this point, see Professor Ames's discussion in 5 Harv. L. Rev., 389. Since May 13, 1893. 368. Act of 1893. By L. 1893, ch. 701, it is provided that : " 1. No gift, grant, bequest or devise to religious, educational, charitable or benevolent uses, which shall in other respects be valid under the laws of this State, shall or be [sic] deemed invalid by reason of the indefiniteness or uncertainty of the persons desig- nated as the beneficiaries thereunder in the instrument creating the same. If in the instrument creating such a gift, grant, be- quest or devise there is a trustee named to execute the same, the legal title to the lands or property given, granted, devised or be- queathed for such purposes shall vest in such trustee. If no per- son be named as trustee, then the title to such lands or property shall vest in the Supreme Court. 2. The Supreme Court shall have control over gifts, grants, bequests and devises in all cases provided for by section one of this act. The attorney-general shall represent the beneficiaries in all such cases and it shall be his duty to enforce such trusts by proper proceedings in the court." 369. Act of 1896. The Real Property Law, which went into effect October 1st, 1896, did not in terms repeal the statute just quoted, but it contains the following provision which in effect repeals it in so far as it applied to real property : " A con- veyance or devise of real property for religious, educational, char- itable or benevolent uses, which is in other respects valid, is not museum or other educational institution in the State of New York, provision was made for a written conveyance to trustees therein named of real or per- sonal property. The act enumerates the matters that may be designated in the conveyance', gives the trustees power, in the name of the institution, to sue and defend, etc., provides for election of the grantor to manage the prop- erty during his own life, etc., and for amendment of the trust, etc., and limits the times within which suits may be maintained to set aside the conveyance, or defences set up involving its validity, etc. TENANCY. 257 to be deemed invalid by reason of the iiidefiniteness or uncer- tainty of the persons designated as the beneficiaries thereunder in the instrument making such conveyance or devise. If in such instrument, a trustee is named to execute the same, the legal title to the real property granted or devised shall vest in such trustee. If no person is named as trustee, the title to such real property vests in the Supreme Court, and such court shall have control thereof. The attorney-general shall represent the bene- ficiaries in such cases and enforce such trusts by proper proceed- ings." Real Prop. L., 93. The Act of 1893, chap. 701, and 93 of the Real Property Law are not retroactive. Real Prop. L., 1 ; People v. Powers, 147 N. Y. 104 (109). But in a case where the only reason why a given transfer could be held in- valid lies in the fact that trusts for indefinite beneficiaries are contrary to the public policy of this State, these statutes, evinc- ing a change in that policy, would operate to sustain a prior dis- position, where no vested rights would be interfered with. Dam,- mert v. Osborn, 140 N". Y. 30 (43-44) ; s. c. 141 N. Y. 564. These statutes are more fully discussed post, Chapter X. (3) Beneficiary of Specific Share. 370. Separate funds. Where, in accordance with the re- quirements of the trust instrument, or of the nature of the trust duties and the condition of the estate, a* definite fund or parcel is duly set off as the trust share of a given beneficiary, his rights and interests are thereafter centred in that particular property. By its increase in earning power, or in its value if he is to be- come entitled to the corpus, he benefits ; by its depreciation, he suffers. In the fate of the other funds or parcels he has no in- terest. Mills v. Smith, 141 N. Y. 256 ; Bushnell v. Drinker, 5 Redf. 581 ; Wise v. Murphy, 5 Redf. 365 ; Freeman v. Free- man, 4 Redf. 211. On the other band, in the absence of any due and actual setting off, the rights of each beneficiary range over the entire fund. 0' Connor v. M. Bank, 124 N. Y. 324. See further ante, 213-217. (4) Tenancy. 371. The question just considered differs widely from the question whether the trust instrument as such contemplates the 17 258 THE BENEFICIARY. fund as one, or as composed of several distinct shares. This lat- ter question usually arises in connection with an attack on the instrument as involving a suspension of the power of alienation, or of ownership. If the fund is to be held in solido, both in fact and in contemplation, during the lives of more than two persons, it is invalid. If it is to be contemplated as consisting of distinct shares, whether actually set apart or not, no particular one of which is to be held in trust for more than two lives, it is valid. The distinction is illustrated in Locke v. F. L. & T. Co., 140 N. Y. 135, and cases there cited. Although the terms joint tenancy arid tenancy in common are not technically, or at least historically, applicable in strictness to such interests as those held by beneficiaries under an express trust in real property, in New York, which do not give even an equitable title, they are fre- quently employed to designate the two classes just referred to. If the fund, as such, is to be held in trust, in its entirety, during the trust term, the beneficiaries are said to be joint tenants ; if it is to be held in respective portions, even though not actually divided, each for the life of one person, or two persons in succes- sion, the beneficiaries of the trust are said to be tenants in common. Savage v. Burnham, 17 N. Y. 561 (571) ; Dela- field v. Sfiipman, 103 N. Y. 4-63 (468) ; Stevenson v. Lesley, 70 N. Y. 512 (516) ; Locke v. F. L. & T. Co., 140 N. Y. 135 (145). If the meaning of the trust instrument is not clear, the statutory rule that in real property tenancy in common is pre- sumed unless otherwise expressed (Real Prop. L., 56) applies to the interests of beneficiaries under trusts of real property. Coster v. Lorillard, 14 Wend. 265 (335, et seq.} ; Hillyer v. Vandewater, 24 N. E. Rep. 999 ; s. c. without opinion, 121 N. Y. 681 ; Harrison v. Harrison, 36 N. Y. 543 ; and see Van Brunt v. Van Brunt, 111 N.Y. 178 (187). 1 Whether the same presumption applies in trusts of personalty was not at first very clear, though the cases seemed to lean in that direction. See Matter of Lapham, 37 Hun, 15 ; Everitt v. Fveritt, 29 N. Y. 39 ; Bliven v. Seymour, 88 N. Y. 469 (478) ; Mills v. Husson, 140 N". Y. 99 (104) ; Matter of VerplancJc, 91 N. Y. 439. But 1 But " every estate vested in executors or trustees as such shall be held by them in joint tenancy." Real Prop. L. 56. REMEDIES AGAINST THE TRUSTEE. 259 the question seems to be positively answered in the affirmative by Locke v. F. L. & T. Co., 140 N. Y. 135 (1*5). And there is also another rule of law, applicable alike to both kinds of prop- erty, which has been resorted to to solve the question whether, in the absence of any clear expression in the will, the given trust contemplates the holding of the funds as one, or as several. This is, that as between two fairly possible constructions, the law pre- fers the one which will sustain rather than the one which will destroy the validity of the instrument. Mason v. Jones, 2 Barb. R. 229 (242) ; Cromwell v. Cromwell, 2 Edw. Ch. 495, aff'd 3 Ch. Sentinel, 7 ; Harrison v. Harrison, 36 N. Y. 543 ; Locke v. F. L. & T. Co., 140 N. Y. 135 ; Du Bois v. Ray, 35 N. Y. 102 (166) ; Post v. Hover, 33 N. Y. 593 (601). As to the limita- tions of this principle, see Matter of Kimberly, 150 N. Y. 90 (94).' (5) Beneficiary *s Rights. 372. The rights of the beneficiary find their correlative in the duties and liabilities of the trustee. They are based on the terms of the trust instrument, the special statutes, and the gen- eral principles of the law. The particular subject of the bene- ficiary's assignment or other disposition of his interest when he may, and when he may not, assign is, for greater convenience, discussed later on (post, Chap. IX.). (6) Remedies against the Trustee. 373. In general. In every case where the trustee misap- propriates funds, commits any devastavit, or in any way brings, or threatens to bring, loss upon the estate, or impairs the safety of the estate or the full accomplishment of the trust, or neglects the performance of his duties, or uses his position for his own profit or advantage, the beneficiary has some complete remedy, and sometimes a choice among several remedies. Thus, in proper cases, he may require the trustee to account ( 221 et seq.) ; call for security ; secure his removal ( 344 et seq.} ; hold him liable, on accounting, for damage, or for wrongful personal profits, 1 The subject of tenancy among trust beneficiaries is more fully discussed in Chaplin Susp. Povr. Aliena, 170 et seq. 260 THE BENEFICIARY. or for interest, simple or compound ( 234 et seq.) ; enforce a summary application for payments ( 254- et seq.) ; or have him punished for contempt, by tine or imprisonment (Chap. XXVI.) ; and in general compel the proper execution of the trust and have every unauthorized impairment made good. As to the remedy by injunction, see 2 Perry on Trusts, 816 ; and the last sen- tence of this present section. And in proper cases he may also pursue his remedy against the trustee's sureties, if there is a bond. So also in cases discussed below he may trace property which has been improperly diverted from the trust, and recover it. A trust created for the benefit of one person cannot be en- forced for the benefit of another ; as where three joint endorsers of a corporation note agreed among themselves that in case of the default of the corporation, each should pay one third of the amount, and each executed a mortgage to a trustee to be fore- closed at the instance and for the benefit of either of the others who should be obliged to pay more than his share. It was held that on default of the corporation, these mortgages could not be enforced for the benefit of the creditors. Seward v. Hunting- ton, 94 N. Y. 104. In Petrie v. Petrie, 7 Lans. 90 (97), it was held that if a trustee is insolvent, a beneficiary may maintain an action to restrain him from applying the funds of the estate to the payment of fictitious or outlawed debts, or committing any other breach of trust ; but not if he is solvent. Compare Sut- ler v. Johnson, 111 N. Y. 204 ; O'Flynn v. Powers, 136 N. Y. 412 (423). " A cetstui que trust is frequently spoken of as an equitable owner of the land. This, though a convenient form of expres- sion, is clearly inaccurate. The trustee is the owner of the land, and, of course, two persons with adverse interests cannot be owners of the same thing. What the cestui que trust really owns is the obligation of the trustee ; for an obligation is as truly the subject-matter of property as any physical res. The most strik- ing difference between property in a thing and property in an obligation is in the mode of enjoyment. The owner of a house or a horse enjoys the fruits of ownership without the aid of any other person. The only way in which the owner of an obligation can realize his ownership is by compelling its performance by the obligor. Hence, in the one case, the owner is said to have a REMEDIES AGAINST THE TRUSTEE. 261 right in rem, and, in the other, a right inpersonam. In other respects the common rules of property apply equally to owner- ship of things and ownership of obligations. For example, what may be called the passive rights of ownership are the same in both cases. The general duty resting upon all mankind not to destroy the property of another is as cogent in favor of an obligee as it is in favor of the owner of a horse." Professor Ames, in 1 Harv. L. Rev. 1 (9). The conception of two owners of the same identical thing at the same time, one recognized at law as the real owner, and the other recognized in equity as the real owner, a conception so fre- quently encountered in the reports and text-books, has not by any means disappeared in this State, in spite of the statutory declaration, in harmony with the principle stated by Professor Ames, that the beneficiary should have no estatefeither at law or in equity Jbut merely a right to enforce the performance of the trust. Indeed, the conception of an equitable ownership figures not merely as a matter of phraseology, but as a practical basis for decisions resting entirely upon it. Thus, under the statute pro- viding that in certain cases rents undisposed of shall belong to the person presumptively entitled to the " next eventual es- tate," it has been held that where there is a trust in M to receive and apply part of the rents for a term, to the use of A for life, and then to apply all the rents to the use of B for life, B was entitled to the " next eventual estate" (i.e., an "equitable es- tate" as beneficiary), and so should receive, pending the life of A, the portion of the rents undisposed of. Pray v. Hegenum, 92 N. Y. 508 (519). The strict theory, therefore, cannot be fol- lowed out of the window, and accordingly, throughout this book, the usual terms have sometimes been adopted. In reference to the case last cited, it might be said to turn on a mere question of statutory construction, and to hold that the Legislature, by the term " next eventual estate," intended the next eventual right to the benefit, but the court hardly seem to place their decision on that ground. For on page 519 they speak of the beneficial interest in the future trust as " a plain devise of an equitable life estate to Austin D. Moore, Jr., in the share given to him, which would carry all the accruing rents and profits." Compare end of 492, post. 262 THE BENEFICIARY. "Where it is necessary in any proceedings to allege or prove the existence of a trust, as distinguished from a mere indebted- ness, the fact that the so-called trustee, in the transaction in ques- tion, promised to pay interest on the moneys received, is almost conclusive evidence of a debt. Ames's " Cases on Trusts" (2d ed.), 32, note, and cases there cited. But, as in Hamer v. Sid- way, 124 N". Y. 538, an acknowledgment that a certain fund is held for another "on deposit drawing interest" does not have this effect ; the trustee does not agree to pay interest for the use of the money, but says it is set apart and invested, and is earning interest for the beneficiary. 1 374- Jurisdiction. Even apart from the statutes, equity has general jurisdiction in cases of trust, to supervise the acts of a trustee and protect the beneficiary. N. Y. Constitution, Art. VI., 1 ; Bispham on Equity, chap. 11, 20 ; 1 Perry on Trusts, 10. And as between law and equity, the remedy of the bene- ficiary against a trustee, where the trust is open and continuing, and the accounts of the trustee have not been settled and adjust- ed and a balance ascertained, is in equity ; but where the trust has been closed and settled and a balance ascertained, an action at law will lie, for money had and received, or in other appro- priate form. Van Camp v. Searle, 147 N. Y. 150. By the Code of Civil Procedure, 2802, et seq., jurisdiction has been conferred on the Surrogates' Courts, in connection with testa- mentary trusts, and the provisions for various proceedings for accountings, applications for payment of money and delivery of property, Matter of Mo Carter, 94 N. Y. 558 (562) ; Tilden v. Dows, 3 Dem. 240 ; Beekman v. Vanderveer, 3 Dem. 221 ; Moorhouse v. Hutchinson, 4 Dom. 362 ; right to share in dis- tribution, security, removal, and appointment of successors, etc., are there set forth. And in this connection, it is to be noticed 1 For discussion of a trust as a contract, the performance of which can be enforced in equity, and the sometimes anomalous feature of the right of the beneficiary, as a third person, to enforce a contract to which, though made for his benefit, he is not a party, see a note in 1 Harv. L. Rev. 200, summariz- ing a lecture of Professor Ames ; ante, 29 et seq. and notes ; and an article by Profesnor Bennett, in 9 Harv. L. Rev. 233, and cases there cited, including JEtna Nat. Bank v. Fourth Nat. Bank, 46 N. Y. 82 ; Wheat v. Rice, 97 N. Y. 296 ; Oarnsey v. Rogers, 47 N. Y. 233. REMEDIES AGAINST THE TRUSTEE. 263 that the exclusive jurisdiction of equity, which figures as one of the elements in the definition of technical express trusts (ante, 29), has relation not solely to the courts which have succeed- ed to the general equity powers of the Court of Chancery, but also to any court upon which equitable jurisdiction covering a given case has been conferred. 1 Lewin on Trusts, 7. 375- Tracing trust property. Where trust property has been unlawfully converted or disposed of, the beneficiary, per- sonally or through a proper representative of the estate, as the case may be, may trace it, or its proceeds, so long as they can be identified, and may recover them until they come into the owner- ship of a bona fide purchaser for value and without notice. Ferris v. Van Vechten, 73 N. Y. 113 ; Fowler v. B. S. Bank, 113 N. Y. 450 (455) ; Matter of Gavin v. Gleason, 105 N. Y. 256 (260) ; Newton v. Porter, 69 N. Y. 133 ; Holmes v. Gil- man, 138 N. Y. 369 ; Baker v. N. Y. Nat. Exch. Bank, 100 N. Y. 31 ; Lockman v. Reilly, 95 N. Y. 64 ; Gilchrist v. Ste- venson, 9 Barb. R. 9 (16) ; /. & T. N. Bank v. Peters, 123 N. Y. 272 (278) ; Van Alen v. Am. Nat. Bank, 52 N. Y. 1 ; Matter of Leonhard, 86 Hun, 289 (297) ; Matter of Gilbert, 39 Hun, 61 ; aff'd 104 N. Y. 200 ; Matter of Greene, 2 Con. 166, and cases there cited ; A. S. JR. Co. v. Fancher, 145 N. Y. 552 ; s. c. 2 N. Y. Anno. Cases, 1, p. 10, note ; Converse v. Sickles, 146 N. Y. 200. Compare Hatch v. National Bank, 147 K Y. 184 ; Warren- Scharf Paving Co. v. Dunn, 8 A pp. Div. 205. See Graham v. Van Duzer, 2 Redf. 322. An attempt to fol- low the trust property does not constitute an election to waive any remedy against the trustee, and if the attempt is unsuccess- ful, the trustee may still be sued. Both remedies are consistent, and based on the same theory a breach of trust. Fowler v. B. S. Bank, 113 N". Y. 450 (455). So the beneficiary may trace the trust property, and proceed directly to secure its restoration to the trust, without first proceeding against the trustee's sureties. Haddow v. Lundy, 59 N. Y. 320 ; Flint v. Bell, 27 Hun, 155 (157), aff d 101 N. Y. 688 ; Oliver v. Piatt, 3 How. (L T . S.) 333 ; People v. American L. & T. Co., 2 App. Div. 193 ; Mat- ter of Leonhard, 86 Hun, 289 ; Newton v. Porter, 69 N. Y. J33 ; Holmes v. Oilman, 138 N. Y. 369 ; Van Alen v. Ameri- 264 THE BENEFICIARY. can Nat. Bank, 52 N. Y. 1 ; Baker v. N. Y. Nat. Exch. Bank, 100 N. Y. 31. The beneficiary may, if he so elect, take the substituted property procured by the trustee with the trust funds. Ferris v. Van Vechten, T3 N. Y. 113. Or he may elect, if the trust fund and the trustee's personal fund have been invested together, to become co-owner with the trustee in the substituted property. Holmes v. Oilman, 138 N. Y. 369 (378). Or he may hold the trustee personally liable for misappropria- tion. Ferris v. Van Vechten, 73 N. Y. 113. The cases cited show that these principles are general in character and not con- fined to the case of express trusts. On the other hand, in ex- press trusts they may be modified, as to procedure, and parties, by the nature of the trust and the relation of the beneficiary to the title. 1 But in order to succeed in tracing and recovering the trust property or its proceeds, it is essential to clearly prove the identity of the property found, or show that the proceeds of the trust property are invested therein. Ferris v. Van Vechten, 73 N. Y. 113 (119). The same principle applies, as against other creditors of the trustee, where he has converted the trust funds to his own use and an attempt is made to trace them into a bal- ance to his credit at a bank, or into other property held by him. Matter of Gavin v. Gleason, 105 N. Y. 256. 376. Estoppel. For a discussion of the principle that in certain cases the beneficiary may be estopped from seeking relief against the trustee for his past acts, see ante, 256. 377. Right to refunding. Legatees may be held liable to restore a trust fund entitled to prior payment, where the pay- ment to them has been made without authority of a decree bind- ing all parties, and there also proves to have been a deficiency of assets to complete the trust fund. Mills v. Smith, 141 N. Y. 256. Failure to cite parties interested in a certain trust fund, in an accounting by an executor-trustee, does not render distributees liable to refund, where the evidence shows that they were not 1 For an attempt to trace trust funds into real estate, in the Surrogate's Court, and then to use his decree, in an action for partition of the land, as establishing legal title in the claimants, see Side v. Brenneman, 7 App. Div. 273. REMEDIES AGAINST THE TRUSTEE. 265 paid from that fund, but that it was afterward wasted by the executor-trustee. Mills v. Smith, 141 N. Y. 256. Where an executor-trustee accounts before the surrogate, and his accounts are settled, showing in his hands a certain trust fund, and subse- quently there is a devastavit, and no trust fund remains, the per- son entitled to receive that fund absolutely cannot require the residuary legatees who have received the rest of the estate to refund. As between him and them there is no cause of action. His remedy is against the executor. This was a case where the only evidence went to show that the trust fund was not used to pay the residuary legatees, but was held distinct, and was wasted by the executor-trustee. This rule applies though neither plain- tiff nor his predecessor, interested in the trust fund, was cited on the accounting. This defect, in the absence of a showing that the residuary legatees received his -fund, merely left the execu- tor-trustee unprotected by the accounting, as against the plaintiff. Mills v. Smith, 141 N. Y. 256. And on the general subject of refunding, see also Matter of Lang, 144 N. Y. 275 ; Petrie v. Petrie, 7 Lans. 90 (95). Where commissions are allowed or paid by beneficiaries or successors, but the payment or allowance is induced by fraud or duress, and is not voluntary, they may be recovered back. Scholey v. Mumford, 60 N. Y. 498 ; s. c. 64 N. Y. 521. But if parties voluntarily elect to adjust a disputed claim of commissions, and there is no fraud or duress, the com- missions cannot be recovered back. Hurlburt v. Durant, 88 N. Y. 121 (128) ; Hancox v. Meeker, 95 N. Y. 528 (538). 1 1 As to the principle governing the jurisdiction of the Surrogate's Court, where there has been an overpayment to a legatee, and the executor, on ac- counting, seeks an affirmative decree against the legatee, and in his own favor, for the excess, see Matter of Underbill, 117 N. Y. 471 ; compare Matter of Hodgman, 140 N. Y. 421 (431). CHAPTER V. THE TRUST PROPERTY. 378. May be any property. There is no restriction upon the form of property that may be held in trust. Anything that is capable of ownership, and of transfer at all, may be transferred and held in trust. Code C. P., 1910. Bishop on Insolvent Debtors, p. 173, et seq. There are, however, certain rights capable of possession but not of transfer, on the ground that an assignment of them would be contrary to public policy ; e.g., a trustee cannot assign his right to unaccrued commissions (ante, 317). Other illustrations are given in 1 Perry on Trusts, 69. Apart from such exceptions, the property assigned may consist in a mere equitable title. It may be an equity, over and above a mortgage, or may be charged with the payment of debts or lega- cies, Scott v. 8lebbins, 91 N. Y. 605, and is of course subject to existing rights of creditors in fraud of whom it may have been transferred in trust, or to the payment of testator's debts in so far as it may be needed after his other property first liable may prove insufficient. 1 Locke v. F. L. & T. Co., 140 N. Y. 135. 379. Real property. The usual subject of real property trusts is a present estate. But future estates may be transferred in trust ; the owner of land may vest a future estate in a trustee, Peck v. Sherwood, 56 N. Y. 615. Ante, 147. And land may 1 A general gift of the entire income of personal property, or of the rents and profits of real property, may be equivalent to a general gift of the prop- erty itself. This rule is controlled by the expressed or implied intent of the donor, and such intent may be evidenced by the fact of his giving the prop- erty itself to others in the same instrument, and by other indications. Locke v. F.' L. & T. Co., 140 N. Y. 135 (146); Patterson v. Ellis, 11 Wend. 298; Smith v. Post, 2 Edw. Oh. 526 ; Hatch v. Bassett, 52 N. Y. 359 (362). See par- ticularly Matter of Smith, 131 N. Y. 239. PERSONAL PROPERTY. 267 be devised on a trust to arise upon a future contingency. See Reed v. Underhill, 12 Barb. R. 113 (116-117) ; Winihrop v. McKim, 51 How. Pr. 323, aft'd 66 N. Y. 625. And a remain- derman may create a trust in his remainder, to vest in possession in the trustee at the termination of the precedent estate. King v. Whaley, 59 Barb. R. 71 (77). 380. Personal property. Money is a frequent subject of disposition in trust. The trust corpus may also consist in a policy of insurance on the life of a third party, Matson v. Abbey, 70 Hun, 475, aff'd 141 N. Y. 179 ; SmiUie v. Quinn, 90 N. Y. 492 ; or on the life of the creator of the trust, see Sutler v. State M. L. A. Co., 55 Hun, 296, aff'd 125 N. Y. 769, see Johnston v. Smith, 25 Hun, 171 ; or a contingent interest under a policy, Hirsh v. Auer, 146 N. Y. 13 (19) ; or a bond and mortgage executed by a third party, and held by the creator of the trust, and assigned or bequeathed by him to the trustee, Van Epps v. Van Epps, 9 Pai. Ch. 237 ; Tobias v. Mayor, 17 Hun, 534 ; Cornell v. Cornell, 96 N. Y. 108. Or the owner of real prop- erty, for the purpose of creating a trust, may convey it to a third party, and take back a mortgage to himself as trustee for desig- nated persons ; in such case, the land belongs to the grantee, subject to the mortgage, and the grantor holds the mortgage in trust, McPherson v. Rollins, 107 N. Y. 316 ; Kirsch v. Tozier, 143 N. Y. 390, if so intended, Beeman v. Beeman, 88 Hun, 14 ; Coleman v. Hiler, 85 Hun, 547 ; Buffalo Cement Co. v. McNaughton, 90 Hun, 74 ; Kelsey v. Cooley, 11 N. Y. Supp. 745 ; Townsend v. Rackham, 143 N. Y. 516. Compare ante, pp. 14, 15, 50, 66 ; and ante, 186. For further illustrations of mortgages as trust corpus, see Ettlinger v. P. R. & C. Co., 142 IS". Y. 189 ; Matter of Mechanics' Bank, 2 Barb. R. 446 ; Nearpass v. Newman. 106 N. Y. 47 ; Brink v. Layton, 2 Redf. 79 ; Brown v. Harris, 25 Barb. R. 134 ; ante, 186. So with a fractional interest in a bond and mortgage, Downing v. Mar- shall, 23 N. Y. 366 (371). So with chattel mortgages. Zeiter v. Bowman, 6 Barb. R. 133. And an assignment to a trustee carries the equity in a chattel mortgage previously given by the assign- or. Kitchen v. Lowery, 127 N. Y. 53. As to indemnity claims against a foreign government, see Taft v. Marsily, 120 N. Y. 268 THE TRUST PROPERTY. 474 ; benefit certificates, Matter of Palmer, 3 Dem. 129 ; con- tracts for the payment of money, Cummins v. Barkalow, 1 Abb. Ct. App. Dec. 479 (185) ; book accounts, Ditmars v. Smith, 3 App. Div. 57 ; part of a debt, Chambers v. Lancaster, 3 App. Div. 215 (216) ; patent right, Barnes v. Morgan, 3 Hun, 703 ; 4 Abb. K. C. 67, note ; bonds, Gilehrist v. Stevenson, 9 Barb. R. 9 ; judgments, Woodruff v. Boyden^ 3 Abb. N". 0. 29 ; any choses in action, Wade v. Holbrook, 2 Redf. 378, see Code C. P., 1910 ; proceeds to be derived from a future sale of land under a power, and then to be held in trust, ante, 150. A contingent remainder consisting in the balance, if any, of per- sonal property which may be left unconsumed by a third par- ty, a life tenant, may he included, as a future interest, in a present gift to a trustee. House v. Raymond, 3 Hun, 44 (49). A deed of trust by one of " all his property, real and personal," to a trustee, to manage for his benefit during his life, with power to sell, and pay the proceeds to the cre- ator of the trust, does not presumably include such prop- erty as the assignor's watch, his wearing apparel, and a portrait of himself. It is not to be supposed that he intended to have such articles sold. Hill v. Heerm,ans, 6 Hun, 661. As to a lease held by testator as tenant, see Miller v. Knox y 48 IS". Y. 232. As to a trust in income, while the corpus is vested in the beneficiary, see Onondaga T. & D. Co. v. Price, 87 N. Y. 542 (547). The trust corpus may consist in the lien of testator's es- tate upon testator's firm business and property, Bell v. Ilep- worth^ 134 N. Y. 442 (449), or of patents, trade secrets, and copy- rights, 1 Perry on Trusts, 67. For many other illustrations, see ante, 82, et seq. Stock certificates may be held in trust, and though they stand in the individual name of the trustee, evi- dence may, at his death, be given to show the trust, as in Ouion v. Williams, 7 Is T . Y. Supp. 786, 55 Hun, 605, aff'd 125 N. Y. 768. 1 1 In addition to the cases on trusts in savings bank deposits, cited ante, 87, see Markey v. Markey, 13 N. Y. Supp. 925, where deposit " in trust" for an- other, and delivery of the book, failed to create either a trust or a gift because none was intended. For an excellent statement of the essential features of a perfected gift of sealed obligations and mercantile specialties, by delivery of deed of gift or TRANSFER TAX. 269 381. Estimating its value. Under the statute (L. 1860, cji- 360) providing that no person having a husband, wife, child or parent shall bequeath or devise to any charitable, etc., corpora- tion, etc., more than one half of his net estate, the rule is settled that if he give a life estate, followed by a bequest or devise of the remainder to charity, the question of whether he has violated the statute is determined by ascertaining the cash value, at his death, of the life estate, according to the life tables, and com- paring the result with the then cash value of the remainder. Hollis v. Drew Theological Seminary, 95 N. Y. 166 (compare Matter of Teed, 59 Hun, 63 ; 76 Hun, 567). But if there is a power, in the trustee of the life estate or other life tenant, or any one, or, in the case of personal property, a trust, to sell and apply the corpus, so far as necessary, to the use of the life tenant, or life beneficiary, it has been held that this rule cannot be applied, and that therefore the computation must be deferred until, at the termination of the life estate, it can be ascertained as a matter of fact what portion of the estate has gone to the life ten- ant. Hich v. Tiffany, 2 App. Div. 25. It might have seemed that as the gift to charity is either valid or invalid at testator's death, and as it is then invalid only if it does then exceed one half, the burden should be thrown upon the contestant to show the invalidity as of that date. Compare Matter of Davis, 149 N. Y. 539. ' 382. Transfer tax. Concerning the application of the Tax- able Transfer Act and the statutes which it replaced upon trans- fers of real property and personal property respectively, see Matter of Swift, 137 N. Y. 77 ; Matter of James, 144 N. Y. 6. As to their bearing upon the case of non-resident transferors, delivery of the document, the transfer passing title to the physical instrument and carrying an irrevocable power of attorney to the donee to collect, in the name of the obligee, but for his own use, see note in 5 Harv. L. Rev., 35 ; also Professor Ames' notes in his " Cases on Trusts" (2d ed.), pp. 140, 145, 156, 162. For a case of a gift of chattels by present words of gift the parties being present at the place where the chattels were, the situation being practically identical with that in the cases summarized, ante, p. 44, see Kilpin v. Ratley (1892), 1 Q. B. 582. 270 THE TRUST PROPERTY. see Matter of James, 144 N". Y. 6 ; Matter of Houdayer, 150 N. Y. 37 ; Matter of Phipps, 77 Hun, 325 ; aff'd 143 K Y. 641 ; Matter of Whiting, 150 K Y. 27 ; Matter of Bronson, 150 N. Y. 1. As to the bearing of the general tax laws upon securities held in trust, as affected by the non-residence of trus- tees or beneficiaries, or the fact that the property is not within the State, see People ex rel. Day v. Barker, 135 N. Y. 656 ; People ex rel. Darrow v. Coleman, 119 N. Y. 137. In general, see also the following : Matter of Davis, 149 N. Y. 539 ; Mat- ter of Morgan, 150 N. Y. 35 ; People ex rel. Gould v. Barker, 150 N. Y. 52 ; Matter of Ogsbury, 7 App. Div. 71 ; Matter of Green, 7 App. Div. 339. The fact that a trustee deposits his own funds, together with trust funds, in his name " as trustee," does not relieve his estate, on his death, from the imposition of a transfer tax upon the amount of his own funds thus deposited, which, while in principle a debt owing to hirn, as trustee, by the bank, practically constitute, in relation to the transfer tax, his own property, or represent an interest in property. Matter of Houdayer, 150 N. Y. 37 (41). " A deed of trust, executed February 14th, 1889, provided that the trustee named therein should hold certain securities and apply their income to the use of the grantor as long as she should live, and after her death that he should divide the securities equally among her nieces, and also contained the following proviso : ' Provided, however, that this instrument may, at any time, be modified or vacated by an instrument in writing to be executed by me and by the said trus- tee, or his successor or successors.' Under this latter clause the instrument was subsequently slightly modified. The grantor died on the 21st day of May, 1893. [It was] Held, that the property which passed under the trust deed was not subject to the transfer tax imposed by ch. 399 of the Laws of 1892 ; that the transfer became effective at once upon the execution of the deed and the delivery of the securities, and that the donees men- tioned in the instrument took a vested interest, liable only to be defeated by their failure to survive the donor or by modifications which might be agreed upon, during the term of the trust, be- tween the trustee and the grantor ; that there was no power of revocation reserved, as the power to revoke or modify expressly required the assent of both the donor and the donee ; that the TRANSFER TAX. 271 transfer was in the nature of a gift inter vivos and was not tax- able." (Head note, Matter of Green, 7 App. Div. 339, which cites Matter of Seaman, 147 N. Y. 69 ; Estate of David, Surr. Dec. (N. Y. Co.) 1895, 263). See also Matter of Ogsbury, 7 App. Div. 71. CHAPTER VI. THE TRUST TERM. 383* General principle. There is no statute providing spe- cifically the term for which a trust may be created to continue, except (1) in the case of trusts for accumulation, as to which see post, 405, 406 ; (2) in the case of trusts to receive and apply rents to the use of a person " during the life of that person, or for any shorter term," as to which see post, 394 ; (3) in the case of trusts for the benefit of creditors, which cease after twenty-five years, unless otherwise provided by the trust instru- ment or especially prescribed by law ; Real Prop. L. , 90 ; and (4) that every express trust ceases when its purpose ceases. Real Prop. L., 89. (5) The only other statutes bearing on this sub- ject are those which deal with suspension of the power of aliena- tion, or of ownership, beyond a specified term. These latter, therefore, apply in any event only to such trusts as involve sus- pension ; but all other trusts may be created without reference to any designated term, save for the exceptions just enumerated. 1 The two points here to be considered, therefore, are, first, the nature of suspension, and the restrictions imposed on it ; and sec- ondly, the distinction between the trusts that do, and those that do not, involve suspension. The subject of suspension, which can be properly discussed only in its full relation to future con- tingencies as well as trusts, has been examined in detail elsewhere (Chaplin on Susp. Pow. Aliena.). In this chapter, the general principles are set forth, with leading illustrations. In taking up the subject, it must first be noticed that the recent revision, which went into effect October 1st, 1896, made some radical changes which might appear, at least on their face, to alter the 1 " The absolute ownership of a term of years shall not be suspended for a longer period than the absolute power of alienation can be suspended in re- spect to a fee." Real Prop. L , 39. STATUTES COMPARED. 273 established theory of suspension as effected by trusts. The former and the present statutes will, therefore, be quoted and compared. 384. The former statutes. The former revision provided, in respect to real property, that " Every future estate shall be void in its creation which shall suspend the absolute power of alienation for a longer period than is prescribed in this article. Such power of alienation is suspended when there are no persons in being by whom an absolute fee in possession can be con- veyed." 1 R. S. 723, 14. " The absolute power of aliena- tion shall not be suspended by any limitation or condition what- ever for a longer period than during the continuance of not more than two lives in being at the creation of the estate, except in the single case mentioned in the next section" (as to which see post, 392). Id., 15. 385. The present statute. The foregoing provisions were repealed by the Real Property Law, which has substituted there- for the following provisions in respect to real property : " The absolute power of alienation is suspended, when there are no persons in being by whom an absolute fee in possession can be conveyed. Every future estate shall be void in its crea- tion, which shall suspend the absolute power of alienation, by any limitation or condition whatever, for a longer period than during the continuance of not more than two lives in being at the creation of the estate ; except" (as to the exception, see post, 392) ... " For the purposes of this section a minority is deemed a part of a life and not an absolute term equal to the possible duration of such minority." Real Prop. L., 32. 386. Statutes compared. The definition of suspension, i.e., that it exists " when there are no persons in being by whom an absolute fee in possession can be conveyed," is the same, under the former and the present law. Now nothing was better settled than that there were two methods (disregarding powers, which do not in reality constitute a distinct class) of so disposing of property that there should not be persons in being by whom an absolute fee in possession could be conveyed, namely by either 18 274 THE TKUST TERM. creating certain future estates, or creating certain express trusts. The revisers of 1830, in their notes, announced that only the former of these methods could effect suspension, for they say that " An estate is never inalienable unless there is a contingent remainder, and the contingency has not yet occurred. This is the meaning of the law prohibiting perpetuities, and is the effect of the definition in 14." (5 Stat. at Large (Edmonds), Ap- pendix, 307.) This view obtained, at first, some support from the courts, Kane v. Gott, 24 Wend, at 662 ; and opinion of McCoun, V. C., Lorillard v. Coster, 5 Pai. at 188, et seq., but was finally overthrown, and the law was clearly established that estates may be rendered inalienable either by certain contingen- cies, or by certain express trusts. See Kane v. Gott, 24 Wend, at '662. Also opinion of Nelson, Ch. J., in Hawley v. James, 16 Wend, at 121 ; and Coster v. LoriUard, 14 Wend, at 305- 306 ; s. c. 5 Pai. 218, 222, et seq. ; Radley v. Kuhn, 97 N. Y. 26 (34) ; Robert v. Corning, 89 N. Y. 225 (235) ; Smith v. Edwards, 88 N. Y. 92 (102, et seq.} ; Leonard v. Burr, 18 N. Y. 96 (107) ; Craig v. Hone, 2 Edw. Ch. 554, 564. The reason for this conclusion is very plain. For as to con- tingent estates, there are two classes, one of which does, and one of which does not, involve suspension. " A future estate . . . is contingent while (1) the person to whom, or (2) the event on which, it is limited to take effect remains uncertain." Real Prop. L., 30. Now if the only uncertainty lies in the event, and it is certain who is to take the estate if the event happens, it creates no suspension. For " An expectant estate is descendible, devisable and alienable, in the same manner as an estate in pos- session." Real Prop, L. 47. And if all the persons are ascer- tained who can in any event take the expectant estate, they can, by all uniting with the owner of the present estate, convey an absolute fee in possession. The power is not suspended. 1 On the other hand, if there is such uncertainty as to the persons, that it cannot be said that it must, in every event, go to some one or more of a number of living and ascertained persons, then, obviously, there is an interest as yet unrepresented, and conse- quently it is impossible to effect an absolute conveyance of the 1 See Chaplin, Susp. Pow. Aliena., 64, et seq. STATUTES COMPARED. 275 fee in possession. For example, if a future estate in fee is limit- ed to A, if A. outlives the precedent estate, otherwise to B, A and B between them represent every future interest, and if they and the life tenant unite, they can convey an absolute fee. The power is not suspended. But if a future estate is limited to such children of A (an unmarried man) as may be living at the ter- mination of the precedent estate, and if none, then to B, it can- not be said, till that time comes, who is to take the remainder. The power is suspended. 1 So much for contingent estates. As to express trusts, there are also two classes, one of which does, and one which does not, effect suspension. For where the trust (for example, a trust to sell land for the benefit of cred- itors) is not such as to stand in the way of an outright sale of the real property at any time, either by the trustee, or the trustee and others acting together, or of a release of the debts, by the creditors, there is, ex m termini, no suspension of the absolute power of alienation. But on the other hand there are trusts (e.g., a trust merely to receive and apply rents and profits) the very purpose and essence of which is that the land shall not be alienated by the trustee during the term, RadUy v. Kuhn, 97 N. Y. at p. 31 ; Robert v. Corning, 89 N. Y. at p. 335 ; and where, consequently, a sale by him would be in direct contra- vention of the trust, and as to such the statute provides that where the trust is expressed in the instrument creating the estate, every sale, conveyance or other act of the trustee, in contraven- tion of the trust, shall be absolutely void, Real Prop. L., 85 ; and also that " the right of a beneficiary, of an express trust to receive the rents and profits of real property and apply them to the use of any person, cannot be transferred by assignment or otherwise." Id., 83. In such a case, though all interests, present and future, are represented by living and designated per- sons, " there are no person^ in being by whom an absolute fee in possession can be conveyed." Everitt v. Everitt, 29 N. Y. 39 (90) ; Radley v. Kuhn, 97 N. Y. 26 (34) ; Robert v. Corning, 89 N. Y. 225 (235) ; Smith v. Edwards, 88 N. Y. 92 (102) ; Leonard v. Burr, 18 N. Y. 96 (107). 1 The same principle applies, though a future estate is vested, but defeasi- bly, so that it may be divested in favor of persons as yet unascertained. Cochrane v. ScMl, 140 N. Y. 516 (539). 276 THE TRUST TERM. Such then were the principles affecting suspension under the Revised Statutes : (1) A definition of suspension, as existing whenever there are no persons in being by whom an absolute fee in possession can be conveyed ; (2) a general prohibition of such suspension (except within specified limits) by any limitation or condition whatever ; (3) the principle that suspension might be effected either (in the nature of things) by a contingent estate given to unascertained persons, or (by virtue of the statutes) by an express trust under which the trustee was forbidden to sell, and the beneficiary was forbidden to assign. For in both cases was found the inability to convey in the one case in the nature of the contingency affecting the person who should take the future estate, and in the other in the statutory prohibition of sales of an estate, even though held by arid for ascertained persons. But the revisers of 1896 have omitted entirely the general prohibition against suspension, on which this entire system hinged. For in place of the old statutes : " The absolute power of alienation shall not be suspended by any limitation or condi- tion whatever, for a longer period," etc. (referring both to trusts and contingencies) ; and " every future estate shall be void in its creation which shall suspend the absolute power of alienation for a longer period," etc. (referring solely to suspension effected by a contingency, and dealing with the fate of the future estate which produces that result, the present revisers have substituted the following only : " Every future estate shall be void in its creation, which shall suspend the absolute power of alienation, ty any limitation or condition whatever, for a longer period," etc. This deals solely with suspension effected by future estates. The words " any limitation or condition whatever," which for- merly constituted a part of the abolished general prohibition, now relate only to future estates. It is difficult to perceive what purpose the revisers of 1896 had in mind. If they had intended to revert to the original intention of the former revisers, that nothing but future contingent estates should effect a suspension (see ante, p. 274), they could hardly have phrased these sections better. For example, under this theory, land might be devised to twenty trustees, to receive and apply the rents and profits to fifty beneficiaries, all those living at any given time to succeed to the beneficial rights of those who died : with a vested remain- STATUTES COMPARED. 277 der to others in fee. See Chaplin, Susp. Pow. Aliena., 360- 366. It seems inevitable, therefore, that the new statute (if to be read according to its express terms) in confining its prohibition to suspension caused by future estates, either (1) leaves express trusts without any prescribed term within which they must cease, or (2) proceeds on some theory that a present vested estate held in trust to receive and apply rents, is, or involves, some kind of a future and contingent estate ; that this contingent estate is what causes the trust to effect suspension ; and that thereby it falls within the provision that " every future estate shall be void in its creation which shall suspend the absolute power of alienation" beyond two lives, etc. Now there can be no doubt that the es- tate of the trustee is present, and vested. The only thing that is in any sense future is the beneficiary's right to the rents as they shall from time to time become due and payable. Whether this can be called a future estate seems to be the question. u A future estate is an estate limited to commence in possession at a future day, either without the intervention of a precedent estate, or on the determination, by lapse of time or otherwise, of a pre- cedent estate created at the same time." Real Prop. L., 27. The right of the beneficiary hardly seems to fall within this defini- tion. A further statute, Real Prop. L. , 50 (and on this, per- haps, the revisers of 1896 relied), provides that " A disposition of the rents and profits of real property to accrue and be received at any time subsequent to the execution of the instrument creating such disposition, shall be governed by the rules established in this article, for future estates in real property." As to this sec- tion, it is reproduced from the Revised Statutes (1 R. S. 725, 36). It has not received much attention from the courts, and its purpose is somewhat obscure. One thing, however, seems perfectly clear. If it applies at all to the case of rents and profits under trusts to receive and apply them, and so renders them sub- ject to the rules for future estates, it does not render them con- tingent / and it is only when future estates are contingent or de- feasible by a contingent estate or possibility that they effect suspension. The " estate" of the beneficiary of such a trust, in the future rents and profits of real estate, is not contingent or defeasible, for neither the person to whom nor the event on 278 THE TRUST TERM. which it is limited to take effect remains uncertain. Real Prop. L., 30. Furthermore, this very question has (in another con- nection) been discussed by the Court of Appeals. The case arose under the statute now embodied in Real Prop. L., 53, which provides that " when, in consequence of a valid limitation of an expectant estate, there is a suspension of the power of alienation, or of the ownership, during the continuance of which the rents and profits are undisposed of, and no valid direction for their accumulation is given, such rents and profits shall belong to the persons presumptively entitled to the next eventual estate." It is to be noticed that the section just quoted applies only where the suspension is caused by an expectant estate. It was argued that it does not apply to express trusts to receive and apply rents and profits, because such a trust does not involve any expectant estate ; and the court say : " This construction of the statute seems to be the natural construction according to the ordinary meaning of the language." (On this point see post, 489, et seq.) The court held the statute just quoted applicable in that case, because there was also a future estate which, though vested, was defeasible in favor of unascertained persons, a fact which caused a suspension. Cochrane v. Schell, 140 N". Y. 516 (538- 539). The statutory change above discussed presents many diffi- culties, which can only be laid at rest when they are brought be- fore the Court of Appeals. Mr. Birdseye (R. S., 2d ed., note to Real Prop. L., 32) takes the view that the present section does not vary materially from its predecessor. But as a mere matter of plain grammatical construction the difference is wide. It is no doubt highly probable that the courts will endeavor to find some means of construing the statute so as to avoid a change in the law. 1 387. Personal property. " The absolute ownership of per- sonal property shall not be suspended by any limitation or condi- 1 The opinion in Sanford v. Qoodell, 82 Hun, 369, fails to discriminate be- tween vesting and alienability. The theory on which it proceeds is erroneous, though it might, perhaps, be sustained on another ground. But the estates and interests there involved were all alienable, and the various parties could have united and conveyed an absolute fee. There was, therefore, no suspen- sion. See Sawyer \. Cubby, 146 N. Y. 192 ; Murphy v. Whitney, 140 N. Y. 541 (546) ; Bailey v. Bailey, 97 N. Y. 460. THE CREATION OF THE ESTATE. 279 tion whatever, for a longer period than during the continuance and until the termination of not more than two lives in being at the date of the instrument containing such limitation or condi- tion ; or if such instrument be a will, for not more than two lives in being at the death of the testator." 1 R. S. 773, 1. " In all other respects, limitations of future or contingent inter- ests in personal property shall be subject to the rules prescribed in the first chapter of this act [i.e., 1 R. S. 718-750, now re- pealed and replaced by the Real Property Law of 1896] in rela- tion to future estates in lands." Id. Trusts of personal prop- erty, where, by analogy to the trusts of real property, neither the trustee nor the beneficiary can sell or release, suspend the absolute ownership of personal property. Genet v. Hunt, 113 N. Y. 158 (168). But if there are persons in being who, among them, have absolute ownership, and can by uniting, transfer the property and free it and its proceeds from the trust, there is no suspension. Sawye?' v. Cubby, 146 N. Y. 192 ; Murphy v. Whitney, 140 N. Y. 541 ; Montignovni v. Made, 145 N. Y. Ill ; Williams v. Montgomery, 148 N. Y. 519 (525) ; ante, p. 278, note ; Chaplin, Susp. Pow. Aliena., Chap. VII. 388. Powers. This subject is considered, post, Chap. XXII. 389. The statutory period. The period during which the statute allows suspension of the absolute power of alienation is 11 two lives in being at the creation of the estate" (Real Prop. L., 32), with a single exception applicable solely to real property. (Post, 392.) 390. " The creation of the estate." Where an expectant estate is created by grant, the delivery of the grant, and where it is created by devise, the death of the testator, shall be deemed the time of the creation of the estate." Real Prop. L., 54. " A grant takes effect, so as to vest the estate or interest intend- ed to be conveyed, only from its delivery ; and all the rules of law, now in force, in respect to the delivery of deeds, apply to grants hereafter executed." Real Prop. L., 209. And the validity of a testamentary disposition is to be determined by the facts as 280 THE TRUST TERM. they exist at the testator's death. For example, if the will cre- ates a trust for the lives of testator's three children, and before testator's death one of them dies, the trust then going into eftect is valid. Lang v. Ropke, 5 Sandf. R. 363 ; Griffen v. Ford, 1 Bosw. 123 (137) ; Tollman v. Tollman, 3 Misc. 465 (473) et seq. ; Lang v. Wilbraham, 2 Duer, 175 ; Dubois v. Ray, 7 Bosw. 300 ; Oxley v. Lane, 35 N. Y. 340 (344, 346) ; Hosea v. Jacobs, 98 Mass. 65 ; Lewis, " Perpetuities," 27 ; Gray, " Rule against Perpetuities," 231 ; 4 Kent Comm. (12th ed.) 283, note 1, cit- ing numerous English authorities. Contra, Odell v. Youngs, 64 How. Pr. 56. 391. Two lives in being. (A detailed examination of this subject will be found in Chaplin, Susp. Pow. Aliena.). In all cases (with one exception, post, 392) the suspension must be bounded strictly by two lives. Henderson v. Henderson, 113 N. Y. 1. The instrument must be so drawn that the suspension not only may, but inevitably must, so terminate. Schettler v. Smith, 41 N. Y. 328 (334 et seq.} ; Henderson v. Henderson, 113 N. Y. 1 (14, 15) ; compare Purdy v. Hayt, 92 N. Y. 446 (457). Part of a life, e.g., a minority, counts for a life ; Benedict v. Well, 98 N. Y. 460 (466). Real Prop. L., 32. The lives designated must be lives of persons in being at the creation of the estate. Thus, a designation of the " wife' ' or " widow" of an unmarried person will not answer, for he might marry a person not now in being. Schettler v. Smith, 41 N". Y. 328 ; Van Brunt v. Van Brunt, 111 N. Y. 178 ; Durfee v. Pomeroy, 7 App. Div. 431. Although a term of suspension must be meas- ured by a life or two lives in being, yet there is no objection to employing any other measures, so long as they cannot extend the term beyond two designated lives. Phelps' Ev?r v. Pond, 23 N. Y. 69 ; Oxley v. Lone, 35 N. Y. 340 (345, 357). And so it is unobjectionable to create a trust to last until many lives have ended, if only no particular portion of the trust estate is tied up for more than two lives, as where a trust is created to divide the property into ten shares, and hold each share in trust during two lives respectively, Stevensonv. Lesley, 70 N. Y. 512 ; Meserolev. Meserole, 1 Hun, 66 ; Savage v. Burnham, 17 N. Y. 561 (570). Allen v. Allen, 149 N. Y. 280. BEYOND TWO LIVES. 281 The lives selected to measure the term may be those of any per- sons, whether trustees, beneficiaries, or third parties. Bailey v. Bailey, 97 N. Y. 4-60 (467), except that trusts to accumulate must be created for the sole benefit of an infant, and must begin during its minority and end at or before its majority, Real Prop. L., 51 ; 1 R. S. 773, 3 ; but they may be created for the benefit even of an unborn child, to go into operation during its minority and within the duration of any two designated lives in being at the original creation of the estate. Id. And in case of real property only, trusts may exist after the lapse of two lives, in one case, post, 392. 392. Beyond two lives. " A contingent remainder in fee may be created on a prior remainder in fee, to take effect in the event that the persons to whom the first remainder is limited, die under the age of twenty- one years, or on any other contin- gency by which the estate of such persons may be determined before they attain full age." Real Prop. L., 32. See post, 404 et seq. ; 413. This provision relates exclusively to real property. (Compare Real Prop. L., 51, with 1 R. S. 773, 3.) CHAPTER VII. THE TRUST PURPOSE. (1) Real Property. 393- Introductory. In their notes, the revisers of 1830 say : " As the creation of trusts is always in a greater or less de- gree the source of inconvenience and expense, by embarrassing the title, and requiring the frequent aid of a court of equity, it is desirable that express trusts should be limited as far as possi- ble, and the purposes for which they may be created strictly de- fined. The object of the revisers in this section is to allow the creation of express trusts, in those cases and in those cases only where the purposes of the trust require that the legal estate should pass to the trustees. . . . After much reflection, the revisers have not been able to satisfy themselves that there are any cases not enumerated in this section [1 R. S. 728, 55 ; Real Prop. L., 76], in which, in order to secure the execution of the trust, it is necessary that the title or possession should vest in the trustees. Where no such necessity exists (as where the trust is to convey, or to make partitions, etc.), it is obvious that without giving any estate to the trustees, the trust may as well be executed as a power." Accordingly, the Real Property Law of 1896, following in substance the provisions of the Revised Statutes, provides that " Uses and trusts concerning real prop- erty, except as authorized and modified by this article, have been abolished" ( 71) and also (id,, 73) that the preceding sections of the Article shall not prevent or affect the creation of such ex- press trusts, as are thereinafter authorized and defined ; and also ( 76) that 394. The four classes. " An express trust may be created for one or more [the Revised Statutes said ' any or either'] of the following purposes : REAL PROPERTY. 283 " 1. To sell real property for the benefit of creditors ; "2. To sell, mortgage, or lease real property for the benefit of annuitants or other legatees, or for the purpose of satisfying any charge thereon ; "3. To receive the rents and profits of real property, and apply them to the use of any person, during the life of that per- son, or for any shorter term, subject to the provisions of law re- lating thereto ; " 4. To receive the rents and profits of real property, and to accumulate the same for the purposes, and within the limits pre- scribed by law.' ' Real Prop. L., 76. ' Except for one or more of these four purposes, an express trust in real property cannot be created. Syracuse Savings Bank v. Holden, 105 N. Y. 415 (418) ; Follett v. Badeau, 26 Hun, 253 (256). But still, the statute includes, within its terms, an indefi- nite number of particular and special trusts, and the creator of the trust may specify a particular purpose within the class, or create a general trust and leave much to the discretion of the trustee. Leggett v. Perkins, 2 N. Y. 297 (310-311). And the purpose contemplated may be gathered from the entire instru- ment. Kinnier v. Rogers, 42 N. Y. 531 (537). 395- Certain features in common. One consideration which applies to all four classes relates to the question whether the Legislature, in adopting the Revised Statutes, abolished all trusts and simultaneously created four classes which should be permitted ; or abolished all trusts except these four, leaving them standing, within their defined limits. The importance of the an- swer lies chiefly in the fact that under the latter view the princi- ples previously established and applicable to such trusts would still apply, and the earlier English and New York cases would still be binding ; while tinder the former view, the courts would have a freer hand to construe the statute, and determine the in- cidents of these trusts de novo. The doctrine on this subject is set forth in Leggett v. Perkins, 2 N. Y. 297 (307), where Gardi- ner, J., says : " The statute in reference to express trusts is mere- 1 An ante-nuptial deed of trust is restricted like all others, within these classes. Campbell v. Low, 9 Barb. R. 585. 284: THE TRUST PURPOSE. ly permissive. It creates nothing. The Legislature did not first annul all trusts and then proceed to a new creation. They abol- ished all except certain ones which they recognize as existing. The trusts preserved have their foundation in the common law, and their effect is to be determined by common law principles. Except that the statute restricts the purposes for which express trusts may be created, the authority of the donee is as absolute now as before the statute." When, for example, a trust of the third class is now created, "it is recognized as existing with all its common law incidents. The relation of. the donor and trus- tee, the power of the former and the duty of the latter, are pre- cisely what they were by the common law." But trusts of that class are now affected by the provision against assignment by the beneficiary (id., p. 327, dissenting opinion). So it has been held that the right to make a general assignment for the benefit of creditors is not a creation of statute, but is regulated and modi- fied by statute. Boese v. King, 78 N. Y. 471 (478) ; Thrash- er v. B entity, 59 N. Y. 649, opinion given in 1 Abb. N. C. 39 (44) ; People v. Chalmers, 1 Hun, 683, aff'd 60 N. Y. 154. Narrower in view are the remarks of Bronson, J., in Hawley v. James, 16 Wend. 60 (148), where he says : " To give 'effect to the statute, in the spirit in which it was enacted, we must, as far as practicable, eradicate from our minds all that we have learned in relation to the doctrine 6f trusts as they existed before the late revision and read the statute as though the particular kinds of express trusts which it specified were now for the first time authorized by law. We may resort to the common law for defi- nitions and rules of construction, where the statute itself is defi- cient. But in attempting to ascertain whether any particular trust can now be created, we cannot resort to the common law, for the obvious reason that this light has been extinguished by the Legislature." For further general discussion of the relation of the statute to the preceding law, compare Downing v. Mar- shall, 23 N. Y. 366 (377 et seq.) ; Tates v. Yates, 9 Barb. R. 324 ; Campbell v. Low, 9 Barb. R. 585 (589). As to retroactive effect of the statute, the first section of the Real Property Law declares that : " This chapter does not alter or impair any vested estate, interest, or right, nor alter or affect the construction of any conveyance, will, or other instrument THE FIRST CLASS. 285 which has taken effect at any time before this chapter becomes a law ;" e.g., the power of a beneficiary in a trust created before the Revised Statutes, to alien, was plainly a right reserved from their operation. Dyett v. C. T. Co., 140 N. Y. 54 (65). Other cases relating to retroactive effect are : Anderson v. Mather, 44 N. Y. 249 (258) ; Matter of Dekay, 4 Pai. Ch. 403 ; DePey- ster v. Clendining, 8 Pai. Ch. 295 (304), aff'd 26 Wend. 21 ; Jauncey v. Rutherford, 9 Pai. Ch. 273 (275) ; Bellinger v. Shafer, 2 Sandf. Ch. 293 (296) ; .Stagg v. Beekman, 2 Edw. Ch. 89 (91) ; Aspinwall v. Pirnie, 4 Edw. Ch. 410 ; Ogden v. Smith, 2 Pai. Ch. 195 ; Champlin v. Haight, 7 Hill, 245 ; Green v. Dikeman, 18 Barb. R. 535 ; Stewart v. MoMartin, 5 Barb. R. 438 (442) ; Welch v. Allen, 21 Wend. 147 ; Bishop v. Bishop, 4 Hill, 138 ; Salmon v. Stuyvesant, 16 Wend. 320 (324) ; Root v. Stuyvesant, 18 Wend. 257 ; Savage v. Burn- ham, 17 N. Y. 561. For illustrations of trust schemes which would have been valid if created before the statute, but which were by it rendered invalid for the future, see Hawley v. James, 16 Wend. 60 (113) ; Coster v. Lorillard, 14 Wend. 265 ; Chwatal v. Schreiner, 148 N. Y. 683. 396. The receipt of rents. The subject of the receipt of rents, in its bearing on all four classes of express trusts, has been considered ante, 146. (a) Tlie First Class. 397- To sell real property for the benefit of creditors. A general assignment for the benefit of creditors, in so far as it ap- plies to land, falls within the first class, Heerrnans v. Robertson, 64 N. Y. 332 (342) ; Bennett v. Goble, 43 Hun, 354 ; Kip v. Eirsh, 103 N. Y. 565 (571-572) ; Hullell v. Medbury, 53 N. Y. 98 ; Wagner v. Hodge, 34 Hun, 524, aff'd 98 N. Y. 654 ; Flint v. Bell, 27 Hun, 155, aff'd 101 N. Y. 688 ; as does a special assignment of part of the grantor's property, to pay some of his debts. Knapp v. McGowan, 96 N. Y. 75 (85). But in view of the fact that general assignments are also regulated by another statute relating specially thereto, and constitute a branch of law by themselves, and that they have already received (Bishop on Insolvent Debtors) elaborate and exhaustive treat- 286 THE TEUST PURPOSE. ment, they will not be treated here. Only such authorities bear- ing on them are referred to as bear also on all trusts of the first class. 1 The " creditors" referred to in the subdivision of Real Prop. L., 76, relating to the first class of trusts are only such as repre- sent debts already contracted when the trust goes into effect. Rome Exchange Bank v. Eames, 4 Abb. Ct. App. Dec. 83 (90 et seq.) ; Youngs v. Youngs, 53 N. Y". 613. The trust to sell must be absolute and imperative, without discretion in the trus- tee except as to time and manner of sale. Henderson v. Hen- derson, 113 N. Y. 1 (11) ; Cooke v. Platt, 98 N. Y. 35 ; Stein- hardt v. Cunningham, 130 N. Y. 292 (300). And the direction to sell must be the sole, or at least the primary purpose of the grant. Woerz v. Rademacher , 120 N. Y. 62 ; Cooke v. Platt, 98 N. Y. 35 (38, 39). See Henderson v. Henderson, 113 N. Y. 1 (11). Such a trust covers all the property transferred to the trustee, although only a part of it will be required to pay the debts. Bennett v. Oarlock, 79 N. Y. 302 (318). Differing from trusts to receive and apply income, which are limited to a term measured by lives (see ante, 389), and therefore neces- sarily involve a remainder over, vested or contingent, or a rever- sion in the grantor or in the testator's heirs, trusts to sell involve a fee in the trustee. It is true that even in such a case the crea- tor of the trust may declare to whom the lands to which the trust relates shall belong, in the event of the failure or termination of the trust, or may grant or devise the lands subject to the execu- 1 As to what is, and what is not a general assignment, see Royer Wheel Co. v. Fielding, 101 N. Y. 504 (509) ; Tiemeyer v. Turnquist, 85 N". Y. 516 (522) ; Him v. Bowe, 114 N. Y. 350 ; Matter of Gordon, 49 Hun, 370 (372) and cases there cited ; see 22 Abb. N. C. 339, note ; Watty v. Shipman, 21 Hun, 598 ; Hayden v. Wellington, 63 Fed. Rep. 6. Such general assignments cannot be revoked by the act of the assignor alone. Bishop on Insolvent Debtors, 3d ed., 284, 285. Concerning the effect on general assignments, of federal bankruptcy statutes, see Thraslier v. Bentley, 59 N. Y. 649 (opinion given in 1 Abb. N. C. 39) ; Boese v. King, 78 N. Y. 471 (477) ; Haas v. O'Brien, 66 N. Y. 597 ; Mayer v. Hellman, 91 U. S. 496 ; Bostwick v. Burnett, 74 N. Y. 317 ; Colie v. Jamison, 4 Hun, 284 (286) ; Matter of Backer, 2 Abb. N. C. 379 ; Ludington's Petition, 5 Abb. N. C. 307 (319) ; Havemeyer v. Loeb, 5 Abb. N. C. 338 ; Matter of Straus, 9 Abb. N. C. 131 ; Matter of Stowell, 16 Abb. N. C. 90 ; Von Hein v. Elkus, 8 Hun, 516. THE FIRST CLASS. 287 tion of the trust ; and that such a grantee or devisee thereby acquires " a legal estate in the property, as against all persons, except the trustees, and those lawfully claiming under him" (sic, formerly them). But in the case of express trusts to sell, where the trus- tee takes the whole fee, this power or right of the creator does not constitute an estate in himself ; no title or interest remains in him ; there is nothing, for example, to which the lien of a judgment could attach. People v. Bacon, 99 N. Y. 275, 279. The fact that the creator of the trust may discharge the trust by paying off the debts which the trust was created to satisfy ; or that he may become entitled to a residue remaining unsold after the debts are discharged, does not give him a reversionary inter- est to which a judgment against him can attach. His right is merely an equitable one, and in no sense impairs or diminishes the estate of the assignee, which remains perfect and exclusive until the purposes of the trust have in fact been accomplished. Id. Even if the creator of the trust afterward conveys or de- vises, the grantees or devisees take no title whatever, legal or equitable, as against the trustee. Briggs v. Dams, 21 N. Y. 574. The question of just when this complete title in fee ceases, and title vests beneficially in others, may sometimes be a per- plexing question. By statute (Real Prop. L., 90) a trust to pay debts ceases at the expiration of twenty-five years unless otherwise provided. Apart from the statute, the expiration of the trust may in certain cases be presumed. Kip v. Hirsh, 103 N. Y. 565. If, as may happen, there is a trust to sell and pay debts, and hold any unsold portions or surplus proceeds on a fur- ther trust to receive and apply rents and income, it might be peculiarly difficult to say just when the title in fee required by the first trust shifts into an estate for life, under the second trust, so as to furnish opportunity for the vesting of a reversion or remainder, for the present title is in the same trustees under both trusts. Apparently the fact that all the debts had at a given period been paid might be shown. The death of the trustee leav- ing the trust unexecuted does not give any new rights to the creator of the trust. Merritt v. Scott, 3 Hun, 657. As to the effect of the transfer of title to a trustee under an express trust to sell, upon an easement in adjoining land which was to con- tinue only so long as the creator of the trust should continue 288 THE TRUST PURPOSE. to own the land in question, consult Colie v. Jamison, 4 Hun, 284-. A trust to sell and pay over the proceeds to the grantor is in- valid as a trust, as not within any of the four classes. Heer- mans v. Burt, 78 N. Y. 259 (267), see 64 N. Y. 332. A trus- tee to sell is the trustee of such only of the creditors as choose to accept him as such. The trust being valid, his title is good as against all the creditors, but they are free if they choose to en- force their claims against any property of the debtor not validly conveyed to the trustee. Warner v. Jaffray, 96 N. Y. 248 (254 et seq.). But such property as is validly transferred to the trustees cannot be reached by any of the creditors, by proceed- ings based on disregard of the trust, even though the trust is not general, but is for the benefit of certain creditors only, fiogers Locomotive, etc., Works v. Kelley, 88 N. Y. 234 (239). If, under a trust of the first class, the beneficiaries (i.e., the creditors of the creator of the trust) release their claims against him in consideration of his releasing to the trustee all his rever- sionary interestsjn the subject of the trust, the trust itself there- upon ceases. For there are no longer any debts to be paid, to furnish the basis of a trust. The beneficiaries cannot create a new trust for distribution, as that is not one of the purposes for which an express trust in land is permitted. The result is that the title vests in the beneficiaries as tenants in common. Sel- den v. Vermilya, 3 N. Y. 525 (533 et seq.). A beneficiary under a trust of the first or second class may assign his claim. But in such case, if he agrees to remain liable for its collection, he may still maintain an action to compel an accounting. Pendergast v. Greenfield, 127 N. Y. 23. And in any case where it is neces- sary for a creditor, under a trust to pay debts, to take proceed- ings to enforce the trust, or to protect the property from unlaw- ful interference, he is not required to first prove his debt by action at law. Spelman v. Freedman, 130 N. Y. 421 (426). If a purchaser from a trustee to sell has noticed that the trus- tee' is making the sale for personal ends, and in fraud of the trust, and with a view of defrauding the beneficiaries, the latter may reach the same in his hands, flint v. Sell, 27 Hun, 155, aff'd 101 N. Y. 688, and cases there cited. So in the case of a reconveyance by the trustee to the creator of the trust, before THE SECOND CLASS. 289 the trust is completely executed, and a conveyance by the crea- tor to another. Briggs v. Davis, 20 N". Y. 15, corrected 21 N. Y. 574. The creator of a trust to sell waives any defence of usury against a creditor made a beneficiary of the trust, and it cannot be set up by the trustee. Cfiapin v. Thompson, 89 X. Y. 270. As to a trust to sell and pay outlawed debts, see Hale v. Stewart, 7 Hun, 591. Under a trust to pay debts, a beneficiary (i.e., a creditor) who holds collateral securing his claim in part, may nevertheless prove and secure a pro rata dividend on his entire claim, and is not confined to a dividend on the unsecured balance. Otherwise, the unsecured creditors would share in the benefit of the collateral. People v. Remington, 121 N. Y. 328. (b) The Second Class. 398. To sell, mortgage or lease real property, for the benefit of annuitants or other legatees, or for the purpose of sat- isfying any charge thereon. Real Prop. L., 76, modifying the prior wording by inserting the words " annuitants or other." This provides for three methods and two purposes, to all of which certain principles apply. 399. In general. If an attempted trust to sell, mortgage or lease is not validly constituted, the land may remain in, or pass to, those otherwise entitled, subject to a power to be executed for those purposes. Steinhardt v. Cunningham, 130 X. Y. 292. Post, 515 etseq. As to when the court will imply the essen- tials requisite to a valid trust to sell, mortgage or lease, see Stein- V hardt v. Cunningham, 130 X. Y. 292. Trusts of this class being only for the benefit of annuitants or other legatees, or to satisfy any charge on the land, there can be no valid trust to mortgage or lease land for the benefit of creditors at large, whose claims are not a charge on the land. Such creditors are to be protected only by a trust of the first class " to sell real property for the benefit of creditors." Darling v. Rogers, 22 Wend. 483 (498) ; Hawley v. James, 16 Wend. 60 (149) ; Irving v. DeKay, 9 Pai. Ch. 521 (529). The two classes may be combined, how- ever, and as a trust to sell, so far as method goes, is common to both, a trust to sell and mortgage, to pay debts some of which are,, and some of which are not, charged on the land, will be construed, 19 290 THE TRUST PURPOSE. thus : the truet to sell may be exercised for the benefit of all the creditors, whether their claims are or are not charged ; the trust to mortgage may be exercised to satisfy mortgages, judgments and other charges. Id. Where th'ere is a trust to sell, but none to mortgage, yet if the trustee acquires other land, by foreclosure of a mortgage, or by unauthorized investment of proceeds of sale, etc., as to such land he has the legal title and can give a good mortgage, this property being regarded throughout as per- sonalty. McLean v. Ladd, 66 Hun, 34:1. A trust of the sec- ond class must, in order to be valid, not merely in terms author- ize a sale, mortgage or lease for the statutory purpose, but such must also be in fact its actual and oona fide purpose. Heer- mans v. Burt, 78 X. Y. 259 (265), see 64 N. Y. 332. A trust of this second class gives no title in the land to the beneficiary, and he cannot quit-claim it, but may assign his equitable right to enforce the trust. Duvall v. E. E. L. Church, etc., 53 N. Y. 500. If an annuitant of a legacy charged on land becomes vested with the title to the land, even for life, the lien is lost in the title. Clark v. Clark, 147 N. Y. 639 (645). The scheme of the statute is in the direction of such a construction as will vest the title in the heirs or devisees rather than the executors, and permits the working out of the wishes of the testator, when legal, under a trust power. The court will not needlessly strain after a construction that will declare a trust. Steinhardt v. Cunning- ham, 130 N". Y. 292 (300). If the trust is to sell, mortgage or lease to pay off a mortgage on the land, and also to receive and use the rents received, for the same purpose, it is held in Matter * of fisher, 4. Misc. 46, that as to the rents this is a trust for ac- cumulation, and so invalid because not for an authorized purpose. A trust to lease, mortgage or sell, if invalid, in a given case, as to one of these methods, may nevertheless be valid as to the \ others. Tlaxtun v. Corse, 2 Barb. Ch. 506 (519) ; Harrison v. Harrison, 36 N. Y. 543 (548) ; Post v. Hover, 33 N. Y. 593 (598). It seems to follow quite obviously that a trust of this second class may by its terms authorize the trustee to sell only, or to mortgage only, or to lease only. 400. To sell. The cases already cited under the First Class, 397, apply here, except as to the purpose for which the sale is THE SECOND CLASS. 291 to be made. A trust to sell land and pay the proceeds to another falls under this class, the proceeds being a legacy. Duvall v. K E. L. Church, etc., 53 N. Y. 500. So with a trust to sell and divide the proceeds. Savage v. Burn-ham, 17 N. Y. 561 (567) ; Hamlin v. Osgood, 1 Redf. 409. But there cannot be a valid express trust to partition land. Hawley v. James, 16 Wend. 60 (149). "Where there is a bequest ana devise in trust for the payment of certain legacies, with discretionary power to sell for that purpose, and the legacies fail even in part so that the personalty will suffice to pay them, a sale of the realty becomes unnecessary aud the court will not in such a case imply a trust of the second class, vesting title in the trustee. Chamberlain v. Taylor, 105 N. Y. 185 (191, 193). 401. To mortgage. The fact that a testator directs the ultimate division, among devisees in remainder, of the net pro- ceeds to be raised by mortgage on the devised lands, by trustees appointed to effect the mortgage, does not make the trust one to mortgage " for the benefit of legatees." It is no benefit to the devisees to receive money raised by mortgage out of their own property. Weeks v. Cornwell, 104 K Y. 325 (328, 329, 338). While the statute of trusts does not authorize a trust to mortgage land to raise money to pay debts other than those charged on the land, it contains nothing which prevents a debtor, or the grantee of a debtor, in pursuance of a prior oral understanding, entered into at the time of the execution of the conveyance to him, from executing a mortgage to secure the payment of specific debts. Royer Wheel Co. v. Fielding, 101 N. Y. 504 (509). In such a case, where in fact the debtor unnecessarily joins with his grantee in executing the mortgage, which is given to a creditor for the benefit of himself and other specified creditors, and which pro- vides that on foreclosure sale, and after payment of these debts, the overplus shall be returned to the mortgagors, the legal effect is that such overplus would pass to the other creditors. Such a provision, therefore, does not avoid the mortgage. Royer Wheel Co. v. Fielding, 101 N". Y. 504 (510). Where a trustee as such gives a mortgage, it is unnecessary on foreclosure to allege the facts showing that he was in fact a duly constituted trustee. Skelton v. Scott, 18 Hun, 375 ; Kingsland v. Stokes, 25 Hun, "292 THE TRUST PURPOSE. 107. As to necessary allegations where the trustee is plaintiff, see Secor v. Pendleton, 47 Hun, 281. 402. To lease. The whole subject of leasing, under the several classes of express trusts, is considered post, 453 et seq. The question whether a trustee of the second class can make a lease which may extend beyond the term of the trust, and be binding on the future owners of the land, is different in char- acter from that raised on the same point under the third class. Seejyost, 455 et seq. For here the trustee necessarily has the fee. Bennett v. Oarlock, 79 N". Y. 302 (317 et seq,}. (c) The Third Class. 403. To receive rents and profits and apply them to the use of beneficiaries. This class, in common with others, involves receipt of rents, and, as distinguished from the others, the appli- cation of rents to the use of the beneficiary as its chief purpose. The consideration of the entire subject of rents what they are ; the distinction between rents and income, and corpus ; their ap- portionment ; the deductions to be made from gross rents and income ; the method of apportioning deductions, and the time from which and to which rents and income are computed inas- much as it is not confined in its application to one class of trusts, will be taken up later. (Chap. Vlll.) And as these topics naturally precede the subject of the application of rents and income, the consideration of that subject, although it relates only to this third class, will also be deferred. (See 471 et seq.) (d) The Fourth Class. 404. To receive and accumulate rents and profits of real property. 1 The fourth subdivision of 76 of the Real Property Law, in defining trusts of this fourth class, ante, 394, permits them " for the purposes, and within the limits prescribed by law." As to the general statutes relating to suspension, see Chap. VII. The purposes and limits of trusts for accumulation in particular are set forth in the following statutes. 1 As to a new and special provision for accumulation of unexpended or undistributed interest, when the trustee is a trust company, see the Banking Law (L. 1892, ch. 689, 160 ; and Birdseye's R. 8., 3d ed., p. 230, 160, note). WHEN ACCUMULATIONS MUST BEGIN. 293 405. Real property. " All directions for the accumulation of the rents and profits of real property, except such as are al- lowed by statute, shall be void. An accumulation of rents and profits of real property, for the benefit of one or more persons, may be directed by any will or deed 1 sufficient to pass real prop- erty as follows : " 1. If such accumulation be directed to commence on the creation of the estate out of which the rents and profits are to arise, it must be made for the benefit of one or more minors then in being, and terminate at or before the expiration of their minority. "2. If such accumulation be directed to commence at any time subsequent to the creation of the estate out of which the rents and profits are to arise, it must commence within the time permitted, by the provisions of this article, for the vesting of future estates, and during the minority of the beneficiaries, and shall terminate at or before the expiration of such minoiity. "3. If in either case such direction be for a longer term than during the minority of the beneficiaries, it shall be void only as to the time beyond such minority." Heal Prop. L., 51. " Where such rents and profits are directed to be accumulated for the benefit of a minor entitled to the expectant estate, and such minor is destitute of other sufficient means of support and education, the Supreme Court, at a special term, or, if such ac- cumulation has been directed by will, the Surrogate's Court of the county in which such will has been admitted to probate, may, on the application of his general or testamentary guardian, direct a suitable sum out of such rents and profits to be applied to his maintenance or education." Real Prop. L., 52. For the statute regulating accumulation of the income of personal property, secpost, 413. When Accumulations must Begin. 406. (1) The first provision is that they may be directed to commence either on the creation of the estate or subsequently. 1 Notice, for its bearing on Id., % 208, which has omitted the words " and sealed" which were found in the section for which it is substituted, that this section retains the word " deed," a term implying a seal. 2 Blackst. Comm. 295, 305. 294 THE TRUST PURPOSE. In either event they must commence during the minority of the beneficiaries for whom the accumulation is directed. But accord- ing as the directions of any given instrument fall under one or the other of these two classes, the succeeding provisions appli- cable to it vary somewhat. So far as concerns the present exam- ination concerning the time when the term must begin, the first of these two classes, namely, that consisting of trusts beginning at the creation of the estate out of which the rents and profits to be accumulated are to arise, presents no peculiarity. In the sec- ond class, namely, that consisting of trusts to commence subse- quent to the creation of the estate, the accumulation must begin within the time permitted for the vesting of future estates. This latter provision should be carefully noted. The time thus referred to is to be found set forth in 32-37, 39, 40, 50 of the Real Property Law. This, with a single exception (ante, 392) is two lives in being. A future estate is permitted to vest at the end, or immediately upon the termination, of two lives. There- fore, an accumulation may begin in certain cases at the end, or immediately upon the termination, of two lives. This is par- ticularly noteworthy from the fact that in the case of accumula- tions of personal property a nice distinction between the statutory expressions has led to a different rule, which will be stated else- where. Post, 413 et seq. See Manice v. Manice^ 43 N. Y. 303 (382). (2) Under subdivision 2 of 51, relating to accumu- lations, the persons for whose benefit accumulation is directed need not be in being at testator's death. Mason v. Mason's Executors, 2 Sandf. Ch. 432, aff'd 2 Barb. R. 229 ; Manice v. Manice, 43 N. Y. 303 (376). See Gott v. Cook, 7 Pai. Ch. 521. But they must be in being at the time for commencement of the accumulation. Manice v. Manice, 43 N. Y. 303 (376) ; (see Gott v. Cook, 7 Pai. Ch. 521) ; Eilpatrick v. Johnson, 15 N. Y. 322 (325). And accumulation for an unborn child can never begin before its birth. Manice v. Manice, 43 N. Y. 303 (376) ; Haxtun v. Corse, 2 Barb. Ch. 506 (518) ; Kiipatrick v. John- son, 15 N. Y. 322. (3) Postponement of the beginning of ac- cumulation does not invalidate the provision, if it is to begin within the time permitted for the vesting of future estates, and also during the minority of the infant for whose benefit it is directed. Thus a direction to begin accumulation at the expira- FOR WHOM ACCUMULATIONS MAY BE MADE. 295 tion of one month after testator's death, and during minority, is valid, if a valid term is marked out within which, if at all, it is to begin, as within one month in case A and B live so long. Mason v. Mason's Executory 2 Sandf. Ch. 432 (476-477), aff'd 2 Barb. R. 229. For whom Accumulations may be Made. 407. Every accumulation must be made for the sole benefit of an infant. Pray v. Hegeman, 92 N". Y. 508 (516, 517, 519 ; see s. c. 98 N. Y. 351 ; Barbour v. Deforest, 95 N". Y. 13 ; Harris v. Clark, 7 N. Y. 242 ; Manice v. Manice, 43 X. Y. 303 ; McCormack v. McCormack, 60 How. Pr. 196 ; Craig v. Craig, 3 Barb. Ch. 76 (92) ; compare Titus v. Weeks, 37 Barb. R. 136 ; (but see Toms v. Williams, 41 Mich. 552 (569) ; Wil- son v. Odell, 58 Mich. 533) ; Boynton v. Hoyt, 1 Den. 53 ; Cook v. Lowry, 95 N. Y. 103 (107). See Bean v. Bowen, 47 How. Pr. 306 ; compare Bryan v. Knickei-backer , 1 Barb. Ch. 409 (425) ; Kilpatrick v. Johnson, 15 X. Y. 322 ; King v. Run- die, 15 Barb. R. 139 (145). See Gott v. Cook, 7 Pai. Ch. 521 ; Matter of Hoyt, 32 N. Y. State Rep. 787 ; Matter of Sands, 1 Con. 259 ; Potter v. McAlpine, 3 Dern. 108 (127). (For an exception where a trust company is the trustee, see the Banking Law, L. 1892, ch. 689, 160, and Birdseye's note, 2d ed., p. 230.) Thus a direction to accumulate rents and profits during a specified minority, add the accumulations to the principal and hold the consolidated total in trust to receive and apply the rents and profits for the benefit of the same person, with a limitation over to others upon his death, is void. For although the minor is benefited to some extent, the accumulation is not solely for his benefit. See Pray v. Hegeman, 92 N. Y. 508 (513). (Com- pare s. c. 98 N. Y. 351) ; Barbour v. Deforest, 95 N". Y. 13. Accumulation may, in the case of real property, be directed to commence at the end of two lives in being, for the benefit of a person then a minor, and extend through his minority, where the corpus is to vest in him in possession at his majority, or go over on an alternative disposition in case of his death during minority. This case is held to be covered by the provisions of 32 of the Real Property Law. But in order that such an ac- cumulation may be considered valid, the remainder to the infant 296 THE TRUST PURPOSE. must be vested though defeasible. If vested in interest it will support the accumulation. Manice v. Manice, 43 N. Y. 303. These propositions are inapplicable to accumulations of personal property. Compare Real Prop. L., 32, 51, with 1 R. S. 773, 1, 3. Post, 413, etseq. 408. If a valid term is marked out, within which the provi- sions for accumulation must be accomplished if at all, there may be a direction for successive accumulations, as, first, wholly for A ; then, beginning from a later period, for A and B equally ; then, as A reaches majority, leaving B and C minors, for B and C equally, etc., Mason v. Mason 1 s Executors, 2 Sandf. Oh. 432 (475) ; aff' d 2 Barb .R. 229 ; but not for an accumulation until all of several children reach majority. Forsyth v. Rathbone, 34 Barb. R. 388. A scheme of accumulation may validly provide that if neces- sary a part of the rents may be applied to the use of the infant instead of accumulated, and also that the test of this necessity should be the insufficiency of its other means of support. Roe v. Vingut, 117 N". Y. 204 (218). A devise in trust to lease, and accumulate the rents until they reach a sufficient sum to there- with pay off testator's debts, is invalid, as no trust to accumulate is allowed for such a purpose. Wells v. Wells, 30 Abb. N. C. 225. In so far as the debts were general, and not charged on the land in question, the trust would also .be invalid under the second class of trusts. In the case cited the debts in question were in fact secured by mortgages, and thus were charged on the land. It might not seem altogether clear that the trust in such case would be invalid, under the second class, though it is per- haps the better view that that class of trusts contemplates the application of the rents as received, to the payment, on account, of the debts charged. Com pare post, 469, 470. How tJie Term must be Measured. 409. As already stated, the term for accumulation is gov- erned by two statutory provisions. By the first and general one, it must be restricted within two lives, and, in the proper case, a further minority. (Real Prop. L., 32.) By the second and special one, it must also begin during, and end with, the minor- WHEN THE TERM MUST END. 297 ity of the beneficiary in question. (For an exception, see the provision of the Banking Law, L. 1892, ch. 689, 160, and Birdseye's R. S., 2d ed., p. 230, note.) In order that it may be brought within the terms of 32 of the Real Property Law, allowing suspension for a minority after two lives, the remainder in the corpus must be vested (defeasibly) in the infant while the accumulation is proceeding. Manice v. Manice, 43 N. Y. 303 (374). Within the limits thus thrown around the term by these provisions, the minority of the beneficiary is the strictly essential measure of its duration, Cook v. Lowry, 95 N. Y. 103 (107) ; Matter of Dey Ermand, 24 Hun, 1 ; McCormack v. McCor- mack, 60 How. Pr. 196 ; King v. Bundle, 15 Barb. R. 139 (145) ; Williams v. Williams, 8 N. Y. 524 ; Simpson v. Eng- lish, 1 Hun, 559 ; Matter of Hoyt, 32 N. Y. St. Rep. 787. Thus, it is not allowable to direct its continuance for a fixed term not measured by minority, Rice v. Barrett, 102 ~N. Y. 161, or for a time not measured at all, Yates v. Yates, 9 Barb. R. 324, or for several lives, Hobson v. Hale, 95 N. Y. 588 (616, 617) ; Harris v. Clark, 7 N. Y. 242. For a change in the phraseology, and possibly in the meaning, of the general statute relating to the term of suspension, see ante, 386. When the Term must End. 410. When the minor reaches majority the trust for accu- mulation must cease. Goebel v. Wolf, 113 N. Y. 405 (415) ; Bryan v. Knickerbacker, 1 Barb. Ch. 409. (For an exception, where the trustee is a trust company, see the Banking Law, L. 1892, ch. 689, 160, and Birdseye's R. S., 2d ed., p. 230, note.) If he die during minority, it ceases at his death. Goebel v. Wolf, 113 N. Y. 405 (415). If the direction is for a longer term than minority, it is void only for the excess. Real Prop. L., 51, subd. 3 ; Radley v. Kuhn, 97 N. Y. 26 (32) ; Oil- man v. Reddington, 24 N. Y. 9 (19) ; Schermerhorn v. Cotting, 131 N. Y. 48 (61) ; Robison v. Robison, 5 Lans. 165. Its in- validity in this respect not only does not affect the validity of the accumulation during minority, but does not affect the validity of other parts of a general trust scheme. Schermerhorn v. Cotting, 131 N. Y. 48 (61, 64) ; Greer v. Chester, 62 Hun, 329 ; aff'd 131 N. Y. 629 ; Arthur v. Arthur, 3 A pp. Div. 375. See also 298 THE TRUST PURPOSE. post, 744. A trust to receive and accumulate rents, etc., until A becomes 25, for the sole benefit of B and C, infants, is valid if the respective ages of A, B and C are such that A must reach 25 before B or C comes of age. Radley v. Kukri, 97 N. Y. 26 (32). The Accumulated Fund. 411. The car-pus out of which the accumulations are to be raised may be given over to others in case of the death of the beneficiary either before or after coming of age. As to the ac- cumulations themselves, it is undisputed that after the infant once reaches majority they belong to him indefeasibly. Oil- man y. Healy, 1 Dem. 404, and cases cited ; Pray v. liegeman, 92 N. Y. 508 ; but see s. c. 98 N. Y. 351 ; and Barbour v. Deforest, 95 N. Y. 13 ; and the trust instrument cannot pro- vide that they shall then be held on a further trust for his use. Tweddell v. JV. Y. Life Ins. & Trust Co., 82 Hun, 602. But the disposition of the accumulated fund in case of the death of the minor before reaching majority, gave rise to a conflict of de- cisions in the courts below, and has only recently been passed on by the Court of Appeals. (1) Bolton v. Jacks, 6 Robt, 166 (230). (1868.) Here there was such a disposition, and the court thus discuss its validity : " As by the act of God, it has become impossible to comply with the provisions of the statute, by devoting the accumulations to the benefit of the minor, the accumulated fund must, if there are no directions in the will, and no clause in the will which would carry it in a different direction, revert back, and, in such event, the testator would die intestate as to such fund. But there is no reason why a testator should not have the power to anticipate such an event, and treat this accumulated fund as a part of his original estate, and devise it to such persons as he chooses." The court then call attention to the fact that in either view of the question their decision of the case in hand would be unaffected. (2) Willets v. Titus, 14 Hun, 554. (1878.) In this case testa- tor gave the " free use" 1 ' of his estate, real and personal, to his wife and daughter. On the majority of the daughter the prop- erty was to be divided between them. If the daughter should THE ACCUMULATED FUND. 299 die during minority, then the wife was to have it all. If the wife should die during the daughter's minority, then the daughter was to have it all on reaching majority, -and until then it was to be " handed out" at the discretion of the executors. If the wife and daughter should both die during the daughter's minority, then the said real and personal property was to be divided be- tween certain other persons named. In fact, first the wife and then the daughter died during the minority of the latter. It ap- peared that not all of the rents and income had been paid over to them, and that there was, therefore, a surplus on hand. The disposition of this surplus was in question before the court. It will be noticed that the will did not direct any accumulation, and to this fact the court call attention, but say that " assuming" that a direction to accumulate is to be implied from the direc- tion to the executors to " hand out" in their discretion, the di- rection is a valid one. And it is held that " if the daughter had reached the age of twenty-one years, then all would have come to her in possession ; but as she did not, the whole body of the estate, which included all that had not been handed out to the daughter, passed under the third clause of the will." (3) Oilman v. Bealy, 1 Dem. 404 (408). (1882.) Here the question was not before the court, but the same principle is stat- ed, and Bolton v. Jacks, supra, and Willets v. Titus, supra, are referred to with approval. (4) Draper v. Palmer, 2T N. Y. State Rep. 510. (1889.) Here there was a trust of land in two shares, the rents of one share to be applied to the use of J until he reached the age of thirty, when he was to receive the property. If he should die under thirty, it was to go over, free of the trust, to K. If there should be any rents not needed for J's support, they were to be accumulated during his minority and at majority paid over to him. J died during minority. One question before the court was the proper disposition of an amount already accumulated for his benefit. The court say : " In the directions given for the accumulation, the grantor strictly confined himself to the power provided for that object by the statute, for the accumulation was directed to be for the benefit of the son out of whose share or interest it arose during his minority. . . . And having been declared in the deeds to be solely for the benefit of this deceased 300 THE TEUST PURPOSE. grandson as far as the accumulation of the rents and profits of his share were made, the rents and profits so accumulated be- longed to him. They were unqualifiedly to be for his benefit. And he was in no manner afterward directed to be deprived of that benefit, but it was to be ultimately secured by paying over the accumulations to him on his attainment of the age of twenty- one years. The object of the statute, as well as of this language of the deed, in confining the accumulations to the benefit of the minor, was to vest the right to the moneys, as they accumulated out of the share of the estate appropriated for him by the deeds, in him. ... It was the payment and not the right, which was in this manner postponed." And it is held that the fund went to the infant's next of kin. It is true that in the case last cited the creator of the trust did not attempt to provide an alternative disposition of the accumulations in case of the death of the minor under age. What the case exactly decides is that where the creator of the trust to accumulate does not attempt to provide for the devolution over of the accumulations in case of the death of the minor during minority, there the accumulations will, in case of such death, be regarded as indefeasibly vested in the minor. But the strong implication of the opinion is that the testator could not have given the accumulated fund over to an- other, even if he had tried to, and that the necessary and un- avoidable consequence of a trust to accumulate is, to vest the ac- cumulations indefeasibly in the minor, as fast as they accrue, subject to the postponement of mere possession, under the trust. And this view certainly seems to be supported by far the weightier reasons. (5) Goebel v. Wolf, 113 N. Y. 405 (415). (1889.) " The provision for accumulation became inoperative as to the share of the deceased minor child upon his death. . . . We think the consequence of such death was to devolve the title to the one- fourth part of the estate in remainder upon the heirs-at-law and next of kin of the deceased child, according to the nature of the property, and that they are likewise entitled to a like propor- tionate share of any income accumulated to the time of the death. ..." This case at least settled one point that where there is no contrary direction in a will, the accumulated fund passes to the infant's heirs or next of kin, at any rate where the THE ACCUMULATED FUND. 301 infant was vested with the corpus subject to the trust. It would follow that the infant, if of sufficient age, might also have dis- posed of the accumulated fund by will (unless the implication here is that the accumulations from land must go to those who receive the land, in which case, as an infant cannot make a will disposing of land, he could not dispose of the accumulated rents therefrom.) (6) Roe v. Vingut, 117 N. Y. 204 (217). (1889.) Here the will provided for an accumulation, to be paid over to respective infants at majority. By the fourth and fifth subdivisions provi- sion was made for the payment of the "share'' of a deceased infant to its issue, or failing that, to the survivors. The court construe " share" to include " accumulations" (com pare Smith v. Parsons, 146 N. Y. 116), and say " such a provision for the dis- position of an accumulation for the benefit of an infant, in case of his death, is good." (7) Smith v.' Parsons, 146 N. Y. 116. (1895.) Here the testator had created a trust of personal property, to apply the income of certain shares, so far as required, to the use of respec- tive infants, and to accumulate any surplus income for them re- spectively until majority or earlier death, and at majority to pay over the accumulated fund, and continue to hold the corpus in trust for the use of the beneficiaries during life, and upon the death of a beneficiary, before or after majority, to transfer her share to persons designated. One of the beneficiaries died dur- ing minority. A large fund had been accumulated from the income of her share. The question was, whether these accumu- lations passed to her administratrix, or to her sister as entitled under the gift over in testator's will. " The single question presented by this appeal is whether the accumulations of income upon Martha's share [Martha being the deceased infant] vested as they were paid in, or was the vesting postponed until she attained the age of twenty-one." The court held (a] that "it is the policy of the statute permitting the accumulations of personal property for the benefit of a minor [1 R. S. 773, 3] that they should vest in the infant beneficially when received, and it is only payment over that is postponed until the expiration of the minority ;" (6) that in the case before the court, testator in using the word "share" (compare -Roe v. Vingut, supra) had made a 302 THE TRUST PURPOSE. gift over of the corpus, in case of the infant's death during minority, but had not attempted to include the accumulations therein, and that therefore the accumulations, having vested in the infant, passed to her administratrix (from which it follows that if she had been of sufficient age, she might have disposed of them by will), (c) By way of dictum, though stated explicit- ly, all the judges concurring, that testator had power to make such disposition of the accumulated income of an infant dying during minority as he might see fit ; " there is no legal objection to bequeathing the same to any person, whether a minor or of full age, and such a provision in a will would not violate the stat- ute which provides that accumulations must be for the benefit of minors." The following sentence, however, seems inconsistent with this : For the court say : " When a minor dies, for whose benefit accumulations of income have been directed, it is compe- tent for the testator to dispose of them in the same manner as any other portion of his estate, provided they have not vested in the infant as paid in." But, as already stated, the court held that the policy of the statute is that they shall vest in the infant as received. It is difficult to determine just what the effect of these dicta is. See s. c. sub nom. Smit/i v. Campbell, 75 Hun, 155. It is to be noticed that this case related to a trust of per- sonalty. Where there is a testamentary gift of a share of testa- tor's estate to an infant, with a gift over in case of his death dur- ing minority, and he does in fact die under age, any unexpended income then on hand belongs to the infant's estate. But such a case does not involve a trust for accumulation, the will contain- ing no direction to that effect. Beardsley v. Hotchkiss, 96 N. Y. 201 (217) ; see also Tweddett v. N. T. Life Ins. & Trust Co., 82 Hun, 602. Post, 490. What not an "Accumulation." 412. The accumulations dealt with by the statute are such as are called for by the express terms or necessary implication of the trust instrument, and not such as happen to be made by the trustee or beneficiary out of income not required or not need for support, etc., nor such as result from the directions of a de- cree. Thus, the fact that a beneficiary of a trust, or a legatee, does not use up all the rents, or income, and chooses to allow WHAT NOT AN "ACCUMULATION." 303 them to accumulate in the hands of the executor or trustee, does not create an u accumulation." Livingston v. Tucker, 107 N. Y. 549. See Beardsley v. HotchJciss, 9t5 N. Y. 201 (217) ; Mat- teson v. Armstrong, 11 Hun, 245 (249) ; Robison v. Robison, 5 Lans. 165 (169); Thomas v. Pardee, 12 Hun, 151 (150); Matter of Benson, 96 N. Y. 499. Post, 490. A direction to add to the principal of the trust estate, royalties on ore to be excavated from the lands held in trust, does not fall within the statute. The royalties are essentially the price received for portions of the corpus. Palms v. Palms, 68 Mich. 355. On this point see the will in Lee v. Tower, 124 N. Y. 370. Nor does it constitute " accumulation" to retain and apply the inter- est to make good a depletion of the original capital occasioned by an anticipatory payment of a future interest. See Livingston v. Tucker, 107 N. Y. 549 (552). A trust of real and personal prop- erty to receive rents and income and daring a child's minority to apply the same or so much thereof as may be necessary for his support, maintenance and education, and after majority to pay over all said rents and income to him for life with remainder in the corpus to his surviving children if any, otherwise to others is not void because the balance of rents and income, if any, dur- ing his minority, may be added to the corpus and interest ob- tained therefrom for the minor. There is no direction for ari accumulation. Norton v. Cantwell, 108 N. Y. 255 (265). A testamentary provision creating a real property trust, to receive and apply income, and giving to the trustees sole direction and management of the property, and wide discretionary powers con- cerning it, and authorizing expenditures of income, within rea- sonable limits, to perfect or protect the corpus, or make improve- ments which are a protection of the trust business, as a going concern, semble does not fall within the prohibition of the statute regarding accumulations ; if confined to preservation of the corpus, and maintaining or increasing its earning efficiency, it is not objectionable as an accumulation. Matter of Nesmith, 140 N. Y. 609. Apart from the validity of such a provision, the voluntary act of a trustee in using funds from his own pocket to improve the corpus, and increase or maintain its earning power, and charging the same against the increased earnings thus effect- ed, is not hostile to the statute, and he is entitled to such reim- 304 THE TRUST PURPOSE. bursement during the trust term. Such a disposition of the mat- ter is within the legitimate exercise of the judicial powers of the surrogate. Id. It might also, under this last point, be said that the statute is only aimed at the direction of accumulation by the terms of the instrument, and not at a proper equitable adjustment of the rights of a trustee who chooses to risk his own property in im- provements and additions to the corpus, and who seeks reim- bursement merely from the increased income thereby secured, if any, the beneficiaries receiving in full all the current income of the original corpus, as if the new improvements had not been made. In the case last cited, the trust estate consisted of land, on which were storage warehouses. The trustee from his own funds built a new building on the land, at a cost of $12,000, and thereby increased the total rental value of the entire estate by $6000 annually, and he was allowed to retain such increase dur- ing the trust term until reimbursed. Here, it might be said, a new element is introduced. For the $6000 annual increase was not due solely to the $12,000 building, but partly to the fact that the trust land was thereby utilized and rendered valuable, and that therefore part of the income applied to reimburse the trustee and thus indirectly to pay for the $12,000 building, was derived not from the loan but from the income of the original corpus. To this there are two answers. First, that it was not directed by the instrument, and so not covered by the statute. Second, that the reimbursement was derived solely from income which, from whencesoever derived, would never have existed but for the loan. And whether or not it came from the corpus or from the loan, it did at any rate arise solely from the fact of the loan and its use. Matter of Nesmith, 140 N. Y. 609. A trust to accu- mulate a fixed sum (say $700), for an infant, during his minority, from rents, etc., is valid under Real Prop. L., 76, but being for the payment of a sum in gross, it is assignable. A trust for accumulation is inalienable only when it covers the rents and profits generally. " Where the sole object of the trust is to pay a sum in gross, by collecting and accumulating rents, etc., to a specific amount, the cestui que trust may release or assign." Radley v. Kuhn, 97 N. Y. 26 (31-32). Compare Cochrane v. Sehett, 140 N. Y. 516. ACCUMULATION PERSONAL PROPERTY. 305 413. Personal property. " An accumulation of the inter- est of money, the produce of stock or other income or profits arising from personal property, may be directed by any instru- ment sufficient in law to pass such personal property as follows : " If the accumulation be directed to commence from the date of the instrument, or from the death of the person execut- ing the same, such accumulation must be directed to be made for the benefit of one or more minors then in being, or in being at such death, and to terminate at the expiration of their minority : "2. If the accumulation be directed to commence at any period subsequent to the date of the instrument, or subsequent to the death of the person executing such instrument, it must be directed to commence within the time allowed in the first section of this title, for the suspension of the absolute ownership of per- sonal property, and at some time during the minority of the per- sons for whose benefit it is intended, and must terminate at the expiration of their minority. 1 R. S. 773, 3. " All directions for the accumulation of interest, income or profit of personal property, other than such as are herein allowed, shall be void ; but a direction for an accumulation, in either of the cases specified in tLe last section, for a longer term than the minority of the persons intended to be benefited thereby, shall be void only as respects the time beyond such minority. Id., 774, 4. " When any minor for whose benefit a valid accumulation of the interest or income of personal property shall have been direct- ed, shall be destitute of other sufficient means of support and education, the Supreme Court at special term, and, where such accumulation has been directed by any last will and testament, the Surrogate's Court of any county in which such last will and testament has been admitted to probate, upon the application of such minor or his guardian, may cause a suitable sum to be taken from the moneys accumulated, or directed to be accumulated, and to be applied to the support and education of such minor." /6?., 5, as amended. For a special provision relating to accu- mulation where the trustee is a trust company, see the Banking Law, L. 1892, ch. 689, 160; Birdseye's R. S., 2d ed., p. 230, note. As has already been stated, an accumulation of the rents and 20 306 THE TRUST PURPOSE. profits of land may begin immediately upon the termination of two lives. (See ante, 392.) But in the statute relating to accumulation of the income of personal property, the phrase re- lating to time is " within the time allowed for suspension of the absolute ownership." But the time allowed for suspension is two lives. Therefore, accumulations of the income of personal property must begin before the two lives have expired. The dis- tinction between the two classes of property may, therefore, be stated thus : In the case of real estate, the accumulation must begin before or at the time prescribed for vesting, namely, by or at the end of the two lives ; while in the case of personal prop- erty, it must begin during the two lives. This distinction is clearly set forth in Manice v. Manice, 43 N". Y. 303 (381 et seq.}. The discussion of this point, in the case just cited, may be summed up as follows : In the case of real property, when the two lives have ended, there is, in certain cases, opportunity for a further suspension during a minority. Here the accumulation may begin at the end of the two lives, and extend on through the minority. But in the case of personal property, when the end of the two lives has been reached, there is no further op- portunity for suspension, and consequently none for accumula- tion, it necessarily follows, therefore, that a trust for accumu- lation of the income of personal property, in order to secure any leeway to effect its purpose, must perforce begin within the term of suspension that is, within two lives in being, and then run until the majority or earlier death of the infant, or the sooner termination of the two lives, is reached. Apart from the differences to which attention has been called, it is seen that here, as in the case of real property, the period of accumulation is regulated by two distinct provisions. By the first it must begin, continue and end within the limit of two lives in being. (See the change in the phraseology of the statute on this point, ante, 386.) By the second it must also begin, continue and end within the minority of an infant for whose bene- fit the accumulation takes place. It may begin at the date of the instrument, or at the death of the testator, or subsequently, see Gott v. Cook, 7 Pai. Ch. 521 (541), but in neither case may it be directed to begin before the birth of the minor. When he reaches majority it must cease. When the two designated lives PERSONAL PROPERTY. 307 end it must cease. See Gott v. Cook, 7 Pai. Ch. 521 (541). If the minor dies before coming of age it must cease. It must be for the sole benefit of the minor. Bean v. Bowen, 47 How. Pr. 306. As a general proposition it is settled that the statute con- cerning accumulation of the income of personal property is sub- stantially the same as that concerning accumulation of the rents and profits of land. Post, Chap. XXXI. (2) Personal Property. 414. Purpose, in general. A trust in personal property may be created for any purpose not per se illegal. Oilman v. Reddington, 24 N. Y. 9 (12) ; Barry - v. Lambert, 98 N". Y. 300 ; Hirth v. Auer, 146 K Y. 13 (19) ; Bucklin v. Bucklin, 1 Abb. Ct. App. Dec. 242 (249) ; ffamer v. Sidway, 124 K Y. 538 ; Matter of Denton, 102 N. Y. 200 ; Van Vechten v. Van Vegh- ten, 8 Pai. Ch. 104 (128-129), aff'd 1 Sandf. Ch. 395 ; DePey- ster v. CUndining, 8 Pai. Ch. 295 (305), aff'd 26 Wend. 21. Trusts of personal property are not, in respect either of the' mode or purposes of their creation, within the Statute of Uses and Trusts. Matter of Carpenter, 131 K Y. 86 (88). But in par- ticular, there is a detailed statute relating to trusts in personal property for the purpose of accumulating the income (ante, 406, 413). Though any purpose, not illegal, suffices, it has been questioned whether a transfer of property to one, merely "in trust" for another, without specifying what is to be done with it, names any purpose at all. See Hagerty v. Hagerty, 9 Hun, 175. No special difficulty seems to exist in such cases. If the intent of the testator appears to be, from the entire instrument, that the property is to be held in trust for a lawful period, and that the beneficiary shall enjoy the income, the absence of ex- plicit directions is immaterial. If no such intent appears, then the trust is a mere naked trust, and the beneficiary may claim the property at once from the trustee e.g., an insurance policy pay- able to B in trust for C. Butler v. State M. L. A. Co., 55 Hun, 296 (302), aff'd 125 N. Y. 769. The cases of trusts relat- ing to deposits in savings banks (ante, % 87), seldom indicate any particular purpose. Also Matter of Cooper, 6 Misc. 501 (507). 415. Illustrations. Thus valid trusts in personal property 308 THE TRUST PURPOSE. may be created, to receive certain annual income from executors and to pay it to the use or benefit of A, Thompson v. Conway, 23 Hun, 621 ; to collect and pay over the proceeds of promissory notes to a person designated by the creator of the trust, Matter of Carpenter, 131 N. Y. 86 (89) ; to hold a mortgage, as mort- gagee, to secure a (personal or corporation) bond, or to secure any legal agreement, James v. Cowing, 82 N. Y. 449 (453- 454) ; Merrill v. F. L. & T. Co., 24 Hun, 297 ; Ottman & Co. v. Cooper, 81 Hun, 530 ; King v. Merchant^ Exchange Co., 5 IS". Y. 547, but compare ante, 99, 103 ; to pay taxes, charges and liens on certain lands, Bidwell v. Grecnshield, 2 Abb. N. C. 427 ; to hold bonds issued by a town for railroad purposes, Town of Lyons v. Chamberlain, 89 N. Y. 578 ; to manage, with power to sell, and return proceeds to the creator of the trust, Hill v. Heermans, 6 Hun, 661 ; to receive and apply income to the creator of the trust, Foster v. Coe, 4 Lans. 53 (57) ; to make advances to a beneficiary, Hill v. Hill, 2 Lans. 43 ; to carry on a business, Ottman & Co. v. Cooper, 81 Hun, 530. If the drawer of a check transfers to the bank securities for the purpose of enab- ling it to meet the checks, as a fund to secure the payee, and the drawer then fails, the bank holds the securities as trustee for the holders of those checks, as against other creditors of the drawer. Watts v. Shipman, 21 Hun, 598. A fund deposited with bank- ers for the expressed purpose of paying certain declared dividends on stock, or interest due on bonds, is a trust fund, Matter of Le Blanc, 14 Hun, 8 ; aff'd 75 N. Y. 598 ; Hurd v. Farmers' 1 L. & T. Co., 63 How. Pr. 314. Compare Pierson v. Drexel, 11 Abb. N. C. 150, where a deposit was made with bankers as a fund applicable to the payment of certain claims, but with no in- tention of creating a trust. See also Butler v. Duprat, 51 Super. Ct. 77. An assignment by one member of a firm, to a third party, of all the property real or personal, owned by him in the partnership, in trust for the use of the grantor, does not purport to, or does not in reality, convey any share of the estate, but merely transfers a chose in action to enforce an ac- counting and payment of proportion of balance. A trust in such an interest is not prohibited, and its purposes are not restricted by the Statute of Uses and Trusts. Greenwood v. Marvin, 111 N. Y. 423 (438). PERSONAL PROPERTY. 309 The cases already cited merely illustrate, but do not cover, the wide field of purposes for which personal property trusts may be created. Still further illustrations may be found in the classes specifically enumerated in the statute relating to trusts of real property, covering trusts to sell, to mortgage, to lease, to receive and apply or accumulate income, and in the purposes for which powers in trust may be created (Chap. XX.). The only restric- tion is that the purpose should not be of an illegal character. Post, 620. 416. Trust for masses, etc. But it is to be noticed that though the purpose is thus unrestricted, there are other essential elements of a trust that must be present. Thus, the law finds no objection to the purpose of providing for masses. But an ex- press trust cannot 1 be created for that unobjectionable purpose for the reason that there is no beneficiary to enforce it. (? Con- ner v. Gifford, 117 N. Y. 275 (280) ; Holland v. Alcock, 108 N. Y. 312. See People v. Powers, 147 N. Y. 104. But the same end may be obtained by making a contract inter vivos pro- viding for the saying of masses after death. Oilman v. McAr- dle, 99 N. Y. 451. Such a transaction does not constitute a trust. Id. So such a contract may be made providing for a monument, the enclosing of a burial plot, etc. Matter of Oonk- lin, 2 Con. 176. In Todd v. Vaughan, 90 Hun, 70, it was held that a valid trust might be created inter vivos, to pay funeral ex- penses, and also to provide for funeral expenses and a gravestone for a third party. The result was correct, but it would appear that the transfer could only be sustained as a contract and not a trust. So the same end might in a sense be attained by absolute gift of property, inter vivos or by will, the donor or testator relying solely on the option of the donee or legatee to provide for masses in accordance with the mere expression of a desire, ante, 36 (g) post, 521. And in Matter of Backes, 9 Misc. 504, it was held that a testamentary direction to the executor to expend a portion of the estate held by him as executor and not as trustee, for masses, was valid. Whether this conclusion is sound, de- pends on whether the duty imposed can be said to fall within the 1 See the reference to the new statute, at the end of this section. 310 THE TRUST PURPOSE. scope of executorial duties. In one sense, the duties of an execu- tor are merely to settle up the estate by collecting assets and pay- ing debts and legacies ; and anything not fairly within this field can be performed by him only by virtue of an express trust, vesting in him the legal title, or a power in trust. (See ante, 156 et seq.} But powers in trust, like express trusts, require for their validity an ascertained living individual as the benefi- ciary. It remains to consider how widely the field of an execu- tor's duties may be validly extended by the will, without requir- ing a trust or a power. For one thing, the law imposes on the executor as such the duty of burying the decedent, and providing a gravestone. Patterson v. Patterson, 59 !N". Y. 574: ; Code C. P., 2749. If, therefore, the will contains a bequest to the executor for those purposes, it thereby merely deals with the subject of executorial duties, and does not create a technical trust at all. Ernans v. Hickman, 12 Hun, 425 ; Matter of Frazer, 92 N. Y. 239 (249). So it is settled that testator may enlarge the purely executorial duties by extending them long into the future in connection with the payment of annuities (not under an express trust), Clark v. Clark, 8 Pai. Ch. 152 ; and also, that he may charge his executor with the duty of expending capital of the estate in preserving and keeping in order, or repairing, a burial plot (where the executor is not vested with title to the fund, as legatee in trust), Pfaler v. Rdberg, 3 Dem. 360 ; Mat- ter of Frazer, 92 ]$". Y. 239. In Matter of Fisher, 2 Con. 75 such a provision was held void, as involving an illegal suspen- sion, though this view of the given scheme might seem doubtful. In regard to a direction to employ a part of the estate for pro- curing masses, while it is clear that a trust cannot be created, it is not clear that a mere direction to use a portion of the estate to pay for prayers might not be as readily sustained as a direction to pay for a cemetery lot, or for the services of a workman in repairing it. Matter of Hagenineyer, 12 Abb. N. C. 432. See Matter- of Black, 1 Con. 477 ; Wood v. Vandenburgh, 6 Pai. Ch. 277 (284). In both cases there is no trust and no beneficiary, but a purpose to be attained in making decent dispositions relating to testator's death, a purpose to which, per se, the law has no objection. However this may be, the matter is now per- haps covered by the new law relating to transfers of property, PERSONAL PROPERTY. 311 inter vivos or by will, for religious uses, where the beneficiaries are indefinite or uncertain, but the scheme is in other respects valid. See post, 513 ; Fowler, Char. Uses, pp. 91, 111. The cases under discussion, however, raise a question whether the new statutes apply not only where the beneficiaries are indefinite and uncertain, but also where there are no beneficiaries at all and it is not even contemplated that any are to be selected or ascertained at any time. CHAPTER VIII. RENTS, ISSUES AND PROFITS. (1) Corpus and Income Distinguished. 417. Introductory. In considering the distinction between corpus, and rents, issues and profits, as between life tenant and remainderman, the authorities are in many respects equally ap- plicable whether the life interest is held beneficially or in trust. The questions presented are frequently of great difficulty, but certain principles are well established. In the first place, the cardinal rule is that the intention indicated in the trust instru- ment shall prevail. If it appears that the creator of the trust in- tended accretions of the class in question in a given case to go to the life tenant, or to go to the remainderman, this is conclusive! Monson v. N. T. S. & T. Co., 140 N. Y. 498 (515), the will being given in full in 24 N. Y. Supp. 455 (with which compare Duclos v. Benner, 136 N. Y. 560) ; Matter of Gerry, 103 N. Y. 445 (449). Many of the cases to be cited on the present subject turn to some extent on the phraseology of the instruments in question, and to that extent fall short as authorities on the rules to be followed when the instrument is silent.' (For a reference to many articles in legal publications on the present topic, see footnote in 2 Con. p. 165 ; also Riggs v. Cragg, 26 Hun, 89, which was reversed in 89 N. Y. 479 (487), on the ground of lack of jurisdiction in the courts below). 1 In Linsly v. Bogert, 87 Hun, 137, the will gave to the life beneficiary of a trust fund the increase to be realized on the principal, and it was held that (a) such increase must mean net increase in the long run, and so could not be ascer- tained till the life beneficiary's death ; and therefore (b) it was not to be sup- posed that testator meant to give any accretions of corpus to the beneficiary to take effect only when he could no longer enjoy them, rather than to those to whom the fund was given in remainder. CORPUS AND INCOME DISTINGUISHED. 313 418. Real property. If property held in trust to receive and apply the rents and profits to the use of a beneficiary for a term, with remainder to others, is in the form of real estate, and there is an increase in the value of the land from natural causes, such increase is an accretion to the corpus, and inures to the benefit of the remaindermen. Matter of Gerry, 103 N. Y. 445 (450) ; 2 Perry on Trusts (4th ed.), 546 ; Van Vleck v. Lounsbery, 34 Hun, 569 ; Scovel v. Roosevelt, 5 Redf. 121. In apparent hostility to these authorities is a dictum in Clarkson v. Clarkson, 18 Barb. R. 646 (652), where the will authorized the trustees to invest in stock, or mortgages, or real estate, and to pay to the beneficiaries the " interest, dividends or proceeds ;" the court said, that if they had invested in real estate, the benefi- ciaries would be entitled " to the proceeds or profits arising from the investment. This latter might be determined by the sale of the land for an advance, and a reinvestment of the principal as provided by the will." If a mortgage held in trust is foreclosed, and the land is bought in by the trustees, and later sold at an advance, the proceeds, over and above interest on the debt, go to capital. Schoonhoven v. Van Wyck, 31 Barb. R. 457. Com- pare Trust Co. v. Hall, 5 Dem. 73. If trust property is de- stroyed by fire, the insurance money belongs to the corpus of the trust. Eagle v. Emmet, 4 Bradf. 117. 419. Bonds and mortgages. If trust funds are invested in government bonds, or bonds secured by mortgage, bearing a fixed rate of interest, which can neither be increased by the pros- perity nor diminished by the misfortunes of the debtors, and are eventually to be satisfied by the repayment of the principal sum of the obligation, here any gain realized upon their sale, over and above the amount paid, is capital and not income. The rise in value of such securities is generally due to the fact that subse- quent to the original purchase the general rate of interest ob- tainable on other equally safe securities has declined, while their rate remains unchanged. 1 This increase in value is in no sense a profit on the investment, but is an accretion to the fund, arising 1 The excess in value, above par, of United States bonds is, like the face value, not taxable. People v. Comm'rs of Taxes, 90 N. Y. 63. Compare 432. 314 BENTS, ISSUES AND PROFITS. from natural causes, and depends on the length of time that may expire before the bonds are paid off. After a certain point, it begins to decline, and at the period of maturity entirely disap- pears. The benefit of the comparatively high rate of interest is enjoyed annually by the beneficiaries, and if they live till the maturity of the bonds, they have then received in annual inter- est the entire difference, if any has existed at any time prior thereto, between the face and market value of the securities. Matter of Gerry, 103 N". Y. 445. To the same effect are the following authorities : Matter of Pollock, 3 Redf. 100 ; Town- send v. U. S. Trust Co., 3 Redf. 220 ; Matter of Clark, 62 Hun, 275 (282) ; Matter of Lawrence, 2 Con. 53 (55) ; Cross v. L. 1. L. & T. Co., 75 Hun, 533 ; Bergen v. Valentine, 63 How. Pr. 221 ; Matter of Proctor, 85 Hun, 572 ; Whitney v. Pho3nix, 4 Redf. 180. In Scovel v. Itoosevelt, 5 Redf. 121, the trustee held certain United States 6 per cent. 5-20 bonds, out- standing and uncalled. The government offered, in exchange for the same, (a) an equal amount in new 4 per cents ; (b} ac- crued interest on the old 6 per cents ; (c) three months' extra in- terest on the old 6 per cents. This offer was accepted. It was held that the accrued interest on the 6 per cents, and the regular interest on the 4 per cents, belonged to the life tenant ; but that he was only entitled to 2 of the 6 per cent extra interest, thus bringing his total interest up to 6 per cent during the three months in question. Compare Farwell v. Tweddle, 10 Abb- N. C. 94, where 5-20s were called by the government, under its option reserved in the bonds ; also Wfiittemore v. Beekman, 2 Dem. 275, where, government bonds having been called, inter- est to cease after three months, the Treasury Department, before that time had elapsed, ordered them prepaid with interest to the end of said three months. The " interest" for the period subse- quent to actual payment was held to represent principal. It would seem, however, that if the unexpected prepayment was accompanied by failure, after due effort, to find a satisfactory reinvestment at once, appropriate allowance should, up to the end of the three months, be allowed to the beneficiary from the prepaid interest. In Duclos v. Benner, 136 N. Y. 560, the facts were that a will created a trust to set apart and invest a fund of $30,000, or one third of the estate, as the beneficiary CORPUS AND INCOME DISTINGUISHED. 315 might elect, and pay over the income to a person named, for life, with remainder over. The trustees invested $40,000 in government bonds, and later sold them at a profit. The bene- ficiary was one of the trustees, and had, in fact, actual manage- ment and control of the estate. None of the bonds were in fact ever set off to represent her $30,000, and the court, hold- ing that she was not in a position to make any claim to the surplus realized on sale, did not pass on the question of what her rights might have been if the bonds had been set apart for her. Compare Matter of Hodgman, 140 N. Y. 421. If there is a premium on securities when purchased by the trustees, representing the value added by a high rate of interest, part of the interest thereafter received obviously represents principal, and accordingly should be set apart as a sinking fund, so that when the bonds fall due, and are paid off at par, the sinking fund will equal the premium originally paid. Reynal v. The- baud, 3 Misc. 187 (190). On this point see also 2 Perry on Trusts, latter part of 547, and cases there discussed. In New England Trust Co. v. Eaton, 140 Mass. 532, it is held that a trustee is authorized to pursue this course, and in Shaw v. Cor- dis, 143 Mass. 443, that the principle stated does not apply where the original securities in which the fund is invested at the crea- tion of a trust are then at a premium. In such a case nothing should be reserved for a sinking fund. See post, 485. 420. Stock, In Riggs v. Cragg, 89 N. Y. 479 (487) the court state that the right to " stock dividends" as between ten- ant for life and remainderman had not been considered by the court of last resort in New York. " The decisions upon the subject in other States and in England are conflicting, and it will be the duty of this court, when occasion arises, to seek to settle the question upon principle, and establish a practical rule for the guidance of trustees and others, which shall be just and equitable as between the beneficiaries of the two estates." In 1886, in Matter of Gerry, 103 N. Y. 445 (449), the court speak of " the questions or embarrassments attending the division of gain or profits, arising upon investments in trade, or the stock of cor- porate business enterprises, and which are usually represented by dividends, either regular or extra, payable in cash, stock, or 316 BENTS, ISSUES AND PROFITS. scrip, or remaining undivided in the hands of the corporation." The very next year, however, the general subject was at last brought before the court, and the following points were de- cided : 421. (a) If before testator's death, a dividend is declared upon stock left by his will in trust, but he dies before the date fixed for its payment, it is not, at his death, income, but a debt owing to the estate, and does not go to the life beneficiary. This is to be distinguished from Cogswell v. Cogswell, 2 Edw. Ch. 231, where " the interest or dividends" which were given to the life tenant might include dividends of which testator be- came the legal owner during his life, by virtue of their being declared, though they were payable afterward, flatter of Ker- nochan, 104 N. Y. 618 (623). In Brundage v. Brundage, 60 N. Y. 544, testator bequeathed twenty shares of stock, and be- fore his death the company used part of its earnings for improve- ments, etc., and issued to the stockholders, as evidence thereof, and to secure future reimbursement, interest certificates repre- senting these earnings. They carried dividends, and were assign- able, and payable at the option of the company out of future earnings, or convertible at the like option, into stock. Testator accepted them, and received dividends thereon. It was held that before his death they became part of his estate, as property distinct from the original shares, and that at his death they did not pass to the legatee 01 the twenty shares of stock. 422. (5) If before testator's death the company has accu- mulated from income a sinking fund, and after his death his trustees sell the stock at a fixed price, and the purchasers also pay a further sum representing their pro rata interest in the sinking fund, this latter sum is properly added to the price of the stock, as principal, and does not belong to the life beneficia- ries. Although it represents income, that income still belongs to the corporation, and is not declared as dividends, and still re- mains pledged for the payment of bonds to secure which the fund was created, and its existence merely enhances the value of the shares. Matter of Kernochan, 104 N. Y. 618 (625). 423. (G) If after testator's death, and during the life ten- CORPUS AND INCOME DISTINGUISHED. 317 ancy, a dividend, representing earnings, is declared, it all be- longs to the life beneficiaries, and is not to be apportioned by ascertaining what part represented earnings prior to testator's death, and what part subsequent earnings, and allotting these parts respectively to the remainderman and the life tenant. The general rule that dividends belong to him who holds the stock when the dividend is declared and allotted, irrespective of when the earnings accrued or when the dividend is payable (Clapp v. Astor, 2 Edw. Ch. 379 ; Hyatt v. Allen, 56 N. Y. 553 ; Hop- per v. Sage, 112 N. Y. 530), is to be applied in determining the relative rights of a tenant for life ana a remainderman. (But interest accruing de die in diem is apportionable, e.g., in the case of a mortgage. Clapp v. Astor, 2 Edw. Ch. 379, 383, and post, end of 424.) " The rule is a reasonable and proper one, which limits the right of a stockholder to profits, by the action of the managers of a corporation or company. It is their sole and exclusive duty to divide profits and declare dividends when- ever, in their judgment, the condition of the affairs of the cor- poration renders it expedient, and it would lead to great embar- rassment and confusion if a court should undertake to interfere with their discretion so long as they do not go beyond the scope of their powers and authority" (approving Barton's Trust, L. R. 5 Eq. 238, 245, and Re Hopkirts Trust, L. R. 18 Eq. 696, where an extraordinary dividend out of earnings covering a period of five years, extending back of the testators death, was held to be- long to the life tenant ; and Sproule v. Bouche, L. R. 29 Ch. Div. 635, 653). Matter of Kemochan, 104 N. Y. 618 (626). In this case the dividend was paid in cash ; it has been held by the courts below that the same rule applies, whether it is paid in cash, scrip, or stock, if derived from earnings. Glark&m v. Clarkson, 18 Barb. R. 646 ; Simpson v. Moore, 30 Barb. R. 637 ; Goldsmith v. Swift, 25 Hun, 201 ; Matter of Warren, 2 Con. 411 ; Matter of Woodruff, Tucker, 58. But if there is a mere pro rata distribution of treasury stock, to the stockhold- ers, not representing profits, it belongs to the corpus and is not income. Its issue decreases, pro tanto, the value of the original shares, giving to the stockholders a larger number of shares, but no larger fund, and the total issue still represents capital only. Knight v. Lidford, 3 Dem. 88. And so if a corporation sells a 318 BENTS, ISSUES AND PROFITS. part of its plant, and distributes the proceeds among the stock- holders, they belong not to income but to capital. Matter of SUttman, 2 Con. 161. But in Matter of James, 146 N. Y. 78 (96-103), it appeared that part of testator's property consisted in stock of three corporations ; before his death two of them built railroads, sold them, and received land grantsjn payment, which in turn they sold, and after his death, and according to their cus- tom, they divided the proceeds of sale as dividends ; the other constructed and sold a railroad, and received in payment a cer- tificate of indebtedness secured by a mortgage, upon wl\ich pay- ments were received, and, after testator's death, were divided as dividends. The only business of these corporations was to build and sell railroads, take land or other property in payment, and then convert these payments into cash for division. It was held that all these dividends represented income and not capital. Under the peculiar facts, these dividends were ordinary and not extraordinary. The particular terms of the will are to some ex- tent relied on, and the court express doubt whether in the ab- sence of apparent intention of the testator to give the life tenant all that came in under the name of income, these dividends could be regarded as other than capital. 424. (d) If after testator's death and after the termination of the life estate, a dividend is declared, it belongs to the re- mainderman, although made from profits wholly or partly ac- crued during the life tenancy. Matter of Kernochan, 104 N. Y. 618 (629) ; Hyatt v. Allen, 56 N. Y. 553 (558). But otherwise as to income accruing de die in diem, e.g., interest on bonds, notes, etc., U. S. Trust Co. v. Tobias, 21 Abb. N. C. 392 (400) ; Betts v. Setts, 4 Abb. N. C. 317 (415) ; Clapp v. Astor, 2 Edw. Oh. 379 (383). 425. (e) Privileges or options given by a corporation to its stockholders, to subscribe for stock and bonds, which option has a value of its own, is held by the trustees as capital and not as in- come. If accepted, the purchase would operate to increase the capital or change its manner of investment ; if not accepted, the life tenant could neither complain of the choice of the trustees, nor in any way control their discretion. Matter of Kernochan, CORPUS AND INCOME DISTINGUISHED. 319 104 K Y. 618 (630). The following points have been decided in the lower courts : 426. (f) If a corporation is consolidated with another, and for the purpose of equalizing the interests of stockholders of the stock in question, there is during the life tenancy an extra issue to them of stock or of bonds of the consolidated company, this surplus issue merely follows the interest which it is issued to equalize. Thus, in so far as the original stock constituted corpus, the new surplus goes to corpus/ Clarkson v. Clarkson, 18 Barb. R. 646 (657) ; Goldsmith v. Swift, 25 Hun, 201 ; in so far as stock thus equalized (being a stock dividend during the life tenancy) represented earnings, and constituted income, the new surplus goes to income. Id. 427. (g) In allotting stock dividends, etc., to life tenants, only such portion should be distributed as represents earnings. In other words, the fund itself is not to be depleted by such dis- tribution. For example, if stock has been bought at a premium, and an extraordinary dividend is declared, it must first be ascer- tained whether the selling value of the stock remains as high as that at which it was bought, and if it has fallen, the difference must be subtracted from the extraordinary dividend and retained as corpus, before distributing tjie balance to the life tenants as profits. Such, at least, is the ruling in Clarkson v. Clarkson, 18 Barb. R. 646 (657-658) ; logic would seem to lead to the ap- plication of the same rule where the original purchase was at par, and there had been a decline. Simpson v. Moore, 30 Barb. R. 637, as to which last point, however, see Hyatt v. Allen, 56 N. Y. 553. 428. Unearned premiums. As to "unearned premiums" on a life insurance policy bequeathed, see Plait v. Moore, 1 Dem. 191 (195). 429. Contracts. Where testator directed his executors to complete the performance of certain contracts made by him in his lifetime, and to that end to make advances ; and also gave the " net annual income" of his estate to his wife, it was held 320 BENTS, ISSUES AND PROFITS. that profits realized under the contract were not " net annual profits." Matter of Pollock, 3 Redf. 100. See Cogswell v. Cogswell, 2 Edw. Ch. 231 (239). 430. Payments on account. If part of the trust estate consists of a debt owing from a third party, payments by him on account, though not exceeding the accrued interest, must, as be- tween the trust estate arid the remainder, be considered as capi- tal, not income. Should the entire claim be paid, with interest, the interest would constitute income. So held, in Matter of Tietjen, 5 Dem. 350. (2) Deductions from Gross Income. 431. Intent controls. The statutory terms for income, in connection with trusts of real property, are " rents and profits." Another common phrase is " rents, issues and profits." In trusts of personalty, the usual term is income, or profits. Other designations are often employed in trust instruments, sometimes with the same, and sometimes with a different meaning. Unless thus varied, the terms rents, issues, profits, income, in a trust instrument, mean net rents, issues, profits, and income. Matter of Albertson, 113 N. Y. 434 ; Matter of Deckelmann, 84 Hun, 476. The creator of a trust might so express himself as to author- ize the payment to the beneficiary of funds constituting corpus as well as income, Matter of Dewey, 82 Hun, 426, or might direct the amount payable to the beneficiary to be the income re- duced by the payment therefrom of charges which otherwise would be paid from capital, Matter of Young, 17 Misc. 680, or may, as between the trust fund and other distinct property, spe- cially relieve one and charge the other. So his intention may be either to provide for the application of rents or income, which in such a case means net income, or to provide for an annuity of a specified amount, in which case there are no deductions. Mat- ter of Dewey, 82 Hun, 426 ; Whitson v. Whitson, 53 N. Y. 479 ; Delaney v. Van Aulen, 84 N. Y. 16 ; Brimblecom v. Haven, 12 Met. 511 ; Swett v. City of Boston, 18 Pick. 123 ; Pierrepont v. Edwards, 25 N. Y. 128. So he may provide that the gross income shall be paid to the beneficiary, Mackay v. Dennington, 82 Hun, 509, aff'd 145 N. Y. 606. Indications of WHAT DEDUCTED FROM INCOME. 321 such special intentions must always be taken into account in esti- mating the bearing of a given decision. Clarke v. Clarke, 145 N. Y. 476 (480) ; Matter of Jones, 103 N. Y. 621, aff g 37 Hun, 430 ; Blake v. Slake, 30 Hun, 469 (471) ; Miss v. Olmstead, 3 Dem. 273 ; Reynolds, v. Reynolds, 3 Dem. 82 ; Matter of Bull, 5 Dem. 461 ; Matter of Thompson, 5 Dem. 117 ; Matter of Williamson, 1 Con. 139 ; Matter of Morris, 63 Hun, 619, affd 133 N. Y. 693 ; Wilder v. Ranney, 95 N. Y. 7 (11) ; Matter of Braunsdorf, 2 App. Div. 73. But in cases where the terms of the trust do not vary the general rules, the following charges are to be subtracted from gross income, before paying over the balance to the beneficiary. (a) What Deducted from Income. 432. (1) Ordinary taxes. Deraismes v. Deraismes, 72 K Y. 154 ; Zapp v. Miller, 109 N". Y. 51 (58) ; Thomas v. Evans, 105 N". Y. 601 (612) ; Whitson v. Whitson, 53 K Y. 479 ; Cromwell v. Kirk, 1 Dem. 599 (603) ; Matter of Miller, Tucker, 346 (348) ; Cairns v. Chabert, 3 Edw. Ch. 312 ; Booth v. Ammerrnan, 4 Bradf. 129 ; Stubbs v. Stitlibs, 4 Kedf. 170 ; Lawrence v. Holden, 3 Bradf. 142 ; Pinckney v. Pinckney, 1 Bradf. 269 ; Matter of Deckdmann, 84 Hun, 476 (477) ; Bid- well v. Green shield, 2 Abb. N. C. 427 ; Parkinson v. Parkin- son, 2 Bradf. 77 ; De Witt v. Cooper, 18 Hun, 67 ; Wells v. Knight, 5 Hun, 50 ; Wilcox v. Quinby, 73 Hun, 524 ; Matter of Young, 17 Misc. 680. But if a tax assessment is so far com- pleted, before testator's death, as to constitute a debt of the es- tate, it is the executors who must pay the tax from the assets. Matter of Babcovk, 115 N. Y. 450 ; Griswold v. Griswold, 4 Bradf. 216 ; Matter of Steward, 90 Hun, 94 (99) and cases there cited ; Matter of Young, 17 Misc. 680. Expenses incurred solely to increase net income, e.g., interest on money borrowed to invest in government bonds, in order to avoid the tax otherwise payable from income, are chargeable against in- come. Wheelwright v. Rhoades, 28 Hun, 57 (59). If the beneficiary pays the tax, the trustee has no right to the re- ceipt. Matter of Brewer, 43 Hun, 597. (As to the power of a State to subject United States bonds to a transfer tax, see 21 322 RENTS, ISSUES AND PROFITS. Matter of Whiting, 150 N. Y. 27, 31 ; and compare ante, 419, note.) ' 433- (2) Current expenses. Woodward v. James, 115 N". Y. 346 (360). Trustees commissions, on rents and income. Matter of Mason, 98 N. Y. 527 (535) ; Whitson v. Whitson, 53 N. Y. 479 ; Booth v. Ammerman, 4 Bradf. 129 ; Wester- field v. Westerfield, 1 Bradf. 198 ; Cammann v. Cammann, 2 Dern. 211. 434. (3) Ordinary repairs. Hancox v. Meeker, 95 N. Y. 528 (537) ; Cromwell v. Kirk, 1 Dem. 599 (603) ; Cairns v. Chabert, 3 Edw. Ch. 312 ; Matter of Deckelmann, 84 Hun. 476 (477) ; DeWitt v. Cooper, 18 Hun, 67 ; Wilcox v. Quinby, 73 Hun, 524. 2 And it is not only true that ordinary repairs must, if made, be charged to income, but it is further the duty of the trustee to make them, so far as to prevent decay ; for otherwise the beneficiary would in effect be consuming the cor- pus at the expense of the remainderman. 2 Perry on Trusts, 540. 435- ( 4 ) Interest on incumbrances. 3 Gelston v. Shields, 16 Hun, 143 (149), aff'd 78 N. Y. 275 (281) ; Cogswell v. Cogs- well, 2 Edw. Ch. 231 (238) ; Matter of Deckelmann, 84 Hun, 476 (477) ; Wilcox v. Quinby, 73 Hun, 524 ; Sidenberg v. Ely, 90 N. Y. 257 ; House v. House, 10 Pai. Ch. 158 ; Wade v. Mai- loy, 16 Hun, 226. Unless a contrary intent is expressed. Mose- Uy v. Marshall, 22 N. Y. 200. 436. (o) Miscellaneous. Expenses of conducting a busi- ness, as wages, " trade raising," signs, losses on credits, deterio- 1 As to the remedy, if a tax is collected from one person, which another ought to pay, see L. 1896, ch. 908, 78. 2 So with the cost of special improvements made at the request and for the convenience of the life tenant. Beits v. Beits, 4 Abb. N. C. 317 (438). 3 " Whenever real property held by any person for life is encumbered by mortgage or other lien, the interest on which should be paid by the life ten- ant, and such life tenant neglects or refuses to pay such interest, the remain- derman may pay such interest and recover the amount thereof, together with interest thereon from the time of such payment, of the life tenant." Real Prop. L., 233. WHAT NOT DEDUCTED FROM INCOME. 323 ration or loss of plant, etc., Matter of Jones, 103 N. Y. 621 ; depreciation in furniture retained unsold because the house could be let furnished for a larger sum than could have been derived from the house unfurnished and from the proceeds of the furni- ture if sold ; provided, however, that that difference [equals or] exceeds the depreciation ; otherwise quaere, Matter of Housman, 4 Dem. 404 (409 et seq.} ; liability of testator on certain covenants in leases of property over which his executors have a power in trust to manage. Downing v. Marshall, 1 Abb. Ct. App. Dec. 525 (540). To sustain a construction whereby capital is impaired in the payment of ordinary taxes, current expenses and interest, the direction should be unmistakable and unequivocal. Woodward v. James, 115 N. Y. 346 (360) ; Matter of Albertson, 113 N. Y. 434. For some exceptional cases where the general rule of lia- bility is varied, see Thomas v. Evans, 105 N. Y. 601 ; Matter of Young, 17 Misc. 680. (b) What not Deducted from Income. 437. Introductory. There are other expenses, however, which, if made under due authority, are not to be charged to, and subtracted from, the rents and income alone, but are either to be charged against the remainderman only, or apportioned be- tween the life tenant and the remainderman. In discussing this subject, the starting point must be the general, and rather strict principle that the trustee, or any life tenant, is not authorized to run up charges for repairs or improvements against the remain- derman, or to eat into the capital. 2 Perry on Trusts (4th ed.), 552 ; Matter of Deckelmann, 84 Hun, 476 (477) ; Green v. Winter, 1 Johns. Ch. 26 ; Bellinger v. Shafer, 2 Sandf. Ch. 293 ; Thomas v. Eoans, 105 N. Y. 601 (611) and cases cited ; Matter of Lamb, 10 Misc. 638 (640). It seems, however, that this rule has become somewhat relaxed, and that the tendency of the later cases is to limit its application. Stevens v. Melcher\ 80 Hun, 514 (532); Matter of Deckelmann, 84 Hun, 4T6 (477). But it is obvious that the remainderman's interest is his rata interest in the prop- erty, and to charge it to the available capital in his hands. Third, the decision involved the proposition that on the facts presented the other portion of the expense was merely a general charge on the life tenant personally. But fourth, and this is of special importance, the real estate on which the outlay had been made was the only property in which the life tenant and the re- mainderman (trustee) were both interested, the money fund being bequeathed directly to the trustee, on the same trust as the re- mainder in land, unaffected by any life estate. It was on these facts that the method was adopted of apportioning the expense by charging exclusively upon capital one portion, leaving the other portion exclusively as a personal liability of the life tenant. It will be seen that it would have been impracticable in that case, to effect an automatic adjustment by subtracting the entire expense from the capital, and thus reducing pro tanto the income of the life tenant. For neither trustee nor court could have sold or mortgaged the absolute life estate to raise a fund for such a purpose, and there was no other fund save that in which the life tenant had no interest. To subtract the entire expense from that fund would thus have freed the life tenant from any portion of METHOD OF APPORTIONING DEDUCTIONS. 331 the outlay. The only course open, therefore, was to ascertain the proper respective proportions, and allow the trustee's portion to be charged on the available capital in his hands, leaving the other portion resting upon the life tenant to dispose of as he saw fit. Fifth : In the Peck case, the court does not discuss the method of determining the respective interests, but merely directs the trustee to pay a proper proportion. It will be assumed, however, that the court intended to indicate the method which thereafter the surrogate, when the case again came before him, in fact adopted (see statement in Matter of Sousman, 4 Dem. 404, 409), namely, to ascertain the life tenant's interest in the real estate according to the Northampton tables, and taking the difference between that sum and the total value of the property as the interest of the remaindermen, to make the apportionment upon that basis. In Stevens v. Melcher, 80 Hun, 514 (522-525), the situation was a much more common one, and very different from that in the Peck case. Here the trustee held in trust both real and personal property, all affected by a right in a remainder- man. For an outlay upon the realty, which was held to be ap- portionable between the life tenant (trustee) and the remainder- man, the court held that the total expense of $33,000 should be charged to capital, for the reason that in this way it would be automatically apportioned, through the corresponding loss of in- come, pro tanto, to the life tenant. In this case, it will be seen, the trustee and the remainderman were both concerned in the same fund, consisting both of realty and personalty, in this re- spect differing radically from Peck v. Sherwood, supra. It was, therefore, practicable, as in the Peck case it was not, to effect an automatic adjustment of the respective rights by charging the total expense to capital, and thus reducing both the capital and the income. So also a loss on an authorized investment by a trustee is as between the life tenant and remainderman, charged to capital, thus automatically charging the life interest of the beneficiary pro tanto, through loss on income. Whittemore v. Beekman, 2 Dem. 275 (283). So if, as in another branch of the Stevens case (80 Hun, p. 525 et seq.\ the outlay has effected a corresponding increase in the value of the improved realty, a charge of the outlay to the extent of the entire permanent in- crease may also be properly made against capital, as in effect a mere 332 BENTS, ISSUES AND PROFITS. shifting of investment from personalty to realty, while any bal- ance over and above permanent increase may be charged direct- ly on income. Id. , p. 535. Compare Cogswell v. Cogswell, 2 Edw. Ch. 231 (240-242). The same rule was adopted in Mat- ter of Deckelmann, 84 Hun, 476, where the court, at the in- stance of the beneficiary of the trust, directed the trustee to make certain permanent improvements and charge the expense to principal. The court do not refer specifically to the fact that this would or might reduce the net income, and thus impose upon the beneficiary a portion of the burden, but they refer to and approve the reasoning and the conclusion of Judge Parker in Stevens v. Melcher, supra. Also Gillespie v. Brooks, 2 Redf. 349 (364). The distinction between the Peck case and the Stevens case seems to have been overlooked in Matter of Housman, 4 Dem. 404, where the interests of the life tenant (in trust) and remain- derman centred in the same corpus, and where accordingly a charge of the entire sum upon the corpus, as in the Stevens case, would have effected an automatic adjustment. The court, how- ever, followed the rule in the Peck case, thus throwing on the life tenant a double burden : first, the loss of the pro rata amount subtracted bodily from income, and secondly, the loss, pro tanto, of income due to depletion of the corpus by the charge apportioned to the remainderman. The same remark applies to Matter of Miller, Tucker, 346 (criticised in Gunning v. Car- man, 3 Redf. p. 72), to Matter of Young, 17 Misc. 680 (690), and apparently also to Cromwell v. Kirk, 1 Dem. 599 (604). In the Cromwell case, the life tenant had already died, and the question was how to apportion the amount to be contributed from her estate. It was therefore necessary to fix upon a spe- cific sum, and the surrogate resorted to the life tables, with a view of ascertaining what her chance of life was at the date of the outlay. This involves an application of the rule in the Peck case, while it is submitted that the rule applicable was that of the Stevens case, according to which, if the expenditure in ques- tion was originally made from the corpus, the matter had, at her death, completely adjusted itself, while if the expenditure was originally subtracted from income, the same should be restored to her estate as of the date of her death, and charged to the re- METHOD OF APPORTIONING DEDUCTIONS. 333 mainderman as of that date, the life tenant in either case having contributed her share through loss of income on the amount of the outlay. Thus in neither case would a reference to the life tables be called for. Gunning v. Carman, 3 Redf. 69 (73). The life tenant, in all such cases, would thus lose all the annual income of the amount expended during life, while the remain- derman, while ultimately obliged to pay the principal sum, would be entirely freed from payment or loss of income thereon until he came into possession. In Matter of Laytin, 2 Con. 106, the facts apparently justified the application of the rule in the Peck case, and a resort to the life tables, for there testator had devised to his wife for life a house and lot, and bequeathed to her an an- nuity of $7000. It does not appear that the person entitled to the remainder in the house was also entitled to the fund held by the trustees to provide the annuity. The only method, there- fore, of effecting any part of the charge against the life tenant, in favor of the remainderman, without a sale of the house, was to subtract it directly from income. The case is a difficult one to discuss, because it does not appear why the trustees of the annuity fund had any authority to effect repairs at all on a house in which they had no title either for life or in remainder. If an outlay neither adds to nor subtracts from the permanent value of the estate, as a whole, and does not reduce the total in- come, it would seem that if authorized on behalf of the estate at large it should be charged to capital, in which case neither life tenant nor remainderman would lose anything, while if charged in any degree directly to income, the loss thus effected to the life tenant would accrue pro tanto to the profit of the remainder- man. See Stevens v. Melcher, supra. If, however, the outlay effects both a permanent increase in the value of the estate, and an increase in income, a charge of the entire outlay on capital would entirely relieve the life tenant of a fair share of the ex- pense of which he receives his share of profit. In such case an ascertainment of respective interests and a direct charge of the life tenant's share upon income would appear just. But see Ste- vens v. Melcher, and Matter of Deckelmann, supra. This point is dealt with in Cogswell v. Cogswell, 2 Edw. Ch. 231 (240-242), where certain buildings on Cedar Street were left in trust with remainder over. The city, in widening the street, cut off ten 334 RENTS, ISSUES AND PROFITS. feet in front. The court directed that the expense of erecting warehouses on the lots be paid from the available capital ; that out of the rents, 6 per cent on the cost of the buildings be re- served, together with a reasonable allowance for the natural de- preciation and wear and tear of the buildings until the life es- tates should fall. " In this way the tenant for life will receive the ' net receipts and profits' of this portion of the estate, and, in the meantime, the money expended in buildings will be a safe investment and drawing interest, . . . and upon the determina- tion of the life estates, those to whom the money invested will belong come into the possession of the same, in the permanent improvements upon the lots somewhat lessened in value, it is true, but the depreciation compensated for in the allowance made for the purpose. This appears to be just and equitable on both sides. . . . The master must ascertain the probable duration of the lives, taking an average of the three 1 ' (there were three beneficiaries of the trust, one third of the estate vesting on the death of each) " and how much less the buildings will be worth at that time, from natural causes or ordinary use, than when new ; and this amount he must apportion to be paid out of the rents in such manner as may be just." Jt would appear from the direction to reserve full interest on the cost, out of the rents, that the life tenants were not entitled to the income on the fund used for building. Compare Stevens v. Melcher, 80 Hun, 514 (525 et seq.). 447. Summary. The authorities just discussed illustrate the conflict between the two rules already referred to affecting the method to be adopted in apportioning, as between a life tenant, (trustee) and the remainderman, payments for assessments and other charges held to be a p port 5 on able. Some of the cases hold, that the whole payment should be charged to capital, on the theory that thereby the life estate, through loss of income on the amount spent, pays the carrying charges, while the remainder- man ultimately receives the capital less the sum expended but plus the corresponding improvement effected ; with the modifi- cation that if the improvement thus effected is not wholly perma- nent, an annual sum, adjusted by reference to the life tables, should be directly subtracted from income and added to capital, METHOD OF APPORTIONING DEDUCTIONS. 335 sufficient to form a sinking fund to make good to the remainder- man any loss from wear and tear during the trust term. This rule seems adapted to effect exact justice to both parties in a convenient manner, and to spread the charge upon income over the entire term of the trust. Other cases hold that the life tables should be referred to to determine the respective interests of the trust estate and the remainder, and that only the share of the lat- ter should be charged to capital (thus cutting off the trust income pro tanto) while the share of the trust estate should be charged to income, thus further reducing the receipts of the beneficiary. In other words, the trust estate pays interest on the entire ex- pense (which is just) and also pays a share of the principal (which will frequently be unjust). For if the case is one where no wear and tear, or depreciation, in the permanent improvement, is probable, it is obviously improper that the trust estate should do more than keep down interest which would be effected by charging the whole expense to capital. If there is to be wear and tear, and depreciation, justice requires that the trust estate should be charged therefor by means of a graduated or an aver- age annual deduction from income for a sinking fund (see Reynal v. Thebaud, 3 Misc. 187), and not by charging the total estimated depreciation in a lump, and taking it from income bodily. The apparent conflict between the authorities may be ex- plained as follows : (1) There are cases of life tenancy and re- mainder, one of which is in trust, where it is proper to ascertain the respective interests of the Iwo estates, and allot the principal expense accordingly, and take out bodily from the capital of the trust estate its proper share, and no more ; e.g., where it is the remainder that is the estate in trust, and the trustee holds on the same trust available funds in which the life tenant has no inter- est, but no available funds on which the life tenant has an inter- est. Here, obviously, the pro rata share of the trust remainder, and no more, should be charged to the available trust funds; This effects no loss of income on the life tenant, and hence he must be left burdened with his full pro rata share. Peck v. Sherwood, 56 N. Y. 615. Misapprehension of the point decided in this case is one cause of the misapplication of the rule allotting proportionate shares of the principal expense to capital and in- RENTS, ISSUES AND PROFITS. come respectively. (2) There are other cases, e.g., where the life estate has already ceased, and where, accordingly, an adjust- ment of fixed sums to be respectively charged is called for. These also seem to have been erroneously regarded as authori- ties for a similar course pending the trust term. Gunning v. Carman, 3 Redf. 69 (73) ; Cromwell v. Kirk, I Dem. 599 (604). (3) Still other cases involve no trust at all, and call for a sum- mary adjustment of respective liabilities and a final settlement at once and for good. Thus, in Williams v. Cox, 3 Edw. Ch. 178, a widow filed a bill for dower in rents of lands held under a lease from her husband. There was an assessment on the land. There was no method by which it could be charged to capital thus effect- ing an automatic pro tanto decrease in rents. The court held that the assessment should be paid by the heirs, and that one third of the interest thereon should be deducted from the rents to be assigned to the widow. Such cases afford a misleading analogy where there is a trust fund in court, a direct charge upon which of the total expense to be adjusted will automatically effect a charge upon the trust to the extent of the interest on the ex- pense. Even in cases where no trust is involved, but where opportunity offers to effect an indirect and equitable apportion- ment by throwing the principal charge wholly on capital in hand, the courts will so adjust the burden. Thus in Swaine v. ferine, 5 Johns. Ch. 482 (491 et seq.\ a widow filed a bill for assign- ment of dower and mesne profits ; the heir had been obliged to pay off a mortgage to which the dower interest was subject. The decree gave the widow one third of the land, and mesne profits, less her ratable contribution toward the redemption of the mortgage. The court held that in view of her getting her third freed from the mortgage, she ought to pay interest on one third of the mortgage debt paid by the heir, but as this method would be inconvenient and embarrassing, the direction was that the value of such annual payment for her life should be com- puted and subtracted from the mesne profits, any excess to be subtracted from the dower assigned. So in Stilwell v. Doughty, 2 Bradf. 311, where there was no trust, a sewer assessment was wholly charged on the remainderman, and the life tenant was directed to pay interest, the result corresponding to that where an outlay is charged wholly on the capital of a trust fund, thus APPORTIONING RENTS AND ANNUITIES. 337 reducing the income of the trust. The rules to be applied where an outlay is such as not to reduce either the estate or the income, or is such as to increase both, have already been considered. 448. Mortgage or sale. Where funds must be raised for the due protection or improvement of the estate, and none are, available except through sale of a portion of the realty, or a mortgage, the trustee may, either with or, it seems, in some cases, without the direction of the court, according to circum- stances, effect a sale or mortgage of the trust estate, and use the proceeds. U. 8. Trust Co. v. Roche, 116 N. Y. 120 ; Matter of Deckelmann, 84 Hun, 476 (477). But see Loscy v. Stanley, 147 N. Y. 560. Ante, 182 ; post, 458. See the present statute, Real Prop. L., 85. 449. Devastavit. If a portion of the total trust property, including corpus and accrued rents, is missing, through the fault of the trustee, and there is no direct evidence whether it has been subtracted from corpus or income, the nature of the respec- tive funds, and the comparative ease of disposing of one, or the other, may be considered, to some extent. Cook v. Lowry, 95 N. Y. 103 (112-113). (4) Apportioning Rents and Annuities. 450. As to rents, and annuities, and their apportionment, as between the trust estate and that of the creator of the trust, or between the trust estate and that succeeding it, a brief review of the history of the law is necessary. Under the common law, (a) If a person having a life estate, with no power to lease be- yond his own life, should make a lease for years, reserving rent in instalments, as, half yearly, and should die in the middle of a half year, thereby terminating the lease, the rent from the last pay day to his death was entirely lost. Marshall v. Moseley, 21 'N. Y. 280 (282). This presented a case where the rent-yielding lease, and not merely the lessor's interest in it, was terminated by his death ; and the principle determined not who should receive the rent, but that no rent was payable. This rule was changed by 11 Geo. 11., c. 19, 15, and in New York, 1 R. L. 438, 1 R. S. 747, 22, now Real Prop. L., 22 338 RENTS, ISSUES AND PROFITS. 192, enabling the executor or administrator of the lessor dying before the first rent day or between two rent days, to recover the proportion of rent accrued before such death. (b) An entirely different case was presented where one was en- titled to receive rents under a lease in such manner that while his own interest therein was terminated by his death, or by any other means, yet the lease itself was not thereby terminated. Here, if he died between pay days the rent did not cease, and the question was, to whom it should be paid. In such a case, the common law allowed no apportionment. Thus if, after mak- ing a lease, the owner devised a life estate and a remainder, sub- ject to the lease, and the life estate terminated between pay days, the next payment belonged to the remainderman. Marshall v. Moseley, 21 N. Y. 280. This principle also was abrogated in England by 4 and 5 Wm. IV., c. 22, which provided that all rents and all other payments made payable at fixed periods under any instrument executed after the passing of the act, should be apportioned so that on the termination by death or any other means, of the estate of the person entitled to such rents, such person, or his representative, should have a portion of such rents, according to the time elapsed since the last period of payment. Other provisions prescribed the method of recovery and appor- tionment. In 1875, a similar statute (L. 1875, ch. 452) was adopted in New York. It is now found, with certain immate- rial changes of phraseology, in Code C. P., 2720, which pro- vides that " all rents reserved on any lease made after June 7th, 1875, and all annuities, dividends and other payments of every description made payable or becoming due at fixed periods under any instrument executed after such date, or, being a last will and testament that takes effect after such date, shall be ap- portioned so that on the death of any person interested in such rents, annuities, dividends or other such payments, or in the es- tate or fund from, or in respect to which the same issues or is de- rived, or on the determination by any other means of the interest of any such person, he, or his executors, administrators or as- signs shall be entitled to a proportion of such rents, annuities dividends and other payments, according to thq time which shall have elapsed from the commencement or last period of payment thereof, as the case may be, including the day of the death of APPORTIONING RENTS AND ANNUITIES. 339 such person, or of the determination of his or her interest" after making proper allowances and deductions. This act also pro- vides for the method of collection and apportionment. By its terms, it does not apply where otherwise expressly stipulated, nor to policies of insurance. In its phraseology it was borrowed bodily, with slight and here immaterial changes, from the Eng- lish act above cited. The law on the subject of annuities prior to 1875 is discussed and illustrated in Kearney v. Cruikshank, 117 N. Y. 95. In that case, the question arose over an annuity, where the annuitant died between pay days. It was an annuity payable by trustees under an express trust. It was held that under the prior law, which governed that case, the Act of 1875 not being retroactive, there was no apportionment, while, if the will creating the trust had gone into effect subsequent to the pas- sage of that act, the annuity would have been apportionable. The old rule was held to apply not only where the annuity was payable on dates specifically fixed, but also where the dates for its payment were fixed by the law under the principle rendering annuities payable at the end of each year, and the court express the conviction that the Act of 1875 changes the rule in both cases by its reference to annuities " made payable or becoming due at fixed periods." See also Irving v. Rankine, 13 Hun, 147, affd, it seems, in 79 N. Y. G36. The law as to rents, prior to 1875, is discussed and illustrated in Marshall v. Moseley, 21 N. Y. 280. See also Deooe v. Van Vranken, 29 Hun, 200 ; Miller v. Crawford, 26 Abb. N. C. 376 ; Matter of Weeks, 5 Dem. 194. (c) It will have been noticed that the English statute, 4 and 5 Wm. I V., c. 22, provided for apportionment in case of a termi- nation by death or otherwise between pay days, of the estate of a person entitled to the rents. Under this statute the question arose as to the meaning of the word " termination ;" and it was decided that the Act only applied where the death or other cause referred to actually put an end to the interest as such of the per- son entitled. Thus, as in the case already stated, if an owner gave a lease, and then devised a life estate in the land, here the life tenant's death actually put an end to his interest in the estate. It was extinguished. If it occurred between pay days, the stat- ute applied and apportionment followed. But if an estate, in- 340 BENTS, ISSUES AND PROFITS. stead of thus ceasing, merely devolved on another, it was not terminated, but merely transferred ; the statute did not apply ; and no apportionment resulted. For example, if an owner executes a lease, not extinguishable by his own death, and dies between pay days, the land passes to his heirs, or to devisees ab- solutely or in trust ; the owner's estate has not terminated ; it has passed to others. In such a case there is no apportionment as between his executors and the heirs or devisees. The latter take the next payment in full. Browne v. Amyot, 3 Hare, 173 ; Beer v. Beer, 12 C. B. 00 (77) ; Clulow's Estates, 3 Kay & J. 689. As these decisions construing the English act antedated the passage of our Act of 1875 (now Code C. P., 2720) which adopted its phraseology, our act is, on familiar principles, to be read as thus construed. Black on Interpretation of Laws, p. 159. And this construction of the act has in fact been spe- cifically adopted in New York. Matter of Weeks, 5 Dem. 194 ; Miller v. Crawford, 26 Abb. N. C. 376. McAdam on Land- lord and Tenant, 2d ed., p. 347. The statute 2 R. S. 82, 6, now Code C. P., 2712, subd. 7, enumerating, among assets passing to an executor, " rent reserved to the deceased which had accrued at the time of his death," relates to rent accrued and payable, and not to such as has accrued intermediate the pay days and is not yet payable. Fay v. Halloran, 35 Barb. R. 295. The result is that as between the executors of a testator dying between pay days and the trustee of a life estate created by the will, the trustee takes the whole of the next payment, without apportionment ; and that if the same trust ceases between pay days, the statute applies and the trustee secures a pro rata share of the instalment thereafter payable ; the trust is thus favored at both ends. As to apportionment of rents as between several persons who succeed as co-tenants or otherwise to the title of a lessor, see Jones v. Felch, 3 Bosw. 63 ; Cruger v. McLaury, 41 N. Y. 219 ; Moseley v. Marshall, 22 N. Y. 200. (5) From when and to when Computed. 451. Under trusts. Legacies are not payable till the end of a year. Cooke v. Meeker, 36 N. Y. 15 (18). And no inter- est accrues on general legacies until that period has expired. Id* 23, as explained in Matter of Stanfield, 135 N. Y. 292. As to FROM WHEN AND TO WHEN COMPUTED. 341 specific legacies, see Platt v. Moore, 1 Dem. 191. ;But where the income of an estate, or of a designated portion, is given for life, the legatee is entitled to what is acquired from testator's death. Matter of Stanfield, 135 N. Y. 292. And this applies in express trusts of personalty, to apply the interest and income to the use of a beneficiary, irrespective of the relationship of the beneficiary to the creator of the trust. The beneficiary takes the interest acquired from testator's death to the end of the trust term. CooJce v. Meeker, 36 N. Y. 15 ; Matter of Stanfield, 135 N. Y. 292 ; Barrow v. Barrow, 55 Han, 503 ; Matter of Travis, 85 linn, 420 ; Matter of Lynch, 52 How. Pr. 367 ; Keating v. Bruns, 3 Dem. 233 ; Matter of Devlin, Tucker, 460 ; Pierce v. Chamberlain, 41 How. Pr. 501 ; Powers v. Powers, 49 Hun, 219 ; Matter of Fish, 19 Abb. Pr. 212 ; Bullard v. Benson, 1 Dem. 486 (494) ; Matter of Barnes, 7 App. Div. 13 ; Matter of Benson, 96 N. Y. 499 (511). But though interest begins to run at once, it is not payable until the end of a year, Matter of Stanfield, 135 N. Y. 292, unless the court grant an allowance from income already accrued and which would pass to the benefi- ciary's estate in case of his death. Lockwood v. Lockwood, 3 Redf. 330 (337). An annuity also runs that is, the first instal- ment begins to accrue from testator's death, and is payable at the end of the first year. Cooke v. Meeker, 36 N. Y. 15. And if made payable in equal instalments on certain designated dates, payment of the first instalment is to be made on the first of those dates after testator's death, though the intervening period is less than one of the full periods for successive payments. Gris- wold v. Griswold, 4 Bradf. 216 ; Cochrane v. Walker, 4 Dem. 164. So with a fund bequeathed to make good a deficiency, if any, in a subsequent sale of certain lauds devised in trust. After sale, and after a deficiency is ascertained, interest is to be allowed from testator's death on so much of the fund as is required to supply the deficiency. Rodman v. Fincke, 68 N. Y. 239. Where real property is given to trustees to receive and apply or accumu- late rents, the trustees, in whom the title vests, receive the rents accruing to them from the beginning to the end of the trust, for the trust purposes. Rodman v. Fincke, 68 N. Y. 239 (245- 246). Ante, 450. The fact that a sum given in trust is not set off and invested at once, as directed, or is not ascertainable 342 KENTS, ISSUES AND PROFITS. at once, does not prevent the subsequent allowance of interest from testator's death. Matter of Stanfield, 135 N. Y. 292 ; Rod- man v. Fincke, 68 N. Y. 239 (246) ; Fincke v. Fincke, 53 N. Y. 528. The point from which and to which income is computed in case of change of ownership between pay days is determined according to principles discussed ante, 450. 452. Under powers. If testator creates a testamentary power in another to appoint certain legacies, it has been held that the usual rules as to computation of interest on legacies do not apply, and that interest runs from the death of the appointor. Dixon v. Storm, 5 Redf. 419. (6) The Receipt of Rents and Profits. 453. Introductory. The necessity for authority to the trus- tee to receive the rents and profits, and the principle that such authority may be implied, have been considered ante, 146. The distinction between a grant oi authority to the trustee to receive and apply rents, and the requirement that he shall per- mit the beneficiary to receive them, are discussed post, 472, 4-74. The disposition of rents where the trust instrument makes no valid provision is discussed post, 489 et seq., and sections there cited. Under the present head two topics will be consid- ered : (a) The general authority of the trustee, to lease ; (b) the meaning of the term " lease" under the second class of trusts. (a) Authority to Lease. 454. In general. The trust instrument may specifically create a trust " to sell, mortgage or lease real property for the benefit of annuitants or other legatees, or for the purpose of sat- isfying any charge thereon." (Real Prop. L., 76.) This is the second class of permitted express trusts. The third class, to receive and apply rents and profits, implies an authority in the trustee to lease, Leggett v. Perkins, 2 N. Y. 297 (317) ; Corse v. Corse, 144 N. Y. 569 ; Belts v. Betts, 4 Abb. N. C. 317 (385) ; and the same reasoning would seem to apply to the fourth class, to receive and accumulate. The first class, however, to sell for the benefit of creditors, must in general be inconsistent with any implied power to lease, Matter of McCaffrey, 50 Hun, 371 (376) ; AUTHORITY TO LEASE. 343 but it seems that there is no necessary inconsistency in every case. For example, circumstances might arise to render it ob- viously improper to sell forthwith, at a heavy sacrifice, and in such case an implication might be raised of authority to lease for a short term rather than have the property wholly unproductive. Wood on Landlord and Tenant, 165 ; Evans v. Jackson, 8 Sim. 217 ; Jervaise v. Clark, 5 Madd. 90. So it has been suggested that express authority to dispose of all or any part of the estate, might cover a lease. Leggett v. Perkins, 2 N. Y. 297 (317-318) ; Hedges v. Riker, 5 Johns. Ch. 163 (167). So also the trust instrument, in addition to a trust for some other purpose, may confer a power in trust to lease, if not incon- sistent with the trust. Henderson v. Henderson, 113 N. Y. 1 ; Matter ofSeebeck, 140 N. Y. 241. 455. For what term. The most important point for con- sideration relates to authority to execute a lease that may con- tinue binding after the trust ceases. 456. (i) Under a power. A power in trust may confer such an authority. Matter of McCaffrey, 50 Hun, 371 (374) ; Fowler v. Mutual L. I. Co., 28 Hun, 195 ; Greason v. Keteltas, 17 N. Y. 491 ; also the cases cited ante in 454. See Ker- nochan v. Wilkens, 3 App. Div. 596. 457. (2) When fee in trustee. So also where the trustee holds in fee (as he does under a trust of the first class, to sell ; or of the second class, to sell, mortgage or lease, which are the only trusts conferring a fee, Bennett v. Garlock, 79 N. Y. 302, 317 ; Matter of McCaffrey, 50 Hun, 371, 376), he has like authority, if consistent with the given trust. See ante, 454. The general principle is that a trustee may lease for a term justi- fied by the quantity of his estate ; if this is a fee, he may make a lease binding for any reasonable term. Wood on Landlord and Tenant, 165, 166 ; Taylor on Landlord and Tenant, 130, 131 ; Woodfall on Landlord and Tenant, Webster's Am. Ed., 17, p. 33, note ; 1 Washb. on Real Property, 5th ed., 490. But the term must be a reasonable one, and if not may be annulled in equity. Wood on Landlord and Tenant, 167 ; 344 BENTS, ISSUES AND PROFITS. Taylor on Landlord and Tenant, 132 ; Greason v. Keteltas, 17 N. Y. 491. The reasonableness of the lease may depend to some extent on the customs of the locality. Matter of Odell, \ Con. 94 (98). In Greason v. Keteltas, 17 N. Y. 491, New- comb v. Keteltas, 19 Barb. R. 608, and Ahern v. ISteele, 115 N. Y. 203, all three arising under the same will, the trustee held in fee, and the trust was created before 1830. The case of Laba- tut v. Delatour, 54 How. Pr. 435, only follows the two preced- ing cases. Matter of McCaffrey, 50 Hun, 371 (375-376). Ex- cept in trusts to lease, these principles must find at best a very limited application in trusts of the first and second class in New York. The fact that trustees are directed to convey to re- maindermen at the termination of the trust, does not, in itself, give the trustees a fee. No conveyance is requisite. Though provided for, its exercise is useless. When the trust ends, the remainders vest in possession. Such a direction has no bearing, therefore, on the present question. Gomez v. Gomez, 81 Hun, 566 (570), aff'd 147 N. Y. 195 (200). 458- (3) When fee not in trustee. If the trustee holds under the third class of trusts to receive and apply rents ; or the fourth class, to receive and accumulate rents, he has not a fee, but a life estate ; for the trust term must be measured by lives. Real Prop. L., 32, 50, 51, 76 ; Losey v. Stanley, 147 N. Y. 560. It may be an estate for the life of the trustee, or for that of the beneficiary or a third party and so an estate pur autre vie. A beneficial life tenant, whether for his own life or that of an- other, has no inherent power to execute a lease binding on the remainder. Woodfall on Landlord and Tenant, Webster's Am. Ed., 4, p. (5) and p. (10) ; Matter of McCaffrey, 50 Hun, 371 (374). (But a power may be expressly conferred on him to execute such a lease for a term not exceeding twenty-one years. Real Prop. L., 123.) And if the life tenant be a trustee, under the principle measuring his authority to lease by the quan- tity of his estate, his lease is not binding beyond the trust term. Wood on Landlord and Tenant, 165 ; Taylor on Landlord and Tenant, 130 ; Woodfall on Landlord and Tenant, Webster's Am. Ed., 17, p. 33 note ; Matter of McCaffrey, 50 Hun, 371. In Corse v. Corse, 144 N. Y. 569, where a lease for ten years, AUTHORITY TO LEASE. 345 by trustees holding a life estate, was sustained, the trust term had not expired when the validity of the lease was attacked, and the present point was not raised. So with Leggett v. Perkins, 2 N. Y. 297. In Betts v. Beits, 4 Abb. N. C. 317 (385), the lease was made for a term extending beyond the trust, but the discus- sion of that feature is omitted from the report (p. 415). 459. (4) When remaindermen incompetent. If the re- maindermen are infants, or otherwise incompetent, the legisla- ture may authorize, and under that authority the court may in a proper case direct, the leasing of their real property. See Code C. P., 2348 et seq. ; Gomez v. Gomez, 147 N. Y. 195 (201 et seq.*) Hedges v. Hiker, 5 Johns. Ch. 163. But proceedings to that end, affecting the remainder limited on the trust estate, must be taken under the Code provisions solely. Losey v. Stan- ley, 147 N. Y. 560 (573). Therefore where there is a trust for a life or lives, with remainder to such incompetent persons, the difficulty may be removed. 460. (5) Inherent power of court. But if the remainder- men are not incompetent, it appears clear that the court, in the absence of statutory authority, cannot confer such a power on the trustee of a trust for a life or lives. Gomez v. Gomez, 147 N. Y. 195 ; Losey v. Stanley, 147 N. Y. 560. 461. (6) Power of the Legislature. The remaining point is, whether the Legislature can authorize the court to grant such power to the trustee, where the remaindermen are not incompe- tent. If any such attempt has been made by the Legislature, it was embodied in L. 1895, ch. 886, for which 86 of the Real Property Law has now been substituted. The latter provision is as follows : " A trustee appointed to hold real property during the life of a beneficiary, and to pay or apply the rents, income and profits thereof to, or for, the use of such beneficiary, may execute and deliver a lease of such real property for a term not exceeding five years, without application to the court. The Supreme Court may, by order, on such terms and conditions as seem just and proper, in respect to rental and renewals, author- ize such a trustee to lease such real property for a term exceed- 346 RENTS, ISSUES AND PROFITS. ing five years, if it appears to the satisfaction of the court that it is for the best interest of the trust estate, and may authorize such trustee to corenant in the lease to pay at the end of the term, or renewed term, to the lessee the then fair and reasonable value of any building which may have been erected on the prem- ises during such term. If any such trustee has leased any such trust property before June fourth, eighteen hundred and ninety- five, for a longer term than five years, the Supreme Court, on the application of such trustee, may, by order, confirm such lease, and such order, on the entry thereof, shall be binding on all persons interested in the trust estate." Real Prop. L., 86. 462. (7) Scope of the statute. If this statute purports to empower the trustees of existing trusts, either with, or without, authorization from the court, to execute leases which shall bind adult and competent remainderman, it would appear to be un- constitutional. Powers v. Bergen, 6 N. Y. 358 ; Brevoort v. Grace, 53 N. Y. 245 ; Emlury v. Conner, 3 N. Y. 511 (516, 517) ; Oilman v. Tucker, 128 N. Y. 190 (199) ; Matter of DeansviUe Cemetery Asso., 66 N. Y. 569 (573) ; Wynehamer v. The People, 13 N. Y. 378 (393) ; People v. Havnor, 149 N. Y. 195 (199) ; Bertholf v. O'Reilly, 74 N. Y. 509 (515) ; Matter of Application of Jacobs, 98 N. Y. 98 (105). It is decided that L. 1886, ch. 257 (L. 1895, ch. 886 ; now Real Prop. L., 85, being the section immediately preceding the one now under dis- cussion) which empowers the Supreme Court to authorize a sale or mortgage by the trustee, in certain cases, is confined in its application to the estate held by the trustee, and does not affect the remainder, and that the Legislature would have no power to authorize, for private purposes, the sale or mortgaging of an estate owned by adult and competent remaindermen except to pay taxes and assessments. Losey v. Stanley, 147 N. Y. 560 (572). Ante, 182. The court held in that case that the statute was not intended to attempt this impossible result, and relied to some extent, on that point, on the fact that the statute required notice of the appli- cation for leave to sell or mortgage to be given only to the bene- ficiaries of the trust. That feature, now found in Real Prop. L., 87, relates at present to leases, as well as to sales and mortgages. There is, however, this distinction between the two cases : that AUTHORITY TO LEASE. 347 the trustee had, apart from the statute, no power, and could gain none from the court, to sell even the life estate, nor, save in cer- tain exceptional cases (ante, 181), to mortgage it. The statute, therefore, providing for sale or mortgage, even of the trust es- tate, had a purpose. But the trustee did, apart from any special statute, have power to lease the trust estate for the trust term. If this is all 86 of the Real Property Law gives, it was unnec- essary. If it meant to affect the remainder, it is unconstitu- tional. Perhaps it may be construed as restrictive, and as mean- ing that whereas the trustee possessed the power to make a lease for the full trust term, he should now be confined to leases for five years, subject to the earlier termination of the trust, and that to a lease for the full trust term, or a lease providing for re- newals, he must secure the direction of the court. Further, if the statute is intended to apply only to estates thereafter created, and to sanction leases binding on the remainder, it might be sup- ported as a permissible regulation of estates in property, or of the principles affecting succession. See JV. Y. & Oswego M. E. B. Co. v. Van Horn, 57 N. Y. 473 (477). It is to be no- ticed that, however construed, 85 and 86, relating to sales, mortgages and leases, are sweeping in character, and seem to apply even where such dispositions are expressly forbidden by the trust instrument. 463. To what trusts the statute applies. Another dis- tinct question raised by 86, relating to leases, is this : By its terms it only applies to " a trustee appointed to hold real prop- erty during the life of a beneficiary, and to pay or apply the rents, income and profits thereof,' ' etc. If this phrase is intend- ed to cover the entire third class of trusts, it is unfortunately worded. For the third class (Real Prop. L., 76) is thus de- fined : " To receive the rents and profits of real property, and apply them to the use of any person, during the life of that per- son, or for any shorter term, subject," etc. Now (1) if the phrase in 86, " to hold real property during the life of a bene- ficiary" is. like the phrase in 76 "to receive . . . and apply to the use of any person during the life of that person," to be construed to cover trusts measured by the life of a third party (a point which possibly raises no serious difficulty), yet (2) it seems 348 BENTS, ISSUES AND PROFITS. difficult to stretch the meaning of the phrase u during the life of a beneficiary," in 86, to cover the same ground as the words " during the life of that person, or for any shorter term " in 76. In other words, a trust may be created under 76, to re- ceive and apply the rents either for life or a less term ; while a lease may be executed under the literal terms of 86, only when the trustee is appointed to hold the property for a life. The actual meaning of the statute on this point is certainly not free from obscurity. Section 86, relating to leases, appears to have no bearing on trusts for accumulation, as they are not trusts to apply rents. Probably that class of trusts so far as affects the interests in remainder of the beneficiary, who must, of necessity, be an infant (Real Prop. L., 51) is covered by Code C. P., 2348 et seq. relating to sale, mortgage or lease of the property of infants ; on this point see also Real Prop. L., 50, providing that a dis- position of future rents and profits shall be governed by the rules for future estates. 464. Renewal clause. Trustees who do not hold in fee have no power, after the trust ceases, to renew leases made by them pending the trust, nor, in the leases thus made, to provide for renewals after the termination of the trust. Gomez v. Gomez, 147 N. Y. 195 (200, 201). If they do hold in fee, the propriety of inserting renewal clauses must be determined according to its reasonableness in the given case. Greason v. Keteltas, 17 N. Y. 491. If the case is one where the court may, and does, author- ize a lease extending beyond the trust term (as, where the re- maindermen are infants) it may also authorize a renewal clause, which is binding on the remaindermen, and may be enforced, after the trust has ceased. And so, though the infant remainder- men have only a contingent remainder, which is in fact cut off under a beneficial power of appointment executed in their favor, so that they take not as remaindermen under the original instrument, but as appointees under the power, and where the donee of the power, who thus exercised it in their favor, has joined in the execution of the lease. As they take under his ap- pointment, they take subject to the burdens duly imposed by him. And so, even though the donee appoint not to them directly, but to trustees to their use. Gomez v. Gomez, 147 N. Y. 195. AUTHORITY TO LEASE. 349 Although parties acting in the capacity of trustees only aie not ordinarily under any obligation, in executing the duties of their trust, to enter into any personal covenants in relation to the trust property, yet when they voluntarily do so they are not only themselves bound to perform such covenants, but those who suc- ceed to their rights as trustees are also bound by valid cove- nants, so long as they retain the control of the property to which they relate. See Real Prop. L., 222. The relief afforded may be by way either of specific performance, accounting, or dam- ages, according to the case made out. Greason v. Keteltas, 17 N. Y. 491 ; Fowler v. Mutual L. /. Co., 28 Hun, 195. And even if the successors are not technically the survivors or substi- tutes in the trust function of the original trustees, yet they may take subject; in this respect, to the obligations already imposed. Gomez v. Gomez, 147 K Y. 195 (200). As to the liability of the respective parties for a nuisance on property held subject to a lease executed by trustees, and extending beyond the trust term, see Ahern v. Steele, 115 N. Y. 203. 465. When executed by guardian. Where a lease is directed by the court acting for the protection of infants, it may appoint a guardian to execute it, or may empower the trustees of the present trust estate to do so. Gomez v. Gomez, 147 N. Y. 195 (202). 466. If property held in shares. The trust may contem- plate a division of the property into separate portions, each to be held on a distinct trust. Various illustrations of the bearing upon such trusts of the trustee's power to lease, are found in the reports. Matter of McCaffrey, 50 Hun, 371 (376) ; Corse v. Corse, 144 N. Y. 569. 467. Lease not essential. The leasing of trust property is not essential in all cases of trusts to receive rents. The trust in- strument may authorize the trustee, under a trust to receive and apply rents, to occupy and manage it and thus produce an income. Downing v. Marshall, 23 N". Y. 366 (376-377). So the trustee, whether specifically authorized or not, may permit the beneficiaries of such a trust to occupy, and thus enjoy the use. (Post, 472 et seg.) 360 RENTS, ISSUES AND PROFITS. 468. Invalid lease Tenant's liability. Where trustees are given power to lease, but a lease, as for a ten years' term, is invalid because not duly executed, the tenant, if he goes into possession, is liable as on a lease from year to year. Kernochan v. Wilkens, 3 App. Div. 596. (b) Leases under the Second Class. 469. In general. Under the second class of express trusts, to sell, mortgage or lease real property for the benefit of annui- tants or other legatees, or to satisfy any charge thereon, the rents received under a lease constitute a fund in the hands of the trus- tee which he uses as a general trust fund to pay off legacies or charges. It makes no difference as to the validity of the trust, whether the sale (or mortgage or lease) is for the benefit of a sole legatee or for that of several. Skinner v. Quiti, 43 N. Y. 99 (106). 470. Meaning of "lease." In Hawleyv. James, 16 Wend. 60 (152 et seq.} the following view of a trust to lease, under the second class, was expressed by Bronson, J. : The provision as to leasing, in the second class must not be understood to imply the right to receive rents and profits. The maxim noscitur a sociis should be applied, and a meaning given to it implying alienation, if possible. Thus, it would cover leases of the land to beneficia- ries or to creditors at a nominal rent, for a term sufficient to satisfy the legacy or debt ; or leases to third persons, reserving the rent to the legatee or creditor. Or the term could be sold outright for a gross sum. They are trusts to sell land or some in- terest in it. The trustee does not hold for a term, and the land need only remain in his hands until a purchaser can be found who is willing to take it on reasonable terms. Such is Judge Bron- son's statement. It would seem, by analogy to the decisions on a similar point under the third class, that the trust to lease must be so constituted as to give the trustee the right to receive the rents ; but that he might, in the exercise of his discretion, adopt the method of renting to creditors or legatees. The same view of the statute is taken in Cowen v. Rinaldo, 82 Hun, 479 (484 et seq.). It is there held, that a devise in trust to receive the rents, and therefrom pay legacies, taxes, etc., and mortgages LEASES UNDER THE SECOND CLASS. 351 affecting the land, is invalid because not for a statutory purpose, on the ground that it must fall, if at all, within the second class of trusts, and that that class does not permit a trust to receive rents, but only to dispose of the whole or a portion of the estate, either by way of sale, mortgage or lease, for a lump sum, or by way of a lease to the beneficiary, or reserving the rent to the beneficiary. This is believed to be an erroneous view of the statutory meaning. In the first place, if the second class of trusts does authorize a trust to lease and receive the rents and apply them to the payment of legacies and charges, then a trust to " receive the rents" for that purpose would be equivalent to a trust to " lease," and would fall within the statute. This is set- tled by the cases relating to the third class of trusts. So that trusts " to lease and receive rents" and trusts merely " to receive rents," may here be considered together. That such a trust, for the purpose of paying annuities or other legacies and charges, may be validly created, seems to result from the following considera- tions : (1) The statute allows trusts " to sell, mortgage or lease real property for the benefit of annuitants, or other legatees, or for the purpose of satisfying any charge thereon." Real Prop. L., 76. Judge Bronson's theory is that no trust for any of these purposes authorizes the receipt of rents and profits, and that no trust to receive rents and profits for any purpose what- ever can be created except for the purpose of applying them or accumulating them, under the third or fourth classes. Hawley v. James, 16 Wend. 60 (153). This view entirely overlooks 1 R. S. 729, 56, now Real Prop. L., 77, which provides that a devise of land in trust to be sold or mortgaged, where the trustees are not also empowered to receive the rents and profits, fails as a trust and is only valid as a power. That is, authority to receive rents and profits is essential to the validity of a testamentary trust to sell or mortgage. By analogy it would seem that the same power was contemplated in trusts to lease, but was not specified because the nature of the trust implied it. (2) The point is made in the two cases last cited, that a trust to receive rents would effect suspension ; that it is settled that trusts to sell, mort- gage and lease do not eftect suspension ; therefore they do not in- volve the receipt of rents. But as just seen, a trust to sell or mortgage requires authority to receive rents, and yet does not 352 KENTS, ISSUES AND PROFITS. involve suspension. And in particular, trusts to receive rents and therefrom pay legacies and charges cannot possibly effect suspension, because the beneficiaries may release and thereby terminate the trust. Duvall v. E. E. L. Church, etc., 53 N. Y. 500 ; Williams v. Montgomery, 148 N". Y. 519 ; Mott v. Acker- man, 92 N. Y. 539 (550) ; Greenland v. Waddell, 116 N. Y. 234 (246) ; Beardsley v. Hotchkiss, 96 N. Y. 201 (214) ; Emer- iti v. Everitt, 29 N. Y. 39 (77, 78) ; Miller v. Emans, 19 N. Y. 384. And as soon as the beneficial interest is annulled the trust ceases. It is in this respect that a trust to sell, mortgage, or lease, differs from a trust to apply rents to the use of a benefi- ciary who is by statute forbidden to release. Under a trust to lease and receive rents arid apply them to paying off legacies, annuities and charges, a conveyance by the trustee, the bene- ficiaries and the persons entitled to the land subject to the trust could be made at any time. The view adopted in the cases above cited is also illustrated in Matter of Fisher, 4 Misc. 46. But compare Paries v. Paries, 9 Pai. Ch. 107, aff'd N. Y. Comm. Adv. Jan. 3, 1843 (see 2 N. Y., p. 320). (7) The Application of Rents. 471. Introductory. This subdivision deals only with the third class of trusts, i.e., to receive and apply rents. The statu- tory term " apply" the rents and profits to the use of a person for life, etc., has given rise to much discussion. The chief ques- tions have related to the method intended whether the trustee must necessarily see to the application of every dollar, himself, or may, or must, turn the rents over to the beneficiary to be used by the latter as he sees fit ; and whether the trustee must receive the rents and income in cash, and in that form pay or apply them, or may effect such payment or application indirectly by permitting the beneficiary to occupy or enjoy the use of the land or fund. 472. Method of application. Some light is thrown on what the statute authorizes the trustee to do in executing the trust, by the decisions establishing what the statute authorizes the creator thereof to do in creating it. The trust instrument may specify, to some extent, the particular use to which the trustee shall put THE APPLICATION OF RENTS 353 the rents. In the early case of Leggeti v. Perkins, 2 N. Y. 297, the opinions go very far in their doctrine. The particular point decided was that a trust to receive and pay rents, is valid, the diiection to " apply," in terms, being unessential. Gardiner, J., in his opinion, says that the statute does not require the creator to use its own term " apply," and thus delegate to the trustee the sole discretion as to method of application ; that the inten- tion was merely to provide that the trust must require the appli- cation of the rents to the use, in some form, of the beneficiary, leaving it to the creator, if he chose, to specify the particular use, and if not, then to the discretion of the trustee ; that for example, the creator may confine the application of the rents to the mere " education" of the beneficiary, which is one use. A majority of the judges concurred in holding valid the trust in question, to receive and pay over. The doctrine set forth by Gardiner, J., has either been narrowed by the subsequent cases, or is to be understood in a sense somewhat more restricted than might appear from a casual reading of his opinion. It is cer- tainly not true that in all cases "the creator of the trust may direct specifically the performance of those things, which the trustee, whose authority is derived from him, might himself perform, in the lawful execution of the trust, if no specific direc- tions were given." Thus, in the absence of directions, the trus- tee may permit the beneficiary to occupy the land ; but a direc- tion in the trust instrument that he shall permit such occupation, vitiates the trust. The point is, that the statute contemplates the trustee as the owner of the estate, and vested with the whole title, and charged with the duty of active control ; but a title with no power to enter, or control, or lease, or collect rents, would, under the theory of the statute, be an anomaly. It is not anomalous to permit the legal owner charged with the active management to suffer another to occupy, but it is anomalous to compel him to do so. Another form of statement is, that the statute permits only active trusts, while if title be given to a trus- tee, and the absolute right to occupy and control the premises to the beneficiary, the trust is passive. Some remarks in the opin- ion referred to indicate that Gardiner, J., did not intend his sleeping words to have their full effect. However that may be, it is well settled that anything in the trust instrument that 23 354 RENTS, ISSUES AND PROFITS. interferes with the trustee's right to hold the land, and receive the rents, vitiates the trust. Apart from this, it may perhaps be true that the creator may direct the particular method in which the rents, after the trustee has received them, shall be applied to the beneficiary's use. Just how far even this is true, does not appear to be well settled. Certain points have been decided. Thus, the particular words "to apply" the rents, etc., need not be employed in creating a valid express trust of the third class. It is sufficient to direct the trustee to " pay over" the rents. Moore v. Hegeman, 72 N. Y. 376 (384) ; Vernon v. Vernon, 53 N. Y. 351 (359) ; Van Cott v. Prentice, 104 N. Y. 45 ; Leggett v. Perkins, 2 N. Y. 297 ; Marx v. McGlynn, 88 N. Y. 357 (375) ; Gott v. Cook, 7 Pai. Ch. 521 (538-539), aff'd 24 Wend. 641 ; Parks v. Parks, 9 Pai. Ch. 107 (121-122), see 2 N. Y., p. 320 ; Betts v. Betts, 4 Abb. N. C. 317 (385). And the fact that the trustee is to apply during minority, and pay over during a subsequent period, may not indicate any distinc- tion between the two terms. Moore v. Hegeman, 72 N. Y. 376. So with "manage and dispose of," Cruger v. Cruger, 5 Barb. R. 225 ; or a direction that the beneficiary " shall re- ceive," etc. (i.e., from the trustees), see DeKay v. Irving, 5 Den. 646 (651) ; or that the trustees " use" the income for the support of the beneficiary, Kiah v. Grenier, 56 N. Y. 220 (225) ; or " appropriate" the rents, for his support, McArthurv. Gordon, 126 N. Y. 597 ; or " manage, control, and render to the beneficiary the income," Campbell v. Low, 9 Barb. R. 585 (592-593). A trust of property "to be managed and disposed of on the separate orders and receipts of the beneficiary," is sufficient in form, if it can be read to mean the application of the rents by an active trustee, on receipts from the beneficiary. Cruger v. Cruger, 5 Barb. R. 225 (238). A devise of rents and profits to B, with gift to A of general management and dis- position of the estate arid income as devised, is sufficient. Wood- ward v. James, 115 N. Y. 346 (356). The direction to apply, as well as receive, may be implied. Beekman v. Bonsor, 23 N. Y. 298 (314-315). A devise of land in trust " to hold and use" for the support, etc., of A, but not to be sold or conveyed, creates a valid trust. Kiah v. Grenier, 56 N . Y. 220. On the other hand, if, as in Harris v. Ely, 25 N. Y. 138, the trust deed THE APPLICATION OF RENTS. 355 conveys land in trust to suffer the grantor to occupy, possess and enjoy the property, and receive and appropriate the income to her own use, it is said that this is a passive trust, and clothes the trustee with the nominal legal title only. Also Wainwright v. Low, 132 N. Y. 313 (314, 319). In Verdin v. Slocum, 71 N. Y. 345, testator devised land in trust, and directed the trustees " to permit and suffer my son, William B. Slocum, to have, receive and take the rents, issues and profits thereof for the term of his natural life." The court held that " the trust attempted to be created is a passive one, and condemned by the statute. The trus- tees had no active duties to discharge. They were not to receive the rents and profits of lands, and apply them to the use of Wil- liam B. Slocum, or to pay them over to him. They were directed to permit and suffer him to have, receive and take the rents and profits. They had no discretion to exercise. They could not refuse the permission, and they could in no way exercise any control over the rents and profits. That such a trust is condemned by the stat- ute has never been doubted. [Citing Parks v. Parks, 9 Pai. Ch. 107, aff'dN. Y. Comm. Adv. Jan. 3, 1843 ; Jarvisv. Babcock, 5 Barb. R. 139 ; Beekman v. Bonsor, 23 N. Y. 298 (314, 316)]. William B. Slocum was entitled to the possession of the land and to the rents and profits thereof, during his life, and hence the statute (1 R. S. 727, 47, 49 ; [Real Prop. L., 72, 73] ; Craig v. Craig, 3 Barb. Ch. 76) vests the legal title in him for the same term." Also Wainwright v. Low, 132 N. Y. 313 (314, 319). In Skinner v. Quin, 43 N. Y. 99 (106), however, the court say that " the trusts created by the will are all legal and valid. One was to receive the income of the estate, to pay and apply the same to the support of the testator's wife and mother during the life of the latter, and to permit them to occupy the farm as a home during the same period." In that case, how- ever, the will does not in terms direct this to be done, but the trust is to apply the net income to the use of the wife and moth- er, permitting them to occupy, etc., thus, as the will was con- strued, leaving it to the discretion of the trustees to permit or refuse occupancy. Compare dicta in Salsbury v. Parsons, 36 Hun, 12. Also House v. Raymond, 3 Hun, 44 (46, 50). A beneficiary entitled to actual possession and to the rents and profits has a legal estate. Adams v. Perry, 43 N. Y. 487 356 RENTS, ISSUES AND PROFITS. (496). Where a testator directs the legal title of land to be taken in the name of the beneficiary, and gives the rents and profits thereof to a trustee to apply to the use of the beneficiary, the two provisions are inconsistent, and the title vests absolutely in the beneficiary free from the trust. Wood v. Wood, 5 Pai. Ch. 596. A conveyance, with habendum " to secure the mainte- nance of grantor." is not good as a trust. Mott v. Richtmyer, 57 N. Y. 49 (63-64). But compare post, 757. If the bene- ficiary have the right to occupy, and collect and receive rents, the trust is void, though the trustee is required to take care that the rents are properly applied. Jarvis v. Babcock, 5 Barb. R. 139. A direction that the property " be held for the benefit and be used and expended for the support, maintenance and educa- tion of A," has been held invalid, in Sterricker v. Dickinson, 9 Barb. R. 516 (518). The true reason would seem to be that it is a trust to apply corpus only and does not give authority to receive the rents. 473. Receipt of rents Power of revocation. The dis- tinction between the cases above cited, where a trust was held void because of the reserved right of the creator thereof to oc- cupy, or to receive the rents, etc., and the cases where a valid trust is held consistent with a reserved power in the creator there- of to re-enter, take possession, and resume control, seems to lie in the fact that in the former there is no point of time when the trustee can be said to have any title at all his rights are at all times subordinate to the reserved rights of the grantor, who has continuing authority ; while in the latter, until the power to re- voke is duly and formally exercised, the trustee's title is com- plete ; after it is revoked, the grantor comes in as a successor. The distinction may sometimes be rather shadowy. Compare Wainwright v. Low, 132 N. Y. 313 (314, 319), with Von Hesse v. MacKaye, 136 N. Y. 114. Of course a certain distinction is to be observed on this point between trusts of real and trusts of personal property. A reservation of the right to take possession, etc., which, as applied to real property, might not be capable of construction as a power of revocation, because of the formalities required in revoking such a trust, and which might therefore necessarily be understood as an illegal restriction and qualification THE APPLICATION OF RENTS. 36? vitiating the attempted transfer of a modified title in trust, might nevertheless, as applied to personal property, be quite naturally construed as a mere power of revocation, and so valid, and con- sistent with a complete title in the trustee until exercised. See the two cases last cited. Where a trustee does allow the benefi- ciary to occupy, instead of receiving the rents and applying them to the beneficiary's use, there is no basis for an (intermediate) accounting of the trustee, who has received and paid out nothing. Matter of Brewer, 43 Hun, 597 (599). For an instance of a case where part of the trust corpus consisted of a mortgage on a farm, and the trustee, instead of collecting the interest, sent the infant beneficiaries to board at the farm for the summer, and set off the board bill against the interest, and where, accordingly, having in fact received no money from that source, he was held not liable to account as for money received, see Dow v. Dow, 18 N. Y. Supp. 222, aff'd 66 Hun, 631. But as to the trustee's right to commissions on " rents," as if received and paid out, see Natter of Washbon, 14 N. Y. Supp. 672 (675). 474. Trustee's discretion. Although a provision in the trust instrument that the beneficiary shall have the right to oc- cupy the trust premises, vitiates the trust, because it is inconsis- tent with that full legal and equitable title, and that active right to receive the rents, which must be given to the trustee, yet in the absence of such a direction, the trustee himself may in the exercise of his discretion permit the beneficiary to occupy, and thus indirectly receive the rents. In such case he occupies and enjoys not in his own legal right, but under the legal right of the trustee. Matter of Brewer, 43 Hun, 597 (601). See also Mat- ter of Turner, 10 Barb. R. 552 (554) ; Bliss v. West, 58 Hun, 71, aff'd 132 N. Y. 589 ; Matter of Washlon, 14 N. Y. Supp. 672. If the trustee permits the beneficiary to occupy, the latter must pay ordinary taxes, mortgage interest, and any other charges which would otherwise be paid by the trustee out of rents received before paying over the net balance to the beneficiary, Bates v. Underhitt, 3 Redf. 365 ; and the trus- tee may repossess himself at any time, Matter of Brewer, 43 Hun, 597 (602), and, if necessary for this purpose, may bring an action of ejectment. Id., 603. But if the beneficiary, entitled 358 RENTS, ISSUES AND PROFITS. to the income, personally buys land, though with money bor- rowed from the trust, and gives back to the trustee a mortgage thereon, to secure the loan, it is the mortgage, and not the land, that constitutes the trust fund, and the beneficiary has the right to occupy the land, and is the absolute owner of the equity. .Baldwin v. Jsham, 25 Hun, 560. " The cestui que trust, if he is in a situation to know and pro- vide for his own wants with ordinary discretion must certainly have the power to direct how the money shall be applied when it has been actually received by the trustee [Temple v. Haw- ley, 1 Sandf. Ch. 153 (178)] ; for it never could be tolerated, in such a case, that the trustee should have the power to direct what food the cestui que trust should eat, what clothes he should wear, what church he should attend and contribute to the support of, or to what other specific purpose his surplus income should be applied. In case the trustee should attempt, without any justifi- able cause, to exercise such a control over the income of the trust fund, after it has been received so as to become the absolute property of the person for whose use it was to be applied, it would be the duty of this court to remove such trustee, and ap- point another who better understood his duty. On the other hand it would equally be a breach of his duty to place the in- come, after it was received, in the hands of a lunatic or a drunk- ard, who he had reason to suppose would waste it without apply- ing it to any beneficial use ; and so it would be if he purchased articles of food and clothing or other property himself, and placed them in the hands of such a person, when he had reason to believe they would be wasted, instead of being used for the benefit of such cestui que trust or his family. [Mason v. Jones, 2 Barb. R. 229.] In every such trust, whether the trustee is directed to pay over the rents and profits, as received, in money, or in necessaries to be purchased by himself, a certain degree of discretionary power must be vested in the trustee. And if that discretion is properly exercised by him, the rents and profits or income, received from time to time, will be applied to the use of the cestui que trust, whether the same are delivered to him in money or in necessaries for himself and family. Where the trus- tee acts in good faith, and for the apparent benefit of the cestui que trust, in refusing to place the rents and profits or income in THE APPLICATION OF BENTS. 359 his hands to be wasted, the Court of Chancery will protect him in the honest discharge of his duty, by refusing its aid to the improvident cestui que trust. And if the income is paid over to the cestui que trust who is under no legal disability to receive it, after it has actually accrued and not by way of anticipation merely, even where the trust is in the words of the statute, he can never afterward call upon the trustee to account for the money on the ground that it has been misapplied. The statute having authorized a trust to receive the rents and profits and apply them to the use of the cestui que trust, if the person creat- ing the trust thinks proper to direct the manner of the applica- tion as in this case, by paying them over to the objects of his bounty to be used in such way as they think proper notwith- standing their coverture, 1 cannot see why the direction is not within the letter as well as within the intent and meaning of the statutory provision on this subject. I therefore concur in opin-' ion with those who hold that a valid trust may be created, to re- ceive the rents and profits of real estate, and to apply them to the use of the cestui que trust by paying the same over to him in money, after they have accrued and been received by the trustee.' 1 Gott v. Cook, 7 Pai. Ch. 521 (538-539), aflFd 24 Wend. 641 ; Van VecJiten v. Van Veghten, 8 Pai. Ch. 104 (126), aff'd 1 Sandf. Ch. 395 ; Holden v. Strong, 116 N. Y. 471 ; Cornell v. Cornett, 96 N. Y. 108. Where the trust is of personal property, the creator of the trust may of course give such directions, not of an illegal character, as he chooses. But the principle upon which the trustee should proceed in exercising any discretion given or left to him, as to payment and application, are the same as in a corresponding trust of realty. Holden v. Strong, 116 N. Y. 471. And where there is a trust for support, the beneficiary is entitled thereto although he may have laid by money of his own, and be able to earn his own living. Holden v. Strong, 116 N. Y. 471 ; also Forman v. Whitney, 2 Abb. Ct. App. Dec. 163. While, where the rents of trust land are to be applied to the use of a beneficiary, the trustee may, if he sees fit permit him to occupy, he cannot in the absence of a direction to that effect in the trust instrument, compel the beneficiary to occupy that land, or live in any particular place, as a condition of receiving the benefit of the trust. McArthur v. Gordon, 126 N. Y. 597. 360 RENTS, ISSUES AND PROFITS. Compare Livingston v. Gordon, 84 N. Y. 136 ; s. c. 93 N. Y. 644 ; Cornell v. Cornell, 96 N. Y. 108 ; Forman v. Whitney, 2 Abb. Ct. App. Dec. 163 ; Estate of Riley, 4 Misc. 338 (340). 475. Where beneficiary an infant. If the beneficiary to whose use the rents or income are to be applied is an infant, it has been said that the proper course is for the trustee to pay them over to a duly appointed guardian, to be applied by the latter. Bradley v. Amidon, 10 Pai. Ch. 235 (243). At the least, he would in general be justified in pursuing that course. See Furman v. Coe, 1 Cai. Gas. 96 (110, 112). For the duty of determining whether to pay over, or to apply personally, exists where the question is whether the beneficiary is a proper person to trust with the expenditure of the money, while in the case of an infant beneficiary the guardian is to be presumed competent to disburse the rents paid over to him. See Bradley v. Ami- don, 10 Pai. Ch. 235 (243) ; Oakley v. Oakley, 3 Dem. 140. But it is suggested that this presumption may not be conclusive in favor of the trustee, and that he should not thus pay over the rents if he knows that the guardian is not making a proper appli- cation of them, but should, in pursuance of his general duty under the trust, bring the matter to tho attention of the court. The guardian's right and duty to see that the trustee is properly managing the corpus, IZobert v. Morgan, 4 Dem. 148, may have its correlative duty on the part of the trustee to see that the in- come is properly applied by the guardian, at least if he has rea- son to suspect bad judgment or bad faith. If there is no general guardian, the rents or income should be applied personally by the trustee until one is appointed to receive them from the trus- tee and apply them. But even after such appointment, it would appear that the trustee would be justified in directly applying proper sums for proper purposes, from the rents. Savage^. Olmstead, 2 Redf. 478 (480). See Hyland v. Baxter, 42 Hun, 9. Where rents are paid over, instead of " applied," the neces- sity of paying them to a guardian does not appear entirely set- tled. In Ireland v. Ireland, 84 N. Y. 321 (326), the court, in discussing a point not before them, appear to suggest that a trus- tee may directly apply rents to the use of infant beneficiaries, or may pay them over to their father as the head of the family, if THE APPLICATION OF BENTS. 361 not an improper person (see Matter of Slocum, Tucker, 443), while in Savage v. Olmstead, 2 Redf. 478 (480), it is held that a payment to the natural guardian would be unauthorized ; see also Hoyt v. Hilton, 2 Edw. Ch. 202 ; 2 Perry on Trusts, 624 ; Matter of Hobson, 61 Hun, 504, aff'd 131 K Y. 575. 476. Application of distinct shares. A provision for re- ceiving and paying over income to several beneficiaries during one life, does not necessarily imply that if one dies during the term the others are to receive his share of income. In the ab- sence of any direction, and under certain circumstances, that share of income may be regarded as undisposed of by the trust instrument, and may be dealt with accordingly, Delafield v. Shipman, 103 N. Y. 463 (469) ; Strong v. Strang, 4 Redf. 376 ; under principles stated post, 477, 489, 491, 556. 477. To apply part only. A trust to apply a part of the entire rents gives title to the trustee in all the land. Cochrane v. 8chell^ 140 N. Y. 516 (537). If the other part is undisposed of by the trust instrument, the law disposes of it by giving it, if it accrues during a term of suspension occasioned by an expectant estate, to those presumptively entitled to the next eventual estate (post, 489), and otherwise to those entitled under the principles of the common law (post, 556). And if only so much is undis- posed of as is not needed from time to time for the beneficiary of the trust, the surplus thus disposed of by law may fluctuate accordingly from time to time. Rilpatrick v. Johnson, 15 N. Y. 322 (329). Post, 491. And the rights of a beneficiary, on the other hand, may be dependent on those of some other person (who may even be the trustee), who is also entitled to income for his support. Macomber v. Bank of Batavia, 12 Hun, 294. Thus, a trust to apply the total rents to the use of A for his life, except the application of certain specified annual sums to the use of B, is in legal effect a trust providing first for B, and then for A so far as the remaining rents will permit. Matter of Chauncey, 119 X. Y. 77 ; Delaney v. Van Aulen, 84 N. Y. 16. See post, 488. 478. Trust for support Fixing amount. Where a will creates a trust to pay over so much of the income or principal as 362 BENTS, ISSUES AND PROFITS. may be necessary and proper for the support of the beneficiaries, the question whether the trustees are authorized to fix the amount thus necessary, or whether it shall be fixed by the court, depends on the intention of the testator, as expressed in the will. If the amount to be applied to the use of a beneficiary is made to de- pend on his actual needs, or any other test as to which different views might be entertained, and no discretion is given to the trustee, or any other person, the appropriate amount is deter- mined by the court. Bundy v. Bundy, 38 N. Y. 410 ; Estate of Riley, 4 Misc. 338 (342). Compare Bradley v. Amidon, 10 Pai. Ch. 235 (243). Post, 480. 479. Increase and decrease. Power in the trustee to in- crease the amount of income payable to a beneficiary, does not authorize a subsequent decrease to the original amount, Mason v. Jones, 13 Barb. R. 461, aff'g Mason v. Mason's Ex*rs, 4 Sandf. Ch. 623 (630), but would seem to warrant successive increase. 13 Barb., E. p. 465. But if the other trust purposes are com- pleted, and a corresponding portion of the estate is duly dis- tributed, reserving a specific fund to supply the income of the trust in question, this constitutes a final determination to effect no further increase except in so far as the income of the specific reserved fund may permit. Case v. Towle, 2 Sandf. Ch. 426. 480. Discretion By whom exercised. Where discre- tionary power is given to trustees to withhold, increase or de- crease payments, or do other acts, the trust instrument often in- dicates whether the trustees must all unite in exercising it, or whether it may be exercised by a majority, or by certain trus- tees. In the absence of such indication, the general rule ap- plies that in so far as the discretion is to be exercised by the trustees at all, all must agree and unite. 1 Perry on Trusts, 413. But the terms which appear to confer a discretion may, as a matter of construction, constitute a direction to perform given acts if certain facts actually exist, in which case the court may determine the existence of the facts and compel the per- formance of the resulting duty. Ante, 478 ; post, 488, 581-584. Discretion may be given to the trustee to apportion the rents among several beneficiaries as he deems wise. If he THE APPLICATION OF RENTS. 363 acts improperly or inequitably, equity will intervene, and control his discretion, but not if he keeps within the bounds of a fair and reasonable discretion, except on special grounds calling for relief. For illustration of such special grounds, and also of the main principle just stated, see Ireland v. Ireland, 84 N. Y. 321. As to abuse of such discretion, see Jones v. Jones, 8 Misc. 660. 481. Application by way of offset. If the trustees loan trust funds, as they may do, to the beneficiary, on bond and mortgage on real estate, they may " apply" the income repre- sented by that fund by crediting the mortgagor therewith as a payment of interest on the mortgage, and endorsing it as such on the bond, at least if the beneficiary consent to such a course ; and it would appear that the offset could in substance be effected irrespective of such consent. Baldwin v. Jsham, 25 Hun, 560 ; Judge v. (? Connor, TO Hun, 384. See also end of 474. 482. Making up deficiency. Where there is a trust to ap- ply rents and income, simpliciter, of course the beneficiary sim- ply receives, in each year, whatever there may be, whether more or less. Ddaney v. Van Aulen, 84 N. Y. 16 (23). Obviously the same rule must govern where a given proportion of the rents or income is to be applied. But the trust instrument may fix a precise sum to be applied or paid from the rents or income, or furnish some rule according to which the amount is to be fixed from time to time (e.g., to apply $500 a year from the rents ; or to pay over to the beneficiary such annual sum as the trustees shall determine to be appropriate for his education and mainte- nance). If, in such a case, the rents and income in a given year fall short of the sum fixed, two questions arise : First, whether the deficiency may be made up from corpus ; second, whether it may be made up from surplus avails in after years. See also, as to a provision for a separate fund to made np deficiencies, post, 485. 483. (a) From corpus. InDelaneyv. VanAulcn,84:N. Y. 16, testatrix left her property in trust to receive and pay the rents and income to A for life, except a specified annual sum to be paid therefrom to B for life. The question involved was whether, 364 RENTS, ISSUES AND PROFITS. the rents proving insufficient to supply this latter provision, the deficiency could be made up from corpus. The court trace the history of the question whether a direction to take rents and profits, and thereout to pay a sum of money, confines the source of payment to the rents and profits as they come to hand from year to year, or permits encroachment on the principal, by sale or mortgage. They find that the natural meaning of the words had, by 1813, been extended, by force of a well-established rule of chancery, to cover a power to supply a deficiency by sale or mortgage, when the will requires (1) the raising of a gross sum at a fixed time when it must be raised and paid without delay, and (2) when the direction is not restrained by other words. But they also find that while this rule xvould apply to annuities, yet now the operation of the rule may be restrained not only by the words of the will, but by all other indications which courts are wont to note in order to gather the intention of a maker of a dis- posing instrument in writing. " The courts have been ready to take hold of the context of wills to hold the rule in check." " Indeed, it may now be said that there is no principle whatever involved in these cases, save to ascertain what is thetestator's intention and to carry that intention into effect." In the case last cited, the court rely heavily on the fact that the primary gift is of the rents and income, except the annual sum provided for the subsidiary beneficiary. Obviously the primary gift called for income only, and not for capital in any event. The other gift being a mere exception therefrom must be construed in the same way. Extrinsic evidence was also relied on. Compare Pierrepont v. Edwards, 25 N". Y. 128 (138) ; Florence v. Sands, 4: Redf. 206. Also as to whether a direction to invest a sum sufficient to net $1000, and pay it yearly to A, is restricted to the particular fund, see Matter of Haviland, 49 Hun, 301, aff'd 124 N. Y. 640. The testator may of course specifically provide that any deficiency shall be made up from some other source, as, from the corpus, or from other funds in the hands of the trus- tee, as in Matter of Hayden, 77 Hun, 219. Post, 485. 484. (b) From future surplus. In Matter of Chauncey, 119 N. Y. 77, this question came before the court on the same will considered in Delaney v. Van Aulen, ante, 483. A, who THE APPLICATION OF BENTS. 365 had been entitled for life to all the income except the specified annual provision for B, had died. The court found that the in- tent was to supply any deficiency in the payments to B, after A's death, from surplus income of succeeding years ; but they appear to lean strongly toward the conclusion that such intent would have been presumed in the absence of any particular indication of intent, or at any rate that the fact that the provision is for sup- port, furnishes sufficient indication. To the same effect are Stewart v. Chambers, 2 Sandf. Ch. 382 ; Cochrane v. Walker, 4 Dem. 164 ; Matter of Roos, 4 Misc. 232 (234). The questions already discussed are not necessarily confined to cases where sur- plus receipts are not specifically disposed of by the will. Stew- art v. Chambers, 2 Sandf. Ch. 382 ; Matter of Chauncey, 119 N. Y. 77 (84). For whether there is or is not a disposition of surplus, any real surplus, after satisfying the annuities in the sense intended, belongs to somebody, either under the will or under the controlling law. The real question is, what constitutes surplus over and above what is needed for a complete fulfilment of the terms of the provision in question. Where there is a trust to receive and apply rents, and to sell the land, and to add to its proceeds from the residuary estate enough to make up a total sum specified, to be held on the same trust, the beneficiaries, until the land is sold, are entitled only to the rents of the land, and cannot have any supposed deficiency in what would have been earned by the sum named, if it had been raised and set off, made up to them. Fincke v. Fincke, 53 N. Y. 528. But when the sale takes place, and the amount required from the residuary estate, to make up the specified fund, is ascertained, then the beneficiaries become entitled to a further sum, representing in- terest on such amount, computed from the testator's death. Rodman v. Fincke, 68 N. Y. 239. 485. Fund to supply deficiencies. The creator of the trust may establish a fund to make good any falling off of income on the corpus of the trust. Matter of Thompson, 1 Con. 145 ; Rodman v: Fincke, 68 N. Y. 239. Ante, end of 483. But apart from any such provision, it appears that if any surplus of rents remains in any year, after full satisfaction of the required payments of the current and preceding years, it cannot be held 366 RENTS, ISSUES AND PROFITS. as a fund to meet future deficiencies, but must be distributed to those then entitled to it. Matter of Chauncey, 119 N. Y. 77 (85). See Matter of Boos, 4 Misc. 232 (234). As to whether a direction to reserve such surplus, in order to make good any future deficiency, would constitute an "accumulation'' under the Statute of Trusts, see Grant v. Grant, 3 Kedf. 283. 486. Payable out of the State. In Stewart v. Chambers, 2 Sandf. Ch. 382 (399-400), the trust instrument provided for the payment of income in London, in British sterling money. It was held that the prayer of tli3 trustees asking for directions must be answered by directing the purchase of exchange on Lon- don, the beneficiary being there. See also Conflict of Laws, Chap. XXIX. 487. Illegal or impossible condition. If income is to be applied to the use of a beneficiary, but the provision is subject to an illegal or impossible condition, the general princi- ples applicable to beneficial legacies or devises wonld appear to be applicable. Potter v. McAlpine, 3 Dem. 108 (123 et seq.} ; Hogan v. Curtin, 88 N. Y. 162. A thorough and clear review and discussion of the history of the law affecting conditions in restraint of marriage, is to be found in Bigelow's note to the 13th ed. of 1 Story, Eq. Jur., p. 276, note a. As to the gen- eral law of conditions, precedent and subsequent, and their effect on the validity of testamentary dispositions, see 2 Williams on Executors (Randolph & T.'s Ed.), 570^ seq. and notes ; Id., 585 et seq. and notes. Id. (Perkins Ed.), Vol. II., p. 1357 et seq. O' 1 Brien v. Barkley, 60 State Rep. 520 ; Horndorf v. Horn- dorf, 13 Misc. 343 ; Simonson v. Waller, 14 Misc. 95 ; Matter of Bratt, 10 Misc. 491. 488. To apply corpus. In real property there cannot be a valid express trust to turn over the corpus to the beneficiary (ante, 394), though there may be a power to convey to the beneficiary, or to sell and pay over a part or all of the proceeds (post, 617), and this power may in general co-exist with an ex- press trust for any valid purpose (post, 618). But in personal property, there being practically no restriction on the purposes for THE APPLICATION OF BENTS. 367 which an express trust may be created ( ante, 414), there may be a trust to hold and pay over principal as well as income. Such a trust, or a power for a like purpose, does not interfere with the vesting of a gift of the remainder, or the surplus of the proceeds of sale, in so far as not thus consumed. Mitchell v. Knapp, 54 Hun, 500 (505), aff'd 124 N. Y. 654. Sauter v. MuUer, 4 Dem. 389 ; ante, 161 ; Terry v. Wiggins, 47 N. Y. 512 ; Campbell v. ^Beaumont, 91 N. Y. 464. But in such cases, only imperious necessity should be allowed to override the apparent contempla- tion of testator, that there would probably be something left for the gift over to act on. Roosevelt v. Roosevelt, 6 Hun, 31 (42), affd "substantially upon the opinion below," 64 N. Y. 651. As to the power of the court to compel a trustee to exercise a discretionary power to pay over corpus, see Matter of Berry, 5 Dem. 458 ; Matter of Blanck, 5 Dem. 301 ; Banning v. Gunn, 4 Dem. 337. Ante, 480 ; post, 584 et seq. In the absence of authority in the trust instrument, the trustee is not authorized to apply corpus to the use of the beneficiary. Smith v. Smith, 3 Dem. 556. The corpus does not belong to the benefi- ciary as such, and he has no rights in it, except as a breeder of rents or income. Therefore even the Supreme Court, which has inherent power in extreme cases to control the corpus of person- alty, or the rents of realty, for the use of its owners if infants or otherwise incompetent, Matter of Muller, 29 Hun, 418 ; Hyland v. Baxter, 42 Hun, 9 (13) ; In re Bostwick, 4 Johns. Ch. 100 ; Losey v. Stanley, 147 N. Y. 560 (570), has no power, nor can the Legislature give it any power to apply to the use of any beneficiary, property which belongs to somebody else. Lockwood v. Logwood, 3 Redf. 330 (337) ; Losey v. Stanley, 147 N. Y. 560. If the corpus itself belongs, subject to the trust, to the same person who is the beneficiary of the trust, then, if it is personal property, the court may, in case of necessity, order such application, if the beneficiary is incompetent, acting under its inherent powers ; if it is real property, and the beneficiary is incompetent, then the Legislature may authorize the court to act. Id. Powers v. Bergen, 6 N. Y. 358. Compare, as to apportionment of payments, as between the trust estate and the remainder, ante, 437 et seq. And in such cases, where the trust fund is personal, and the facts are such that the court, if 368 BENTS, ISSUES AND PEOFITS. applied to, would have authorized an application of corpus, by the same person who is trustee, to the support of infant remain- dermen, the court may, on settling the trustee's account, credit him with proper applications of corpus thus made, though he had acted voluntarily and had not applied to the court for permission ; and BO, even though he had, according to his own theory, paid from corpus, expenses that should have been paid from income, where the beneficiary, who thus received an undue excess of in- come, employed the same for the necessary support ot the infant remainderman. The net result is the same as if the trustee had paid the expenses from income, and applied a like portion of the corpus to the support of the infant remaindermen directly. Mat- ter of Braunsdorf, 2 App. Div. 73. So where there is no trust at all for example, where an incompetent person is entitled, as a legatee, to the income of a fund for life the court may allow depletion, if necessary, and if the person entitled in remain- der consents. Matter of Muller, 29 Hun, 418 ; Hyland v. Baxter, 42 Hun, 9. So where, pending probates-one may re- ceive an allowance, if entitled whether the will stand or fall. Rice v. Tonnele, 4 Sandf. Ch. 568 ; Hoyt v. Jackson, 1 Dem. 553. As to allowance to a trustee, on accounting, of advances improperly made by him from corpus, on the theory of a charge against future income, see Matter of Rutherford, 5 Dem. 499 ; Saltus v. Saltus, 2 Lans. 9 ; Matter of Saltus, 3 Abb. Ct. App. Dec. 243 (246) ; Matter of Odell, 1 Con. 91. The trust instru- ment may even empower the trustee to apply corpus to his own use. Jones v. Newell, 78 Hun, 660. 489. Rents undisposed of. " When, in consequence of a valid limitation of an expectant estate, there is a suspension of the power of alienation, or of the ownership, during the continu- ance of which the rents and profits are undisposed of, and no valid direction for their accumulation is given, such rents and profits shall belong to the persons presumptively entitled to the next eventual estate." Real Prop. L., 53.' Under this stat- ute there are three points to be considered : (a) When are rents 1 This statute is applied, by analogy, to personal property. See post, % 765 (c). THE APPLICATION OF RENTS. 369 " undisposed of" ? (b) When does this statute apply ? (G) What is the " next eventual estate" ? 490. (a) Meaning of "undisposed of." 1 Rents maybe undisposed of, in the sense of this statute, either because there is no attempt to dispose of them, or because there is an attempted disposition which is void. (Cases cited post, 491.) A further distinction of importance is illustrated by two recent cases. In Cochrane v. Schell, 140 N. Y. 516, a trust was created to receive and apply rents and income to the payment of certain annuities amounting to $20,000. The actual income was $80,000, and no other disposition thereof was made. The court held that there was an implied trust for accumulation of the rents over and above $20,OOC, which was void, as not being for minors ; and as there was a future estate which caused a suspension, and the surplus was " undisposed of," it passed to those presumptively entitled to the next eventual estate. In Hendricksv. Hendricks, 3 App. Div. 604, testatrix created a trust to receive and apply all the in- come to the use of a lunatic daughter. The actual income was largely in excess of her needs. The court held that as the trust required the application of all of it to the nse of the beneficiary, none of it was " undisposed of," and the surplus not needed vested, as it accrued, in the beneficiary. In other words, if the creator of the trust chooses, he may validly direct the applica- tion of the rents, however large, to the use of a beneficiary, how- ever small his capacity of utilizing them as they accrue ; and they are not " undisposed of" because they exceed the benefi- ciary's needs. To the same effect is Gasquet v. Pollock, 1 App. Div. 512, where the direction of the will was to pay the surplus not needed for the support of the lunatic beneficiary, to his com- mittee. Compare ante, 477. So with an infant, if the surplus rents vest, but payment is merely postponed during infancy, Horton v. Cantwell, 108 N. Y. 255 (265). 1 Although not specifically disposed of, rents or income may be covered by a general residuary clause, see Matter of Grossman, 113 N. Y. 03. The result of such a clause is, that the rents are not undisposed of, and therefore this statute does not apply. Matter of Dey Ermand, 24 Hun, 1 (15). See post, 523. 24 370 RENTS, ISSUES AND PROFITS. 491. (b) When statute applies. After it is determined in a given case that there are " rents undisposed of," still the stat- ute only applies to cases involving both of the following features that is : (1) where there is a " suspension," which (2) exists " in consequence of a valid limitation of an expectant estate ;" e.g., where there is a remainder either contingent because per- sons who may take it cannot be ascertained, or vested defeasibly subject to being defeated wholly or partly, during the pendency of the preceding estate, in favor of persons who, in the meantime, cannot be definitely ascertained. Cochrane v. Schell, 140 !N". Y. 516 (538-539) ; Matter of Grossman, 113 N. Y. 503. Where rents are undisposed of, but there is no suspension, or, if there is a suspension, it does not exist in consequence of an expectant es- tate, then this statute does not apply, and the disposition which the law makes of the rents is determined by other principles (see ante, 477, and post, 556). The next thing to be done, there- fore, is to determine when a suspension is, and when it is not, occasioned by an expectant estate. It is very clear that it is thus occasioned where a future estate is given to persons who cannot be ascertained till a future period, so that in the meantime there are no persons in being who could convey an absolute fee (ante, 383 ; Cochrane v. Schell, 140 K Y. 516, 538-539). If, in such a case, the rents are undisposed of, the statute applies, without dispute. Nearly all the cases dealing with this general subject are of this class : Delafield v. Shipman, 103 N. Y. 463 ; Cochrane v. Schell, 140 N. Y. 516 (538-539) ; Cook v. Lowry, 95 N. Y. 103 ; Pray v. Hegeman, 92 N. Y. 508 (s. c. 98 N. Y. 351, see 72 K Y. 376) ; Schettler v. Smith, 41 N. Y. 328 ; arbour v. De Forest, 95 N. Y. 13 ; Kilpatrick v. Johnson, 15 N. Y. 322 ; Matter of Grossman, 113 K Y. 503 (510-511) ; Hull v. Hull, 24 N". Y. 647 ; Oilman v. Reddington, 24 N. Y. 9 ; Cushman v. Norton, 59 N. Y. 149 ; Matter of Sands, 1 Con. 259 ; Craig v. Craig, 3 Barb. Ch. 76 (79, 93) ; Haxtun v. Corse, 2 Barb. Ch. 506 (518) ; Gott v. Cook, 7 Pai. Ch. 521 (541), aff'd 1 The statute also applies only to cases where the income in question is de- rived from some specific fund, or from property so situated that its rents or income can be readily distinguished from that of all other property. Phelpss Ex'r v. Pond, 23 N. Y. 69 (83). THE APPLICATION OF RENTS. 371 24 Wend. 641 ; Grant v. Grant, 3 Red! 283 ; Van Emburgh v. Ackerman, 3 Redf. 499. So also where there is an expectant estate which is vested, but vested in trustees on such a trust that the trustee cannot sell and the beneficiary cannot release (ante, 383), it is equally clear that if the rents in the meantime are undisposed of, the statute applies. Thus in Manice v. Manice, 43 N. Y. 303 (385), there was first an estate in trust for one life, to apply part of the income, and next a trust in the remainder, for another life, to apply all the income, and it was held that the rents undisposed of under the first trust were payable to the trus- tees of the second trust for the beneficiary thereof. So wherever there is a power, to be exercised only in future, in favor of un- ascertained pei-sons or of trustees, so that the future estate or interest to arise under the exercise of the power cannot in the meantime be released, here, if there are intermediate rents un- disposed of, the statute would apply. For in all the foregoing cases, there is a suspension occasioned by an expectant estate. But there is another class of cases where there is a present vested estate in trustees, to receive and apply or accumulate part of the rents, the other part being undisposed of, and a vested remain- der is limited upon the precedent trust estate. It has been sup- posed, that in such a case the resulting suspension was due solely to the fact that though the estate was present and vested, it was vested in trustees forbidden to convey, and for the benefit of persons forbidden to release their rights, and that such a present estate had nothing about it answering to the term expectant, see ante, 383 et seq. ; while the expectant estate, i.e., the remain- der, being absolutely vested, cannot possibly be the cause of the suspension. Nevertheless, the point has been raised, that as, under such a trust, the rents and profits, or income, are to accrue through a period extending into the future, and as the right of the benefi- ciary to them is to attach from time to time as they accrue and fall due, the beneficiary has, in a sense, an expectant estate in the rents and profits, which, under the statutes forbidding sale or release, occasion a suspension ; and that if some part of the rents are undisposed of, the statute above quoted applies, and gives them to those entitled to the next eventual estate. Matter of Roos, 4 Misc. 232 ; Gould v. Ruiherfurd, 6 Misc. 72, aff'd 372 RENTS, ISSUES AND PROFITS. 79 Hun, 280 ; see Matter of Hayden, 77 Hun, 219, and Robi- son v. Robison, 5 Lans. 165. This view would appear to be based on the statute providing that " a disposition of the rents and profits of real property to accrue and be received at any time subsequent to the execution of the instrument creating such disposition, shall be governed by the rules established in this article [on Creation and Division of Estates] for future estates in real property." Eeal Prop. L., 50. This view was urged upon the Court of Appeals in Cochrane v. Schell, 140 N. Y. 516 (538-539), and was dismissed as involving an unnatural construc- tion. But it so happened that in that case there was also a future estate in the corpus which did occasion suspension, and so brought the case within the statute. The point might be dismissed without serious attention but for the fact that in the new revision the whole scheme of suspen- sion now appears to be, and as a matter of grammatical construc- tion certainly is, hinged on the theory that a suspension can be occasioned solely by a future estate (ante, 383-386), from which it follows either that 50 just quoted does render the beneficial interest under a trust to receive and apply or accumu- late rents a future estate, or that present trusts of that class do not occasion suspension at all (ante, 383-386). It is hardly to be supposed that the latter alternative will be adopted by the courts. It is to be noticed, however, that if the other is correct, the statute relating to rents undisposed of, Real Prop. L., 53 ; ante, 489, is unfortunately worded. It says : " When, in conse- quence of a valid limitation of an expectant estate, there is a sus- pension," etc., thus implying that there may be a suspension not. thus occasioned ; while the theory under consideration necessi- tates the view that every suspension must be thus occasioned. To fit the theory, this section should read : " Whenever there is a suspension," etc. 1 1 It may be noticed that in their Notes the revisers of 1830, in referring to the provision now embodied in Real Prop. L., 53, relating to rents undis- posed of, say : " This section is adopted substantially from the work of Mr. Humphreys, to which we have before referred. His reasons for it are thus given : ' A distinction refined, but substantial, subsists under our law, be- tween estates vested, but defeasable as a limitation to the first son of A, but if he shall die under the age of twenty -one, then to his second son and a con- THE APPLICATION OF BENTS. 373 It should here be noticed that in several dicta, and one deci- sion, the Court of Appeals have applied the statute under consid- eration to cases where there was a present trust estate followed by an absolute and indefeasibly vested remainder. This one de- cision is sweeping in its terms. " We think it [this statute] is applicable to all cases where trusts are created and there is an expectant estate." 1 But as to this case, it is to be noticed (a) that the court expressly state that the result in the case in hand would be precisely the same, irrespective of any reliance on this statute, both under the expressed provisions of the will and also under the rules of the common law ; therefore the construction given to the statute was unnecessary ; (J) that this case, decided twenty years ago, has never since been cited by the same court upon this point ; and (be derived from the following provisions : (a) The deed passed mo title. 1 R. S. 729, 58, now Real Prop. L., 79.- (b) No instrument which did not pass some title to somebody could be effective to create a power under 1 R. S. 735, 106, supra, 548. (c) Nevertheless, the deed in question did create a power, for it fell within the section providing that where an ex- press trust should be created for any purpose not enumerated in the statute, yet if it directed or authorized any act which might be lawfully performed under a power, it should be valid as a power in trust," etc. 1 R. S. 729, 58, now Real Prop. L., 79. The case cited held the latter section controlling. The result was, according to that reasoning, that where an owner of land desired to create a power over it in another person, while himself retaining title subject to the power, if he devoted his deed solely to a direct creation of this power, it was void ; but if he cast the same purpose in the form of an unauthorized trust, the statute would condemn the trust as such and save it as a power. The same result might be secured by conveying by the same in- strument some petty estate, subject to the power. If that were done, it was then allowable to create the power in direct terms. POWERS, HOW CHEATED. 435 It was probably to meet this criticism that the terms of the stat- ute were changed to those above quoted. 549. By will. It is to be noticed that this question did not arise in respect to powers created by will. Jennings v. Coriboy, 73 K Y. 230 (234). The phraseology was not that a power might be granted " by a clause in a devise in a will," etc., but that it may be granted " by a devise contained in a will," etc., thus using the word devise not as confined to a testamentary devolution of title, but as covering the creation of a power. In the nature of things also, a devolution of title, either to heirs or devisees, results when the will goes into effect. The statute, 2 R. S. 56, 5, rendering after acquired lands of the testator subject to a general devise, applies also to a case where the legal title is not devised, but the executors are directed (express- ly or by implication) to sell all his estate, etc., and dispose of the proceeds. The power attaches to and affects after acquired lands. Byrnes v. Boer, 86 1ST. Y. 210. As to wills, see post, 653. 550. By implication. 1 A power need not be created in ex- press terms, but may be implied. Catdll v. Russell, 140 N. Y. 402 ; Matter of Gantert, 136 N. Y. 106 (109, 110) ; Dill v. Wisner, 88 N.Y. 153 (159) ; Phillips v. Dames, 92 KY. 199 ; Matter of Fox, 52 N. Y. 530 ; Van WinTde v. Fowler, 52 Hun, 355 ; Morton v. Morton, 8 Barb. K. 18 (20) ; Stewart v. Ham- ilton, 38 Hun, 19 ; McCready v. Metropolitan Life Ins. Co., 83 Hun, 526, aff'd 148 N. Y. 761. Thus, under a will reading as follows : " Until the sale and conveyance of said premises by my executor as hereinafter provided, I give and devise unto my sister the use of the top floor of my house and premises, free of rent," but making no further provision as to a power, the court say : " Formal words are not necessary to create a power, and, to quote the language of Sugden, ' However obscurely in a will the intention may be expressed, yet if it appears that a power of sale was intended, a sale will be supported.' (8th ed., p. 425, 7.) ... In determining whether a power of sale was in- tended, it is important in a doubtful case to ascertain whether 1 On this subject see also ante, 60-62 ; 146 ; post, 622. 436 THE CREATION OF POWERS. the general scheme of the will seems to require it. Here, if the power does not exist, the legacies must abate to the extent of nearly four fifths of their amount. While a mere deficiency of personal estate for the payment of legacies will not of itself be sufficient to raise a power of sale, yet where words are used fairly expressive of an intent that the executor shall sell, but their im- port is uncertain or equivocal, the necessity of a sale, in order to give full effect to the will of the testator, may properly be per- mitted to have great weight in the construction of the instru- ment ; we therefore think the decision of the learned judge at special term was right in holding that the executor had power to sell, and it is not important to determine whether the power is imperative or not. The executor is seeking to enforce it, and when executed the real property will be converted into person- alty, and thus rendered available for the general purposes of ad- ministration, including the payment of debts and legacies. (Erwin v. Loper, 43 N. Y. 521 ; Hood v. Hood, 85 Id. 561 ; Glacius v. Fogel, 88 Id. 434 ; Matter of Powers, 124 Id. 361 ; Matter of Gantert, 136 Id. 106.)" Cahitt v. fiussell, 140 N. Y. 402. So the devise of certain land to A, and on A's death "the remainder thereof, if any," to B, gives B a contingent remainder, and A takes a life estate with power of sale. If A had no such power, there could be no question but that all the land would be remaining at A's death. But A was evi- dently given the right to use up the land, and this could only be done by selling it (or mortgaging it). The vendee, or the pur- chaser on foreclosure under a mortgage, would take a good title. Leggett v. Firth, 132 N. Y. 7. A power to lease, though not given in express terms, may be implied, where any other con- struction would lead to absurd or impracticable consequences. Starr v. Starr, 132 N. Y. 154. Power in a life tenant of per- sonal property to dispose of it by will, may be implied from a pro- hibition against any disposition during her life, and the absence of any gift of the remainder. McLoskey v. Reid, 4 Bradf. 334 (342). A power in the executor to rent implies power to receive rents. Morse v. Morse, 85 N". Y. 53 (59). Power to apply rents implies power to receive them. Vernon v. Vernon, 53 N. Y. 351. Power to sell if given to a life tenant for her own benefit does not imply payment, during her life, of a legacy POWERS, HOW CREATED. 437 given to A in general terms. Steinele v. Oechsler, 5 Redf. 312. Inartificial and inexact language will suffice to create a power, if the intent appear clearly. Lesser v. Lesser, 11 Misc. 223. See also ante, 60-62, 146, 622. But where property is first devised and bequeathed absolutely to A, and an " expectation and de- sire" is then expressed as to the disposition by A's will, in favor of B, of any part thereof that may be left at A's death, the words of expectation do not constitute a power in trust in favor of B. Matter of Gardner, 140 N. Y. 122 (128). Compare ante, 36 g, 521. So, as the execution of a mere power to sell and convey does not necessarily require for its execution power to insert covenants in a deed, such power will not be implied. Ramsey v. Wandell, 32 Hun, 482 (485). A transfer of all one's property, real and personal, in trust to manage, with power of sale, during the owner's life, for his benefit, presumably is not intended to include such articles as family portraits, or the own- er's watch and clothes, etc , over which, accordingly, he reserves ownership and power of disposition. Hill v. Heermans, 6 Hun, 661. For other cases in which the grounds for implying a power were held insufficient, see Hobson v. Hale, 95 N. Y. 588 (603) ; Alkus v. Goettmann, 60 Hun, 470 ; Kelly v. Kelly, 61 N. Y. 47 (50) ; Dill v. Wisner, 88 N. Y. 153 (158) ; Matter of Fox, 52 N. Y. 530 ; Cahill v. Brennan, 68 Hun, 540, rev'd 140 N". Y. 402. If testa- tor specifically devises designated portions of his realty, or im- presses them with separate trusts, the presumption is very strong, and usually controlling, that he did not intend that these disposi- tions should be overturned by the exercise of a general power of sale. A direction to sell for the payment of debts cannot be implied in such cases, because, in order to sustain the structure of the will, there must be implied a direction not to sell for such a purpose. But this does not apply where, for instance, the real and personal property is blended in one gift to the executors for a common trust, in which all the beneficiaries share equally. In such cases the exercise of a general and unlimited power of sale is imperative, and may be compelled in favor of any party who is lawfully entitled under the provisions of the will, to the pro- ceeds of the real property when sold, as a creditor, under a gen- eral direction to pay debts. Matter of Gantert, 136 N. Y. 106 (111) ; see Matter' of Me Comb, 117 N. Y. 378. 438 THE CREATION OF POWERS. 551. By reservation. " The grantor in a conveyance may reserve to himself any power, beneficial or in trust, which he might lawfully grant to another ; and a power thus reserved, shall be subject to the provisions of this article [on Powers], in the same manner as if granted to another." Real Prop. L., 124. Belmont v. (? Brien, 12 K Y. 394 (404). In Towler v. Towler, 142 N. Y. 371, an owner of land conveyed it by deed, subject to a life estate thereby reserved to himself, the estate conveyed to vest in possession only at the grantor's death. The conveyance was also subject to a power thereby reserved to the grantor to convey or to devise one third of the land to any wife he might thereafter marry, for her life. He thereafter married, and died without executing the power reserved. For some rea- son the court cast doubt on the proposition that the power was a power reserved, under the section above quoted ; but assuming that it was so, they hold that although, if the power had been granted to another, his intention to create a power in trust, arid to make its execution imperative, might have been reasonably in- ferred from the language and the circumstances, so that equity could have compelled its execution in favor of the wife, yet as he merely reserved it, it must be treated as purely discretionary and not in trust, so that its execution could not be compelled. Three of the judges concurred in the opinion, and three more in the result, while Earl, J., dissented on the ground that the con- clusion reached in the opinion nullified the section above quot- ed. As to imperative and discretionary powers, see post, 581 et seq. A power to mortgage, reserved to a married woman, might be duly exercised by a mortgage to secure her husband's debts. Leavitt v. Pell, 25 N. Y. 474. 552. By operation of statute. Certain attempted trusts are, by operation of the statutes (Real Prop. L., 77, 79), turned into valid powers in trust. This group covers only such attempt- ed express trusts as would have been valid active trusts at com- mon law, as distinguished from passive trusts. Townshend v. Frommer, 125 N. Y. 446 (456-459). But see below, end of first paragraph of subd. J. There are two distinct classes in this group. (a) The first is covered by the following provision : " A de- vise of real property to an executor or other trustee, for the pur- POWERS, HOW CREATED. 439 pose of sale or mortgage, where the trustee is not also empow- ered to receive the rents and profits, shall not vest any estate in him ; but the trust shall be valid as a power, and the real prop- erty shall descend to the heirs or pass to the devisees of the testa- tor, subject to the execution of the power." Real Prop. L., 77. KonvalinJca v. Schlegel, 104 N. Y. 125 ; Bouton v. Thomas, 46 Hun, 6. Concerning this statute, the revisers of 1830 say in their Notes : " There is an evident distinction between a trust to sell, created by deed, and a similar trust created by devise. In the first case, as we have before remarked, it is necessary that the trustees should take the estate, or the trust itself might be de- feated ; but in the latter, no such necessity exists, and by con- struing the trust as a power, the interests of those for whose benefit it is created, are as effectually secured, as if the legal es- tate passed to the trustees. On the death of the testator the power attaches immediately on the land, and no subsequent dis- position can be made, nor incumbrances created, by which its execution can be defeated. There are other reasons, however, which have weighed principally with the revisers in recommend- ing this section ; under the present rules of law, the construction of a will containing an authority to executors to sell, is a matter of great difficulty ; and the question whether the trust is to be construed as a naked authority, or as a power coupled with an estate or interest in the lands, has been a frequent source of litiga- tion. Thus according to Lord Coke, if a man devise that his exec- utors ' shall sell his lands, they have a bare authority and no inter- est ; but if he devise his lands to be sold by his executors, they take the legal estate.' It is true Mr. Hargrave in his note on the passage speaks of this distinction as curious and overstrained, yet there seems a decisive weight of authority in its favor. We would abolish this and similar distinctions, not merely as curious and overstrained, but as entirely useless, unless to propagate law- suits. ... As an additional authority in support of our views, we add the recommendation of Lord Coke himself, who says, ' it is better for a testator to give to his executors an authority, than an estate, unless his meaning be they should take the profits of his lands in the meantime.' (CokeLitt., 11 3 a, and Har. & But. note ; Sugden on Powers, 140 ; 6 John. Rep., 92.)'' See ante, p. 99. 440 THE CREATION OF POWERS. The purpose of an attempted trust covered by the statute above quoted is valid, as far as it goes. If the sale is directed for the purpose of paying debts, or the sale or mortgage is directed for the benefit of annuitants or other legatees or for the purpose of satisfying any charge on the land, then the purpose named falls precisely within the terms of one or the other of two permitted express trusts, but in such cases (in testamentary trusts) the law further provides that unless the trustee shall also be em- powered to receive the rents and profits, no title shall vest in the trustee, but the trust shall be valid as a power. The defect here consists not in the purpose of effecting a sale or mortgage through a trust, but in the method of creating such a trust by will without giving the trustee the right to receive the rents and profits. Under this head a somewhat curious point was passed on in Graham v. Livingston, 7 Hun, 11. There land was devised to executors to sell, and hold the proceeds and apply the corpus as needed to the use of certain beneficiaries ; the executors were not empowered to receive the rents and profits. It therefore came within the terms of the statute just cited. But the court held that inasmuch as the trust to sell was imperative, it effect- ed, in its statutory character as a power, an equitable conversion, and so that the land did not descend to the heirs subject to a power, but was to be treated as personal property immediately on testator's death. Whether this view is correct, in holding that no legal title to the land, pending sale, vested in the heirs, so as to render them necessary parties to a suit to foreclose a mort- gage given by testator, might seem at least doubtful. Compare Eisner v. Curiel, 2 App. Div. 522 ; Delafield v. Barlow, 107 N. Y. 535. See post, 557 g. In Ticket v. Quinn, 1 Dem. 425, the devise was to executors in trust, with no power to receive rents and profits, but " with power to sell." This is said by the court to be a trust turned by the statute into a power effecting conversion. (b) The other class of attempted active trusts which the law saves in substance by sustaining them as powers, are covered by the following provision : " Where an express trust relating to real property is created for any purpose not specified in the pre- ceding sections of this article, no estate shall vest in the trustees ; POWERS, HOW CREATED. 441 but the trust, if directing or authorizing the performance of any act which may be lawfully performed under a power, shall be valid as a power in trust, subject to the provisions of this chap- ter. Where a trust is valid as a power, the real property to which the trust relates shall remain in or descend to the persons otherwise entitled, subject to the execution of the trust as a power." Real Prop. L., 79. Woerz v. Rademacher, 120 N. Y. 62 (68) ; Holly v.Hirsch, 135 X. Y. 590 (594) ; Critten- den v. Fairchild, 41 X. Y. 289 (292) ; Coster v. Lorillard, 14 Wend. 265 (323) ; Clark v. Crego, 47 Barb. R. 599, aff'd 51 N. Y. 646. The purpose named (1) is one which is not speci- fied in 76 enumerating the classes of valid express trusts (see ante, 394) ; but which, nevertheless (2), is one which may be lawfully performed under a power ; and (3) the attempted trust must in all other respects be valid, that is, there must be a com- plete devise or grant of the title (i.e., there must be, in order to bring it within this particular section), and the term of the at- tempted trust must not be illegal. In other words, if the sole objection is that the purpose, good enough in itself, is not one of those for which the law authorizes an express trust, then the law saves it by turning it into a power ; but if it violates the law in other respects, or falls short, in any other way, of effecting a valid trust, then it is either a passive trust, which the law turns into a direct devise to the proposed beneficiary ; or is entirely invalid ; or, in some cases may be sustained as a devise subject to a charge. See ante, 519. Examples of attempted trusts held void as such but valid as powers, are trusts to partition, Hawley v. James, 16 Wend. 60 (149, 161) ; to partition and convey, Id. ; Oilman v. Reddington, 24 N. Y. 9 (15) ; to sell, merely, Janssen v. Wemple, 3 Redf. 229 ; to sell and distribute generally, see Downing v. Marshall, 23 N. Y. 366 (381, with which compare the statutory trust to sell and from the proceeds to pay legacies ; see ante, p. 291) ; to divide or partition, Cooke v. Plait, 98 N. Y. 35 (38) ; to sell and convey, Chamberlains. Tay- lor, 105 N. Y. 185 (190) ; to sell and return the proceeds to the grantor, Heermans v. Robertson, 64 N. Y. 332 (340) ; Fellows v. Heermans, 4 Lans. 230 (whether this was not a mere agency, quaere, Heermans v. Burt, 78 N. Y. 259) ; to sell, use and dis- pose of for the benefit of A, Smith v. Bowen, 35 N". Y. 83 ; 442 THE CREATION OF POWERS. to appraise, divide and convey, Manice v. Manice, 43 N. Y. 303 (364) ; to partition, Henderson v. Henderson, 113 N. Y. 1 (11) ; to hold in trust as security for claims of the so-called trustee against the beneficial owner, Knickerbocker L. I. Co. v. Hill, 3 Hun, 577 ; assignment of a leasehold in trust to convey to designated infants at majority, Sennet v. Rosenthal, 11 Daly, 91 ; a conveyance by A to B, " in trust for A's use, benefit and advantage," B to manage and control the estate in B's discretion, and pay therefrom such sums as B deems reasonable for A's sup- port, and to pay therefrom future debts of A, so far as B deems prudent. Matter of Hall, 24 Hun, 153. If an express trust, vest-, ing title in the trustee, is intended, but is void, it cannot be held good as a power (but this rule must certainly be confined to cases where title is a requisite to the performance of the duties im- posed). Garvey v. McDevitt, 72 N. Y. 556. A grant or devise to A in trust merely to convey to B, does not fall within this subdivision, and the land, instead of vesting in the heirs subject to a power, vests in the proposed beneficiary of the attempted trust, Adams v. Perry, 43 N. Y. 487 (496) ; for the latter is entitled to the immediate possession and right to the rents. See ante, 518. It is to be noticed that the statute ( 79) in terms applies only to cases where an express trust is created " for any purpose not enumerated in the preceding sections" defining the four per- mitted classes. That this is to be taken literally, and that the statute does not apply to a case where the attempted trust does have for its purpose one of the same objects enumerated in the sections preceding 58, but is defective in some other respect, seems to be accepted as the proper construction. Townshend v. Frommer, 125 N. Y. 446 (456) ; Garvey v. McDevitt, 72 N. Y. 556 ; Gano v. McCunn, 56 How. Pr. 337. There are, how- ever, two qualifications upon this result ; for, first, Real Prop. L., 77, provides that " a devise of real property to an executor or other trustee, for the purpose of sale or mortgage, where the trustee is not also empowered to receive the rents and profits, shall not vest any title in him ; but the trust shall be valid as a power, and the real property shall descend to the heirs, or pass to the devisees of the testator, subject to the execution of the pow- er." An attempted testamentary trust, therefore, which does, POWERS, HOW CREATED. 443 like those of the first or second permitted classes (Real Prop. L., 76), have a sale or mortgage for its purpose, but fails as a trust for lack of authorization to receive the rents, is good as a power in trust. Clift v. Moses, 116 N. Y. 144 (151-152) ; Smith v. Bowen, 35 N. Y. 83 (88-89). This section (77) just quoted is confined to testamentary trusts. The other qualification on the rule laid down in 79 is, that even if the purpose sought does correspond with one of those enumerated in 76, yet, if invalid as a trust, it may be good as a power, if avowedly created as such, and not as a trust, and if the acts required can all be fully performed under a power. Tucker v. Tucker, 5 N. Y. 408 (413). The general result may be summed up thus : (a) There are four purposes for which express trusts may be created. (5) If an attempt is made to create an express trust for any other pur- pose, it will, if the purpose is not unlawful, be held good as a power in trust, (c) If an express trust is attempted for one of the four specified purposes, but fails for some other reason, it cannot be sustained as a power, except that (d) if it is a testa- mentary trust to sell or mortgage, and so requires for its validity authority to receive the rents, the omission of that authority will not vitiate the provision, but it will take effect as a power ; and also that (e) a power may be directly created as such, even for any of the purposes enumerated in the four classes ( 76), if capa- ble in its nature of effectuating that purpose, and it would seem that this class would include not only cases where a power was attempted in so many words, but also cases where the wording and the purpose were fairly consistent with the construction that a power and not a trust was intended. 553' Record Probate. The authority of a donee of a power depends, of course, on the validity of the deed or will creating the power, and may often be affected by questions relat- ing to record of the deed, validity of proceedings to prove the will, etc. See Jenkins v. Young, 35 Hun, 569 ; Fleck v. Rau, 9 App. Div. 43 ; but compare, as to foreign wills, Pollock v. Hooley, 67 Hun, 370 (377) ; Doolittle v. Lewis, 7 Johns. Ch. 45 ; Hauselt v. Patterson, 124 N. Y. 349 (360). Post, 596. As to the record of the instrument creating the power as effect- 444 THE CREATION OF POWERS. ing the standing of the power as a lien or charge on the land, see Keal Prop. L., 127. (3) The Legal Title. 554. Title vests subject to power. Where a valid power I is created, the title to the land affected thereby vests in the gran- tee or devisee of the land, or, in so far as not granted or devised, remains in the grantor, or passes to his heirs, subject to the exe- cution of the power. Harvey v. Brisbin, 143 N. Y. 151 ; Chamberlain v. Taylor, 105 N. Y. 185 (192) ; Purdy v. Hayt, 92 N. Y. 446 (455-456) ; Lent v. Howard, 89 N. Y. 169 ; Ver- non v. Vernon, 53 N. Y. 351 (358) ; Orittenden v. Fairchild, 41 N. Y. 289 ; Smith v. Bowen, 35 N. Y. 83. As to the effect of a power as a charge on the land, see Real Prop. L., 127. 555- A power in executors to sell land is not inconsistent with a precedent devise to another. If a sale is effected, the de- visee takes the proceeds. Haight v. Pine, 3 A pp. Div. 434 ; Crittenden v. Fairchild. 41 N. Y. 289. So if the donee of the power is to sell and hold the proceeds in trust for the devisee. Bundy v. Bundy, 38 N. Y. 410. The same result may follow even if there is a nominal but ineffective grant of title to the donee of the power. Vernon v. Vernon, 53 N. Y. 351 (362). Thus, a conveyance to B merely " in trust for C," with power in B to " sell and convey or mortgage, without the appointment of a guardian" (for C), indicates an intention that the power is to be executed wholly for the benefit of the infant ; it is a gen- eral trust power under 117, and the land passes to and vests in C subject to the execution of the power. /Syracuse Sav. Bk. v. TJolden, 105 N. Y. 415 (418). Of course the title and the power may be vested in the same person, as where one holds title under a valid express trust to receive and apply rents, and also holds a power to sell and reinvest. Miller v. Wright, 109 N. Y. 194. So where land is devised to one beneficially in fee. subject to a power in himself as executor to sell for executorial purposes, Haight v. Pine, 3 App. Div. 434. See also post, 571 et seq. The title which vests subject to the power, is such as to make those vested therewith "freeholders'' : e.g., qualifies them to sign a freeholder's certificate as to necessity and propriety of THE LEGAL TITLE. 445 opening a highway through land of non-consenting owner. Peo- ple v. Scott, 8 Hun, 566. Here no grantee of the power was named ; semble, the same result would follow though a grantee had been named. Id., p. 568. See Merriman v. Utica B. L. S. R. Co., 18 Misc. 269. Where land is devised to A and B, but power to sc-11 the same, if required, to pay debts, is given to executors, and after the debts are paid, power to either partition, or sell and distribute the proceeds : (1) The power to sell and pay debts can only be exercised if the personalty is insufficient. (2) The power to partition, or to sell and distribute proceeds, can only be exer- cised after the debts are paid. (3) In case of sale, the amount not required for debts retains the character of realty. (4) The land vests in A and B subject to the power to sell to pay debts, and, after the debts are paid, subject to the power to partition or to sell and distribute. A and B could therefore mortgage or convey their interests, as land, subject to the exercise of the powers, and the grantee, or the purchaser on foreclosure, would take the proceeds in case of sale under the power, as land. Drake v. Paige, 127 N. Y. 562. The power to sell real and personal property, and thus reduce to cash, and distribute, does not necessarily import lumping and pro rata division of the en- tire estate as one fund. For example, where the residuary es- tate, real and personal, is given to testator's " heirs and next of kin in the same proportions in which it would be divided or dis- tributed in case of his death intestate," and the will directs its distribution in cash and for that purpose gives the executors a power of sale, the next of kin take the personalty, and the heirs the proceeds of realty, or, if not sold, the realty itself. Matter of Bingham, 127 N. Y. 296 (314). A direction to the executor to sell land, and a devise of the proceeds, while it vests the naked title in the heirs, may be a devise of the land so far as to bring it within the statute bringing after acquired lands within the scope of a general devise of all testator's lands. Byrnes v. Baer, 86 N. Y. 210. A power in B to sell, and from the proceeds to pay debts and legacies, with a gift of the residue to B, does not give B the fee. He has a mere power, and a beneficial interest in a portion of the proceeds. Germond v. Jones, 2 Hill, 569 (574 et seq.}. Where land is devised in fee subject to a power in another to sell and hold the proceeds in trust for the devisee dur- 446 THE CREATION OF POWERS. ing her life, this provision does not necessarily cut down the fee to a life estate. Vernon v. Vernon, 53 N. Y. 351 (358). In case of a devise and bequest subject to a power to sell or partition among the devisees living at the time of actual sale or partition, the land vests defeasibly in the devisees, but the per- sonalty remains in the hands of the executors, and the interests of the legatees remain contingent until the division. Hender- son v. Henderson, 113 N. Y. 1 (14). A power of sale, even though imperative, and effecting equitable conversion, leaves the title in the heirs or devisees, and the executor, as donee of a power, cannot sue for damages for trespass. His remedy to pre- vent spoliation in the nature of waste is in equity. Ogsbury v. Ogsbury, 115 N. Y. 290 (294) ; see Lent v. Howard, 89 N. Y. 169. See post, 557 g. An executor with power of sale, to pay debts and legacies, may maintain a suit in equity against a stranger claiming title in hostility to donee's power to sell, in order to quiet title and settle his right to sell the land and remove an obstruction to the performance of plaintiff's duty. And this, even though there is no equitable conversion, and title is in the heirs. Ogsbury v. Ogsbury, 115 N. Y. 290 (295). Where there are debts of decedent, the executor may and should bring an action to have cancelled and discharged of record a forged or otherwise void or voidable mortgage, or other conveyance, pur- porting to have been given by decedent ; the ground being that it " interferes with the estate" of the decedent (L. 1858, ch. 314, Real Prop. L., 232) ; and that though the executor does not take the real estate, and as to that is not a trustee, he has the power, and is required, in a proper case, to have it sold. Nat. Bankv. Levy, 127 N. Y. 549 (552) ; Licktenberg v. Herdtf elder, 103 N". Y. 302 ; Barton v. Hosner, 24 Hun, 467. A mere naked power of sale in an executor, does not authorize him to maintain an action for an award for the lands, taken by eminent domain after testator's death. Cashman v. Wood, 6 Hun, 520, but semble, he might recover if (a) he was to receive proceeds to carry out trusts created by the will ; or (b) needed them to pay debts. Id. As to the authority of executors vested with a power of sale, to dedicate land to public use by their description in a conveyance, under the power, of adjoining property, see Bloomfield v. Ketcham, 25 Hun, 218, reversed and proceeding THE LEGAL TITLE. 447 dismissed for defect in papers submitting controversy, 95 N. Y. 657, see 11 Abb. N. C. 269, note. Though it is no part of the duty of an executor to pay taxes on land which accrue after tes- tator's death, yet if he has a power to sell, he may pay such taxes in order to enable him to convey a clear title. Matter of Perry, 5 Misc. 149 (153). A power in trust, to sell land, vests no title in the donee of the power, and he cannot maintain an action of ejectment against those in whom the legal title has vested, though they are in possession. Smith v. Chase, 90 Hun, 99. 556. Intermediate rents. Where there is no specific de- vise of land, but a bare power of sale is given to the executor, not effecting a suspension (in which case a different rule applies, post, 489), and the land accordingly descends to the heirs, sub- ject to the power, the right of possession follows the title, and the heirs are entitled at law to the intermediate rents and profit?. But where the power of sale operates as an immediate conversion of the land into personalty, accompanied with a gift of the pro- ceeds, in equity the intermediate rents and profits go with and are deemed to be a part of the converted fund, and the heir may be compelled to account therefor to the executor, and the latter to the beneficiary for so much thereof as is received by him as well as for the proceeds of sales. Lent v. Howard, 89 N. Y. 169 ; Moncrief v. Ross, 50 N. Y. 431 ; Harper v. Chatham Nat. Hank, 17 Misc. 221. In Campbell v. Johnston, 1 Sandf. Ch. 148, it happened that the heirs and the beneficiaries of the power were the same persons. But though the heirs were there held entitled to the income, it was in their capacity not as heirs but as beneficiaries that they were thus entitled. And where an executor, having power to sell, to pay legacies, prior to sale re- ceived the rents without authority, but all the land was needed to pay the legacies, he was accountable as executor to the lega- tees for the rents and not to the residuary devisees subject to the power. Matter of Hoyd, 4 Redf. 154. Where lands are de- vised subject to a mere power in executors to sell or mortgage to pay testator's debts, the devisees are entitled to retain the rents and profits received by them, prior to sale under the power, and prior to any steps by testator's creditors to subject them to the 448 THE CREATION OF POWERS. payment of debts, e.g., by the appointment of a receiver. This is so, even though the total estate is insufficient to pay testator's debts. The creditor cannot compel the devisees to account for past rents received by them. Clift v. Moses, 116 N. Y. 144. And a power to sell, to effect distribution among those in whom the title vests, does not authorize the donee of the power to collect the rents, or make expenditures for improvements pend- ing a sale. And if he is the executor, his acts in those respects are not the subject of an accounting from him as executor in the Surrogate's Court. Matter of Spears, 89 Hun, 49. But power to sell and collect " proceeds" includes "rents" before sale. Kearney v. Miss. Soc'y, 10 Abb. N. C. 274 (278). Where land is subject to an imperative power in the executor to divide and convey it to certain trustees, they may, before such convey- ance, maintain a suit in equity to restrain the executor, either as such or individually, from collecting the rents, which should come into their hands as trustees, and to compel a sale of enough of the land to satisfy legacies charged thereon and a conveyance of the residue to the trustees. Stevens v. Stevens, 69 Hun, 514 (for further facts in this case, see Stevens v. Melcher, 80 Hun, 514). For the construction, on the point of intermediate rents, of a will creating a power to rent, and receive and apply the rents to the use of several children, till the youngest should come of age and then sell, and distribute the proceeds among them, where one of the children died before the majority of the young- est, see Rauchfuss v. Rauclifuss, 2 Dem. 271, and compare Riley v. Diggs, Id. 184. 557. Partition. Where a power is created to sell land, the question has been raised whether those in whom the legal title is vested may, pending the exercise of that power, bring an action of partition. The decisions appear, at h'rst sight, somewhat con- tradictory. Before examining them, attention may be called to the fact that in some cases the power is given for the specific purpose of partition and distribution, and in others for general purposes which merely involve an ultimate distribution of the surplus remaining after satisfying other directions. Again, those who hold the legal title, may have no beneficial interest therein whatever ; or they may be the same persons for whose benefit THE LEGAL TITLE. 449 the land is to be sold. And again, the power may be present or postponed. And finally, the power may be imperative, and effect an equitable conversion ; or it may be discretionary and effect no conversion. The following points appear to be set- tled : (a) If the power is such that those beneficially interested may elect to take the land itself (post, 691 et seq.), the fact that they have all so elected, before suit brought, extinguishes the power, and furnishes a basis for an action for partition. Prentice v. Janssen, 79 N. Y. 478 ; Purdy v. Wright, 44 Hun, 239. (b) And if, in such a case, they all unite in seeking partition, the action itself constitutes an election. Mellen v. Mellen, 139 K Y. 210 (221) ; compare Mellen v. Banning, 72 Hun, 176 ; Morse v. Morse, 85 N. Y. 53 (58). (\ N. Y. 391 (409) ; Matter of Young, 145 N. Y. 535 ; Miller v. Gilbert, 144 N. Y. 68 (73) ; Campbell v. Stokes, 142 N. Y. 23 ; Matter of Seaman, 147 N. Y. 69 (74) ; Goebel v. POWER TO PAY, DIVIDE OR CONVEY. 497 Wolf, 113 N. Y. 405 (413, 415) ; Warner v. Durant, 76 N. Y. 133 ; Matter of Mahan, 98 N. Y. 372 (376) ; see also Dor- land v. Borland, 2 Barb. R. 63 (82). These rules, in so far as applied to personalty, do not, or do not usually involve any power in a technical and proper sense, as the payment or division required may be eftected under the ordinary powers of the executor or trustee ; but if the property involved is land, and the direction is to sell it and make a future division or payment of the convert- ed proceeds, a power of sale is necessarily involved, and in such a case the rules already stated also apply, Bowditch v. Ayrault, 138 N. Y. 222 ; Matter of Young, 145 N. Y. 535 (538) ; Ros* v. Roberts, 2 Hun, 90, aff'd 63 N. Y. 652 , as they do likewise where there is a power to receive and apply rents, Matter of Seebeck, 140 N. Y. 241 ; and also where there is a power, at a future time, to convey land to the persons entitled. Matter of Seaman, 147 N. Y. 69 (74) ; Campbell v. Stokes, 142 N. Y. 23 ; 1 R. S. 773, 2 ; Goebel v. Wolf, 113 N. Y. 405 (412). And if, apart from the existence of a power to convey, a given remainder would be a vested one, the presence of a power to con- vey to the remaindermen does not interfere with its vested char- acter. Moore v. Applely, 36 Hun, 368, affd 108 N. Y. 237 ; Campbell v. Stokes, 142 N. Y. 23 ; Matter of Tienken, 131 N. Y. 391 (402, 404 et seg.) ; Oilman v. Reddington, 24 N. Y. 9 (15, 16) ; Goebel v. Wolf, 113 N. Y. 405 ; Van Axte v, Fisher, 117 N. Y. 401 ; Stevenson v. Lesley, 70 N. Y. 512 ; Knowlton v. Atkins, 134 N. Y. 313 (317) ; Williamson v. Field, 2 Sandf. Ch. 533 (562) ; Levy v. Levy, 79 Hun, 290. So " The existence of an unexecuted power of appointment does not prevent the vesting of a future estate, limited in default of the execution of the power." Real Prop. L., 31. But if the persons to whom or for whose benefit a conveyance or appointment is to be made under a power in trust are unascer- tainable until the end of the trust term, this fact, but not the presence of the power to convey or appoint, renders the estate to be conveyed or appointed to them contingent, Townshend v. Frommer, 125 N. Y. 446 (467), which case may to this extent be safely cited as an authority (although there the power was created by deed, and the future estate was not a remainder but a reversion), see the discussion in Haynes v. Sherman, 117 N. Y. 32 498 THE BENEFICIARY OF THE POWER. 433 (438-439) ; II. S. Trust Co. v. Roche, 116 K Y. 120 ; if, indeed, in such a case the future estate be a remainder at all, U. 8. Trust Co. v. Roche, 116 N. Y. 120 (130). But in general the case of Townshend v. Frommer, 125 1ST. Y. 446, must be re- garded as highly peculiar, and be treated with caution. Camp- Mi v. Stokes, 142 N". Y. 23 ; note, 26 Abb. N". C. 465 ; Levy v. Levy, 79 Hun, 290. Where there is a power to sell at the end of a trust term, and distribute the proceeds, this power, though imperative, does not necessarily interfere with the vesting of the remainder pending the precedent estate, but, if intended as a direction and authority given for the purpose of convenience of division, the remaindermen take, at testator's death, a vested re- mainder in fee. Matter of Tienken, 131 N. Y. 391 (408) ; Mil- ler v. Gilbert, 144 K Y. 68 (74-75) ; Van Axte v. Fisher, 117 N. Y. 401 (403). So with a power to sell and distribute with a direction to postpone sale till the end of a designated life. Tucker v. Ball, 1 Barb. R. 94. The exercise f a power to con- vey at the end of a trust term to persons previously, or only then, ascertained, is unessential to the vesting of title. The remainder would vest, either at testator's death, or at the end of the trust, even if the power were not exercised. Real Prop. L., 89. Bruner v. Meigs, 64 ~N. Y. 506 (516) ; Matter of Livingston, 34 N. Y. 555 (567) ; Watkins v. Reynolds, 123 K Y. 211 (217) ; Williamson v. Field, 2 Sandf . Ch. 533 (562) ; Campbell v. Low, 9 Barb. R. 585 (594) ; compare the peculiar case of Townshend v. Frommer, 125 N. Y. 446 (467), as to which see remarks supra. A trust created for the grantor's life, with direction " after his death to pay over and transfer" the corpus to the grantor's surviving children, ceases immediately on grantor's death. In an action for partition, then pending, brought by the trustee, he ceases to have any interest ; and the children of the grantor are necessary parties. Miller v. Wright, 109 N. Y. 194. Arid where power is conferred on executors and trustees to appoint commissioners to partition and to convey the shares to the trustees to be held in trust, the trustees take directly under the will and not under the conveyances from the commission- ers. Whitney v. Phmnix, 4 Redf. 180. And where the trust in- strument, instead of creating in terms a power to convey, attempts to grant or devise lands to a trustee in trust to convey (a purpose POWER TO PAY, DIVIDE OR CONVEY. 499 for which an express trust is not authorized), the lands vest in the persons to whom conveyance is directed, under the statute providing that " every disposition of real property, whether by deed or by devise, shall be made directly to the person in whom the right to the possession and profits is intended to be vested, and not to another to the use of, or in trust for, such person ; and if made to any person to the use of, or in trust for another, no estate or interest, legal or equitable, vests in the trustee. . . ." Real Prop. L., 73 ; also Id., 72 ; Adams v. Perry, 43 N. Y. 487 (496). Compare, as to the application to remainders, the peculiar case of Townshend v. Frommer, 125 N. Y. 446 (462 et seq., 467) which, if intended to convey the idea that a mere power to convey a future estate which, apart from the power, would be vested in interest pending the precedent estate, has any opera- tion to render the same contingent, is certainly inconsistent with a long and otherwise unbroken line of prior and subsequent au- thorities, and is to be disregarded. See Campbell v. Stokes, 142 N. Y. 23 (30) ; Levy v. Levy, 79 Hun, 290 ; see Real Prop. L., 31. If, in the case of a devise to trustees, for a legal term, and then in trust to convey, the remaindermen are unascertainable until the time for the conveyance arrives, it was held in Nathan v. Hendricks, 87 Hun, 483, that the fee, in the mean time, vests in the trustees. It is difficult to perceive the theory on which this holding rests. A trustee never takes a fee except in the case of a trust to sell to pay debts, or a trust to sell, mortgage or lease to pay legacies, etc. A trust to convey does not fall within any one of the four permitted classes of express trusts. If attempt- ed, it vests the title in the proposed beneficiary. Real Prop. L., 72, 73 : Adams v. Perry, 43 N. Y. 487. The remainder being contingent, there may be a reversion in the heirs of the de- visor ; but it is impossible that there should be a fee in the trustees. The remarks of the court on this point were not neces- sary to the result, and on appeal the judgment was affirmed, but on the theory that the trustees had a mere power to convey and that all the parties entitled in remainder had been cited and were bound by the result. Matter of Boer, 147 N. Y. 348. Such cases are to be distinguished from those where an imperative power of sale effects a conversion into personalty, and deprives the remaindermen or reversioners of any title to the land itself, 500 THE BENEFICIARY OF THE POWER. except perhaps in some shadowy and purely theoretical sense. Delafidd v. Barlow, 107 K Y. 535. A residuary clause directing distribution of " all the rest," may include the remainder in a trust fund created by previous provisions for the life of a beneficiary. Delehanty v. St. Vin- cents 0. A., 56 Hun, 55, aff'd 134 N. Y. 612. Power to fix a, discreet time for paying a legacy, does not prevent its vesting. Hone's Ex'rs v. Van Schaick, 20 Wend. 564 (568). Where real estate is directed to be sold under a power, and distributed as personalty, and the person entitled to the proceeds dies before the execution of the power, such proceeds are to be distributed as the personal estate of the decedent, in the same manner as if the property had been sold before his death. Bunce v. Vander Grift, 8 Pai. Ch. 37. 615. Descendant Advancement. " An estate or interest given by a parent to a descendant by virtue of a beneficial power, or of a power in trust with a right of selection, is an advance- ment." Real Prop. L., 295 ; which see for further provisions as to advancements. Kent v. Hopkins, 86 Hun, 611. 616. Children Descendants Issue. 1 A power to be ex- ercised for the benefit of "children" refers to offspring of the first degree unless it appears that there were no persons in exist- ence who would answer that description at the time of mak- ing the will, or that there might be none at the time or in the event contemplated by the testator, or where the testator has clearly shown by the use of the word, or in other portions of the will, that he employed the word " children" as synonymous with " descendants" or " issue" or to designate another class of per- sons. Mowatt v. Carow, 7 Pai. Ch, 328 ; Palmer v. Horn, 84 N. Y. 516 ; Matter of Potter, 71 Hun, 77. A power to appoint among " descendants" of a person named, prima facie relates to those who are his descendants at his death. A living person can- not, in a technical sense, have descendants. But even in this sense it authorizes the appointment, during the life of the ances- tor, of a contingent remainder to such persons as shall, at his 1 See post , % 757. CHILDREN DESCENDANTS ISSUE. 501 death, be his descendants. Hillen v. Iselin, 144 N. Y. 365. For a discussion of the term " issue" see Chwatal v. Sehreiner, 148 N. Y. 683 ; Drake v. Drake, 134 N. Y. 220. 1 1 For a discussion of the term " relations" in reference to the persons among whom property is to be appointed under a power, and the question whether it refers to relations generally, or to those who would be entitled under the statutes of descent and distribution, and the distinction, in this respect, be tween powers that do, and those that do not, involve discretion in selecting the appointees from among the class of " relations," see GallagJier v. Crooks, 132 N. Y. 338 ; Platt v. Mickle, 137 N. Y. 106 ; Pope v. Whitcombe, 3 Mer. 689 ; Walter v. Maunde, 19 Ves., 426 ; Supple v. Lowson, Ambl. 730 ; Sugden on Powers, chap. 15 ; Supreme Council v. Bennett, 47 N. Y. Eq. 39 ; Whith&rne v. Harris, 2 Ves. 527 ; Handley v. WrigJitson, 60 Md. 206 ; Demsne v. Mellish, 5 Ves. 529, and cases there cited in notes ; Green v. Howard, 1 Bro. C. C. 31, and notes ; Esty v. Clark, 101 Mass. 38 ; Kimball v. Story, 108 Mass. 385 ; Harding v. Olynn, 1 Atk. 469, and note. CHAPTER XX. THE PURPOSE OF THE POWER. 617. What purposes authorized. The statute relating to Powers provides in particular for a general and beneficial power to a married woman to dispose of real property conveyed or de- vised to her in fee (Real Prop. L., 122) ; and for a special and beneficial power (1) to dispose of any estate less than a fee, be- longing to her, and (2) to a tenant for life to make certain leases. (Real Prop. L., 123) ; as to these powers, see ante. Chapter XIX. The statute also refers to powers to transfer, to encum- ber (Real Prop. L., 115) ; to dispose of, to charge (Id., 118) ; to revoke (Id., 125) ; to sell (Id., 126) ; to mortgage (Id., 136) ; to distribute (Id., 138) ; to select beneficiaries (Id., 140). But the specification of these particular powers is not inconsistent with the creation of powers for other purposes. For a power may be created for any purpose not in itself illegal (Rey- nolds v. Denslow, 80 Hun, 359 ; but compare ante, 544) and except in so far as an express trust may be prescribed by statute as the sole method of effecting a given purpose (as to which, see 552, p. 442). Such is also the general rule of the English law. Farwell on Powers (2nd ed.), 110. Thus, a valid power may be created to sell (which power does not in itself involve power to mortgage, Albany F. 1. Co. v. Say, 4 N. Y. 9, 19 ; Gum- ming v. Williamson, 1 Sandf. Ch. 17, 25 ; Losey v. Stanley, 147 N. Y. 560, 568. But as to whether power to sell or other- wise convey, authorizes a mortgage, see Albany F. I. Co. v. Bay, 4 N. Y. 9). A power to sell land devised, and pay over pro- ceeds to the devisee, is not repugnant, if the intent is to give the proceeds to devisee instead of the land. Skinner v. Quin, 43 N. Y. 99, and the power to sell may itself be given for any law- ful purpose, as to pay debts ; to effect a convenient distribution, Kiainier v. Rogers, 42 N. Y. 531 (535) ; Manice v. Manice, 43 WHAT PURPOSES AUTHORIZED. 503 N. Y. 303 (364-) ; for the advantage, in any way, of the estate, Lindo v. Murray, 91 Hun, 335 ; to mortgage, Mut. Life Ins. Co. of N. Y. v. Shipman, 108 N. Y. 19 ; to partition (which also includes power to sell for the purpose of effecting partition, if sale is appropriate for that purpose), Knapp v. Knapp, 46 Hun, 190 ; 'Holly v. Hirsch, 135 K Y. 590 (595) ; Manice v. Manice, 43 N. Y. 303 (364) ; to appoint, Matter of Stewart, 131 N. Y. 274 ; (a power to appoint legatees renders inappli- cable the rule that a legacy shall be paid in one year, Dixon v. Storm, 5 Redf. 419) ; to appoint a remainder, Floyd v. Carow, 88 N. Y. 560 ; to distribute, Crittenden v. Fairchild, 41 1ST. Y. 289 (293) ; to change a devise for life to a fee by giving a certifi- cate, Viele v. Keeler, 129 N. Y. 190 ; to appoint an executor of a will, or a trustee, CutJibert v. Babcock, 2 Dem. 96 ; Hartnett v. Wandell, 60 N. Y. 346 ; Rogers v. Rogers, 4 Redf. "521 ; Bel- mont v. O" 1 Brien, 12 N. Y. 394 (405) ; to appraise, Manice v. Manice, 43 N. Y. 303 (364) ; to collect dividends, Onondaga T. & D. Co. v. Price, 87 N. Y. 542 (547) ; to cut of a contin- gent devise by conveying the fee, Jackson v. Jzdwards, 7 Pai. Ch. 386 ; in executors, to sell, and invest proceeds until their accounts are settled, Williams v. Freeman, 98 N. Y. 577 ; to lease, Henderson v. Henderson, 113 N. Y. 1 ; Matter of Seebeck, 140 N. Y. 241. This power to lease may or may not involve the right to receive tli3 rents. Thus, a life estate in the use and income of one third of a house may be given to A, and power to lease the whole house and receive the rents of the other two thirds, to executors. Starr v. Starr, 132 N. Y. 154. To have entire management and control ; under this head there has been some apparent disagreement among the authorities on the point whether a power to receive rents, which is a usual feature in trusts to manage, is not inconsistent with a mere power, on the theory that authority to receive rents involves title. Thus, it is held in Wood v. Wood, 5 Pai. Ch. 596 (603), that where lands are devised to one, power to receive and apply the rents to the use of the owner could not be given 1o another. On the other hand, however, the authorities are numerous that there may be a valid power to take entire charge, control and management of real and personal property ; to lease ; to collect and apply rent3 and income ; to invest, to insure ; to pay taxes and assessments ; 604 THE PURPOSE OF THE POWER. to repair ; to pull down buildings and erect new ones, etc., Henderson v. Henderson, 113 N. Y. 1 ; and from the rents to pay annuities and distribute the surplus, Matter of Seebeck, 140 N. Y. 241 ; to the same effect, see Starr v. Starr, 132 N. Y. 154 ; Holly v. Hirtch, 135 N. Y. 590 (595) ; Blanchard v. Blanchard, 4 Hun, 287 (289), aff'd 70 N. Y. 615 ; Tucker v. Tucker, 5 N. Y. 408 ; Heermans v. Robertson, 64 N. Y. 332 (341), see 78 N. Y. 259 ; Van Brunt v. Van Brunt, 111 N. Y. 178 (186 etseq.}. There are cases where the duties imposed upon the grantee of a so-called power to receive rents are such that title in him is requisite to enable him to perform the duties im- posed, in which case, if the purposes are such as may be carried out by a trust, an express trust will be implied, Ward v. Ward, 105 N. Y. 68 (73-74) ; and in still others, authority to one to collect rents and profits, for his own benefit, will carry also the beneficial title. Jennings v. Conboy, 73 N. Y. 230. Another authorized purpose of a power is a power reserved or granted to terminate a trust. It has been said that a power to terminate a trust is not a technical power, but a condition. Matter of Van- derbilt, 20 Hun, 520 (525). But evidently there might be a tech- nical power the exercise of which would necessarily result in ter- minating a trust, and also that a technical power for that particu- lar purpose is specified in the statute. Keal Prop. L., 128. 618. Powers and trusts combined. The existence of an express trust does not interfere with the contemporaneous exist- ence of a power in trust, affecting the same property. Thus, there may be a trust of land to receive and apply rents and profits, together with a power in the trustee to lease, or mort- gage, or sell. Miller v. Wright, 109 N. Y. 194. So there may be a trust to receive and apply rents of land, coupled with a power of sale, the proceeds still to be held in trust to receive and apply the income. Fincke v. Fincke, 53 N. Y. 528 ; Belmont v. CPBrien, 12 N. Y. 394. But a devise of land to trustees in trust to receive the rents and profits, but with no direction to apply them ; and to sell, and hold the proceeds on a valid trust, may not create a valid trust as concerns the land, so as to pass the title to the trustees. Perhaps it creates only a power in trust, for the purpose of raising funds, and the trust as such covers only POWERS AND TRUSTS COMBINED. 505 the proceeds. Holly v. Hirsch, 135 N. Y. 590 (594). Such a trust might, however, it would seem, be a valid trust even as to the land, if so intended, if regarded as a trust to sell land in order to pay a legacy, i.e., a legacy of the proceeds to a trustee to hold in trust. See ante, 400, p. 291 ; p. 441. An express trust to receive and apply, or receive and accu- mulate, rents, may be coupled with a power to apply the prin- cipal to the use of the beneficiary. This latter is not a trust, for no express trust is authorized for that purpose. But as a power it is valid, whether viewed as a power to sell and apply, or as a power to sell and hold the proceeds as personalty on a trust to apply them the purpose for which a trust of personalty may be created being unrestricted. Oilman v. Reddington, 24 N. Y. 9 (14) ; Kilburn v. See, 1 Dem. 353 ; Roosevelt v. Roose- velt, G Hun, 31 (40), aff'd 64 N. Y. 651. Such a feature does not interfere with the vesting of the remainder limited on the trust, but merely renders it defeasible. Van Asste v. Fisher, 117 N. Y. 401. See Real Prop. L., 31. Power in a trustee, to sell, and reinvest proceeds in other lands subject to the same trust, is not inconsistent with the inalienable nature of the trus- tee's estate in the lands, and his execution of the power does not run counter to the statutory prohibition of sales in contravention of the trust. Roosevelt v. Roosevelt, 6 Hun, 31 (43-44), aff'd 64 N. Y. 651. Power to grant or devise the entire estate, and a trust for the life of the donee, may be harmonized by making the power apply only to the remainder. Crooke v. Co. of Kings, 97 N. Y. 421 (432). There may also be two powers, one in one person, and one in another, affecting the same property and even the same transaction, e.g., there may be a power in A to appoint the persons to whom a conveyance shall be made, and a power in B to convey accordingly. SchenoTc v. Ellingwood, 3 Edw. Ch. 175. And so there may be a power subject to the exercise of another power. Livingston v. Murray, 68 N. Y. 485 ; and a trust in land in one person, and a power to sell the land free of the trust in another person. Pollock v. Hooley, 22 N. Y. Supp. 215 ; 67 Hun, 370. 619. Power and contingent trust. Where a power of sale to be exercised in future is given to executors, with a provision 506 THE PURPOSE OF THE POWER. that if in the meantime the widow should fail to suitably educate the children, the executors should have possession and collect and apply the rents, etc., the existence of the contingent devise in trust does not make the power anything more than a mere power. Reedy. Underhill, 12 Barb. R. 113 (116-117). 620. Unlawful purpose. An attempt to create a power may fail, though the requisite formalities are observed, because the purpose is either repugnant to the other dispositions of the deed or will, or is per se illegal. Thus, where a will devises a life estate subject to a power in the same devisee to receive and ap- ply the rents thereof to himself for life, the power fails. The life tenant has, as such, an inherent power as owner to receive and use the rents. Beck v. McGillis, 9 Barb. R. 35 (51). Or the purpose may be contrary to a statutory provision, as a power to receive and accumulate rents in order to pay a legacy to a trus- tee to be held in trust. Garvey v. McDevitt, 72 N. Y. 556. Or the purpose may be too indefinite to permit of enforcement by the court. Ilenly v. Fitzgerald, 65 Barb. R. 508. Or where an estate which a will attempts to create is void, for continuing a suspension for an illegal period, a power of sale, to take effect at the termination thereof, is also void. Dana v. Murray, 122 K Y. 604 (618). Compare Hone's Ex'rs v. Van Schaick, 20 Wend. 564 ; Moore v. Moore, 47 Barb. R. 257. So a power given to accomplish any illegal or forbidden purpose is void. Robert v. Corning, 89 N. Y. 225 (236). A power to sell land and pay the proceeds to a corporation, is not a devise to the cor- poration, arid is not invalid because of the inability of the cor- poration to take by devise. Downing v. Marshall, 23 N. Y. 366 (392). But a devise of land in trust to receive and pay the rents to a corporation unable to take by devise, is invalid, and cannot be sustained by turning it into a power to effect the same end. Downing v. Marshall, 23 N. Y. 366 (388), and 1 Abb. Ct. App. Dec. 525 (530). Compare with a devise in trust to receive and pay the rents to an alien, which is valid. Ante, 358. See also, as to powers effecting suspension of the power of alienation, post, Chapter XXII. 621. Must be some purpose. Although any lawful pur- pose (compare 544) will suffice to sustain a power, there must MUST BE SOME PURPOSE. 507 be some purpose. A purely passive power is invalid. Aldrich v. J^unk, 48 Hun, 367 (375). And so with a power the purpose of which, though apparently intended to be active, is so vague, in- definite and uncertain, that the court cannot ascertain with rea- sonable certainty what the power really is, in order to enforce it. Clapp v. Byrnes^ 3 App. Div. 284. But if the purpose be active, the fact that it is not set forth in express terms is not fatal, if it may be clearly implied from the entire instrument. Thus where a will contains a disposition of property and leaves the same to trustees with power to sell, without in terms saying what shall be done with proceeds, it will be presumed that they are to be applied to the purposes of will. Royce v. Adams, 123 1ST. Y. 402 (404). In this case the original trustees were also in fact the executors of the will. CHAPTER XXL THE EXECUTION OF POWERS. (1) Method, Scope and Time of Execution. 622. Form of execution. " A power can be executed only by a written instrument, which would be sufficient to pass the estate, or interest, intended to pass under the power, if the per- son executing the power were the actual owner." Real Prop. L., 145. See post, 626. The instruments to be considered are, therefore, wills, conveyances (Real Prop. L., 207), and contracts (post, 625). ' 623. Execution by will. " Where a power to dispose of real property is confined to a disposition by devise or will, the instrument must be a written will, executed as required by law." Real Prop. L., 147. It may sometimes be difficult to deter- mine whether the power is " confined to a disposition by devise or will." It is a question of intent ; but the mere reference to donee's death will not, pet- se make the power testamentary only, e.g., a power to B, the life tenant, to dispose of the remainder after his own death. Here the reference to B's death may mere- ly relate to the future estate which will then begin, and which B is empowered to dispose of. Farwell on Powers (2d ed.), 60. See Real Prop. L., 148. A power to appoint " by will or otherwise," or "by deed or otherwise," is of course not confined to the instrument particularly specified. So an " instrument in 1 Article VIII. of the Real Property Law) Recording Instruments Affecting Real Property), applies to instruments in execution of a power, even though the power be one of revocation only, such instruments being covered by the term " conveyance" there employed, except wills, leases for a term not ex- ceeding three years, and executory contracts for sale or purchase. Real Prop. L., 240. t METHOD, SCOPE AND TIME OF EXECUTION. 509 writing" would include both deeds and wills. Farwell on Pow- ers (2d ed.), 173. The term " executed as required by law," is to be interpreted with reference to the statutory requirements relating to due execution. Code C. P., 2694, 2611, 2476 et seq. But the right to have a will admitted to probate, the valid- ity of the execution thereof, and the validity and construction of any provision contained therein, is not affected by a change of the testator's residence made since the execution of the will. Code C. P., 2611. These principles apply to the case of a will containing an exercise of a power. Betts v. Beits, 4 Abb. ]N". C. 317 (389). And where a power, while not confined to a testamentary exercise, permits it, and the donee elects to execute it by will and not by deed, still the instrument " must be a writ- ten will executed as required by law." See ante, 622. In case the power is a general and beneficial power to devise the inheritance, and the donee is a tenant for life or years, he thereby acquires a fee, and becomes entitled, under the statute, to con- vey by grant. Ante, 567. Such a conveyance is made, how- ever, not in execution of a technical power, but under the in- herent power of the owner of the fee, who has become such by virtue of the operation of the statute in merging, so to speak, his estate and power. A's will gave his real and personal property to B absolutely. It also provided that B should also, during A's life, have " pow- er" to devise and bequeath said property by will " heretofore or hereafter made," to take effect in case B died first, in which case said property was to be turned over at A's death to the executor or trustee named in B's will. It seems that this was not a " power of appointment," because of the absolute ownership and control continued in A during his life, but held that the de- visees and legatees under B's will made and going into effect during A's life, took the property by virtue of A's will, B's will acting only to ascertain the persons entitled, and the proportions, under A's will. Matter of Pifard, 111 N. Y. 410. But see ante, 77. 624. Execution by grant. " Where a power is confined to a disposition by grant, it cannot be executed by will, although the disposition is not intended to take effect until after the death 510 THE EXECUTION OF POWERS. of the person executing the power." Real Prop. L., 148. Coleman v. Beach, 97 N. Y. 545 (556) ; Smith v. Chase, 90 Hun, 99 ; compare Hellenberg v. Dist. No. One, <&c., 94 N". Y. 580. See ante, 565, 566. 1 Under a power in the executor to mortgage, the fact that the bond secured by such a mortgage to raise funds for the estate is signed by the executor individually, and not as executor, is im- material. Roarty v. McDermott, 146 K Y. 296 (301). So with a deed executed by virtue of a power vested in the execu- tor. Wright v. Syracuse, Ontario & N. Y. R. R. Co., 92 Hun, 32 (35) ; Real Prop. L., 155. If under a power to sell, a deed in execution thereof is tendered by the donee to a purchaser, and is rejected for an alleged defect in the title, which, however, is subsequently established as valid, by decree, the prior tender does not act as a conditional delivery ; there must be a new de- livery. Mott v. Ackerman, 92 N". Y. 539 (552). Where the grantor in a trust deed, who is also beneficiary under the trust, reserves a power to appoint and direct a conveyance by her deed, the conveyance to be made by the trustee according to such ap- pointment ; and pending the trust the beneficiary executes and delivers a mortgage, this constitutes a valid appointment and conveyance, the assent or conveyance of the trustee not being requisite. Campbell v. Low, 9 Barb. R. 585 (589). The Real Property Law, in 221, establishes the construction to be given, in any deed by an executor of, or trustee under, a will, of the words " together with the appurtenances and also all the estate which the testator had at the time of his decease in said prem- ises, and also the estate therein which said grantor has or has power to convey or dispose of, whether individually or by virtue of said will or otherwise." " 625. Agreement to execute. The donee of a power to sell, may enter into an executory contract for such sale, and the per- 1 " If a married woman execute a power by grant, the concurrence of her husband as a party shall not be requisite, but the grant shall not be a valid execution of the power unless it be acknowledged by her on a private exami- nation in the manner prescribed, etc. 1 R. S. 736, 117. Repealed, and not re-enacted, by the Real Property Law. 2 For the statutory form of executor's deed, see Real Prop. L., 223. METHOD, SCOPE AND TIME OF EXECUTION. 511 formance of the contract may be decreed in equity at the suit of the purchaser. The contract of sale is, in effect, an execution of the power, and confers upon the purchaser an equitable title to the land sold, and the court will compel the donee to perfect that title by a conveyance, where the contract is fair and for a sufficient consideration, and there is no default or laches on the part of the purchaser, Bostuoick v. Beach, 103 N. Y. 414 (421), and a deed subsequently given in pursuance of the contract, re- lates back to the execution of the contract, as if then delivered, as against subsequent purchasers with notice. Demarest v. Ray, 29 Barb. R. 563.' Specific performance may be enforced though the land lies in another State, Newton v. Bronson, 13 N". Y. 587, in which case the same result follows even though the trustee holds only as mortgagee, if by the law of the State where the land lies a mortgagee has title to the land, and may in the given case convey. See Harrison v. U. T. Co., 144 N. Y. 326 (332- 333). The fact that the trustee holding the power is an infant does not prevent a decree directing a conveyance. Ante, 108 ; Anderson v. Mather, 44 N. Y. 249 (259). If the other party refuses to accept a deed, the donee may bring suit for specific performance, and in case of his death the suit may be continued by his successor, farmers' 1 L. & T. Co. v. Eno, 21 Abb. N. C. 219 ; McCready v. Metropolitan Life Ins. Co., 83 Hun, 526. aff'd 148 N". Y. 761. These cases are to be distinguished from those holding that an executor cannot make a valid contract to convey land over which he has no power, " as soon as he can ob- tain a sale of the same under an order of the surrogate." Her- rick v. Grow, 5 Wend. 579 ; or where, under a special statute or for any other reason, a sale must be effected at public auction. Egertorfs Adin'rs v. Conklin, 25 Wend. 224. Where trustees or donees make a contract of sale, and the purchaser refuses to complete, they must account to the benefic'iaries of the trust or power for the amount paid down by the purchaser and forfeited. Campbell v. Johnston, 1 Sandf. Ch. 148. 626. Disregarding grantor's directions. " Where the grantor of a power has directed or authorized it to be executed 1 As to recording executory contracts for sale or purchase, see Real Prop. L., 244 ; Trustees of Union College v. Wheeler, 61 N. Y. 88 ; Boyd v. Schles- singer, 59 N. Y. 301. 512 THE EXECUTION OF POWERS. by an instrument not sufficient in law to pass the estate [see ante, 622], the power is not void, but its execution is to be governed by the provisions of this article." Real Prop. L. , 149. " Where the grantor of a power has directed any formality to be observed in its execution, in addition to those which would be sufficient by law to pass the estate, the observance of such addi- tional formality is not necessary to the valid execution of the power," Real Prop. L., 150 ; e.g., a requirement that the in- strument in execution of a power to appoint by deed should be attested by two witnesses. Schenck v. Ellingwood, 3 Edw. Ch. 175 ; or a requirement that the instrument in execution shall contain certain recitals. Bradstreet v. Clarke, 12 Wend. 602. " Where the conditions annexed to a power are merely nomi- nal, and evince no intention of actual benefit to the party to whom, or in whose favor, they are to be performed, they may be wholly disregarded in the execution of the power." Real Prop. L., 151. Kissam v. Dierkes, 49 N. Y. 602. 627. Intent of grantor to be observed." Except as pro- vided in this article [Article IV., Powers], the intentions of the grantor of a power as to the manner, time and conditions of its execution must be observed ; subject to the power of the Su- preme Court, to supply a defective execution as provided [post, 666] in this article."' Real Prop. L., 152. (a) Every power is to be exercised in the manner prescribed. Thus, a power to sell, does not authorize an exchange, Woerz v. Rademacher, 120 N. Y. 62 (69). But a power to sell, and buy other land with the proceeds, authorizes an exchange, Mayer v. McCune, 59 How. Pr. 78. So a power to sell does not author- ize a mortgage, Arnoux v. Phyfe, 6 App. Div. 605 ; Bloomer v. Waldron, 3 Hill, 361 ; Coutant v. Servoss, 3 Barb. R. 128 (140) ; Gumming v. Williamson, 1 Sandf. Ch. 17 ; Albany Jf. L Co. v. Bay, 4 N. Y. 9 ; contra in England, where " a power of sale generally authorizes a mortgage." Farwell on Powers (2d ed.), 558. And a power confined to sales, cannot be evaded by a nominal conveyance to a dummy, and the execution of a mort- gage by him to a party with notice. Arnoux v. Phyfe, 6 App. Div. 605 ; Benedict v. Arnoux, 7 App. Div. 1. But a power to sell or dispose of all or any part of the estate authorizes a mort- METHOD, SCOPE AND TIME OF EXECUTION. 513 gage. Hawley v. James, 16 Wend. 60 (153) ; Leggett v. Per- kins, 2 N. Y. 297 (318). And a power to purchase authorizes the giving of a purchase money mortgage. Coutant v. Servoss, 3 Barb. R. 128 (140). Power to sell, contained in a mortgage, is regulnted by statute, the provisions of which must be fol- lowed. Lawrence v. Farmers* L. & T. Co., 13 N. Y. 200 ; Id., p. 642. Power to borrow money and therewith repair and improve real property, implies a power to mortgage. Wet- more v. Holsman, 14 Abb. Pr. 311. A power to sell does not authorize a lease. Crooked Lake JVav. Co. v. Keuka Nav. Co., 4 N". Y. State Rep. 380. But a power to sell and dispose of land has been held to warrant a lease. Hedges v. Hiker, 5 Johns. Ch. 163. And in any event a power to sell or dispose of all or any part of testator's estate, authorizes a lease. Leggett v. Perkins, 2 N. Y. 297 (318). A lease is an alienation of part of the estate ; so is a mortgage. Hawley v. James, 16 Wend. 60 (153). It seems that an imperative power to an executor to sell land to pay legacies, "in such portions, or parcels, or alto- gether," as the donee may think best or most profitable, includes a power to cut down and sell off timber growing on the land, and thereby convert the timber into personalty. Keller v. Ogs- bury, 121 N. Y. 362 (366). A power in trust to divide, does not authorize a sale, Craig v. Craig, 3 Barb. Ch. 76. A power to sell and to reinvest, was held in Manier v. Phelps, 15 Abb. N. C. 123 (137) not to be restricted to sales for the purpose of reinvestment only, but to cover sales for distribution, or to pay debts, the decision going on the theory that there were two pow- ers, i.e., a power to sell, and also a power to reinvest. Where a will gave property to A, and a codicil revoked this, and gave it to several, with power in B to appoint to A one half of what was then taken away, the codicil was held to refer to one half of each share thus given to others, and not one half of the total apportioned as the donee might decide. Kane v. As- tors Etirs, 9 N. Y. 113 (133). (J) A power must be exercised for the purpose intended. Allen v. De Witt, 3 N. Y. 276 ; Hctzel v. Barber, 69 N. Y. 1 (13) ; Jackson v. Jansen, 6 Johns. R. 73 ; Sharrpsteen v. Tillou, 3 Cow. 651. Thus : a devise of certain land to testator's wife for life, remainder to his children, the life estate being charged 33 514 THE EXECUTION OF POWERS. \vith the support of the children ; to the executors, a discretion- ary power to sell the said land, and invest the proceeds and apply the income and principal to use of same devisees. There was other land. There was not enough personalty to pay debts. It was held, that the said power of sale did not warrant a sale there- under to pay the debts. Matter of McComb, 117 N. Y. 378. As to how far this is affected by infancy of children, see Id., p. 383. A discretionary power in the executors and trustees to sell land, at such time and manner as shall to them seem best for the interests of the estate, and invest the proceeds and dispose of them according to the terms of the will, does not warrant a con- veyance or release of the land to a creditor whose claim should be paid from personalty, if sufficient, or from realty only through statutory proceedings for leave to sell to pay debts. The sale contemplated by the will is one to realize proceeds for invest- ment, at a time when the land can be sold to better advantage than if held. Schotte v. Schotte, 113 N. Y. 261 (273 et seq.) ; Amount v. Phyfe, 6 App. Div. 605 ; Allen v. DeWitt, 3 N. Y. 276 ; Ruxsell v. Russell. 36 N. Y. 581. In Schotte v. Schotte, 113 N. Y. 261, the court say : " The power of sale given by the will was to sell at times or in a manner which the executors should deem for the best interest of the estate. The authority contem- plated first a sale, and second the exercise of a judgment as to the best interest of the estate. Here there was, in truth, no sale such as the will contemplated. That was one for the purpose of realizing proceeds to be invested as the source of income and in- teiest, and at a time when such values could be realized as would justify a sale instead of further delay for an appreciation of value. Nothing of that kind took place. No proceeds were realized. The land was appropriated to pay a debt chargeable primarily upon the personal property without an order of the sur- rogate or proof that the personal assets were insufficient to pay the debts. The authority to sell was given for one distinct and definite purpose, and not at all to enable a disputed debt to be compromised. The deed, therefore, passed no interest of the remainderman, and the surrogate was powerless to take it away and appropriate it to the payment of debts except in the statu- tory method." And in Harris v. Strodl (132 N". Y. 396) it is said that : " The power is to sell and convey whenever they may METHOD, SCOPE AND TIME OF EXECUTION. 515 deem it best to do so, and upon such terms as they deem desir- able. It is contended that they deemed it best to convey to the defendant for the purpose of vesting in him the remnant of the title which remained unconveyed after the conveyance of the widow and children, and that they deemed the confirmation of that conveyance upon the consideration expressed in it desirable terms. This may meet the letter of the power, but does not sat- isfy the spirit. . . . Clearly they ought to have so sold these as to secure the proceeds to the grandchildren in the event of the con- tingency happening, making them the ultimate devisees of the testator. But as the case is presented the executors made the conveyance to the defendant so as to enable the takers of the de- feasible estates to keep and convert to their own use the full price of the whole estate, as if their children had no contingent future estate in it. The plaintiff has full knowledge of all these facts." if an executor with a power of sale to pay debts should under- take to sell for an invalid or outlawed debt, the court, on the application of the heir or devisee, will interpose for his protec- tion. O'tlynn v. Powers, 136 N. Y. 412 (4^3), citing Sut- ler v. Johnson, 111 N. Y. 204. A power of sale in the execu- tor, to pay debts, may be exercised by him for the purpose of paying a debt due to himself from the decedent, allowed in his accounting by the surrogate. O^Flynn v. Powers, 136 N. Y. 412 Power to mortgage or sell for the benefit of an in- fant in whom land is vested subject to the execution of the power, does not authorize a mortgage to secure debts of a third party, and such mortgage is void. Syracuse Sav. J$lc. v. Holden, 105 N, Y. 415 (419). The grantee of the power has an authority, and must follow it merely. Hillen v. Iselin, 144 N. Y. 365 (373). Unauthorized execution of a power conveys no title except as to such part, if any, as is vested beneficially in the donee. Smith v. Bowen, 35 N. Y. 83 (89). Where land is vested subject to a general power in trust to mortgage in the discretion of the donee, to raise funds for such payments from the corpus to testator's children as the donee should deem best, for education and main- tenance, and on foreclosure of a mortgage given by the donee it does not appear that it was given for any other purpose, nor, if it was, that the mortgagee was chargeable with any knowledge 516 THE EXECUTION OF POWERS. thereof, it is valid and enforceable. Mut. Life Ins. Co. of N. Y. v. Shipman, 108 N. Y. 19. Though the power must be exercised for the purpose for which it is given, yet if it is gen- eral, and unlimited, and no purpose is named except the advan- tage of the estate, as determined by the donee, it may be exer- cised for any purpose within its general scope. Lindo v. Mur- ray, 91 Hun, 335. The same instrument may confer two pow- ers on the same person, one general and unrestricted, arid the other special and limited. In such a case, a deed executed by the' donee may be good under the general power, although the special one either does not apply or is invalid. McCready v. Metro- politan Life Ins. Co., 83 Hun, 526, affd 148 N. Y. 761. So there may be two powers, one express and limited, and one im- plied but general. In such a case, a deed may be valid under the implied power, though it does not fall within the terms of that expressed. Messenger v. Casey, 18 Week. Dig. 71. (c) A power in trust must be exercised for the benefit of the persons indicated in the instrument creating it, and not for non- objects. Shannon v. Pickell, 2 N. Y. State Rep. 160 ; Syra- cuse Sav. JBL v. Holden, 105 N. Y. 415. See post, 660. A . power given by will to sell, may be annulled by the testator's act in selling and conveying the same land. But if, in such a case, the testator makes a binding contract to convey, but dies before conveyance, so that the legal title passes to his heirs, or devisees, while the so-called equitable title is in the vendee, the question has been raised whether the general power to sell all testator's land enables the donee to convey the legal title to the vendee. In Roome v. Philips, 27 N. Y. 357, it was held that the heirs must join in the conveyance. In that case, the power was given to executors, but was attempted to be exercised by an adminis- tratrix with the will annexed, the first question presented thus being whether the power had passed at all to her. The court held in the negative on that question, but required the adminis- tratrix to join in the deed because she asserted a right to execute it. See also Lewis v. Smith, 9 N. Y. 502. The authority of the Roome case appears to be shaken, even within its own limits, but at any rate is strictly confined to cases where the facts pre- sented and passed on are the same, and does not apply to a power coupled with an interest (ante, 539). Holly v. Hirsch, 135 METHOD, SCOPE AND TIME OF EXECUTION. 517 N. Y. 590. It applies, at most, only where the power of sale is a mere naked power, and the donee of the power has no interest in its execution. But where testator creates a valid power to sell all his land, and gives to the donee all or a portion of the pro- ceeds outright, or all or a portion thereof to hold on a valid trust, the power is coupled with an interest and entitles the donee to give clear title to the proposed grantee under aeon- tract of sale made by the testator before his death, but of which the legal title still remained in testator at his death. Though there is nothing but the mere legal title to descend to testator's heirs, it descends subject to the exercise of the power, just as if the entire legal and equitable title had descended. Holly v. Hirsch, 135 N. Y. 590. See also the general discussion in Wil- liams v. Haddock, 145 N. Y. 144. (d) Conditions imposed by the trust instrument, must be com- plied with, whether they are to precede or accompany the exer- cise of the power. Harris v. Strodl, 132 N. Y. 392 (397 and cases cited) ; Kissam v. Dierkes, 49 N. Y. 602 ; Barber v. Cary, 11 N. Y. 397 (402) ; Griswold v. Perry, 7 Lans. 98 (104) ; e.g., a power to sell if income is insufficient, Griswold v. Perry, 7 Lans. 98(103). Distinct powers, for separate purposes, to be exercised only in a given order, cannot be exercised in the reverse order. Thus, power to sell to pay debts, if required, and after debts paid to sell and distribute proceeds, does not warrant any sale for distribution while any debts are outstanding. Drake v. Paige, 127 N. Y. 562 (572). As to whether a power to sell to pay debts or legacies if the personalty is insufficient, authorizes a sale under the power, for that purpose, where the insufficiency of personalty results from the waste and squandering thereof by the executor, see Anderson v. Damson, 42 Hun, 431, and for cases to the same point, but arising not under a power but in statutory proceedings for leave to sell, compare Kingsland v. Murray, 133 N. Y. 170, with Matter of Bing- ham, 127 N. Y. 296 (308) and cases cited. A power in an executor to sell land for any purpose which in the donee's judg- ment renders a sale desirable, authorizes a sale to pay debts. Such a general power is subject to the qualification that some permissible occasion exists for the exercise of his discretion in the respect he has in view. Thus he could not sell land to pay 518 THE EXECUTION OF TOWERS. claims of his own against the estate until they are proved and allowed. But if he does sell, before his claims are allowed, for other permissible purposes, and has a surplus of proceeds, he may use these to pay his claim when allowed, in the absence of per- sonal property applicable thereto. Matter of Powers, 124 N". Y. 361. A general power in a trustee to sell land at such times and in such manner ao shall seem to him best for the interest of the estate, must not be exercised arbitrarily without any reference to interests of estate. See M. L. Ins. Co. v. Woods, 121 N. Y. 302, holding the sale there justified. As to power to sell on con- dition subsequent, see Oriswold v. Perry, 7 Lans. 98 (104, 105). The execution of a power must conform to the spirit as well as the letter of the trust instrument. Thus, where a life estate is granted to A, with remainder to B defeasible by his death dur- ing the life estate, in favor of C, and the executors are given full power to sell and convey at any time on such terms as they may think desirable, deeds by A and B, who are to receive the total consideration for the fee, and by the executors, who are in fact to receive nothing as representing the possible interest of C, do not give, to a grantee who knows the facts, a clear title to the fee. The conveyance by A and B conveys only what they have a life estate and a defeasible fee ; and the conveyance by the executors, while according to the letter of the power, does not satisfy its spirit. Their duty is to so sell the contingent remain- der of C as to secure the proceeds for C in the event of his be- coming entitled thereto. A marketable title is not offered, and the proposed vendee is entitled to recover back his deposit, etc. Harris v. Strodl, 132 N. Y. 392. Where a will creates a life estate in A, and on the death of A a share of the remainder is to be held in trust for B, for his life, and on B's death to go abso- lutely to his issue, or if no such issue then as A, the life tenant, shall by will direct ; otherwise to fall into the general estate ; these provisions, in themselves considered, contemplate that B is to outlive the life tenant, and that A's power to appoint shall only apply to a remainder to follow the trust estate for B. If the life tenant outlives B. there is no trust, and therefore no re- mainder after a trust, and so nothing for the power to act on. Such a conclusion, of course, depends on the intent expressed. METHOD, SCOPE AND TIME OF EXECUTION. 519 Austin v. Oakes, 117 N. Y. 577 (591). If the instrument grant- ing the power requires the donee to give notice of the sale, or to sell at public auction, etc., it has been held, in case of powers created prior to the Revised Statutes, that when a sale is in fact effected, it will be presumed that the required preliminary steps were duly taken, Bissing v. Smith, 85 Hun, 564 ; Minuse v. Cox, 5 Johns. Ch. 441 ; at least so far as to protect the purchaser for value. And if they were not taken, the result would be that the purchaser would acquire a good title, while the donee of the power would be held liable for any loss resulting from the fail- ure to comply with the terms of the power. Minuse v. Cox, 5 Johns. Ch. 441. ' If a power to appoint a remainder be given to A, " if the ap- pointment be not contrary to the provisions which I shall leave in a certain paper," etc., or if contrary then the power is not to take effect, the result of the invalidity of the limitation on the power is not to make the power general, but to extinguish it. Mar- tin v. Pine, 79 Hun, 426 (430). (e) The time when, or the period within which, a. power is to be executed, depends on the expressed intent of its donor, Eger- ton?s Adm'rs v. ConMin, 25 Wend. 224, and must be determined by an inspection of the entire instrument creating it, and a con- sideration of the purposes for which it was conferred. Richard- son v. Sharpc, 29 Barb. R. 222 ; Hatchings v. Baldwin, 7 Bosw. 236 ; Martin v. Pine, 79 N. Y. 426. If the power is given to be exercised at a future period, or upon the happening of a given 1 " Sales of real estate situate in the city and county of New York, or at any other place within the State of New York, made by executors in pursu- ance of an authority given by any last will, unless otherwise directed in such will, may be public or private, and on such terms as in the opinion of the executor shall be most advantageous to those interested therein. " L 1883, ch. 65, 1 ; Birdseye (3d ed.), p. 1233 ; other sections of which relate to the standing of such sales from September 1st, 1880, to the date of the Act. "While this provision names executors only, its permission of either private or public sales represents a general rule affecting persons authorized either as trustees, or as donees of a power, to sell land. " In the absence of any direc- tions upon the subject, the sale may be either public or private, as circum- stances render it for the advantage of the estate, unless there are statutes [e.g., in case of foreclosure by advertisement, Code C. P., 2388] that require all sales under powers to be at public auction. " 2 Perry on Trusts, 602 ; 780-782. 520 THE EXECUTION OF POWERS. contingency, it cannot be exercised earlier. Drake v. Paige, 127 N. Y. 562 (572) ; Hall v. McLaughlin, 2 Bradf. 107 ; Allen v. DeWitt, 3 N. Y. 276 ; see James v. Beasley, 14 Hun, 520. And the result is the same where the postponement is implied instead of expressed. Matter of Vandervoort, 1 Redf. 270. And if it is to be exercised during a given period it can- not be exercised later. Richardson v. Sharpe, 29 Barb. R. 222. A power given to a life tenant, to be exercised during his life, cannot be continued in his executors by*his will. Coleman v. J2each, 97 N. Y. 545 (557). And a power to appoint during the donee's life, though in trust, if in fact made absolutely dependent on the will of the donee, cannot be carried out by the court after his death leaving the power unexercised. See Webb v. 8anford, 55 Super. Ct. 139, aff'd 112 N. Y. 680. But though in terms given to be executed during or at a specified period, it may be executed later if such an intent is shown by the entire scheme of the will creating the power. Waldron v. Schlang, 47 Hun, 252 ; Mott v. Ackerman, 92 N. Y. 539 (550-551) ; Coleman v. Beach, 97 N. Y. 545 (557) ; Phillips v. Davies, 92 N. Y. 199 ; Dorland v. Dorland, 2 Barb. R. 63 (79) ; Millspaugh v. Van Zandt, 55 Hun, 463 ; Allport v. Jerrett, 61 Hun, 447 ; Ilellenberg v. Dis- trict No. One, &c., 94 N. Y. 580 ; Wild v. Bergen, 16 Hun, 127 (129) ; Gersen v. Rinteln, 2 Dem. 243. See post, Chapter XXI V. If, though the power be imperative, the time of its exercise is left discretionary, the donee's judgment on the question of time is conclusive. But that judgment he must exercise, and in good faith, or the court may put him in motion or act in his place. Haight v. Brisbin, 96 N. Y. 132 ; Hancox v. Meeker, 95 N. Y. 528 (535-537). If no time of execution is specified, and no spe- cial discretion is given to the donee, a reasonable time adjusted according to the facts of the case in hand, will be allowed. Mat- ter of Weston, 91 N. Y. 502 (508). It has been held, in one case, that a sale should be effected within two years, in any event, unless some special reason exists for further delay. Mat- ter of Travis, 85 Hun, 420. For a case of sale compelled after 20 years, see Wilcox v. Quwiby, 20 N. Y. Supp. 5 ; 65 Hun, 621. But where the time for execution is to be determined solely by the judgment of the donee as to whether a specified METHOD, SCOPE AND TIME OF EXECUTION. 521 situation exists, the courts cannot coerce his judgment. Mc- Lean v. McLean, 3 Hun, 395, aff'd 62 N. Y. 627, where a con- veyance was directed to A whenever the donee should be satis- lied that A would make a proper use of it. A different question would arise if the contingency, instead of thus depending solely on a matter of opinion, consisted in the donee's being satisfied that some specific fact existed, the existence of which could be definitely ascertained and verified. For here his failure to be satisfied of it would be due to bad faith. See ante, 474, 478, 480. If a power is created, to be exercised at or after a certain event happens, or on a given contingency, its exercise will be valid though the instrument in execution is drawn up, dated, and signed before that time, but is not delivered or otherwise put into effect until the proper time comes. Farwell on Powers (2d ed.), 144, citing Wandesforde v. CarricTc, 5 Ir. R. Eq. 486 ; C. of Sutherland v. North/more, 1 Dick. 56 ; Anon., 2 Leon. 220. This must be the case, in one sense, if the power is testamentary. See Real Prop. L., 231. And see Taggart v. Murray, 53 N". Y. 233, where a power was given to the life tenant to dispose of the property by will if she left no heirs, and where, accordingly, even if the condition existed, the will must be ex- ecuted before (in legal contemplation) it could be known that she would die without heirs. An analogy is found in the case of a deed from a married woman to her husband, executed before, and delivered after, the passage of a law authorizing such a con- veyance, as in Reynolds v. City Nat. Bank, 71 Hun, 386. The principle is, of course, subject to a contrary intent, express or implied, in the instrument creating the power. A distinction is drawn by the English law between the cases illustrating the prin- ciple just stated, and a power which, in itself, is not to arise until a future or contingent event happens, or until a condition is ful- filled, and which cannot therefore be exercised until the event happens or the condition is fulfilled ; for until then it is not an existing power to be exercised in future, but has in itself no exist- ence as a power. Farwell on Powers (2d ed.), 147. 628. Power to appoint, if general and beneficial, does not require the appointment of the legal title directly to the benefi- 522 THE EXECUTION OF TOWERS. cial appointees. It may be duly exercised, in the absence of any restrictive provision in the instrument creating it, by appointing to trustees on valid trusts. Maitland v. Baldwin, 70 Hun, 267 ; Crooke v. County of Kings, 97 N. Y. 421 ; Gutting v. Cutting, 86 N. Y. 522 ; Frear v. Pugsley, 9 Misc. 316 ; see Gomez v. Gomez, 147 N. Y. 195. So a beneficial power to "dispose," authorizes a disposition to a trustee in trust, and with a power of apportioning the income and of selling the land and reinvesting, even though the original power is one that cannot be delegated. For the original donee fully executes the power personally by disposing of the property in trust, and determining to whom it shall all go, even though the subsequent trustee have the powers above mentioned. In exercising these powers he is not execut- ing in any sense the original power to dispose, which has already been fully executed by the original donee thereof. Crooke v. County of Kings, 97 N". Y. 421 (441, 452). But if it is a power in trust to appoint to or among designated persons or members of a designated class the rule is otherwise, and the appointment must be beneficial and not in trust. Stewart v. Keating, 15 Misc. 44 (55 et seq.\ Farwell on Powers (2d ed.), 325. Com- pare Busk v. Aldam, L. R. 19 Eq. 16, given in Ames's " Cases on Trusts" (2d ed.), 460, where the power was to appoint among the donee's children " in such manner" as she should direct, and where an appointment to trustees for them was sustained. A power to appoint during life, does not require a single exercise only, but may, unless contrary to an intent expressed or implied, be executed piecemeal. Farwell on Powers (2J ed.), 164. " An estate created by the execution of a power, takes effect in the same manner as if it had been created by the deed which raised the power. The party who takes under the execution of a power takes under the authority and under the grantor of the power, whether it applies to real or personal property, in like manner as if the power and the instrument creating the power had been incorporated in one instrument." 4 Kent, Comrn., 338. Where the donee of the power has the right of selection, the interest appointed vests in the appointee at the time of the appointment, but his title relates to and is acquired under the instrument creating the power. Matter of Stewart, 131 N. Y. 274 (281). This principle is applicable when the question of the METHOD, SCOPE AND TIME OF EXECUTION. 523 derivation of the appointee's estate arises under the taxable trans- fer act. Id. Compare Matter of Curtis, 142 N. Y. 219 (223). 629. Cloud on title. An instrument in attempted execution of a power may constitute a cloud on the title, as where the power is conditional upon the happening of a condition precedent, e.g., if the devisee for life of an estate in real property, be given the power to encroach on corpus, in so far as necessary for her comfort and support, this confers a qualified beneficial power. It authorizes either a sale or a mortgage, if the condition prece- dent exists. Swarthout v. Itanier, 143 N. Y. 499. The pre- sumption is that a deed or mortgage in fact given, was given for the permitted purpose. Id. Therefore such an instrument is not void on its face. In a suit to foreclose the mortgage, the burden would be on the remaindermen to discredit it. Id. In en- forcing his mortgage, the mortgagee would not necessarily disclose any defect. Therefore, the conditions exist which constitute such an instrument, if it was not in fact executed for the author- ized purpose, a cloud on the title, and a suit will lie to remove the cloud. Id. But the existence, as distinguished from the attempted execution, of a power cannot create a cloud on the title. If it is valid, there is no cloud. If it is invalid, and its invalidity appears on the face of the instrument which attempts to create it, there is no cloud in a legal sense. Mellen v. Mellen, 139 N. Y. 210 (219), citing Bailey v. Briggs, 56 K Y. 407 ; Townsend v. Mayor, 77 N. Y. 542, and cases there cited. Hotchkiss v. Elting, 36 Barb. R. 38. Compare Real Prop. L., 276. 630. Invalidity adjudged after execution. As to the principles governing a case where, under a decree establishing the validity of a power, it has been executed, and thereafter the decree is vacated, or it is otherwise judicially determined that the power was invalid, see ante, 297, and compare Fischer v. Langbein, 103 N. Y. 84. Where a power is itself invalid, as through lack of beneficia- ries to enforce its execution, or otherwise, the fact that it has been executed in a manner which, had it been specifically re- quired in the instrument creating the power, would have ren- 524 THE EXECUTION OF POWERS. dered the entire scheme valid, does not cure the defect. The validity of the power depends on its nature and not on its execu- tion. Tildenv. Green, 130 N. Y. 29 (52) ; Readv. Williams, 125 K Y. 560 (569) ; Cutting v. Cutting, 86 N. Y. 522. But the fact that a grantee of a power might, without departing from the general terms of the power, attempt to create an illegal es- tate, does not invalidate a power which does not contemplate or require any such illegal execution. Hillen v. Iselin, 144 N. Y. 365 (380) ; (and post, 654 et seq.} ; Power v. Cassidy, 79 N. Y. 602 (612). 631. As against after-born child. Where an after-born child is entitled to take all the real estate as if there had been no will, a conveyance under a testamentary power passes no title as against him. Smith v. Robertson, 89 N. Y. 555. Ante, 520 e, 632. Estoppel. One who might object to the validity of a power affecting land vested in him, may ratify acts done by vir- tue of it, as by accepting the proceeds of a sale thereunder, with knowledge of the facts ; Matter of Place, 1 Redf. 276 ; or by coming into court and demanding such proceeds, Matter of Clark, 62 Hun, 275 (283-284). If the donee of a power might object to its application to a given case, or at a given time, as in hostility to rights given to him individually under the will, yet if he chooses to waive such objection, it is said that a vendee cannot raise it. Knapp v. Knapp, 46 Hun, 190. (2) Two or more Donees. 633. Introductory. There are three statutory provisions relating to the execution of powers in cases where there are two or more donees ; one of these statutes applies to all such cases, and the other two apply only when the donees are also executors or testamentary trustees, and hold the power as such. 634. First statute." Where a power is vested in two or more persons, all must unite in its execution ; but if before its execution, one or more of such persons dies, the power may be executed by the survivor or survivors." Real Prop. L., 146. The reference in this section to the persons in whom a power is TWO OR MORE DONEES. 525 vested, means the donees of the power. Real Prop. L., 112. Where there are two or more donees, and the power is discre- tionary, all must act personally. Whitlock v. Washburn, 62 Hun, 369 (373) ; Merger v. Duff, 4 Johns. Ch. 368 ; but if no discretion is involved, one may delegate his power to the other, and the latter may execute for himself and also as the delegate of the other. Ante, 593. 635. Second statute. " Where any powers to sell, mort- gage, or lease real estate, or any interest therein, are given to executors as such, or as trustees, or as executors and trustees, and any of such persons named as executors shall neglect to qual- ify, then all sales, mortgages and leases under said powers made by the executors who shall qualify shall be equally valid as if the other executors or trustees had joined in such sale." Code C. P., 2642. For discussion of the statute, see 636, 637. 636. Third statute. " Where any real estate or any inter- est therein, is given or devised by any will legally executed, to the executors therein named, or any of them, to be sold by them or any of them, or where such estate is ordered by any last will to be sold by the executors, and any executor shall neglect or refuse to take upon him the execution of such will, then all sales made by the executor or executors, who shall take upon them the execution of such will, shall be equally valid, as if the other executors had joined in such sale." 2 R. S. 109, 55. This right of the one who does qualify, under the foregoing statutes ( 635, 636), to execute the power given to " the execu- tors," applies equally whether the direction to sell is imperative or is left to the discretion of the executors, Leggett v. Hunter, 19 N. Y. 445 (455, and cases there cited) ; Taylor v. Morris, 1 N. Y. 341 (349) ; and "in this respect the statute makes no distinction between a devise to sell and a bare authority." Id. 350. But the executors who qualify must all unite to convey land under such a power. One of them cannot do so without the others, unless power is given to him specially in the will. Wilder v. Ranncy, 95 N. Y. 7 ; Berger v. Duff, 4 Johns. Ch. 368. And this is so though the power is such as to equitably convert the land. All who qualify must unite to effect the 526 THE EXECUTION OF POWERS. actual conversion. Wilder v. Ranney, 95 N. Y. 7. Those who do not qualify need not join. Ogden v. Smith, 2 Pai. Ch. 195 ; M. L. Ins. Co. v. Woods, 121 N. Y. 302 ; House v. Raymond, 3 Hun, 44 (51). The statutes also cover the case of the death of one or more executors and the execution of a discretionary power by the survivor. Carroll v. Conley, 9 N". Y. Supp. 865, aff'd 124 N. Y. 643. See ante, 634. Where a power of sale is given to such of several executors named as shall qualify and take on themselves the burden of administration and three qual- ify and two of the three subsequently execute a deed, the facts might show a renunciation by the third, so as to validate the deed. As to facts pro and con, see Fleming v. Burnham, 100 N. Y. 1. Ante, 124. The statute, 2 R. S. 109, 55, apply- ing to devises, etc., to executors to be sold, and where one neg- lects or refuses to take upon himself the execution of the will, giving power to the other to sell, is applicable where the will does not devise to them in terms " to be sold," but only to de- mise as much as they think proper, and to sell as much as they think proper. In this instance there were indications that a sale would probably be necessary to carry out all the provisions of the will. A sale by the one acting executrix is in such a case valid. Niles v. Stevens, 4 Den. 399. 637. Statutes compared. 1 The reference in the provisions quoted from the Code and the Revised Statutes, to sales, mort- gages, and leases, cover not only the making of the sale, etc., in its restricted sense, but to the execution of the instruments of conveyance, etc. Banner v. Storm, 1 Sandf. Ch. 357 (360) ; and vice versa, it is undoubtedly true that the provision above quoted from the Real Property Law, referring to the execution of the power, covers the making of a valid contract of sale, etc. See ante, 625. The first statute above quoted applies to all powers, whether beneficial or in trust ; the second and third apply only to pow- ers in trust, and not even to all of them, but only to such as are created by will and give the power to the executors as such, or - For a comparison of the foregoing statutes, see Ogden v. Smith, 2 Pai. Ch. 195, and House v. Raymond, 3 Hun, 44. TWO OR MORE DONEES. 527 as trustees. The first also refers only to the case where one or more of the grantees dies, and says nothing of refusal to accept the power, or of resignation or removal ; and while the second and third refer only to the case where one of the executors or trustees refuses or neglects to qualify or to take on himself the execution of the will, and says nothing in express terms of his death, resignation or removal. The decisions upon the scope of these provisions are somewhat meagre. This much, however, may seem clear, that the provision of the Real Propeity Law ( 14ft) is general in its terms, and includes the case where one of two or more executors holding a power dies, thus supple- menting the provisions of the Revised Statutes and the Code to that extent. But the latter provisions are specific, and cannot be relied on to cover the case of grantees who are not executors or executors and trustees. None of the three provisions refers in terms to resignation or removal. It has accordingly been held that where one of several executors resigns, or is removed, the survivors cannot execute a power given to all, in Matter of Van Wyck, 1 Barb. Ch. 565 (569-570), but that the court may, in a case where the power is of such a character as to pass to a successor, appoint a new trustee or administrator to act with the original ones who remain, in executing the power. Id. But in Matter of Bernstein, 3 Redf. 20 (25 et seq.\ the ground is taken that where one resigns the others may execute the power. And such seems to be the necessary implication from the reasoning of the court in Fleming v. Bivrnham, 100 N". Y. 1 (10 et seq.}, where, though renunciation was not there sufficiently established, the court assume that the resignation of one who has once quali- fied, leaves the others competent to execute the power ; and they say "If he qualified as executor, and, with his co-executors, Thomas McKie and Andrew Stark, undertook the burden of the will, and was not subsequently discharged, or did not renounce his executorship, or refuse to act as executor, then it seems to be conceded that the power of sale was not well executed by the conveyance of his two co-executors, in which he did not join" (p. 10). And in Bunner v. Storm, 1 Sandf. Ch. 357 (360), it was held that if one renounces the others may act, but it does not appear whether the " renunciation" occurred after qualifying. In Roseboom v. Mosher, 2 Den. 61 (68), it was held that a neg- 528 THE EXECUTION OF POWERS. lect or refusal by one of two executors who had qualified, to take upon him the execution of the will, even though he should not formally resign, would enable the other to convey. See also Sharp v. Pratt, 5 Wend. 611. The provisions of the two stat- utes under consideration do not override clear provisions of the will that both the executors must act. Herriott v. Prime, 87 Hun, 95. Thus, if the will specifically requires that both the ex- ecutors must consent and unite in effecting a sale, and that neither can act alone, then if one renounces, it has been held that the power could not be exercised by the other. Hyatt v. Aguero, 56 Super. Ct. 63. Another point to be noticed is the following distinction between the two statutory provisions above quoted from the Code ( 2642) and the Revised Statutes (2 R. S. 109, 55), namely, that the former speaks of a power to sell ; the lat- ter, under one branch, of a devise of land to be sold / and under another branch, of a direction that the land be sold ; under the former statute the executors have a mere power ; the latter, under its first branch, purports to give them title, arid does so if the sale is for a purpose for which an express trust may be creat- ed, and if they are also empowered to receive the rents and profits (Real Prop. L., 77). The statute 21 Hen. 8, Oh. 4, provided that where part of the executors having a power to sell refused to assume administration and charge of the will, a sale by those accepting and taking charge should be valid, and the courts extended its scope to cover devises of land to executors to be sold. JRoseboom v. Mosher, 2 Den. 61 (69). But under our statutes, in one case (Code, 2642) neglect to qualify is the test of capacity in the other grantees, and in the other case (2 R. S. 109, 55) it is either neglect or refusal to assume the execution of the will, and renunciation is not necessary to bring the statute into operation. Taylor v. Morris, 1 N. Y. 341. As to the former distinctions between a devise " to sell" and a devise that the executors shall sell ; or that the land shall be sold by the executors ; or a devise of land to be sold by the executors, see Farwell on Powers (*2d ed.), 68-69. How far the history of these provisions, and the variation in phraseology, may color the decisions, it is difficult to say. But see laylor v. Morris, 1 N. Y. 341. It is to be regretted that the recent revision has not cleared up the difficulties thus presented. TWO OR MORE DONEES. 529 638. Summary. The general results of the foregoing dis- cussion may be summed up as follows : (a) Where a power to sell, mortgage, or lease is held by executors, as such, or as trus- tees, or as executors and trustees, the neglect of any to qualify devolves the power on the others or other (Code, 2642\ (b) When land is devised to executors to be sold, the neglect or refusal of any to assume the execution of the will, likewise de- volves the power on the other or others (2 R. S. 109, 55). (c) The last cited section also provides that where " such estate" is " ordered" by the will to be sold by the executors, like neg- lect or refusal shall effect a like result. These references to "such estate," and the "order" are obscure. The meaning might be to raise a distinction between a devise of land to be sold, and a mere order that it be sold, not accompanied by a de- vise ; or a distinction between a devise of land to be sold and a devise accompanied with an order that it be sold. See ante, 552 a. Both distinctions are recognized by early English cases, (d) Where some of the executors renounce, the others succeed to the power, (e) Where they resign after qualifying, the same result follows. (/} Where any of the executors is re- moved, the question whether this may be classed as a refusal or neglect to act seems undecided. (% N. Y. 228.) Hen- dricks v. Isaacs, 117 N. Y. 411 (419) ; Crandall v. Uoysradt, 1 Sandf. Ch. 40 ; Woodward v. James, 115 N. Y. 346 (357). Under a devise and bequest to A, to receive and apply the rents and income to the use of A himself, and his wife, Anna, and their son Robert, it was held that the trustee had a reasonable but not an uncontrolled discretion, in determining the method of application, and the particular share to which each should be en- titled ; that circumstances, such as the fact that they all lived to- gether, or that the son lived apart in his own house, or that the wife had procured a separation, or that one or the other was sick or infirm, etc., might properly have weight in varying the exer- cise of his discretion. The court exercised its discretion, under the given facts, in giving the son one third, counting from the bringing of this suit by him, but not for the preceding period during which he had acquiesced in the trustee's course ; as to the wife, who had procured a partial divorce, and been awarded THE BENEFICIARY'S WIFE AND CHILDREN. 591 $1000 as alimony, one third was also awarded, from the bringing of this suit, less the $1000 annual alimony, on the ground that in fixing alimony the court had regarded the entire income of the trust as the husband's own, and this fact had formed the basis of the allowance. Ireland v. Ireland, 84 N. Y. 321. And where a will gave to testator's wife the use and income of real and personal property for the support of herself and for the support and education of her son, during minority, to remain in her full control for her benefit and that of her son, and in case of her death during his minority, testator's executor to have control for the son's benefit during minority, it was held fo cre- ate a valid trust as to the son, the wife taking the beneficial use and income also for her support. Macomber v. Bank of Bata- via, 12 Hun, 294. In Matter of Appley, 33 N. Y. Supp. 724, under a trust provision for a man and his family, the wife had upon notice to the husband, and A, the trustee, procured an order directing the payment to her by "A, trustee," a specified annual sum from the income. A died, and upon the refusal of his successor to comply with the order, on the ground that it was not directed to him, a new application was made to compel him to continue the payments. The court held that the successor would have been justified in acting under the former order ; that the matter had already been passed on and settled by the court, and that accordingly a new order, merely to afford explicit author- ity to the successor, might be granted upon the pending applica- tion, although the service of notice upon the husband, while per- sonal and actual, was not such as would have sufficed to give the court jurisdiction over him on a separate and distinct application. 715. (b) If wife and children are not designated in the trust instrument, yet any trust to receive and apply rents to the use of a man, extends also to his wife and children, the rights of whom, under the trust, are superior to those of judgment cred- itors of the beneficiary named. It is only the surplus income, over and above what is needed for the proper maintenance and support of the wife and children of the beneficiary, as well as of himself, that can be reached by such creditors. Tolles v. Wood, 99 N. Y. 616 ; Williams v. Thorn, 70 N. Y. 270 ; Wetmore v. Wetmore, 149 N.Y. 520 ; McEvoy v.Appleby, 27 Hun, 44 ; SU- 592 THIRD PARTIES. lick v. Mason, 2 Barb. Oh. 79. But if the wife is the beneficiary, the husband has no interest in the trust, and her judgment cred- itors may reach the surplus above what is needed for the support of the wife and children only. Howard v. Leonard,, 3 App. Div. 277 ; Stuart v. Kissam, 2 Barb. R. 493, reversed, but not on this point, 11 Barb. R,., 271. (As to whether this principle would be applied where the husband was incapacitated, and de- pendent on the wife, see the cases just cited.) 716. (c) If the wife procure a divorce, and the decree directs the husband to make payments for her support and that of the children, she may by suit in equity compel the husband's trustee to make payments to her out of the income payable to the husband, and whether yet accrued or not, on account of the amount so decreed to her in the divorce suit. Wetmore v. Wet- more, 149 N. Y. 520 ; Thompson v. Thompson, 52 Hun, 456. Under this head several questions have been passed on by the courts. And first as to the necessity of any preliminary attempt to reach the defendant's property, before bringing such a suit in equity. In Miller v. Miller, 7 Hun, 208, it was held (1) that the wife's right to have the income applied to the payment of her alimony, which was, apparently, a lump sum, rested solely on her position as a creditor of her husband and so entitled to the sur- plus under 1 R. S. 729, 57 (Real Prop. L., 78) ; (2) that therefore execution must be issued upon the judgment awarding alimony, and be returned unsatisfied, before she could proceed in equity. Thereupon execution was issued, and returned unsat- isfied, and a new suit was brought in equity, on the theory of a creditor's bill, alleging, and seeking to reach, an existing surplus, Miller v. Miller, 1 Abb. N. C. 30, and this claim was sustained. But the court says : " These views are based upon the treatment of the plaintiff as an ordinary judgment creditor ; whether that is her just position before the court, is certainly a question which is worthy of consideration," and strongly intimates the opinion that her right is distinct from and superior to that of a judgment creditor, and is based on the duties and incidents of the marital relation, as crystallized in the judgment for alimony. In Thomp- son v. Thompson, 52 Hun, 456, after judgment directing the THE BENEFICIARY'S WIFE AND CHILDREN. 593 husband to pay an annual sum for the support of the wife and their child, the wife brought suit in equity against her husband, and the trustee of a trust to receive and apply income to the use of the husband, to secure payment of her alimony from the in- come. It would appear that no execution had been issued. The court held (1) that, the trust for the benefit of the husband ex- tended also to the support of his wife and child, and that a judi- cial provision for their support out of the income is a proper ap- plication of a portion of the income, and paramount to the rights of judgment creditors (this principle being also supported by Tolles v. Wood, 99 N. Y. 616 ; Howard v. Leonard, 3 A pp. Div. 277 ; Williams v. Thorn, 70 N. Y. 270 ; McEvoy v. Ap> pleby, 27 Hun, 44 ; Sillick v. Mason, 2 Barb. Ch. 79) ; and (2) that such application may be made, to satisfy a decree in a di- vorce suit providing for the wife and children. This case evi- dently proceeds on the theory that the decree does not render the wife a creditor ; that she does not proceed under the statute de- fining creditors' rights in the surplus ; that she is not confined to such surplus ; and that she need not exhaust her remedy at law before suing in equity. In Romaine\. Chauncey, 129 N. Y. 566, it was held that a decree granting alimony does not render the wife a creditor of the husband, in the ordinary sense, nor is her claim against him property, in all senses ; and that accord- ingly a prior creditor of the wife cannot compel the appropria- tion of alimony to the satisfaction of the debt. To the same effect are Locke v. Locke, 71 Hun, 363 ; Andrews v. Whitney, 82 Hun, 117. The final cases to be considered on the present point are those arising under a trust created for the benefit of William B. Wet- more, under which he was entitled to the income of a fund of $100,000 for his life. His wife procured a divorce, and the de- cree awarded her $3000 annually, for her own support, and $1000 annually for that of each of their three infant children. The payments being in arrear, the wife first obtained judgment against the husband for the amount then accrued, and execution thereon was issued and returned unsatisfied. (See 149 N. Y., p. 525.) Thereupon, the wife obtained an order under Code C. P., 1772, by which the personal property, and the rents and profits of the real property of the husband, were sequestered, and the Conti- 38 594 THIRD PARTIES. nental Trust Company was appointed receiver thereof. That re- ceiver then brought an action against the trustee {Continental Trust Co. v. Wetmore, 67 HUD, 9) to reach the income of the trust fund. And it was held that the receiver could not main- tain an action for that purpose, and that the relief sought could only be obtained in a suit brought in the name of the wife. Thereupon such an action was brought ( Wetmore v. Wetmore, 79 Hun, 268). The court at general term held that the action was not in the nature of a creditor's bill ; that the wife and children of a beneficiary are included in the personal use to which the in- come of the trust fund is to be applied. " Their use is his use. Why ? Clearly because of his legal obligation to support and maintain them." " As the plaintiff was not treated as an ordi- nary creditor, there was no question of surplus property before the court. There was nothing to be ascertained upon that head." Here the point is that the wife's right of action has nothing to do with the statute allowing a judgment creditor to reach the sur- plus. Indeed, as that surplus which judgment creditors can reach is the surplus over and above what is required for the use of the wife and children as well as the designated beneficiary, Wil- liams v. Thorn, 70 N. Y. 270 ; ToOe* v. Wood, 99 N. Y. 616 ; McEvoy v. Appleby, 27 Hun, 44, it would seem quite clear that the wife and children are not to be put in the same boat with or- dinary judgment creditors. This case was appealed, and the de- cision above is reported in 149 N". Y. 520, where the court held (1) that in so far as plaintiff stood on the judgment on which execution had been issued and returned unsatisfied, she was a judgment creditor, and entitled as such to reach the surplus under 1 R. S , 57 ; Real Prop. L., 78 ; (2) that she was not, however, restricted to this basis for relief, as to subsequent instal- ments of alimony under the original decree in the suit for divorce ; (3) that as to this latter claim, and standing solely on the original decree, she was also a creditor under the statute ; that in accord- ance with the doctrine of Romaine v. Chauncey, 129 N. Y. 566, she was not a creditor in a general sense ; but that she was so, nevertheless, in a certain sense : " The will, as we have seen, contains no direction for the accumulation of surplus. Such sur- plus over and above that which is necessary for the support of the defendant William is, therefore, under the statute made liable in THE BENEFICIARY'S WIFE AND CHILDREN. 595 equity to the claims of his creditors. Equity is here given juris- diction to apply such surplus. And it appears to us that the plaintiff is a creditor within the spirit and intention of the stat- ute." (4) That her right to relief is based on the duty of the husband to maintain her during life, a duty still existing notwith- standing the decree of divorce. The decree merely measures and fixes that duty. The court also held that not onlji the sur- plus accumulated, but also future surplus thereafter to accrue, might be subjected, in the present action, to the payment of past and future instalments. They also held that in determining how much of the income to allow the wife, the husband's other sources of income should be considered ; in the present case, it was held appropriate to direct the application of the entire trust income to the satisfaction of the decree ; but leave was given to defendant to apply at any time for leave to share in the income. The main theory on which the decision is based appears to be that if the wife choose to put her claim for arrears in the shape of a judgment at law, then she stands, as to that judgment, in the position of an ordinary judgment creditor entitled to reach the surplus not needed by the husband considered as the sole benefi- ciary ; if, or in so far as, she stands on the original decree in the divorce suit, she is a quasi creditor having special claims, and is entitled in equity to reach the surplus not needed by the husband considered as only one member of a family all of whom are en- titled to such support as the trust fund and the husband's other means will afford ; and that to this end she has precedence over ordinary judgment creditors. In the case in question the hus- band was without the jurisdiction. It is suggested by the general terra (79 Hun, 268, 272), that if the husband had remained within the jurisdiction the court could have compelled the appli- cation of the trust income by compulsory process. In determin- ing how much is needed by the defendant for support, " it is proper to consider his station in life, and the manner in which he has been reared and educated, his habits, and the means he may have to aid in his support." Wetmore v. Wetmore, 149 N. Y. 520 (531) ; Moulton v. de ma Carty, 6 Robt. 533 ; Bun- nell v. Gardner, 4 A.pp. Div. 321 ; Andrews v. Whitney, 82 Hun, 117. Ante, end of 705. 596 THIRD PARTIES. (3) Purchasers for Value? 717. Pqrchasers from creator of trust. 2 " A conveyance of an estate or interest in real property, or the rents and profits thereof, and every charge thereon, made or created with intent to defraud prior or subsequent purchasers or encumbrancers, for a valuable consideration, of the same real property, rents or profits, is void as Against such purchasers and encumbrancers. Such a con- veyance or charge shall not be deemed fraudulent in favor of a subsequent purchaser or encumbrancer, who, at the time of his purchase or encumbrance, has actual or legal notice thereof, un- less it appears that the grantee in the conveyance, or the person to be benefited by the charge, was privy to the fraud intended." Real Prop. L., 226. See also Id., 228, and Id., 227 ; 2 R. S. 137. 1. "A conveyance of or charge on an estate or in- terest in real property, containing a provision for the revocation, determination or alteration of the estate or interest, or any part thereof, at the will of the grantor, is void, as against subsequent purchasers and encumbrancers, from the grantor, for a valuable consideration, of any estate or interest so liable to be revoked or determined, although the same be not expressly revoked, de- termined or altered by the grantor, by virtue of the power re- served or expressed in the prior conveyance or charge. Where a power to revoke a conveyance of real property or the rents and profits thereof, and to reconvey the same, is given to any person, other than the grantor in such conveyance, and such person there- after conveys the same real property, rents or profits to a pur- chaser or encumbrancer for a valuable consideration, sucli subse- quent conveyance is valid, in the same manner and to the same extent as if the power of revocation were recited therein, and the intent to revoke the former conveyance expressly declared. If a conveyance to a purchaser or encumbrancer, under this sec- 1 For an elaborate note citing and classifying the authorities on the subject of purchaser for value without notice of the trust, and purchaser with notice from purchaser without notice ; see Ames's Cases on Trusts (3d ed.), pp. 286-289, 309-310 ; purchaser from fraudulent assignee of chose in action, Id., 310, and cases there given in full ; successive purchasers or assignees from trus- tee, Id., 326-328, notes. Also a very valuable article by Professor Ames on Purchaser for Value without Notice, 1 Harv. L. Rev., 1. * See ante, 700, note. PURCHASERS FOR VALUE. 597 tion, be made before the person making it is entitled to execute his power of revocation, it is nevertheless valid, from the time the power of revocation actually vests in such person, in the same manner, and to the same extent, as it then made." Real Prop. L., 231. As to trusts for the benefit of the creator, see 2 R. S. 135, 1. Ante, 710. " This article [VII., Convey- ances and Mortgages] does not in any manner affect or impair the title of a purchaser or encumbrancer fora valuable consideration, unless it appears that he had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor." Real Prop. L., 230. 718. Purchasers from creator of power. 1 The statute which determines when a power becomes a lien or charge as against purchasers, is quoted ante, 701. The rights of cred- itors where a power is reserved, are covered by Real Prop. L., 124^125. The invalidity of a power intended (e.