New York Probate and Estate Administration Lawyer Blog
This controversy involves the validity and effect of certain portions of the will of Mr. X, late of the city of Brooklyn, deceased, and the correctness of the directions contained in a decree of the surrogate of Kings County as to the disposition of certain moneys of his estate. Mr. X was a resident of Brooklyn and died in that city on September 5, 1895, leaving a last will and testament, which was admitted to probate on the 1st of October in the same year. His executors were and are Mrs. MH, his widow, Mr. E, and Mr. J, president of the Kings County Trust Company.
The will directs the executors to deposit in the Kings County Trust Company all the testator’s securities and moneys to constitute what he terms in his will the general fund of his estate. It bequeaths to his wife, Mrs. MH, all the testator’s personal property in his Brooklyn residence and devises to her his summer residence in the town of Lee, in Berkshire County, Mass., and all his real estate there for the period of her natural life. At the death of his wife, or sooner, if she consents, the executors are directed to sell said real property and deposit the proceeds to the credit of the general fund of the estate already mentioned. The executors are further empowered to sell any of the testator’s personal property not otherwise disposed of whenever, in their judgment, it shall be for the interest of the estate, and to deposit the avails thereof in the same general fund. Out of this general fund the executors are to make payments as follows: (1) Twelve hundred dollars a year to the testator’s wife and all taxes and expenses for necessary repairs upon his Brooklyn residence. (2) Six hundred dollars a year to the testator’s sister, Frances Wheeler, during the lifetime of the testator’s wife, and upon her death, if the said sister survives her, a sum sufficient to insure an income of $600 per annum for the remainder of her life . (3) To the testator’s niece, HB, $400 a year during the life of the testator’s wife, and upon her death, if the niece survives, a sum sufficient to insure an income of $400 per annum for the remainder of her life.
Upon the death of the wife the executors are directed to appropriate from the general fund of the estate the sum of $35,000, to be expended in the erection of a statue to Lafayette .
Whatever sum may remain in the estate after the statue is erected is to be applied, first, to the payment of $200 to the town library of Lee, Mass., and then in the proportion of one-fifth each to the Gates Avenue Homoeopathic Dispensary, the Brooklyn Children’s Aid Society, the Brooklyn Society for the Prevention of Cruelty to Children, the Brooklyn Home for Aged Men, and the American Society for the Prevention of Cruelty to Animals.
The testator’s sister, W, died on November 23, 1902; his niece, HB, died on April 11, 1908, leaving a last will and testament, of which K is the sole executor. It will be seen, therefore, that all the personal beneficiaries under Mr. X’s will, except his widow, are dead, and the obligation of his executors and trustees to pay their annuities has ceased.
Among the assets of the estate were 160 shares of the capital stock of the Metropolitan Plate Glass Insurance Company, now known as the Metropolitan Casualty & Insurance Company. The authorized capital of this corporation at the time of the testator’s death was $100,000. In 1902 the directors determined to increase it to $200,000, and to this end they declared a cash dividend of 100 per cent., payable out of the company’s surplus, on February 15, 1902. Stockholders were accorded the privilege of subscribing at par for the additional stock to the extent of 100 per cent. Of their respective holdings, and Mr. X’s executors availed themselves of this privilege in behalf of his estate and applied the $16,000 which they received by way of dividend to the acquisition of 160 shares of the new stock. It appears that they have since sold these 160 additional shares at public auction at a price which yielded the estate the sum of $19,912.80.
The questions which require consideration upon this appeal are only two in number: (1) Is the bequest in the eleventh paragraph of the will for the erection of the Lafayette statue valid? (2) Is the sum received by the executors and trustees for the additional stock purchased with the surplus dividend of the Metropolitan Plate Glass Insurance Company to be regarded as capital or income?
The provisions of this paragraph can be questioned only upon the ground that the will is indefinite and uncertain as to the persons designated as beneficiaries; but, as Judge G points out, the beneficiary was the city of Brooklyn, and, although it ceased to be a separate municipality in 1897, two years after the testator’s death, the existing city of New York has succeeded to all its corporate rights, capacities, and trusts. Among these was the capacity to receive a gift for the erection of a statue.
The question whether the surplus dividend is to be deemed capital or income depends upon the time of the acquisition of the surplus which was divided. The amount of the dividend was $100,000; the findings of the surrogate show that on December 31, 1895, shortly after the testator’s death, the surplus of the Metropolitan Plate Glass Insurance Company was $190,000, and that at the time of the adoption of the resolution for the dividend it was $279,000, an increase of $89,000 within that period. This increase, which, under the doctrine of Robertson v. De Brulatour (188 N. Y. 301, 80 N. E. 938) and other cases, is to be regarded as income, was 89 per cent. of the total dividend; and consequently 89 per cent. of that portion of the dividend which went to the executors must also be deemed income. This amounted to $17,722.39. Inasmuch as it exceeds the aggregate of the annual payments directed by the will, and an accumulation of it would be unlawful, the Appellate Division considered that it must go to the corporations mentioned in the residuary clause of the will as being the parties entitled to the next eventual estate; whereas the executor of the deceased niece insists that it should go to her estate inasmuch as she stood in that position.
The statute as to undisposed profits provides as follows: ‘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.’ This rule is equally applicable to future interests in personal property. But are the corporations mentioned in the residuary clause the ‘persons presumptively entitled to the next eventual estate’ under this will? I think not. The next eventual estate is the bequest of $35,000 for the erection of the statue to Lafayette. The intention of the testator is perfectly clear that, after the provisions for his wife, sister, and niece have been carried into effect, and his wife has died, his estate, to the extent of $35,000, shall be expended for the benefit of the city of Brooklyn, now the city of New York, in the manner indicated.
We have here an estate in expectancy to which the city of New York is next entitled; and therefore the city comes within the very letter and spirit of the statute. If this view be correct, the 89 per cent. for the surplus dividend received by the executors and trustees as proceeds of the surplus dividend belongs to the city, and must be paid by the executors to the city and credited on account of the legacy for the statue.
It follows that the order of the Appellate Division and the decree of the surrogate should be modified, so as to charge the executors and trustees with $17,722.39, instead of $19,912.80, as income arising out of the proceeds of the sale of 160 shares of the Metropolitan Casualty & Insurance Company, and with the balance thereof as capital of the estate, and, further, so as to direct that they pay said income to the city of New York under the eleventh paragraph of the will. As thus modified, the order and decree should be affirmed, with costs to those parties who have appeared and filed briefs in this court.
When the provisions of a will are not in harmony with the prevailing laws regulating them, remedies to give effect to the spirit of the will are best given by an expert estate and probate lawyers.
The Stephen Bilkis & Associates together with their experienced lawyers can help with these issues.