Opinion
03-24-1900
LEWIS et al. v. TOWAR et al.
Cortlandt Parker, for complainants. C. H. Hartshorne, for defendants.
Bill by William A. Lewis, receiver, etc., and others, against Rosaline H. Towar and others, to compel performance of a deed of trust. Decree rendered.
Cortlandt Parker, for complainants.
C. H. Hartshorne, for defendants.
EMERY, V. C. Defendant Rosaline H. Towar is the surviving trustee under a deed, dated October 1, 1875, which conveyed to the trustees the 100/147 interest in a mortgage of $147,000, and the bond secured thereby, "In trust to pay semiannually to Margaret E. Bentley, for life, the interest accruing upon said 100/147 of said bond and mortgage, or so much thereof as she may desire, and the balance to said Rosaline H. Towar and Peter Bentley equally, and upon the death of Margaret E. Bentley to assign said 100/147 of said bond and mortgage, with all accumulations of interest, equally to said Rosaline H. Towar and Peter Bentley, or their legal representatives." The deed of trust was executed as part of a family settlement of the estate of Peter Bentley, 1st, under whose will his widow, Margaret E. Bentley, received, Inter alia, his homestead for life, and certain personal property absolutely, and also received for her life so much as she shall desire (not to exceed one-third) of the income of testator's residuary estate; the devises and legacies being in lieu of dower. Peter Bentley, 2d, and Rosaline H. Towar, the son and daughter of testator, besides receiving special devises of lands, were the general residuary devisees and legatees. Margaret E. Bentley, Peter Bentley, 2d, and Thomas H. Towar, testator's son-in-law, were appointed executors and trustees; and they, as executors, executed to two of themselves (Margaret E. Bentley and Peter Bentley, 2d) together with Rosaline H. Towar, the deed of trust in question. At the time of the execution of this deed of trust, the bond and mortgage, which were dated October 1, 1807, bore Interest at the rate of 7 per cent., but by an agreement (which has been read at the hearing by consent) made April 3, 1895, after the principal was due, between Margaret E. Bentley and Rosaline H. Towar, the then surviving trustees, and the defendant the Pennsylvania Railroad Company, lessee of the mortgagor, the rate of interest was reduced to 4 per cent. per annum, payable semiannually, on the 1st days of March and September, and the time for payment of the principal was extended to the expiration of six months' written notice by either party to the other. Peter Bentley, 2d, died April 2, 1888, and Margaret E. Bentley died on July 26, 1899. Margaret E. Bentley, as appears by the bill and answer, received the interest from the death of Peter Bentley, 2d, up to March 1, 1899. Complainant, Lewis, who is the receiver of the estate of Peter Bentley, 2d, upon the death of Margaret E. Bentley demanded of the surviving trustee an assignment to him, as receiver, of one-half of the undivided interest in the bond and mortgage, with one-half of all Interest then existing thereon. The trustee refused to make an assignment in this form, but offered to assign an undivided one-half interest in the bond and mortgage, with the arrears of interest, except the Interest accrued from March 1, 1899, to the date of Margaret E. Bentley's death. This offer was declined by, complainant, who then filed this bill to compel performance of the agreement and the execution of the trust Rosaline H. Towar is executrix and legatee of the tenant for life, and is a defendant it.this capacity, as well as that of surviving trustee. Her husband and the Pennsylvania Railroad Company are also defendants, and the latter, by its answer, tenders itself ready to pay the interest (as reduced to 4 per cent.) in the manner directed by the court.
The question is whether the interest accrued between the date of the last payment and the death of the tenant for life belongs to the estate of the tenant for life, or to the remainder-man. Interest upon a bond and mortgage accrues de die in diem, and, as between tenant for life and remainder-man, the general rule in equity, and perhaps at law, is that it will be apportioned; and this rule applies even though the interest is expressly made payable half-yearly, or at fixed periods. Notes to Ex parte Smyth, 1 Swanst. 349, and cases cited; Edwards v. Countess of Warwick, 2 P. Wms. 171; 1 Story, Eq. Jur. par. 480, note 1, and cases cited. In Re Lackawanna Iron & Coal Co., 37 N. J. Eq. 26, an annuity for support was held to come within the general rule as to apportionment This general rule as to apportionment is, however, a rule adopted to carry out a supposed intention of the grantor, and is applicable only where the instrument creating the rights to the fund and interest itself fails to disclose the intention of the donor or grantor to make a different disposition of the accruing interest; and, wherever the instrument itself discloses an express intention as to the disposition of the accruing interest, this must be the ultimate test of its disposition. In the present case two declarations or provisions of the deed show that the donors had such intentions on the subject of the disposition of the accrued interest, and prevent the application of the rule of apportionment. In the first place, it is expressly provided that upon the death of the life tenant the trustee is "to assign the bond and all accumulations of interest" equally to Mrs. Towar and Peter Bentley, or their legal representatives. The remainder-men are entitled to an assignment in the language of the trust, and an assignment in these terms would convey the legal right to receive the entire six-months interest from the debtor when due. It is not contemplated that after the death of the tenant for life the trustees shall have the legal right to receive any interest on the mortgage subsequently payable, but it is intended that the remainder-men shall receive it, as the holders of the legal title to the bond and interest; and, in the absence of any direction that any part of the interest to which the remainder-men are to have the legal title is to be held by them in trust for the representatives of the tenant for life, it must be considered that the trust in favor of the tenant for life, or her estate, was absolutely closed upon her death, and the direction to transfer the entire legal title to the remainder-men must be intended to give them the entire equitable title to all interest payable after the death of the tenant for life, free from any trust in favor of the life tenant or her estate. Secondly, the direction to assign the bond, with all accumulations of interest, to the remainder-men, shows that the parties did not intend to confine the rights of the remainder-men simply to the principal of the bond, but intended this assignment to operate to some extent upon the right to interest, which existed at the death of the tenant for life. The term "all accumulations of interest" as used in this case, naturally Included, as it seems to me, at least the interest accrued at the death of the tenant for life, and cannot be limited, as defendants' counsel contend, solely to the interest which had accumulated in the trustees hands, as Interest already paid to them, but held by them as interest not desired by the life tenant. This balance of the entire interest which was not desired by the life tenant was expressly provided for by the terms of the deed, which directed this balance of interest to be paid to the remainder-men equally, and would therefore belong to them under this express gift of interest. Under this express gift this balance so accumulated was payable at once, or as soon as the life tenant sufficiently indicated her desire not to receive it; and these accumulations, therefore, could not, as it seems to me, be the accumulations which were assignable (not payable) solely upon the death of the tenant for life. This express provision as the payment to the remainder-men of the interest already paid and accumulated in the hands of the trustees makes it necessary to hold that the subsequent direction to assign all accumulations of Interest upon the death of the tenant for life can have no meaning or application unless it refers solely to the accrued interest, or else to hold that it was an unnecessary or contradictory provision as to the interest accumulated in the hands of the trustees, and not paid over. In Lippincott v. Ridgeway (1859) 11 N. J. Eq. 526, 536, Chancellor Williamson said that the words "accumulated interest" have no technical legal meaning, and in that case held that the testatrix, by the use of these terms in her will, meant accruing interest undisposed of, as otherwise they would have no application whatever. Under the trust, therefore, complainant is entitled to an assignment of the undivided half interest in the bond, with one undivided half of the accumulations of interest and to a decree that this assignment passes the interest which had accrued from March 1, 1899, up to Margaret Bentley's death.
The deed of trust also contained a covenant by Peter Bentley and Rosaline H. Towar that Margaret E. Bentley "will receive from the trustees annually the sum of seven thousand dollars." At the hearing an application was made to amend the answer so as to set up that by this clause complainant is precluded from making the claim set up in their bill. No proofs having been taken, the only effect which could be given to the amendment, if made, would be the effect of the clause onthe construction of the instrument, as to the point now in question, and for this purpose the entire deed is before the court in the answer as filed. If the object of the amendment be to set up a cross claim on the covenant as a defense to the bill, or as a basis of relief, it should not be allowed, as the claim cannot be fully heard on these pleadings, but the liability on this covenant, if any, should be decided in a suit directly brought thereon. The application is therefore denied.