Opinion
October 1, 1957
Emmet, Marvin Martin for trustee, petitioner.
The decedent, Adelaide T. Willets, died on April 23, 1908. In this proceeding for the judicial settlement of the final account of the trustee under the trust created in article Fifth of the decedent's will, the trustee seeks a construction. Article Fifth of her will reads as follows: "I give and bequeath to my husband WALTER R. WILLETS the sum of Five Thousand Dollars ($5,000) IN TRUST to invest and keep the same invested, and apply the net income thereof to the use of said Rose Golden during the term of her natural life, and on her death I give the same in equal shares to my issue per stirpes. In case my said husband should die before the termination of this trust I appoint the New York Life Insurance Company Trustee in the place of my said husband."
It is the petitioner's contention that the provision of article Fifth, "I give the same in equal shares to my issue per stirpes", does not refer to the issue of Adelaide T. Willets living at her death, but to such issue living at the death of the life beneficiary, Rose Golden.
The case of Matter of Brady ( 153 Misc. 901) upon which the petitioner places primary reliance, invokes the familiar rule of construction known as the "divide-and-pay-over" rule. This rule of construction has been summarized in Matter of Bailey ( 124 Misc. 466, 468) in the following language: " First. Where the only words of gift are found in the direction to divide or pay at a future time, the gift is future, not immediate; contingent and not vested. Second. Where the gift is of money and the direction to convert the estate is absolute, the legacy given to a class of persons vests in those who answer the description and are capable of taking at the time of the distribution. ( Matter of Crane, 164 N.Y. 71, 76, and cases cited; Matter of Pulis [ 220 N.Y. 196] and cases cited; Salter v. Drowne, 205 N.Y. 204; Matter of Leonard, 218 id. 513, 521; Matter of Finck, 168 App. Div. 135; Matter of McKim, 115 Misc. 720; Cleere v. Riley, 123 id. 9.)
"The exceptions to the above two rules of construction are as follows: First. If the postponement of the payment is for the purpose of letting in an intermediate estate, then the interest shall be deemed vested at the death of the testator and the class of legatees is to be determined as of that date, for futurity is not annexed to the substance of the gift. Second. Where there are words importing a gift in addition to the direction to the executor or trustee to pay over, divide or distribute, the general rule of construction does not govern because the language employed, outside of direction to divide or distribute, imports a gift and, therefore, the situation is precisely as if the will contained words of gift."
The pertinent language with which we are dealing is "I give the same in equal shares to my issue per stirpes". (Italics supplied.) It will be noted first that nowhere in the sentence are there words such as "divide-and-pay-over" employed. Secondly, the use of the words "I give" clearly conveys an intention of a present gift. (3 Jessup Redfield on Surrogates Law and Practice, § 2481.)
There is no indication of an expression of futurity of vesting that can be gathered in any language used by the testatrix. The expression "and on her death" is not indicative of a contingent remainder but relates merely to the time of enjoyment of the estate in remainder. ( Matter of Jodice, 155 N.Y.S.2d 886; Riker v. Gwynne, 201 N.Y. 143, modfg. 139 App. Div. 423; Connelly v. O'Brien, 166 N.Y. 406; Hersee v. Simpson, 154 N.Y. 496.)
Applying the above rules, the phrase "on her death" followed by words of present gift created a vested remainder, the enjoyment merely being postponed until the death of the intermediate life beneficiary. This application of the above rules is also in complete harmony with the "well-settled rule in this state that a remainder is not to be considered contingent in any case where consistently with the intention of the testator, it can be construed as vested". ( Matter of Glover, 127 N.Y.S.2d 312, 313.)
The fact alone that the remainder is a gift to a class does not necessarily require us to find that the remainder is a contingent interest. As the court said in the case of Matter of Sweazey ( 2 A.D.2d 292, 296-297): "Neither does the fact that the gift of the remainder was a gift to a class rather than to persons identified by name justify the implication of a requirement of survival to the time of distribution. It is true that a class gift, by definition, is a gift to `a group capable of future change in number' (Restatement, Property, § 279) and that, in the case of a class gift of a future interest, the class may remain open to admit additional members until the time of distribution (Restatement, Property, § 295) but `From the fact that a class can increase in membership until a certain future date, no inference should be made that only such members of the class as survive to such future date become distributees' (Restatement, Property, § 296, subd. [2] and see comment j). A distinction must constantly be kept in mind between the question of the admission of new members to the class and the question of the elimination of pre-existing members; these are two entirely separate aspects of class gifts (3 Powell on Real Property, § 365, pp. 166-167). A class gift to the children of a living person is subject to `open and let' to admit additional children, up to the time of distribution; but a child, who has once become a member of the class, is not eliminated from membership by reason of his failure to survive to the time of distribution, unless there is an express provision to that effect in the will or unless there is some basis in the context of the will for implying such a provision. ( Matter of Elting, 268 App. Div. 74, affd. 294 N.Y. 941, supra; Matter of Bigelow, 285 App. Div. 107 2, affd. 309 N.Y. 884; Matter of Chalmers, 238 App. Div. 672, affd. 264 N.Y. 239; Matter of Brown, 154 N.Y. 313; Matter of Watson, 201 Misc. 193, affd. 279 App. Div. 840; Restatement, Property, § 296; 5 American Law of Property, § 21.11, p. 143)."
In summary, the concluding paragraphs of Matter of Sweazey (pp. 297-298, supra) contain some apt language with relation to the "divide-and-pay-over" rule: "Finally, the appellants invoke the oft-cited but rarely followed `divide-and-pay-over' rule. Under that rule, if the only words of gift are in the form of a direction to the trustee or executor to divide and pay over the corpus at some future time, that fact tends to support the implication of a requirement of the survival of the donees to the time of distribution. The rule has been condemned by all the leading scholars in the field and it has been explicitly rejected by the American Law Institute (Restatement, Property, § 260); 2 Powell on Real Property, § 333; 2 Simes on Future Interests, §§ 361, 394; 3 Walsh on Commentaries on Real Property, § 316). The rule has been criticised upon the ground that it makes the determination of the testator's intention turn upon immaterial differences of phraseology and the hope has been expressed `that the rule will be repudiated by modern courts, since it furnishes no satisfactory basis for the determination of the intention of transferors' (5 American Law of Property, § 21.21, p. 162). Furthermore, the rule has been so riddled with exceptions, that it can fairly be said that the exceptions have eaten up the rule. In fact, the writers of an authoritative text have expressed the view that `the rule has become no more than a make-weight argument which is employed to bolster decisions previously arrived at on some other ground' (p. 161)."
The account will be settled as filed.
Submit decree in accordance with this opinion.