Opinion
December 29, 1917.
Frank W. Holmes, for the appellant Hattie C. Smith.
Orville C. Sanborn, for the respondent.
The question is whether plaintiff may maintain an action against his grandmother, Hattie C. Smith, life tenant and trustee, under the will of Freeman A. Smith to prevent waste of the estate. The testator left Hattie C. Smith, his widow, and three children, Freeman A. Smith, Grace A. Love, defendants, and David Smith, plaintiff's father. The will gave the remainder of the estate in trust to the executor to pay one-third of the net income to the widow and the residue in equal proportions to his children, with direction that the widow should receive the share of a child under the age of twenty-one years to be applied to maintenance and education, or in case of the widow's death before division, to pay the entire net income in equal proportions to the children for their support and education "until the youngest surviving of them shall have attained" the age of twenty-one years. "When my youngest child who shall survive to the age of twenty-one years, shall have reached" that age, the executors and trustees shall divide the residuary estate into three equal parts, "one of which parts they shall thereupon transfer * * * to my said wife Hattie C. Smith in trust for her and my children," with the beneficial interest in the net income thereof in the widow for her life, and the remaining two-thirds "they shall upon such division, transfer, * * * to my children share and share alike, to have and to hold to them, their heirs and assigns forever the issue of a deceased child to take the parent's share, per stirpes and not per capita." But in case the wife should die "at or before the time for the division," the executors and trustees shall then at the time fixed for such division, divide all such estate "among and convey the same to my children, share and share alike, to have and to hold the same to them, their heirs and assigns forever, the issue of a deceased child to take the parent's share per stirpes and not per capita." Such was subdivision 5 of paragraph 3. The 6th subdivision provides for the final disposition of the one-third share in case the widow survives the first division, and is: "Upon the death of my said wife, after such division of my residuary estate, I give and devise the one-third part of my said residuary estate, so set apart and held in trust by and for her as aforesaid to my children, share and share alike, to have and to hold the same to them, their heirs and assigns forever, the issue of a deceased child to take the parent's share per stirpes and not per capita." The scheme of the will is to give to the widow one-third of the net income of the estate during her life, and to pay or to apply the rest of the net income to the children with a power in the mother living to receive and to apply the share of a minor. When the youngest child surviving to the age of twenty-one years should reach that age, the whole estate should be divided if the widow were not living; if she were living, one-third of the estate should be kept and divided at her death. In case of the death of the widow before the first division, there were no words of present gift; in case of her death after such division, there are such words. The widow and plaintiff's father lived to the time of the first division, when two-thirds of the estate were divided among the children and one-third retained by the wife. The widow is still living, but the plaintiff's father has died. Did plaintiff's father, David Smith, take an indefeasible vested estate in the one-third set apart upon the first division? If so, the plaintiff has no interest and cannot maintain the action on the present record. If plaintiff has any interest it is because upon the wife's death the gift and devise of the third part is to children "share and share alike, * * * the issue of a deceased child to take the parent's share." The question is to be determined by the laws of the State of New Jersey, and the task is to fit the law of that State to the will. In Security Trust Co. v. Lovett ( 78 N.J. Eq. 445) the will gave the estate to the wife for life, with a direction that after her death the proceeds from the sale of the real estate should be divided "between my children," naming them, share and share alike, one-twelfth share among named children of a deceased daughter, and provided: "should either of my above named children die leaving issue, it is my will that the portion herein devised or bequeathed to such child or children shall be equally divided between their issue." There was a gift to named persons and not to a class, and there was more propriety in referring the substitutionary clause to death before that of the ancestor, but the vice-chancellor wrote: "This provision, relating to the contingency of the death of the children, will, by the accepted rules of construction in such cases, be understood to refer to the death of the children prior to the period of distribution — that is, prior to the termination of the life estate by the decease of the widow. Brown v. Lippincott, 49 N.J. Eq. (4 Dick.) 44; Fischer v. Fischer, 75 N.J. Eq. (5 Buch.) 74." It may be said that there was no present gift as in the present 6th subdivision, but a direction to divide as in the 5th subdivision of such will. In Miller v. Worrall ( 59 N.J. Eq. 134) there was a direction to divide upon the death of the wife "between my children, share and share alike, to whom I do hereby give, devise and bequeath the same, their heirs and assigns forever, the children of any deceased child to have the share of his, her or their parent." A child died before the life tenant without leaving issue, and although the controversy was between her executors and the surviving children, it was said that "By the express provisions of the will, if a child dies before the period of distribution and leaves children, those children take, by substitution, for the parent. In this event, and in this event only, is the right of the child curtailed." In Dilts v. Clayhaunce ( 70 N.J. Eq. 10) the testator gave the residue of his estate to his wife for life, and at her death to his stepson, Ege, and provided that in case Ege should die "without lawful issue, that my property * * * be equally divided between my brothers and sisters, and in the case of the decease of either or any of them their several portions shall descend to their children." The court decided that Ege took a vested estate in fee simple, subject to the contingency of his death without lawful issue. The chancellor wrote: "Giving to every word of the clause in question its full force, it may be thus paraphrased, viz.: Upon the happening of the contingency I have prescribed, my property, of all kinds, shall go to my brothers and sisters equally, and if any have died leaving children, their share shall go to their children; but if any have died leaving no children, their share shall go to their heirs-at-law or next of kin, according to the nature of the property." It is urged by plaintiff that Lyons v. Ostrander ( 167 N.Y. 135) and Marsh v. Consumers Park Brewing Co. (220 id. 205) are to the same effect. The learned counsel for appellant relies upon the cases in this State and in the State of New Jersey, but decisions in the latter State cited by him do not have the present substitutional clause. Fischer v. Fischer ( 75 N.J. Eq. 74) seems to support the plaintiff, as does Brown v. Lippincott (49 id. 44). It is concluded that the plaintiff has an interest in the fund. It is not necessary to decide whether it is an indefeasible interest. It is sufficient to enable him to maintain this action. But the trustee should not be required to give a bond to secure payment to the plaintiff of a fixed sum, nor should it be found that a fixed sum will be due him. The bond should be in the sum of $26,292.85 to secure the plaintiff against loss for such sums as Hattie C. Smith has wasted, as herein found, or may hereafter waste. The 5th conclusion of law should be amended by omitting the words "and is entitled, upon the death of Hattie C. Smith, to receive one-third of said trust fund unimpaired," substituting, "and is presumptively entitled to share in one-third of said trust fund." The costs and allowances should not be paid out of the estate by sale of assets or otherwise, but judgment therefor should proceed against the defendants personally.
The interlocutory judgment, final judgment and order, amended pursuant to this opinion, should be affirmed, with costs of the appeal to the plaintiff.
JENKS, P.J., STAPLETON, RICH and BLACKMAR, JJ., concurred.
Interlocutory judgment, final judgment and order, as amended pursuant to opinion affirmed, with costs of the appeal to the plaintiff.