This is an appeal by the administrator e. t. a. of one Elizabeth N. Blake, deceased, and a creditor of said testatrix, one Cooper, from so much of a decree of the surrogate as disallowed a certain payment by the administrator to said creditor. The payment was made by virtue of assignments by the deceased bo her creditor of certain trust income to accrue. These assignments have been held invalid under section 15 of the Personal Property Law (as amd. by Laws of 1911, chap. 327).
Concededly if the trust fund was created by the decedent for her own benefit and she may be regarded as the settlor thereof, the assignments were valid. On the other hand, if the trust is to be deemed as having been created for her benefit and she may not be regarded as the settlor, then the assignments were invalid and the determination appealed from correct.
The question to be determined makes necessary a consideration of the facts and circumstances surrounding the creation of the trust. Sometime in 1900 the deceased became the owner in fee of various parcels of valuable real estate which had been conveyed to her by one Peter L. Ronalds. After his death in 1905, his children sought to avoid such conveyances and an action was instituted against the deceased for such purpose. Shortly thereafter this action and all differences between the parties and claims to the property were agreed to be settled and compromised pursuant to a formal instrument entered into between the parties. By such agreement the deceased agreed to convey all of the real property involved to certain trustees to sell the same, or as much thereof as might be necessary; and after paying the sum of $2,350 to the deceased, there was to be set up a trust fund of some $200,000, the income of which was to be paid to her during life. At the expiration of such time the trust fund was to go to the Ronalds children.
It is also provided that until the necessary property could be sold the deceased was to receive the income from all of the real property up to a certain amount, and that after the trust had been established, the balance of the property, or the proceeds thereof, should forthwith go to the Ronalds children. The action previously instituted to recover the real property was to be discontinued and it was acknowledged that the agreement was made for a good and valuable consideration by all of the parties. After the execution of this agreement the deceased executed a deed of trust in accordance with its terms, whereby she granted, conveyed and released- to the trustees and to the Ronalds children the real property involved.
These facts lead to the conclusion that, so far at least as the *582trust fund in the amount of $200,000 was concerned, the deceased was the settlor or creator. By the settlement agreement she did not waive her legal title to the real property which had been the subject of the litigation. This is true certainly with respect to such portion thereof as was necessary to establish the trust fund of $200,000. It may not be said that she was coerced into such settlement, nor that she was merely refunding or returning that which belonged to others. The agreement provided that it was made without any representations and that it was for a good and valuable consideration. The deceased admitted neither any defect in her own title nor any merit to the claim of the Ronalds children. She was simply buying her peace. The action was discontinued. Because,. instead of in the first place setting up the trust, the deceased entered into an agreement to create it as part of a larger agreement, does not alter the fact that it was the deceased who created such trust. She, therefore, could assign a portion of the income therefrom. (Schenck v. Barnes, 156 N. Y. 316; Raymond v. Harris, 84 App. Div. 546; Kene v. Hill, 102 id. 370; Newton v. Hunt, 134 id. 325; affd., 201 N. Y. 599.)
It follows, therefore, that the decree in so far as it is appealed from should be modified by allowing the payment in question and as so modified affirmed, without costs.
Finch and McAvoy, JJ., concur; Martin, J., and Dowling, P. J., dissent.