Wells v. Wells

McADAM, J.

The action is brought for a judicial construction of the will of James N. Wells, deceased, and for instructions to plaintiffs, the executors and trustees under such will. The testator was at the date of his will, and at the time of his death, the owner of a residence at Biverdale, in the northern extremity of the city of New York, and of three adjoining houses situated on Ninth avenue, in said city, and known as Nos. 189, 191, and 193. The Biverdale property was subject to a mortgage of $15,000, and 191 Ninth avenue to two mortgages for $8,000 each, all of which had been made by the testator as collateral to bonds given by him to secure borrowed money. He also had outstanding at the time of his death his bond to secure $5,000, which was not secured by the mortgage or pledge of any particular property. This bond was made subsequent to the date of the will. The testator owned no personal property of any value, having disposed of all his personal effects from time to time during his lifetime by gift to different members of his family. He was not engaged in any business or venture requiring or involving the incurrence of pecuniary liability, but was, and had during his entire life been, an agent, factor, and trustee, managing and controlling large landed estates. He was a man of large experience in all matters connected with the ownership and management of real property, and exercised extraordinary particularity in all matters of detail. His will was written with his own hand. At the date of the will, and at his death, he was a widower. His family consisted of three married children, James N. Wells, Jr., William J. Wells, and Mrs. Hall, all of whom were living in their own homes; an unmarried daughter,, Kate Wells, who had always lived with testator, and three infant grandchildren, of the ages, at his death, of from 15 to 20 years. They were the children of testator’s deceased son, David, and had lived in testator’s family until the remarriage of their mother, some six years ago. Only the most cordial and affectionate relations existed between the testator and every member of his family. The will is set out in the complaint in extenso, and need not be repeated here. Acting under the directions of the will, the executors sold the Biverdale property for $22,000. Of this, $15,000 was deducted for the mortga'ge on the property. Of the $7,000 received by the executors, they applied $5,000 to- the payment of the bond referred to. They stiff have a sum of about $2,000 to be applied under the direction of the second paragraph, as it shall be construed by the court.

The first question submitted is whether the provisions of the second paragraph of the will, directing the payment from the proceeds of the sale of the Biverdale property of “my just debts, both funded and otherwise,” include the two mortgages on 191 Ninth avenue, and whether it is the duty of the executors to apply the balance of about $2,000 now in their hands on account thereof. This, of course, depends upon the intention of the testator as indicated by the will. At common law the mortgage debt was primarily payable, like other debts, out of the personalty, by the executor in exoneration of the devise. But under the Bevised Statutes, where real property which is subject to a mortgage executed, by the testator passes to a devisee, the latter must satisfy it without resorting to the executor, unless there be an express direction in the will that the mortgage be otherwise paid. 1 Rev. St. p. 749, § 4. A mere direction in the will to pay debts is not enough to-relieve the land from the burden of the mortgage. Rapalye v. Rapalye, 27 Barb. 610; Taylor v. Wendel, 4 Bradf. Sur. 824; Meyer v. Cahen, 111 N. Y. 270, 18 N. E. Rep. 852. A direction in a will to pay all of testatrix’s debts, “whether on bonds and mortgages or otherwise,” has been held, in accordance with the apparent intent of the testatrix, to include mortgages on property included in deeds of gift executed by testatrix in her lifetime, as well as a nfortgage on property devised. Waldron v. Waldron, 4 Bradf. Sur. 114. It was held before the Revised Statutes that a testator might, by dispositions and language tantamount to express directions, charge his personal estate with the payment of an incumbrance subject to which he had purchased lands. The intent gathered from the whole will was sufficient. Cumberland v. Codrington, 3 Johns. Ch. 272. So a mortgage given to secure an accommodation indorser for future indorsements does not charge the mortgaged lands in exoneration of the personal estate. Cochrane v. Hawver, 54 Hun, 556, 7 N. Y. Supp. 907. Where there is an express direction in the will that a mortgage be otherwise paid than from the mortgaged lands, so as to take the case out of the statute, (1 Rev. St. p. 749, § 4,) such mortgage debt is as obligatory upon the executor as is the payment and discharge of any other debt of the testator. In re Hopkins, 57 Hun, 9, 10 N. Y. Supp. 264. The use of the words, “both funded and otherwise,” necessarily includes the debts secured by bond and mortgage, or the words become meaningless,—a result not permissible, because contrary to the cardinal rule that the intent must prevail. The sense in which terms are used by a testator must, when ascertained, 0be adopted by the courts as controlling, apd given proper effect. The term “funded” is not ordinarily used in connection with the debts of an individual, hut, if so used, must necessarily refer to debts which are embodied in securities of a permanent character, and to the payment of which certain property has been applied or pledged. See Imp. Dict. tit. “Fund,” and Webst. Diet. “Fund;” Ketcham v. City of Buffalo, 14 N. Y. 356. The court must construe the language of the will so as to give effect to all of its terms. Unless the “funded” debts are mortgage debts, the use of the word in this instance is mere surplusage, as there is nothing to which it can be applied. The testator evidently intended to include something more than would have been indicated by the use merely of the words “just debts.” This intent can only be effectuated by including the mortgage debts in the additional words used. The surplus arising from the sale of the Riverdale property must therefore be applied, on account of the “funded” debt represented by the Hinth avenue mortgages.

The next question is whether the rents of testator’s property are also intended to be applied to the payment of the mortgage ■debts, if the proceeds of sale of the Riverdale property are insufficient. The second clause of the will says, at its end:

“But, if there is not enough derived from the proceeds of said sale to pay all of my said debts, that then for my said executors, or the survivor of them, to apply the net income from what other property I may die possessed of towards the payment of said debts, until all my said debts are paid in full.”

This clearly shows the intent of the testator to apply the rents to the same class of debts as the Biverdale property, and to make up any deficiency ih their payment.

The court is next asked to pass upon the validity of the provision of the sixth paragraph of the will, directing the executors to lease the previously devised property until the net amounts derived therefrom shall amount to enough to pay all the debts, and then to convey to the devisees. The provisions of the Bevised Statutes regulating the accumulation of rents and profits, and the creation of perpetuities, are as follows: It is provided in 1 Rev. St. p. 726, as follows:

“Sec. 37. An accumulation of rents and profits of real estate, for the benefit of one or more persons, may be directed by any will or deed, sufficient to> pass real estate, as follows: (1) If such accumulation be directed to commence on the creation of the estate out of which the rents and profits are to arise, it must be made for the benefit of one or more minors then in being, and terminate at the expiration of their minority. (2) If such accumulation be directed to commence at any time subsequent to the creation of the estate out of which the rents and profits are to arise, it shall commence within the time in this article permitted for the vesting of future estates and during the minority of the persons for whose benefit it is directed, and shall terminate at the expiration of such minority. Sec. 38. If, in either of the cases mentioned in the last section, the direction for such accumulation shall be for a longer term than during the minority of the persons intended to be benefited thereby, it shall be void as respects the time beyond such minority. And all directions for the accumulation of the rents and profits of real estate, except such as are herein allowed, shall be void.”

It is provided in 1 Rev. St p. 723, as follows:

“Sec. 14. Every future estate shall be void in its creation, which shall suspend the absolute power of alienation for a longer period than is prescribed in this article. Such power of alienation is suspended, when there are no persons in being by whom an absolute fee in possession can be conveyed. Sec. 15. The absolute power of alienation shall not be suspended by any limitation or condition whatever for a longer period than during the continuance of not more than two lives in being at the creation of the estate, except in the single case mentioned in the next section.”

It seems to be well settled that a suspension or accumulation for an absolute and definite fixed period, or for an indefinite period not measured by human lives in being, is in violation of the statutes. The direction to the executors to collect the rents until they accumulate to an amount sufficient to pay all the testator’s debts, funded or otherwise, is clearly contrary to the statute provisions cited, and therefore void. The testator has not attempted to create such a trust as the statute authorizes,—that is, a trust to sell lands, a trust for alienation,—but the trust in the will is of an opposite character. It is a trust to tie up the estate, and prohibit all alienation, until all the debts of the testator, “funded” or otherwise, are paid; a trust which, if properly declared, suspends the power of alienation until the purposes for which it was created have been accomplished. Hawley v. James, 16 Wend. 60. These debts are to be paid, not from sales, but from the rents and profits of the lands devised to the trustees. Such a direction is invalid because it might travel through a longer space of time than allowed for the suspension of alienation. Even the possibility, at the creation of an estate, that the event upon which it depends may exceed in point of time the authorized period, is fatal to it, and this though it he subsequently demonstrated that the result was in fact accomplished within the time permitted. There is no personalty, consequently, no primary fund for the payment of 'the “funded” debts. There is no special devise for their payment, except by means of “the rents and profits” of the realty, which disposition is, as before intimated, void, but the intent of the testator is nevertheless apparent that the three pieces of property on Ninth avenue should discharge these obligations. That intent can best be effectuated by directing an immediate conveyance by the trustees to the devisees of the realty, charging it, in proportion to the value of each piece, with a proper share of the mortgage debt. In this manner, form yields to substance, the intention of the testator prevails, and all objection to the legality of the trust, as illegally suspending the power of alienation, is at once removed. This seems just and equitable to all, for, though some of the provisions of the will are declared void, the remaining portions are not to be construed as if the void' provisions had not beep contained in the will, for those provisions may be considered in giving a construction to the clauses which are valid. Tucker v. Tucker, 5 N. Y. 408.

The plaintiffs request that in the event of the court finding this attempted disposition of the rents and profits invalid, and in violation of the statutes, the court give instructions as to the validity of the devises in the prior part of the sixth paragraph of the will, and whether it is their duty to immediately convey to the persons mentioned as therein directed. The answer to this may be foreshadowed from what has preceded. The will indicates an intent to charge all of testator’s debts, including mortgage debts, upon his entire real property, in the event of the Riverdale property not producing a sufficient sum. It is apparent from the fifth paragraph of the will that the testator understood that he possessed no personal property of any pecuniary value, and was solicitous to have his debts paid. This intent is reiterated in almost every dispositive provision of the will, and would satisfy the requirements of the analogous rule as to charging legacies upon lands. Legacies have been deemed charged on the real estate in cases where there was a known insufficiency of personal estate, and the surrounding circumstances give support to such intent. Briggs v. Carroll, 50 Hun, 586, 3 N. Y. Supp. 686; Society v. Foote, 52 Hun, 307, 5 N. Y. Supp. 236; Adkins v. Adkins, 13 N. Y. St. Rep. 193, and kindred cases. The intent of testator to charge these debts on his real property being established, and the means selected having failed, the balance, on equitable principles, is chargeable upon the entire real estate devised, proportionately to the value of the respective parcels. The will sufficiently expresses an intent to take the mortgage debts out of the general rule of the Revised Statutes, and put them in the same position as other general debts charged upon real property. This created a lien which may be enforced by the executors, either in equity, or in the statutory proceeding to sell -or mortgage the lands for debts. Where the will shows an intent to treat mortgage debts of the testator as ordinary debts, and the fund designated by him for their payment fails, they are chargeable upon his entire real estate devised, each portion of which must bear a, share proportionate to its value. Searles v. Brace, 19 Abb. N. C. 10. See, also, In re Hopkins, 57 Hun, 9, 10 N. Y. Supp. 264.

There must be a decree in accordance with these views, and it must provide that the amount of the two mortgages is a charge upon the three ¡Ninth avenue houses, in proportions fixed by the respective values, as proved at the trial; and, so charged, the executors may convey the land to the beneficiaries at once.