On the former appeal herein by the substituted trustees from an interlocutory judgment overruling their demurrer to the complaint on the ground, among others, that it failed to state facts sufficient to constitute a cause of action, this court sustained the complaint. (Newton v. Jay, 107 App. Div. 457.) The material facts bearing upon the sufficiency of the complaint and which have now been substantially proved as alleged, are stated in our former opinion, and may, therefore, so far as pertinent to the questions presented by this appeal, be discussed without being restated. Our decision
After the former decision on the appeal answers were interposed by all of the defendants and the issues were brought to trial. The learned trial justice found every material fact alleged in the complaint and sustained every claim made thereon by the plaintiff with one exception. The learned counsel for the substituted trustees evidently contended on the trial, as he now does here, that the clause in the mortgage given by the defendant Anna Benkard Hunt, Frederick Percy Hunt, Lilian Catherine Hunt and Reginald Sidney Hunt, all of her children, excepting the respondent Rupert Herbert Hunt, who at thejhue of the execution of the mortgage was an infant and did not join therein, to Thomas Charles Line, made on the 1st day of July, 1898, providing that the said Anna Benkard Hunt, at the request of and with the concurrence of her adult children, released to them and to all persons interested in the trust estate as a condition of obtaining the loan from the mortgagee the power of appointment in unequal shares conferred upon her by herself or reserved to her by the indenture of November 18, 1879, to the end and intent that the trust estate should thereupon vest absolutely in her four children named therein, being all of her children, including the infant, share and share alike, subject only to her life interest therein, was not effectual to release and extinguish the power of unequal appointment among her children, that is to say, that it did not divest her of authority to exercise the power of appointment which she reserved or gave to herself by the indenture of November 18, 1879. If the trial justice had sustained the contention made in behalf of the plaintiff on this point, the judgment would have presently attached not only to the income, which, by the trust indenture, was given to the trustees for the use of the settlor of the trust during her life, but to a three-quarters interest in the remainder of the corpus of the estate as well, provided the remainder vested absolute in the children as was assumed by the parties to the mortgage and was asserted by both appellants and respondents and assumed by this court without examination on the former appeal. If the right of the children to share equally in the remainder had
The notice of appeal of the plaintiff is, as has been stated in the statement of facts, from many parts of the judgment, which, however, depend upon the decision of the single question as to whether the settlor has, as against the owner of the indebtedness and the holder of the mortgage, extinguished all right to further exercise any power of appointment with respect to directing by will or otherwise that her children shall take the remainder in unequal shares, or that one or more shall take to the exclusion of others or another.
The learned counsel for the appellants other than the plaintiff request the court to reconsider the decision made on the former appeal, principally upon the-ground that the court overlooked or failed to follow the decision of the Court of Appeals in Noyes v. Blakeman (6 N. Y. 567). On the former appeal herein that case was cited in the points and examined by the court, but it was not deemed necessary to consider it in the opinion, for it was deemed inapplicable, in view of the later decision in Schenck v. Barnes (156 N. Y. 316), which expressly decided that where the settlor of the trust reserves to himself the beneficial interest for his life, such beneficial interest is subject to the claims of creditors, even though he were solvent at the time he created the trust. It necessarily follows from that decision that the prohibition against the alienation by a life beneficiary of rents, issues and profits, contained in section 63 of article 2 of title 2 of chapter 1 of part 2 of the Revised Statutes, does not apply where the life beneficiary is the settlor of the trust; and it necessarily follows that it was competent for the settlor of the trust to assign her interest in the income, as she did in the case at bar, by giving a mortgage thereon. Nothing in the case of Noyes v. Blakeman (supra) was, we think, intended to decide that
It was stated in the opinion on the former appeal, in effect, that the settlor of the trust, by her agreement with the parties in interest, as already stated herein, and by executing the mortgage, extinguished any right she had to make a further appointment with respect to the division of the remainder between her children. The decision of that question was not necessarily involved and is, therefore, not res adjudícala. The four justices who are voting for a modification of the decree in accordance with the views expressed in this opinion are equally divided in their views on that question, and for that reason, as well as for another to be stated presently, no opinion is expressed thereon now. In the circumstances, we deem it proper to defer a decision of the question as to whether the settlor of the trust may, by will or otherwise, give any further effectual direction with respect to the shares in remainder which her children "shall take, until her death, and to confine our decision to an adjudication that the plaintiff, by virtue of the mortgage, has a lien upon and is entitled to the income payable under the trust indenture to
It appears by the judgment roll in an action in the Supreme Court in the county of Hew York, brought by one of the original trustees in July, 1879, against the other two, the settlor of the trust and her husband and her children, for leave to resign and for the substitution of William Jay and Alonzo C. Monson — respondent Rupert Herbert Hunt was not a party, for he was not born until after the termination of the litigation — that with the consent of the settlor, two of the original trustees resigned in 1879, after accounting in that action, and the third then, pursuant to authority conferred upon him by the original trust agreement, named Alonzo C. Monson and William Jay as substituted trustees on the nomination of the settlor of the trust, and then the plaintiff in that action resigned as trustee with the consent of the settlor; that before .these resignations the trustees had decided to exercise the power conferred upon them and advanced to the settlor the sum of $50,000 out of the corpus of the trust fund on condition that she should exercise the power of appointment reserved to her in the original trust indenture, which was a general power of appointment to be exercised by her by a last will and testament or an instrument in the nature thereof, and in default of such exercise, it was provided that the remainder should pass under the laws of the State of Hew York with respect to intestate property ; that she had exercised this power of appointment by the indenture of Hovember 18, 1879, to which reference is made and which is more fully described in the opinion of this court on the former appeal, and that,the court, in and by the judgment in that action, entered Hovember 26, 1879, accepted the resignations of the trustees and the appointment of the substituted trustees and conferred the same authority upon the substituted trustees as on the original, except as to advancing part of the capital to the settlor and naming successors, and fix
The decree of the Supreme Court to which reference has been made confirms the trust indenture of November 18, 1879, which, in effect, reserves to the settlor authority to revoke by last will and testament the appointment as made, in whole or in part, as to one or more of the children, and to direct that another or others shall take the estate thus cut off, which might result in the children taking in unequal shares. The question whether it was competent for the settlor of the trust, as a condition of obtaining the loan to secure which the mortgage was given, to effectually release and relinquish this reserved right to give a further valid direction by her last will and testament with respect to the shares which the children should take as between themselves, is one which we do not now decide, for
“And in the event of there being no child or children of hers, nor issue of a child or children living at the time of the death of the party of the first part, then she reserves to herself the absolute right of disposing of the said trust estate by her Last Will and Testament or instrument in the nature thereof, to any person or persons whomsoever, as she may desire, and she also reserves to herself the right to dispose by Last Will and Testament or by instrument in the nature thereof, of all and singular the said trust estate in the event of all her children departing this life without issue during the lifetime of her said husband, anything herein contained to the contrary in anywise notwithstanding.”
It seems quite clear, in view of these provisions, that any child who predeceases his mother would become divested of any interest in the estate, and that the same would vest on the death of his mother in his issue, and in the event of his leaving no issue then living, in the other children or their issue then living (Matter of Hogarty, 62 App. Div. 79); but they would take under the indenture and not from him.
The construction of the indenture in this regard was not presented for adjudication on the former appeal, and the court did not decide the question. The observation in the opinion on the former appeal that “ upon the execution of the deed of appointment and the relinquishment of the right to further exercise the power of appointment, the interests of the children, which were theretofore contingent, became vested subject only to the life estate of their mother, the legal title, however, being in the trustees ” (107 App. Div. 457, 468), was made with reference to the extinguishment of the right of the settlor to further exercise the power of appointment. The question as to whether the remainder vested absolute in the children, or was subject to be divested, was not only not necessarily involved in a decision of the appeal, but the court was not asked by either party to pass upon the question, and both counsel in their points assumed and expressly claimed that the remainder vested absolute in the children so far as the question now under consideration is concerned — they litigated the question as to the right of the settlor to exercise the authority reserved — and that theory of
Counsel for the plaintiff who was the respondent stated in his points as follows: “ But, in addition to the interest of Mrs. Hunt, we have also an assignment of the interests of two of her children in the trust estate. That these expectant interests in remainder are assignable needs no argument. They are vested remainders, the possession only being postponed. * * * The power of appointment does not interfere with the vesting.”
It will thus be seen that the question as to whether the estates of the remaindermen were vested absolute, or subject to be divested by their death during the life of their mother, was not presented for decision on the former appeal, but would be necessarily involved if the court should now undertake to decide the precise interest in remainder that will be subject, on the death of the settlor of the trust, to the payment of this indebtedness, and since the interests of the mortgagor-remaindermen are subject to be divested by their death during the lifetime of their mother, it cannot now be known whether any share or interest in the remainder will be applicable to the payment of. the indebtedness, and since we are not in accord on the question as to whether the settlor may, by her last will and testament or otherwise, affect the interest in remainder which any
The effect of the foreign adjudication was, we think, properly decided by the learned trial justice and needs no further consideration here. We agree with the learned trial justice that the income can be reached as it accrues from time to time in the hands of the substituted trustees. The contingent estates in the remainder of the other mortgagors might, perhaps, be presently reached by directing a sale thereof; but that relief does not appear to have been asked and no objection is made to deferring relief against the remainder until the expiration of the trust.
We think, however, that the court erred in adjudging that the substituted trustees are accountable to the plaintiff for all income received after notice of the claim made by plaintiff under the mortgage. The plaintiff took no further step toward asserting or enforcing "his claim after giving this notice, until he commenced this action some four years thereafter. In view of the fact that the Supreme Court in resettling the trust commanded the trustees to pay the income to Mrs. Hunt, I think they were justified in continuing to pay it after such notice until the plaintiff obtained an injunction, the appointment of a receiver or a judgment of a court of competent jurisdiction, declaring that the lien of the mortgage attached to the income as it accrues. The judgment, therefore, should also be modified by requiring the trustees to account only from the date of the decision of the trial court herein.
The judgment should be modified as herein indicated and by inserting appropriate provisions showing that it is not to be deemed an adjudication on the question as to whether or not it is competent for the settlor of the trust to direct by last will and testament that the remaindermen who joined in the mortgage shall take less than their interests as recited in the mortgage — the modifications to be
Patteeson, P. J., Claeke and Scott, JJ., concurred; Ijtobaham, J., dissented.