Amherst College v. . Ritch , 151 N.Y. 282 ( 1897 )

I deem it proper to state the reasons for my dissent from the conclusion reached by the majority of the court.

The testator, by the ninth clause of his will, bequeathed to twenty colleges therein named legacies to a large amount, aggregating approximately a sum equal to one-half of his estate as it existed at the time of his death, on the 15th day of November, 1890. By the tenth clause he gave to his executors all the rest and residue of his estate in trust, to convert the same into money and to divide the same equally between the same twenty colleges named in the ninth clause. If the will had remained unchanged it is clear that, under the statute of 1860, the gifts to the twenty colleges by the ninth and tenth clauses would have been ineffective and void so far as they exceeded one-half of the testator's estate. The testator left a wife surviving him, and the statute prohibits a devise or bequest by a testatator having a husband, wife, child or parent, to any corporation of the classes therein enumerated, of more than one-half of his estate, and where such devise or bequest exceeding one-half of the estate shall have been made, the statute declares that "such devise or bequest shall be valid to the extent of one-half and no more." The statute is aimed at and takes away the power of a testator in the respect mentioned. In Chamberlain v. Chamberlain (43 N.Y. 424) Judge ALLEN, referring to the statute of 1860, says: "The prohibition operates upon the testator's capacity to give, rather than upon the power of the legatees to take," and RAPALLO, J., inStephenson v. Short (92 N.Y. 433), referring to the cognate section in the act of 1848, says: "The second (section) restricts the power of a testator to devise or bequeath to such corporation in certain cases, and prohibits a testator who leaves a wife, child or parent from devising or bequeathing to such corporation more than one-fourth of his estate." In the earlier case ofBascom v. Albertson (34 N.Y. 584) the court, referring to the act of 1860, although the construction of the act was not then in question, said: "It was designed to regulate and restrict the power of testators." There are other authorities in the state to the same purport, but it is unnecessary to cite them, because there can be no doubt upon the plain language of the statute that it was intended to limit the power of testators and invalidate any testamentary disposition to corporations mentioned in the act, in excess of one-half of testator's estate, but sustaining it up to that point. The language "shall be valid to the extent of one-half and no more," is too plain for argument or construction. I deem it important, in view of the interpretation placed on the codicils and the releases of the widow and next of kin, to proceed somewhat further upon the assumption that the original will had remained unaltered, and to consider what would have been their rights if the testator had died without having changed the original will. I can entertain no doubt that in that event the portion of the estate beyond the one-half part, to which the twenty colleges would be entitled under the ninth and tenth clauses of the will, would, although given by the will to the twenty colleges, nevertheless go to the widow and next of kin, and descend and be distributable under the Statute of Descents or Distributions, as in case of intestacy. No other conclusion is possible. The devise or bequest to the twenty colleges was invalid as to the excess, for so the statute declares. It could not go to the residuary legatees, because they took in trust for the corporations. The intention of the testator could not be enforced, because the disposition he attempted to make was illegal. The corporations could not stand upon the devise and bequest in their favor, because the statute which prohibited the gift necessarily precluded them from insisting upon the validity of the disposition. In all cases, upon the death of the owner of property, the title devolves upon some one, either under his will or upon his heirs or next of kin, or escheats to the state. If he undertakes by will to dispose of his property in a mode or for purposes which the law prohibits, the attempted disposition is void, and in the absence of any alternative valid disposition by the will, it goes to his heirs and next of kin by operation of law. For no moment of time is the title suspended. In the case just supposed the rights of the heirs and next of kin attach immediately upon the death of the testator, and the will at most is a mere cloud upon their title. Their right would vest immediately without the intervention of any court, and an appeal to the court would be necessary only to put them in possession of their right in case it was denied or withheld. If any authority is needed to establish the proposition that a devise or bequest, made in contravention of the statute of 1860, is void, and that the part of the estate devised to charity, in excess of the one-half part thereof, devolves upon the heirs and next of kin as in case of intestacy, in the absence of any valid alternative disposition, the case of Chamberlain v. Chamberlain is decisive. There the residuary estate, comprising more than one-half of the testator's estate, was devised and bequeathed, after the enactment of the statute, to two corporations within the act, and it was adjudged by the judgment, entered in the Supreme Court and in this court, that the gift, in excess of the one-half part of the estate given by the will to the two corporations, devolved upon the heirs and next of kin. The testator when he made the will was under no misconception as to the invalidity of the will under the act of 1860, so far as it gave to the twenty colleges more than one-half of his estate, nor as to the resulting rights of his heirs and next of kin. He was fully apprised by counsel of the restriction in the law of 1860, and in the memorandum which he delivered with the will to one of his executors, he recognized that his purpose to give the bulk of his estate to the twenty colleges could not be effectual, except through the forbearance and acquiescence of his heirs after his death. But after the execution of his will he came to appreciate the danger that his purpose might be defeated by the refusal of his heirs to consent to forego their rights or to waive any objection under the statute of 1860. This led to the execution of the codicil, by which he revoked the tenth clause of his will, substituting therefor a new residuary clause whereby he constituted Bulkley, Ritch and Vaughan his residuary legatees and devised and bequeathed to "them and their heirs forever" his whole residuary estate, in form an absolute gift, subject on its face to no trust or condition whatever. It is out of the secret understanding found to have existed between the testator and the residuary legatees in respect to the disposition to be made of the residue that one of the most important questions in the case arises. It was found by the trial court that Bulkley, Ritch and Vaughan were made residuary legatees under the codicil by reason of the promise of Ritch and Vaughan, made to the testator, for themselves and on the part of Bulkley, that they would sell and convert the residuary estate into money and divide the same equally, share and share alike, among the twenty colleges mentioned in the ninth clause of the will. That this was the general purpose of Fayerweather in making this disposition is rendered clear by the memorandum of Dec. 11, 1884, deposited with Ritch, in which the testator declares that he had made Messrs. Ritch and Bulkley his residuary legatees, "in the confidence that thereby my intentions as expressed in my will shall be carried into effect." By a codicil subsequent to the date of this memorandum Vaughan was joined as legatee with Bulkley and Ritch.

I assume that the finding of the trial court, heretofore stated, is supported by evidence. The judgment in this case awards to the twenty colleges named in the ninth clause of the will the whole of the residuary estate remaining in the hands of Bulkley, Ritch and Vaughan, who were executors of the will as well as residuary legatees. Independently of other grounds urged in support of the judgment, it is claimed that the promise of the residuary legatees, which was the inducement operating upon the mind of the testator to make the residuary gift, is enforceable in a court of equity as an equitable obligation binding in conscience, and which the legatees were bound to perform. The law, it is insisted, raises out of the transaction a trust in favor of the real objects of the testator's bounty, which a court of equity proceeding upon its established principles will compel the legatees to observe and perform. If the correctness of the judgment below turned upon the question who were the parties intended by the testator to be benefited, and what colleges or institutions he intended should receive the residuary fund, I should have little hesitation in reaching the conclusion that they were the twenty colleges mentioned in the ninth clause of the will, and that a distribution made under the so-called deed of gift, or a devolution of the residue upon his heirs or next of kin, would disappoint his expectations in making the codicil. But this is to be said of every case where the disposition made by a will fails from some inherent defect in the disposition itself. "It is not sufficient," says the chancellor in Haxtun v. Corse (2 Barb. Ch. 521), "to deprive an heir at law or distributee of what comes to him by operation of law, as property not effectually disposed of by will, that the testator should have signified his intention by his will, that his heir or distributee should not inherit any part of his estate. But to deprive an heir or distributee of his share of the property which the law gives him, in case of intestacy, the testator must make a valid and effectual disposition thereof to some other person." The cases are numerous in which courts of equity have fastened constructive trusts upon the legal title to real or personal property in the hands of nominal owners in favor of persons to whom the owner owes an equitable duty in respect of the property in his hands, inconsistent with his retention of an absolute title. The foundation of this jurisdiction is in every case the incapacity of courts of law to give any or to give adequate relief, and from its very nature can never be invoked except for the promotion of justice and the prevention of fraud. The trust may be raised from circumstances, but for these purposes and for no others. It would be a solecism for a court of equity to imply an equitable obligation to do that which its own principles condemn, or to enforce an express trust in contravention of the law. The beneficent jurisdiction of courts of equity to raise and enforce constructive trusts has no more signal illustration than in cases of devises or bequests procured to be made, absolute in form, upon the promise of the devisee or legatee to make some provision out of the property devised or bequeathed for some other person or object, or to appropriate it in a particular way, and where it may be gathered that, except for the promise, the devise or bequest would not have been made. In such a case, the courts enforce the promise to prevent a double fraud, a fraud upon the testator and a fraud upon the person for whose benefit the promise was made. It is unnecessary to cite the cases which support this equitable principle. The subject is treated at length in the very able opinion of Judge FINCH in the case ofO'Hara v. Dudley (95 N.Y. 403), and no other authority need be cited. But the principle, however broadly stated, must, from the nature of the case and the constitution of the court called upon to apply it, be always subject to the limitation that the promise must be to do a lawful and not an unlawful thing.

The purpose to which the devisee or legatee undertakes to apply the money must be lawful, and although the purpose may be lawful, the promise may be illegal by reason of some prohibition of law disabling the testator from making a posthumous gift to the beneficiary under the circumstances or in the mode adopted. In either case, I conceive a court of equity cannot and will not imply a trust against the devisee or legatee for the purpose of enforcing the promise. The case of O'Hara v. Dudley is a direct authority on the first proposition in the preceding paragraph, and the cases under the act 9 Geo. II, chap. 36, improperly called a mortmain act, cited in Judge FINCH'S opinion, sustain, I think, the second proposition. In the case of O'Hara v. Dudley and in the English cases under the act of Geo. II, the courts refused to sustain a trust for the purposes intended by the parties, but adjudged that there was a resulting trust in favor of the heirs and next of kin of the testator in the property held by the devisee or legatee under a gift absolute in form.

I have no doubt that under the facts found a court of equity, proceeding according to its settled principles, would raise a constructive trust as against the residuary legatee in favor of the twenty colleges. But this, subject to the necessary limitation that the trust so constituted was lawful. If it was unlawful under the act of 1860, and if performance would violate that statute, then clearly a court of equity would not raise a trust in order to give effect to the proposed illegal disposition. I am of opinion that the arrangement between the testator and the residuary legatee was in contravention of that statute. It is not denied that if the constructive trust sought to be raised in favor of the twenty colleges had been written out on the face of the will, the trust would be void under the statute. The statute prohibits a devise or bequest contrary to its provisions, "in trust or otherwise," a prohibition of the broadest and most sweeping character. But the claim is that the twenty colleges to whom the residuary estate has been awarded to not take under the will or under any devise in the will, or through any testamentary act, but outside of and independently of the will, through and by virtue of the conscientious obligation created by transactions de hors the will, and that the case is not, therefore, within the statute. The same result concededly is attained as though the trust was written in the will, but this it is claimed is no objection to its enforcement, because a trust outside of the will arising by construction is not prohibited, and although the scheme adopted by the testator and assented to by the residuary legatees was for the purpose of evading the law, an evasion of a statute is not, or may not be a violation of the statute evaded.

I do not adopt the radical view of one of the learned counsel for the appellants, that a court of equity will not raise a constructive trust in favor of the twenty colleges, and will not lend its aid to enforce a transaction in evasion of the statute of 1860, although the transaction is not prohibited thereby. The residuary legatees concededly upon the facts found are not entitled to retain the property for their own benefit, and the heirs and next of kin have no title if it was legally disposed of by the will, and the secret trust was not illegal. It would not be unconscientious for the court to award the fund to the institutions for whose benefit it was really given, on the mere ground that the testator intended to circumvent the law, provided the method he adopted was not a violation of the statute, although it tended to thwart its general policy. But, as I have intimated, the arrangement between the testator and the residuary legatee was prohibited by the statute of 1860. That statute was not prompted by any hostility to charities or to religious or educational institutions. It did not restrict giftsinter vivos to the corporations mentioned, however large, even to the whole of the donor's property, and the only restriction upon such gifts would arise out of the incapacity of the donee to take under its charter. What the statute plainly did intend was to prohibit one form of donation to corporations described in the act, which should exceed one-half of the donor's estate, namely, a donation by will. The donor was not permitted by will to give to the charities mentioned beyond the prescribed amount. The statute regulated and restricted testamentary donations, and no others. It is to be observed also that all corporations are not included. The testator might have given by will all his property to corporations not of the class enumerated, and their capacity to take would be the only question. Nor is a testator prohibited from giving all his property by will to the corporations mentioned in the act, when he leaves no wife, children or parent surviving. The corporations enumerated in the statute were those to which, in the last days of life, a man, acting under mistaken notions of duty, might voluntarily or through persuasion be induced to give his property in disregard of the just claims of kindred. The felicitous language of COMSTOCK, Ch. J., inDowning v. Marshall (23 N.Y. 366), frequently quoted, used in considering the general policy of the restriction upon devises to corporations contained in the general statute, is peculiarly applicable here. Speaking of the policy and necessity of the restriction in the Revised Statutes, he says: "Nor is this necessity by any means a fanciful one. It is eminently praiseworthy to give in the interest of charity and religion. But in the last hours of life exaggerated impressions of charitable or religious duty often obscure the judgments of men, and subject them to undue influence and persuasion. Against these the statute is intended to guard, because it is in behalf of associations incorporated for pious and benevolent purposes, that the sentiments of men in such situations are most generally appealed to. The enactment is, therefore, prohibitory, and it ought to be expounded and applied in that sense."

The English statute of Geo. II, before referred to, although more radical than the statute of 1860, is founded on the same policy. It prohibits all devises of lands, or of funds to be laid out in lands, to charities, but it does not prevent the owner of property, in his lifetime, to convey to charities all his property by deed, affixing only the restriction that it shall have been executed twelve months before his death and enrolled at least six months prior to that event, restrictions intended manifestly to prevent even this method of gift when made in prospect of or under the shadow of impending death. The court is asked to hold in this case that a scheme contrived by the testator and his residuary legatees for the purpose of circumventing the statute of 1860, and to make a posthumous gift of a very large estate to corporations, to whom the testator could not give it directly by will, through the device of a constructive trust, is not in contravention of the statute of 1860. I cannot assent to this proposition. It has, in my judgment, neither reason nor authority in its favor. The language of Lord ELDON, in Stickland v. Aldridge (9 Ves. 516), is applicable to this case. "It would," he said, "be a strong proposition that the providence of the legislature, having attempted expressly to prevent a disposition of land for purposes of this sort, was so short as to be baffled by such a transaction as is stated by this bill." The attempt here is to separate the strictly testamentary act from the secret arrangement, and to refer the right of the twenty colleges exclusively to the latter. But the will is a necessary and indispensable element in establishing the alleged trust. The testamentary gift and the secret arrangement are inseparably conjoined. The plaintiffs cannot proceed a step without showing the will and the testamentary gift. It is only by attaching to this the promise of the residuary legatees that it can be pretended that any trust in their favor arises. The Statute of Wills, which requires wills to be in writing, was an obstacle to be overcome when originally the attempt was made to establish a parol trust in contradiction of the testamentary instrument. But the court solved the difficulty by treating the two transactions as separate. The will, it was said, was not changed, but the right might be grafted on to the parol promise, and so technically the devise was not changed. But this subtle distinction was sustained for the purpose of preventing fraud and never to overreach or subvert the law. In numerous cases under the statute of Geo. II, the English courts have held that a secret trust for charity, engrafted on a devise absolute in form, was void. It is said that these cases are sustainable on the broad words of the statute. But the English statute is, I think, no broader than the statute of 1860. This statute prohibits all bequests or devises to corporations named therein beyond the permitted amount, "in trust or otherwise," that is, as I construe it, "in trust for the corporation or in any other manner," and it would, I think, be a narrow and misleading view to hold that it does not prohibit the device resorted to in the case before us.

If I am right up to this point, it necessarily follows that immediately on the death of the testator, a resulting trust in the residue of the estate sprang into existence in favor of the widow and next of kin, which the court would transform into a legal estate by compelling a transfer by the residuary legatees to them of the legal title. They could not under the findings retain the property for their own benefit; the twenty colleges could not enforce the illegal trust attempted to be created in their favor, and the only other alternative was a resulting trust in favor of the widow and next of kin. This trust eo instanti on the death of the testator displaced the unlawful trust attempted to be created in favor of the twenty colleges. It was, therefore, essential to support a claim by the twenty colleges to the fund that they should be able to show a right thereto derived from the widow and next of kin. They were the equitable beneficial owners, and their interest under well-settled rules prevailing in this state was assignable. They, as owners, could transfer their rights and interests to the twenty colleges, or to any other persons or corporations by an actinter vivos. It would be a transfer of their own property, not within the act of 1860. But it would not be enough to establish the title of the twenty colleges for them to show that the widow and next of kin had divested themselves of their interest. It must appear that it had been acquired by the twenty colleges, or that an assignment was made to some other person or persons, which by the terms of the assignment or by operation of law inured to their benefit. I repeat, the attempted trust in favor of the twenty colleges being void, and the resulting trust in favor of the widow and next of kin attaching to the fund, no title thereto can be asserted by any person or corporation, except a title derived from or under the widow and next of kin. The learned counsel for the twenty colleges, appreciating the stress of this view, seeks to sustain their title by the claim that the residuary fund was vested in them by force of the instruments called releases executed by the widow and next of kin, bearing date March 5th, 1891, and June 12th, 1891. These instruments it is insisted extinguished all claim of the widow and next of kin in the fund now in question, and their claim being out of the way, the residuary legatees held the fund subject to the original trust, freed from any infirmity, by reason of the act of 1860. The construction sought to be placed on the instruments of release by the learned counsel for the twenty colleges, namely, that they operated merely as a surrender to the residuary legatees and an extinguishment of the rights and claims of the widow and next of kin to the residuary estate, is, in my judgment, wholly inadmissible. This construction ignores the evident intention of the parties to the instruments, and contradicts their plain language and meaning, when read in the light of the surrounding circumstances. The so-called deed of gift to the twenty or more colleges and institutions, executed by the residuary legatees February 24th, 1891, purported to give the residuary fund to the beneficiaries therein named, with a reservation to Bulkley, Ritch and Vaughan of the right out of the fund to make additional provision for the widow and next of kin beyond that contained in the will. On the 5th of March, 1891, while the contest as to the probate of the codicils was pending, two instruments were executed, one by Bulkley, Ritch and Vaughan to the widow and next of kin, which referred to the deed of gift of the 24th day of February, 1891, and the reservation therein, whereby they added to the annuity to the widow the sum of $10,000 beyond that given her by the will, and gave to the widow and next of kin, out of the residuary estate, further sums aggregating $310,000. The other instrument was the so-called first deed of release, in which the widow and next of kin, "in consideration of the instrument of even date herewith" (above referred to), bound themselves to make no claim upon Messrs. Bulkley, Ritch and Vaughan, other than for the "amounts left us by the will and codicils, and the deed of gift executed by the said Bulkley, Ritch and Vaughan on the 24th day of February, 1891, and the instrument dated on the 5th day of March, 1891," and they further bound themselves upon payment to them respectively of the several amounts mentioned in "said deed of gift and said instruments, to severally execute a general release of all claims, except those arising under the will and codicils, both to the executors and to the donees mentioned in the deed of gift dated on the 24th day of February, 1891, and to said Bulkley, Ritch and Vaughan individually."

On the 12th day of June, 1891, the widow and next of kin severally executed the formal deeds of release provided for in their deed of March 5th, 1891. The release of Mrs. Fayerweather first acknowledges the receipt of the two hundred and twenty-five thousand dollars, to which she was entitled under the instrument executed by Bulkley, Ritch and Vaughan March 5th, 1891. The language is: "For and in consideration of the sum of two hundred and twenty-five thousand dollars, lawful money of the United States, to me in hand paid by Justus L. Bulkley, Thomas G. Ritch and Henry B. Vaughan, as executors and trustees under the last will and testament of Daniel B. Fayerweather, deceased, and individually and as the representatives of the persons and corporations hereinafter named, forming a class known as donees under the deed of gift executed by the said Bulkley, Ritch and Vaughan on February 24, 1891." She next acknowledges that sum to be "in compromise and full settlement of any and all contests on my part of the will of said Daniel B. Fayerweather, deceased, or concerning his estate." Following the statement of the consideration and that the sum received was in full compromise and settlement, are the operative words of the instrument, namely: "Have remised, released and forever discharged, and by these presents do for myself and for my heirs, administrators and executors, remise, release and forever discharge the said Justus L. Bulkley, Thomas G. Ritch and Henry B. Vaughan, as executors and trustees aforesaid, as individuals and as representatives of the said donees constituting a class, and also the said donees, to wit, the persons and corporations mentioned in a certain deed of gift duly delivered, made by Justus L. Bulkley, Thomas G. Ritch and Henry B. Vaughan on the 24th day of February, 1891, which deed of gift was introduced in evidence in the probate proceedings of the last will and testament of Daniel B. Fayerweather, deceased (and marked Exhibit No. 7, contestants), and which said deed of gift is hereby made a part of this release, in order that the persons constituting said class of donees, and to whom this release runs, may be more fully known, and also the legal successors, assigns, heirs, executors and administrators of all the aforesaid persons and corporations, ofand from all and all manner of action and actions, cause and causes of action, suits, debts, dues, sums of money, claims and demands whatsoever, in law or in equity," etc., concluding by an exception of her claim for the annuity mentioned in the agreement of March 5th, 1891, "made pursuant to the deed of gift above referred to." The releases by the next of kin were of the same purport.

It seems impossible to read these releases in view of the circumstances which led to their execution, without being forced to the conclusion that they were executed with the intention and for the sole purpose of giving effect to and confirming the deed of gift of February 24th, 1891. They acknowledge the receipt of the consideration from Bulkley, Ritch and Vaughan, as representatives of the donees under the deed of gift. They "remise and release" to the donees under the deed of gift, and to Messrs. Bulkley, Ritch and Vaughan, "as representatives of said donees." They annex the deed of gift to the release in order that the persons "to whom the release runs" may be identified. This transaction, if it has any meaning, was to make good the deed of gift, which, without the confirmation of the widow and next of kin, would be ineffectual, and give no title to the donees. The absence of specific words of transfer or sale is of little moment if the intention is plain. The intention is the cardinal fact in the construction of written instruments. Where the words permit an instrument to operate in either of two ways it is effective for the way at which the intention points, when that can be ascertained by reading the instrument in the light of the surrounding facts. In former times certain technical words were essential in deeds of realty. Here the property was mainly personal, and in respect to the creation of interest in personal property formal words are not important, if the substance of the transaction intended can be ascertained. Unless the releases operate as confirmation of the deed of gift it has no operation whatever as to the donees, "to whom this release runs." The release, for greater precaution, extended to the executors in their official character, and to them as individuals, but this accentuates the fact that the paramount purpose was to ratify and confirm the deed of gift. And, finally, on this point, whatever may be said as to the release operating as a transfer to the donees in the deed of gift, there can be no pretense that the widow and next of kin intended to transfer their interest in the estate to the twenty colleges. They are not in any way referred to in the written instruments, and it is difficult to perceive how a transaction can inure to their benefit contrary to the intention of the parties, and which would give it the practical effect of rehabilitating the illegal trust.

It is said that the statute of 1860 was intended for the benefit of a wife, husband, child or parent, and that, if they do not raise the question, the validity of a will under that statute cannot be questioned by other parties. In my view that inquiry is not pertinent under the facts in this case. The widow has raised the question in the most emphatic way by transferring her interest in the estate to the donees under the deed of gift. But I am of opinion that any person who would take an interest in the property of a decedent, under the Statutes of Descent or Distribution, in case of intestacy, may raise the question under the statute of 1860, although not holding the relationship mentioned in the statute, provided he would be entitled, if the statute had been violated, to a share in the excess willed to the corporations, and that he would not be bound by the consent of other parties to the disposition. The cases of Harris v.American Bible Society (2 Abb. Ct. App. Dec. 316), and ofChamberlain v. Chamberlain (43 N.Y. 434), seem to be direct authorities upon this point. In both the testator left a widow, and no child or parent, and bequeathed more than half his property to corporations by wills taking effect after the passage of the act of 1860. In the one case the widow consented to the invalid disposition, and in the other, by her election to take a provision in lieu of dower, she was held to be barred from claiming any other interest. In both cases the objection interposed by next of kin, remote relations of the testator, was sustained.

There are other points urged by the counsel for the appellants which are not free from difficulty, but I will not consider them. I think the judgments below are erroneous, and that the donees under the deed of gift are entitled to the fund.

All concur with VANN, J., for affirmance, except ANDREWS, Ch. J., who reads for reversal.

Judgment affirmed.