Colonial Trust Co. v. Brown , 105 Conn. 261 ( 1926 )

(concurring in the result but dissenting as to the ground of decision upon one point).

I agree in substance with the answers given to the questions propounded on the reservation. In some of the reasoning of the court I am unable to concur. This applies principally to one point which is liable to affect the construction of wills in future cases, and in that I find the justification for this statement of opposing view. The opinion of the court holds that the annuities provided for in the fifth and sixth articles of the will of the testator do not offend against the rule of perpetuities, and for these reasons: "Each of the `surviving children' for whom annuities are provided in the fifth and sixth articles must obviously be in being at the death of his parent, and the gift to him must vest immediately upon that death. All the annuities must vest, then, within a life or lives in being and twenty-one years, and none of them are, therefore, obnoxious to the rule against perpetuities." Since the conclusion that none of the annuities provided for in these articles are obnoxious to this rule is vital to the determination of whether the trust created by this will in this plaintiff, or the prohibition against the sale of the properties as provided in article ninth, is, for that reason, invalid, and for the better understanding of this question, I discuss the conclusion which the court reached in the reasons quoted, and which I understand counsel concede, at somewhat greater length.

Article fifth gives (1) an annuity to the testator's half-brother Frederick J. for life; (2) upon his decease the annuity is given to his two children Leonie M. Brown Williams and Hayden W. Brown in equal proportions for their lives; (3) in the event of the decease of Mrs. Williams one half of this annuity is given to her surviving children in equal proportions for their lives; (4) in the event of the decease of either of them to the survivor or survivors during their lives; (5) in the event of the decease of Hayden W. Brown one half of this annuity is given to his surviving children in equal proportions for their lives, and (6) in the event of the decease of either of them to the survivor or survivors for their lives.

Mrs. Williams had three children born prior to, and living at, the decease of the testator, and one child, Rachel, born after the decease of the testator, and these four children are now living. Hayden W. Brown has two children, William and Francis, both born prior to the death of the testator.

No possible question arises as to the annuities provided for in the seventh article. The annuities given in the fifth article upon the decease of Mrs. Williams and Hayden W. Brown are to their "surviving children." Obviously they must be those in being at the decease of their parent, hence the gift to them will vest in the surviving children immediately at the decease of the parent. The provision that "in the event of the decease of either of them," that is, the child of Mrs. Williams or Hayden W. Brown, the annuities shall be paid "to the survivor or survivors," adds nothing to what has already been said, that is, that in the event of the decease of Mrs. Williams or Hayden W. Brown, one half of the annuity shall be paid in equal proportions to each of her or his surviving children. None of these annuities were obnoxious to the rule against perpetuities, since each vested as one of a class within a life or lives in being at the decease of the testator and twenty-one years and the period of gestation after such life or lives in being.

The sixth article gives an annuity during his life to Buckingham P. Merriman and upon his decease it gives the annuity in equal proportions to his surviving children, that is, those living at his decease, in whom it then vests. This provision is therefore not obnoxious to the rule against perpetuities.

The opinion then holds that "where, as in the instant case, all estates, legal and equitable, vest within the period fixed by the rule against perpetuities, unquestionably the trust is valid, and will continue until the death of the longest living annuitant." In all of these positions I fully agree. The opinion then says these annuities "fix as the duration of the trust not only the period of the lives of the annuitants in being at his death, but also the further period of the lives of the children who may be born to the named annuitants after his death, that is, a period of possibly seventy or eighty years, or even longer." And this latter provision falls, the court holds, within this rule.

I have been unable to understand the last statement, or the conclusions drawn as to the prohibition forbidding the trustee to sell the two properties included within it, as involving other than a contradiction with what precedes it. The opinion holds the trust good during the period of life of the annuities and that none of the annuities are obnoxious to this rule, yet the trust is bad so far as it continues beyond the lives of living annuitants because it extends beyond the period fixed by the rule of perpetuities. Let us determine the purposes, the scope and the duration of the trust created by article fourth of the will.

The specified purposes, as provided by articles fourth and eleventh, are (1) the care, custody, investment and reinvestment of the trust estate; (2) the payment of the annuities, trusts, charges and legacies provided in the fifth, sixth and seventh articles of the will; (3) the accumulation of income for payment of the incumbrances on the Exchange Place property and West Main Street property "so fast as the trustee shall have any unexpended funds in its hands, or to use the funds of said estate as it may deem necessary and proper for the improvement and construction of" these properties; (4) the maintenance of an office for the administration of the trust in the Exchange Place and West Main and Meadow Streets property; (5) the retention during their lives of Blanche M. Pierce as the head of the office of the trust and of Pedro Delgazo as a janitor. The will does not expressly specify the duration of the trust, nor the time of its ending, nor prescribe whether the corpus of the trust fund shall continue during the duration of the trust, nor whether any portion of it may be sooner released from the trust. These may be determined from a reading of the will, out of its necessary implications. It is apparent that the duration of the trust cannot exceed that of the annuities created in articles fifth, sixth and seventh, since the ending of the annuities must end the trust, and the remainder interest, long legally vested, must then vest in enjoyment. The primary purpose of the creation of the trust was to prevent the corpus of the trust fund being distributed during the life of the annuities.

Since the duration of the trust is coterminous with that of the annuities it cannot continue longer than they continue. A trust can never extend beyond the period comprised within the rule against perpetuities. Trusts such as this, for the accumulation of income and its appropriation for defined and lawful purposes, "must be strictly within the limits of the rule against perpetuities, and . . . if such a trust exceeds those limits, it is void." Hoadley v. Beardsley, 89 Conn. 270,279, 93 A. 535; Lewis Oyster Co. v. West,93 Conn. 518, 527, 107 A. 138; Bates v. Spooner,75 Conn. 501, 54 A. 305. Sometimes a trust may be good in part and in part offend this rule; if these parts are separable the good may stand while the bad will fall. Examples of the application of this rule are found in Connecticut Trust Safe Deposit Co. v. Hollister,74 Conn. 228, 50 A. 750; Loomer v. Loomer, 76 Conn. 522, 57 A. 167. Since the annuities are not obnoxious to this rule the trust is not obnoxious to it.

True reasoning, as well as the rule of the authorities lead to these conclusions. None of the annuities under these articles offend against the rule. The duration of the trust at its maximum life is measured by the life of the last surviving annuitant. Within this period every provision of the trust is good and every exercise of the power given to the trustee is valid in so far as the rule against perpetuities is concerned. Every provision of the trust, and every exercise of the power vested in the trustee cannot offend against the rule during the life of the annuities. If any of the annuities provided by these articles did offend against the rule, the trust and the powers given to the trustee would only be invalid during the period of the invalid annuity. Nor would either offend against the rule during the period of the existence of the valid annuities, which in this case the opinion of the court in its later pronouncement holds to be all of the named living annuitants. Resting upon its conclusion that the trust was to continue throughout the life of children of living annuitants born after the death of the testator and was to that extent void, the opinion holds that the prohibition of the ninth article forbidding the trustee to sell these properties was void. It correctly indicates the distinction between the rule against perpetuities and that against restraints upon alienation to be that the first is concerned with the vesting of estates in right and the latter with the limitation which may be imposed upon the enjoyment of the property. "By analogy" the opinion truly holds, "the same rule has been adopted for determining the length of time during which the alienation of lands may be lawfully restrained as is used in determining the period within which an estate must vest in order to be valid."

The opinion continues: "We can only conclude that a trust may not in any event be so created as to prevent the alienation of the property comprising it for a period which might exceed the duration of a life or lives in being and twenty-one years. By that test, the restraint which the testator sought to impose in the ninth article of his will is necessarily invalid, for it was to extend throughout the duration of the trust, and that in turn was to continue throughout the lives of persons in being at his death, to whom life annuities were given, and also during the lifetime of their children, who might be born after his death, and who would succeed to the annuities."

The annuities provided for in these articles were not within the rule, therefore the trust whose duration was measured by their duration was not within the rule, and since the maximum period for which a restraint on alienation is valid is measured by the same rule, the prohibition under the ninth article forbidding the trustee to sell these properties extended throughout the duration of the trust, and did not offend against this rule. Further, while holding that the trust is good as to all annuities under these articles except those to the children of persons living at, but born after, the decease of the testator, the opinion holds the prohibition against alienation by this trustee is not only void as to the period beyond the life of those living at the testator's decease but void as well, for the period covered by the lives of the annuitants living at the decease of the testator. The premise seems to me wrong, the reasoning fallacious and the result at war with authority.

If any of these annuities were void because of falling within this rule and the trust and the prohibition against alienation as to this void, it would not follow that the trust or the prohibition against alienation would be void in toto. The prohibition would in such case offend the rule as to the period of the annuity which fell within the rule and to that extent made void the trust. It and the trust would not offend the rule as to the period of life of the other annuities. If this were all, to this extent the prohibition against alienation in the ninth article would be good, and the period of time covered by the life of annuitants living at the decease of the testator might aggregate upward of seventy-five years. There would still be before us, undecided by the opinion of the court, the question whether these restraints on alienation although good as not offending the rule of perpetuities were for other reasons bad in law. I repeat. None of the annuities provided for in these articles offend this rule. If I am mistaken as to this, unquestionably the annuities to persons living at the decease of the testator, do not offend the rule. It is the law that a restraint upon alienation may not offend this rule, yet be bad because against public policy. And this principle of the law is applicable whether all or some of the annuities provided in these articles are good. When the restraint unreasonably impedes the economic development of the community by taking the property out of commerce an unreasonable length of time, and thus unreasonably injures the public welfare, it becomes an unreasonable restraint on alienation in consequence of the social loss it causes through its limitation of restraint, and is therefore void. A trust or a provision of a trust or a restraint upon alienation which is contrary to public policy is void and will not be enforced.Manierre v. Welling, 32 R. I. 104, 78 A. 507; Egerton v. Earl Brownlow, 4 H. L. Cas. 1, 144; Stanley v.Colt, 72 U.S. (5 Wall.) 119, 163; Perry on Trusts, Vol. 1 (6th Ed.) § 21.

In the will before us the restraint on the alienation of the Exchange Place and Homestead properties is prolonged through the lives of three generations covering a span of perhaps seventy-five to a hundred years. This restraint on the alienation of these properties is opposed to the interests of the beneficiaries of the trust. The Exchange Place property is located at a corner of the public square in the very center of the city of Waterbury, in the heart of the financial and retail business district; it is as valuable as any land in the city, and is most favorably adapted for a large building containing places of business and offices. The Homestead is located in a central locality of changing character, so that its most available use cannot now be determined.

The effect of a prohibition against the alienation of these properties cannot but react disadvantageously upon neighboring properties, and if continued for seventy-five or more years would seriously impede the proper growth and development of the business parts of the important and growing city of Waterbury, whose opportunities for business development are somewhat restricted by its location. The restrictions militate so strongly against the interests of both beneficiaries and the public as to make them unreasonable. For this reason I would hold the prohibition forbidding the trustee to sell in article ninth invalid as against public policy.