Hancox v. Wall , 35 N.Y. Sup. Ct. 214 ( 1882 )

Barker, J.:

All the parties before the court on the hearing of these demurrers agree that it was the intention and purpose of the testator to convert all his real estate into money. The direction in the will on this subject is peremptory, and it is made the imperative duty of the trustees to sell the real estate and convert it into personal assets, and no discretion whatever is vested in them on this question.

It is not left to their personal judgment and election whether the conversion shall take place or not. As to the mode and manner of administering the trust estate, the prices for which the real estate should be sold and the time of payment, they have a discretion, and that is all the discretionary power which the testator intended to give them under the will.

The clause of the will is so clear and certain that there is no room for misapprehension. The language is as follows: “I do hereby authorize and empower my said executors to let or lease my real estate, to receive the rents and profits thereof, and after the decease of my wife to sell and convey the same, for such 'prices, and upon such terms, as they may deem best for the interests of my estate.”

Mrs. Wall being dead the time has arrived, fixed by the testator, when all his real estate should be converted into money.

In executing this power it is the duty of the trustee to exercise his best judgment in fixing upon the prices at which the several pieces of property should be sold, and so long as he acts in entire good faith, and without intent to injure the persons having the life estate in the trust property, and is not seeking to benefit the remaindermen, the court will not interfere in the exercise of his best judgment. But if the action of the trustee is unreasonable and injudicious, and a failure to make the conversion is producing injury to the life annuitant, then this court has the power, and it is its duty, to control the action of the trustee and compel him to proceed and make the conversion, and the same will be done under the supervision and direction of the court.

A court of equity, by virtue of its general jurisdiction over trusts and trustees, can, irpon a proper state of facts, direct how a discretion of this character shall be exercised by the trustee.

The exercise of this power of the court is in no sense an interference with the discretion which the testator intended to give the trustee. It is simply compelling the trustee to act and to adminis ter the trust fund. (Hill on Trustees [4th Am. ed.], 762, 773 ; Ireland v. Ireland, 84 N. Y., 321; Furniss v. Furniss, 51 How., 64.)

There being two classes of persons interested .in the question as to'when the conversion should take place, it requires considerate action on the part of the trustees. They who take an absolute title in the trust fund after the termination of the life estate, may be largely benefited by a delay in the conversion, which may be to-the great disadvantage and disappointment of the life annuitant.

It is, however, the plain and manifest purpose of the testator that his children should at once, upon his death, enjoy an income to be derived in part from the sale of the real estate; and if it be true, as the plaintiff claims, and as is averred in her complaint, that there has been a reasonable time in which to make the sale and investment, and that the delay is unnecessary and wrongful, and to her disadvantage, then the trustee should be controlled in his action, and required, under the direction of the court, to make the conversion, and the sale will be watched by the court with a view of protecting the interests of all the parties.

If the averments in the complaint as to the delay in making the conversion were insufficient to show that the trustee was not exercising a reasonable judgment and fairly protecting the interests of the plaintiff, we would still be of the opinion that the plaintiff states facts sufficient to entitle her to relief of a different nature and character.

The plaintiff being interested in the property which is to be converted into money and invested for her benefit, she has a right, although the trustee is acting in good faith and is exercising the discretion vested in him, wisely and properly, to call upon him, from time to time, to disclose to her the nature and character of the property in his hands constituting the trust fund-— to show its value, the income derived therefrom, and the expenses to which the trustee is subjected in its management, that she may be able in the future to watch and look after her own interest.

In this case, the trustee has had the possession and management of this large trust estate for a period of years. The plaintiff’s income to be derived therefrom is yet undetermined, and the defendant claims that most of the income received is expended in paying taxes and caring for the real estate. Tt seems to us to be eminently pi oper that the trustee should make a full and complete exhibit of the situation of the trust estate, disclosing to the plaintiff the character of the property, and the mode and manner in which it is managed, even if she fails to prove such facts as would justify the court in interfering and controlling the action of the trustee in making a conversion of the real property into cash items. (Costabadie v. Costabadie, 6 Hare, 410; Hill on Trustees [4th Am. ed.], 165.)

In disposing of this appeal, we do not deem it necessary to' determine the question discussed upon the argument whether, under the will, the trustee may hold the trust funds after a conversion has taken place, in bulk, for the benefit of the beneficiaries, or whether it is an imperative duty to make separate and distinct investments for each of the life annuitants. That question can be more properly determined upon the final hearing.

The interlocutory judgment is affirmed, with leave to the defendants to answer on payment of costs at Special Term and on this appeal.

Brady, P. J., concurred; Daniels, J., concurred in the result.

Judgment affirmed, with leave to answer over on payment of costs.