Opinion
August, 1907.
R. Gordon Mackay, for plaintiffs.
M.H. Winkler, for defendant Schmitt and others.
Eugene Smith, for defendant City Fireproofing Company.
The testator, Michael Schmitt, devised and bequeathed all his property to his executors, "In trust to sell and dispose of all or any part thereof either at public or private sale, and upon such terms and at such times as to them may seem to the best interests of my estate and after converting the same into cash to pay over the same as follows." A number of legacies are then provided for, and a further direction is made that the executors divide the remainder of the estate equally between the testator's nephews and nieces living at the time of his decease.
Certain rents having come into the hands of the executors, and there being debts in a substantial sum, the question has arisen whether these rents belong to the residuary legatees or whether the moneys are properly applicable to the purposes of administration.
This question turns upon the effect of the clause whereby the devise is made to the executors "in trust." There was no express trust — merely a power in trust (Real Property Law, § 77) — and, if the real estate be viewed as having retained its character as such, the result would be that the parties entitled to the residue took it — and with it the rents — subject to the exercise of the power. Konvalinka v. Schlegel, 104 N.Y. 125; Clift v. Moses, 116 id. 144.
In my opinion, the rents belonged to the executors upon the theory of an equitable conversion. That a sale was to be had before any of the legacies were paid and that the parties entitled to the residue were to share in it only in the form of a distribution in cash, after the sale and the payment of legacies, is the intention practically expressed in so many words. The clause preceding the provision for a devise "in trust" directs the payment of debts, and it is to be assumed that the testator was aware of the condition of his debts and assets. Without a sale as an incident to the substantial administration of the estate, and without the receipt of rents — an incident of an equitable conversion — by the executors, the will could not be carried out, in view of the condition of the estate; and it appears, therefore, that there was an intention, implied as well as expressed, that the real estate be treated as personalty. A construction favoring a conversion is to be resorted to upon such a state of facts. Dodge v. Pond, 23 N.Y. 69; Lent v. Howard, 89 id. 169; Fraser v. Trustees, 124 id. 479.
I find no ground for an affirmative direction that the executors proceed to an immediate sale, or for any further defining of their duties in the matter of collecting the rents and of paying the debts. Their duties are clear; and they have some discretion as to the matter of sale (Lent v. Howard, supra) with which, in the absence of any proof of a threatened abuse of their powers, the court is not called upon to interfere.
Form of decision and judgment may be presented, in accordance with this memorandum, upon notice of settlement.
Judgment accordingly.