In re the Estate of Voorhis
1941 N.Y. Misc. LEXIS 1805, 176 Misc. 585, 27 N.Y.S.2d 818 (1941)
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Rule of Law:
When a will grants a named trustee discretionary power over the amount to be spent on a non-charitable, honorary trust purpose (such as monuments for a private family plot), and the named trustee fails to act, a successor trustee cannot exercise that unique personal discretion, and the unspent portion of the fund results to the residuary legatees. However, if the bequest is imperative, commanding a specific sum or the entirety of the fund to be spent, it can be enforced as a charitable trust by a successor trustee under statutory provisions.
Facts:
- The deceased died in 1922, leaving a will that named Arthur J. Martin as executor and trustee.
- Paragraph twenty-fourth of the will bequeathed $10,000 to the trustee for a memorial window (up to $1,000) and monuments/markers in the family plot in Bellefontaine Cemetery, with the trustee having discretion regarding the cost.
- Arthur J. Martin died in November 1924, two years after the deceased's death.
- Samuel W. Maguire was appointed as successor trustee and, in March 1926, received the $10,000 fund specifically for the trust under paragraph twenty-fourth.
- By September 1927, Maguire spent $1,000 for a memorial window and $1,732.60 for monuments and markers.
- Maguire subsequently invested a remaining portion of the fund into a $6,500 mortgage participation certificate and used income from it for various expenses, including insurance premiums on the William Clark monument.
- The William Clark monument, located within the deceased's family plot in Bellefontaine Cemetery, had a reproduction cost of $60,000.
- The will's residuary clause (paragraph thirtieth) distributed all remaining property to specific "natural persons" pro rata, based on their other bequests.
Procedural Posture:
- After the death of Samuel W. Maguire, the successor trustee, his executrix presented an account of his trust transactions to the Surrogate's Court.
- Certain residuary legatees (with aggregating interests of $88,000) and a special guardian (representing an incompetent legatee with a $500 interest) filed objections to the account in the Surrogate's Court.
- The objectants sought a decree disapproving Maguire's investment of a portion of the trust fund (the mortgage participation certificate) and disallowing most of his reported expenditures.
- The accountant (Maguire's executrix) contended that the trust established by paragraph twenty-fourth was valid and still active, relying on Personal Property Law § 13-a.
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Issue:
Does a testamentary bequest for specific memorial purposes, granting the named trustee discretion over the expenditure amount without requiring the entire fund to be used, create an enforceable charitable trust that a successor trustee can fully administer, or does the failure of the named trustee to act cause the unspent portion of the fund to revert to the residuary legatees?
Opinions:
Majority - Delehanty, S.
No, the failure of the named trustee to act prevents the successor trustee from executing the discretionary portion of the trust, causing the unspent balance to revert to the residuary legatees. The court explained that traditionally, gifts for monuments on private burial grounds (not for the testator's own grave) were considered "honorary trusts," defective as private trusts (due to lack of specified beneficiaries) and as public/charitable trusts (due to lack of public purpose), often resulting in a resulting trust for the heirs. While New York's Personal Property Law § 13-a now validates such gifts for others' graves as a charitable use, a crucial distinction regarding trustee authority applies. If a will grants a named trustee permissive, discretionary authority over the amount to be spent for the trust's purposes, rather than an imperative command to expend the full fund, that discretion is considered personal to the named trustee. Upon the death or disability of the named trustee, this personal power cannot be exercised by a successor trustee. In such a scenario, the beneficial property rights in the unspent fund immediately vest in the residuary legatees at the testator's death, subject only to divestment by the named trustee's exclusive exercise of that power. Since the deceased's will for paragraph twenty-fourth used permissive language ("to cost any sum in his discretion") and implied personal confidence in the original trustee, Arthur J. Martin, Samuel W. Maguire, as successor trustee, could not properly administer the remaining discretionary funds. Consequently, the court sustained the objections to the investment and disallowed certain expenditures, surcharging Maguire's account for the unspent principal sum of $7,267.40 and collected interest.
Analysis:
This case is significant for clarifying the limits of successor trustees' powers in administering statutory charitable trusts involving memorials, particularly when the original bequest involved trustee discretion. It underscores that even when a bequest is deemed charitable by statute, the specific wording of the will regarding trustee discretion is paramount. Testators must explicitly command the full expenditure of funds for the designated purpose if they intend the trust to be fully enforceable by any trustee, rather than granting personal discretion to a specific individual. This ruling helps prevent the unintended failure of such trusts and the reversion of funds to residuary estates, emphasizing careful drafting to ensure testamentary intent is carried out.
