
    Charles C. Smith, as Executor, etc., of Adaline L. Gregg, Deceased, Appellant, v. The A. D. Farmer Type Founding Company, Respondent.
    
      Beconversion of money into land—election not to have a power of sale exercised — the right exists where the equitable owner is entitled to the money ai once — not so in the ease of a consolidated fund in which the sha/i'es cannot be determined until certain deductions are made — not so when an accounting by an executor is necessary to determine distributive shares—trust to pay annuities —valid accumulation of rents — suspension of the power of alienation as to real and as to personal property.
    
    The general rule as to a reconversion of land into money or money into latid is, that where money is given to he laid out in land to be conveyed to a person, though there is no gift of the money to him, yet, in equity, it is his and he may elect not to have it laid out; and so, on the other hand, where land is given upon a trust to sell and to pay the proceeds to a person, though no interest in the land is expressly given to him,in equity/he is the owner and the trustee must convey as he shall direct. But before such a reconversion can he made, or such election had, the parties seeking to elect must, upon the sale of the land, at once be entitled to the money.
    In an action brought by the executor of a deceased lessor to recover rent, it appeared that the will of the lessor, Adeline L. Gregg, by its sixth clause gave her residuary estate to her executor in trust, with a mandatory power of sale of the real estate, the time and manner of the sale alone being left discretionary. The executor was directed to divide and apportion, into two equal parts, “the rents, issues and proceeds of the sale,” after deducting “ the .charges, expenses and bequests ” mentioned in the will as charges upon the estate, and also such as might occur “in the management, disposition and settlement of the estate.” One of these shares was bequeathed to the testatrix’s daughter Josephine or her heirs and assigns, who were to receive an annuity out of the rents until the power of sale was exercised, at which time -whatever might remain of the rents and the proceeds of said equal parts were to he paid over to her or them, while the other share was directed to he held in trust for her daughter Minnie for life, who Was to receive a similar annuity until the power of sale was exercised,, at which time -whatever might remain of the rents and the proceeds of the sale, less certain charges, was to be invested, and the income thereof was to be paid to her for life, and, upon her death, the share was given to her children. Minnie died and the trust as to her failed, and - her children and Josephine served notice of an election to take the realty as such, the power of sale never having been exercised.
    The defendant, who was a lessee of certain of the real estate, claimed that this notice of election divested the plaintiff, the executor, of all title to the rents, and that the same was in the surviving daughter and in the grandchildren. Held, that the action was maintainable by the executor;
    That the scheme of the will created, as to the residuary estate, a consolidated fund, consisting of personal property and the rents, issues and profits of the real estate and its proceeds; that, in order to create that fund in accordance with the wishes of the testatrix, the executor must sell the real estate; that from the fund must be made the deductions mentioned in the will; that until this was done the shares given the daughter and the grandchildren could not be determined, and that, consequently, their notice of election was ineffectual, as they had no immediate right to the proceeds of the sale of the realty;
    That the provisions of the will created a trust for the purpose of paying legacies — an annuity being a legacy, and, when payable out of the rents, a charge upon the land;
    That the fact that there was an accumulation of rents, beyond the amount necessary to pay the annuities, did not invalidate the trust, for the reason that the accumulated rents would go to those persons who were entitled to the next eventual estate;
    That, assuming that, at the present time, the living daughter and the two grandchildren were entitled to the surplus rents, such a right gave them no present right to elect' to reconvert the money into land, because, omitting the surplus rents, they would not be entitled to the proceeds of the sale of the real estate ' until an accounting or settlement by the executor should determine what was left of the accumulated fund;
    That the executor had a right to, and should, account with a view to determining the value of the distributive shares in the consolidated fund of the surviving daughter and grandchildren;
    That there was no void trust as to the real estate, as the power of alienation was not improperly suspended, since the executor might, under the power of sale, convey a fee at any time;
    That there was no unlawful suspension of the absolute ownership of personal property, because the distribution must be made within, or at the expiration of* the lives of the two daughters of the testatrix.
    Appeal by the plaintiff, Charles -C. Smith, as executor, etc., of Adaline L. Gregg, deceased, from so much of a judgment of the Appellate Term of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 18th day of December, 1896, as affirms the judgment and order entered upon the decision of the General Term of the City Court of New York, entered in the office of the clerk of said court on the 15th day of August, 1898.
    
      Albertus Perry and Daniel Gla/rh Briggs, for the appellant. |
    
      Bengamin Yates, for the respondent. :■
   Patterson, J.:

This action was brought to recover rent under the terms of a lease made between Adaline L. Gregg, as lessor, and Farmer, Little & Co., as lessees. The lessor died leaving a last will and testament, of which the plaintiff was appointed executor and trustee. The defendant corporation succeeded to the' rights of Farmer, Little & Co., and assumed all the obligations and covenants of the lease made to the copartnership. That lease was for a period of ten years from the 27th of January, 1887, at the yearly rental of $3,500, payable monthly, and for the rent due for the month of May, 1896, this action wras brought. The plaintiff claims the rent under the will of his testatrix. By the provisions of the sixth clause of that will the rents,, issues and profits of realty are, with other property, given in trust to the plaintiff and a mandatory power of sale of the real estate is contained in the same clause, the time and manner1 of sale alone being left discretionary. An out and out conversion of the realty into personalty was effected by that clause of the will; but the proceeds of the sale of the real estate are made part of a consolidated fund, which fund is created for the ultimate benefit of two daughters of the testatrix, after deductions that can only be ascertained and allowed on the settlement of the estate, when one-half of the1 fund will be distributable to one daughter or her heirs, and the other half (which was to have been held in trust for the other daughter for life with remainder to her children) will go to two 'grandchildren of the testatrix. The power of sale has never been exercised. The daughter, whose share of the consolidated, fund- was to be held in trust, has died and that trust fails. The. surviving daughter and the two grandchildren have served notice of an election to take, the realty as such, and the defendant sets up in its answer this alleged or attempted reconversion of the property from personalty intodand, and claims substantially that the plaintiff’s . right and title to the rent under the lease and now sued for , has ceased, and that the real parties to whom the rent is due and to whom the defendant is responsible^ are the surviving daughter and the two grandchildren. Upon the trial of the cause in the City Court of New York, a verdict was found for the plaintiff under the direction of the court, and exceptions were ordered to be heard in the first instance at the General Term, where the exceptions were sustained and judgment absolute was ordered for the defendant. An appeal was taken to the Appellate Term of the Supreme Court and the judgment of the General Term was there affirmed, except so far as that judgment provided for the- recovery of costs against the plaintiff; and from the judgment of the Appellate Term the plaintiff appeals to this court, that is to say, from so much of that judgment as affirms the decision of the General Term sustaining the defendant’s exceptions.

The courts below have treated the sixth clause of the will of the testatrix as if it presented the simple feature of parties, now entitled to the ■ proceeds of land to be realized on the execution of a power of sale, electing to take the land' instead of the proceeds. It was considered by those courts that, on the determination of a trust created for the benefit of one of the testatrix’s daughters, the whole estate mentioned in the sixth clause vested in the surviving daughter and the two grandchildren, subject to the power. of sale, and that the election of those parties to take the land instead of the proceeds of sale, put an end to the power; that as the real estate was not disposed of by the executor under the power contained in the will, and as there was no lawful purpose for which a sale was now absolutely required, there was no obstacle to- a reconversion of the same by the parties in interest. The general rule relating to a reconversion of land into money or money into land is well understood, and is illustrated by the cases cited in the opinion of the Appellate Term. That rule is, that where money is given to be laid out .in land to be conveyed to a person, though there is no gift of the money to him, yet in equity it is his and he may elect not to have it laid out; and so, on the other hand, where land is given upon a trust to sell and to pay the proceeds to a person, though no interest in the land is expressly given to him, in equity he is the owner and the trustee must convey as he shall direct.” (Leigh & Dalzell on Eq. Conv. [1st Am. ed.] 170.) But before such- a reconversion can be made or such election had, the parties seeking to elect must, upon the sale of the land, at once be entitled to the money. (Hetzel v. Barber, 69 N. Y. 11.) In that case the court remarks: “ As they are entitled at once to the money, they could, at public or private sale, offer more for the land than any one else, and could thus, if the doñeé of the power acted' honestly and fairly, prevent a sale to any .one else,- or they could take the money and at once again invest the same in land.. Hence the law very properly gives them the right to elect to take the land, and it must be presumed to have been the intention of the donor of the power that they should have such -election.” But in the case at bar, the surviving daughter and the grandchildren of the testatrix are not entitled at Once to the proceeds of the sale. Those proceeds must be received by the executor, for by the sixth clause of the will they are drawn into the settlement of the estate. Nor is a presumption allowable of an intention of the testatrix to authorize a reconversion of the money into land. The difficulty with the present case is that the surviving daughter and the grandchildren are not given -the proceeds of the land -independently and as a separate -bequest. The whole scheme of the sixth clause indicates an intention of the testatrix that her children and - grandchildren shall never take the land as such. The disposition made by the testratrix by the sixth clause is, of her whole residuary estate, consisting of personal property, the rents, issues and profits of real estate and proceeds of sales of real estate, all of which are, by necessary construction, to be massed or mingled in one combined or consolidated fund, and the bequest to the children or grandchildren is of moieties of that Consolidated fund after deletions to be made. ■ , In order to constitute that fund the executor must sell the land and receive the proceeds, or else the testamentary intent of the testatrix is defeated. . The purpose is- not destroyed by reason of the death, before ■ the execution of the power of sale, of one of the daughters of the testatrix.

The provisions of;the sixth clause are as follows, viz.:

All the rest, residue and' remainder of my real and personal -estate, wheresoever and whatsoever it may be at the time -of my decease; and rights, claims, dues and demands, whether now held or hereafter obtained by. me (that would include certain claims against a third daughter of the.testatrix, as provided in the tenth clause of the will), I do hereby give, devise and bequeath unto Charles C. Smith, Esq., my executor hereinafter named, to have and to hold the same, but, nevertheless, in trust, and upon the uses and trusts and for the purposes provided in this my will. And I do hereby fully authorize and empower my said executor and trustee, to manage, lease, mortgage and to sell and dispose of all my real estate or any part thereof, or any rights therein, at public or private sale, and at such time or times, and in such manner as he may deem proper, * * * and to divide and apportion the rents, issues and proceeds of the sale thereof, after deducting the charges, expenses and bequests mentioned and referred to in this my will as a charge upon, and as may occur in the management, disposition and settlement of, my estate in two equal parts, portions or shares, one of which equal parts, portions or shares of said rents, issues and sale I hereby give, devise and bequeath to my daughter Mrs. Josephine Hillyard, and her heirs and assigns fe^ver, to be paid as follows: I direct my said executor and trustee to pay to her or them six hundred dollars of the rents of said real estate during and for each and every year until the same is sold, and then whatever may remain' due of said rents and the proceeds of said equal' part, portion or share of said real estate when sold, less the aforesaid charges, expenses and bequests, to pay the same to her or them; and the other of said equal parts, portions or shares of said rent, issues and proceeds of said sale I direct my said executor and trustee to pay six hundred dollars of the rents thereof to my daughter Mrs. Minnie Gowing, during and for each and every year until said real estate is sold as aforesaid, and then to invest and, if need be, reinvest whatever, may remain due of said rents and the proceeds of the sales of said last-mentioned part, portion or share, less said charges, expenses and bequests, and the sum of five hundred dollars to be allowed to her out of said proceeds, and to pay the interest & income of the balance thereof to her during and for the remainder of her natural life, and upon her decease whatever may afterwards become or fall due of said rents, and the balance of said proceeds of said sale so invested I give and bequeath to her children and my grandchildren (naming them), to be equally divided between them, and to belong to them and their heirs forever.”

This residuary estate is, therefore, given, to the executor in'trust; he is to receive the rents and profits of the real estate forming part thereof; out of the rents and profits he is to pay annuities until the power of sale is exercised; these annuities are the $600 a year to each daughter. The surplus rents accumulate ; they are to be added to the proceeds of sale when that sale is effected under the power, and then the consolidated fund is distributable. Those provisions of the will create a trust for' the purpose of paying legacies, for an annuity is a legacy, and, when payable out of the rents, is a charge on the land. (Hawley v. James, 5 Paige, 461; Mason v. Jones, 2 Barb. 229 ; Mason v. Mason’s Executors, 2 Sandf. Ch. 432.) The fact that there results an accumulation of rents over and above the amount necessary to pay the aunuities does not invalidate the trust, for the accumulated rents would go to those persons who were, entitled to the next' eventual estate. (Manice v. Manice, 43 N. Y. 303 ; Cochrane v. Schell, 140 id. 516.) The persons so entitled to the surplus rents may be the two daughters, or,, at tj^ present time, the one daughter and the two grandchildren, but that does not give them the present right to elect to reconvert the money into land, for, taking out the surplusi rents, they are not entitled to the proceeds of sale until an accounting or settlement by the executor as to what is left of the fund. . All the residuary estate mentioned in the sixth clause is mingled.' Although awkwardly expressed, it is provided by the sixth clause that the proceeds of the sale of land are to be divided into two equal parts, after deducting the charges, expenses and bequests mentioned and referred to in the will as a charge upon, and as may occur in the ma/nagement, disposition and settlement of, the testatrix’s estate. The daughters and grandchildren are, therefore, -not at once entitled to the proceeds. How much of these proceeds of the sale will go to them cannot. be ascertained until the whole estate is administered and settled, and to reconvert the land and take away the proceeds from the executor would prevent him from settling the estate in the manner contemplated and intended by the testatrix.

I think the effect of the sixth clause of the will is to combine all the residuary estate into a consolidated fund, and that whole residuary estate is to be considered as personal estate from the death of the testatrix, and that the rents and profits of the real estate and the proceeds of sale are legal assets in the executor’s hands, for which he is bound to account as personal estate (Stagg v. Jackson, 1 N. Y. 206); that the surviving daughter and the grandchildren take as legatees distributive shares, not of separated proceeds of sale, but of a fund of which the proceéds of sale constitute merely a part, and that, under such circumstances, there is no right of election to reconvert the proceeds of the sale into the land. There is no void trust as to the realty, because the power of alienation is not suspended. The executor may convey a fee at any time. There is no unlawful suspension of the absolute ownership of personal property, because the distribution must be made within or at the expiration of two lives, namely, those of the testatrix’s two daughters, and the plain-" tiff is entitled to receive the rents of the property in question, and the judgments of the courts below were wrong and should be reversed, and the exceptions overruled and judgment entered for the plaintiff as directed in the trial court.

Van Brunt, P. J., Rumsey, O’Brien and Ingraham, JJ., concurred.

Judgments reversed, exceptions overruled and judgment ordered for the plaintiff as directed in the trial court, with costs.  