
    In the Matter of Appointing a Trustee under the Last Will and Testament of Mary L. Kirby, Deceased. Frank R. Chandler and Frederick W. Leggett, as Executors, etc., of Mary E. Van Aulen, Deceased, Appellants; James E. Delaney, Respondent.
    Second Department,
    June 27, 1906.
    Trust — transfer by beneficiary of his interest in trust property in consideration of a mortgage on a portion thereof to secure payment of an annuity—appointment of substituted trustee — when assignment of mortgage on trust property void — accounting.
    A testatrix left her residuary estate, consisting of real and personal property, in trust, the income payable to her husband for life, except an annuity therefrom to be paid tó o'ne D. for life, the whole property to go to her brother on the termination of the trust.
    Subsequently D. entered into an agreement with the widow of said remainder-man, who took his estate by will subject to the trust, which agreement recited deficiencies in payment of the annuity due D. for the payment of which he released the trustee and said widow in consideration of the payment of a fixed sum. By the agreement D. accepted the personal bond of the widow secured by a mortgage upon a certain piece of real estate, which was part of the trust estate, as security for the future payment of his annuity by the widow and
    
      agreed that .proceedings-might be taken to extinguish the trust in his favor. He also, pursuant to the authority of a special statute and of his own right irrespective of the statute, assigned all his right in the trust property to the widow in consideration of her personal agreement to pay his annuity.
    The said D. thereafter assigned the bond and mortgage given to secure the payment of his annuity to a third party while the property and rights of the widow passed to others on her death.
    On the question as to whether the trust was extinguished.by the acts aforesaid, and whether the court had power to appoint a substituted trustee on the application of D., .
    
      Held, that D. by his agreement disposed of his interest in the trust estate except as to that, portion thereof on which he had acquired a liemby the mortgage given to secure the payment of his annuity, although it seems that neither the Legislature-nor a cestui que trust has-power to terminate a legal trust -created for a legal period. " . - .
    Hence; as he still had an interest in that portion of the trust estate, he had a fight ■ to t-lie appointment of a' substituted trustee to administer that specific property to which, however, the trusteeship should be limited;
    That said D. was not divested of his interest .in the income by the assignment of the bond and mortgage thereon, as such assignment was void by virtue Of' section 3 of the Personal Property Law and section 83 of -the Real-Property Law.; - -
    That as D. had receipted for his annuities in full to the date of the commencement of the proceedings, he Was not entitled to an accounting.
    Woodward and Miller, JJ., dissented. -
    Appeal, by Frank K. Chandler and another, as executors, etc., of Mary E. Yan Aulen, deceased, from an order of the Supreme Court, made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 13th day of November,, 1905.
    
      Robert W. Todd, for the appellants.
    
      J. E. Delaney [James Taylor with him on the brief], for the respondent.
   Rich, J.:

, Appeal from an order appointing a trustee of the estate of Mary L. ¿ir-by, deceased, and directing an accounting by the executors of Mary E. Yan Aulen, a former trustee, deceased. The appeal Of the executors is based upon the contention that the trust- has been terminated; thq cestui que trust has* by legislative authority, trattsferred all Ills interest in the trust estate, and for that reason is not entitled to the relief granted by the Special Term.

Mary L. Kirby died in the borough of Brooklyn on September 16, 1875, leaving a last will and testament, thereafter duly admitted to probate, containing the following clause: “ Third. I give, devise and bequeath unto my executors hereinafter named, and to the survivor of them, all the rest, residue and remainder of the estate, real and personal, of which I may die seized and possessed, in trust, nevertheless, to and for the uses and purposes following, that is to say : To receive the rents and profits of such part thereof as shall consist of real estate, and to invest and keep invested upon bond and mortgage of real estate, or in the public funds of the United States, State or city of New York, as they may deem most safe and productive, such part thereof, as shall consist of personal estate, and apply said rents and profits of real estate and interest or income of personal estate to the use of my said husband, William L. Kirby, during liis natural life, except that they shall apply to the use of James E. Delaney, who was brought’ up by me, the sum of five hundred dollars per annum thereout, until he shall arrive at the age of twenty-one years and from and after that time the sum of one thousand dollars per annum thereout, during the lifetime of my said husband, William L. Kirby, and from and after the decease of my said husband, the sum of two thousand dollars per annum thereout, during his natural life.”

Letters testamentary issued to Josiah Macy, Jr., and Thomas . Everit, two of the executors named in said will; upon their death William G. Van Aulen, a brother of said Mary L. Kirby and her sole and only heir at law, to whom her entire estate descended subject only to the continuance of the trust created during the lifetime of said James E. Delaney, was duly appointed trustee of the trust created in and by said will, qualified and acted as such until his death.- He left a last will and testament by which he devised and bequeathed his entire estate to his wife, Mary E. Yan Aulen. Upon his death George W. Chauncey was duly appointed trustee in his place and stead. At the time of her death the estate- of Mary L. Kirby consisted of real and personal property, a parcel of the real property being a house and lot in the city of New York-known as No. 140 Waverly place. It was provided by chapter 119 of. the Laws of 1883, “ That James E. De Laney of the city of Brooklyn shall ha.ve full power, and authority, and it shall-he lawful for him to assign, Or in any other manner to dispose of. all his right, title and interest in and to a certain trust for - the receipt' of the '■rents and profits of lands situated in the city and county of Mew York, and in the city of Brooklyn, county of Kings, formerly belonging to Mary' L. Kirby, late of said city of- Brooklyn,, which trust is set forth in the will of the said- Mary L.- Kirby, recorded in the office of the surrogate of Kings county

On May 1, 1891, Delaney (the ecstwi qie-trust); and Mary E. Yan Aulen (the then owner of the entile estate of said Mary L. Kirby subject to the tfust therein in favor of said Delaney) entered into an agreement in writing and under seal reciting- among other things the rights of, the parties,, the former proceedings relating to said trust" and estate, the statute referred to, the adjustment of deficiencies arising from the failure to pay Delaney the-full amounts -to which he was entitled under the provisions of said will because of the iñsujB6.Ciency of the income derived from the trust, estate at the sum of $10,132.52 and its payment by Mrs. Yan Aulen, the discharge of . the trustee and Mrs. Yan Aulen from any further claim for past deficiencies. These" recitals were followed by the following covenants and agreements : '

First. Said party of the first part hereby consents that an order or decree may be made by said Supreme Court,'upon the application of either said George W. Chauncev or said Mary E. Yan-Aulen, substituting the said Mary E. Yan-Aulen as trustee of the trust created in his favor, in and by the said last will and testament of the said Mary L. Kirby, deceased, in the place and stead of said George W. Chatincey, the present trustee, and also consents that she may be appointed such -trustee, without being required to give security of any kind- by way of bond or.otherwise, and. he also consents to the extinguishment.of the trust created in its* .favor, as to all the.property, real and personal, in the -hands of said George W. Chauncey the present "trustee, as well as to any property, real or personal, which may hereaftér come to -his hands, or into his possession or into the hands Or into the possession of his successor or siiecessors; and. he also consents that a judgment or decree may be made by said Supreme Court, in any proceedings the said Mary E. Van Aulen may institute or cause to be instituted extinguishing and terminating said trust created in his favor as aforesaid. * * *

Fourth. The said party of the first part' having accepted the personal bond of said party of the second j>art with three sureties, secured by a mortgage upon said premises, known as No. 140 Waverly Place in the City of New York, as .and for the security for the payment of'said two thousand dollar annuity to him, during his natural life as aforesaid, hereby consents that said party of the second part may at any time hereafter, if she shall so elect, substitute other real property situated in the cities of New York or Brooklyn, -or both, as security for her said bond, in the place of said premises known as No. 140 Waverly Place, as aforesaid, provided such other property so to be substituted* shall have a cash value of not less than thirty thousand dollars,” etc.

“Fifth. The said party of the first part, pursuant to the pro visions of the Act of the Legislature of the State of New York, entitled ‘An Act enabling James E. Delaney, of the City of Brooklyn, to assign .or in any other manner, to dispose of his. right, title and interest in and to a certain trust for the receipt of the rents and profits of lands situated in the City of Brooklyn, County of Kings, and in the City and County of New York, formerly belonging to Mary L. Kirby, late of the City of Brooklyn, which trust is set forth in the Will of the said Mary L. Kirby, recorded in the office of the Surrogate of Kings County,’ passed March 22, 1883, hereby,, in consideration of the premises, sells, assigns, transfers, and sets over to said party of the second part, all his right, title and interest in and to the trust, for the receipt of the rents and profits of the lands situated in the City and County of New York, and in the City of Brooklyn, County of Kings, formerly belonging to Mary L. Kirby, late of said City of Brooklyn, which trust is set forth in the Will of said Mary L. Kirby, recorded in the office of the Surrogate of Kings County, and said party of the first part, as his own voluntary act and deed, irrespective of the authority conferred upon him by said Act of the Legislature, hereby sells, assigns, transfers and sets over to said party of the second part, all his right, title and interest in and to said trust estate created in his favor as aforesaid, and to all property, real and personal, covered by or embraced in said trust. .

“ Sixth. Said party of the second part hereby expressly agrees to pay to said party of the first part during liis natural life, said annuity of two thousand dollars, in quarter yearly payments of five hundred dollars each, on the first .days of July, October, January and April,, in each and every year, or" within fifteen days after, the first day of each of said months.”

Down to.the time of her.death Mary E. Van Aulen performed this agreement on her part and paid to said Delaney the money secured thereby, and thereafter her executors, the appellants, have made such payments, the last One being made on October '2, 1905 (seventeen days before the petition in this proceeding was. verified), to Silas A. H. Dayton on Delaney’s order, in the following form :

“$500',00 ■ • Brooklyn Boro, Hew York, Oot. 2d, 1905:,
“At sight. Pay to the Order of Silas A. H. Dayton, Esq., Five Hundred 00/100 Dollars.
“Value received and Charge the same with Exchange, to account .of being amount of' annuity due me under Will of Mary L. Kirby in full-to date.
“ J.'E. DELANEY.”'

This draft was drawn on the appellants as executors of the will of Mary E. Van Aulen, and paid by them.

• In 1890 Chauncey resigned as trustee, and said Mary E. Van Aulen was duly appointed in his place and stead. She never filed any account as trustee, and died in May, 1905, leaving a last will and testament, thereafter duly admitted to probate, in which, .with the exception of some minor bequests, she left her entire estate to her sister, Martha A- Buckingham, and her nieces, Anna S. B. Chandler and Rosalie A. B. Selfridge. Letters testamentary issued to the appellants named in her will, who qualified and are now acting as her executors. January 9, 1903, Delaney assigned the bond and mortgage given him' by Mary E. Van Afilen to Silas A. H, Dayton. There is ño claim that this bond and mortgage is not an adequate security for the payment to. Delaney of the $2,000 yearly, to which he is entitled under the provisions of the will of Mary L. Kirby for life.

It is claimed that it was not within the power of the Legislature to give legal effect to the agreement of Delaney by authorizing such action on his part as would result in the transfer of his interest in the trust estate and consequent termination of the trust, and that Delaney’s assignment of his interest and consent to the extinguishment of the trust were for that reason inoperative. As counsel states the proposition, “ no act of the cestui que trust, the trustee, or the Legislature, or all three combined, could terminate a legal trust created for a legal period ’ until the expiration of the time set by the testator,” which would be at Delaney’s death.

Within the authority of Metcalfe v. Union Trust Co. (181 N. Y. 39) this proposition correctly states the law, but it does not control our decision in this proceeding, or sustain the order appealed from, except as to that portion of the trust estate consisting of. the real property known as Wo. 140 Waverly place in the city of Wew York. I am of the opinion that Delaney did not, by his agreement with Mrs. Yan Aulen, dispose of his interest in the trust created by the will of Mary L. Kirby. He was not the owner of any portion of the property represented by the trust estate, and would never acquire property rights therein under the provisions of the trust. v His right was limited to the payment from the income thereof of the sum of $2,000 each year until his-death, and this right was created and' secured by the trust provisions. There is nothing in the will showing any intent on the part of Mrs. Kirby to secure the payment of the sums she directed paid to Delaney from the income or rents and profits of any'particular property or from any specific fund. The entire income had failed to produce a fund sufficient to pay his annuities up to the time the agreement was executed, there being a then existing deficiency of upwards of $10,000. Hntil payment was made each year, his right as a cestui que trust extended to the income of the entire trust estate. This right as to past deficiencies was extinguished by their payment by Mrs. Yan Aulen when the agreement was entered into.

The legal effect of the agreement, so far as its provisions were valid, was to release to Mrs. Yan Aulen, as Delaney might legally do (she being the sole owner of the estate; subject to his rights therein), his right or interest in the property from which the income applicable to the payment of his annuities were -payable, with the exception 'of- that parcel (of the value of $30,000) upon which he had, prior to - the execution of the agreement,,accepted and acquired a specific .lien,- viz., the premises known as No. 140 Waverly place, which ljen was much more valuable as a property right, as it did away with the probabilities of deficiencies in the payments óf the future and gave to him the control and means of enforcing the payment of his yearly annuities. This in no manner violated the provisions of the statute Or the intent of the testatrix. After the bond and mortgage were given they represented ,the interest and rights of Delaney in the trust and trust estate, which right and interest were thereby limited to that -portion of the trust estate upon which the mortgage was a lien. The assignment of this bond and mortgage to Dayton did not-divest Delaney of this right because of the provisions, of section 3 of the Personal Property Law (Laws of 1897, chap. 417) and section 83 of the Peal Property Law (Laws of 1896, chap. 547), which prohibited such transfer “ by assignment or otherwise.”

- In the property No. 140Waverly place, which yet forms a portion of the trust estate, Delaney has an interest; his right as a cestui gue trust is éhforcible against that portion of the estate which has been set aside as a. security for his protection, which interest is sufficient to,entitle him to the appointment of a trustee of that portion of the estate of Mary L. Kirby represented by the premises Nti. 140-Waverly place in the city of New York, to which property the trusteeship must be limited. " Having Been paid his annuities, as evidenced by his receipt in full, down to the time this proceeding was commenced, he is not entitled to an accounting. .

The order should be modified in accordance with this opinion and . as so modified affirmed, without costs to eithey party..

Hirschberg, P. J., and Gaynor, J., concurred ; Woodward and Miller, JJ., voted to reverse the order.

Order modified in accordance with the opinion of Rich, J.} and as modified affirmed, without costs to either party.  