
    Matter of the Judicial Settlement of the Account of The Farmers’ Loan and Trust Company, as Executor Under the Last Will and Testament of Charles Palmer, Deceased.
    
      (Surrogate’s Court, Kings County,
    
    
      December, 1909.)
    Trusts—Termination and abrogation of trust—Fulfillment of purpose.
    Wills—Interpretation and construction—Conditions, contingencies AND ALTERNATIVES—PARTICULAR TERMS OF DOUBTFUL MEANING—BECOMING “FINANCIALLY SOLVENT.”
    Where, under the will of a testator, a trust fund is directed to be paid over to the beneficiary whenever he shall become financially solvent and able to pay all his just debts and liabilities from resources other than the principal of the trust fund, and the beneficiary, after the testator’s death, upon his voluntary petition in bankruptcy, is discharged from all his debts, he is thereby brought within the language of the will and entitled to receive the fund.
    
      Proceeding upon the judicial settlement of the account of an executor.
    Turner, Rolston & Horan, for executor; Gerrit Smith, for Francis J. Palmer; Frederick I. Pearsall, special guardian.
   Ketcham, S.

The will of the decedent provided as follows:

Fourth. I give and bequeath and direct that there shall be paid as soon as conveniently may be after my death, to The Farmers’ Loan and Trust Company, the sum of fifty thousand dollars, to be held by said The Farmers’ Loan and Trust Company, In Trust, for the following uses and purposes, to wit: To invest said money and keep it invested in such securities as to my said Trustee may seem proper, and to pay or apply the net interest or income thereof to or for the use of my son Francis J. Palmer, quarterly during the term of his natural life. It is my wish in making this provision that my said son shall have the principal of said trust fund whenever he shall become financially solvent and able to pay all his just debts and liabilities from resources other than the principal of this trust fund. In order to carry out this design I expressly authorize and. empower my said Trustee, upon receiving a written statement from my said son saying that he is financially solvent and able to pay his just debts and liabilities from resources other than the principal of this trust fund (which statement my said Trustee may act upon without further investigation) or upon receiving such additional evidence of the facts as in its judgment may require, to pay over to my said son, absolutely in its own judgment, and without its judgment in such case being subject to revision by any other person or authority, the principal of the said trust fund, and thereupon his receipt for said trust moneys shall be full justification and acquittal to the said Trustee for the payment thereof.”

At the time of the testator’s death, Francis J. Palmer was in•debted in large sums and had no money of his own with which to pay the same. After his father’s death, upon his voluntary petition in bankruptcy, a decree was entered duly discharging him from all debts provable against him under the Bankruptcy Law; and it is assumed, as the arguments all suggest, that the only debts owing by him at the time of his father’s death were the subject of the discharge.

The said Francis J. Palmer has filed with the trustee a statement whereby he alleges that he is financially solvent and able to pay all his just debts and liabilities from resources other than the principal ” of the trust fund created by the language quoted supra.

• Upon the motion of the trustee the question arises as to whether or not, under the construction of the paragraph of the will quoted supra and the facts shown, the trustee is under the (duty of paying to the son the sum of $50,000 mentioned in the ■said paragraph.

In Young v. Young, 127 App. Div. 130, the beneficiary was -entitled to the trust fund if he should “ discharge ” all his debts and liabilities and “ be in the judgment of the executors entirely ¡solvent.” The court say: “ We think that the testator intended merely to put the property devised and bequeated by said sixth paragraph beyond the reach of the creditors of said son. He .said nothing about qualities which the son should show in order to be entitled absolutely to said property, and the requirement that the son should discharge his debts and liabilities, coupled as it was with the provision that he should be, in the judgment -of the trustee, entirely solvent, shows what the testator intended. One is solvent who is able to pay his debts and liabilities, and, in •determining solvency, debts which had been discharged by bankruptcy proceedings or upon which any remedy was barred by the Statute of Limitations could not be considered. The testator intended merely that the son should be freed from debt, and he did not prescribe any method by which. that freedom frOm debtA should be secured.”

The reasoning which is applied to a case where the verbal requirement was that the son should do an affirmative act, viz., “ discharge his debts,” loses nothing in application to the present case, where the duty of the trustee depends, not upon the doing of any act by the son, but solely upon his attainment of a certain personal condition. If his present -situation comes within the terms of the will, he is entitled to the fund, whether that situation has been achieved by his efforts or has happened to him.

That he is financially solvent must be confessed under the decision quoted. Associated with the term “ financially solvent ” are the words “ able to pay his just debts,” etc. These two expressions are not at variance and were not introduced into the will to neutralize or endanger each other’s meaning. The latter member of the expression “ able to pay,” when coupled with the words “ financially solvent,” is to be known by the company it keeps; and the ability to pay, which was in the testator’s thought, must be construed to have been that sort of ability which consorts with and does not exceed or distort the meaning contained in the words “ financially solvent.”

Moreover, the son here concerned is able to pay his just debts, since there are none left which are legally enforceable. Whether “ just debts ” include obligations formerly enforceable, but later made subject to defenses and so longer enforceable by law, has been determined in situations not unlike the case at bar. The common direction in a wiE that “ all just debts shall be paid,” or that testatmentary dispositions shall take effect “ after the payment of just debts,” is held not to include debts once due but now subject to the defense of the 'Statute of Limitations. Martin v. Gage, 9 N. Y. 298; see also 4 Words & Phrases Judicially Defined, sub nom. “ Just Debts,” p. 2902. .The same rule is laid down with regard to debts directed to be paid to which the "defense of infancy at the time of the making of the debt is available. Smith v. Mayo, 9 Mass. 62; 6 Am. Dec. 28. Such a direction in a will is said not to avail a creditor who, holding an Otherwise just debt, neglects the usual means of proving demands until after the estate is closed. Collamore v. Wilder, 19 Kan. 67. Under "a statute that upon assessment for taxation just debts ” shall be deducted, it is,said: “ The use of the term. just debts ’ in the statute plainly implies that legal, valid and incontestable obligations must be shown in order to entitle the estate to the benefit.of the statute.” People ex rel. Osgood v. Commissioners, 99 N. Y. 154.

In the will under consideration, the testator directed that all his just debts be paid.” Is it conceivable that in the same instrument he used the same expression to mean two different things; first, when applied to his own debts, and secondly, when applied to the son’s debts ?

■The beneficiary is able to pay all debts which are just ” in law. Those which the law will not make him pay if he invokes a defense which the law has. given him cannot be “ just.”

The conclusion is that, whether or not the executor accepts the certificate or written statement of the beneficiary, it is become one of the express conditions of its trust that the son shall have the principal of the trust fund, because he has become “ financially solvent and able to pay all his just ” debts and liabilities from resources other than the principal of this fund. The jurisdiction of the surrogate has not been questioned and is possibly ample to justify the direction that the decree shall provide for .the payment of the $50,000 accordingly.

Decreed accordingly.  