
    Charles M. Cannon, as Substituted Trustee under the Last Will and Testament of John W. Quincy, Deceased, Plaintiff, v. Mary Perkins Quincy, George B. Lauck, as Committee of the Property of John W. Quincy, an Incompetent Person, and Katherine Allen Quincy Trowbridge, Defendants.
    (Supreme Court, New York Special Term,
    December, 1909.)
    Trusts: Execution and administration of trust — Investments — Change of form of securities: Termination and abrogation of trust — Fulfillment of purpose.
    There is no provision of law by which trust funds may be invested in railroad or industrial stocks; and, in the absence of some authority in a last will creating the trust, the trustee is not justified in continuing an investment formerly made by the testator which lie would not be justified himself in making.
    Under the will of a decedent his residuary estate was left to his wife for the term of her natural life, provided she remained his widow, but upon her remarriage she was to receive only the dividends, income and profits arising from his stock in a certain corporation for the term of her natural life; and upon her death such stock was 4o fall into and become a part of the residuary estate, io be disposed of as provided, in another part of his will by which, upon the death or remarriage of his wife, a trust estate was created for the benefit of each of his two children by said wife, or their issue, into which trusts should pass his entire trust estate, including specifically the stock of said corporation, subject, however, to the payment to the widow of the interest. income and dividends arising from said stock for and during her natural life, in case of her remarriage. The will contained no declaration of intention or desire on the part of the testator that said stock should be held by the trustee beyond the time of his wife’s death, nor was such an intent or desire to be fairly inferred from the language of the will. His widow died without remarrying. In an action for the construction of the will and for instructions to the trustee, held:
    It was the duty of the trustee to hold said stock until the time of the wife’s death and then to sell the same within a reasonable time thereafter and divide the proceeds between the two trust funds created for the benefit of testator’s children.
    Action to construe will and for instructions to trustee.
    Wilfrid N. O’Neil, for plaintiff.
    Leonard & Walker, for Mary P. Quincy.
    Otto B. Schmidt, for George B. Lauck.
    Willard N. Baylis, for Katherine A. Q. Trowbridge.
   Dowling, J.

Under the will of John W. Quincy, deceased, his residuary estate was left to his wife for the term of her natural life, provided she remained his widow; but upon her remarriage she was to receive only the dividends, income and profits arising from his stock in the Thomas Iron Company for the term of her natural life, and upon her death said stock was to fall into and become a part of the residuary estate, to he disposed of as provided in the following (third) paragraph of his will. By that third paragraph there was created, upon the death or remarriage of his wife, a trust estate for the benefit of Ms children by said wife, or their issue, into which trust should pass his entire trust estate, including, specifically the stock of the Thomas Iron Company. His widow died without remarrying. The beneficiaries of the trust estate are his children by Lucretia D. Quincy, viz.: Mary Perkins Quincy and John W. Quincy. Differences of opinion have arisen between said beneficiaries as to whether a sale of said stock should he had and, the trustee desiring the direction of the court, this action is brought for a construction of the will and for instructions to the trustee as to his proper course in the premises. At the outset, it may safely be asserted that the rule laid down for the character of the securities in which trustees might invest funds of their trust estates has been settled since the case of King v. Talbot, 40 N. Y. 76, wherein Woodruff, J., laid it down: “ Whenever money is held upon a trust of this description (i. e., for children) it is not according to its nature, nor within any just idea of prudence to place the principal of the fund in a condition, in which it is necessarily exposed to the hazard of loss or gain, according to the success or failure of the enterprise in which it is embarked, and in which, by the very terms of the investment, the principal is not to be returned at all. It is not denied, that the employment of the fund, as capital in trade, would be a clear departure from the duty of trustees. If it cannot be so employed under the management of a copartnership, I see no reason for saying that the incorporation of the partners tends, in any degree, to justify it. The moment the fund is invested in bank, or insurance or railroad stock, it has left the control of the trustees; its safety and the hazard or risk of loss is no longer dependent upon their skill, care or discretion, in its custody or management, and the terms of the investment do not contemplate that it ever will be returned to the trustees. If it be said, that at any time the trustees may sell the stock (which is but another name for their interest in the property and business of the corporation), and so repossess themselves of the original capital, I reply, that is necessarily contingent and - uncertain, and so the fund has been voluntarily placed in a condition of uncertainty, dependent upon two contingencies, first, the practicability of making the business profitable, and, second, the judgment, skill and fidelity of those who have the management of it for that purpose. If it be said, that men of the highest prudence do, in fact, invest their funds in such stocks, * * * In their private affairs, they do, and they lawfully may, put their principal funds at hazard; in the affairs of a trust they may not. The very nature of their relation to it forbids it.” This rule has been recognized by the law governing investment of trust funds (Pers. Prop. Law [Laws of 1909, chap. 45], § 21), which limits a trustee to investment of trust funds in the same kind of securities as those authorized for savings bank investments, and in bonds and mortgages on unincumbered real .property in this State to the extent of fifty per cent, of its value. The Banking Law, Laws 1909 (chap. 10, § 146) allows savings hanks to invest their funds in United States bonds and stocks, State bonds and stocks, bonds and stocks of certain municipalities and first mortgage railroad bonds of certain roads. There is no provision of law by which trust funds may be invested in railroad or industrial stocks. ' It was held in Matter of Burr, 48 Misc. Rep. 14, that, “ generally speaking, trustees arc not justified, in the absence of some authority in the instrument creating the trust to the contrary, in continuing ail investment formerly made by the testator which they would not be justified themselves in making. Perry Trusts, §§ 454, 465. It is their duty to convert such stocks into money within a reasonable time after the creation of the trust.” Although the removal of the executor in that case was afterwards reversed by the Appellate Division (118 App. Div. 482), their action was based on other grounds, and this doctrine was not questioned. Do where can there be found in the will any declaration of an intention or desire on his part that this stock should be held by the trustee beyond the time of his wife’s death. Dor can such an intent or desire he fairly inferred from the language used. The claim of such intention is based on the third paragraph of the will. But the words “ I hereby give, devise and bequeath all the rest, residue and remainder of my said estate, including the Thomas Iron Company stock,” are used because it was necessary to make an inclusion of that stock in the residuary estate in view of its possible separation from the corpus of the estate in the event of the widow’s remarriage. And that this was the occasion of the specific mention of the stock in paragraph third ” is proven by the words which immediately follow those just quoted: “ Subject, however, to the payment to my said wife of the interest, income and dividends arising from said stock for and during her natural life in case of her remarriage,” Conceding that thcs deceased thought highly of his investment in this stock, that he was convinced of its present and prospective value, and that he discussed its merits with his friends, this hut strengthens the view that having its merits continually in mind he would have made plain provision for its retention hy his trustee did he desire him so to do. It is clear, therefore, that first, it was the duty of the trustee to hold the stock in the Thomas Iron Company until the time of Mrs. Quincy’s death, for if she at any time remarried a special trust fund of such stock was created for her benefit for life, the income, dividends and profits of such stock being so payable to her; second, it was the duty of the trustee within a reasonable time after Mrs. Quincy’s death to sell such stock and divide the proceeds between the two trust funds created for the benefit of testator’s children. Let decision and judgment he submitted accordingly; and, as such sale has not yet been had, it should take place as speedily as can be safely done. Costs and disbursements, payable out of the fund, are awarded to all the parties who have appeared herein.

Judgment accordingly.  