Citations
- 246 A.D. 201
Full opinion text
McAvoy, J.
Plaintiff brought an accounting action to settle its accounts as trustee under an inter vivos trust.
The trust instrument was executed by John D. Rockefeller on July 3, 1917, and provided that upon the death of the life beneficiary, Edith Rockefeller McCormick, the principal should be distributed as she might appoint by last will and testament among her descendants and charitable corporations. In default of appointment by her, the trust instrument directed the trustee to divide the principal into such number of equal shares as there should be children of Mrs. McCormick surviving her and to continue to hold these shares subject to the provisions of the trust instrument.
In January, 1918, Mr. Rockefeller, Mrs. McCormick and the trustee executed an instrument, the express purposes of which were the release of the power of appointment by Mrs. McCormick, the approval of the release by Mr. Rockefeller, and the termination of the power,
Mrs. McCormick died on August 25, 1932, leaving a last will and testament which did not refer to the trust instrument or the power of appointment or the trust property and which gave all of her personal estate, one-twelfth to her son Fowler, two-twelfths to her daughter Mrs. Oser, four-twelfths to her daughter Mrs. Hubbard, and five-twelfths to Edwin D. Krenn, who was not a descendant of Mrs. McCormick or a charitable corporation. The will contains other provisions which, in our opinion, indicate that it was the intention of Mrs. McCormick not to attempt to exercise the power of appointment.
After the death of Mrs. McCormick, the trustee divided the principal of the trust estate into three equal parts, one for each of the three children of Mrs. McCormick. The defendant Mrs. Hubbard objected to this division of the trust estate and claimed (1) that the document of 1918 failed to terminate the power of appointment, and (2) that Mrs. McCormick’s will operated as an exercise of the power, and might be interpreted in either of two ways. The interpretation which Mrs. Hubbard preferred was that the will appointed the entire trust estate, four-sevenths to herself, two-sevenths to her sister, Mrs. Oser, and one-seventh to her brother, Fowler McCormick. As a second choice, she suggested interpreting the will as «an appointment of seven-twelfths of the trust estate, four-twelfths to herself, two-twelfths to Mrs. Oser and one-twelfth to Fowler McCormick, leaving the remaining five-twelfths unappointed.
No other party joined in the objection filed by-Mrs. Hubbard. Her brother, Fowler McCormick, and the guardian ad litem for the children of her sister, Mrs. Oser, joined with the trustee in opposing her notion of construction.
The objection of Mrs. Hubbard was overruled by the referee who held, first, that the document of 1918 terminated the power of appointment, and, second, that, even if the power had not been terminated, still it was not exercised by Mrs. McCormick’s will. (155 Misc. 61.) Reading applicable statutory provisions we find: Section 148 of the Real Property Law: “ When power is irrevocable. A power, whether beneficial or in trust, is irrevocable, unless an authority to revoke it is granted or reserved in the instrument creating the power.”
Section 136 of the Real Property Law defines a beneficial power: “ A general or special power is beneficial, where no person, other than the grantee, has, by the terms of its creation, any interest in its execution. A beneficial power, general or special, other than one of those specified and defined in this article is void.”
“ A general power is in trust, where any person or class of persons, other than the grantee of the power, is designated as entitled to the proceeds, or any portion of the proceeds, or other benefits to result from its execution.” (Real Prop. Law, § 137.)
A general power of appointment is not a power in trust under section 137. A general power of appointment is always beneficial. (Farmers’ Loan & Trust Co. v. Mortimer, 219 N. Y. 290.) The only general powers that can be in trust under section 137 are those general powers of sale, etc., possessed by executors and other fiduciaries, and they may be discretionary, i.