Cutting v. Cutting (86 N.Y. 522, 1881)

Folger, Ch. J.

This is a suit in equity, seeking to charge a debt owned by the plaintiff, against the estate of Fulton Cutting, deceased, upon certain estate, made up of real and personal property. The estate sought to be charged was owned, in her life-time, by Mrs. Gertrude Cutting, the mother of Fulton Cutting. She made a will, and died; by which will she gave that estate to executors, in trust, to take the rents and profits during his life, and apply them to -his use; and upon his decease, to make over the body of the estate to whomsoever he should by his will appoint to receive it. He made a will, and a codicil to it, and died; having appointed by that will, that that estate should be made over to Walter L. Cutting, in trust for two sons of him, the testator, and by that codicil, having given to his sister all the interest which he had or might have in the estate of his mother. Neither Walter L. Cutting, nor the two sons, nor the sister, appear from the case to have been creditors of the testator, but volunteers. The plaintiff is a creditor of the testator, by judgment got against him in his life-time. It is that judgment debt that it is sought to have charged. The plaintiff relies, therefor, upon a rule of equity, which he claims to be, that where a person has a general power of appointment by will over property, and has exercised the power, the property thus appointed forms a part of his assets, and is subject to the claims of creditors; and that, too, in preference to those of a legatee or of the gratuitous appointee. The text-books state the rule to be, as it is claimed by the plaintiff. 4 Kent, *339 ; 2 Sugden on Powers, *29, § 7; id. *173, § 2; Bam on Assets, *148-9 ; 2 Williams on Ex’rs, *1435; Chance on Powers, § 1817; and the decisions cited in them, amply uphold the statement they make.

The defendants deny that this is the rule in this State, and insist that though it may have been at some time, and may be yet, the rule in England, it has never been adopted as the rule here. They concede that such part of the common law of England as was the law of the colony of Yew York on the 19th day of April, A. D. 1775, continued to be the law of the State of Yew York, unless altered by the legislature thereof; as indeed they must. (Const, of 1777, § 35; Const, of 1821, art. 7, § 13; Const, of 1846, art. 1, § 17.) And the common law of England was the law of the colony at that date, so far as it was applicable to the circumstances of the colonists. (Bogardus v. Trinity Church, 4 Paige, 178, 198; Myers v. Gemmel, 10 Barb. 537, 541.) And it has since continued so to be, when conforinable to our institutions, unless it was established by an English statute which has been abrogated, or was rejected in colonial jurisprudence, or has been abolished by our legislation. (Williams v. Williams, 8 N. Y. 525, 541; Perry v. Perry, 2 Paige, 501; Griffin v. Griffin, 47 N. Y. 134; Brinkley v. Brinkley, 50 id. 184, 190.) We confess that we see not why the rule is not as conformable to our institutions as to those of England. The objections that have been at times made to it have been general, based rather upon the abstract hardship and arbitrary nature of it (In re Harvey’s Estate, L. R., 13 Ch. Div. 216) than upon its inaptitude to the institutions of a peculiar people; and the remark of Earl, J., in Jennings v. Conboy (73 N. Y. 230, 233), while directed against the whole law of powers, as it had grown up in England, abstruse, intricate, and ñdl of nice distinctions, concedes that it was the rule in this State, and that there was needed legislative interposition to root it out. We think, too that it is clearly indicated in the revisers’ notes to the Revised Statutes, and in the action of the legislature that adopted the article “ of powers ”, of their framing, that it was then conceded that the English rule was the law of this State at that time. And we need not now go farther in that inquiry, for we have come to a conclusion, based upon the Revised Statutes, that the English rule has been abrogated by our legislature, and that the plaintiff cannot maintain his position.

All of the facts in this case arose since the adoption of the Revised Statutes, and the solution of the legal questions presented by those facts must he made by the application to them of the provisions of article 3, title 2, chapter 1, part 2 of those statutes, entitled, “ of Powers.” Thereby, powers, as they then existed bylaw, were abolished; and thenceforth, the creation, construction, and execution of powers were to be governed by those provisions. (1 R. S. 732, § 73.) It is not denied that, if the will of Mrs. Cutting created a valid power, it has been well executed by the testamentary disposition made by Fulton Cutting ; so that what we have to determine is this : Did her will create a valid power, and if it did, what sort of a power is it, and how shall that power be construed ?

The will of Mrs. Cutting gave to Fulton Cutting the authority to- direct and .appoint by his will to whom, upon his decease, certain property should be assigned and conveyed by the trustees named in her will, and who had the legal estate in it. This was an authority to do an act. in relation to lands, or the creation of an estate therein, which Mrs. Cutting herself might, so far as appears, have lawfully performed; and so, the authority thus given falls within the primary definition of a power, made in the Revised Statutes. (Id., § 74; and see Kane v. Astor's Executors, 9 N. Y. 113, 132.) It was given “ by a devise contained in a last will and testament; ” and so it is granted in manner and form as called for by the Revised Statutes. (1 R. S. 735, § 106.) Proceeding further, we find that the authority given is what the statutes call a general power, for it authorizes the alienation in fee of the lands embraced in it, to any alienee whatever, and is thus directly within the language and intent of section 77, and without that of section 78, which defines what is a special power. (Jennings v. Conboy, 73 N. Y. 230.) We may next inquire, whether the authority given created a beneficial power. The language of section 79, applicable to this case, is this: “A general * * power is beneficial, when no person other than the grantee has, by the terms of its creation, any interest in its execution.” It is certain that no person other than Fulton Cutting had, by reason of the words of Mrs. Cutting’s will that gave him authority, an interest that he should execute that authority. Thereby, the literal force of the section is met and satisfied. But the defendants contend that there is an implication that should be made; and that not only is there a negative expressed in the language, but an afiirmative also, to be implied; that while to make a power beneficial, no one other than the grantee of it can, by the terms of its creation, have an interest in the execution of it; yet it must also appear affirmatively by those terms that the grantee of the power has an interest in that execution. If this is granted, they farther contend that a power to appoint by will is such that the grantee has no interest in the execution of it. There are decisions in this State adverse to the contention. They hold that a power to dispose of by will is a beneficial power. (Freeborn v. Wagner, 49 Barb. 43; S. C. on appeal, 4 Keyes, 27; Jennings v. Conboy, supra.) Indeed, the revisers and the legislature in this very act “ of Powers,” have given an interpretation of the words “ beneficial power,” so far as to show that a power only to devise may be a beneficial power. In section 84 they say : “ Where a general and beneficial power to devise the inheritance shall be given,” etc. This language requires that the power there spoken of shall be both general and beneficial. And it thus declares that a power to devise only may be general and at the same time beneficial And as it cannot be a general power, without giving authority to alien in fee, to any alienee whatever (§ 77), it follows that a power to devise to any one whomsoever, when it is not a power in trust (§ 94), is a beneficial power. And so the section last cited (§ 94) serves to interpret the meaning of the phrase “ is beneficial,” in section 79. That section (§ 94) declares, when a general power, such as we have shown this to Fulton Cutting to be, is in trust. It is in trust When any person or class of persons other than the grantee of the power is pointed to, as entitled to the proceeds from the alienation of the lands according to the power. Such is not the case with the power here. General powers are beneficial, or they are in trust. Such is the force of sections 77, 79 and 94. (And see Wright v. Tallmadge, 15 N. Y. 307, 313, 314.) The power given to Fulton Cutting by the will of Mrs. Cutting is not a power in trust, hence it is one beneficial. (15 N. Y., supra.) The defendants argue that the statutes have, with particularity and in detail, enumerated the various cases in which the grantee of a power shall be regarded as entitled to an interest or benefit available to his purchasers or creditors. They cite sections 81, 82, 83, 84, 86; and 85 as defining a phrase used in the other sections cited. But it will be perceived, on reading these sections, that they provide for a legal estate, either in the grantee or the grantor of the power—an estate in fee to grow out of the act . therein mentioned, and make that estate an absolute one in respect to the rights of creditors and purchasers.

Those sections do not forbid the creation of the powers named in them, nor do they enumerate or define them other than as they are within the general words of other sections. What they do is to declare the effect of them upon the estate affected by them; that is to say, they .give the construction that shall be put upon powers thus created. It is a mistake to suppose' that these sections are exclusive or engrossing in their provisions in the respect claimed by the defendants, and that the intent or effect of them is to provide for, and declare, all the cases in which a power granted or reserved is a beneficial power. The defendants also rely upon section 92 of the article on powers. That provides “ that no beneficial power, general or special, thereafter to be created, other than such as are already enumerated and defined in that article, shall be valid.” The stress of the defendants’ case in this particular is upon the word “ enumerated,” and their claim is, that as the power granted to Fulton Cutting is not expressly within the terms of certain of the sections preceding section 92, that it is void as a beneficial power. But clearly what is a beneficial power, general or special, was defined in the sections preceding'the ninety-second, and the general definition in section 79, as we have shown, included the power given to Fulton Cutting. Doubtless the strict meaning of the phrase “ already enumerated” would be “already counted off,” and if we should give that meaning to that phrase in the ninety-second section, we should need to look to the previous sections to find what power had been singly and expressly named as-beneficial. If we did so we should find but few, viz.: one to a married woman to dispose during her marriage, and without the concurrence of her husband, of lands conveyed or devised to her in fee (§ 80); one to a tenant for life or for years to devise the inheritance (§ 84); one to a married woman to dispose during the marriage, and without the concurrence of her husband, of any estate less than a fee, belonging to her, in the lands to which the power relates (§ 87, subd. 1); one to a tenant for life of the lands embraced in the power, to make leases for not more than twenty-one years, to commence in possession during life (Id., subd. 2). How these sections do not directly define the authority that may be given under them, to do the act permitted by them, to be a beneficial power; but they declare that a beneficial power, that is, such an authority as is by the seventy-ninth section declared and defined to be a beneficial power, may be given to certain persons, respectively, to do the acts respectively named in them. And those sections are to be read the same as if in them, in place of the phrase “beneficial power,” was incorporated the definition of a beneficial power given in section 79. Section 80, for instance, is. to be read as though it said: “A general power, and one, when no person other than the grantee has, by the terms of its creation, any interest in its execution,’ may be given to a married woman,” etc. If I am wrong in this notion, then sections 80, 84, 87 are all powers that in a strict rendering of the phrase are enumerated (i.