GUARANTY TRUST COMPANY OF NEW YORK et al., as Trustees, et al., Appellants; MCALEXANDER D. RYAN, Individually and as Trustee, Respondent.
APPEAL from an order of the Supreme Court at Special Term (VALENTE, J.), entered October 23, 1953, in New York County, which (1) adjudged that a trust indenture made on May 27, 1939, by respondent individually, was revoked by him on July 25, 1952, pursuant to section 23 of the Personal Property Law, and (2) directed that the principal of the trust, after deduction of allowances or commissions for the trustees, counsel, and guardian ad litem, be paid to respondent individually. Respondent's mother died in 1947. At the time of these proceedings, respondent had never been married and had never had any issue.
Walter D. Fletcher of counsel (Andrew Y. Rogers and Standish F. Medina with him on the brief; Davis Polk Wardwell Sunderland & Kiendl, attorneys), for trustees, appellants.
Edward V. Loughlin, as guardian ad litem, appellant in person.
Francis J. Rogers of counsel (Paul Saurel with him on the brief; Morris & McVeigh, attorneys), for respondent.
This is an appeal from a final order holding that the settlor of an inter vivos trust was entitled to revoke the same without the consents of living persons who would be his distributees if he died as of the date of revocation. The question for decision is whether the trust instrument created remainders in such distributees or a reversion in the settlor.
The trust indenture was executed on May 27, 1939. Consequently, its revocation is controlled by section 23 of the Personal Property Law prior to the 1951 amendment (L. 1951, ch. 180) relating to the effect of gifts in favor of a class described only as heirs or next of kin.
The instant trust was irrevocable by its terms. The indenture provided that the settlor's inheritance of certain remainder interests from other trusts established by his grandfather was to be placed with the Guaranty Trust Company, T. Roland Berner, and the settlor as trustees to collect the income and pay the same to the settlor (described as the beneficiary) for life. Upon the death of the beneficiary the corpus was to be paid to the persons designated by his will, and in default of such appointment to his lawful issue. In default of issue the principal was to be paid to the beneficiary's mother and his wife, in equal shares, if he was survived by both, or to either of them, if survived by one and not the other. The final clause as to distribution of principal provides that: 'If neither his wife nor his mother shall survive him, to and among the persons to whom, and in such shares or proportions as said property would be distributable if the Beneficiary died intestate while domiciled in the State of New York and owning the Trust Estate.'
The purposes of the trust are recited in the indenture as follows: 'WHEREAS McAlexander Donald Ryan wishes to provide for the future protection of himself and such lawful issue as may hereafter be born to him by transferring and assigning his remainder interests in said trusts created by the last Will and Testament of Thomas F. Ryan'.
The settlor himself testified at Special Term that he planned to put the principal in trust for his children and grandchildren, and that his purpose was to protect himself against extravagance and waste.
In the light of such testimony and the recital of purposes aforesaid, Special Term held that the trust might be revoked on the consents of the brothers and sisters of the settlor, though there were nephews and nieces who could not consent.
For the purpose of our decision we will assume that the testimony of the settlor was properly received, and that consideration must be given to the expressed intention of the settlor as set forth in the trust instrument. Nevertheless, we think that the ruling of Special Term was not correct, that the gifts to the distributees granted ...