« SebelumnyaLanjutkan »
not take advantage of the permission to release and effect a merger. This view would, therefore, leave the general statutory scheme intact, except in cases where the testator, or grantor in trust, should choose to give the beneficiary a vested remainder.
Consideration of the reasonableness of this view of the amendment is not precluded by the proposition that it is the function of the courts to apply the law as it is, and not to make it over as they think it ought to be; for the question here under discussion is, what is the law embodied in this amendment. And on that question it is eminently proper to seek the more rational meaning of the ambiguous term employed in the statute.
First, then, the construction which applies the term “ entitled to a remainder" solely to beneficiaries who are so entitled by virtue of the terms of the trust instrument, is the more reasonable because there is an apparent ground for applying it to such persons, and no apparent ground at all for applying it to others. For, although a trust to receive and apply rents and profits, or income, may be created for the benefit of any person whatever, irrespective of whether he is or is not competent to handle the principal personally, yet it is obvious that the general purpose of the revisers in perpetuating this particular form of trust was to provide a means of furnishing protection to those who for any reason, whether from infancy, imbecility, extravagance, poor judgment, mere lack of experience, or otherwise, might need to be protected against themselves. 1 Some such persons cannot even be safely trusted with the untrammeled disposition of the mere income, and others, while not fitted to manage the principal, can dispose of the income prudently without supervision. But it is to the whole general class, who for some reason and to some extent need to be protected against themselves, that the statute is primarily intended to apply. Such being its general purpose, the decision as to whether such a trust is or is not needed in the case of given beneficiaries must be left somewhere, and was, in fact, left by the statute to the creator of the trust. If he considered that a given person for whom he wished
Leggett v. Perkins, (1849) 2 N. Y., pp. 313-314; Revisers' Notes, Rev. Stat., 2nd ed., vol. 3, p. 585.
to provide needed the form of protection furnished by the statute, he was at liberty to create for his benefit a trust of the class just described, and his judgment in this respect was not subject to review. Such was the law. Nevertheless, there were cases where the creator of the trust, in the very act of invoking the protection of the statute for a given beneficiary, coupled it with a plain declaration of his opinion that no such protection was really called for, as for example, where the same instrument which created the trust also gave to the beneficiary a vested remainder in his own right, which he could, of course, if he chose, at once sell or give away. Such a provision did not, as the law stood, in any way weaken the indissoluble nature of the trust, but it did show pretty plainly that the need of statutory protection of the beneficiary against himself was not very pressing. Under such circumstances, what could be more natural than that the Legislature should withdraw the statutory protection from such a case, and amend the statute so as to enable the beneficiary whom the testator had thus stamped as competent to handle property, to take the entire estate or funds into his own hands at once? But this reasoning has no application to the case where the creator of the trust deals with the beneficiary as beneficiary only, and does not trust him with the ownership of the remainder. This view of the amendment receives striking historical support. The Revisers themselves call attention to the general objects of a trust of this description, and the statute, as originally adopted, provided oniy for the “education and support, or either of them, of any person.” While, therefore, the trust might be created for any person, the form of the use was quite limited. The protection was afforded by prohibiting acts by either the trustee or beneficiary which should evade the intended purpose. A few months later the statute was amended to permit the creation of such trusts for the “use" (instead of mere "education and support ") of the beneficiary. Thereafter, Judge Nelson” expressed the opinion that in so far as the beneficiaries were in fact persons not answering to the general description of those for whose benefit this class of trusts was more particularly provided
1 Revisers' Notes, Rey. Stat., 2nd ed., vol. 3, p. 585.
the prohibition upon their right to assign their interests was uncalled for, and that the section containing the prohibition was broader than was required.
Under such circumstances it is most natural for the Legislature now to take a middle course, and while still allowing the creation of a trust for any beneficiary the creator of the trust may select, to modify this too sweeping prohibition by providing that if the creator of the trust reposes sufficient confidence in the capacity and judgment of the beneficiary to give him a vested remainder, the protection of the statute shall in that case be removed, as being unnecessary. In this view, the Legislature has done nothing but act, along very natural lines, upon the suggestion of Judge Nelson, and has adopted, as the test of the beneficiary's competency, the testator's judgment as expressed by his giving to or withholding from the beneficiary the absolute ownership of the remainder. We have, then, the original statute and amendment; then a judicial criticism to the effect that the prohibition is too broad, being only needed for the class of beneficiaries primarily contemplated; then, finally, another amendment in line with the judicial criticism, withdrawing the prohibition in cases where the creator of the trust has himself shown that it is not needed. So much seems natural, and rational.
But the theory that this amendment has gone further, by also withdrawing the prohibition in all cases where the creator of the trust has given a vested remainder to some one other than the beneficiary, cannot be based upon any such historical explanation, nor supported by any reason whatever to justify its existence, and is, moreover, intrinsically unreasonable, and is not required by a fair reading of the amendment.
For under the construction suggested in this article, the creator of a trust, if he believes that the beneficiary needs to be protected against his own inexperience, poor judgment or folly, may still afford such protection, and at the same time may give a vested remainder, if he sees fit, to others, and this gift of a remainder will not, as it should not, endanger the indissoluble nature of the trust: while under the theory of Mills v. Mills, the creator of the trust cannot effect such protection at all, except by refraining from giving the expectant estate to any one whatever, in order that there may not be any remainder to be merged, or by creating a remainder to persons whose identity must remain wholly undetermined, throughout the term of the trust, so that it will be impossible for the beneficiary to acquire title to it in any manner.
But this distinction, that a beneficiary may be protected against himself if the creator of the trust does not give a vested remainder to somebody else, and may not be thus protected if there is such remainder to somebody else, is so wholly arbitrary that it is difficult to believe that it was ever intended by the Legislature.
Furthermore, the test imposed by Mills v. Mills to determine whether the beneficiary of a trust followed by a vested remainder to another, may in fact destroy the trust, is equally arbitrary. It depends, in that case, on whether the beneficiary does in fact succeed in getting in the remainder. He may or may not acquire it by purchase, or by inheritance, or otherwise, but success or failure in that respect has no real bearing on the question of whether he should be protected against himself in respect to the trust estate. Under the contrary construction, however, the only test of his ability to destroy the trust is whether the creator of the trust, by giving him a vested remainder, has in effect stamped him as a person not in need of statutory protection.
And still further, the construction here suggested preserves substantially intact the established scheme of the law restricting the term of such trusts to two lives in being, while the theory of Mills v. Mills allows them to be framed so that they may continue through a very large number of lives, and so that they must do so is the beneficiaries do not in fact succeed in acquiring the remainder.
In this connection it is also of interest to notice that another decision1 lends a good deal of support to the construction here contended for. It will be remembered that the amendment under consideration deals with two classes of persons, i. e. the beneficiary of the trust, and the person entitled to the remainder. It is when the same person answers to both of these descriptions that he may destroy the trust,
Matter of Rutherford, supra.
in whole or in part, and effect a merger of his two interests. We have here been discussing the question of whether the person thus described as “entitled to the remainder" must be so entitled by virtue of the terms of the trust instrument, or whether it is sufficient that he subsequently becomes entitled in any manner whatever. It is clear that a similar question might be raised in respect to the person described as " beneficiary.” Must he be such by virtue of the terms of the trust instrument, or is it sufficient that he becomes entitled in some other way to receive, from the trustee, income derived from the trust estate? Now this exact question was up for decision in the Rutherford case.
In that case the trust income was divided into shares for different beneficiaries, and one of these beneficiaries dying, and the will being silent as to what should in that event be done with his share of the income, it was held that it was payable, by operation of law, to the remainderman. And yet it was very naturally held that, although the same person was thus entitled to the remainder, and also to the receipt of a share of the income from the trustee, he was not a “beneficiary” of the trust, because not designated as such by the trust instrument, and that accordingly he could not effect a merger and withdraw from the trust estate the present share of principal from which his income was derived. It is true, in respect to this decision, that it might well be said that the term “ beneficiary of a trust” is so specific and clear as to leave no opportunity to apply it to any one not so designated by the trust instrument, while the term “entitled to a remainder" is ambiguous, and capable, considered by itself alone, of application to the case of one who acquired the remainder by some other means. But it still remains true that such a distinction effects the absurd result of preventing the withdrawal of the fund in favor of one whom nobody ever set out to protect, while permitting such withdrawal in favor of one whom the creator of the trust sought to protect against himself; and also that the very fact that the “beneficiary” of the statute is clearly one so designated by the instrument strongly indicates the legislative intent to impose the same meaning upon its reference to the remainderman.