Plaintiffs are Thornton R. Land and Michael S. Land, sons of Thornton C. Land, and are named as beneficiaries in the residuary clauses of their father's will. The will is dated June 19, 1964 and, following Mr. Land's death on May 13, 1965, was probated June 16, 1965 in the office of the Surrogate of Essex County. The estate consists of New Jersey realty having an estimated value of $30,614 and a very substantial total of personal property.
Plaintiffs sue for a judgment declaring that (a) each of them is entitled to receive, free of trust, the benefits provided by the father's will, and (b) Marjorie Land Largey, their sister, holds in trust for each of them and for herself the proceeds of an annuity policy, purchased by the father in July 1964.
The question of a trust on testamentary benefits arises because plaintiffs, while their father was alive, executed documents which purport to be trust agreements. The one signed by Thornton R. Land is undated and was not signed by Thornton C. Land, the trustee named in it. If there were no other obstacles to the effectiveness of this undated document as an express trust, the trustee's failure to sign would create serious doubts about it because of the following provision:
"6. This trust shall become operative on the date of the Trustee's acceptance of the foregoing appointment, indicated in writing at the foot of this document, and, insofar as applicable, retroactively as of the date of my majority."
The trust documents signed by Michael S. Land bear the dates of May 8 and July 28, 1964. They both contain the same paragraph about trustee's acceptance as is quoted above, and they were both endorsed "Accepted" by Thornton C. Land as trustee. All three papers contain this sentence:
"The laws of New York shall govern the construction and execution of this trust."
The trust instrument signed by Thornton R. Land and the first of the two signed by his brother Michael contain (except for the name of the signer) initial paragraphs which are identical and read as follows:
"I, [signer's name], hereby transfer to my Trustees named herein all my right, title and interest in the property of Arthur Harold Land, and of Nellie C. Land, and all my right, title and interest as the child, issue or descendant of my parents, or otherwise, in any and all property, including future and contingent interests, to which I am now or may hereafter become entitled, and all my right, title and interest in any property hereafter deeded or transferred to me by my parents and their relatives, TO HAVE AND TO HOLD said property and all property I may hereafter transfer or cause to be transferred to said Trustees, for the following uses and purposes:"
In the second trust agreement signed by Michael the initial paragraph was changed, but only to exclude any property "received in the future from my mother Margaret E. R. McCampbell" (former wife of Thornton C. Land).
The paragraph quoted above is worded as though it were primarily an immediate transfer of existing property rights, but at the time of signing it could have had no force as an assignment except insofar as it might affect expectancies of receiving property. The two young men were then students, were not self-supporting and owned nothing of substantial money value. Neither was paid any consideration in connection with the signing of the trust papers, and when each signed, his possibility of becoming a legatee could have been nothing more than a hope.
Directly involved here are property rights -- benefits provided by the father's will -- which came into existence after the trust documents were signed. The question is whether the executor of Thornton C. Land should pay over those benefits free of trust to Land's sons or should they go to trustees to be held and administered under the trust instruments. Only the guardian ad litem opposes payment free of trust. If the trusts were to come into existence, the children of Michael and Thornton R. Land would become
remaindermen; hence the guardian's standing to urge that the trust agreements be given effect.
He does not argue, however, that they should be enforced as express trusts, or as contracts to create trusts. In that respect his position is consistent with the authorities. Concerning a situation like the ones presented here, Professor Scott has written (1 Scott on Trusts (3 d ed. 1967), § 86.1, p. 718 et seq):
"Where there is consideration it makes little difference whether the transaction is treated as a present assignment or as a contract to assign in the future. Where there is no consideration, however, a purported assignment, whether by way of outright gift or in trust, or a purported declaration of trust, cannot be upheld as a contract. If the transaction is not effective as a present assignment or declaration of trust, it cannot be upheld as a contract. Where the settlor has no property interest he cannot make a present transfer, and a mere expectancy is not such an interest. The courts have held, therefore, that a purported assignment in trust or declaration of trust by an heir or legatee of what he may thereafter receive by intestate or testate succession, if made gratuitously, is ineffective.
In In re Ellenborough [(1903) 1 Ch. 697] a woman without consideration executed a deed purporting to grant to trustees the real and personal estate to which on the death of her brother and sister she might become entitled under their wills or by intestacy. The sister died and she received a share of her estate and handed it over to the trustees. The brother later died and she became entitled to all his property but she refused to transfer it to the trustees, and took out a summons to determine whether she was entitled to retain the property. The court held that her deed could not operate as a present conveyance and that although in equity it might operate as an agreement to convey, she was not bound by it since she received no consideration, and that she was therefore entitled to retain the property.
In Matter of Gurlitz [105 Misc. 30, 172 N.Y.S. 523 (Sup. Ct. 1918), Modified sub nom. In re Lynde's Estate, 175 N.Y.S. 289 (Sup. Ct. 1919), affirmed 190 App. Div. 907, 179 N.Y.S. 933 (App. Div. 1919)] a man executed an instrument under seal whereby he purported to assign to a trust company as trustee for another his interest under a trust created by his grandfather. The assignment was gratuitous. His mother was a beneficiary under the trust created by his ...