Matter of Culver’s Estate, 294 N.Y. 321 (1945)
When a beneficiary exercises a power of appointment, creating a new trust under a separate will, the trustee of the original trust is entitled to a full commission upon distribution, and the terms of an earlier agreement limiting commissions for the original trust do not apply to the new trust.
Summary
The Bank of New York served as executor and trustee for Andrew Culver’s estate under a will executed after the bank agreed to specific commission rates. Culver’s will granted his daughter, Fanny Buxton, a power of appointment over a portion of the estate. Buxton exercised this power in her own will, creating a new trust with the Bank of New York as co-trustee. The court addressed whether the bank’s commissions for the new trust created under Buxton’s will were limited by the agreement made with Culver. The court held that the bank was entitled to full statutory commissions for the new trust because Buxton’s exercise of the power of appointment created a separate and distinct trust.
Facts
Andrew Culver entered into an agreement with the Bank of New York regarding the commissions it would charge as executor and trustee under his will. Culver executed his will, naming the bank as executor and trustee. The will created a trust for his daughter, Fanny Buxton, granting her a power of appointment over the trust assets. Buxton later executed her own will, exercising the power of appointment and creating a new trust, also naming the Bank of New York as a co-trustee. The new trust benefited Buxton’s children.
Procedural History
The Bank of New York sought a determination of its commission entitlement as trustee under Andrew Culver’s will, specifically regarding the distribution of trust property to itself as co-trustee under Fanny Buxton’s will. The Surrogate’s Court limited the bank’s commissions to the rates specified in the 1900 letter agreement with Culver. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether the Bank of New York’s commissions for distributing assets from the Culver trust to the Buxton trust, where the Bank also served as co-trustee, are governed by the commission agreement with Culver, or whether the bank is entitled to full statutory commissions for the termination of the Culver trust and the commencement of the new Buxton trust.
Holding
No, the bank is entitled to full statutory commissions on the trusts created by Buxton’s will because the exercise of the power of appointment created a new and distinct trust, separate from the original Culver trust. The original trust terminated upon distribution to the new trust.
Court’s Reasoning
The Court of Appeals emphasized that the testator’s intention is paramount in will construction. Culver’s intention was to allow his daughter to dispose of the trust assets as she saw fit through the power of appointment. Buxton’s will created a separate trust, and her intent regarding trustee commissions should be honored. The Court distinguished the case from situations where a single trust is created for multiple life terms, noting that here, there were “two settlors, two instruments of trust, two actually different trusts and two sets of trustees.” The court reasoned that because Buxton fully exercised her power of appointment, the Bank’s duties as trustee under the Culver trust ended, and its duties as co-trustee under the Buxton trust commenced, entitling it to the legal commissions authorized by law for the new trust. “The coincidence of naming the bank as cotrustee should not be construed as a continuance of the Culver trust and so to hold is to disregard the clear and fundamental fact that Fannie C. Buxton fully and finally disposed of the Culver trust for her benefit.”