What, then, is an application "to the use of a person," within the statute? The advocates for a discretionary power in trustees over the fund, have told us that a payment over is not such an application, but have not informed us in what it consists. "To apply to the use of," is to execute the trust pro tanto. It is such an application as will discharge the trustee from all responsibility on account of the fund, or the part of it thus applied. This requires, 1st. The authority, express or implied, of the creator of the trust. 2d. An act of the trustee in pursuance thereof. 3d. The assent, in some form, of the beneficiary, where he has legal capacity; or of his committee or guardian, where he has not. An application "to the use" of a person, like a delivery, or payment, implies an acceptance. The delivery of clothing to a madman, would no more be an application to his use than the payment of money; for he has not the capacity to assent to either. The nature of the property applied is of no consequence, whether money or chattels. Judge Savage observed in Lorillard's Case, "that to apply rents and profits to the use, does not mean to pay them over to the cestui que trust. In that case he would apply them himself to his own use." In what other way can they be applied? If the learned judge had pursued the subject, he would have discovered that his remark applied with equal force, not only to a payment of money, but to every species of property, whether procured by the trustee or otherwise. In the final analysis it would be found that the beneficiary must in all cases apply the thing bestowed to his own use. The reason is, that the donee cannot be compelled to accept the gift, or any part of it. The trustee has to deal with free agents, when the beneficiaries have legal capacity, and with their legal guardians when they have not. He is trustee of the fund designed for their use, not a committee of their persons. If they refuse to accept what he has provided, and is ready to deliver, whether money, or necessaries, there is no application; the trust is unexecuted; the property remains in the trustee, subject to his control, and for it he alone is responsible. On the other hand, if the trustee, in pursuance of an authority written out in the trust deed, or implied from it, delivers to the cestui que trust money or other property for his use, and it is accepted by the latter, the trust is so far executed, the application made, and if within the next hour, the gift is squandered or destroyed, the trustee is exonerated.
Again, it is said that if a person is competent to take care of the money when paid over, there is no reason why the estate should not be transferred to him out of which it is raised. The same reason might be urged against trusts of personal property of this kind, which are confessedly authorized by the statute. But to be influenced by this suggestion, we must shut our eyes to the light of history and experience. Every one knows that there are individuals in every society, who are neither imbecile nor profligate, nor united with those who are so, who could properly dispose of a fixed income, and yet who ought not, from prudential reasons, to control the capital out of which it is raised. The difficulty does not lie in a want of capacity; but it is to be found in their inexperience, the relation which they sustain to others, and sometimes in the nature of their pursuits. Of the men of the past age, whose labors in science and literature are now appreciated, how many might be named who, if living, would be deemed incompetent to manage an estate successfully. Yet men like these have their uses, although they know little of the value of property, or the modes of extracting rent from a refractory tenant. The statute does not exclude them from the class of beneficiaries; nor, as I read it, does it require a guardian or a trustee to supervise their expenses; or make their degradation an essential condition of the trust. We are told that persons of this class can appoint agents to superintend their estates.
So can the creator of the trust, and the law casts upon him this duty, whoever may be the cestui que trust. The chances of a judicious selection would be rather in favor of the man who provided the fund, than the one who was to expend the income.
And lastly, it is said that estates created under the third subdivision are alienable; that a trust to pay over is passive, and opposed to the policy of our law, and the intention of the Legislature. A trust to receive rents and profits, and pay them over, is essentially active in all its particulars. It was so at the common law and is so now. Jick. Anal. p. 15, note and cases; 3 R. S. 582; Reviser's Notes. To pay over is an active duty, and the successful management of real estate, with a numerous tenantry, demands not only integrity, but the exercise of vigilance, together with a knowledge of business, and of property. The revisers say, "that active trusts are indispensable to the proper enjoyment and management of prop-ety. They therefore propose to retain them, only limiting their continuance, and defining the purpose for which they may be created." 3 R. S., supra. I think effect should be given to their design, and that of the Legislature. The objection, indeed, is rather to the policy of the statute, than the validity of a trust to pay over. If the law was more questionable than I believe it to be, it is no reason why it should be made more odious by construction.
The judgment of the Superior Court should be affirmed.
70 New York, 270. - 1877.
Rapallo, J. - this action is brought by a judgment creditor of the defendant Butterfield, after the return of an execution unsatisfied, to reach the surplus income of a trust estate, of which the judgment debtor is the beneficiary.
The trust estate consists of real and personal property, which was given by the will of the father of the defendant, Butterfield, to the defendants, Thorn and others, in trust, to receive the rents and profits of the real estate and the income of the personal estate, and to pay over the rents of the real estate and the income of the personal property to the defendant, Butterfield, during his life.