In re Garth — 10 A.D. 100

Majority

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In the Matter of the Judicial Settlement of the Account of Proceedings of Horace E. Garth and Others, as Sole Surviving Trustees under the Last Will and Testament of Henry F. Spaulding, Deceased. Thomas H. Spaulding, Appellant; Horace E. Garth and Others, as Trustees, etc., of Henry F. Spaulding, Deceased, Respondents.

Headnote

When executors become trustees entitled to commissions as such — effect of authority to retain the original securities owned by the testator —former adjudication.

The will of Henry F. Spaulding, after giving certain legacies, hy the sixth clause thereof, devised to executors, theretofore appointed, his residuary estate in trust to pay his wife §10,000 a year during her life. It also provided for the ultimate disposition of the principal of the trust fund, and of that portion of the residuary fund not necessary for the purposes of the trust. •

Held, that the duties of the executors as such ended when they had carried out the provisions of the first five clauses of the will;

That the duties of the executors in regard to the residuary estate were distinctly trust duties, which entitled them to commissions as trustees;

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That their right to such commissions was not affected hy a permission given them by the testator to retain as trustees the original securities which came into their hands as executors.

A surrogate’s decree, recognizing the creation of a trust estate, constitutes an express adjudication which hinds those who were parties to that decree.

Appeal by Thomas H. Spaulding, one of the legatees named in the last will and testament of Henry F. Spaulding, deceased, from a decree of the Surrogate’s Court of the county of Hew York, entered in said Surrogate’s Court an the 4th day of May, 1896, settling the accounts of the surviving trustees under the last will and testament of Henry F. Spaulding, deceased.

The first clause of the will of Henry F. Spaulding appoints his executors. The second, third, fourth and fifth give certain legacies to specified individuals. The sixth clause gives, devises and bequeaths to his executors all the rest, residue and remainder of his estate, both real and personal, in trust to pay to his wife, Kate B. Spaulding, the sum of $10,000 annually during her life. The principal sum used to produce this income is given to his children, Thoman Hunt Spaulding and Margaret Thompson Schley, upon the death of his wife; and that portion of his residuary estate not necessary for such purpose is given to said children at his death.

The question presented related to the right of the executors to take commissions also in their capacity as trustees, in regard to which the surrogate in his opinion said :

“ The direction to the executors, who in one of the codicils are appointed trustees, and to whom was given the residuary estate, to separate from the body of the same the funds to yield the income to pay the annuity to the widow, and the charges affecting the leasehold, and the provisions for the appropriation for ‘ the trusts created by tlie will ’ of the securities designated, are a clear manifestation of the intention of the testator to constitute separate and distinct trusts as to the funds specified to be held and managed by the accountants solely in their character and capacity of trustees. The severance from the rest of the estate of the funds necessary for the trusts, and of the relation of the executors to such funds, and the consequent assumption of the possession and administration thereof by the trustees, were obviously intended to take place upon the ascertainment of the adequacy of the residuary estate to supply the

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same, and their separation from such estate. Such separation was, in fact, made in pursuance of the decree which was made upon the executors’ accounting, and which determined the amount of the residuary estate and directed its disposition. That decree recognized and, in effect, determined the intention of the testator to be such as I have previously indicated. It terminated the connection of the executors with the funds in question, and directed their distribution and transfer to the trustees, to be held and managed by them as such. Under these circumstances the right of the accountants to commissions as trustees is undoubted.”

William, J. Moran, for the appellant.

John Notman, for the accounting trustees, respondents.

David McClure, for the executors of Kate B. Spaulding, respondents.

We concur in the main conclusion arrived at by the learned surrogate. The duties imposed upon the executors by the sixth clause of Mr. Spaulding’s will were not executorial. They were distinctively trust duties.- The executorial duties ended when the directions contained in the first five clauses of the will were fully executed. Thereupon the rest, residue and remainder of the estate came into being. Upon that rest, residue and remainder the trust then, for the first time, operated. It did not operate during the period of executorial duty, for the fulfillment of that duty was requisite to the ascertainment of the residue.

This is not affected by the fact that the income from the trust fund was payable from the date of the testator’s death. The creation of the trust was one thing. The period over which its operar ■tion and execution should extend was quite another. It is also contended that the trust duty might have been imposed upon the executorial office — might, in fact, have been declared to be an executorial duty. The answer is, that the testator has not so provided ; that he has created a distinct trust; that he has specified the executorial duty; and that he has devised the residue, after the -fulfillment of that duty, upon this distinct trust.

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Nor is the question affected by the permission given to retain the original securities which came into the hands of the executors. That was a mere matter of detail. When the executorial duty was completed without their use, they became a part of the residuary estate. They then became a part of the trust estate. The turning over of these securities from the one account to the other may have been, as matter of fact, a mere formality. But the right to commissions under the statute depends upon fixed rules, not upon the extent of the trustee’s labor. These rules are not affected by such illustrative incidents as the appellant suggests.

We may add that the creation of the trust estate was not only affected by the terms of the will, but was judicially recognized by the surrogate’s decree of 1894. This decree, acting upon the avowedly .separate functions of the executors and trustees, directs the executors to transfer to themselves, as trustees, the corpus of the trust estate, namely, the residue found in their hands upon the executorial accounting. This was an express adjudication in a proceeding to which the appellant was a party.

The question as to Mrs. Spaulding’s right to a share of the commissions need not be specially considered, as the appellant was not prejudiced by its allowance to her executors. Mrs. Spaulding’s co-trustees have not complained. If the surrogate has allowed her representatives a share of these commissions to which her co-trustees were entitled, they alone can complain. The appellant is not harmed so long as but three full commissions in all have been allowed.

The decree of the surrogate should be affirmed, with costs.

Rumsev, O’Brien and Ingraham, JJ., concurred; Van Brunt, P. J., not voting.

Decree affirmed, with costs.