In re the Judicial Settlement of the Accounts of Young

This is an intermediate accounting of ■ Horace G-. Young, as testamentary trustee . under the last will and testament of Thomas Cornell.

Objections are filed by Catharine Ann Cornell, the present life legatee of a portion of the net income ■ and remainderman, and by Nellie L. Carpenter, a contingent life legatee and remainderman, to certain items contained in the account and two supplemental accounts filed on this hearing. The trustee renders his account in two schedules, one of principal account, and the other of income account, and the objections filed are to the general effect that the trustee has charged to income account certain items which should be wholly charged to principal account, or apportioned between principal and income account. It is a question, in the main, from which fund certain payments shall be made.

“ Third. All the rest, residue and remainder of my said estate, real, personal and mixed, of every name or nature whatsoever, T give, devise and bequeath unto my executors and trustees hereinafter named, and to their successors, with full power to sell all or any part of my said estate, as they may deem advisable, from time to time, at either public or private sale, and upon such terms as they shall deem proper, and to invest and reinvest the proceeds from such sales or any moneys that may come into their-hands as they think best,, without regard to any statute or law regulating such investments, and without any personal liability of either of my said executors, or their successors, or any such action, or for any loss or depreciation my said estate may suffer because of such investment; to be held by my said executors, and their successors in trust, for the following purposes and uses only, to wit:

1. .To manage, improve, protect and-care for my said estate, to collect all rents, moneys, interest, dividends and profits my said estate may have from any source, from time to time, as they shall accrue, to. invest and reinvest .the same and all moneys that may come into their hands from the sale of any real estate, securities or' other property, for the best interest of my said estate, in their judgment, to execute all deeds and papers that may be necessary for the transfer of all, or any part of iny said real estate, or any other property I may die seized or possessed of,, to vote upon any-of my securities and hold office in any corporation in which my estate is interested, and to do any and all other acts they may deem neces-" sary or .prudent for the proper management and protection of my said estate the same ás I, myself, might do if living,, present and acting in their stead.”

By "the second subdivision of the third clause, the- executors and trustees are directed “ To preserve and keep my said estate together intact, except so- far as is herein otherwise directed,” during the continuation of the two lives in being which measures the duration of the estate committed to the executors and trustees.

The. will-further provides:

“ 3. To allow my beloved wife, Catharine Ann Cornell, during .the period of said ‘ two lives,’ if she shall live so long, if not, during her natural life, the sole, exclusive and uninterrupted use, occupa

tion and possession of my homestead property in said Rondout, in the city of Kingston, N. Y., as it is now owned, occupied and enjoyed by me, including house, barns, outhouses, greenhouses and connecting and contiguous lands, together with all the household furniture therein contained, including written and printed books, pictures, plate and plated ware, fixtures, ornaments, bric-a-hrac and jewelry; also, all my horses, harness, carriages and sleighs, robes, livery and barn fin-nishings; all of which said property, during said period I will and direct my. executors, out of the income of my estate, to keep in such repair and condition as she may direct, to pay all assessments, taxes and water rents against said property, and insurance upon the same.

“ 4. To pay over unto my said beloved wife Catharine Ann, for her own sole use,'benefit and disposition, during the period of said ‘ two lives,’ if she shall live so long, or, if not, during her natural life, ninety (90$) per cent, of the net income of my said estate in lieu of dower, or of any rights she may have in and to any part of my estate, except as herein provided,, the remaining ten (10$) per cent, to revert to my estate. * * *.

“ 8. If my said wife shall survive the ‘two lives ’ aforesaid, then, at the expiration of the last of said two lives ’ to pay over unto my said wife the principal of my entire estate, real, personal and mixed as it shall then exist, to her and her executors, administrators, heirs, and assigns forever. * * *

“ Seventh. I will and direct that my executors and trustees shall jointly and severally have power to "hire and employ servants and agents, upon such terms and conditions as they may think best, to aid them in the management of my said estate, and to pay such servants and agents from any funds of my estate, in their discretion, for all such services by them performed.”

The trustee has charged against the income account the salaries and expenses of H. C. Soop, for legal services, and R. B. Jones and Edward Derrenbacher, for clerical services, and the amounts paid Rogers, Ruso .& Kelly and H. M. Johnson, for services as stenographers, and $929.19 paid the state treasurer for taxes on wild lands, and Mrs. Cornell and Mrs.. Carpenter allege that these items should be apportioned between principal and income account. He has also charged $200 per month paid to himself for services under an agreement hereinafter more fully considered to income, account, and the contestants allege, in their objections to the account and first supplemental account, that this sum should not he charged

As the authority of the trustee to make 'any of these payments is derived from the will, it becomes necessary for this court to construe this will in order to properly determine the questions herein presented. This the Surrogate’s Court has jurisdiction to do on an accounting. Code Civ. Pro., § 2472; Garlock v. Vandevort, 128 N. Y. 374 .

The first part thereof to be considered will be the testator’s phrase “ net income,” as hereinbefore quoted.

Thomas Cornell died the possessor of an ample fortune, which he had accumulated, and over which he exercised a careful personal supervision. He was president of many large corporations, and had been for many years identified with large business interests. His estate consisted principally of improved and unimproved real estate in this city, farm; forest and wild lands in Ulster and Greene counties, large transportation interests in the Ulster & Delaware Railroad ' Company, the Kaaterskill Railroad Company, the Rondout & Rhinebeck Ferry- Company, and the Cornell Steamboat Company, and large banking interests in the First National Bank of Rondout, and he was prominently connected with many other business interests of magnitude and importance. He had seen this property grow up and assume the proportions--that it had at the time of 'his death. No one knew so well as he, whose untiring industry and frugality had amassed it, its earning capacity, and the possibilities of its development. His will provides a comprehensive scheme for retaining this wealth in his own family. Almost every contingency which the ingenuity of man could for-see is fully provided, for. He was an old man, and his wife was nearly, or quite as old, and is now upwards of seventy years of age.

A will must be construed in its entirety and effect given to what was the manifest intention of the testator. This will breathes, in almost every line, the determination of its strong-willed maker to keep his estate together until it should be turned over to its ultimate beneficiaries. His first solicitude seems to have been for an

• Every will, in conformity, of course, to the general rules for construction, must be determined by the intention of the testator. Measured by this standard, I must hold that by the phrase “ net income,” this testator meant such income as should be left after payment of all the ordinary, proper and necessary expenses of conducting and conserving his estate, including the repairs of buildings, taxes, and salaries and wages of all necessary employees of the estate.

This testator knew that some portions of his estate yielded little or no income, while other portions yielded a large income. It was, however, for his estate as an entirety that he always provided. He was satisfied with his own investments. He gave no direction to sell any particular property, nor change any particular investment, but (Erected his trustee “ to preserve and keep my said estate together intact,” etc., giving him, however, the power to realize on investments when necessary for the estate, or when the trustee deemed it advisable.

It is urged, on behalf of the widow, that the testator could not have intended that all expenses for the care and preservation of the estate should be taken from the income, as that might leave the widow destitute of any income. It would seem to be a sufficient ' answer to that, to point out the large income she is now receiving under the construction of the will adopted by the trustee and approved by this court. But there is another, and, to my mind, a more convincing reply to that proposition. By the fifth subdivision of his will the testator provides as follows:

“ Fifth. I will and direct that in the event my said wife shall refuse to waive her right of dower and accept under the terms of this will, that then and in such event my executors, after paying over unto my said wife her dower interest in my said estate, shall manage and dispose of the remainder of my estate in the manner

hereinbefore directed in the event my said wife should not survive said ‘ two lives/ -and as if she had failed to survive said ‘ two lives ’ and had died at the date of her refusal to accept under.the terms of the will.”

It will thus be seen that not even solicitude for his wife’s income was allowed to stand in the way of the cherished testamentary' scheme the testator had evolved, and that the widow perforce must accept of the provision made for her, or take her legal dower right only. These facts may seem harsh and stern, but they flow naturally from an examination of this will. We may not know how far they may have been softened by financial benefactions prior to decease. We do' know that the selection by the widow of the benefits arising from the will, rather than her statutory rights, shows that she approved the testamentary scheme, at least, so far as she was concerned, and she is now enjoying the large income thus provided for her.' If any portion of the principal estate is taken to pay expenses of management and conducting it, of course the principal is depleted and reduced, and the income likewise reduced. By that act, at once, the intention of the testator to not only retain his estate intact, but to augment it by the addition of 10 per cent, of the net income, is frustrated. By so doing, notwithstanding the most prudent and careful management by the trustee, and the increase in values of the leal estate by the result of natural laws, the estate might easily be seriously impaired and its income steadily decreased instead of increasing as it -now is, and as the testator evidently intended it should do. • •

The construction here adopted is supported by the ease of Dannat v. Jones, 2 Dem. 602 ; affirmed by the General Term, 37 Hun, 430 , and by the Court of Appeals, 103 N. Y. 621 .

In this estate the testator, a brewer, authorized the executors to -continue his business so long' as they should think it advantageous, the profits to be distributed according to a previous clause of his will. The previous clause directed that the net proceeds of the income of certain real estate and personal property should be paid to certain designated beneficiaries during their lifetime. The business was continued, and, on the accounting, the executors charged ¡as disbursements against income the wages of operatives, expenses of -collecting accounts, procuring discounts, foi* “ trade raising,” procuring signs, trade losses, horses lost, and tools' worn out, which were allowed, and the court held that what remained was the profits-■of the business. '

It must be borne in mind that the amount of this estate has been substantially ascertained, and that the debts and liabilities of Thomas Cornell have been in the main ascertained and adjusted; so that, with a few exceptions, which will be specifically referred to, the expenses and disbursements now here, are not for settling the estate, but for carrying it on, and conserving it by the trustee.

Under the construction above given to this will, the objections to charging salary of H. C. Soop, R. B. Jones and Edward Derrenbacher to income account are disallowed. Under the seventh clause of the will, hereinbefore quoted, the trustee is given power to hire and employ servants and agents, and to pay them from any funds of the estate in his discretion. Having exercised this power by employing these parties, and having fairly exercised his discretion under the strict terms of the will by paying them from the income, it is" also doubtful if any court can properly- interfere with the fair exercise of that discretion.

Under an agreement, dated May 30, 1893, executed by this trustee, Catharine Ann Cornell, and the other parties interested, this trustee has paid to himself from income account, for his services in and about the estate, the sum of $200 per month from May 1, 1893. That portion of the agreement under which this payment was made is as follows:

“ The parties of the second part consent and agree that the party of the first part may receive and retain the further sum of $2,400 annually, from the estate of Thomas Cornell, as compensation for his services as executor and trustee as aforesaid, commencing May 1, 1893.”

And it was further provided that this was to continue for ten years, and that such salary and compensation should be in addition to-legal fees and commissions.

Objection is now made that this should not be charged against' the income account, but should be apportioned between income and principal account. Certain benefits were to be had by the life beneficiary under this agreement. In the decree of this court, passing and approving the accounts of this trustee to June 30, 1894,

In the Matter of Meikle, 2 Connolly, 97, the executors only .agreed that one of their number for extra services to the- estate should have house rent worth $30 per month. The remaining heirs (who had not agreed to such extra compensation) objected thereto, but it was allowed.

In Lent v. Howard, 89 N. Y. 169 , one of the executors took , charge of the real estate of deceased at the request of the other executors, and managed and controlled the same. It was held that he was entitled to extra compensation therefor. In this case the

There being no question as to the value of the extra services of the trustee, and he having performed his part of the agreement with no notice shown of Mbs. Cornell’s desire to withdraw her consent prior to this accounting, I hold that he is entitled to the extra compensation in accordance with the agreement, and that it is properly charged against income account.

Now, as to the wild land back taxes paid to A. B. Colvin, state treasurer, amounting to $929.70, and $83.62.

The vouchers show that these payments were for an accumulation of back taxes, and that a portion thereof had accrued prior to the death of Thomas Cornell. The trustee will separate these payments and charge that portion of the amounts which accrued prior to that time, and the interest thereon as computed by the comptroller, to the principal estate, as that portion is a debt of the estate and should not be paid from income. The remainder must be charged to income account. This tax bill is against a large number of pieces of real estate, some of which are productive and some are not. There is no way by which the productiveness or the relative productiveness of certain portions of the real estate can be estimated and compared, and this court adjudge that one portion of taxes be paid from principal account, and the other from income account. Taxes of this kind accruing subsequent to the death of Thomas Cornell must be paid from income. The testator, by his will, treated his estate as a whole and the trustee properly follows the same rule. Matter of Albertson, supra.

The objection to the payment from income of the special assessment of $593.10 to James E. Phinney, city treasurer,- presents a different question. The assessment was for Union avenue sewer extension and grading and paving Chestnut and Downs streets, in the city of Kingston.

The testimony is that these streets had never been paved, graded or sewered before. That immediately after this improvement to Downs street the lots of the estate situated on that street appreciated to the extent of $100 each. The number of lots does not appear.

This is a muncipal assessment for a permanent improvement to the real estate. It is not at all in the nature of annually recurring taxes nor of taxes for repairs to streets that had" once been paved, graded and sewered.

■ The objection to the payment from income of the bill of Parkei & Eiero, attorneys in the Overbaugh ejectment case, and of Rogers, Ruso & Kelly, stenographers in the Ulster County Savings Institution case, both seem to me well taken.'

The first bill is for costs recovered in an unsuccessful attempt by this estate to eject Sarah B. Overbaugh from the possession of certain premises claimed by the estate and which she was in the possession of at the time of the death of Thomas Cornell. This was a proceeding towards ascertaining the amount of and settling the estate by the executor, and not a proceeding by the trustee to conserve it after it had come into his possession or to preserve it from attack. The second bill was for a stenographer in attendance at the trial of an action brought against the estate upon a bond of Matthew T.- Trumpbour, executed by Thomas Cornell in his lifetime. This is a proceeding to ascertain the debts and liabilities of the estate. Both of these accounts .are proper and natural expenses in settling the estate, not in administering the trust created by the will. In the decree of October 31, 1893,' settling the accounts of the executors and turning the estate over to the trustee, both of these claims were provided for, and Horace &. Young, as

The trustee will credit the principal estate with 10 per cent, of the net income from the date to which the last accounting approved by the decree of this court was rendered.

A decree may be hánded up in accordance with this memorandum.

Ordered accordingly.