In re Menzie's Estate

The above-entitled proceedings were instituted by Esther Menzie, life beneficiary under the will of George W. Menzie,

“Second. I give and devise to my beloved wife Esther the dwelling house and lot now occupied by me as a residence in the village of Canastota, N. Y., together with all the appurtenances thereto belonging for and during the term of her natural life the buildings to be kept insured and in good repair by her; and from and after her death I give and devise the said house and lot to my two sons George Le Roy Menzie and John W. Menzie and to their heirs and assigns forever share and share alike. I also give and, bequeath to my said wife the use and enjoyment during her life of my black walnut book case and the books therein contained, the large gilt parlor looking glass, the marble top side board and the marble top black walnut bed room set of furniture consisting of bed-stead dressing bureau and washstand—I also give and bequeath to my said wife and to her heirs and assigns forever all the rest residue and remainder of my household furniture and utensils including beds, bedding, pictures, jewelry, crockery, plate curiosities and ornamental articles in and about the house, her personal ornaments and wearing apparel to be absolutely hers forever and at her own disposal.

“Third. I give and bequeath to my son George Be Roy Menzie and to his heirs and assigns forever—after the death of my said wife—the large black walnut bed room set of" furniture—consisting of bed-stead dressing bureau and wash stand and also my marble top side board and also the undivided ■ one-half of all my books; I also give and bequeath to my said son George Be Roy and to his heirs and assigns forever my gold watch-chain which I now wear.

“Fourth. I give and bequeath to my son George W. Menzie and to his heirs and assigns forever—after the death of my said wife—my black walnut book case, the large gilt parlor looking glass and the other undivided one-half of all my books. - I also give and bequeath to my said son John W. and to his heirs and assigns forever my gold watch which I now wear.

“Fifth. I give and bequeath to my niece Electa Gee wife of Decatur Gee, of " Oanastota, N. Y. the sum of one hundred dollars to be paid to her by my executor within eighteen months after my decease.

“Sixth. I give and bequeath to my niece, Sarah E. Thompson of Eagle Bridge, N. Y. the sum of fifty dollars to be paid to her by my executor within eighteen months after my decease.

“Seventh. I give devise and bequeath to my son George Be Roy Menzie and to "his heirs and assigns forever one-half of all the rest and residue of my property of every name and nature.

“Eighth. I give devise and bequeath to my said wife Esther the use profits and enjoyment during her natural life of the other one-half of all the rest residue of my property and estate of every name and nature and from and after her death I give devise and bequeath the capital or principal thereof to my son John W. Menzie and to his heirs and assigns forever.”

The deceased testator was the father of the accounting trustee. Esther Menzie, the contestant, is the stepmother of the trustee and of the remainderman, John W. Menzie. The accounting trustee is the same named in the will of George W. Menzie, deceased.

From the evidence given before me upon the several hearings had herein, it appears that on the 24th day of May, 1884, this trustee had a settlement of his accounts before the Surrogate’s Court of Madison county and to which proceeding and settlement this contestant, Esther Menzie, was a party and that she consented thereto in writing; that a decree was duly made and entered, and, up to that date, she is bound by the said decree and by all its provisions. She is also estopped from raising any question that she might have raised at that time. The decree is conclusive on matters then within the jurisdiction of the Surrogate’s Court. Laney v. Laney, 19 N. Y. Supp. 518 , 64 Hun, 637 . That decree allowed and adjusted the account of the executor, as filed’by him, and found that the balance for distribution in his hands was the sum of $6,553.25, and directed the disposition of it at that time as follows:

“That he retain the sum of $3,527.96 in full payment of his legacy under said will; that he invest and keep securely invested in good interest-bearing securities the residue thereof, to wit, the sum of $2,925.38 and pay over the interest or income arising therefrom, annually, to Esther Menzie during the term of her natural life, and at her decease pay said principal sum of $2,-925.38 to John W. Menzie in full payment of his legacy under said will.”

The contestant charges that the trustee did not invest and keep securely invested this fund created for her benefit by the will of her late husband, as required by the law and by the duties devolving upon trustees as custodians of trust funds, and that, under his negligent management, waste of the fund followed as an inevitable consequence. The trustee controverts this position, and adds as an additional defense to contestant’s charges that he was acting as her agent under a power of attorney signed by her soon after the granting of the decree in May, 1884. The latter proposition I will dismiss with this observation—the trustee did not need the power of attorney to do his duty under the trust confided to him, and he is now accounting before the court as trustee and not as agent, and in making such account as trustee he should not be allowed to take refuge behind the less limited restrictions of an agent. The tendency of courts is to hold trustees to a rigid fulfillment -of their duties as such, and this is right in principle. They are handling moneys and property not their own. The creation of a trust is always sacred to the party creating it, and, in selecting a trustee to carry on his wishes, the creator places upon such trustee his badge of confidence, not only in his honesty, but that the object of his bounty, as named in the instrument, will receive the best and most conscientious efforts of the trustee named. He should not be allowed to commit a sacrilege upon that confidence imposed. Has

Peeling compelled to hold that this investment of the trust fund by the trustee in 1884 was within his discretion, and its safety further vouched for by the silence of the beneficiary upon the proceedings preceding the decree of May, 1884, the next question that presents itself is: Did the trustee exercise a reasonable degree of diligence in looking after this investment after it had been allowed to remain as aforesaid? In examining this question the court encounters the difficulty brought about by the acquiescence of the life tenant in the acts of the trustee for 20 years, and by accepting of, and receipting for, any income which was paid to her by the trustee from such trust fund, without protest or apparent objection. The answer of the contestant fails to point out wherein the trustee erred; and the court is left to infer, from the mass of evidence taken upon the hearings, that the trustee could have extricated himself from the position in which he found himself in some other and more profitable, manner than that which he pursued. The trustee foreclosed the mortgage and bid in the farm on August 26, 1891. Prom the account and the evidence it appears that the trustee rented the farm from the time of sale to 1897, at which time he sold it and received therefor a $1,500 mortgage on the .farm and a house and lot in the city of Oneida upon which there was an incumbrance of $200. The $1,500 mortgage has been paid and rein

The evidence shows clearly a great depreciation in the securities of this trust fund since 1889, but evidence fails to show any fault attaching to the trustee. That he received all that could be realized from the sale of the farm is not questioned by the contestant, and we have no evidence in the record where the trustee could have done differently. His account shows attention to the property representing the trust fund. The evidence fails to show that such attention was not sufficient and not intelligent. While the depletion of the trust fund and the absence of returns by way of income, by reason of such depletion is to be regretted, yet that alone- is not sufficient to base a finding upon that the trustee is at fault and that his negligence caused the loss. McCabe v. Fowler, 84 N. Y. 314 ; Matter of Weston, 91 N. Y. 502 .

Some portion of the money and interest of the trustee has always, since the death of George W. Menzie, been commingled with the trust fund. It came to him in that way, and so remains to the present time. The contestant alleges this as a fact showing dereliction of duty on the part of the trustee. I fail to see how it can be held as detrimental to the trust. He must lose when the trust fund loses, and would gain when the trust fund shows a gain; conditions placing this as a fact showing dereliction of duty on the part of the trustee when he accepted the trust and not created by him. That the trustee could legally allow his money to remain in the security with the trust fund seems to find warrant in Barry v. Lambert, 98 N. Y. 300 , 50 Am. Rep. 677 ; Atlantic Trust Company v. Powell, 23 Misc. Rep. 289 , 50 N. Y. Supp. 866 .

The only remaining question requiring examination and raised by the answer of the beneficiary is whether the expenses and disbursements with which the trustee had credited himself in his account were proper charges against the income, or should be charged against the corpus of the estate. That the trustee made the payments credited to him by himself in his account is not denied; but from what fund they should be paid is questioned. It is the settled law of this state that, • unless otherwise provided in the instrument creating the trust, the life tenant must bear the expense of ordinary repairs, taxes, interest on incumbrance, if any exist, and insurance. Matter of Albertson, 113 N. Y. 434 , 21 N. E. 117 ; Stevens v. Melcher, 152 N. Y. 551 , 46 N. E. 965 ; Chamberlin v. Gleason, 163 N. Y. 214 , 57 N. E. 487 ; Dewitt v. Cooper, 18 Hun, 67 ; Wilcox v. Quinby, 73 id. 524, 26 N. Y. Supp. 114 . Circumstances will, in all cases, change this rule to some extent. In the case at bar, the investment by force of circumstances, has been changed from personalty to realty, and from 1889 to 1897 yielded practically no revenue above an amount sufficient to preserve the fund for the remainderman; and for so preserving it the life tenant is called upon to pay the expense. This is not proper and cannot be allowed. Matter of Pitney, 113 App. Div. 845 , 99 N. Y. Supp. 588 .

Assessments for permanent improvements cannot be paid for out of the income, and must be paid out of the principal, and the courts seem to hold that the life tenant should pay interest on the amount during life. In this case she had no benefit from those particular items,

In accordance with the foregoing reasoning, the following amounts are disallowed and struck out of the account as filed by the trustee:

Aug. 26, 1891. Paid Canastota Bee............................ Paid S. H. Wing, foreclosure....................... 3Í) Paid P. F. Milmoe, foreclosure...................... 25 00 Paid J. E. Stisser, foreclosure...................... 11 00 Paid Travis & Wolf, insurance............... Paid Farr Bros., hardware for farm........... Paid C. A. Marsh, labor on farm................... 5 25 Paid D. A. Monyer, use of screws................... 1 00 Paid J. Stisser, work, material and repairs......... 23 50 Paid Gleason, repairs to barn...................... 07 50 Paid Barrett, lumber................................ 72 62 Paid Farr Bros., hardware.......................... 0 0° Paid M. Hess, grass seed........................... 14 59 Paid J. Stisser, labor and repairs................... 10 04 Paid M. M. Hess, seed............................ 23 Paid McConnell, paint.............................. 1 Paid P. F. Weaver, paper.......................... 4 Paid Travis & Wolf, insurance..................... 6 00 Paid John H. Gronk, seed......................... 10 00 Paid 5 bushels timothy seed....................... 10 00 Paid ISO pounds B. wire.......................... 0 25 Paid expense of selling farm....................... 3 OO Paid J. E. Brewer, insurance....................... f 35 Paid sundries.................................. Paid 11 loads of dirt............................. 11 00 Paid cedar posts.............•.................. Paid new drain pipe........................... Paid J. W. McPherson, sidewalk................ Paid strike out................................ From the • item of $25.63 entered as “City Tax and sewer tax.” This apiount is arrived at by1 deducting the amount of former city tax. Paid J. S. Tanner, well pump.................. Paid Fitch & Conroy, sewer.................... Paid sewer tax................................. Paid Milo Torrey, driving well................. Paid sewer cost............................... April 13, 1892. Sept. 10, 1892. Dec. 1, 1892. July 7, 1893. May 5, 1894. June 25, 1894. April 4, 1895. Aug. 20, 1895. April 25, 1896. May 14, 1896. Sept. 1897. Dec. 25, 1897. Sept. 1897. April 1899. Sept. 20, 1900. July 11, 1902. July 18, 1904. June 4, 1904. Hov. 8, 1904. Jan. 24, 1905. April 22, 1905. June 15, 1906. 50 39 25 25 00 11 00 0 00 3 48 5 25 1 00 23 50 07 50 72 62 0 50 14 59 15 04 23 75 1 70 4 62 6 00 10 50 10 00 5 25 3 OO 4 35 12 40 11 00 5 OO 4 69 4 20 6 L 00 , 5 00 , 25 00 , 5 77 , 5 00 , 87 21

After eliminating the foregoing items from the account, it will be then approved in that regard. I do not determine here the respective amounts of the foregoing items chargeable to the. remainderman and to the trustee, individually, who is interested in the fund. The respective rights of the two last named parties, so far as the amounts struck out are concerned, may remain until the final settlement of the trustee’s account with his remainderman. will be

A new account may be prepared and filed in accordance with this decision, and decree prepared thereon, and, if agreed upon by the contending parties, submitted to me for signature; otherwise the matter may be brought before me on five days’ notice.

I am of, the opinion that the $500 investment in Farmers’ Loan & Trust Company of Sioux City, Iowa, is not a proper investment, and direct that the same be taken up and invested as provided by statute. The attorney for petitioner and trustee is allowed $25 for making up the

Decreed accordingly.