In re the Final Accounting of Washbon — 38 N.Y. St. Rep. 619

Majority

p. 619

In the Matter of the Final Accounting of Andrew G. Washbon, Deceased.

(Supreme Court, General Term, Fourth Department,

Filed May 8, 1891.)

Headnote

1. Executors and administrators—May allow beneficiary to occupy TRUST ESTATE.

The will of a testator devised a farm, implements and live stock to his executors as trustees for the use of his son. Held, that they might allow the beneficiary to occupy, and were not accountable to the remaindermen for the personal property on the farm.

2. Same—Expenses of contesting a proceeding to construe a will.

Such executors and trustees should be allowed their expenses incurred in contesting a proceeding brought by one named in the will for a construction of a provision thereon for his benefit, especially where-their right to recover such expenses is saved by the decree.

3. Same—Commissions on rents when beneficiary occupies.

They arc entitled to commissions upon the income, e. g., rents and profits of a beneficiary, although they allow him to occupy the premises held in trust.

p. 620

4. Same—Chargeable only with what they receive.

They are not chargeable with more than they receive of a trust estate unless there is some evidence of negligence amounting to a wilful default.

Appeal from a decree made in the surrogate’s court of Otsegocounty, on the 4th day of August, 1890, amended by a supplemental decree, entered on the 12th of September, 1890. The surviving trustees presented a petition for a judicial settlement of their accounts to the surrogate of Otsego county, who issued a citation returnable October 10, 1889, directed to John G-. Washbon, Andrew Gr. Washbon, Anne W. Lee and Nathan Bridges, as executors of the last will and testament of Henry R. Washbon, a deceased trustee; on the return of the citation, proceedings were-adjourned to November 15, 1889, and they were again adjourned to the 9th of December, 1889. The statements and accounts presented by the trustees were verified in November, 1889. Anne W. Lee and Andrew Gr. Washbon, for themselves, in behalf of their father, John Gr. Washbon, filed certain objections to the account. Andrew Gr. Washbon, of the town of Morris, Otsegocounty, made and published his last will and testament, bearing date the 31st day of January, 1865. Robert Washbon, Henry R. Washbon and John Cope, Jr., were named as executors in said will. Henry R. Washbon, one of the executors, died on the 1st day of April, 1884. No inventory having been filed, Andrew Gr. Washbon and Anne W. Lee, on the 23d of November, 1887, filed a petition in the surrogate’s court, asking for an order that a citation issue directed to Robert Washbon and John Cope, Jr., and Nathan Bridges, as executor of Henry R. Washbon, requiring them to return and file an inventory of the estate of the testator, and in pursuance of the proceedings thus instituted an inventory was, on the 28th day of February, 1888, filed, “ and an account of their proceedings as such executors and trustees and the surviving executors made application for a voluntary accounting and proceedings were had thereon, in connection with the compulsory proceedings; proofs were taken before the surrogate, and he “ adjudged and decreed that the said accounts be and the same are hereby finally and judicially séttled, and allowed as so found, adjudged and recorded as aforesaidand Robert Washbon and John Cope, Jr., were “directed to retain in their hands, as surviving testamentary trustees, under the will of said testator, subject to modifications for charges and allowances for interest, and all proper payments and expenses to be adjusted upon a future accounting of said trustees,” the sum of $9,617.54, as appears by the decree entered in the surrogate’s court on the 26th day of July, 1889. The stipulation was filed and that decree was amended on the 2d day of September, 1889, nunc pro tunc. The decree of the 26th of July, 1889, and the 2d of September, 1889, remained in full force and virtue. Before the decree appealed from was pronounced John Gr. Washbon died intestate on the 9th day of March, 1890, and subsequent thereto Andrew Gr. Washbon was appointed administrator of his estate, and on the 18th of April, 1890, he was substituted as a

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party in place of the deceased, and the proceedings were continued by a stipulation “as a final judicial accounting.”

Carver, Deyo & Jenkins, for app’lts; O. F. Matterson, Nathan Bridges and W. H. Johnson, for resp'ts.

In addition to the usual duties imposed upon the persons named as executors in the will of Andrew Gr. Washbon certain duties and liabilities arose by reason of the second provision contained in said will, which was as follows:

“ Secondly. I give and bequeath to my executors hereinafter named the farm in the town of Morris aforesaid, containing about two hundred and fifty (250) acres more or less, upon which my son, John Gr. Washbon, now resides, and which is now occupied and worked by Levi Reddington, together with the farming utensils and live stock thereon belonging to me at the time of my decease, and also the sum of four thousand ($4,000) dollars, and also-the equal one-fourth part of the residue of my estate as hereinafter mentioned, and also any other’s share or interest which may be hereinafter devised or given to them as trustees, in trust to receive the income, rents, interests and profits thereof and to apply the same to the use of my said son, John Gr. Washbon, during his life, and at his decease to grant, convey, transfer and pay over the same to the descendants of my said son, John Gr, Washbon, who shall be living at his decease, to whom I devise and bequeath the same, so that the descendants of each deceased child, if any, of my said son, John Gr. Washbon, shall take together and per stirpes one such share as said deceased child, their parent, would have taken if living, and for the benefit of said descendants of said son, John Gr. Washbon.

“ Item: I desire and request my executors and trustees to keep said farm in as good condition, repair and supply as they may be at the time of my decease.”

Under this provision of the will the trustees had the power, and they exercised their discretion to allow the beneficiary John Gr. Washbon, to occupy the farm and the property mentioned in the provision of the will which we have just quoted; that such occupation should take place seems to have been in accord with the intention of the testator. The trustees should not suffer by reason of permitting the beneficiary to enjoy the property mentioned in the provision of the will just quoted. In the Matter of Brewer, 43 Hun, 597 ; 6 N. Y. State Rep., 625.

By the clause of the will, “ the farming utensils and live stock ” were given to the trustees “in trust to receive the income, rents, interests and profits thereof and to apply the same to the use of ” John G. Washbon, during his life, and the trustees were authorized to “ grant, convey, transfer and pay over the same to the use of John &. Washbon during his life and at his decease to the descendants of my said son John Gr. Washbon, who shall be living at his decease.” As already stated the trustees were warranted in allowing the beneficiary to have the “ use of the farm, utensils and stock,” and it seems the same were used by John G. Washbon and by his family in his lifetime, and the trustees at no time have

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received any beneficial effect from the same. We think the acquiescence of the beneficiary and of the children of John Gr., in the use made of the personal property upon the farm were such that no liability by reason thereof should be imposed upon the trustees. Sherman v. Parish, 53 N. Y., 492 , and cases there cited ; Butterfield v. Cowing, 21 N. Y. State Rep., 500. In the course of the opinion in that case it was said: “ It is quite clear that no cestui que trust can allege that to be a breach of trust which has been done under his own sanction, whether by previous consent or subsequent ratification. The general rule is that either concurrence in the act, or acquiescence without original concurrence, will release the trustees.” The evidence seems to be sufficient to warrant the finding of the surrogate as a matter of fact that all the matters between the trustees and the beneficiary were settled and accounted for down to April 1, 1881, and subsequently as fast as they accrued.

(2) Inasmuch as the beneficiary had the use of the stock and utensils on the farm it was proper to refuse to charge the trustees any value thereof.

(3) Nor were the trustees chargeable with any interest upon the $200 as the value of the testator’s interest in the Hill lot; the beneficiary seems to have had the use of it, and the trustees were not shown to be negligent in respect thereto, or to have received any interests thereon for which they should be held to account.

(4) In March, 1885, Manda Fairchild, who is mentioned in the ninth provision of the will, instituted proceedings against the trustees to compel them to reimburse her the sum of $405.53, which she alleged had been expended in procuring necessary fuel for her use, and for the construction of the ninth provision of the will favorable to her interests. The proceedings were instituted before the surrogate; a contest was had and finally resulted in the determination of the rights of the petitioner and the liabilities and duties of the trustees, and the proceedings were dismissed, “ but without prejudice to the rights of said trustees to recover their costs and expenses of such proceeding, out of and from the said estate.” In the case now before us the surrogate has found “ that said trustees were compelled to, and did pay for witnesses’ fees and other expenses in and about defending said proceedings on or about September 11, 1885, the sum of $57.60, and the further sum of $70.00 ¡November 18, 1885, to B. J. Scofield, Esq., their counsel, for his reasonable charges, both of which items are included among the expenditures enumerated in the above twenty-fourth finding of facts, that the said expenditures were necessary and proper, and had in relation to said trust fund and estate.” We think upon the evidence found that the surrogate properly exercised his judgment and discretion in allowing the disbursements so made by the trustees. Code of Civil Procedure, § 2562; Valentine v. Valentine, 3 Dem., 597 ; McCabe v. Fowler et al., 84 N. Y., 320 .

(5.) We think no error was committed by the surrogate in allowing commissions to the trustees. In Matter of Selleck, 1 N. Y.

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State Rep., 575, it was said: “ It is proper to allow a percentage as executor and trustee when the fund is the same, but is changed by will or by decree of a competent court into a trust fund.” See also Blake v. Blake, 30 Hun, 469 ; Matter of Mason, 98 N. Y., 527 .

Our attention is called to Cook v. Lowry, 95 N. Y., 114 , upon the question of commissions; in that case the special term had exercised its discretion and denied commissions and based its. decision upon a finding that there had been a gross neglect or unfaithfulness on the part of the trustee ; in sustaining the action of the special term, Andrews, J., says: “ The trust in that case was never executed ; the trustee in substance converted the securities to his own use.” We think the case is distinguishable from the one now before us.

(6.) In the sixteenth finding of facts the surrogate states the dividend received upon the shares of the bank stock of the Second National Bank from 1867 to and inclusive of May, 1889 ; in such finding there is an omission of the sum of eighty dollars; which was received on the 1st day of November, 1889. Cope, one of the trustees, testifies, folio 244, that he received the eighty dollars on the 1st day of November, 1889. As we understand the accounts, that eighty dollars has not been charged to the trustees. The error probably crept into the account by reason of the fact that the sum was received pending the proceedings, We can perceive of no reason why the trustees should not be charged with the sum of eighty dollars and the interest thereon from the 1st day of November, 1889. A large amount of evidence was taken before the surrogate in respect to the manner in which the trustees had discharged their duties and some confusion doubtless arose by reason of the circumstance that no inventory was filed of the estate until many years after the probate of the will. The surrogate, upon all the evidence before him was called upon to exercise his judgment and discretion in respect to the sundry items involved in the accounting, and he was authorized to apply the rule that trustees are not chargeable with more than they receive of trust estate unless there is some evidence of negligence amounting to a wilful default. Shuttleworth v. Winter, 55 N. Y., 624 ; Osgood v. Franklin, 2 Johns. Ch., 1 .

However, we are of the opinion that a further hearing should be had before the surrogate’s court, and that in the further statement of the accounts, the surrogate’s court should, (1), allow the commissions on the income, and direct them to be payable by and out of the income only. (2) The surrogate should further investigate and pass upon the question made as to the forty dollars claimed to have been paid out December 13, 1889, which does not appear to be credited to the trustees. (3)- The claim of $448, amount of John E. Washbon notes, should be chargeable only to the income; that seems to be the disposition of July 26, 1889, which seems to be operative upon the parties. The evidence seems to be meager as to the claim of thirty dollars, paid November 23, 1887, for which the trustees produced a receipt, which does not clearly indicate why or how they were justified in making the disbursement.

p. 624

The income account should be adjusted to the date of the death of the life tenant, who died March 9, 1890. The interest subsequent to that time should be allowed and accounted for to the remaindermen. The decree in respect thereto seems to be incomplete and defective.

The surrogate having found that the remaindermen received $2,900 under an agreement to allow or pay interest thereon, it is not apparent why he did not, in adjusting the accounts, take the interest into consideration.

Costs of the proceedings before the surrogate should be equally apportioned between the income and the principal, as indicated by the surrogate when the costs were adjusted. The decree does not seem to have-been so formulated.

We think the decree should be reversed, and the proceedings remitted to the surrogate’s court

Decree of the surrogate of surrogate’s court of Otsego county reversed, without costs of this appeal to either party, and proceedings remitted to the surrogate’s court.

Martin and Merwin, JJ., concur.