Dow v. Dow — 45 N.Y. St. Rep. 5

Majority

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Abbot L. Dow, Trustee, App’lt, v. Margaret H. Dow et al., Resp’ts.

(Supreme Court, General Term, Second Department,

Filed February 8, 1892.)

Headnote

1. Trustees—Accounting.

Where a mother was accustomed to let her children spend the summer with their paternal grandfather on his farm, on which she held a mortgage, under a tacit understanding that the interest should go against their board, her husband, the trustee under her will, is justified in continuing such arrangement, and is not chargeable with interest on such mortgage.

2. Same—Removal.

Losses upon loans on real estate which, but for the failure of others, would have been wise and advantageous to the estate, and which failure could not have been foreseen, are not sufficient cause for the removal of the trustee.

(Dykman, J., dissents.)

Appeal from decree made by the court upon the coming in of a referee’s report upon the accounts of the plaintiff as trustee.

Said decree charged plaintiff with interest upon a certain mortgage ; with profits realized on the purchase and sale of real estate, and removed him and appointed the Franklin Trust Co. as his successor.

Wm., G. Low (Thos. S. Moore, of counsel), for app’lt; William D. Davenport, guardian ad litem, for resp’ts.

The plaintiff is the trustee of the residuary estate of Cornelia S. Dow, deceased, who was the wife of the trustee and mother of the defendants, who were the children of the trustee and the testatrix, his wife. When Mrs. Dow died she held a mortgage on a New Hampshire farm, the title of which was in the father of the plaintiff. No interest was paid upon the mortgage, and in the summer the plaintiff and his children visited for two or three months their grand-parents upon the farm. There was no express agreement, but it was tacitly understood that the interest should go against the board of the children. This arrangement existed in the lifetime of testatrix, and was only continued by the trustee afterwards. The trustee was allowed $Í0,000 a year for the support of the children. The decree so far as it compels the trustee to make good the interest on the mortgage is not supported by the facts. The estate was large, and the whole income was given for the infants’ support. The trustee was-justifled by the custom existing in his wife’s lifetime in providing a home outside of a large city whereby the health of the children would be benefited, and it should not be deemed part of the $10,000 for which no account was to be given. The mortgage produced nothing, and the trustee should not be charged with the interest as if it had. The charge against the trustee for profits on land purchased is improper. He made the contract as an individual. He was advised that he could not buy the land from the estate. The trustee agreed to loan money for the estate for the purposes of building. The land realized a profit The evidence fails to show that the profit was obtained by reason of the loan, but was the result of a rise in value of the land. The loan was

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not ill considered and was made in good faith. The case shows no material loss in mortgages on real estate; none at all on the principal sum of the trust. The loan account upon the houses was increased by the failure of the builders to complete. The failure could not be foreseen, and the referee finds good faith in the advances, and that they were made to protect the trust estate.

It follows that there is no sufficient cause to remove the trustee, lie was chosen by the mother of the children and he is their father. He has done no intentional wrong, and but for a failure of the builders the loan on the real estate in question would have been wise and advantageous to the estate. The loss of interest account to the estate is due to causes outside of the acts of the trustee. It is more and more difficult to obtain interest at the legal rate. The best real estate security will not bring a return of over five per cent, and out of this is to be paid the tax upon the fund. A net return, as shown upon this estate, of two' and three-fourths per cent is not unreasonable, and is fully up to the average of estates of such a considerable amount

The portion of the decree appealed from should be reversed, with costs to appellant out of the estate.

Pratt, J., concurs; Dykman, J., dissents.