Misc.] Surrogate's Court, Chemung County, January, 1918. Cash paid trustees for investment. Administration expenses prior to this Administration expenses since the ac accounting was started: Stenographers' fees... $155 69 641 01 Attorneys' expenses to Albany Printing bills.... 3,635 43 479 00 1,037 00 15,000 00 121 10 for Executor McDowell.... 2,000 00* Counsel fees for Executor 500 00 McDowell 2,000 00* 5,767 95 The account also shows that on January 17, 1910, Boyd McDowell, as one of the executors paid to himself on account of commission for himself... 1,800 00 $169,996 65 This state of the account shows a deficit of $5,237.71. * $500 only has been paid. Surrogate's Court, Chemung County, January, 1918. [Vol. 102. The testimony of executor McDowell and the account show that the trust fund, which consisted of practically all the securities left by the testator, except the two $500 bonds retained in their hands as executors, and the sum of $3,635.43 cash were turned over to the trustees in September, 1909. The household goods were also turned over to the trustees at the same time. These funds and these securities immediately vested in the trustees and became a trust fund, as provided for under the will, and could be used for no other purposes than those provided in the will. The account of the executors shows that since this accounting was commenced and since the original account herein was filed in April, 1916, the trustees have turned over to the executors the sum of $8,500 presumably to cover the deficit referred to in the foregoing statement. This act on the part of the trustees was illegal, and that sum must be recovered by the trustees and the executors should, by the decree to be entered herein, be directed to return it forthwith to the trustees. When the executors turned these securities and funds over to the trustees" they parted with title and possession thereof and were discharged from all liability and divested of all power concerning them." This quotation is from the opinion in Leggett v. Stevens, 185 N. Y. 76, where the same principle was involved, as well as in the cases cited in the opinion. A testamentary trustee takes title to the trust estate by the instrument creating the trust. He takes this title the same as though his legal title had been conveyed to him by a deed." Jessup Surr. (3d ed.) $982. 66 Except as otherwise prescribed in this chapter, an express trust, valid as such in its creation, shall vest in the trustee of the legal estate, subject only to the execution of the trust, and the beneficiary shall not take Misc.] Surrogate's Court, Chemung County, January, 1918. any legal estate or interest in the property, but may enforce the performance of the trust.' Real Prop. Law, & 100. The transferring by the trustees of $8,500 back to the executors was not an act in the execution of the trust and the act was therefore illegal. Legal title having vested in the trustees, they could not part with any part of the fund except by a judgment or order of a court of competent jurisdiction. An act of this same kind was condemned in Matter of Schaefer, 178 App. Div. 134. The taking of commissions by executor Boyd McDowell, amounting to $1,800, in January, 1910, was premature, and for the purposes of this accounting that sum must be regarded as in the hands of the executors. This then makes a total in the executors' hands of $1,800 plus the amount of the Kennedy Valve bond and the Nutwood Drainage bond and accrued interest thereon, amounting to $1,025, as shown by the account, and, in addition thereto, the cash on hand as shown by the account, $530.24, making a total in the hands of the executors out of which to pay their commissions and the expenses of the accounting of $3,355.24. In the matter of the commissions of the executors, it having been decided herein (Matter of McDowell, supra) that the offices of executors and trustees coexisted, they are entitled to but one set of commissions. In fact, the court stated at page 246, that: "If the executors had treated the trust estate as distinct, and had kept separate accounts and claimed commissions in each capacity, it would not be unreasonable for life beneficiaries and the residuary legatees to contest that claim. (Matter of Zeigler, 218 N. Y. 544, 551.)" We quote from the opinion at page 551, "That the same person may be entitled to compensation as executor, and also as trustee, in respect to the same estate, or Surrogate's Court, Chemung County, January, 1918. [Vol. 102. some part thereof, is undoubtedly true, but does not follow in every instance where trust duties are imposed upon an executor. Where, by the terms or true construction of the will, the two functions with their corresponding duties coexist, and run from the death of the testator to the final discharge; interwoven, inseparable and blended together, so that no point of time is fixed or contemplated in the testamentary intention at which one function should end and the other begin, double commissions or compensation in both capacities cannot be properly allowed. (Johnson v. Lawrence, 95 N. Y. 154, 159)" And see Matter of Kellogg, 214 N. Y. 460. It would, therefore, seem to be proper that the executors be allowed commissions on the actual money received and disbursed by them, as such, and, inasmuch as the estate amounted to more than $100,000, they are each entitled to a full set of commissions on such sum. This preserves to them the right, if they are entitled, as will hereafter appear, to commissions as trustees for having received and disbursed the income of the trust fund, and upon the final distribution of this estate to the residuary legatees they may receive their commissions as trustees upon the principal of the trust fund. By working it out in this way, in accord with the decision in the case by the Appellate Division, they will, when the administration of the whole estate is finally completed, each have received one full set of commissions on the principal of the whole fund and such commissions on the income received and disbursed by them as they may be entitled to. Matter of Slocum, 169 N. Y. 153, 160. The total cash received and disbursed as executors is $20,391.23. The commissions of one executor would be $393.91 or $1,181.73 for the three. Inasmuch as the executors received in January, 1910, $618.27 more than Misc.] Surrogate's Court, Chemung County, January, 1918. they were entitled to as commissions, the interest thereon to date, amounting to $293.51, should be deducted from $1,181.73, the commissions to which they were entitled, leaving as their net executors' commissions to which they are entitled on this proceeding $888.22. This leaves a balance in the hands of the executors of $2,467.02, which is hereby allowed them, with which to pay their disbursements and counsel fees, as shown in the foregoing statement. This does not pay the amounts in full, as shown by the statement, but, being the only funds in their hands, is all that can be allowed. A considerable portion of the expense was unnecessarily made by one executor insisting on accounting as trustees in the executors' proceeding, in which action his co-trustees refused to join. This closes the executors' account, with the exception of delivering the articles specifically bequeathed. The decree should direct their delivery. We now pass to the principal question involved in these proceedings, namely, that for the consideration of which the matter was sent back to this court by the Appellate Division, and raised by the objections filed to the account. These objections charge that the investments made by the trustees in bonds that have defaulted in the payment of their interest were illegal. Beneficiaries may elect to approve or reject all or part of investments. King v. Talbot, 40 N. Y. 76. The trust estate consisted of securities $124,216.28, cash $3,635.43, the homestead appraised at $15,000, and the household furniture and furnishings, $1,037. The bonds that have defaulted in their interest are are follows: Bonds of the Rochester, Syracuse and Eastern Railway Company, par value $15,000, cost $13,445. Bonds of the Empire Lumber Company, par value $10,000, cost $9,000. |