139 Mass. 449 | Mass. | 1885
Peter C. Brooks, who died on June 3, 1880, by his will gave the residue of his property to trustees, upon trust to pay all of the net income (not required for the payment of two annuities) to Susan Oliver Brooks, his wife, so long as she should live, and at her death to distribute the fund (excepting so much as might be required for the payment of the two annuities) among those who would take as distributees of his personal estate by the laws of this Commonwealth, if he had died intestate immediately after the death of his wife. His wife died on February 2, 1884. At her death, the trust fund contained bonds for the payment of money issued by different corporations, or by the United States, with semiannual interest coupons attached, payable at different times, determined by the day when the principal sum of each of the different classes of bonds became payable. These coupons the trustee
The question is whether the amounts received by the trustee in payment of the first set of coupons which matured after the death of Mrs. Brooks are apportionable between her estate and the distributees under the will of Mr. Brooks, and, if they are apportionable, in what manner the apportionment should be made. If they are apportionable, it is by virtue of the Pub. Sts. e. 136, § 25; Gen. Sts. e. 97, § 24; as they are not apportionable at common law or in equity. Dexter v. Phillips, 121 Mass. 178. That the coupons can be severed from the bonds, and thus become separate and independent obligations, with all the incidents of debts that are distinct from the principal obligation, is true; and one suggestion is, that each bond and its coupons are in legal effect so many distinct obligations, payable, without interest, at different fixed times, and that an investment in such obligations is an investment in non-interest-bearing securities. If this view were adopted in its full scope, the result would be that a trustee under such a trust ought not to make such an investment ; and that the amounts received from coupons that matured and were paid during the life of Mrs. Brooks ought not to be regarded as wholly Income, although the question would remain whether the present worth of each obligation at the time it was purchased ought not to be computed, in order to ascertain what portion of the sums received should, as between successive takers, be regarded as principal and what as income. It is evident, however, that this is not the real nature of the obligation of a coupon bond. The coupons are promises to pay certain sums of money at certain times expressly as interest on the bond. They differ from the ordinary promises to pay interest semiannually contained in promissory notes only in their capacity of being detached from the bond, and thus acquiring all the incidents of a distinct negotiable written promise. If a trustee should, immediately on the purchase of a coupon bond, cut off the coupons and sell them, the question might not arise of the proper distribution of the proceeds, as between principal and income of the trust fund, because the proceeds might be regarded as a part of the principal to be reinvested; but questions would arise of the .propriety of the trustee’s holding, as a part of the
In Harraden v. Larrabee, 113 Mass, 430, John Henfield by his will gave the residue of his property in trust to pay the income to his son Joseph Henfield during his life. Joseph survived the testator and then died, and his wife, Sarah Henfield, became administratrix of his estate. It was alleged in her answer, and admitted, “that fifteen days’ interest had accrued during her husband’s lifetime upon the bonds in which the trust fund was invested.” The court held that “ to that part of the income she is entitled as his administratrix,” citing the Gen. Sts. c. 97, § 24. It does not appear, however, whether the bonds were with or without coupons, or bonds of individuals or of corporations, or overdue or not when this “interest accrued.”
In Granger v. Bassett, 98 Mass. 462, the executors “ had apportioned the rents, and interest on bonds and notes,” but not the dividends declared by corporations after the death of. the life tenant; and the court held that “the Gen. Sts. c. 97, § 24, do not change the rule of law which held dividends from the pi'ofits of business of incorporated companies not to be apportionable. Foote, appellant, 22 Pick. 299. Such dividends are not only contingent, but uncertain in amount, until the expiration of the full period for which they are declared.” It is argued that, if dividends are not apportionable under the Gen. Sts. c. 97, § 24, (Pub. Sts. e. 136, § 25,) the money received from collecting coupons is not; but this wholly depends upon the construction of the statute. The distinction between dividends and coupons is, not only that dividends are contingent and uncertain in amount, but that they do not in any sense exist as dividends, or as the separate property of the stockholders, until they are declared. “ The acquisitions of banks and other similar corporations are mere incidents of the capital stock, and undistinguishable and inseparable from it till set apart by the declaration of a dividend by authorized officers.” Foote, appellant, 22 Pick. 299, 304.
There was much criticism at the bar upon the phraseology of the Pub. Sts. g. 136, §§ 24, 25, which, were doubtless intended as reenactments of the St. of 1848, c. 310. It was said that the first section of the St. of 1848, g. 310, was only declaratory of the common law, and that the second section excepted from its operation the first year from the death of the testator, and
A trustee’s account would usually be made up yearly, reckoning from the death of the testator, and the “ then current year ” may be taken to refer to the year running when the life tenant died, or the contingent event happened, and the statute may be taken to provide for the apportionment of the income in making up the accounts for that year. The established method of making an apportionment is to divide the amount received (when money is payable periodically at fixed times) according to that proportional part of the whole period for which the money is payable which had elapsed at the time of the death of the life tenant, or at the time of the happening of the event which terminated the right of the tenant. We are satisfied that the statute did not intend to abolish this rule and establish a different one. The amounts received by the trustee from the coupons not payable at, or before, the time of the death of Mrs. Brooks, and which were coupons for interest for six months, which had begun to run at the time of her death, must be apportioned according to the proportional part of the six months which in each class of coupons had elapsed at the time of her death.
So ordered.