304 Mass. 414 | Mass. | 1939
The disputed items of the trustee’s account represent sums paid for taxes upon land on Broadway in Cambridge for the years 1934, 1935, and 1936. It is stated in the report of material facts that the “sole question before the [Probate] Court was whether said taxes . . . should be charged against principal or charged against income.” The question arises between the respondent Duke, who is the granddaughter of the testator and now entitled to receive during her life “the whole or such part of the income . . . as in the judgment of my said Trustees . . . may seem reasonable and proper,” and heirs of the testator’s brother and sisters, who are remaindermen. The will gives the trustee full authority to sell real estate “at such times and on such terms as to . . . [it] may seem expedient.” The Probate Court ordered these taxes charged against income.
The testator owned this land at his death in 1891. It has continued in the trust ever since. The testator had erected industrial buildings upon it and at the time of his death the property was productive of income. Under the management of the present trustee it was highly productive until 1927, when the city took by eminent domain a substantial strip of land along the entire frontage, resulting in the condemnation and demolition of the two main buildings. Since that time the remainder of the property has produced a small income in some years and none at all in other years. For several years prior to the present accounting the taxes have been exceeding the income by about $1,500 a year. The entire corpus of the estate held in trust amounts at book value to approximately $100,000, of which $40,000 is represented by this real estate. It now requires
Whether expenses of a trust' should be'charged against principal or income is, of course, a matter to be determined by ascertaining the intent of the testator or settlor as expressed or implied in the will or settlement. If these documents fail to reveal an intent, resort has been had to the “presumed” intent. This is but another way of saying that the instrument is to be interpreted reasonably so as to effectuate its main object. In this case the respective parties have convinced themselves that expressions in the will, taken in connection with the circumstances of the testator’s life, indicate an intent favoring their respective contentions. We do not share in the belief of either side. In our opinion the will' fails to disclose any actual intent on the part of the testator as to the manner in which the accounts of his estate should be made up under the present conditions, which in all probability he never contemplated, and which may well have been beyond the scope of his imagination. The only intent which we have been able to discern, beyond mere conjecture, is that his granddaughter should have the income during her life, subject to the trustee’s discretion, and the testator’s brothers and sisters or their heirs the principal after the granddaughter’s death. We should strive for a reasonable result which will be consistent with this intent and which will promote and not hamper its accomplishment.
Where a will contains no indication to the contrary taxes upon the real estate of a trust, in accordance with general commercial theory and practice, are commonly chargeable to income. Jordan v. Jordan, 192 Mass. 337, 344, and cases cited. But this is not a universal rule. We think that the true principle, at least where an unproductive in
It is urged upon us that to charge these taxes against principal would be contrary to the decisions in Green v. Crapo, 181 Mass. 55, 60 et seq., Jordan v. Jordan, 192 Mass. 337, 344, 345, 346, and Creed v. Connelly, 272 Mass. 241.
We think that where, as here, the property became unproductive after the death of the testator, and where there is nothing to show that he anticipated that event, and where he made no provision for it, his dominant purpose to give the income of the trust to the life tenant should prevail over any assumed intent that if such a thing should occur the usual method of accounting should still continue at the expense of the life interest. When in such a case a formerly productive asset has, since the death of the testator, become definitely unproductive of net income, so that it has become the trustee’s duty to sell it as soon as a fair sale can be had (see Jordan v. Jordan, 192 Mass. 337, 345; Am. Law Inst. Restatement: Trusts, § 240), taxes and carrying charges thereafter accruing in excess of any income received should be paid, in the first instance, out of principal. This is in accord with recent decisions upon similar facts in other jurisdictions. Hudson County National Bank v. Woodruff, 122 N. J. Eq. 444, 448-449, modified, 123 N. J. Eq. 585. Matter of Rowland, 273 N. Y. 100. Matter
Questions of apportionment of the' proceeds which may arise when this property is sold are not now before us. See Edwards v. Edwards, 183 Mass. 581. Am. Law Inst. Restatement: Trusts, § 241.
The decree is reversed and a decree is to be entered in accordance with this opinion. Costs of this appeal as between solicitor and client are to be in the discretion of the judge of probate.
Ordered accordingly.