68 N.Y.S. 44 | N.Y. App. Div. | 1901
Upon the death of Mills P. Baber, father óf the respondent, Mary A. Pelcher, which occurred on the 31st day of March, 1894, be left a last will and testament, with a number of codicils, in which his executors were directed to “ set apart and keep invested upon bond and mortgage the sum of ten thousand dollars (afterward increased to $20,000), and the income arising therefrom ¡Day my •daughter Mary A. (the respondent), during her natural, life,” and at her death to go to her issue, or, if none, to his other children, excepting Charlotte A., for whom a similar provision was made in the will. The executors were also directed to set apart and to keep invested a like sum for three other daughters by a second wife, and the residue of the estate, real and personal, was. given to his two sons, the •executors, “ after the specific and general legacies have been paid or invested as hereinbefore provided in my will and the several ■codicils.” The executors accepted the trust and found that decedent had $87,225 invested in bonds and mortgages, exclusive of bonds and mortgages made by the executors, and which were dis•charged by the terms of the will, and certain stocks and a sum of money, amounting in the aggregate to $10,332. These shares of stock, with their income, together with the cash on hand, the learned surrogate finds were appropriated and divided 'between the •executors. For the first six months after qualifying the executors paid to the respondent, not the income on $20,000, but one-fifth of the income of the $87,225 which the testator had invested in bonds -and mortgages. For a period of two years the executors held the :$87,225 in bonds and mortgages as a separate fund, and made two mortgages on their own lands for sums sufficient, with the mortgages mentioned, to constitute a single fund of $100,000, and gave one-fifth of the income of this fund to each of the daughters from October 1, 1894, to October 1, 1896. In the meantime, however, and •on April 1, 1896, the executors divided up the mortgages found
The learned surrogate, upon a hearing of the matter, decreed that the respondent was entitled to an income, in .addition to what she had already received, of $1,216.79, and that “ said executors and trustees having unlawfully and without authority invested the sum of five thousand dollars, part of the principal of the trust fund directed by the said will to be set apart and invested for the benefit of said Mary A. Pelcher and remaindermen, in the purchase of certain real property, and having also unlawfully invested on bonds and mortgages made by themselves a sum of five thousand seven hundred and seventy-five dollars,.being a part of said trust fund, it is further ordered, adjudged and decreed that said executors and trustees do forthwith invest' upon bond and mortgage other than bonds and mortgages made by themselves, or upon property owned by them, the sum of ten thousand- seven hundred -and seventy-five dollars.” . The executors appeal from this decree.
It is urged that the court erred in charging the executors with
We are equally clear that the action of the executors in taking the Militscher property, and placing the respondent’s first mortgage on the same footing with that of a second mortgage, was not a compliance with their duties as trustees, and that the loss resulting to the respondent from such conduct should be reimbursed. There was an apparent effort to make the allotment of securities to Mrs. Clark good at the expense of the respondent, while the will contemplated that the executors should afford to each of the five daughters an income from the investment of $20,000 on first bonds and mortgages. It hardly seems necessary to cite authorities in support of the proposition that trustees have no right to benefit themselves at the expense of the beneficiaries of the trust, and there is no other motive apparent in the transaction with the Militscher property. The trustees had no right to assign a second mortgage as a part of the trust fund for Mrs. Clark, to the end that the residuary estate should be as little impaired as possible. Having done so, they had no right to attempt to make the second mortgagé good at the expense of the respondent’s security for her income, and the whole transaction is lacking in that good faith and fairness which is demanded of trustees. If the trust funds had been provided, as directed by the will, the executors would be charged only with the exercise of reasonable care and diligence to keep the investments in a condition to earn an income; but until these funds had been set aside in entire good faith, according to the letter and the spirit of the trust, the residuary legatees, acting as trustees for the respondent, would have no cause for complaint if they were compelled to pay the legal rate
The matter appears to have-been properly disposed of by the court below, which has done no more than to'direct that the terms of the will shall be complied with in the manner pointed out by the law in respect to trusts of this character. ■
The decree appealed from should be affirmed, with costs to be paid by the appellants personally.
All concurred, except Sewell, J., taking no part.
Decree of the Surrogate’s Court of Queens'county affirmed, with .costs to be paid by the appellants personally.