17 Misc. 2d 1069 | N.Y. Sur. Ct. | 1956
The special guardian of infant remaindermen objects to the account of the trustees only insofar as it reflects their failure to amortize the premiums on bonds acquired from the executors. It is not disputed that the trustees
The objection of the special guardian is directed generally to the failure to amortize the premiums on all bonds received from the executors. The objections are not directed to any particular difference among bonds so received. A brief reference in the argument of the trustees to bonds directly owned by the testator and bonds received by the executors in liquidation of a firm, supplies- no record basis for the court to draw any distinction between them. The issue as formulated is directed to all bonds received from the executors and the court will consider the question as thus formulated.
The rule governing amortization of bond premiums makes a distinction between bonds purchased by a trustee and bonds which formed part of the trust estate at the time of its creation. (Restatement, Trusts, § 239, subd. f; 1942 Report of N. Y. Law Rev. Comm., p. 109; 2 Scott, Trusts, § 239.2.) The Court of Appeals recognized this distinction in Matter of Stevens (187 N. Y. 471, 477), where it said: “ We, therefore, adhere to the rule declared in the Balter case [New York Life Ins. & Trust Co. v. Baker, 165 N. Y. 484], that in the absence of a clear direction in the will to the contrary, where investments are made by the trustee, the principal must be maintained intact from loss by payment of premium on securities having only a definite term to run, while if the bonds are received from the estate of the testator, then the rule in the McLouth case prevails, and the whole interest should be treated as income. These rules may not work perfect justice in all cases, and we fully appreciate that there may be inconsistencies between them, but it is far better that they should be uniformly adhered to, even at the expense of a particular case, than that the administration of estates should be subjected to constant litigation and disputes.” (Emphasis added.)
It is true that in Matter of Leopold (N. Y. L. J., July 7, 1942, p. 49, col. 7, Foley, S.) the court decided that the trustees were required to amortize the premium on a bond accepted by the trustees in lieu of cash on the settlement of the executors ’ accounting. That decision, however, seems to be based upon a construction of the will. The decision states that the parties were agreed on the construction, and probably for that reason the court did not elaborate on its decision. All rules relating to such administrative matters as bond premiums yield, of course, to an expressed direction of the testator. However, there is no basis in the pending will for any implication of intent contrary to the general rule. Nor is there any basis in public policy for broadening the rules for amortization of bond premiums. On the contrary, the Legislature has enacted a statute abolishing the requirement for amortizing any bond premiums in trusts thereafter created, and in view of that declaration of public policy, the courts would not be justified in broadening a rule for old trusts which the Legislature has endeavored to repeal insofar as reasonably possible. The objections of the special guardian in relation to amortization of bond premium are overruled.
Submit decree on notice settling the account accordingly.