17 Mills Surr. 485 | N.Y. Sur. Ct. | 1916
Upon the settlement of the decree in this matter, a question has arisen as to the amount of the commissions to which the accounting trustees are entitled. '
There are in the hands of the trustees, cash, shares of stock in a corporation, real estate and an unsecured debt due from the corporation known as George A. Feld Company, to the- decedent. The trustees claim to be entitled to full commissions on the principal and income of each trust fund, received and paid out, and one-half commissions on so much thereof as they have received and not paid out. In the case of the trust created for the widow of the decedent, each of the three trustees claims to be entitled to such commissions upon the ground that the trust fund in question amounts to over $100,000. There is no dispute- as to the value of the shares of stock and the right of the trustees to commissions thereon. The values of the debt referred to and of the real estate have not been determined.
The right of the trustees to commissions claimed by them on so much of the principals of the trust funds as consist of real estate and of shares in the debt mentioned, and the propriety of considering said debt in ascertaining whether any trust fund is over $100,000, are challenged.
Prior to the revision of chapter 18 of the Code of Civil Procedure by chapter 443 of the Laws of 1914, some confusion had arisen as to what section of the Code governed in the matter of commissions of testamentary trustees. By sections 2802 and 2810 of the Code as they then were, it was provided that testamentary trustees were entitled to the same commissions as were allowei by law to executors and administrators. The latter under section 2730 of the Code were entitled to commissions for “receiving and' paying out, all sums of money -x- -x- *» as .therein more specifically set forth. Section 3320 of the Cede of Civil Procedure, however, which prior to
By" the revision of 1914, there was enacted section 2753 of the Code of Civil Procedure which provides so far as material as follows: “ On the settlement of the account of any * * * testamentary trustee, the surrogate must allow to him his just, reasonable and necessary expenses * * * and in addition thereto the surrogate must allow to such * * * testamentary trustee, * * * For receiving and paying out all sums of money ” at the rates therein specified. In this section there is contained a provision as follows: “ The value of any real or personal property, distributed or delivered, shall be considered as money in making computation" of commissions.” This was the law in force during the time for which these trustees now account, section 3320 of the Code o: Civil Procedure having been amended (Laws of 1915, chap. 631), so that its provisions with regard to commissions no longer applied to testamentary trustees.
By chapter 596 of the Laws of 19::6, in effect May 19, 1916, section 2753 was further amended by changing that part thereof last above quoted to read as follows: “ The value" of any real or personal property, and the increment thereof, received, distributed or delivered, shall be considered as money in making
It is evident that, if a trustee’s commissions depended upon the sums of money which he received and disbursed, a great temptation to sell or convert into money, securities and other property which had come into his hands would exist and might result in the sacrifice of the same. The law does not favor such a condition (Matter of Curtiss, 9 App. Div. 285), and, long before the enactment of section 2753 of the Code above referred to, it had been held that under the language of section 3320, as amended in 1904, trustees were entitled to commissions, not only upon sums of money received and paid over by them, but also upon securities thus received and delivered in kind (Robertson v. De Brulatour, supra; Olcott v. Baldwin, 190 N. Y. 99), but the phrase “ all sums of principal ” was construed not to include unsold real estate, the word “ principal ” being limited to personal property a* its equivalent in securities only. (Chisolm v. Hammersly, 114 App. Div. 565 ; Matter of Wanninger, 120 id. 273; affd., 190 N. Y. 527.) If a temptation to sell securities for the purpose of earning commissions existed, it seems to me that such a condition would also prevail with regard to real estate when the title vested in the trustees and they had the power to sell. In the case under consideration, the real estate was devised to the trustees, and they have the power to sell it, thus differing iron the situation in Phoenix v. Livingston (101 N. Y. 451) and Matter of Ross (33 Misc. Rep. 163).
To further perfect the liw in that regard was, I believe, the
It can be readily seen, however, that in á trust continuing for many years, the time when the trustees would receive any remuneration in the form of commissions for services rendered as to that part of the trust fund which consisted of real estate might be greatly deferred, and indeed a trustee might through his death- prior to such allowance be prevented from enjoying the same.
It had been held- under the law, as it existed prior to the revision, that one-half commissions could be allowed to trustees for receiving money and securities, and the ground for such holding was at least in part the hardship- referred to. (Matter of Johnson, 57 App. Div. 494; modified in other respects, 170 N. Y. 139.)
Granting that it was a hardship for trustees to wait for commissions on money and securities until the trust ended and the money was paid over or the securities delivered in- kind, it would appear to be an -equal hardship to compel them to wait for commissions on that part of the principal which consisted of. real estate until the trust ended, and such a condition might, act as an incentive to sell -the real estate.
It is my opinion that it was to relieve that situation that the
I have been unable to find any decision since the amendment referred to which guides me in reaching a determination or which is controlling upon me.
For the reasons above stated I reach the conclusion and hold that the trustees in this matter are entitled -to one-half .of the legal commissions upon the value of the real estate which they have received, and, -as they are now entitled under the language of section 2753 to commissions on real estate received, such value may be considered in determining whether the principal of any trust fund is in excess of $100^000.
As to the amount which the trustees claim to have on deposit with the George A. Feld Company “ as an investment,” but which I have decided is not an investment but a debt (Matter of Keane, 95 Misc. Rep. 25), I reach a different conclusion from that contended for by the trustees. While such a debt might come under . the designation -of personal property as defined by section 2768, Code Civil Procedure, subdivision 13, I cannot believe that the legislature intended that trustees should have commissions on an unsecured debt, which under the will they have no power to treat as an investment. The personal property upon which commissions may be allowed must
Commissions are allowed to compensate the representative or trustee for services rendered by him. (Code Civ. Pro., § 2753; Matter of Rutledge, 162 N. Y. 31, 34; Betts v. Betts, 4 Abb. N. C. 317; Collier v. Munn, 41 N. Y. 143; Matter of Popp, 123. App. Div. 2.) Up to this time, so far as the account discloses., the trustees have rendered no services with reference to this debt. They permitted the executors to erdit themselves with it as “ an investment ” turned over to the trustees, but not as cash, and while I have not permitted the trustees to credit themselves with the item in question .as an investment, I have not charged them with it as cash on this accounting The case is therefore unlike that of' Olcott v. Baldwin, supra. where commissions were allowed on a note and it was said: “ Where securities are accepted as cash, commissions should be allowed thereon the same as if they had been converted into money and the money re-invested.” The services for which these trustees are entitled to commissions with reference to the debt in question all remain to be performed, and, until they are performed with due diligence, no compensation can be allowed in the form of commissions. When the debt is collected, the trustees will be entitled to commissions, but, until it. has been so collected, I decline to hold that such commissions are allowable, unless compelled tó do so by some controlling author, ity. My attention has not been drawn to such, nor have I been alble to find one.
I accordingly conclude that the trustees are not entitled tc commissions upon the debt of $100,347.60 until the same has been collected, and that it cannot be considered in computing the value of the trust estates for the purpose of determining whether they amount to over $100,000.
Decreed accordingly.