
    In the Matter of the Accounting of the Executrix and Executor of Gerd. Martens, Deceased.
    
      (Surrogate’s Court, Westchester County,
    
    
      Filed March, 1896.)
    1. Trustees — Commissions.
    Where the residue is left to executors and trustees in trust to pay the income to certain persons for life, with remainder over, and with full power of sale, they hold the legal title to the real estate as trustees, and as such are entitled to commissions not only upon the rents, but on the value of the property also.
    2. Executors — Taxes on unimproved property chargeable to-principal.
    Where unimproved real estate, having a prospective value, is carried by trustees for the benefit of the remainderman, the expense of carrying it, including taxes, is chargeable to principal and not to income.
    Settlement of accounts of trustees.
    Isaac N. Mills, for trustees; Arthur M. Johnson, for Loretto J. Martens, guardian; Stephen Lent, special guardian.
   S'Ilkman, S.

Two questions are presented by the special guardian for determination before the entry of the decree:

Eirst. Is the real estate to be included in determining the value of the several trust estates for the purpose of computing trustees’ commissions thereon; and

Second. Are the taxes upon the unimproved and unproductive real estate which is appreciating in value properly chargeable to principal?

The testator by the fourth clause of his will gave to his executors and trustees all the residue of his property, real and personal, in trust to divide the same into five equal parts, which they were directed to invest and reinvest in productive real and personal property, to receive the rents, income and profits of each of said shares, and after deducting the necessary and proper taxes, insurance, premiums, expenses or repairs, commissions, costs, charges and expenses, to use and apply and pay the net rents, income and profits of one of sneh shares to each •of his five children during life, and upon the death of any of such children the share represented by the child so dying to be paid to his or her issue, or in default of issue to his or her brothers and sisters and the issue of any deceased brothers and sisters. In a subsequent paragraph of the will full power of ■sale was given to the executors and trustees.

Under the provisions of this will the persons named as executors take the legal title to the real estate, coupled with a complete power of sale, but the title is in them as trustees and not as executors. Whether they are to act in reference to the real estate as executors or trustees is determined by where the legal title is. Executors as such deal with real estate only under a power in trust, and if- they .are seized of the legal estate they then hold as trustees. Griffith v. Beecher, 10 Barb. 432; Matter of Van Wyck, 1 Barb. Ch. 565.

Executors who are merely given a power in trust to sell real -estate have no care or responsibility in respect thereto, neither have! they any right to the rents and profits thereof nor possession thereof, and being charged with no duty except to sell they are not entitled to commissions thereon until they shall exercise the power of sale and convert the same. It is differ-ent with trustees^, they, being possessed of the legal title to the realty, are charged with the care and responsibility thereof, and for the performance of such duties they are entitled not only to a commission upon the rents, but upon the fair value of the property as well.

The rule is well settled and wisely so, for experience proves "that the care of real estate is much more onerous than the care of personal property. The personalty of each of the five trusts being accounted for is considerably less than t$Í00,000, but adding the fair market value of the realty, that amount is largely exceeded. The executors named are,therefore, lawfully entitled as trustees to their commissions for receiving the corpus of the several trusts, their accounts as executors having been heretofore settled.

We are next brought to the consideration of the second question. It appears that the testator died possessed of certain unimproved and unproductive real estate in the city of Mount Vernon, which has been set off and partitioned among the several trusts, and which real estate is appreciating in value; and which the trustees believe by holding for a time can be sold at much larger prices than can be had for it at the present time. In view of the almost certain advance in its value and the benefit to the remaindermen consequent upon holding it, the trustees have charged the taxes thereon to principal and not to income, as is usual. The correctness of this is involved in some doubt. It is the general rule that assessments or taxes in the nature of assessments for betterments to the freehold are chargeable to principal, the life tenant suffering the loss of the interest on the amount thereof. In some cases, however, when the benefit is partially for the permanent benefit of the freehold and partially for its preservation or temporary benefit, the amount of such assessments have been apportioned between the life tenant and remainderman.

It is also the general rule that all ordinary taxes for the support of the government must be borne by the life tenant. Hepburn v. Hepburn, 2 Bradf. 74; Griswold v. Griswold, 4 id. 216; Pinckney v. Pinckney, 1 id. 269; Booth v. Ammerman, 4 id. 129; Gillespie v. Brooks, 2 Redf. 349.

The soundness of the latter rule cannot be questioned, but that it is of universal application and without exception I am inclined to • doubt. In these days, when so much unimproved real estate is being developed and is appreciating in value, a premature sale would often entail great loss, while a judicious delay in sale for a few months or years would largely enhance the value of the estate. Equity would seem to require that the court make exceptions to the general rule, but guardedly and only when the equities are clear and beyond doubt.

And. for this there is some authority. Cram v. Cram, 2 Redf. 244; Matter of Kendall, 4 Dem. 138; Matter of Housman, id. 404.

In the latter case Surrogate Rollins held that where property which ought to be converted is held by executors, a tenant for life is not entitled to the annual produce, but to interest at some fixed rate upon the estimated value of the unconverted property or upon the value as it may be subsequently ascertained, and cites as authority for the rule, Covenhoven v. Shuler, 2 Paige, 122; Cairns v. Chaubert, 9 id. 160; Spear v. Tinkham, 2 Barb. Ch. 211; Lawrence v. Embree, 3 Bradf. 364.

The learned surrogate also said: “ Delay in making the conversion directed by the will should not inure to the advantage of the beneficiaries for life as against the remaindermen or to fhe advantage of the latter as against the former, but to the advantage of the estate as a whole, and the equities should be adjusted between the successive takers,” and cites- Beavan v. Beavan, L. R., 24 Ch. D. 649; People ex rel. Cornell University v. Davenport, 30 Hun, 177.

It must be borne in mind that the intention of the testator in such a case as this is to benefit his children, the life tenants, who are his first consideration, and the fact that he leaves- the estate in trust, and gives to his children only the income, is not so much because he desires their issue, in whom he may have no particular interest, to be benefited, but that his children shall always have support and maintenance and something to constantly remind them of a provident parent. It never could be that a father should intend that his children should live in discomfort and distress in order that unproductive and speculative real estate may be held to appreciate for the benefit of a third or fourth generation, and yet such might well happen if the general rule stated above is without exception. The Surrogate’s Court being a court of equity, it must see that equity is done and; that the clear intentions! of a testator are fulfilled, and where is appears that unproductive and unimproved real estate having a prospective value is carried by trustees in the exercise of a sound discretion for the benefit of the remaindermen, the expense of carrying it is to be charged to the body of the trust estate, and not to the income of the productive property or securities. In this case the trustees are directed to' invest in productive real and personal property, a clear intention that the unproductive property shall not be held. If, however, it is held for a reasonable time in the exercise of a sound discretion which the law gives to trustees in order to obtain better prices, it is for the benefit of the remaindermen, who will receive the larger benefit from the enhanced value, and they must, therefore, bear the expense of carrying it, including the annual taxes, the life tenants suffering only the loss of income upon the principal so used.

Both propositions, must be answered in the affirmative and a decree entered accordingly.

Decreed accordingly.  