
    (68 Misc. Rep. 273.)
    In re FARGO’S ESTATE.
    (Surrogate’s Court, Erie County.
    June, 1910.)
    1. Trusts (§ 274)—Commissions.
    The commissions of executors should be charged against the corpus of the estate, and not against the trust fund formed out of the same, the-income from which is to be paid to designated beneficiaries entitled to-the income.
    [Ed. Note.—For other cases, see Trusts, Cent. Dig. § 391; Dec. Dig. § 274.*]
    2. Trusts (§ 274*)—Compensation.
    Where executors, who were also testamentary trustees, have agreed with parties interested to accept a gross sum annually in lieu of fees and' commissions, and their accounts do not permit of an accurate computation, the agreed compensation should be equally apportioned between, principal and income.
    [Ed. Note.—For other cases, see Trusts, Cent. Dig. § 391; Dec. Dig. §■ 274.*]
    3. Trusts (§ 274*)—Accounting—To What Chargeable.
    The expenses of an intermediate accounting by executors, who were also testamentary trustees, will be charged to the income, and not the-corpus of the estate.
    [Ed. Note.—For other cases, see Trusts, Cent. Dig. § 391; Dec. Dig. § 274.*]
    In the matter of the estate of William G. Fargo, deceased. Proceedings for the judicial settlement of the accounts of executors and. testamentary trustees.
    Decree rendered.
    Louis L. Babcock, for Franklin D. Locke, executor and trustee.
    Jacob Stern, for James C. Fargo, executor and trustee.
    John Larkin, for objectants,
    Joseph G. Dudley, special guardian, for infants.
    
      
      For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes
    
   HART, S.

The testator, William G. Fargo, died during the year 1881, leaving a last will and testament, wherein he devised his residuary estate in trust to be divided in three separate parts, the income of one part to be applied for the use of his grandchildren, the contestants, Anna E. Albree and Mary C. Balliett, for life, with power to-them upon attaining the age of 30 years to dispose of the same absolutely by will. The other two parts were devised in trust for the use of two daughters of the testator, both of whom are dead, and the trust estates held for them have been distributed, with the exception of a large amount of real property of the decedent, which has not yet been sold by the executors.

The executors and trustees have filed annual accounts of their proceedings as such; and the contestants have filed objections to the accounts for the years 1904, 1905,1906, 1907,1908, and 1909. The items contained in the accounts to which objections are made may be classified as follows: (1) Taxes on vacant property; (2) local assessments ; (3) fire insurance; (4) commissions of executors and trustees; (5) expenses of various accountings; (6) miscellaneous expenses.

The residuary estate consisted of real and personal property. The property known as the Mansion property was vacant and unproductive, and the Cook county property, consisting of a farm on the outskirts of Chicago, practically unproductive; both pieces of property being held by the executors and trustees in the hope of realizing an adequate price. The Mansion property has recently been sold, while the Cook county property is still held by the executors.

Objections were filed by the life tenants to the accounts of the executors and trustees for the year 1896, which resulted in an action being brought in the Supreme Court by the executors and trustees for instructions as to the disposition of the real estate of the testator, and a judgment was rendered directing the executors to offer for sale, at public auction, all the lands of the testator, excepting the Cook county property, and fixing the market value of the same. The sixth clause of the judgment provided that, until such lands be sold, the executors and trustees “pay the taxes and assessments levied on the unsold portions thereof, keep the buildings' thereon in proper repair, and ade-* quately insured, and make any and all disbursements necessary in connection with the preservation and proper maintenance thereof; that such payments and disbursements be made out of the revenues of said real estate, and if they shall be insufficient therefor in any given year that the deficit be paid from the proceeds of the sale of real estate for that year.”

Several accountings have been had in the Surrogate’s Court since this judgment was rendered, and decrees have been entered approving the accounts of the executors and trustees up to the year 1904. Decrees have been entered settling their accounts for the years 1904 and 1905, reserving, however, to the contestants the right to reopen such decrees for the purpose of taking proof in support of the objections. Meanwhile, the contestants made application to the Supreme Court to strike out this provision of the judgment and for an accounting of all payments made thereunder, and to have refunded to them such portion thereof as might be charged to capital of the estate were it not for this provision. This application was denied by the Supreme Court, and the judgment remains in full force.

The contestants were of full age and appeared by attorney in that action, and were represented in court at the time the judgment was made. In my opinion, they are bound by the provisions thereof, and estopped from objecting to the payment of these items by the trustees, at least in so far as the first three classifications are concerned, and the objections to these items are therefore overruled.

The remaining items contained in the accounts of the executors and trustees, to which objections are made, consist of executors’ and trustees’ commissions, legal expenses appertaining to accountings, and miscellaneous expenses, all of which have been charged against income. Article 7 of the will creates the residuary trust futid and divides it into three parts. Under subdivision C the executors are directed to apply the net income, issues, and profits, or so much thereof as in their judgment shall be necessary, in equal proportions to the support, maintenance, and education of the contestants, granddaughters of deceased, or the survivor of them, until they shall attain the age of 21 years. When they, or the survivor of them, attain their majority, the accumulation of income is directed to be paid to them, and thereafter he directs that the—

“entire rents, income, issues and profits of said part be applied semiannually to the use of my said granddaughters, or the survivor of them, so long as they, or the survivor of them, shall live. * * * But in case either of my said granddaughters shall live to attain the age of thirty years, then I expressly direct, notwithstanding anything hereinbefore contained, that she shall have the power of disposing of the principal sum, which shall be held in trust for her at the time of her decease under this article of my will, by her last will and testament.”

Article 12 of the will, after naming the executors, contains the following provisions relating to their compensation as executors:

“I hereby direct that they shall he paid out of my estate from time to time such sums as shall be a proper compensation for their services without regard to the statutory fees.”

This estate has been in process of administration more than 25 years, and the executors have received compensation at the rate of $6,000 and $5,000 per annum; this compensation being stipulated by them to be in full of executors’ and trustees’ commissions, both on principal and income. The reasonableness of the amount and the propriety of the charge are not questioned, excepting as to what account it shall be charged. Annual accountings have been had, and the commissions or compensation was for a period of years charged to principal; latterly and for the majority of years it has been charged to income. There can be no doubt that the corpus of the estate is properly chargeable with executors’ commissions, there being no direction contained in the will to the contrary.

The trust fund directed to be created and which is incomplete after the expiration of years is chargeable with net income for the life tenants. It is my belief that the testator intended his grandchildren should receive the income of the trust created for them, less the necessary and proper charge for its administration, not that the income should be charged with the expense of administering the estate as well as the trust fund.

The law seems well established that each part of an estate should bear its burden of the expense of administration. Income should not be burdened with the full amount of the compensation of the executors and trustees, while principal escapes entirely. The life beneficiaries, who are objecting to the various charges against their income, now have the absolute power of disposition of the principal by will, both having arrived at the age of 30 years; and the presumptive remaindermen, who are represented by special guardian, may be extinct or divested by will of the entire trust fund, which has been so carefully conserved, when the final day for distribution arrives.

I am, therefore, of the opinion that the annual compensation paid to the executors should be apportioned equally between principal and income. There is no specific direction in the will that this compensation should be paid from income—it is as executors they are directed “to be paid out of my estate”—and, while this apportionment may not be accurate, an' exact computation being impossible from the accounts submitted, this adjustment will afford some relief to the life tenants until their trust fund is assembled.

The ordinary legal expenses of accounting may be charged to income.

The miscellaneous expenses to which objection is made, all items relating to the sale of real estate, brokers’ commissions, surveys, mortgage tax, and recording fees, will be charged against principal.

The allowances made to special guardians are not proper charges against the income account, and will be charged to principal; that being the only part of the estate in which the infants have an interest.

A decree will be entered, modifying the accounts of the executors and trustees as herein directed. All other objections to the accounts are overruled.

Decreed accordingly.  