
    In the Matter of the Final Judicial Settlement of the Accounts of James G. Hunt, as Sole Surviving Trustee of the Estate of John Ingersoll, Deceased, Appellant, Respondent. Loton S. Hunt, Individually and as Administrator, etc., of Mary Hunt, Deceased, Respondent, Appellant.
    Fourth Department,
    July 9, 1907.
    Executors and administrators — trust'—accounting — erroneous decree ■—division of securities — executor who is also trustee — double Commissions— depreciation of securities. ■
    
      'When, a trustee’s accounts admittedly contain- a sum,belonging, to-the estate of " the deceased cestui que trust, the decree must make provision for its payment • to her representative and it cannot be included in the property payable to the remaindermen.
    When a trust estate includes securities, an'order'directing tile trustee to transfer - . the entire fund 'to the remaindermen entitled thereto in. certain proportions is erroneous; the proper division of the securities should also be.determinedIn order to avoid subsequent litigation on that question..
    . When an executor is also trustee, he is entitled Jo commissions in -each capacity where the will contemplates separate action and distindt- duties.' by him in each capacity.- Thus, wheie a will appoints the executor 'trustee" of two separate trusts, each of which is to terminate on the death of the beneficiary named therein, a trustee -who- continues to administer one trust after the termination of the other is entitled to commissions as trustee in addition to'those received as executor.
    
      Commissions of a- trustee should "be allowed only on the personal property included in the fund; no commissions should be allowed on the real" property. , He should also be allowed all proper’costs and disbursements. • •
    When a will directs '“present good investments to remain,” a trustee who has received government and railroad bonds bought, by the testator, is not chargeable with a depreciation' in value caused solely by the decrease in premiums by reason of approaching maturity.
    Spring, J., dissented in part.
    Cross-appeals by James G-. Hunt, as surviving trustee, etc., - of John IngersoB, deceased, and by Loton S. Hunt, individually and as administrator, etc., of Mary Hunt, deceased, from a decree of the Surrogate’s Court of the county of Herkimer, entered in said Surrogate’s Court on the 15th day of October, 1906, with notice of an intention to bring up for review upon such appeal, an order entered in said court on the same day modifying and, as modified, confirming the report of a referee herein.
    
      J. I. Casey, for the accounting trustee, appellant and respondent.
    ' W. H. Weller, for Loton S. Hunt, individually, etc., respondent and appellant.
   Robson, J.:

.James G-. Hunt is the survivor of the two persons, who áre named as the executors and trustees in the will of John IngersoB, deceased. His coexecutor "and cotrustee was John D. IngersoB. The testator died October 21,1883, leaving him surviving as his heirs at law one son, John D. IngersoB, above named, and one daughter, Mary Hunt. His will was shortly thereafter duly admitted to probate, and letters testamentary thereon were duly issued to the executors therein named. After the usual directions for the payment of his debts, the testator, by the second item of his will, devised and Bequeathed to his son and daughter all his estate, real and personal,-“ to share the same equally between them in the manner and with the restriction and condition hereinafter mentioned.”

Thé next item of his will is as follows:

Thwd. I give and devise the aforesaid real and personal estate to my executors in trust for the benefit of my son John D. Ingersoll and my daughter Mary Hunt above named to be received, used, employed and paid out in the manner hereafter designated and directed, to wit: to be ".received as a trust fund, the present good investments to remain and sncli parts of the said estate as remains now'uninvested to be invested in Real Estate securities, gqvermtjent stocks or other unquestionable securities.
And the said executors as such trustees are each and every year to pay to the said John D. Ingersoll and Mary Hunt each the one-half the net income'and proceeds of my said estate.”

The will then proceeded with particular, directions as to the application and disposition of the share of the income to-which the said John D. Ingersoll might become,entitled. The apparent purpose of these prolusions was to so limit his interest in the estate that, it could not he used, or.become available, for any other purpose than' his support and maintenance,' The executors were given a power to sell, if they should deem it best, any and'all or-such parts of his real estate. “ as they may deem it-to the advantage of the heirs-Plan'd. when sold the proceeds to be invested' in the securities above' named.” The succeeding'.clause of his will is as follows:

“Eight. At the death of the'said John D. Ingersoll or Mary Hunt the trust estate and the trust .power of the said executors over the estate of the deceased shall end and be void, and the property remaining at their decease shall become the property,of the child or children of the deceased; if none be living then to the heirs at . law of the said John D. and Mary Hunt, unless they or either of them dispose o.f their interest in said estate by will during their li ves.” ". .

The tenth item of the will designated the executors,

John D. Ingersoll died April 11, 1885j leaving his- son Fred T: Ingersoll his sole liei-r at law and" sole beneficiary under his will. Mary Hunt died intestate April 25, 1905, leaving as her only heirs at law her. sons James G. Hunt and Loton S. Hunt, above- nained.

The provisions of this will have' received judicial construction in various proceedings, either, directly with that end in view or incidentally where their construction was to some, extent - involved, and file rights' and interests of the parties interested in the estate have been further expressed and determined by various agreements. It is unnecessary to refer to these proceedings and agreements at length further than to say that, so far as the parties to this appeal are concerned, it must be treated .as determined: That testator’s entire estate, consisting- of both real and personal property, was, after deducting debts and expenses properly chargeable thereon,' given to the executors named in his will in trust to hold and manage the same during the joint lives of his son and daughter, and to pay the income thereof in equal shares to these two last-named persons; that the trust in the whole estate terminated upon the death of John D. Ingersoll, and his son and legatee, Fred T. Ingersoll, thereupon became entitled to an undivided one-lialf of the corpus thereof; that the trust in' the .remaining one-lialf of, said estate continued till the death of Mary Hunt, and she- was entitled to the income accruing therefrom up to the date of her death, and that' upon her death her two sons, James Gr. arid Loton S. Hunt, became entitled to have and- receive the corpus of that trust fund,

. Shortly after the death of John D, Ingersoll proceedings Avere had, which resulted in the division of the whole trust estate into two portions and the allotment and transfer to Fred T. Ingersoll of the securities and parcels of real estate making up one equal share , thereof. The remaining share was retained by James Gr. Hunt, the survivor of -the two executors and trustees,- to fill out the unexpired trust during the life of- Mary Hunt.

This division was made by agreement of all-parties who were then interested in the trust estate, including both parties to this appeal'; and was further embodied in and ratified by a decree of judicial settlement of the accounts of the surviving executor and trustee, made by the Surrogate’s Court of Herkimer county pursuant to, and a.s directed by, the- agreement of all parties in interest. Following the terms of the agreement the executors received on that settlement full cornmissions as executors, computed upon the aggregate, value of the whole estate, including real estate. These commissions were apportioned, in the shares agreed upon, between the surviving executor and the estate of his -deceased coexecutor. Since the division of the estate James Gr. Hunt has. continued to hold and manage the half thereof, and has accounted yearly witli his mother for the income it produced, retaining each year full commissions on the income.

Soon after the termination by the death of Mm. Hunt of her. interest in the further income" of the fund these proceedings were begun in Surrogate’s Court by James G. Hunt, as sole surviving trustee, to procure the final judicial settléme'nt.of his accounts. On the return of the citation, Loton S. Hunt appeared by attorney, and, on "the statement that an examination of the accounting party was desired before filing Objections, further hearing was adjourned to July 31, 1905. A few days before, the. date of adjourned hearing objections to the account were filed by Loton S- Hunt, which alleged, among other things,, that by reason "of'.the neglect of the accounting party there had been a loss -to -the- principal of the trust fund by reason of the depreciation in value of railroad and United States .registered bonds amounting to $2,562.25;' and certain payments and disbursements, which the trustee stated had -been made by him and for which he asked to "be credited, amounting to several thousand dollars, were.also. objected to." -The allowance to the trustee of any further commissions on the trust property was also opposed- -On the adjourned day .no examination of the trustee was suggested, and none Was had; but oil the application of Loton S.-Htint an intermediate order directing the transfer "and delivery to him- by the trustee of certain bonds, which were a part of the futid, was obtained'. This order was made despite, the objection of the trustee, who thereafter appealed .to this^court from the-order, and there obtained, a reversal thereof. (Matter of Hunt, 110 App. Div. 533.) Further proceedings in the accounting in Sin-rogate’s 'Court resulted in an-order, entered by consent of parties, sending the matter to-, a referee, -thereby "appointed, to hear "the sam;e and report thereon subject to confirmation, or modification, by the surrogate. • -On the coming in of. the referee’s report the "surrogate modified the recommendations thereof by directing that no order or direction be made.. g,s to any income of real or personal estate not included in the account, nor in relation to the disposition of the real estate included in said account, and confirmed the report, as modified, in-all respects. A decree of the. court accordingly -was' then entered! Proper exceptions were taken to' raise -the questions hereinafter discussed.

The decree provided, among other things that James J&. Hunt-,-" as executor and trustee of the last will and-testament óf John Ingersoll, deceased, is hereby directed to assign, transfer and deliver the remainder of the property described in the foregoing summary after making the payment and deduction aforesaid (which was the payment of referee’s and stenographers fees only) to James G. Hunt and Lotou S. Hunt individually.” The trust estate, as appears by the account filed, consisted of bonds and mortgages, stock in corporations,- railroad and government bonds and a very small relative proportion of cash on hand and money on deposit with a designated financial institution. Included in the cash reported by the trustee as on hand is the sum of seventy-one dollars and sixty-five cents, which confessedly belongs to the estate of the deceased cestui qxie trust, Mary Hunt; and yet the decree makes no provision for its payment to her representatives, but treats that, like the remainder of the fund, as property of the remaindermen, James G. and Loton S. Hunt. "If this were the only objectionable portion of the decree, a trifling modification thereof would correct the error. But the decree, as we have already observed, directs the assignment and transfer to the two designated persons of all the fund, which includes, of course, the securities, in which by far the major part thereof is invested. One of the objects of -an accounting in Surrogate’s Court by á trustee is manifestly that the property involved in the trust, for which the trustee is accounting, may be in that proceeding divided among and distributed to those who are entitled to receive it. The statute confers on that court ample power- to accomplish this result. This purpose is not accomplished by directing transfer- of the property in bulk to the parties entitled thereto, and simply designating their fractional shares therein. If this practice were to obtain, instead of a division of the property in that court, resort to a subsequent action in order to obtain such partition and division would in many cases be necessary. If it be urged that the decree directs the transfer of specific uncollected demands, it appears that no facts which might, if present, warrant such disposition, appear in the case. The only cases in which such transfer of an uncollected demand can be directed by that court are specified in section 2744 of the. Code. The limitations of the power of that court thereby were fully pointed out when this court considered the former appeal in this matter,'to. which we have'already referred. For the reasons there stated we hold that this direction of the court by its decree was unauthorized and .constitutes reversible error!

We are" also of the opinion that the surrogate erred in refusing. the trustee commissions' as trustee upon the value- of the personal property forming á part of the trust estate. It is well - established that double commissions to the -same persons, first in the character of executors and then as trustees, can be awarded only when the will contemplates á several and separable -action in each capacity. This intention must not only be manifested, but possession and-, holding of the trust -estate must., be- changed, either expressly or by implication,.- from that- as executors only, to that-Of trustees of the trüst. i (Johnson v. Lawrence, 95 N. Y. 154; Laytin v. Davidson, Id. 263; McAlpine v. Potter, 126 id. 285.) Executors' may have imposed upon them' by -the will, which appoiúts them, -in addition to their ordinary duties as executors, those which otherwise would be distinctively those of a trustee of a trust thereby created and, if they accept- the executorial appointment,-the performance of-those duties becomes at once a function of, and appertains to their position as' executors. In cases where these facts alone appear their compensation is necessarily limited to that of executors; and double commissions are not- alloived. (McAlpine v. Potter psupra) But if the fair reading of the testamentary provision shows that at some time the executor is to take, hold and manage the fund in. filling a separate and separable trust beyond and distinct fró'm the duties which the will discloses he is to perform in his capacity as .executor, and the.separation or setting apart of the fund is made, or as matter of law is to be regarded as made, then his right to double commissions follows as an incident. (Laytin v. Davidson, supra.)

■ ' It seems to be concedéd that the will Imre in question contemplated that the. whole estate should be held and managed -by the-executors as such,"at least until the division -thereof, directed-■ by the eighth item of the will, above quoted, on. the death of one of the life' beneficiaries, and it was in fact so held and- managed by them. When John D. IngersoTl' died, then, following the pro'vh sions of thé will, it became necessary to.divide-the estate, and the division then made necessarily left one-half of the estate to be managed and administered as a separate trust for the- benefit of Mary Hunt, the life beneficiary, during her life, and on her death to distribute the corpus o'f the fund, so far at least as the same-'consisted of personal property, to those entitled thereto. This, necessarily involved and contemplated a severance of the fund, which we‘think also involved a separation of the functions of executor and trustee, and a separate holding thereafter of that part of the estate by the surviving executor, not in his capacity as executor,, but as a trustee of that separate fund. That this was the understanding and agreement of the parties at the time the division of the estate was made and the separate fund erected is apparent from án examination of the proceedings then taken. The decree of judicial settlement of the executor’s accounts, then entered, which conforms to the agreement made by all parties, including, as we have said, Loton S. Hunt, the ■present objecting party, allows full commissions to the executors as sneli and in terms discharges the sureties upon each of the bonds theretofore given as executors by John D. Ingersoll and James Gr. Hunt, respectively, and further provides that tlie trust created by the will in the one-half of the estate “continues until the death of Mary Hunt as provided and set forth in said will, and James Gr. Hunt is the sole surviving executor of said will and trustee of said trusV

A further consideration lends some slight aid in arrividg at the understanding of these parties, which is disclosed by reference to various agreements in regard to the trust estate, to which Loton S. Hunt is a party, in which James G. Hunt is referred to as trustee of the- particular trust. That the surviving executor was not actually discharged from further duty or responsibility as executor in reference to some uncompleted business, properly belonging to his office as executor, is not decisive that he did not then assume in reference to this fund the duties of trustee, as distinguished from those as executor. The separate trust fund was - erected and set apart, and the property going to form it specifically designated by the agreement, pursuant to which the decree was made. As to that fund and the property that should thereafter compose it the decree was final and conclusive, and nothing remained to be done to completely set apart the fund except the actual transfer of the securities to himself as trustee. Whether or not that transfer was in fact made is immaterial. (Laytin v. Davidson, supra.)

Commissions should, therefore, he allowed the accounting trustee on the value of the personal property included in the trust fund, when the distribution thereof is. hereafter properly directed. Ho commissions should" be allowed on the real property forming part of the trust estate.

■ In addition to refusing commissiotis to the accounting trustee the surrogate lias .also declined to make any allowance to him" of costs or disbursements, further than the direction that the referee’s and stenographer’s fees are to be paid fro.m the fund. H o valid reason appears why the costs and allowances.usually provided in such cases should not be made to the trustee on his accounting, and that matter should be corrected on "the rehearing, which is hereinafter directed. " " •

Loton S. Hunt, as an appellant, insists that the surrogate erred -in failing to charge the accounting trustee with tlie depreciation" in value of certain government- and railroad bonds.. ■

These bonds were securities which came to the executors as part of their testator’s estate. They were by the will instructed that “ the present good investments” were to remain. No' question is made as-to the merit of these-in vestments, hut as tlie time for their payment apjiroaclied the, premium gradually .decreased. This decrease is the loss in value complained of.. This question was properly disposed of by the surrogate. (Matter of Stevens, 187 N. Y. 471, 477; McLouth v. Hunt, 154 id. 179; Robertson v. de Brulatour, 111 App. Div. 882, 895.)

The decree of the Surrogate’s Court should be reversed, with costs to James G. Hunt, appellant,'payable out of the estate,.,and the matter remitted to the Surrogate’s" Court, of Herkimer county for further proceedings thereon.

Ail concurred, except Spring, J., who -dissented-from, that part only which allows double commissions. -

. Decree of Surrogate’s Court reversed, and proceeding remitted to that court for-, further proceedings thereon, with costs .to tlie appellant James G. Hunt payable out of the estate. 
      
      
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