
    In the Matter of the Judicial Settlement of the Accounts of Hannah M. Corbin and Others, as Executors of and Testamentary Trustees under the Last Will and Testament of Austin Corbin, Deceased, Respondents. Anna W. C. Borrowe, Appellant.
    
      Executors and trustees—use of the funds of an estate to liquidate debts of a corporation, the stock and bonds of which were held by the testator—payments.by, to sus^ tain the price-of stock in the market—a life tenant is liable for taxes—costs should not be 'imposed on a contestant who succeeds in part.
    
    The executors and trustees under a will have no power to apply the funds of the estate to the liquidation of the indebtedness of a foreign corporation, most of the bonds and stock of which were owned by their testator.
    
      Such-a- .payment would not-be justified.even.if the property:and -business of the corporation were to be treated as belonging to the testator individually, where the will gave the executors no power to carry on the testator’s business, but, on the contrary, commanded them nbt to incur any debts except in liquidation of debts outstanding at his decease.
    A clause in the will empowering the executors and trustees to “ manage, control invest and re-invest the same (his residuary estate) and the incomeá thereof, and to sell and convey all or any part thereof with or without covenants in their discretion,” does not confer authority upon the executors and trustees to carry on the testator’s business; such authority must be explicit.
    A life tenant of real property is liable for the-taxes which become a lien thereon during-the existence of the life estate.
    A surrogate is not justified in imposing, pursuant to section 2557 of the Code of ' Civil Procedure, the costs of a contested accounting proceeding upon a contestant personally, where "it appears that some of the- contestant’s objections were 'well founded and should have been sustained.
    Executors and trustees under a will have power to make payments pursuant to a contract made between the testator and another person .for the purpose of keeping up the price of certain corporate stock in their joint interest, when it appears that such other person has fully performed the contract on his part. Semble, that even in the absence of a contract, the executors are justified in making payments to sustain the price of the stock in question, where, it appears that very injurious -results to the estate, of the testator would follow if the price of the stock was not sustained.
    Woodward, J., dissented.
    Appeal by Anna W. 0. Borrowe from a decree of the. Surrogate’s Court of the county of Suffolk, entered • in said Surrogate’s Court on the 21st day of June, 1901, settling the accounts of the executors of and trustees under the last will and testament of Austin Corbin, deceased. .
    
      Charles F. Brown [Robert Kelly Prentice with him on the brief], for the appellant.
    
      John F. Parsons, for the respondents.
   Willard Bartlett, J.:

The decree of the Surrogate’s Court in this proceeding should, I think, be modified in three respects: (1) By deducting $106,524.84 from the amount credited' to the executors and trustees on account of payments to the Sunnyside Company; (2) by disallowing the-amount credited to. the executors and trustees for taxes and necessary repairs upon .the Fifth avenue property in the borough of Manhattan, in which the widow was - given a life estate, under the will; and (3) by striking out the direction that the costs and expenses ot the proceeding to the extent of $16,-159.40 be charged against the contestant, Anna W. C. Borrowe, personally, and by inserting in lieu thereof a direction that such costs and expenses be paid out of the estate. ■

(1) The executors and trustees paid $3 8.6,143.75 to the Corbin Banking Company, on account of the Sunnyside Company, after Mr. Corbin’s death. Of this sum, $79,619.41 represented an overdraft by the Sunnyside .Company upon the Corbin Banking Company, for the repayment of which it may be held that the estate was liable. It does ■ not seem to me, however, that any authority can be found in the terms of the will or in the law for the payment of the balance of $106,524.34 to the Sunnyside Company. - Notwithstanding Mr, Corbin’s ownership of most of the bonds and stock of that foreign corporation, the fact cannot be ignored that it was a distinct corporate entity to' which no moneys of the estate as such . could properly be paid, except in discharge of some- legal obligation of the- testator. There was no such legal obligation, so far as this balance of $106,524.34 was concerned.' It can readily be understood- that the executors and trustees may have deemed it conducive to their own best interests personally as legatees, and devisees under the will to maintain this Arkansas land enterprise in which the testator had invested so much of his money; but they could properly aid it only at their individual expense, and not by using the funds of the éstate to the diminution of the contestant’s share therein without her consent. The learned counsel for the respondents argues that Mr. Corbin was the Sunnyside Company, and 'the surrogate in dealing with this branch of the case appears to have treated the Sunnyside property as though it belonged to Mr. Cor-bin individually and had been left by him to his executors in trust. Even if this view were correct and the business of the corporation could properly be deemed the individual business of Mr. Corbin, the executors were nevertheless without power to carry it on in the absence of any direction in the will authorizing them to do so. I cannot spell out any such direction from the clause concerning the residuary estate which empowers the executors to manage, control, invest and re-invest the same and the incomes thereof, to sell and convey all or any par,t thereof with of without covenants in their discretion.” There is no “explicit” authority here t6 carry on a business after the testator’s death, such as the law .requires.(Columbus Watch Co. v. Hodenpyl, 1,35 N. Y. 430), and the idea that Mr. Corbin intended to confer any such power upon.his executors is distinctly negatived by the clause. in the codicil commanding them'tb incur no debts except .in liquidation of debts outstanding at his decease. ■

(2) The general rule is that a life tenant is liable for the taxes which become a lien during the existence of the life estate. (Deraismes v. Deraismes, 72 N. Y. 154.) Under this rule, I do not see. how Mrs. Corbin can be relieved from the payment of the taxes on the Fifth avenue property in Manhattan. .

(3) Under the circumstances, I think that portion of the decreé which' charges the contestant personally with §16-,159.40 costs of this proceeding constitutes- an abuse of discretion-, in the legal sense of that term,, which' requires a modification so .as to make the costs' payable out of the estate under section 2557 of the Code of Civil Procedure. ' (See Matter of Selleck, 111 N. Y. 284, 290.) The personal imposition of costs under-this section has generally been deemed punitive in character and does not seem to be justified as against a contestant some of whose . material objections were well founded and should have been sustained by the surrogate.

As' to the -Other'questions presented by'tliis appeal, I find no suffi- • eient reason for differing from the conclusions reached in the court below. The most important of these questions relate, first, to the-claim of the contestant that the executors should have been charged with $723,246.26 instead of $423,246.26 as the balance to the credit, of the testator on the books of the Corbin Banking Company at the time of his death — a difference of $300,-000; and, secondly, to the alleged error of the surrogate in allowing the executors credits for, payments made to R. J. Kimball & Co., a firm of brokers, on account.. of the purchase of stock of the Long. Island Railroad Company. -

In reference to the $300,000 item, I think the proof — irrespective of any evidence which may be deemed incompetent under section 829 of the Code of Civil Procedure suffices to show that this-amount was really capital contributed by Mr. Corbin to the Corbin Banking Company, which was in fact only a copartnership, although bearing a corporate title. This appears not only by the testimony of Mr. William G. Bosworth, formerly cashier of the Corbin Banking Company, but also by the written declaration of Mr. Corbin himself, under date of December 14, 1893, directing that the $60,000 interest óf Mr. George S. Edgell in the concern should be paid next after the debts of the'company and should be preferred to his special deposit of $300,000. None of this $300,000 ever in fact came into the hands of the executors; it was treated and used as part of the capital of the Corbin Banking Company; and it is manifest that the item figures in this litigation only by reason of the mistake of the executors in assuming at one time that they were liable to account for the sum as a-debt from the firm to Mr. .Corbin. In the brief for the appellant it is truly said that “if Mr. Edgell and Mr. Cor-bin, Jr., by their action in regard to the $300,000 item have placed themselves in an embarrassing position it is no fault of the contestant.” On the other hand, it would be very tin just for the court, on account of a mere blunder in good faith, on their part, to fine these gentlemen an amount representing Mrs. Borrowed alleged interest in $300,000 of her father’s estate.

Finally, I think that the Kimball payments were properly allowed. They were made pursuant to a contract between Mr. Corbin and Mr. Charles M. Pratt, for the purpose of keeping up the market price of Long Island Railroad Company stock in their joint interest. Mr. Pratt fully performed the agreement on his part and was entitled to insist upon performance by Mr. Corbin and his executors. (Chamberlain v. Dunlop, 126 N. Y, 45, 52.) The facts concerning the transaction are fully set forth in. the findings of the surrogate, Nos. 79 to 82 inclusive, and seem to me fully to sustain this view as to the legal obligations of the parties. But even in the absence of any contract under which Mr. Corbin’s executors could have been compelled to make payments to sustain the price of this stock, I am inclined to think that they were justified in doing so by reason of the very injurious results to the estate of their testator which the proof shows would have followed a decline in the market. (See Ripley v. Sampson, 10 Pick. 370; Collinson v. Lister, 20 Beav. 364.) It was the duty of the executors to protect the estate, and in view of the magnitude of the loans to Mr. Corbin secured by Long Island Railroad Company stock, which- would at once have been called in if any considerable depreciation occurred, it is difficult'now to perceive how the executors could otherwise have averted what would have been an overwhelming disaster to-all persons interested .in the-property. • . " ■•./■*

I am satisfied that a modification of the decree of the Surrogate? Court to the extent which I have recommended will do substantial justice as between these litigants. It is to be hoped that it may also be effective to terminate an unfortunate family controversy.

. Hirsohberg, P. J., Jenks and Hooker, JJ., concurredWoodward, J., voted for affirmance.

Decree of the Surrogate’s Court of Suffolk county modified in aceordane'e with the opinion of Bartlett, J.,. and as modified ■ affirmed, without costs, of this appeal to either party.  