
    In the Matter of the Judicial Settlement of the Account of the Guaranty Trust Company of New York, as Substituted Trustee under the Last Will and Testament of John Perkins, Deceased. George W. Angell, Appellant; George W. Stiger and Abbott L. Mills, Jr., as Executors, etc., of Caroline E. Perkins, Deceased, Respondents.
    First Department,
    April 8, 1909.
    Executors and administrators — accounting — prior decree holding that funds represented income conclusive — payment of uremiums on investment — when treated as principal.
    Where, upon a prior accounting by an executrix and testamentary trustee, it was finally determined that royalties received from copyrights owned by the decedent should be credited as income payable to the life beneficiary, the matter is res adjvMeata as to parties to that accounting, -and on a subsequent accounting by a substituted trustee the court will follow the prior decision.
    Where investments are made by a trustee, the principal must be maintained intact from loss by the payment of premiums on securities having only a definite time to run, in the absence of a clear direction in the will to the contrary.
    Amounts paid out by a testamentary trustee to reduce premiums paid on securities having only a definite time to run should be treated as principal, not as income payable to the life beneficiary, and upon her death such sums should go to the residuary legatee.
    Appeal by George W. Angelí from part of a decree of the Surrogate’s Court of the county of New York, entered in said court on the 1st day of September, 1908, settling the account of the substituted trustee herein and directing payment to the executors of Caroline E. Perkins, deceased, of certain items held to be income.
    
      George C. Lay, for the appellant.
    
      Joseph P. Cotton, Jr. [Kenneth B. Halstead with him on the brief], Cravath, Henderson & de Gersdorff, attorneys, for the respondents.
   Clarke, J.:

The controversy upon this appeal is between the residuary legatee and the executors of the life beneficiary of the trust created by the will, as to whether certain sums were properly credited to income or principal. The first item is the sum of $2,006.50, amount of royalties on certain copyrights owned by the decedent. On October 4,1893, a decree was duly made and entered in the Surrogate’s Court, judicially settling the account of Caroline E. Perkins, who was then the sole surviving executrix of the estate. Upon that accounting the amounts received from the said copyright during the accounting period were credited to income as payable to the life beneficiary. Upon that accounting all parties were duly cited, and the appellant at bar and another duly filed objections to classing said earnings as income, claiming said earnings were capital, both in law and according to the last will and testament of the testator. The learned surrogate overruled said objections. An appeal was taken to the General Term (Matter of Perkins, 75 Hun, 129), which appeal specifically brought up the ruling of the surrogate upon said objections. The learned General Term affirmed the decree of the surrogate. The determination of the questions involved necessarily required a construction of the will, and the court said: “ It has been well settled by numerous adjudications that upon an accounting the surrogate has jurisdiction to construe the will, where the construction is necessary to determine questions arising upon the accounting, and that with all the parties in interest present the surrogate may construe the provisions of a will and determine the meaning and validity of any of them, whenever such determination is necessary in order to make his decree as to distribution.” This decision was affirmed by the Court of Appeals (145 IN’. Y. 599), on the opinion of the General Term.

The objection to this item, by the legatee, is the same objection that he made on the prior accounting upon the same ground, and involves the construction of the same clause of the will. The decision so made is not open for review. The very point involved has been litigated and adjudicated between the same parties and is res adjudiaata. (Matter of McGoughran, 124 App. Div. 312; appeal dismissed, 192 N. Y. 565; Matter of Goldsticker, Id. 35.) The order appealed from determining that this sum was income received from the principal of the estate, and in consequence the executors of the life tenant were entitled thereto, is right.

The other items áre sums of $571.29 and $12.76. These were amounts credited to principal to reduce premiums on certain bonds bought by the trustee above par. The decree directed that the said amounts so credited to principal be regarded as income and be paid to the executors of the late life tenant, upon the ground that it was the intention of the testator to secure to his widow the income of the trust created for her benefit, without making any' deduction therefrom to pay the premium on securities purchased for investment. This, I think, was error. In Matter of Stevens (187 N. Y. 471) the Court of Appeals, in considering all the prior cases, laid down the rule that, in the absence of a clear direction in the will to the contrary, where investments are made by the trustee, the principal must be maintained intact from loss by payment of premium on securities having only a definite time to run, while if the bonds are received from the estate of the testator, the whole interest should be treated as income.

Chief Judge Cullen said: “If we are to lay down the doctrine that the question is to be determined on the peculiar facts and language of each particular case, no trustee will know how to safely act, and a question constantly arising in the administration of estates will be involved in great confusion and be the cause of great litigation. the latter often at an expense to the estate greater than the sum involved. Such a result would prove very unfortunate. The justification for the rule is very apparent.”

This definite rule was made by the Court of Appeals upon an examination of all the cases, and by a divided court, with a strong dissent, showing that the matter had been advisedly passed upon as a guide to future trustees. As these bonds were bought by the trustee, we are bound by the decision cited.

The decree should, therefore, be modified by providing that the moneys paid out by the testamentary trustee to reduce premiums on securities purchased were properly taken from the income, and that the amount thereof should be paid to the residuary legatee, and as so modified affirmed, without costs in this court to either party.

Patterson, P. J., McLaughlin, Laughlin and Houghton, JJ., concurred.

Order modified as directed in opinion, and as modified affirmed, without costs. Settle order on notice.  