
    Matter of the Judicial Settlement of the Accounts of Frank Curtiss et al., as Executors and Trustees Under the Will of Abijah Curtiss, Deceased.
    (Surrogate’s Court—Westchester County,
    January, 1896.)
    1. Executors-and administrators—Double commissions.
    Where the residuary estate is given to the executors in trust to sell and invest the proceeds, to pay the income to testator’s widow and children during their lives, and the principal at their respective - deaths to their heirs or next of kin, their duties as executors and as trustees are separate and distinct, and they are entitled to double commissions.
    S2. Same.—Securities retained in the original form.
    Where the estate is given directly to the executors and trustees they may elect to take and retain the securities in the form they were left by the testator, where it is unnecessary to convert them for the purpose of paying debts and legacies, and in such case are entitled to have such securities considered as cash for the purpose of computing their commissions as executors.
    8. Same — Sales of real estate.
    In such a case the executors, as such, are not entitled to commissions upon real estate sold, where such sales were not necessary for the payment of debts or legacies. . - - .
    4. Same—Administrator with will annexed.
    • Where the persons named in a will as executors and' trustees are 1 permitted to resign after the amount of the residuary estate has been ascertained for the purposes of the trust, an administrator with the will annexed should not he appointed, as only trust duties remain to he performed.
    
      Application to settle'decree on resignation of trustees.
    
      Vanderpoel, Cuming & Goodwin (Henry Thompson, of counsel), for executors.
    
      Potter & Johnson, for Caroline C. Johnson.
    William P. Fiero and J. Q. A. Johnson, special guardians.
   Silkman, S.

The court,, upon the application of the peti-

tioners, permitted their resignation, but upon .condition that ■ trustees’ commissions upon the principal of the trust estate be waived. The authority for- imposing, such a condition is found in the case of Matter of Allen, 96 N. Y. 327.

' The court intended that the petitioners should have commissions as.' executors, but none as trustees,-upon the princi- ' pal of the trust. It was directed that the decree- to be entered should be upon notice, and now the settlement of-.the- . decree to be entered is' before the court for consideration..

It is urged by the special guardians with -much insistence:

First. That the petitioners. would .not be entitled in any event to commissions in the two capacities,.‘as executors and as trustees, because, as is claimed, the functions' and duties of ' executor and trustee.c.o-exist and run .together, and that the ■will does not provide for separate -and successive duties.

Second. That .the' decree entered on the 17th day of June, 1891, is not conclusive, as to the allowance of commissions,. . because the life beñéficiaries only were made parties to the proceeding, the infant cestuis gue trust not having, been cited, and

- Third. That -the duties to be performed under, the will are not- duties which can - be performed by a substituted trusteebut must be performed by an administrator with the-, will annexed.

The testator by the seventh clause of his- will provided as follows: “ All the rest, residue and remainder Of my estate, both real and personal, of whatsoever nature and wheresoever, situated, I gi,ve, devise and bequeath unto my executors hereinafter named, their survivors, successors and assigns, in trust, . however, to talte the same in their possession, to convert the same into money without needless sacrifice, subject to the , exceptions above set'forth, to invest the same in such securities as they may from time to time see fit, whether they are the securities recognized by law for investment by executors and trustees or not, to continue in their discretion any- invest- . ment which I have made and to dispose of the same as . follows, viz,: ■ The said residuary , estate shall be divided into two 'equal parts, to be separately invested, to be known as Funds Ro. 1 and 2. ' •

Fund Ro. 1 shall for purposes both of division of income and principal be divided into shares, one share for each of my surviving children and one share-for each child of mine that shall have died before me leaving issue, and for the purposes of such subdivision and apportionment the amount of any balance appearing on my books at my death against any child of mine or any sum which shall be owing to me except as above released shall be considered, not as a debt, but as an advancement, and shall be counted 'as- cash in making up the apportionment aforesaid, and the share of -each child shall be less by such amount than it otherwise would be.-.

“ I direct my executors to pay over or apply the net income . of each child’s share ascertained as above stated to his or her use during the term of his or her natural life, except that no more than.fifteen hundred dollars a'yeai- shall be-paid or - applied, to the use of my son Frederick during his minority. I also authorize and empower them or the survivor of them or their successors in the trusts, in their discretion., to make to each child advancements .out of the principal of each onels share so held in trust for them respectively as may. be deemed for their highest.good in the following sums

Testator then names the times at which the part of the principal may be advanced to his children respectively. He then provides: The net income of .the. respective sums s.o held in trust for my children shall be paid to them or applied .-to their, use during the term of their! natural lives for their maintenance and support. Tire principal, or so much thereof as shall remain at their respective deaths, to he paid or trans- .. ferred to their'heirs or next of kin.”

The testator then provides as to Fund ¡No. 2 as follows:

The income of Fund ¡No. 2 shall be paid over as the same ■ accrues to my wife, Mary E. Curtiss,-during her life, for her own use absolutely. After lier death, or in case she shall reject this provision and claim dower instead,' the income and principal both of said Fund ¡No. 2 and of the other property mentioned in this will not specifically devised or bequeathed shall be disposed of in the same manner as Fund ¡No. 1, but the amount of advancement to my children respectively shall not be increased thereby.”

The testator then by the eighth clause of his will provides :

The legal title to all my real estate subject to the provisions of this will shall vest in my executors and trustees, and they, are hereby authorized and empowered to sell, and convey, lease and in general deal with the same in their discretion.”

He then provides that the property which his wife is given the use of for a period of years shall not he sold without her consent, and that property specifically devised to his son Frederick shall not be sold unless he refuse to accept the same upon the terms provided, and further provides that the distributive shares of any of the distributees might be valued and set off in lieu of sale and distribution of the proceeds.

Testator then by the ninth clause nominates and appoints “ my brother, Frank Curtiss, and my friend, Frederick De Billier, executors of this my last will and. testament.”

It is claimed that the duties under the provisions above quoted are so mingled with the duties of executorship that there is an intention evident on the part of the testator not to separate the offices of executor and trustee, and that the legal > conclusion from such provisions is . that the duties and functions, run together , and are-inseparable, and tjiat the executors and trustees named are entitled to commissions in the capacity ■ of executors only.

In. this. claim I think the special guardians are in error. While it is true that the testator uses the term executors when, perhaps, it would have been more appropriate to have used the term trustees, the use of the term executor or trusteedoes not necessarily define the character of the office. Whether they are to act in the capacity of executors or that of trustees is to be determined by the functions which they are to perform. ■ The duties,-.of- a,n executor are usually simple; the burial of the deceased, the collection of his assets, the payment of his debts and legacies, "and the distribution of the residue to those entitled thereto as residuary legatees, heirs at law or next of kin. The distribution of the residue may be immediate or it may be postponed and be paid in installments or by way of annuity, or paid to trustees for the use and benefit of beneficiaries named. The retention by executors of any portion of the estate upon a trust provided for is a distribution of that part, as much so as if the same had been paid to other persons as trustees. If paid to a trustee or retained by the executor as trustee, the distribution, to be valid, must be •under one of the trusts authorized by the Revised Statutes. Bearing in mind the simple duties of an executor, and the fact that the duties of a trustee must be those in the execution of a trust authorized by statute, we will have no difficulty in determining where the executorial duties leave off and the trustees’ duties begin.

In this case the testator has given his residuary estate to his executors in trust, to pay to or apply to the use of his wife and children the income thereof during their natural lives. This is a trust duty pui’e and simple, and depends upon the Revised Statutes for its validity. While it may be true that for a certain period the duties of the executors and of the trustees co-exist and run together by reason of the fact that the trust being for the support and maintenance of the testator’s wife and children, they are, therefore, entitled to the income from testator’s death, the running together of such duties lasted only until the ordinary executorial duties had been fulfilled and the amount of the residue of the estate established. The Code provides for the compensation of executors (§ 2730), ■ and also for the. compensation of. testamentary trustees separa'e from that of executors. Code, § 2802. " !

•’.It is clear 'frómvthe. authorities-.that-" where it is ■ coñtém--• plated that the executors’ duties are to end and thé trustées’: * duties áre to begin, double commissions may be allowed, one: commission to the executors, and another commission' to the trustees.’ Laytin v. Davidson, 95 N. Y. 263. "■

In fact, under the provisions of the Code as they exist, there' is'no power to deny such commissions, except for misconduct oh the part of'the-e'xeeutof or trustee.

Thshares and' to 'receive and apply the income of the- several ■' shares to the use of the beneficiaries respectively could hot be' performed until the residue given to the executors in trust to ' divide into shares, and pay over and apply the income of the" several, shares to the testator’s wife and children,' had been ■ ascertained. '

In the case before us, the residue was-' ascertained by the decree of the surrogate upon the accounting of the executors-' in 1891. ' '

I have carefully examined the case of McAlpine v. Potter, 126 N. Y. 285, relied upon by the special guardians, but - do riot think the facts in that case admit of its being cited- or of its being an authority -in this. There the testator-gave, to his trustees all his real and personal estate in trust for the purposes named, and to retain his estate entire -and undivided, • except as provided for, and then provides for the payment by his trustees of -bis funeral expenses, debts, taxes, etc. There were no duties to be performed, by the executors as such, and" there was no residuary estate to be ascertained.. The duties were to be performed by the . trustees from the' beginning. Judge Finch says: ■ “At its very outset it makes theexecutors' either wholly arid continuously such, or wholly arid continuously' trustees,- for in its first sentence it gives .the entire -estate in' trust and- directs the executors and trustees hereinafter, named' to retain it undivided till the period 'of distribution, and, meanwhile, to pay ■ funeral expenses, debts accruing, taxes, repairs, reasonable insurance, one fixed and definite annuity and aliquot parts of the net accruing income until the final ■ distribution:” .

It is a proper criticisnr of the will under consideration in McAlpine v. Potter to say that it appointed trustees only, and that there were no duties to be performed by executors.

Here the duties of executors and trustees are separate and distinct, and in such a case the law'not only permits, but directs, the allowance of double commissions.

We are then brought to the point that the allowance of commissions by the surrogate in the decree of June, 1891, is not conclusive upon the infants represented by.- the special guardians, because such infant cestuis que trust were not made par- . ties thereto. . The mere statement' of the position of - the special guardians carries with it the answer that as to such parties the court must now review the allowance of commissions upon principal. All the parties interested in the income " were made parties to the proceeding, and are, consequently, bound by the decree.

. It is urged that the executors were not entitled to commissions allowed upon securities possessed by the testator at the time of his death, and retained by the executors and trustees, but which might have been converted into Cash' in order to determine the cash value of the residuary estate.

I disagree with the position of the special guardians as to the right of the executors to commissions upon the value of these .securities received by them and' retained by them as trustees under the trusts contained in the will..

The trustees were legatees and devisees of the entire residu.ary estate, and as such had a right to elect, to take-it in the •form in which it was left by the testator, provided it was unnecessary to convert it for the purpose of paying debts and legacies, and such election does not deprive executors of commissions thereon,- nor does the fact that the same persons are executors and trustees impair such right to commissions. . Matter of Moffat, 24 Hun, 325 ; Matter of Mason, 98 H. T. 536 ; Phoenix v. livingston, 101 id. 451In re Willets, 112 id. 289. ' ' ■

It would be impolitic for' the law to- deny to executors commissions under such circumstances, because to do so might inyite the disposal of investments judiciously made by the testator for, the purpose only of entitling such. executors to commissions upon the proceeds. It is the policy of the law to remove this temptation.

It must, therefore,, be held that the executors have the right to have the securities considered as cash for the purpose of computing their1 commissions. There has b’een no judicial determination, however, as to the value of these securities hr a proceeding in which all the parties interested could have, been heard as to such value; their value, therefore,, can only be considered as it has been fixed by the appraisers upon the . inventory and appraisement made under the order of the surrogate.

I do not understand that the case of McAlpine v. Potter holds contrary to- the views expressed. As has been stated, the will in that case provided for the functions of trustees only, and directed the estate to be held entire and undivided until disposed of as provided.

The court held that the period of . distribution had' not' arrived, and, until that time arrived, no commissions could be allowed.upon the securities which came..into the hands of the trustees.

The language of Judge Finch clearly distinguishes the case from the present one. He says: “ The bulk of the estate came to the executors already invested and in the form of securities which have not been turned into money. Ho law justifies the allowance of half .commissions upon their estimated value in advance of their conversion into money or its equivalent. ** * * A time will come when the allowance may be entirely just and proper; that will be when the securities :kave- been turned into money for the purpose of payment,, or have been accepted by the legatees as cash without being converted.”

In the case before us the trustees. as residuary legatees ' accepted the securities, and it must be assumed that they were • of the value determined by the official appraisers, and were taken at that value.

"T am, however, of the. opinion .that vthe executors are not entitled as such executors, under the provisions of testator’s will, to any commissions upon the real estate sold. The title to this real estate passed to the trustees under the devise of the rest and residue of testator’s property. There was no necessity for, nor purpose 'to be served by, a sale of the realty by the executors. The executors had no right to deal with it except that it should become necessary for them to convert it for the purpose of paying debts and legacies provided for in the will. While it is true that the testator provides in the eighth clause that “ the legal.title to all my real estate, subject to the provisions of this my will, shall vest in my executors and trustees,” the language used must not be construed in its literal sense, but according to testator’s evident intention to give the title to his executors as trustees for the purposes of ■ the trust. The eighth clause must be read in connection with ■ the seventh, in which he gives all the. rest, residue and remainder, both real and personal, to Ms executors, their survivor and successors in trust, to take the same into possession and to convert the.same.into, mpney. The .sale..of-the real,,estate was a duty to be performed by the trustees and not by the executors, ■ and commissions can be. allowed only upon the proceeds of the real estate to the. executors as trustees, and, as I have decided that the trustees shall be allowed to resign only upon waiving their commissions as trustees upon the principal, . whatever executors’ commissions may have been allowed in the former decree upon such proceeds of the real estate sold must be disallowed.

As to the point taken that there should be an administrator . with the will annexed appointed, I cannot agree with the special guardians.

The duties of. the executors have been performed and the residuary estate ascertained for the purpose of the trust,although it may not .all have been sold' and converted -into • . cash and reinvested. There remain only trust duties to be-performed. '

I have examined the. case of Greenland Waddell, 116 N. Y. 234, relied upon by the' special guardians. The facts in that case were very different- from those, under consideration. In that case the will under consideration contained a power in trust given to the executors ; to sell and dispose of thetestatóFs -real., and; personal property, and. to distribute the proceeds,-one-third of which only, they were to hold under a. valid trust. A clear case of power in trust only, except as to one- ' third, as to which they had the legal title.' Powers intrust, are to be exercised by executors, and. not by trustees.

Mr. Curtiss, however, gave his entire residuary estate to his. executors as trustees under a valid trust, and they were pos- ■ sessed not --only with- a power of sale,.but; the legal title as well. - " '

I think-the: cases are " clearly distinguishable. '

This proceeding, as appears by the petition, is an application on the;-part of- the testamentary -trustees for leave to resign under the authority of section 2814 .of the Code. The petitioners cannot resign as executors. From such duties they can only be relieved by an application- to have their -letters testamentary revoked under the authority contained in section 2689 of the Code.,

' My conclusions' are, therefore,, upon the -objections by the special guardians to the decree proposed by the petitioners:

First. That the duties of executors and of trustees under the will -of testator are . clearly separate., and-distinct, and-the petitioners wére entitled to full commissions as executorswllen the. -residuary estate was ■ ascertained, and would have been entitled to another full commission 'as trustees'had they, continued to fulfill their duties- as- such-.

Second. . That -the petitioners were entitled to- commissions-as executors upon the securities which came into their hands-from the testator,-and were retained by them and held by them as trustees as investments.

Third. That no commissions, should-have been, allowed- ■ upon the proceeds -of the real estate sold.

The commissions to which the executors-were entitled upon their previous accounting must be based upon the following statement of account: The executors are- chargeable with the amount of the inventory, $282,323.85, less the assets, uncollected and. undisposed of, $5,670.75, leaving a balance of $276,653.10, upon, which balance each executor was entitled to a commission of $2,941.53.

The amount of commissions upon income allowed upon the former accounting does not appear to be separated from the, gross amount of commissions allowed. If the amounts had been separately stated, that decree would have been conclusive as to income, because all the beneficiaries interested in the income were -parties to the proceeding. ' • • .

It is, therefore, necessary to determine now what commissions the executors were entitled to upon such income, either as such executors or trustees: The income of the personal property seems to have been $29,228.16, and the income of the real estate $11,564.91. The account covered the period from October 24,-1888, to April 30, 1891. I find commissions on such income to be the sum of $582.93, to be divided between the executors. The total of amount of commissions, therefore, to which the executors were, together entitled on the former accounting as executors and. trustees is the sum of $6,4"65.99, of which $5,883.06 is.chargeable uto- principal, and $582.93 to income. Upon the present account I compute'the commissions to which the trustees are entitled upon income to be $1,453.72. As the estate seems to have been managed, almost entirely by the trustee Curtiss, two-thirds of the latter sum is awarded to him. ,

Ho final decree, however, can be entered at the present time. An interlocutory order -may be entered declaring that certain reasons exist for accepting the resignation of the petitioners as trustees upon the conditions imposed, directing the payment of all moneys and securities belonging to the trust, and the delivery of all books, papers and other property of the trust, to the county treasurer, and directing that the petitioners bring into court an account of their proceedings under ' such order, as well as since the date of the account filed herein,’ to the end that a decree may be made finally settling their accounts,-and forever-diseharging. them and. appointing a new trustee.

This would seem to be the correct practice under the Code of Civil Procedure, sections 2814, 2818.

The final decree may provide for. the payment of the costs and expenses of this proceeding out of the moneys so to be . ' ' deposited.

Ordered accordingly.  