Board of Trustees of the New Bern Graded Schools v. First-Citizens Bank & Trust Co.

Seawell, J. The briefs do not contain much helpful citation of authority on this novel question; but the defendant does point out that the will must be construed with reference to conditions as they existed at the time of its making. It is argued that the amounts set aside for the monthly support of his beneficiaries, close relatives, were carefully considered as to their sufficiency at the time, when, at least in the Federal jurisdiction, it was not subject to the income tax as distributed to the legatees; but a subsequent change in the law makes it so, and the Commissioner of Eevenue claims the monthly payments now taxable in the hands of the named legatees. It is further pointed out that the will provides that the defendant shall “pay all taxes on my property, fire insurance premiums on and costs of repairs thereto, and expenses in connection therewith;” etc. This provision so manifestly refers to property in the hands of the trustee, and not that of which the beneficiary becomes the owner in the act of distribution, it may be eliminated from discussion. We are unable to accede to the proposition that by the simple act of naming the amount each legatee is to receive at the hands of the trustee, the testator took into consideration both all the conditions that then were, and those which might come thereafter; — this particular change in the tax law which might, unfortunately for his beneficiaries, burden the legacy and reduce its value. With the knowledge, however, that nothing is more certain than taxes and death, and that the government might be forced to exploit all resources of revenue, it seems that some express provision would have been made for it if it had been so intended. To prevent such an incidence of the tax on the bequest would, we think, require a more positive expression of intent than we find in the will; and as there is no public policy to require it, we cannot substitute for actual intent any theory of what the testator, in his generosity, would have done if he had thought about it. We are of the opinion that the correct conclusion was reached by the court below and its judgment is, therefore, Affirmed.