Cole v. Oxford Savings Bank

Adams, J. In the contested clause it is provided that the bank shall pay the legatee annually during his natural life the “income,” that is, the interest on the sum of $600, and after his death shall distribute the principal among the other legatees named in the will. The general rule is that a gift of the income of property is to be regarded as a gift of the property itself only when no limitation of time is attached; but where a testator directs that the interest on a sum of money be paid to a designated beneficiary annually during his natural life, and that after his death the principal shall be distributed among other legatees, the legacy is construed, not as a gift to the first taker of the corpus of the fund, but only of the income for the intermediate period. 28 R. C. L., 246, sec. 214; In re Smith, 27 A. S. R., 587. The testator obviously intended that the principal sum should be invested during the life of the plaintiff and distributed after his death. In effect he appointed the Oxford Savings Bank and Trust Company a trustee with specific directions as to the manner in which the trust *516 should be executed. Perry says: “Any agreement or contract in writing, made by a person having the disposal over property, whereby such person agrees or directs that a particular parcel of property or a certain fund shall be held or dealt with in a particular manner for the benefit of another, in a court of equity raises a trust in favor of such other person against the person making such agreement, or any other person claiming under him voluntarily or with notice.” Trusts and Trustees, sec. 82. If 'a speciál duty be imposed upon the trustee, such, for example, as the collection and application of the income or the rents and profits of the estate, the trust is called “active,” because the trustee must have the legal title in order to perform his duties. Lummus v. Davidson, 160 N. C., 484; Rouse v. Rouse, 167 N. C., 208; Fowler v. Webster, 173 N. C., 442. Under these circumstances the agreement relied on by the plaintiff cannot destroy the trust and deprive the bank of its right to hold 'and disburse the fund described in Item 2 (h) of the will as therein provided. We think the same conclusion is applicable to the residuary clause, in which, it was provided that all the residue of the property should be divided among the legatees named in the second item in the proportion that the specific bequest to each of them bears to the whole amount given them. In Item 2 no part of the corpus of the estate was bequeathed to the plaintiff, and we think it was the testator’s intention to give to the plaintiff during his lifetime the annual income or interest to be derived from the amount deposited in the bank under the residuary clause ($284.40) in like manner with the provision in Item 2 (h) of the will. For the reasons assigned the judgment is Reversed.