Van Blarcom v. Dager

[793] The opinion of the court was delivered by Dodd, J. By the will of George W. Hughes, deceased, the income of all his property, personal and real, was given to his wife during the term of her'natural life, with á bequest over of the principal at her death. The testator died while in Russia, on the 15th of October, 1862, and his will was subsequently proved by his widow and executrix, before the surrogate of Passaic, in this state. A portion of his property‘was balances in the hands of bankers in Europe, which balances were represented by a draft on Baring Brothers & Co., in London. This draft, for the sum of over eight thousand pounds sterling, was sold by the executrix, in New York, on the 21st of October, 1862. Its gold value was then and there the sum of $41,227, for which, as there was then a premium on each gold dollar of twenty-seven and one-half per cent., the executrix received, in legal tender money, the sum of $52,573.89. In this suit now pending for the settlement of the estate, two questions were decided by the vice-chancellor, which are again raised by this appeal: Eirst—Is the premium which was received by the executrix on the gold value of the draft, to be taken as part of the income of the estate, or is it to be taken as a part of the principal fund ? Second— Is the income of the estate which was given to the wife, to be reckoned from the death of the testator, or from the expiration of one year thereafter ? It was held by the vice-chancellor, that the premium on the gold was not income, but a part of the principal. In this ruling I entirely concur. The appellants, in resisting it, relied upon the cases of Van Doren v. Olden, C. E. Gr. 176, and Ashhurst v. Field, 11 C. E. Gr. 11. These cases do not support the appellant’s claim. Trust funds, of which the income, interest or profits were given by a testator to one person for life, and the principal over on the life tenant’s death, were there invested in the stock of an incorporated [794] company. Extra dividends, in the form of new stock, had been made by the company, out of the earnings of their business; and the question was, whether the stock dividends were to be regarded as income or capital. The answer to the question was held to turn upon the point whether the earnings, out of which the dividends had been declared, had been carried to account of accumulated surplus laid up by the company before or after the investment was made. If before the investment, the dividends were adjudged to be capital and to belong to the remaindermen. If after the investment, they were income, and belonged to the tenant for life. The important circumstances distinguishing those cases from the present, were the existence of earnings or profits from the business; and, also, the declaring of the dividends on the distribution of such profits by the board of directors. A mere increase or rise in the market value of the investment would have been essentially different, and not to be regarded as income belonging to the tenant for life. The difference between the par value of the gold and its value in legal tender money, is not earnings, but, like the increase in value of the testator’s jewelry or pictures, sold at an advance on their cost, is a part of the property from which income is to arise. If, in the draft, was included interest which had accrued on the testator’s money after his death, such interest should be distinguished in the accounting from the principal on which it arose. Second—At what time did the income to .the widow begin to accrue? It was decreed by the vice-chancellor, to begin at the expiration of one year from the testator’s death. To the correctness of the decree in this particular, I am unable to assent. It is grounded on the general rule, that legacies bear interest from the time they are payable, and upon the statutory provision, that the executor or administrator shall have a year after probate in which to pay legacies, where no time for their payment is fix.ed by the will. This general rule has been expressed and applied in cases adjudged in this state. Church at Acquackanonk v. [795] Ackerman’s ex’r, Sax. 40 ; Brinkerhoff v. Marselis’s ex’r, 4 Zab. 680; Halsted v. Meeker’s ex’rs, 8 C. E. Gr. 186; Hennion’s ex’r v. Jacobus, 12 C. E. Gr. 28 ; Howard v. Francis, 3 Stew. 444. Ex all these cases, the legacies were specific sums, or the interest of such sums, and differ from bequests of the residuary'personal estate made to a legatee for life. This distinction is explained and enforced by the chancellor in the recent case of Green v. Green, 3 Stew. 452, in which the opinion was delivered after the decision of the present case. The rule that, where the Residuary personal estate is given to a legatee for life, the interest thereon accruing from the testator’s death, shall, in the absence of any direction to accumulate, go to the tenant for life, is declared, by the chancellor, to be established. It is placed, not on the presumption that the life interest was given for support, but on the equity which seeks, as between the life tenant and the remainderman, to give to each his due. To give the interest for the first year to the remainderman by treating it as part of the principal, is correctly said to be injustice to the tenant for life. In addition to the authorities cited in the chancellor’s opinion, reference may be made to Berry on Trusts § 651, and the accompanying notes. I am of the opinion that the appellants should he allowed the income from the testator’s death. The decree should be reversed. Decree unanimously reversed.