The decedent left a last will and testament, which was duly admitted to probate, by which he made a number of charitable and individual bequests of legacies, amounting in the aggregate to $127,000, and then provided that all the rest, residue and remainder of his estate, including the lapsed legacies and legacies that shall, for any reason, have failed to take effect, be given to his executors in trust to invest, etc., for the benefit of life tenants, specifically named, and upon their decease bequeathed the principal to remaindermen, also specifically designated. By the tenth clause of his will he expressly declared that the charitable and individual legacies already referred to "shall be paid in full only in case my total estate, as valued by my executors, shall amount to $300,000, and in case my estate shall be valued at less than $300,000 then the legacies hereinbefore mentioned shall abate proportionately."
It will be noted that the chief objects of his bounty were the life tenants and the remaindermen. For, having made general bequests amounting to $127,000, he then reserves at least the sum of $173,000 for the purpose of making up the trust estates for the benefit of the life tenants by the provision referred to in the tenth clause of his will. It is contended on behalf of the general legatees that the estate must be valued before administration and without deducting the expenses thereof or the commissions of the executors, while on behalf of the life tenants it is insisted that by the term "total estate" as used by the testator he meant the total estate available for distribution under the provisions of the will, and that *Page 352 the cost of administration, together with the debts, funeral expenses and commissions, should be deducted before the valuation should be made for distribution. We think that the contention of the life tenants should be sustained. As we have already pointed out, they were the chief objects of the testator's bounty and he had carefully guarded the amount that he had designed for them by the provision that in case his estate did not amount to the sum of $300,000 the general legacies should abate proportionately, thereby leaving the the residuary fund unimpaired.
It appears in this case that the expenses of administration amounted to $21,411.73, and that the commissions were $6,810.72; that after deducting and paying these expenses and allowing the commissions of the executors the total value of the estate left for distribution was the sum of $253,698.60. It is, therefore, apparent that if these items are not deducted in making the valuation, the general legatees will receive their legacies nearly in full or at least ninety-five per cent thereof and that the residuary legatees will have to bear the entire burden of the administration of the estate and have the amount designed by the testator for their benefit reduced by upwards of twenty-eight thousand dollars. This result would reverse the apparent intent of the testator by casting the rebate upon the residuary legatees rather than the general legatees. We are aware that, ordinarily, these expenses are chargeable upon the residuary estate and are paid by it, but in this case we think the testator has expressly provided otherwise by making the life tenants his preferred legatees and providing that the rebate shall be taken out of the general legacies. We, therefore, are fully in accord with the views expressed upon this subject by the learned Appellate Division, and we here indorse and approve the opinion of LAUGHLIN, J., upon that subject. We also concur in the construction given by him to the provisions of the third codicil and as to the subsequent bequests made by the testator.
One subject only remains for consideration by us and that pertains to the question of interest upon the general legacies. *Page 353 The learned surrogate allowed interest from the expiration of a year after letters testamentary were issued. The learned Appellate Division, by a divided court, modified the decree of the surrogate in this particular, disallowing interest but allowing the general legatees to participate proportionately in the income that had been derived by the executors during their administration of the estate.
It is contended in this case that these legacies were unliquidated and consequently would not draw interest. We think this contention cannot be upheld. The testator has specifically mentioned the amount that he intended to give to each of the general legatees. The claim of each was, therefore, known and liquidated as fully and completely as if it had been fixed by a judgment or a promissory note. The only question open was as to whether the estate had property from which the legacies could be paid in full. In this case the assets available for the payment of these legacies were not sufficient to pay in full. They would only pay eighty-six per cent thereof and consequently the situation presented is analogous to that of the distribution of the assets of an insolvent estate among its creditors. We think, therefore, that the general legatees had the right to have interest allowed, provided there were funds available out of which interest could be paid. (People v. Merchants' TrustCo., 187 N.Y. 293.) The question, therefore, is presented as to whether there is a fund available for that purpose. Ordinarily, expenses are chargeable to the residuary estate, and the income from the estate goes to the residuary legatees, and, ordinarily, legacies under the statute become due and payable one year after the issuing of letters testamentary, and if not paid, interest is allowable thereon from that date payable out of the residuary estate; but in this case, as we have seen, the rule has been changed by the testator, and the residuary legatees are preferred over the general legatees. The life tenants are entitled to the interest or income derived from the residuary estate, and, having been preferred over the general legatees, should not be compelled to have their estate diminished for the purpose *Page 354 of paying interest to the general legatees. There is a fund, however, reported by the executors, amounting to the sum of $28,294.15, income derived from the estate during the time it was in their hands in the process of administration. This income consists of interest on bonds, notes, deposits and dividends on stocks, and is, therefore, derived from the assets of the estate, which would have gone to the general and residuary legatees had administration been completed within the year allowed by the statute. We, therefore, entertain the view that equity requires that this income should be distributed pro rata between the general and the residuary legatees, and applied upon the interest and income that has accrued upon their respective legacies. As to the interest remaining unpaid after such distribution it must be deemed abated for the reason that there is no fund out of which the same can be paid.
The contention is made that the Appellate Division had no jurisdiction to review the determination of the surrogate made with reference to the income, for the reason that no appeal had been taken therefrom. The appeal taken, however, did bring up for review the question of the allowance of interest, and the determination of this question involved also the determination of the fund out of which the same should be paid. We think, therefore, the determination made by the Appellate Division was just and equitable, and was within its powers.
Motion to dismiss appeals denied, without costs.
The order of the Appellate Division should be affirmed, with costs only to the executors and to the special guardian of the Hoefner children, payable out of the residuary estate.
GRAY, EDWARD T. BARTLETT, VANN, WERNER and HISCOCK, JJ., concur; WILLARD BARTLETT, J., absent.
Order affirmed, etc. *Page 355