This suit is before us upon the complainants' exceptions to the master's report.
By the will of William S. Vose, deceased, his executors were directed, from and after the death of his wife, to invest and keep invested in some safe and profitable manner, if the same had not been already invested, twelve thousand dollars, and from the income of the same to pay to his daughter, the complainant, Mary Catherine Grinnell, the annuity of four hundred and sixteen dollars for and during the term of her natural life, said annuity to be paid in equal sums semi-annually; and also to pay the remainder of the interest of the twelve thousand dollars, if any, during the lifetime of Mrs. Grinnell, to his granddaughter, the complainant, Catherine Williams.
After the death of the testator's widow, who was one of the executors, in May, 1882, the surviving executor, Augustus P. Sherman, set apart a certain mortgage and certain bank stocks appraised by him at their then market value, which were portions of the estate of the deceased, towards the fund of twelve thousand dollars directed to be invested, and deposited in a savings bank a sum sufficient to make up the residue of that amount. Thenceforth he paid over to Mrs. Grinnell and Mrs. Williams the income of the twelve thousand dollar fund so constituted, less taxes, charges, and expenses, until the failure, in 1884, of the Metropolitan Bank of New York, one of the banks whose stock had been included in the fund set apart. After this bank ceased to pay dividends, the income of the fund, less taxes, charges, and expenses, was insufficient for the payment to Mrs. Grinnell of the whole of her annuity, and nothing has remained to be paid to Mrs. Williams, and nothing has been paid to her. *Page 47
On December 21, 1885, Augustus P. Sherman resigned his office as executor, and thereupon the respondent Baker was appointed administrator de bonis non, with the will annexed, of the estate of the deceased, and duly qualified himself as such. From the time he was so appointed and qualified, Baker took upon himself the control and management of the estate of the deceased, and has collected the rents and income therefrom, including the said fund of twelve thousand dollars. Being desirous of resigning his office of administrator, he tendered his resignation to the court of probate of Newport, and presented to that court an account of his dealings with the estate. Thereupon, on January 8, 1889, the complainants filed this bill, in which they pray for the appointment of a trustee under the will of the deceased, and that, when appointed, such trustee may be directed to set aside and invest the sum of twelve thousand dollars for the benefit of the complainants, which they aver in the bill had not been done; that the respondent Baker render an account to this court of his dealings with the estate of the deceased; that the amount due to Mrs. Williams may be ascertained, and the trustees to be appointed be directed to pay the same to her; and for general relief.
The cause was heard at a former term upon the question whether there had been such a setting apart from the rest of the estate, by the surviving executor Sherman, of the mortgage, bank shares, and money deposited in the savings bank making up the twelve thousand dollars, as to impress upon them a trust in favor of the complainants, or, in brief, whether the trust had been sufficiently constituted. The court held that it had, and consequently that the loss incurred by the failure of the Metropolitan Bank must fall upon the trust fund so established, instead of upon the estate generally. Thereupon a decree was entered that the trust fund had been duly set apart by said Sherman as executor, that his accounts theretofore filed in the probate court be approved, and his resignation as trustee be accepted, and that the cause be referred to a master to take an account of the said trust fund in the hands of the respondent Baker, from and after the last payment to Catherine Williams on May 19, 1884, and to report thereon to this court. The master has taken the account so ordered, and has filed his report. To this account and report the exceptions under consideration relate. *Page 48
The first four exceptions are to the allowance by the master of the fees or commissions charged by the surviving executor Sherman and the administrator Baker respectively as compensation for services, and of the expenses incurred by them in the administration of the trust, and of the taxes paid by them upon the fund of twelve thousand dollars, as properly payable out of the income of the fund.
It is contended in behalf of the complainants that the master erred in making the allowances, because the four hundred and sixteen dollars directed to be paid to Mrs. Grinnell is an annuity so called and so described in the will; that an annuity so directed to be paid by executors must be paid in full, without deductions for taxes, commissions, expenses, or anything else; that there is a distinction between income and annuity, in that the former may embrace only net profits, while the latter is a fixed amount to be paid absolutely, without contingency and free from all charges. We do not think the argument can prevail. Although the will speaks of the four hundred and sixteen dollars to be paid to Mrs. Grinnell as an annuity, and although an annuity implies a fixed amount payable absolutely, it is nevertheless to be paid to her out of the Income of the fund to be invested. No provision is made for the payment of it in case the income is insufficient, nor is its payment charged upon the residue of the estate. The testator apparently supposed that the income of the twelve thousand dollars would, in any event, be sufficient for the payment of the four hundred and sixteen dollars, after deducting all charges for taxes and expenses of the trust, and also leave something to be paid to Mrs. Williams, as it doubtless would have been but for the unfortunate failure of the Metropolitan Bank, and the consequent loss of a part of the principal and corresponding reduction of the income. Taxes and the charges and expenses attending the execution of the trust must be paid. We find no provision in the will for the payment of them, and therefore the ordinary rule that they are to be paid out of the income must apply. Walcott v. Pitcher, 7 R.I. 555, 562; Butterbaugh's Appeal, 98 Pa. St. 351, 352, 353; Pinckney v. Pinckney, 1 Bradf. 269, 275; Hepburn v. Hepburn, 2 Bradf. 74, 76.
The case at bar is very different from the following cases cited in behalf of the complainants. Ex parte Mc Comb, 4 Bradf. 151, and Stewart v. Chambers, 2 Sandf. Ch. 382, were cases in which the *Page 49 annuities were charged upon the entire residue of the estate.Craig v. Craig, 3 Barb. Ch. 76, was a case in which the executors were directed to invest such a sum as would produce a certain clear net income of five hundred dollars a year. Mosely v. Marshall, 22 N.Y. 200, was a case in which, there being no provision in the will for the payment of the interest on certain mortgages on real estate devised to a widow for life during the life estate, it was held that, as it was the evident intention of the testator that the widow should have "the rents, issues, and profits" of the estate devised as an entirety, the interest should be paid at the expense of the residuary devisees and legatees, and that the executor was, therefore, bound to keep it down out of their estate.
Drake v. Price, 5 N.Y. 430, was also cited in behalf of the complainants. In that case it was, indeed, held that executors, in making, in pursuance of the directions of the will, an investment of a portion of the testator's estate, and in collecting and paying over the interest of the investment to the person to whom they are directed by the will to pay the same annually for life, act as executors and not as trustees, and hence that their commissions are a charge upon the estate generally, and not upon the income received and paid over. Such, however, is not the rule in this State. The ordinary powers and duties of an executor are, to take possession of the goods and chattels of the testator; to collect the debts due to him; to sell the goods and chattels, so far as may be necessary for the payment of the testator's debts and the pecuniary legacies and expenses of administration; and to distribute the residue of the assets among the persons entitled to them under the provisions of the will. If to these ordinary powers and duties there is superadded the power and duty to invest portions of the testator's estate and to pay over the income, such power and duty, being appropriate to the office of a trustee rather than of an executor, are held to constitute a trust, and the executor in executing them is regarded as a trustee and not as executor.Pomroy v. Lewis, 14 R.I. 349, 352; Belcher v. Branch,11 R.I. 226; Peck v. Smith, 16 R.I. 260; Peck v. ProvidenceGas Co., infra. Being a trustee, his charges for compensation and expenses, in the absence of any provision in the will for their payment, must be taken from the income of the trust fund; otherwise the fund upon *Page 50 termination of the trust cannot go in its entirety to the persons then entitled to it under the provisions of the will.
We are of the opinion that the master did not err in making the allowances which are the subjects of the first four exceptions. These exceptions are, therefore, overruled.
The fifth exception is, that the master has not found and reported that a portion of the twelve thousand dollars has been lost, and that it is the duty of the trustee to supply or replace the amount lost from the rest of the estate left by the testator, and so keep the amount of twelve thousand dollars invested, in order that the full income from the sum may be obtained.
The contingency of a loss of a portion of the fund was apparently not present to the mind of the testator in framing his will. At all events, the will does not charge the maintenance of the fund upon the residuary or any other part of his estate, nor make any provision whereby a loss happening to the investment is to be made good, but purports to dispose of all the estate of which the testator was possessed at his death. Assuming, then, that the master had found and reported the loss, and that it was the duty of the trustee to supply or replace the sum lost, as the complainants insist he should have done, it would not have availed them, since property given to others, or held for their benefit, could not be taken to make up the loss. The fifth exception is, therefore, overruled.
Counsel for the complainants claims in his brief that the twelve thousand dollars has never been invested, and criticises the action of the executor, in that, instead of investing anew the sum specified, he set apart from the estate certain stocks and securities, and for this purpose designated, in part, stocks of a fluctuating value, at a time when their market value was much above their par value; and he contends that, even if the executor had the right to thus make the investment, he had no right to value these stocks above their par value, or, at any rate, above their appraised or inventoried value in the inventory of the testator's estate. These considerations could not properly have been urged before the master, nor do they appear to have been so urged; nor are they embraced in the exceptions to the master's report. If the complainants had wished to be heard upon them, they should have *Page 51 been brought to the attention of the court at the hearing upon the bill, or by a petition for rehearing filed within a year after the entry of the decree. Franklin Savings Bank v. Greene,14 R.I. 1; Randall v. Peckham, 11 R.I. 600. With reference to them, however, it may be said that the direction was to invest and keep invested, "if the same has not been already invested," etc. We think it was entirely competent for the executor, under this direction, to constitute the fund out of the investments which were a part of the testator's estate, if they were such as a prudent man would have deemed safe and advantageous for those to be benefited by the provision, instead of selling them and investing the proceeds anew. Nor do we think that it was improper that in doing so he appraised the stocks at their market value at the time they were set apart. If he had not so appraised them, others interested in the estate would have had good ground of complaint.
While we sympathize with the complainants in their loss, it is a misfortune which we are powerless to remedy.