By judgment rendered May 5, 1924, San Antonio Loan and Trust Company was appointed .trustee of all notes, money and personal property set apart to the estate of John B. Hildebrandt, deceased, and empowered to invest, manage and control the same during the life of Barbara Hilde-brandt, the wife of said John B. Hilde-brandt. The trust company in the present suit impleaded the remaindermen named in the will and the 'beneficiaries under the will of Mrs. Barbara Hildebrandt, to determine their respective rights in 97.7 acres of land located in Colorado County, Texas, and the proceeds derived from the sale of two oil and gas leases covering the same. Judgment below was rendered in favor of the remaindermen named in the will of John B. Hildebrandt, deceased.
The will of John B. Hildebrandt contained the following provision:
"I give, devise and bequeath to my wife, 'Barbara Hildebrandt, the entire income of all my property,, both real and personal, to be used by her and for her benefit during her lifetime * * * (and) upon the death of my said wife, I desire that all the remainder of my property, real, personal, and mixed, be divided between the following named persons or their survivors, share and share alike, * * (Here follow the, names of John F. Hildebrandt and seventeen others, generally referred to as the remaindermen.)1
Among the assets of the estate which came into the possession of the trustee was a promissory note for the principal sum of $1,300,' executed by Richard M. Craig and others and secured by a lien on the 97.7 acres above mentioned. The trustee filed suit on the note and on March 16, 1937, secured a judgment for the sum of $2,557.83, together with an ordér foreclosing the lien. The decree provided, however, that no persona} judgment was rendered against the defendants in the suit who were the makers of the note. The trust company bought in the property at sheriff’s sale held on May 4, 1937, and has held the legal title thereto since that date.
. On July 27, 1945, the trustee executed an oil and gas lease covering the property and received a bonus payment of $4,885; A similar lease for a like consideration was executed on February 13, 1951. Both leases were for a primary term of five years ana the delay rentals were paid over to Mrs. Barbara Hildebrandt until her death on October' 28, 1952;
The trustee took the position that the bonus payments were part of the corpus of the estate and the trial judge agreed with this view. The appellants, Leslie J. Hamilton and Frances Hamilton, sole beneficiaries under the last will and testament of Mrs. Barbara Hildebrandt, contend that interest on money is income and belongs to the life tenant, and that accordingly any property purchased or acquired by or •through the use of the claim for interest held by Barbara Hildebrandt became her property. As analyzed by appellees, this is essentially a case wherein an asset of the estate, despite its various mutations, has increased in value over the years, and they contend that this increase in value and the proceeds realized as a result thereof (evidenced by the oil and gas lease) belonged to them, First National Bank v. Mulholland, 123 Miss. 13, 85 So. 111, 13 A.L.R. 1000, and annotations following the report in A.L.R., subject to the life tenant’s right to receive the interest upon the bonus paid for the leases until her death. Mitchell v. Mitchell, 151 Tex. 1, 244 S.W.2d 803.
However, the land acquired by the estate can not be considered as essentially the same thing as the note held by Hilde-brandt at the time of his death. To do so would be to disregard certain important realities of the situation. Undoubtedly interest is income, and the judgment of March 16, 1937, provided for a recovery of $2,557.83, of which amount $1,257.83 was interest or income. This judgment was in turn used to acquire the land which •together with the bonus payments received from the sale of an oil and gas lease thereon constitute the subject matter of this lawsuit. While, as above pointed out, it is appellees’ primary contention that there is -no “income” due appellants, because no interest on the note was ever collected in cash and all ordinary rentals and revenues from the land have been paid to the life tenant, it is mentioned in .passing, that upon the foreclosure’sale the tract of land was bid in for $1,500. It can not well be contended that this bid represented or even indicated the market or intrinsic 'value of the land at the time. The trustee, as plaintiff in judgment, accepted a decree releasing Richard M. Craig and the other makers of the note from all personal liability thereon. The result of this was to remove the motive to secure as high a price as possible
“Úsually at the time of foreclosure of the mortgage there, are sums due both on account of interest and principal. The common method of dealing with the matter is to divide the proceeds , of the foreclosure betwe.en trust income ■ and trust capital in proportion- to the amounts, of'interest and. principal due . . on the mortgage at the time of the foreclosure, where the sum produced is less than the whole balance- of principal and interest due. Thus; if a trustee forecloses a mortgage on which there is due $1,000 of principal and $50 of interest, and after the expenses of the foreclosure are .deducted there remains a balance of $525 cash in the hands of the trustee, it would seem equitable to hold that one twenty-first of the proceeds, or $25, should be treated as income for the life cestui and twen- . ty twenty-firsts, or $500, should be added to trust capital. There is no reason for allocating the loss entirely to -capital or to income. No question of intent of settlor or mortgagor is involved. In foreclosing the trustee was attempting to get both back interest and principal, and he succeeded only . partially in his effort as to.each.” 4 Part 1 -Bogert, Trusts and Trustees, . 248, § 820. See also, 65 C.J. 822, Trusts, § 705.
It is undisputed that the judgment represented both principal and interest. This judgment was exchanged for land. It was used to buy land in other words. That portion of the judgment represented by interest and belonging to Mrs. H'ilde-brandt was therefore used to acquire or “buy” land, and as a result she became the equitable owner of the same proportionate interest in the land as she had formerly held' in the judgment. The doctrine of resulting trusts is applicable to the case. Neill v. Keese, 5 Tex. 23, 51 Am.Dec. 746; McCoy’s Heirs v. Crawford, 9 Tex. 353; Hix v. Armstrong, 101 Tex. 271, 106 S.W. 317; Watson v. Harris, 61 Tex.Civ.App. 263, 130 S.W. 237; Mauritz v. Bell, Tex. Civ.App., 81 S.W.2d 730, wr. ref.; Restatement of the Law of Trusts, §§ 430 and 455; 54 Am.Jur. 153, 161 Trusts, §§ 194 and 206.
The judgment of the trial court is reversed and the cause remanded for further proceedings not inconsistent with this opinion. ■