The question to be determined on this appeal is that involved in the controversy between the defendants entitled by the terms of the trust deed to the principal of the trust estate, and the personal rej)resentatives and some of the legatees of Walter Langdon, who was entitled to the income, as to certain transfers from income to principal, and the charges against income of the amount of premiums paid for the government bonds upon the change of investment made during the trust term. It is urged that this question is to be resolved by some hard and fast rule, such as has been laid down by certain English authorities, which hold that no part of the income of a trust fund can be taken from a life tenant to make good to the remaindermen the premium-paid in making the investment, which rule, it is claimed, has been applied in two leading cases in the State of Massachusetts (Shaw v. Cordis, 143 Mass. 443; Hemenway v. Hemenway, 134 id. 446); or by the rule claimed to have been established by legal authorities in this State, that where, in the investment of the principal of a trust fund a premium is paid on the purchase of securities, such premium is in the nature of an advance from principal which the remaindermen are entitled to have repaid to the principal (People ex rel. Cornell v. Davenport, 30 *546Hun, 177; Farwell v. Tweddle, 10 Abb. N. C. 94); or by. what is spoken of .as the sinking, fund theory, according to which a trustee ' who buys bonds at a price above their par value-should' create a sinking fund by setting aside a part of the yearly interest on such bonds to offset their depreciation, in value caused by the approach of the day of maturity.
.That.no universal rule can be formulated, and. that each case' should be dealt, with as it. arises, we think, becomes evident, not alone from, the various views entertained in particular cases, but from a consideration of the elements that should be taken into account'with respect to each particular case, only a few of which need be mentioned. As in wills, so in the construction of trusts, the first thing.to be ascertained is the intention of the creator of the trust. When this is clear and explicit it-is the duty of the trustee to carry out such intention regardless of whether it may be., to the advantage of the ,'life tenant or -the remainderman.. Thus, if the trust instrument provides that a fixed sum or fund shall be invested •in United States bonds, then selling at a premium, and that the- ■ entire income arising therefrom shall be paid to the life tenant,, it is ■the duty of the trustee to purchase such securities,, paying therefor whatever premium is necessary, and without, diminution pa’y the entire income to the cestui que trust. Cases, however, arise where explicit directions are not given to the trustee, and where the.intent is not clearly expressed, and then the rule to be adopted must be one that will secure substantial- justice as between ■ the life tenant and ; the remaindermen. Here the primary. motive- of Hr. Astor was undoubted solicitude for. his grandson, the life tenant, Walter Lang-don, for whose benefit the trust was originally - intended, and to whom was given.the right -by will to apportion among his children: the corpus of the fund after his death. The deed of trust provided ' that the' investments to be made by the trustee should be with the consent and approval of Walter. Langdon, the life tenant, and it is to be inferred from the facts.appearing that it was' so. done, The deed of trust, while permitting an.' investment in United States securities, did not limit the trustee to such ait investment, but upon .. a change of investment allowed him to reinvest “in the stock of the United States or of the State of New York or of the city of New York, or in bonds secured by mortgage of improved, and productive1 *547real estate.” It was executed in 1847, and the reinvestment was made when the .Ohio bonds became due in 1881. At the latter date, the trustee with the assent of Langdon selected the highest form of security in which to invest; and if Langdon.were permitted to receive the whole income during life it was certain that as the United States bonds neared maturity they would become of less value, and the principal sum to that extent would be diminished. There is nothing in the language of the deed of trust which expressly authorized the trustee to impair the corpus of the fund for the benefit of the life tenant, and the trustee might well have questioned his right and hesitated to pay the large premium required to secure the government bonds to the injury of the remaindermen. "With the assent, however, of the life beneficiary, he might have, adopted either one of three courses: (1) The premiums might have been charged against the income at the. outset; or (2) the burden might have been divided and distributed over the years which would elapse before the maturity of' the bonds; or (3) he might have provided for the retention by him of sufficient of the income by way of security against any loss.
This last was apparently the course adopted, because we find that (with one exception, when part was drawn) all of the income was allowed to remain in the hands of the trustee and was invested by him and carried ■ along in the same account. The form of such account shows that when an investment of the accumulated income was made by the trustee lie charged it to principal; and thus the accounts were kept, presumably with the knowledge and assent of the life beneficiary. This method of bookkeeping, however, and a letter which appears in the record, wherein we find that Langdon upon receiving a statement of the account writes to the trustee, saying “ all of which I accept,” have been made the foundation for the conclusion reached by the learned, referee that Langdon thereby ■intended to assent to the application of his entire income to the increase of the capital of the trust fund so that upon his death it went to his next of kin who were entitled as remaindermen to the corpus of the fund.
Apart from the disputed question as to whether a portion of the income should go to make good the sum paid for premiums, it is conceded that the balance was the property of Langdon, to which *548he was ,at all times entitled,, unless upon some facts or principle of law he at some- time lost the right - to claim it. These, it is insisted ' are to be found in his assent to the application which it is said was made by the trustee of the income to. increase the principal of the trust fund, as sliowm by the expression, already referred to in his letter, by which in respect to a certain account sent him he said, “ all of which I .accept.” Such action we do not think operated as a. gift or. an estoppel, because the elements, to constitute either are. Wanting But it is-insisted that it acted by way of ratification which, whether revocable or not during Lángdon’is' lifetime, is conclusive upon .his ■ executors after his. death. This insistence is supported by an argument that the original action of the trustee being unauthorized, the assent of Langdon thereto effected a ratification which was binding : upon his executors.. ; • • •
The principles applicable to ratification and acquiescence are well stated in Adair v. Brimmer (74 N. Y. 539). ' And in' Cumberland Coal & Iron Co. v. Sherman (30 Barb. 575) it is said : “ 2. The confirmation must be a solemn and deliberate act — not, for instance, fished out from some .expressions iii a letter”,—that the court will watch it with the utmost strictness and will not allow it to stand but on the very clearest evidence; that -the cestui que trust must be honestly made acquainted with the material circumstances of the case — “ The confirming party must not be ignorant of the law / that is, he must be aware that the- transaction is of such a character that he could impeach it id a court o.f -equity.”
Acquiescence, .therefore, with full knowledge, of -all the 'facts implies active consent, and' is not to be spelled out from doubtful or ambiguous acts. We find, no evidence to' show, that Langdon thought that his' legal right to the accumulated income-in the hands of the trustee would be in ■ any way affected or impaired by the method adopted by the trustee in keeping the accounts, or that he ' knew .or understood that the trustee was making an illegal application of his money. Kór do we think the trustee was. making . such1 application, because, taking into consideration tlié acts and ■ conduct of the trustee and Langdon, the whole transactions are susceptible of a different and more reasonable -construction. Lang-don in liis lifetime had a perfect right, to allow the .income which belonged to him to accumulate and to remain in the hands of the *549trustee. lie had also the right to permit or direct the trustee to take his income and invest it, and there being no prohibition against such action, it was competent for the trustee to invest it in the very-same class of securities in which the trust fund was invested. Such conduct did not estop or prevent him at any time from asserting his ownership to the money which belonged to him and which he permitted the trustee to retain and invest. The trust deed provided that the investments were to be made with the approval of Lang-don. We have the fact that he knew the character of the investments, and it is a fair inference that, with such knowledge, he approved of them.
After the sale of the Ohio bonds, the investment in government bonds, for which a high premium was paid, shows that the trustee with Langdon’s approval selected the highest class of securities, and to provide against the possibility of any loss by reason of the payment of such premium, Langdon left in the hands of the trustee this accumulated income, which was invested and remained with the trustee. Beyond an amount sufficient to protect the trustee, Lang-don had the right to claim, and could at any time have claimed and withdrawn, such moneys or the securities into which they were converted. It is a fair presumption that the intention of leaving such income with the trustee was to prevent at all time the capital of the estate from being in any way diminished or depleted and to save harmless the trustee from any possible liability.
We do not think, therefore, that the facts. support the presumption indulged in by the learned referee, that Langdon transferred or assigned or gave his income to the trustee to be added to and made a part of the principal. Unless he had done so by some formal act or in some way by which he was estopped—- and none of the elements of a gift or estoppel are present — we fail to see why it would not have been entirely competent for Langdon at any time to withdraw his income accumulated over and above an amount sufficient to protect the trustee and-to leave the principal of the fund intact. If we take this latter view, which is the more natural and reasonable one, instead of assuming that he turned over or assigned his income to the trustee, then the letter, which is regarded as creating in some way a ratification, a "gift or an estoppel, is made clear and unambiguous. • If the trustee was investing the trust fund, and *550in connection therewith was' investing. Langdo.n’s surplus income in the same securities, nothing would' be more natural than that, upon receiving an account of investments made, in accordance with his views, Langd.on should have' written that. he accepted the account.. This would be but another way of saying that he approved of the character of • the investments and acquiesced in the correctness' of the figures contained in the account. But it was a strained and unreasonable view and .one unsustained by .authority to hold, because- a person allows his income to. accumulate -in the hands, of the. trustee of the fund out. of which the income arises, and because such income is invested in.the same securities as the principal and is carried by the trustee in the same account, and both the principal and the accumulated income thus invested are made the basis for a new fund- from which income is derivable, that it "will be assumed that the person owning the income so invested has turned it over to the principal fund; so as to deprive himself of- its ownership and thereafter to estop himself or -his executors after- his -death from claiming it as. his property, Giving to the letter all the'force that, may be claimed foi it, yet, when read in the light of the actual transaction, we think it would, be placing, as said, a strained construction upon it to hold that it operated -by way of assent or ratification as an assignment and transfer of all Langdon’s interest in money which was eonceded-ly his, or that it was evidence of an intention on his . part to divest himself of all. right, title, and interest, therein. It is clear that Langdon, during his. lifetime and subsequent to the writing of the letter, had the right to withdraw the income; and we think it equally clear that his ownership continued until’his death. The only effect of the transaction between. Lang-don and the trustee was to invest the trust fund in a way not -only safe but most agreeable to them, and, in order to make up any depreciation, to provide an additional fund more than' sufficient to offset any sums paid by way of premium, so that all question as to the trustee’s, liability, for depreciation in the .amount -of capital would he avoided.
Our conclusion, therefore, is that,, in accordance with the intend ' tion of the life, tenant .and trustee, and in accordance with''a rule that works substantial justice, so much of such accumulated income as is needed to keep intact the fund of $150,000 should be applica*551ble for that purpose, and that beyond that amount it should be held to be, as it was, the property of Langdon, which upon liis death belonged to his executors.
The judgment should be accordingly modified by directing payment to the executors of Langdon, less commissions to the plaintiff, of the amount in excess of $150,000, with costs to the appellants.
Williams and Parker, JJ., concurred.