I concur with Mr. Justice O’Brien in the conclusion at which he has arrived. Under the deed of trust, there was transferred to the trustee $150,000 of the public debt of the State of Ohio. The income of the securities thus constituting the corpus of the trust was undoubtedly payable to Walter Langdon so long as the trust fund remained invested therein. These specific securities constituted the trust fund, and the trust deed having directed that the interest and income thereof should be paid to Mr. Langdon, the market value of such securities became entirely immate'rial. What Mr. Langdon was entitled to receive was the income realized from such specific securities which constituted the trust fund. When, however, the amount due upon those securities was paid, the trustee received the sum of $150,000, and that'sum of money then constituted the corpus of the trust. Mr. Langdon was entitled to receive the net income, not of any specific securities in which a trust fund had become invested, but the income received from that fund of $150,000. To realize such income, the trustees were required to invest the fund in one of four classes of securities — in the stock of. the United States, the stock of the State of New York or of the city of New York, or in bonds secured by mortgage on real estate. Upon the investment of that fund in securities of the character mentioned, Mr. Langdon was entitled to receive the income of the fund thus invested. He was not entitled to receive the principal, or any part of the principal, but the income only. That was the income upon the trust fund, viz., $150,000. When it became necessary to invest that trust fund in the securities directed by the trust deed, if such securities were at a premium, which premium would decrease as the securities approached maturity, it is quite clear that the payment of the whole of the interest received by the trustee upon such securities could *552not be made to the beneficiary without paying him, upon each payment'of'.the, interest receivéd, a portion .of the principal. In the case of United States bonds, leaving out of • view the fluctuation in price,, which would depend, upon ¡the credit of the government,, and the fluctuation in the rate of interest at which money could he . invested, it is apparent that, each payment of interest upon such bonds would represent a certain percentage paid for interest upon the investments and -also a certain percentage paid on account of the principal, viz., -the amount of premium which had been paid for the bonds.' If United States bonds, payable January 1, Í90J, were purchased in the year 1885 at twenty-two and seven-eighths per cent premium, in 1907 these bonds would be paid ¡off at par; consequently, if the total interest received for the bonds was paid to- the beneficiary,-when the bonds became due, the amount of the trust -;fund would be depleted by the amount of premium that had been paid, To obviate this result, some 'arrangement would be necessary . by which the amount, paid on -account of the principal, each year should be' retained by the trustee, so- that when the bonds came to-be paid,, he would have an amount -in his hands .sufficient to> make up the trust fund to its full amount, viz., $150,000 ; and that result could only be arrived at by his retaining a sufficient - amount of the interest received to accomplish it.
We are now dealing with .the case of’ a sum of money in the hands of the trustee which he was bound, to invest, and to pay the -income from that sum of money or trust fund to the beneficiaries. . In this , case such investment - was made, but instead of investing, the trust fund,, viz., $150,000, in such United States -bonds, receiving the interest from such bonds and retaining a sum sufficient to- make good the impairment of the,capital of the trust, upon the payment of the bonds at maturity, the trustee, with- the. assent of the beneficiary, took.the money of the beneficiary and invested'it with the trust fund, thereby securing a'larger amount- of United States bonds' than the trust fund alone.'.would furnish. It is clear that,the result of this proceeding would be that the amount of bonds held by the trustee would include a certain amount of bonds -belonging to the trust fund,, -and in addition thereto am amount-belonging to the beneficiary. " As the income was received by-the trustee it would have been entirely justified in -paying over to the beneficiary the total *553amount received, because it had of the United States bonds sufficient in amount to repay to the trust fund any amount in excess of the trust fund which it had paid to the beneficiary, and upon the final termination of the trust, if the trust continued until the time when the bonds should be paid, then the trustee would have the sum of $150,000 of the trust fund; but if the trust ended before that time, then the account could be settled by the trustee realizing by a sale of the bonds sufficient to make the trust fund good, and the balance would belong to the beneficiary as accrued interest, to which he was entitled Whatever form the arrangement between the trustee and the beneficiary took, it was the duty of the trustee to see that the trust fund remained intact, at least so far as any payment to the beneficiary was concerned that would reduce it below the amount at which the fund itself stood. I think there is nothing in this record to justify an assumption that either of the parties understood at the time that they were doing any more than this when the investment was made. The account, as it was sent to Mr. Langdon, showed a purchase by the trustees of $17,350 United States four per cent bonds, which, with the bonds previously purchased and held by the trustee, make an aggregate of $150,000 United States four per cent bonds at par. The account also showed that there had been transferred from what was called the income account to the principal account about $20,000, and that it was by virtue of- this transfer or, in other words, by an appropriation of money which belonged to Mr. Langdon, that these bonds had been purchased. It was that account that Mr. Langdon .accepted. There was nothing in this acceptance of the account to indicate an intention -on the part of Mr. Langdon to increase the trust fund by this amount; and I do not agree with the referee in his conclusion that such an acceptance of the account was in effect a gift by Mr. Langdon to this trustee of this sum of about $20,000, by which this trust fund was to be increased to that amount. It was a simple approval by him of the investment by the trustee of his money in United States bonds to be held by the trustee for him. After this transaction Mr. Lang-don allowed the interest upon this trust fund to accumulate with the trustees, except that it appears that on May 8, 1888, he received $17,100 in cash ; the balance of such income, excluding that invested *554in. United States' bonds, amounting to upwards of $48,000, having-been paid to'bis éxecutors. after his death. There is nothing except.. the mere entry transferring this $20,000 from income to principal,, that would indicate any intention- to treat these bonds in any differ-,' ent way from- -that of the other income of the trust fund which was. allowed to remain in the hands of the trustee, and Mr. Langdon’s. acceptance of an account which showed such -investment, was certainly insufficient to do more than estop-him- from objecting'to such, investment as an improvident one or not justified under the circumstances. There is no evidence to show that these bonds materially ' appreciated or depreciated between the time they were purchased- - and the-time of. Mr. Langdon’s death, except so far as their value, decreased because of the approach- of the period when they would be paid off at par, nor does it appéar that there was any increase or decrease of the principal of the trust fund by reason of an advance or decline of the -securities in which it was invested, arid upon the sale of these securities for distribution the'trustee should retain tire-trust fund, viz., $150,000, to be distributed under the trust deed,, and the balance .belongs to the. personal .representatives of .Mr. Langdon. .•
The judgment should be modified accordingly, and as modified,, affirmed. • ■ . -
Van Brunt, P. J., and Parker, J., concurred.
Judgment modified by directing payment to the' executors of Langdon of the amount in excess of $150,000, -less commissions to-the plaintiff, with costs to the appellants, and.as modified, affirmed-