I agree generally with the construction given by the learned referee to the will of William Kemp, deceased, although not without sharing in the misgivings he evidently entertained as to the validity of the 7th article. I am not, however, able to concur in the affirmance of the judgment appealed from in so far as it surcharges the accounts of the plaintiffs and imposes a personal liability upon them for a large sum of money which, as it is found, they should have, but did not retain out of income in order to create an amortization fund to meet the depreciation in capital value of certain securities purchased by former trustees at a price above par and turned over to these plaintiffs by order of the Surrogate’s Court after an accounting by said former trustees. The original investment in such securities was authorized by the will, which gave broad powers in this regard to the trustees, and such investment is not now claimed to have been improvident, as indeed it could not well be after the approval thereof by the Surrogate’s Court.
The will made a somewhat unusual provision for the payment of income to the testator’s widow and children. He created, as the will has been construed, several trusts for the benefit of each, and provided in terms the minimum income that was to be paid to each, the amount of the trust being originally *126measured in each case by the amount necessary to provide the minimum income to be paid over. It was not until January 2, 1909, more than a year after the commencement of this action, that the trusts thus created were able to provide even the minimum incomes designated by the testator as those to be paid to his widow and children, and up to that time the trustees retained no part of the income to create an amortization fund. They did, however, from and after January 1, 1909, commence to set aside such an amortization fund.
The question as to when and under what circumstances trustees should set apart income to make good the shrinkage in capital value of securities purchased at a premium above par has been much discussed in this State, and cannot be said to have been put at rest until the decision of the Court of Appeals in Matter of Stevens (187 N. Y 471), which was handed down in February, 1907. Prior to that time it had been held, in Matter of Hoyt (160 N. Y. 607), that the question as to how the loss, occasioned by the payment of premiums on investing the principal of a testamentary trust fund, should be borne as between the life tenant and remainderman was to be determined by ascertaining, when that could be done, the intention of the testator as expressed in the will creating the trust, in view of the relation of the parties and surrounding circumstances. As was justly remarked by Chief Judge Culler in Matter of Stevens (supra), no trustee could know how to safely act under such a rule.
The rule was finally settled by the Stevens case, followed by Robertson v. de Brulatour (188 N. Y. 301), that in the absence of a clear direction in the will to the contrary, where investments are made by the trustees, the principal must be maintained intact from loss by the payment of premiums on securi-' ties having only a definite term to run, while if the bonds are received from the estate of the testator, or had been specifically bequeathed, the whole interest should be treated as income.
Both of the cases last cited, however, concede that the. rule requiring the creation of an amortization fund with respect to securities purchased by the trustees, will be applicable only where, as is said in the Stevens case, there is no “clear *127direction in the will to the contrary,” or, as is said in the Robertson case, “where the will affords no aid upon the subject of the testator’s intention.” The learned referee has applied the rule in its full rigor in the present case, finding nothing in the will to indicate a different intention on the part of the testator. I think on the contrary that such a different intention is very clearly expressed. The direction to the executors and trustees in each case runs as follows: “ I direct my executrix and executors hereinafter named to set apart out of my estate such sum as will be sufficient to provide an annuity or annual sum [of a specified amount] over and above all taxes, expenses and charges connected therewith * * * and to collect and receive the income thereof, and out of the net income thence arising to pay over to or apply to the use of” the beneficiary named a definite sum which varies in amount in different cases.
It is plain that the predominant purpose of the testator so far as concerned these several trusts was that each beneficiary should receive at least the annual income specified in each case and the amount to be set apart as a trust fund was measured by its ability to produce such income. It seems to me that it is quite clear that it could not have been within the intention of the testator that the several sums thus provided to be paid should be reduced, except by unavoidable taxes, charges and expenses, below the minimum fixed by him for the benefit of the remaindermen who, to some extent at least, will profit doubly, if the judgment herein be affirmed, in having been paid more income than they should have received and then having the amount so paid returned to the estate by the trustees individually. Furthermore, as it seems to me, the surcharge of the trustees’ accounting is very inequitable. It is a legal maxim that every man is presumed to know the law, but it frequently expresses a legal fiction, and it certainly implies unusual acumen on the part of these trustees to charge them with knowledge before the decision of the Court of Appeals in the Stevens case that the law required them under such a will as they were engaged in administering to cut down the annual income specifically provided for by setting up an amortization fund.
*128In my opinion the judgment appealed from should he modified in the respect indicated and as modified affirmed, with costs to the appellants payable out of the estate.
Ingraham, P. J., Laughijn and Clarke, JJ., concurred.