By tbe last will and testament of Dan. Post, wbicb was admitted to probate in April, 1853, be devised to tbe plaintiff, bis wife, tbe use of and tbe right to occupy tbe'bouse and lot described in tbe complaint, situated in tbe village of Newport, so long as she remained bis widow. She has never remarried. After making several other devises and bequests to tbe said plaintiff and bis children, be, by tbe tenth clause of bis will, directed bis exebutors to distribute in equal shares all tbe remainder of bis estate, both real and personal, between bis wife, tbe plaintiff, and bis children, all of whom are mentioned therein by their respective names. Tbe provisions of tbe will in favor of bis wife were declared to be in lieu of her right of dower in bis real estate. William P. Benchley and Henry D. Safford were named as executors of the will, and they were given “ full power and authority to sell tbe real estate and to give and execute full and ample deeds of warranty therefor.” Prior to tbe 20th of January, 1865, Safford died, and on that day tbe surviving executor, Mr. Benchley, sold and conveyed tbe bouse and lot for tbe sum of $1,800, which was paid .to him and tbe plaintiff joined in tbe deed, and, for tbe consideration of one dollar, as therein expressed, released all her interest in tbe premises, but she never received any part of tbe $1,800 paid to tbe executor. On tbe same day tbe executor, in bis representative capacity, executed and delivered to tbe plaintiff a bond in wbicb tbe fact of said sale and conveyance and tbe terms thereof were recited and the one relating to tbe release *86by the plaintiff is as follows, viz.: “As a consideration for such release, it was agreed by and between the said William S. Benchley, as such executor as aforesaid, and the said Betsy Post, that the said executor should annually after the first day of March next during the widowhood of the said Betsey, pay or cause to be paid to her the sum of seventy five dollars.” The penalty of the bond was fixed at $1,072, the condition being that the said executor, as such, should pay to the plaintiff the sum of seventy-five dollars annually so long as she remained the widow of the testator. - The executor made such payment up to the time of the commencement of this action, which was on the 29th day of May, 1886. No distribution has ever been made of the said principal sum nor does it appear how the executor has kept and invested the same, or the amount which he has realized as interest thereon.
The plaintiff’s claim is that she is entitled to the net income derived from the said principal sum, and she brings this action to compel an accounting and the payment over to her of so much thereof as yet remains in the hands of the executor after crediting him with the payments already made. The defendant assumes the position that the said bond is in the nature of an agreement between the plaintiff and the executor, and, as such, is binding on her, and that its legal effect is, to exempt the executor from all liability to account to the plaintiff concerning the income derived from the said funds.
There is nothing in the case showing that the plaintiff and the devisees, who were entitled to the fund on the termination of the plaintiff’s widowhood, ever entered into any arrangement or agreement by which she agreed to accept the annual payment of seventy-five dollars in lieu of her interest in the house and lot or of the avails derived from its sale. It is not pretended that the plaintiff has, in any manner, given up or surrendered her right to the use and income derived by the executor from said principal sum, except so far us she may have done so by joining in the said deed and accepting the said bond with the legal obligations which it imposed upon her. The executors, before making the said sale, rendered an account before the proper surrogate of all their other transactions and paid over all moneys remaining in their hands to the devisees and legatees as required by the will.
The fund derived from the sale of the house and lot rightfully *87came into the hands of the suryiving executor, in his representative capacity, to be used and finally distributed as directed by the testator in his will. By the terms of the will the devisees mentioned in the tenth clause became vested with the title to the premises in question, 'liable, however, to be divested by a sale of the same by the executors, who were given the power to sell the premises for the purpose of making a distribution of the proceeds to and among the devisees. This power' of sale was absolute and unqualified without any specific directions when the house and lot should be sold. An authority given by will to an executor to sell lands, unless accompanied with the right to receive the rents and profits, vests no estate in the executor, but the lands descend to the heirs or pass to the devisees of the testator, subject to the execution of the power. (1 R. S., 729, §§ 56, 59; Crittenden v. Fairchild, 41 N. Y., 289; Morse v. Morse, 85 id., 53.)
In this case it is clear that the power of sale bestowed upon the executors, was for the purpose of making a distribution of the proceeds, when the time should ari’ive for it to be made, for by the tenth clause of the will, they are directed to make distribution of the remainder of the testator’s estate, and the house and lot would have constituted a part of such remainder, had it not been sold before the termination of the widowhood of Mrs. Post. The widow consented to the sale, and by the release which she executed, the purchaser acquired a perfect title to the premises. As between her and the purchaser, it was not in any proper sense a sale, for a consideration paid to her, of her interest in the house and lot. All the consideration was paid to the executor, and as the executor making the sale, was discharging a duty imposed upon him by the will, it is to be presumed that it was beneficial to all interested parties, and that the price paid was satisfactory to all concerned. By converting the land into money under the power of sale, the widow and the devisees of the remainder took the same interest in the proceeds as they had in the land. (Ackerman v. Gorton, 67 N. Y., 63-66,) No claim is made by the defendants, that by the1 conversion of the land into money, the estate of the devisees was-enlarged, or that they could enforce a distribution of the proce'e'dsat once, and thus deprive the widow of the use and the net income-of the entire proceeds. As the case is now presented, we are' not *88called upon to determine whether by the terms of the will the widow had the absolute right at her election to occupy the premises until terminated by her death or remarriage. She is given the use as well as the right to occupy the house and lot, and in equity the fund stands in the place of the land, and she is entitled to its use.
As the time of distribution had not arrived when the sale took place the executor, as trustee, was charged with the duty of preserving and investing the fund, and paying over the proceeds to the plaintiff. The plaintiff was one of the beneficiaries, and (1st), she was entitled to the entire net income; and (2d), as one of the devisees of the remainder, she was to share in the distribution of the principal fund if she should.at any time remarry. The executor, as such, had no power or authority to contract with the plaintiff binding her to receive less than the net proceeds. The income during her widowhood was her individual estate The contract which he made was not binding on the devisees, and if the income derived from the fund, should, from any cause, be less than the sum of seventy-five dollars per annum, he could not make up'the deficiency from the principal sum. He is not bound himself, personally, to pay to the plaintiff the stipulated sum mentioned in the bond. So that instrument, regarding it as containing a promise on the -part of the plaintiff to accept seventy-five dollars annually in satisfaction of the net income, and as a release of all the balance, was not available to her as a security that she should, during her widowhood, receive that sum as an annual income under all circumstances. To the plaintiff the undertaking was utterly worthless, as she could not enforce the promisedn either a court of law or equity: For these reasons, in determining the rights of the • parties in this action, I think the bond should be entirely ignored, because it is not binding •upon the obligor personally, or as the executor of the will. If the ■plaintiff and the devisees of the remainder had, at the time of the sale or since, as between themselves entered into an agreement to extinguish her interest in the fund by paying to her a gross sum or a fixed sum to be paid annually, and she had executed a release of her rights, under such an arrangement it would have been valid and binding. But no such position is taken by the defendant, nor has the referee found any fact which supports that view of the case.
We may now examine the defense upon the supposition that the *89bond is binding upon the defendant individually. The defendant, in bis answer, alleges that tlie plaintiff intended to release all her interest in the premises and in tlae purchase-price and received therefor and consented to accept the bond in payment and satisfaction of all her claim upon the fund or income thereof. In support of this part of the answer the defendant relies entirely on the bond and the recitals which it contains. No other item of evidence, as to the intention, is found in the case, nor has the referee found that there was any such agreement or arrangement upon the subject. I submit the recitals do not establish the fact that the plaintiff agreed to accept seventy-five dollars per annum in lieu of and as a full satisfaction of her right to the net annual income derived from the fund. It is only an admission that the executor has agreed to pay her seventy-five dollars per annum in consideration of such lease. It is to be presumed that the money, if properly invested, would produce a sum equal to the legal rate of interest, and the annual income would he a sum equal to that amount less the expenses of investment and taxes. The recital does not state that the plaintiff had released the executor from the performance of any of his duties which he owed her as a beneficiary of the fund.
A trustee or a donee of a power in ti’ust cannot trade and bargain with a beneficiary with a view of deriving any advantage to himself by the transaction. The l’ule is inflexible and applying it to this case, the executor, by his fiduciary character, was incapacitated to purchase, and neither upright intention on his part nor the payment of a fair price will overcome the legal impediment, and a court of equity will set aside the transaction on the application of the beneficiary, without requiring him to establish that the trustee acted fraudulently or profited by the bargain. (Boerum v. Schenck, 41 N. Y., 182; Hill on Trusts, 434; Cowee v. Cornell, 15 N. Y., 100.)
. The docti’ine of acquiescence, which in some cases may defeat the demand of the beneficiary for relief, has no application in view of the facts of the case. It does not appear that the executor has used a dollar of his own money in making the payments heretofore made, for the legal presumption is that the sum derived from the ■use of the fund exceeded the sums which he has paid over to the plaintiff. He has simply taken the plaintiff’s money to discharge *90his own promise, and such was the. substance of the arrangement he made with the plaintiff.
The interlocutory judgment requires an accounting concerning the interest and income of the fund from the day the sale took place. The referee has not determined whether the accounts shall contain annual rests or not, and whether interest upon interest should be allowed the plaintiff if it should appear that the net income was greater than the sum paid over to her. In determining that question the facts and circumstances which will appear upon the' accounting must be taken into consideration. It is not proper that we should make any intimation upon that subject, as it is one of the questions referred to the referee upon which he has not yet acted.
The statute of limitations constitutes no defense as to such sums as may be found to have been detained by the executor for the period of more than six years prior to the commencement of this action, as his fiduciary capacity was expressly imposed upon him by the terms of the will, and he was bound to take care of the interests of his cestnd que t/rust so long as the relation existed, and he could do nothing adverse to it. The rule that when one receives money in his own right, and he is afterwards by evidence or construction changed into a trustee, he may insist on the lapse of time as a bar has no application to this case. (Lammer v. Stoddard, 103 N. Y. 672; Price v. Mulford, 12 N. Y. St. Rep. 18 [Ct. of Ap.]; Perry on Trusts, § 863; Decouche v. Savetier, 3 Johns. Ch., 190; Kane v. Bloodgood, 7 id., 89.)
The judgment should be affirmed, with costs.
Bradley, J.:The will of Dan. Post gave to the plaintiff “ the use of and the right to occupy the house and lot and the out-buildings thereon,” so long as she should remain his widow.
I am unable to adopt the conclusion of the referee that this devise to the plaintiff was subject to the power of sale given to the executor by the will. The intention of the testator evidently was to give to her the right of occupancy of the premises during the time designated, and the power to the executor was not such as to permit, without her consent, the conveyance of the estate devised to her *91and the substitution for it of the income of the proceeds of sale. In view of the provisions of the will, the only essential purpose of the power of sale was for the division of the residuum of the estate amongst the residuary legatees and devisees, which, as related to these premises, was subject to this devise to the plaintiff.
The cited case of Crittenden v. Fairchild (41 N. Y., 289) does not seem to support the view of the referee in that respect. There the will gave and devised the remainder of the estate, real and personal, of the testator to several persons, to be divided between them, and gave to the executor full power and authority to sell his real estate, or any part thereof, and to execute deeds of conveyance. It was held that the devise to the residuary devisees was not' inconsistent with the power of sale, but was subject to it, because it was apparent that the power was intended and necessary to enable the executors to make the division and distribution amongst such devisees and legatees, and for that purpose the executors took a power in trust. In the case at bar there is no occasion to divest the right of occupancy given to the plaintiff, as the residuary legatees and devisees take subject to such .devise to her, and it is only for the purposes of the division between them that the power of sale apparently was intended to be exercised, and for that purpose only, it may be treated as a power in trust, as it does not appear that its exercise was necessary to pay debts, and the provisions of the will do not permit it for the payment of the specific legacies, because they are not charged upon the real estate, and there is no equitable conversion of the real into personal estate by the will. Ás the plaintiff-joined with the executor in the conveyance, the view relating-to the character of the power of sale and its exercise has no importance upon the question presented here, except in, its bearing upon the ■ relation existing between the executor and the plaintiff prior to and at the time of the sale and conveyance of the house and lot, as relates to the estate in it devised to her. There was then no relation of trustee and cestui que trust between them in that respect. The plaintiff was sui juris when she made the arrangement with the executor to join in the conveyance and to take an annuity of seventy-five dollars secured by his bond. The premises were sold for $1,800, he received the money, has paid the plaintiff seventy-five dollars annually pursuant to the agreement between them, and the residuary *92legatees and devisees are not entitled to the corpus of the fund, which is substituted for the premises, until the termination of the estate in it devised to the plaintiff, and then they will be entitled to only the principal sum of the fund. In the meantime the executor holds it as trustee for the benefit of all concerned.
This action is brought to require him to account to the plaintiff and pay to her the amount of the income of the proceeds of the sale in excess of the annuity so paid to her. The referee has found that the arrangement with the executor to pay the plaintiff such sum annually was without consideration; that it was the duty of the executor at once after the sale to invest its proceeds and pay the interest from the investment to the plaintiff; and that the burden of proof is on the defendants to show that the bargain made by their testator with the plaintiff was entirely fair, to relieve it from suspicion that it was otherwise, and directs an accounting for which an interlocutory judgment was entered. My view is not in support of the conclusion of the referee that there is any presumption that the transaction of the agreement between the executor and the plaintiff was unfairly had, conducted and consumated on the part of the executor, or that the duty was imposed ujion him to at once invest for her benefit the fund produced by the sale. At the time of making the agreement there apparently was not, nor does it appear that there was in fact any relation between those parties which, in any recognized legal sense, put the plaintiff into a position of disadvantage. And therefore the burden is not upon the defendants to relieve the transaction from suspicion of unfairness on the part of their testator. But he received and held the proceeds of the sale as trustee, and he had no right to speculate out of his relation and realize or appropriate to his own use or profit from it. The plaintiff notwithstanding her agreement was entitled to the whole income of the fund, less his reasonable expenses and commissions, and for that he may have been and his representatives may be required to account to her.
The inquiry arises as to the principles that should govern in respect to the accounting to be had. Ordinarily a trustee taking a fund not subject to call is required to use diligence in making it productive by safe investment at interest, and failing to do so will presumptively be chargeable with interest upon it. (Jacot v. Emmett,
*9311 Paige, 142; De Peyster v. Clarkson, 2 Wend., 17; 1 Perry on Trusts, § 462.) But this case is not within that rule by reason of the agreement before mentioned, by which the plaintiff agreed to take the sum of seventy-five dollars annually. And thus the executor was put at rest upon that as the extent of his liability. The plaintiff has for upwards of twenty years received from him that annuity without, so far as appears, raising any question as to its sufficiency to discharge his liability for income of the fund. This acquiescence may have resulted from her understanding that her rights were governed by the terms of the arrangement represented by his bond. And I think that such is its effect, unless it is made to appear that he did in some manner make an investment of the fund which produced an income beyond the amount so provided for and paid, and. that such claim is not established by presumption.
These views lead to the conclusion that by force' of such agreement between the plaintiff and the executor, the principle which is ordinarily applied to charge a trustee or guardian who receives a fund to take care of for his cestui que trust or ward is rendered inapplicable to the situation in this case, in so- far that there was no neglect of legal duty on his part to the plaintiff which charged him, in his omission to invest the money and derive an income from it, if he failed to do so. The question is one of the amount of income produced and not of failure or neglect to invest, or what might or ought to have been derived from it by investment. While some of the conclusions of the referee are'not in accordance with these views, the adjudication expressed in the judgment is not in any respect inconsistent with them. It simply determines that the plaintiff is entitled to an accounting and directs the defendants to furnish a copy of their account. And although the evidence does not show that the plaintiff will be entitled to recover anything upon the accounting it seems unnecessary to direct a new trial or to modify the judgment. The whole question can arise upon the hearing before the referee. And the question of costs can be disposed of on the entry of final judgment.
The judgment should be affirmed, costs of this appeal to abide the final award of costs.