This is a bill in equity by which the widow of David M. Kinmonth seeks to enforce against the executors and trustees of her deceased husband a trust created by bis will.
The material facts presented by the bill and answers are these. The testator, who died February 22, 1860, by his will, after certain specific legacies therein set forth, bequeathed the whole, residue of his estate to trustees, in trust to invest the same carefully, and to keep the same safely invested, and as often as once in each year, to divide the net income thereof into three parts, one of which they should pay over to his wife, during her natural life. The same persons were named as executors and trustees.
A part of his estate was his interest in a limited partnership, which was formed September 4, 1858, to continue for four years; and to which he had contributed $50,000, as special partner. By the articles of partnership he was to be entitled to one half of the profits, and might withdraw the same semiannually ; any balance of profits left in the business was to be on interest; he was to bear one half the losses, to the extent of his capital invested, and make good the same semi-annually; and at the end of the term the general partners were to take the stock, fixtures and goodwill, and to pay over to him the capital which he had contributed, and the net profits then due. It was alsc provided that if either of the general partners should violate any of the partnership covenants, the testator and his representatives should have the right to dissolve it, and take possession of the stock, stand, property and business,, and carry on the business on his or their own account; and that in case of the death of either of the general partners within two years, the partnership should continue till the time of the next semi-annual accounting, *276and the testator and bis representatives should then have the same right to take the property and business. By the will, the executors were authorized not to avail themselves of this last provision, unless they should see fit.
The business had .been established and carried on by the testator, previous to the formation of the special partnership. The special partnership has proved extremely profitable, the testator having received a large sum as profits before his death; and the executors have received as profits and capital, $158,558.44 since their appointment.
The plaintiff seeks to compel the executors to distribute the sum of $108,558.44, as the net income of the estate.
The case has been most ably and thoroughly discussed by the counsel for the respective parties, upon principle and authority , and it will be sufficient to state briefly the result at which we have arrived.
The English rule is perfectly well settled, that where the residue of personal property is left without specific description, and is given in succession to a tenant for life and remainder-man, it shall be invested in a permanent fund, so that the successive takers shall enjoy it in the same condition, and with the same productive capacity. The reason of the rule is the obvious and just consideration, that the intention of the testator is expressly declared to give the enjoyment of the same fund to the successive takers; and that this can only be done by fixing the value of the fund at the time when the right of the first taker to its use commences. The leading case is Howe v. Dartmouth, 7 Ves. 137. This was followed by Fearns v. Young, 9 Ves. 549, where the doctrine was applied to the case of money invested in a partnership at the death of the testator. Many of the subsequent cases are collected and reviewed in 2 White & Tudor’s Lead. Cas. in Equity, (Amer. ed.) 278 & seq., in the notes to Howe v. Dartmouth; and these, with others, have been carefully presented in the argument of this cause.
In the application of this rule, the English courts of chancery by a long course of decisions, have determined that an investment in the three per cents, is to be generally regarded as the *277only investment which will be sanctioned or directed by the court as safe and permanent; though, in a few cases, a reference has been made to a master to find whether an existing security at a higher rate of interest is not absolutely safe, and more beneficial to all the parties. Caldecott v. Caldecott, 1 Y. & Coll. 312, 737.
But wherever property is specifically bequeathed, or where the intention can be gathered from the whole will that it should be enjoyed in specie, the rule does not apply.
And the rule itself, so far as it requires an investment in public securities, has never been adopted in this commonwealth. As was said by Chief Justice Shaw, in Lovell v. Minot, 20 Pick. 119, “ there are no public securities in this country, which would answer these requisitions of an English court of equity.” The only rule which has been recognized by this court as obligatory upon a trustee in making investments is, that he shall act with good faith, and in the exercise of a sound discretion.
In Lovell v. Minot, an investment by a guardian in the promissory note of a person in good credit, secured by a pledge of stock in a manufacturing company which was then selling in the market at above its par value, at the rate of about three quarters of its par value, was held to be made with sound discretion.
In Harvard College v. Amory, 9 Pick. 446, an investment was made by trustees under a will, of a fund, the profits and income of which were to be paid to the testator’s widow for her life, and after her decease the fund to be distributed. It was held that the trustees were authorized to invest in the capital stock of an incorporated manufacturing company, and of an incorporated insurance company; and that the actual profits and dividends received from such investment were rightly paid to the widow. The will itself expressly empowered the trustees to invest the fund “in safe and productive stock, either in the public funds, bank shares or other stock, according to their best judgment and discretion; ” and enjoined attention “ in the choice of funds, and in the punctual collection of the dividends *278interest and profits thereof.” A large part of the testator’s property consisted of manufacturing and insurance stock.
But although in this commonwealth there are no investments regarded as so absolutely secure as to make a choice of them obligatory upon trustees, and in all cases a considerable latitude is allowed, yet it has never been held that trustees for successive takers were at liberty to disregard the security of the capital, in order to increase the income. Nor, where property is of a wasting nature,, is an investment in it consistent with their duty, in the absence of specific directions in the creation of the trust. They are equally bound to preserve the capital of the fund for the benefit of the remainder-man, and to secure the usual rate of income upon safe investments for the tenant for life; and to use a sound discretion in reference to each of these objects. If there is no specific direction, and they are charged merely with the general duty to invest, they cannot postpone the yielding of income for the increase of the capital, nor select a wasting or hazardous investment for the sake of greater present profit. And the rule is the same in regard to property which comes to the trustees from the testator, not specifically bequeathed, as it is in regard to making new investments. If the investment is not such as this court would sustain them in making, it should not be allowed to continue, but should be converted. Its value as a fund should be ascertained as of the time when the enjoyment of the income of it is to commence; and the fund treated as if it had been at that time converted into such an investment as the court would sanction. In determining this value, it is not always practicable to settle it with exactness, until the conversion is actually made; especially in cases where the capital is more or less at risk. The most just rule seems to be, where reasonable care and prudence have been used by the trustees in making the conversion, to treat the whole sums received from time to time, until converted, as parts of the estate; and to find what sum at the time to which the conversion has reference would be equivalent to the amount actually received, at the time it was received; and to treat that sum as capital, and the remainder as income. Thus if the residue *279consisted of notes or obligations payable at a future day, without interest; and the tenant for life were entitled to the income from the death of the testator; when the money was received, so much of it only would be treated as capital, as, if invested at the death of the testator, would have produced the whole amount at the time the notes or obligations were payable; and the rest would be income. If the property were embarked in a commercial adventure, or were in the shape of a bottomry bond, or other hazardous condition, the trustees would be required to use suitable skill and caution in collecting whatever could be obtained from it, and the value of whatever was or ought to have been realized from it would be fixed as of the time of the testator’s death, and treated as capital. And on the other hand, where the property is of a wasting nature, as terminable annuities, leases, or the like, the value of the whole investment at the testator’s death should be ascertained, and what should be regarded as income be computed upon that basis.
In applying the principles which we have stated to the case at bar, it is conceded that the income to which the plaintiff is entitled should commence and be computed from the death of her husband. We are of opinion that there is nothing in the will which indicates an intention that she should enjoy the income of any particular property which the testator possessed, in specie, but the whole residue was to be alike subject to investment by the trustees. The reference to the special partnership is only in connection with instructions to the executors as to their duty in a certain contingency. In the next place, we cannot regard the investment by a special partner in a trading partnership as such an investment as the court would sanction. It is obviously difficult, in this case, to determine what was the value of the investment at the testator’s decease, by any other mode than a computation based upon the whole product ultimately realized from it. It included not merely the fifty thousand dollars contributed by the testator to the enterprise, but the interest in an established and lucrative business, with the right to the services, for a fixed period, of all the general partners. The *280whole was at risk until the partnership concerns were all settled It somewhat resembles property invested in a ship, or upon a whaling voyage, or long commercial adventure; from which returns are received from time to time, but with liability to losses which may require the whole to be refunded; and where the successful progress of the enterprise so far may have enhanced the value of the property far beyond its original cost. We think such returns could not be justly treated, between tenant for life and remainder-man, as the income of an investment.
We think, therefore, that upon a just construction of the will, equity will require that the profits received by the executors from the special partnership should not be regarded or treated exclusively as income, but that they be treated, when received from time to time, as property belonging to the estate, a part of which is to be invested as capital, and a part distributed as income ; which parts are to be ascertained by finding what sum, if received at the death of the testator, would amount with interest at six per cent., and making annual rests, to the sum actually received, at the time it was received; and that the sum so found should be invested as principal, and the remainder distributed as income.
The costs of the litigation are to be paid from the whole fund.
Decree accordingly..