In re the Judicial Settlement of the Accounts of Young

Parker, P. J.:

I am of the opinion that the decree of the surrogate in this matter is correct, except in so far as it allows, as a credit to the trustee, the item of $200 per month as extra compensation for his services.

Under the provisions of the will, it was his duty to account for and pay over all the “ net income ” realized from the estate. It was to ascertain how much of such income he had in his hands "that the accounting was ordered.

By “ net income ” is meant the income derived from the whole property less the necessary expenses incurred in its management and disbursements incurred on account thereof. That is, less such expenses and disbursements as the trustee might lawfully incur in its management. A payment to himself of $2,400 per year, in addition to his lawful fees, was not a lawful disbursement unless he showed that he had rendered extra services which were fairly worth that amount. There is no evidence that he rendered any extra services whatever. Nor does he base his claim to be credited that amount upon any such theory. He claims it entirely by virtue of an agreement made with all parties interested, under .date of May 20,1893, to the effect that he should “ receive and retain the further sum of $2,100 annually from the estate of Thomas Cornell,” etc. There is nothing in this agreement indicating that he was to perform any extra worh in consideration of this increased pay. On the contrary, he is to receive it “ as compensation for his services as executor and trustee.”

Such agreement did not make the expenditure of $2,400 a disbursement necessarily incurred in the management of the estate — one which it can be supposed the testator had in his mind when he created the trust. Hence, it cannot be used to diminish the net income of the estate. The net income, was the balance struck between all receipts and the necessary and lawful expenditures made, exclusive of this credit to himself as extra compensation.

Now, whether the agreement signed by Mrs. Cornell is or is not a valid one that can be enforced against her, I do not think the surrogate, in settling these accounts, had any right to consider. The thing which the surrogate was to ascertain, and which his decree was to distribute, was the net balance of income in the trustee’s hands. If the trustee had any agreement with the distributees, or either of of them, that excused him from paying over to either the whole or any part of his or her distributive share of such balance, such agreement would be available to him when called upon to pay; but the existence or validity of such an agreement was not a matter which could be litigated or settled in the Surrogate’s Court. (Matter of Underhill, 117 N. Y. 471; Stilwell v. Carpenter, 59 id. 414.)

The effect of the agreement between the beneficiaries and the trustee, that he might “ retain * * * from the estate ” a certain sum per year as an additional compensation for his services, was nothing more than a contract to pay him such amount, and possibly to give to him a lien for such amount upon their distributive shares. It did not operate to lessen the amount of the “ net income,” for which lie should account, nor to lessen the distributive share which the surrogate should adjudge to each. It is a serious question whether such an agreement is not prohibited by the provisions of section 63 (1 R. S. 730), and the determination of that question by the surrogate was not at all necessary to enable him to properly determine the amount of “ net income ” then in the executor’s hands for distribution. It was not within the scope of his jurisdiction upon that accounting to decree an enforcement of such contract as between the beneficiaries and the trustee. For this reason I conclude that the decree of the surrogate should be modified by striking out therefrom the item of $200 per month, allowed him pursuant to such agreement, and as so modified affirmed, with costs of both parties payable out of the fund.

Landon and Herrick, JJ., concurred ; Putnam and Merwin, JJ., dissented.