Farmers' Loan & Trust Co. v. Turner

• Decision Date: 30 March 1926
• Citation: 242 N.Y. 240,151 N.E. 439
• Parties: FARMERS' LOAN & TRUST CO. v. TURNER et al.
• Court: New York Court of Appeals Court of Appeals

242 N.Y. 240

151 N.E. 439

FARMERS' LOAN & TRUST CO.

v.TURNER et al.

Court of Appeals of New York.

March 30, 1926.

Action by the Farmers' Loan & Trust Company, individually and as trustee under the will of Herbert B. Turner, deceased, against Elizabeth M. Turner, individually and as executrix of Thornton F. Turner, deceased, and others, for the purpose of settling its account as trustee. Judgment settling the account, entered on a report of a referee was unanimously affirmed by the Appellate Division (209 N. Y. S. 830, 213 App. Div. 866), and plaintiff appeals by permission.

Affirmed.

1. Trusts 316(2)

Trustees' commissions are the same, whether action for settlement of account be brought in Supreme Court, or whether proceeding be instituted in Surrogate's Court (Civil Practice Act, § 1548; Surrogate's Court Act, § 285 [Laws 1920, c. 928]). Since Civil Practice Act, § 1548, and Surrogate's Court Act, § 285, should be construed together, trustees' commissions are the same, whether action for settlement of account be brought in Supreme Court, or whether proceeding be instituted in Surrogate's Court.

2. Trusts 316(2)

Trustee, having paid to itself mortgages held on testator's property, is not entitled to commissions on amounts of mortgages but only on amount of testator's equities in property (Civil Practice Act, § 1548; Surrogate's Court Act, § 285 [Laws 1920, c. 928]). Under Civil Practice Act, § 1548, and Surrogate's Court Act, § 285, trustee, having paid mortgages held by itself on testator's property out of proceeds of life insurance policy and contributions from testator's children together with proceeds of sale of property, is not entitled to commissions on mortgages, but only on amount of testator's equities in property.

Appeal from Supreme Court, Appellate Division, First department.

C. Alexander Capron and James D. Ouchterloney, both of New York City, for appellant.

John B. Warner and Harry C. Miller, both of New York City, for respondents Lorentzen and others.

Russel S. Coutant and Hall Park McCullough, both of New York City, for respondent Turner.

McLAUGHLIN, J.

A single question is presented by this appeal, and that is the commissions to which the trustee is entitled under the last will and testament of Herbert B. Turner.

The testator, a resident of New Jersey, died on the 8th day of July, 1903. At the time of his death he owned two pieces of real estate in the city of New York. This real estate, with certain personal property, he gave and devised to the plaintiff in trust for certain purposes specified in his will. He had upwards of $50,000 life insurance. The real estate was subject to mortgages thereon aggregating $200,000. One of the pieces of real estate was located on Madison avenue, New York City, upon which there was a mortgage of $160,000, made by the decedent to the trust company individually, and held by it at the time of his death. The other piece of real estate was on Twenty-Eighth street, New York City, and that was subject to a mortgage of $40,000, made by the decedent to the trust company individually, and held by it at the time of his death. He expressed in his will a desire that his children should add or contribute to the life insurance fund enough to make $60,000, which amount should be used by the trust company in reducing the mortgage on the Madison avenue property to $100,000. His children, in obedience to his desire, paid to the trust company a sum sufficient to make, with his life insurance, $60,000, and that amount the trust company paid to itself, thereby reducing its mortgage from $160,000 to $100,000.

The trust company subsequently sold the Madison avenue property for $400,000, and out of the purchase price it paid to itself, in satisfaction of the balance due on the mortgage thereon, $100,000. It sold the Twenty-Eighth street property for $75,000 ($20,000 cash, and a purchase-money mortgage for $55,000). At the time the sale was made, the trust company individually held a mortgage on that property for $40,000, and out of the purchase price it paid to itself $20,000 in cash and assigned and transferred to itself individually a participating interest to the extent of $20,500 in the purchase-money mortgage.

The receipt of the purchase price for both parcels, and the satisfaction of the mortgages thereon, were simultaneous transactions, and deeds of conveyance were not delivered to the purchasers until the trust company, as mortgagee, had received the full amount of the mortgage incumbrances in the manner above indicated.

This action was brought in the Supreme Court for the purpose of settling its account as trustee under the will of the testator. The only issue raised on the settlement of its account was the amount of commissions to which it was entitled. This issue was sent to a referee to hear and determine. The referee reported that the trust company was entitled only to commissions on the testator's equity in the real estate mentioned. Judgment was entered on the report, and the trust company appealed to the Appellate Division. The Appellate Division unanimously affirmed the judgment, and, by permission, this court allowed an appeal to it.

I am of the opinion that the judgment is correct and should be affirmed. The plaintiff, as trustee, was entitled only to commissions on the testator's equity in the real or personal property received or paid out. It did not actually and in fact receive or pay out the amount of the mortgages. It is true that it did in form receive and pay out that amount, but only in form. The testator at the time of his death did not own or have any interest in the real estate referred to, except his equity therein. The mortgages were...