#### In the Matter of the Judicial Settlement of the Account of Charles Froelich, Substituted Trustee of the Trusts Created under the Last Will and Testament of Andrew Froelich, Deceased, Respondent. Caroline Wolf, Appellant.

Second Department,

November 29, 1907.

Will construed — trust with direction to carry on business — When trustee should not charge himself with rent — when prior decision and accounting not res adjudicata — when trustee not personally chargeable with loss — salary of trustee conducting business.

In construing a will all its clauses and provisions must be read together in deter- . mining the intent of the testator, and his intent so gathered controls.

A devise of the residuary estate in trust with direction to apply tho income to the execution of numerous trusts, among them the continuance of the testator’s foundry business until the youngest child shall arrive at twenty-one years or so long as the net profits of the business shall yield ten per cent upon an investment of §50,000, etc., should be construed to mean that the testator intended that the building in which the foundry was formerly conducted should be treated as part of the investment in the business and should be' used by the trustee therein without charging himself with rent for the benefit of another trust.

Such being the plain intent of the testator, a substituted trustee is not estopped from asserting such construction although his predecessor had charged herself with rent.

A prior decision- construing said will is not *res adjudicata*upon that question, if the record contained nothing relating thereto either directly or by inference.

Although the accounts of the former trustee charging herself - with rent of the foundry were approved by the Court,, the decrees do not estop a substituted trustee from asserting that the rent should not be paid, especially when the former trustee paid herself the rents as beneficiary of another trust and has not been led to act to her prejudice.

Although said business was to be carried, on only so long Is the'net profits should yield-ten per cent upon an investment of §50,000, a trustee carrying on the business should not be personally charged with a net loss of about §2,000 in the absence of. evidence of any negligence or mismanagement, if the loss appears to have been due to competition. A reasonable latitude should be allowed the trustee in determining whether or not the business was capable of. making the profit required.

An executor or trustee is only' entitled to a salary for carrying on a business in addition to his commissions when the services rendered are outside of the duties imposed by the trust, or were rendered under a special agreement with *441the interested parties. Where the will expressly provides for compensation to the trustee for conducting a business, the services rendered are those imposed by the will, and he is not entitled to a salary in addition to commissions and the testamentary provision,

Appeal by Caroline Wolf from a decree of the Surrogate’s Court of the county of Kings, entered in said Surrogate’s Court on the 22d day of December, 1906, settling the accounts of Charles Froelich as' substituted trustee.

*Joseph M.*Gazzam, *Jr. [Darwin, J. Meserole*with him on the brief], for the appellant.

*James Troy [John E. Bullwinkel*with him on the brief], for the respondent.

Woodward, J.:

The testator’s will was probated by the- surrogate of Kings county in the year 1886. By the 3d clause of the will a trust was created. It reads as follows:

> “ *Third.*I give, devise and bequeath all the rest, residue and remainder of my property, real and personal and mixed of what nature and kind soever and whatever the same may be at the time of my death to my friend Lewis S. Goebel and to my brother Philip Froelich in trust nevertheless to take charge of my real estate, collect the rents and income thereof, and out of the same pay all taxes, assessments, water rents, insurance, premiums, and all moneys necessary to keep the buildings upon the said real estate in good repair and condition.

> “ And upon the further trust to pay over one-half of the net rents, and income of my said real estate to my wife Caroline Froelich quarter yearly for the support and maintenance of herself and my minor children and in lieu of dower.

> “ And upon the further trust to apply the remaining one-half of said net rents and income to the payment of any mortgage or mortgages that may be liens upon said real estate.

> *“*And upon the further trust after the payment of all mortgages upon said real estate to invest the said one-half of said net rents-and income upon bond and mortgage upon unincumbered real estate *442in the City of New York- or Brooklyn for the benefit of my children. ' -

> “ And upon the further trust to take charge of my stove fixtures and stove trimming business in the City of New York, City of Newark, New Jersey and foundry in the City of Brooklyn together with all the stock of goods ón hand, material, fixtures, machinery patterns, tools, implements and appurtenances; also all book accounts, outstanding claims and in short everything connected with , my said business.

> “ And. upon the further trust to continue the said business and carry on the sainé and to continue to carry on the same until my youngest child shall arrive at the age of,twenty-one years, or as long as the net profits of said business shall yield ten per cent, upon an investment of fifty thousand dollars.

> “And n]j>on the further trust to sell and discontinue said business whenever my said executors and trustees shall deem it for the best interest of said estate- so to do. • •

> “ And upon the further trust to retain' out of the net profits of said business the sum of ten per cent, of such net profits as compensation to my executors and trustees for their services in the management of the said business. Said sum of. ten per cent, to be in addition to the lawful commissions allowed them as executors and trustees.

> ■ “ And upon the further trust, to invest the net profits and income from said business, after deducting the said ten per cent, compensation to said executors and trustees - upon bond and mortgage uponunincumbered real estate in the City .of New York or Brooklyn of to deposit the same in some Savings Bank or Banks of good standing in-the City of New York or Brooklyn, for the benefit of my children.

> “ And upon the further trust to convert all my personal property not above mentioned into money-and to invest the same for the benefit of my said children in the same manner as any other moneys are to be invested as above provided.

> “And .upon the further trust to pay and advance to each of my children as they respectively arrive at the age of twenty-one years or as they respectively marry, the sum of three thousand dollars.

> *443, "And upon the 'further trust immediately upon the arrival of my youngest child at the age of twenty-one years in case my said wife shall not then be living to divide all my estate real and personal and the accumulations of interest equally among my children, share and share alike after deducting all advances made as above provided to any of my children, so that each of my children shall have and receive an equal share of my estate. Should my said wife be living at the time my youngest child arrives at the age of twenty-one years,.then it is my will and pleasure that no division of my estate shall be made until after the death of said wife.”

The testator left considerable real estate, consisting of houses and lots, and also a foundry in the city of Brooklyn. At the time of his death the testator was engaged in conducting a general stove trimming business, and used this foundry in connection with such business. The accounting trustee, under the power and authority of the trust clause of the will, continued the testator’s business and used the foundry for the same purposes as the testator. The appellant insists the trustee should have charged the business with rent for use of the foundry, and that Caroline Wolf,- the widow of the testator, was entitled to receive one-half the net rents derived from the foundry property as part of her one-lialf of the net rents of the real estate. It is contended that the foundry property is to be treated exactly like- all the other, real estate left by the testator, and after the payment of the expenses of maintenance one-half the net rent under the provisions of the trust clause of the will should be paid to the widow for life. The accounting trustee insists that under the will he is not required to pay to himself any rent for the use of the foundry.

It appears to have been the practice for years for the predecessors of the present trustee to charge the business with rent for the use of this foundry, one-half of which was paid the widow. For a time after the substitution of the respondent as trustee he also followed that practice, but subsequently declined to further do so upon the advice that the business was not legally liable therefor.

The question is, therefore, sharply presented as to the proper construction of the trust clause in that respect. In construing a will all its clauses and provisions must be read together in determining the intent of the testator, and that intent so gathered must *444control. *(Goebel*v. *Wolf,*113 N. Y. 405.) What is said by the testator in the earlier parts of the trust clause-must be considered in'connection with the subsequent clause relating to the continuance of the business. We think the general language of the earlier part of the clause, in which the testator directs his trustees to take charge of his real estate, “ collect the rents and income thereof,” etc., is qualified and modified by the later direction to his trustees to take charge of his stove fixtures and stove trimming business *“ and foundry in the City of Brooklyn, * * * and in short everything connected with my said business,”*and continue said business in the manner directed.. There is no specific direction for the business to pay rent. The foundry was a necessary incident to, that business, and most intimately connected therewith. The fixtures and other property in it would have been of little use except when used in connection with it. It was the clear intention of the testator that this' foundry was to be treated as a part of the investment of the business, and to be used by the trustees in the future conduct of the business as a necessary incident to'it. It was not to be rented to third parties but to be used by the trustees themselves, and in the absence of any specific direction that they should charge the business with its rental value, we think they cannot be required so to do. The question is simply one of construction, and we believe the argument is all in favor of the position taken by the respondent in this regard. If this is the proper construction, it is no answer that in prior years rent had in fact been allowed! We see nothing in those acts estopping the trustee from now insisting on the proper construction of the will.

It is contended by the- appellant that the judgment' construing the provisions of this will previously rendered *(Goebel*v. *Wolf,*113 N. Y. 405) makes the question here involved *res adjtodicata,*especially when taken in connection with the former accountings of prior trustees in which their accounts crediting themselves, and charging the appellant, with rent of the foundry property were passed and approved. The counsfel for the appellant relies on the case of *Thorn v. De Breteuil*(179 N. Y. 64) as sustaining this contention.

We have examined the record in the case of *Goebel*v. *Wolf (supra)*and we can find nothing in that case which, in our opinion, *445precludes or estops this court from maintaining and enforcing the views now entertained and above expressed upon the question of the- rental of the foundry. The findings and judgment made in the action to construe the will simply adjudge the trust created by the will as to the real estate and for the conduct of the testator’s business valid, and makes certain other findings in no way relating to the questions here involved. The decree does not purport' to find or decide any question as to whether or not the trustees in the conduct of the business should pay rent to themselves for the use of the foundry property. That question does not. appear to have been directly or inferentially involved in this disposition of the action for a construction of the will. It is true, too, that the predecessors of the present trustee paid rent for the foundry property and their accounts for such payments were allowed and passed. We cannot see, however, that those decrees settling trustees’ accounts estop the present trustee from taking his present position that rent should not be paid. The appellant has not acted or been in any way induced to act to her prejudice by receiving the benefit of rents for former years. She simply received more than she was legally entitled to. This ought not to estop the substituted trustee from asserting that the practice followed by his predecessors was wrong and should be discontinued. Especially is this true where the respondent’s predecessor in office was Mrs. Wolf, the appellant here, and the accounts rendered were her own.accounts.

We find nothing in *Thorn*v. *De Breteuil*in conflict with this conclusion, where a prior adjudication had been expressly made covering the point brought into dispute for a second time, and where executors and trustees had in good faith acted upon the judicial construction put upon the will under consideration.

The trustees’ account shows that the business conducted under the trust clause in the will showed a net loss of $2,286.48, and the appellant contends the trustee should have discontinued the business, and is personally chargeable with the loss which occurred during his administration.

The provisions of the will under which the business was continued authorized the trustees' “ to continue the said business and carry on the same and to. continue to carry on the same until my yoiingest child shall arrive at the age of .twenty-one years, or as long as the *446net profits of said business shall yield ten per cent, upon an investment of fifty thousand dollars.”

We think the fair construction of this clause made it the duty of the trustees to pióse out the business when it became apparent that the business would not earn the ten per cent profit specified. At the same time reasonable latitude should be allowed the trustee in determining whether or not the business was capable of making the ten per cent profit anticipated. It is common experience that many kinds of business may encounter temporary and -unexpected losses, and may perhaps for a given year even run at a loss, when in fact the business as a whole may prove profitable. The trustees, in view of this common experience,.would be justified, in our judgment, in continuing the business for sufficient length of time until it could be determined by.an honest effort to make the business a success, whether the business as a whole is a paying one.

We have examined the record in this case and cannot discover in it sufficient to justify the court in finding that the trustee under the circumstances was required sooner to discontinue the'business. . We do not think the evidence would justify the court in charging him personally for the losses suffered.

There is no evidence of any negligence or mismanagement of the business on the part of the trustee, while on the other hand there is some evidénce that the failure to realize profits was in part due to a competition in business organized and carried on with the approval, if not the active co-operation, of the appellant. There is no little justice in the contention that under such circumstances the contestant .ought not to charge the substituted trustee with a personal liability for the comparatively small loss the business conducted by him sustained.

It is contended that error was committed in allowing the trustee for moneys drawn from the business and paid himself as “ *salary*” for managing the business, aggregating $4,840. It appears that prior to the trustee’s appointment as substituted trustee in 1901 and while his mother (now Mrs. Wolf), the appellant in this case, was acting as trustee, John M. Wolf, the present husband of the former trustee, was employed at a salary as superintendent and manager of the business, and was paid for such services a salary even larger than that subsequently received by the respondent. Wolf left the *447business, and without an active head to look after its details and this respondent who had been also employed in the business and was more or less familiar with it, was appointed trustee in the place and stead of his mother who resigned. From that time on he devoted his time and attention to its conduct, and rendered substantially the same services as formerly given by Wolf, and withdrew from the business a weekly salary for the same.

It would seem that from every considei’ation of justice and equity the trustee should under such circumstances be paid a conipensation commensurate with the services rendered, and little sympathy can be had for one objecting to its allowance. Nevertheless we have been unable to find authority for its allowance without violating the well-recognized rules and pi’inciples of law which govern such cases. The will expressly provides for and authorizes the retention “ out of the net profits of said business the sum of ten per cent, of such net profits as compensation to my executors and trustees for their services in the management of the said business. Said sum of ten per cent, to be in addition to the lawful commissions allowed them as executors and trustees.”

We are aware that in certain special and peculiar cases, where an executor or trustee renders to the estate he represents special services outside and beyond his general duties as executor or trustee, proper allowances have been made for their payment over and above the commissions allowed by law. As where a former manager was appointed temporary administrator during a contest over the probate of a will, and.was directed to temporarily carry on the decedent’s business *(Matter of*Moriarity, 27 Misc. Rep. 161); or where one of several executors, by agreement with the widow and heirs, rendered services for nine years not only in collecting rents, but by manual labor, in keeping the trust property in repair *(Matter of McCord,*2 App. Div. 324); or where a skilled machinist at the request of the heii-s continues a manufacturing business of the testator, rendering services therein for which he was peculiarly fitted by his mechanical training *(Matter of Braunsdorf*13 Misc. Rep. 666); or where a testator, leaving five farms, one of the executors at the request of the others, including the widow, took charge of the real estate for some fifteen years. *(Lent*v. *Howard,*89 N. Y. 169.)

*448In each of the above cases the services rendered were quite outside the duties-imposed upon the executor or • trustee by the instrument or order under which they acted, and In some cases, the" services were rendered under a special arrangement with the interested parties. In this, case the -will under which the respondent acted expressly,-provided for the compensation to be paid the trustee for the management of the business, and it is impossible to say that, such services as were rendered were, outside the duties imposed upon him by that instrument. An administrator or executor is ordinarily confined to the fees or commissions prescribed -by the statute,* and if the business of the decedent be continued under authority contained in the will, the services rendered, by the executor in continuing it. are deemed part of the duties of his office,, and he cannot receive therefor- any other than the compensation allowed by,law. (Clausen. v. Puvogel, 114 App. Div. 455, 459; *Matter of Hayden,*54 Hun, 197; affd., 125 N. Y. 776; *Matter of Dummett,*38 Misc. Rep. 477; *Collier*v. *Munn,*41 N. Y. 143.)

The. enforcement of the general rule in this- case works, a. hard: ship, but the rule is a salutary one, and one which this court, cannot disregard. , ' *‘*

We see no reason for disturbing, the findings of the. surrogate as to certain expenses incurred in the business, and covered by .small sums drawn from the business from time to time.

The decree appealed from should be modified in. the manner-above indicated.

Gaynor, Bioh and Miller, JJ., concurred; Hirsohberg, P. J., not voting. ,. . '

Decree of the Surrogate’s Court of Kings county modified in accordance with opinion of Woodward, J., and as modified affirmed,, without costs.

*

 See Code Civ. Proc. § 2730.— [Rep.