Court Opinion

ID: 5550706
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:35:03.440385+00
Date Added: 2024-06-11T08:34:52.507328
License: Public Domain

The Assistant Vice-Chancellor.
The complainant’s first, and Mrs. Green’s first and second exceptions, relate to the *420interest upon what is called the Freeman debt. The pne party-claims that the interest on that debt at the legal rate, shall be borne by Mrs. Green in respect of her enhanced income by reason of its not being taken out of the capital; while the other party insists that no interest whatever is to be paid on the debt, either from her income, or out of the capital of the ninth part of the estate.
I have considered the question with great care and attention, and the result is a clear and strong conviction that no interest is to be paid on the debt of Freeman. ■
I will advert briefly to the circumstances.
At the date of the will the testator held two bonds executed to him by William M. Ross and Augustus T. Freeman, one dated March 1, 1824, for $2000 with interest, and the other for $4400 with interest dated September 24, 1825. Both bonds, were in effect payable.on demand.
It appears that Freeman had been in business, and the money represented by the bonds was sunk, and he had become insolvent. The circumstance of the testator’s taking bonds, payable as these were drawn, indicates that he had little or no expectation of their ever being paid by the obligors.
Freeman was then the husband of Mrs. Green. As the granddaughter. of the testator, she had an acknowledged claim upon his bounty for one-ninth part of his estate. He made his will on the 12th of April, 1826, and gave one-ninth part of the residue, or chief part of his estate, both real and personal, to trustees, upon trust, first to pay to his executors out of the same, but not out of the annual income or proceeds thereof \ all such sums of money as might be owing to him at his decease by Freeman ; and secondly, to pay to his granddaughter for her life, the net annual income and product of the residue of the trust property, for her separate use.
The ninth part of' the personal estate which enured to this trust, was not enough to pay half of the principal of the bonds ; and it was conceded that the real estate of the testator yielded only about four per cent, on its valuation.
The subsequent management, and the course pursued by the trustees, is not important to the inquiry. The solution of the *421question is to be derived from the will and the state of things existing at the testator’s death in September, 1826. And the question is, did the testator intend that any interest should be charged on Freeman’s debt after his death, against this ninth part of his estate; and if so, did he mean that Mrs. Green’s income should under any circumstances bear a portion of such interest ?
It will be observed that this charge is not a debt due from the devisee or legatee. Freeman owed the debt jointly with Ross. He had no bequest whatever from the testator. So far as the ninth part of the estate is concerned, the question must be regarded precisely as if it were the debt of Ross alone, or of any other stranger to the blood of the testator, which he had thought proper to have deducted from such ninth part.
It is simply a charge or burthen imposed upon the capital of that ninth part, for the reason that the testator had been induced to make the loans to Freeman by reason of his family connection.
Now what does the will direct as to the payment of this charge 'l
Not that it shall be paid generally, out of the ninth part and its products. The income is expressly exempted from contributing to its liquidation.
Nor is there any direction to pay to the executors interest upon the debt.
It is evident from the careful exclusion as to the income, that the testator anticipated some delay in paying the Freeman debt. Yet the will is silent as to the payment of any interest. The charge is plain and explicit, to pay the sums of money which Freeman owed to him at his death. Not the sums of money which Freeman owed him, with interest thereon, or with interest until paid.
The direction is equally explicit that no part of those sums, shall be paid out of the annual income or product of the trust estate.
The scope of the will and the testator’s views, I think may be thus summed up. He set apart one-ninth of his residuary property for the benefit of his granddaughter and her issqe. As her *422husband had failed, and the trust estate would be her only means of support, and would moreover produce a moderate rate of income; the testator devoted to her use the whole of such income, without any charge or abatement, during her life. At the same time, he required the trust estate ultimately to repay the sum due to him from Freeman; and he left it to the trustees in the exercise of their discretion, to appropriate the necessary amount out of the capital of that estate, whenever in their judgment in reference to the interests of all concerned, it was proper to make the application. A delay might enhance Mrs. Green’s income for a time, and might still be for the benefit of the testator’s estate at large.
It surely could not have been his intention to authorize the trustees to delay a payment of the debt in the manner here claimed. If it carried interest at all, it bore interest at seven per cent. Suppose the net income of the whole trust estate, or ninth of the residue, were four per cent. It is manifest that every year’s delay would be a positive injury to Mrs. Green to the extent of three per cent, on the debt, if the interest should ultimately come out of her income.
The will does not provide that in case of a delay, Mrs. Green’s income shall contribute to the interest of the debt. As I have stated, the testator contemplated a delay, and at the same time, interdicted any interference with the income of the trust property.
In order to make the debt bear interest as against this trust estate, it is necessary to insert in the will the words “with interest thereon.” This cannot be done by construction, when there is nothing in the will which declares such an intent. (See Mann v. Mann's Executors, 1 J. C. R. 231; S. C. 14 Johns. 1.)
At the death of the testator, there was due on these bonds, the sum of $6827 46. Suppose the devise and bequest of the ninth part had read thus: “ In trust, first, to pay to my executors out of the said trust estate, (but not out of the income thereof,) the sum of $6827 46.” Would that have imposed a charge for interest, either upon the income or capital? Clearly not. It would have been a mere charge on the capital, to be paid in *423gross, by a sale or other application of the capital. The executors could have compelled and hastened such payment; but the executors could not collect interest, and neither they or the trustees could retain or reclaim from the tenant for life, the income of any part of the capital which accrued prior to such application.
The language used in this will, “ sums of money owing at my decease,” with the language of the two bonds; is the same in effect as if the expression had been “ the sum of $6827 46.”
Keeping in view that this is not a debt of Mrs. Green’s, or of the remaindermen in the trust estate, but a simple charge of a sum in gross upon the capital of a fund, and payable out of the capital alone, and whether sooner or later, exclusive of the income of the fund; and there is no difficulty in the question. Even upon a debt, interest is never charged for mere delay of payment. It is charged upon a contract to pay it; by statute ; and by way of damages upon a breach of trust. A contract to pay interest is sometimes implied, but there is no such implication upon a mere charge, unless upon the plain intention of the person granting the charge.
There are some authorities which by analogy, fully sustain the construction which I have maintained.
In Hawley v. Cutts, Freem. Ch. R. 24, A. owed B. £300 on a bond. By his will B. made a bequest in these words, “I give A. £300 in money which he oweth me upon bond.” At B.’s death, there was £20 due for interest besides the principal of the bond. It was held that the interest did not pass by the bequest.
In Roberts v. Kuffin, 2 Atk. 112, (more fully reported by the name of Roberts v. Kyffin, in Barnard. Ch. R. 259,) the testator gave to his son the following bequest, “ I give to T. R. £300 which I have at interest secured by a mortgage on the estate of Marriot, and I also give him all the messuages, lands and tene ments secured for the payment of that money, till the same be paid and discharged.” Lord Hardwicke held that the son was entitled to the principal only, and not to the interest on the mortgage. He said it was very clear on the first clause of the will, standing by itself. And he put by way of illustration, the case of a bequest of £300 upon a bond; concurring with the decision in Hawley v. Cutís.
*424In. Smallman v. Goolden, 1 Cox’s Ch. R. 329. the testator . gave to his son “ all sum and sums of money due to me from him, on bond or bonds or any other security.” The son was indebted on bond at the date of the will, and subsequently became indebted to the testator on a bond for £100. Lord Kenyon, then Master of the Rolls, decided that the latter bond was not included in the bequest.
In Hamilton v. Lloyd, 2 Ves. jr. 416, the testatrix had a mortgage upon an estate of which her brother was tenant for life, and had his bond for £120 arrears of interest on the mortgage. In her will she disposed thus; “ I give to my brother Lloyd the arrears of my mortgage upon his estate,” &c. It was contended that this was a gift of the mortgage itself. But Lord Loughborough deemed it too plain to raise a doubt upon, and limited it to the bond for the arrears.
In Jones v. Lord Sefton, 4 Vesey, 166, the testator gave his personal estate to his wife, and to his son he gave all arrears of rent due to him at his death. When he died he had a bond given to him for arrears of rent several years previous to that time. Lord Loughborough decided that the bond was bequeathed to the widow, and not to the son.
I was referred on the other side to Clarke v. Sewall, 3 Atk. 99. What is there said by the Chancellor, relates to interest on the legacy, not on the debt; as may be seen in Ward on Legacies, 299.
In Gittins v. Steele, also cited'from 1 Swanst. 199, legatees who had received a particular legacy, were required to refund in part, on the construction of the will; and on the question whether they should pay interest, the Chancellor said he would not ordinarily charge interest, but as the same legatees were entitled to another fund which was making interest, he charged them interest at four per cent, on the amount overpaid.
Upon these authorities, it is impossible to hold that the words “ sums of money due to me,” mean in a will, sums of money due to me with interest thereon.
Unless we add those words to the will, there is no" authority to the trustees to take interest on the Freeman debt, out of the capi*425tal of the trust estate. And the will is express against taking it out of the income. 4
It may be said that equity requires Mrs. Green to pay out of the income, at least such sum as the income has been benefitted by the trustee’s omission to pay the debt of Freeman whereby the capital and income would have been proportionably reduced. But no such equity is apparent. The testator intended she should have the full income, until the trustees should sell and pay the charge. They have thought proper not to sell, and I am not to presume that they acted unwisely. Non constat, but that the whole estate has been enhanced in value for the remaindermen, more by the turning in the personalty for its improvement and the keeping of it in mass, than it would have been by the payment of the Freeman debt through a sale of a portion of the real estate.
" I think there is no ground for withholding from Mrs. Green any part of the income, and therefore must overrule the complainant’s exception, and allow the second exception of the defendant.
Her first exception is also allowed, except so far as it may embrace interest which had accrued on the bonds at the death of the testator. The language of the will so frequently cited, and the subsequent words applied to the same subject, viz. “ his debts which may be owing to me at my decease as aforesaidare sufficient to embrace all dues at that time, whether for principal or interest, and on bond, note or simple contract.
The complainant’s second exception relates to the master’s disallowance of a charge of $500 which the trustee had taken from Mrs. Green’s income, and carried to the sinking fund for the dischárge of a debt of near $50,000 which was incurred for the improvement of the real estate of the testator in pursuance of an order of this court made in October, 1831.
By this order they were permitted to apply to that fund, such balance as would remain of the annual rents of the estate, after paying to each person interested in the estate, such amount of the annual vent, as such person at that time received.
The annual rent in this direction must be deemed the rent from the first of May in each year, that being the letting year in *426this estate, as well as the letting year recognized in the city of New York by our statutes.
With either the letting year, or the calendar year, as the basis, there never has been any balance, after paying to Mrs. Green the amount of annual rent which she received at the time the order was made. The master’s decision was unquestionably right, and the exception must be overruled.
The defendant’s third exception is founded upon the master’s charge to her of $721, it being a part of the expense of certain permanent improvements and erections made by the trustee upon the ninth part of the estate as allotted in the partition, from which her income was derived.
The master’s statement of the facts, in connection with the schedule marked I. attached to his report, abundantly sustain his allowance of the charge, and the exception must be disallowed.
The master’s report is confirmed in every particular, save the interest on the Freeman debt. If the parties can agree upon the balance after deducting the sums withheld for that cause, a decree may be entered at once, disposing of the whole matter. Otherwise the cause must be sent back to the master.(a)

 The parties subsequently agreed upon the corrections to the master’s report, and a decree was entered accordingly.