Court Opinion

ID: 6132228
Source: CourtListenerOpinion
Date Created: 2022-02-04 21:17:48.246505+00
Date Added: 2024-06-11T08:53:43.285860
License: Public Domain

jBaRNAed, P. J.:
The executors were empowered by the eighth clause of the will to continue the business of brewing which the testator had carried on in his lifetime “ upon the same premises.” The same section provides that a certain portion of the profits may be agreed upon between the executors and John J. Jones for management of the business, and “the residue of said profits” were made part of the estate for division and investment as provided by the will. By the other provisions of the will the estate was divided in five parts. The executors were to keep the property safe, and after paying taxes and expenses, insurance and repairs, and all other legal and necessary charges, they were to pay over “ the residue or net proceeds on one of the fifths to Margaret Jones for life, with remainder over after her death to her children, if she had children, and disposing of the same otherwise if she had* not. The executors *433determined to continue tbe business, and did so. Margaret Jones claims that she is entitled to one-fifth of the fair rent of the real estate. The claim cannot be supported. When the testator permitted the continuance of the business on the same premises and provided for a division of the profits the right to use the real estate in the business was absolute, and by reason of the non-payment of rent the profits were increased. The appellant has, therefore, been paid rent in the larger profit. The claim of Margaret Jones that the bad debts should be deducted from the capital is equally untenable. The question of due diligence in carrying on the business in respect to credit given is not made As matter of law, assuming a legitimate loss, such loss should come out of the profits. There is no profit on the capital employed until the balance is struck which deducts losses and keeps the capital intact. • Such losses are incident to business, and when the testator gave a power to continue the business he intended to do a benefit to the life estate by giving a larger income yearly than if the estate was invested in the usual form. Repairs on the property are provided for by the will. The power to continue the business involved with it the power to use up the property used in it. TJnder the power of those two clauses the personal property used up and restored new was properly charged against the profits and not against the capital. Presumably, when a new article was substituted for the old the income as well as the capital was increased. The point taken by appellant that building á well and fencing and building a man-hole are not on the face of it repairs, is not, as matter of law, a certain conclusion to be drawn from the charges. In the absence of proof showing what the charges are for, no error is apparent which calls for a reversal of the decree on account of these items.
The judgment should be affirmed, with costs.
DyKMAN, J., concurred.
Pratt, J.:
Several objections were made to the accounts of the executors which were overruled by the surrogate. They are nearly all of the same character and may be disposed of together. They are as follows: First. That losses incurred in carrying on the testator’s *434business bj the executors after his death from bad debts and inability to collect accounts for sales made should be charged in part to the principal of the estate. Second. That expenditures made for horses, wagons and harness, and other personal property which were purchased to take the place of other property worn out in the business, should have been charged to the principal of the estate. Third. That the executors have not been charged with the rent of the real estate occupied for the business carried on.
By the eighth clause of the will the executors were authorized to continue the testator’s business for such time as they should think most advantageous to his estate, and the profits were to be received by the executors as part of the estate for division and investment as provided by the will. The testator devised all his estate to his executors in trust, to take possession of and manage the same. The rent of the real estate after payment of taxes, repairs and insurance, and the dividends, interest and income of the personal estate, after payment of all necessary and legal charges and expenses, was to be paid over to his brother and sisters during their lives, and upon their death was devised to the children of said brother and sisters. There is no specific bequest of the profits of the business further than that contained in the direction to pay over to the brother and sisters the income of the personal estate.
It needs no argument to show that if the appellants’ theory of the case should prevail that it would be merely a question of time when the principal would be exhausted, and with the destruction of the principal the income would cease. "Whenever there was a bad debt, or an account lost, or a worn-out piece of personal property to be replaced, so much of the principal would have to be taken to make good the loss, and we should have the remarkable exhibit of a business, where the capital was surely and certainly being exhausted, yet yielding a clear income all the time. By profits of his business the testator intended net profits. The principal of the fund was to remain intact. All losses from bad sales and all expenditures to replace worn-out personal property were properly chargeable to the income. As to the rent of the real estate there is no charge on either side of the account. If it is charged against the executors, it would have to be paid out of and charged to the income, the result would be the same. The items charged for *435improvements to tbe real estate were proper, they fall under tbe bead of repairs.
We find no error in tbe settlement of tbe account and tbe decree ■of tbe surrogate should be affirmed, with costs.
Part of decree of surrogate appealed from affirmed, with costs.