Stone v. Littlefield , 151 Mass. 485 ( 1890 )

C. Allen, J.

The trustee received from his predecessor, as part of the trust estate, a note secured by a mortgage of real estate. For non-payment of interest, taxes, and the principal sum, the trustee foreclosed the mortgage, and afterwards sold the land. Before making the sale, he was under the necessity of paying the taxes for two years, which the mortgagor ought to have paid. So far as appears, this investment had yielded no income. The question is whether this expense for taxes shall be deducted from the principal, or be taken from the income of other and productive investments of the same trust estate. The testator’s widow being entitled to the use and income of all of the residue of his estate, must that income bear the loss which may be sustained by reason of a particular unfortunate investment ?

We are of the opinion that it must be deducted from the principal. Otherwise, a loss upon some one investment, for which no one would be legally responsible, might absorb the widow’s whole income for the year, or even more. It is more just that a loss of this description should be held to diminish the corpus of the trust estate, so that the life tenant will receive less income, and the remainderman less principal. A profit or gain upon an investment would go in the same way.

The remaining question is whether under the will the testator’s widow was to have the gross or the net income. It is admitted that ordinarily, when property is given in trust to pay the income tp a person for life, and at his death to convey the property to a remainderman, net income and not gross income is meant. We find nothing in this will to take this case out of the general rule. The argument in behalf of the life tenant chiefly rests upon the provision in the fourth clause, “ at the death of my said wife I give, devise, and bequeath all my said estate then remaining,” etc. These words are consistent with either supposition. They would be equally proper whether the whole principal was or was not to be kept intact. Looking at the whole will, it seems quite obvious that the true construction is that the testator’s widow was to have the net income only.

The result, is that in each case the decree of the judge of probate must be affirmed.

Decrees affirmed.