App. Div.] SECOND DEPARTMENT, JULY TERM, 1903. respective minorities. Or, if these gains and profits are not to be distributed until the termination of the trust as provided for in the said clause, i. e., upon the death of the wife and the daughter Florence, then there is an accumulation of such gains and profits not directed for a minority. I think that in either event there is an accumulation not directed exclusively for the benefit of minors, and that such directions, so far as they do not contemplate accumulations exclusively for the benefit of infants during their minorities, cannot stand. (Barbour v. De Forest, 95 N. Y. 13; Pray v. Hegeman, supra; Boynton v. Hoyt, supra; Kilpatrick v. Johnson, supra.) I now proceed to examine the grounds for the conclusion of the learned and able referee that the provisions of this will are not repugnant to the statutes. He writes that the question in this case is "whether a direction by a testator to an executor to carry on (the testator's) business and to add a portion of the profits to the capital for the purpose of maintaining and developing the business is the creation of an estate out of which profits are to arise within the meaning of the statute, and whether the profits of such a business are rents and profits of real estate and income of personal property within the meaning of the statute." I do not concede that this is an exact statement of the question. The scheme of the testator is not primarily to add a portion of the profits to the capital for the purpose of maintaining and developing the business. He directs the business to be carried on for the lifetime of his wife and of his daughter Florence, and of the survivor of them, and that all profits and gains after the sum set apart for the support of his wife and children is deducted, be added to and form a part of the working capital. He then gives his wife $70,000 a year, and out of the surplus provides for the maintenance of his children until they are twenty-five years old respectively. The terms used are "profits and gains," and "surplus income." The terms involve the idea of the deduction in the first instance of the expenses of the business. In People v. Supervisors of Niagara (4 Hill, 20), BRONSON, J., while stating that "income" and "profits" are sometimes synonymous, says further that "profits' generally mean the gain which is made upon any business or investment when both receipts and payments are taken into the account." (See, too, Matter of Jones, 103 N. Y. 621, 624.) But as soon as the children reached the fixed periods of SECOND DEPARTMENT, JULY TERM, 1903. [Vol. 86. twenty-five years, respectively, they are to receive their full proportionate sum per annum out of the profits. The gains and profits are not then to be devoted primarily to the purposes of maintaining and developing the business; they are first to sustain the wife and children, the wife in the stated sum, and the children in all necessary sums, with discretionary advancements, and the excess is to be added to the working capital of the estate. But as soon as the children reach twenty-five years of age, respectively, all of the surplus income and profits are to be devoted to them. I infer that the retention of the excess in the meantime was based upon the scheme, not that the business should be maintained and developed therewith, but that not until they reached twenty-five years, respectively, would the children require, or should they be intrusted with, the whole of their income, for the application to the working capital of the excess of profits is not to cease in any period of the business or when any matter incident thereto has been accomplished, but at a fixed period in the life of each child. The paramount consideration, then, was the provision for his children, not the maintenance of the busiOf course, if the excess went to the working capital, it was a benefit thereto, but this does not warrant the statement that the purpose of the testator was to develop or to maintain the business, and there is not a word of the testator which indicates that such was primarily his intent. ness. Returning to the question as stated by the learned referee, I note that the statute (1 R. S. 726, § 38) does not merely forbid the creation of an estate. Its specific words were: "And all directions for the accumulation of the rents and profits of real estate except such as are herein allowed, shall be void," and the present Real Property Law (Laws of 1896, chap. 547, § 51) reads: "All directions for the accumulation of the rents and profits of real property, except such as are allowed by statute, shall be void." As to personalty, the statute (1 R. S. 774, § 4) reads: "All directions for the accumulation of the interest, income or profit of personal property, other than such as are herein allowed, shall be void," and the present Personal Property Law (Laws of 1897, chap. 417, § 4) reads: "All other directions for the accumulation of the income of personal property, not authorized by statute, are void." The learned counsel for the plaintiff, also arguing that there must be a creation of an estate, App. Div.] SECOND DEPARTMENT, JULY TERM, 1903. lays stress upon the fact that the provisions against accumulations are part of the law of the State regulating trust estates, and points out that the words "creation of the estate" are used twice in section 37 of the statute (1 R. S. 726). I do not attach much force to this argument. It is entirely natural that provision against accumulation of the rents and profits of real estate should be found within the title "Of the Nature and Qualities of Estates in Real Property and the Alienation thereof," and within the article "Of the Creation and Division of Estates." It is to be noted that the words "creation of the estate" are used in connection with the accumulations that are to commence on the creation of the estate, out of which the rents and profits are to arise, and that there is nothing to indicate that if the accumulations are not directed in ipsissimis verbis to be made in order to create an estate, that they are without the ban of the statute. Any direction as to profits must be either for accumulation or for application. If it be for the former, then it is opposed to the spirit of the statute as much as if the testator had in express words directed that the profits should constitute an estate. It is the fact of the accumulation, not the form of it, that must control. It is not the nature of the property created by the accumulation, but the accumulation, that offends the statute. I think that the direction that profits and gains arising from the said business be added to and form a part of the working capital of the estate is equivalent to a direction for the accumulation of the rents and profits, and of the interest, income and profits of the real and personal estate of the testator. In the first place, the testator directs that the business shall be continued and carried on with his estate and property, so the profits and gains thereof are the continuous earnings of that business, or the continuous returns therefrom as a going concern. He used the terms interchangeably with income and profits, inasmuch as he provided that the profits and gains shall, after the sum set apart for his wife and children is deducted, be added to and form part of his estate. I think that "profits and gains" is equipoìlent with "rents and profits." "Rent is a certain yearly profit in money, provisions, chattels or labor, issuing out of lands and tenements in retribution for the use." (3 Kent Comm. [14th ed.] 728, citing authorities.) "Rent is defined to be a certain profit issuing SECOND DEPARTMENT, JULY TERM, 1903. [Vol. 86. yearly out of lands, and is a return to the landlord for their annual use." (Boyd v. McCombs, 4 Penn. St. 146.) It is "a compensation for the premium of a corporeal inheritance, and a profit either in money or some other thing, etc., issuing out of land in return for its use." (Bloodworth v. Stevens, 51 Miss. 475.) "It must be a certain profit issuing out of lands and tenements corporeal." (Van Wicklen v. Paulson, 14 Barb. 654, citing 2 Bl. Com. 20; Co. Lit. 19, 20.) In Stephens v. Reynolds (6 N. Y. 454, 458) the court say of rent: "And it is defined to be a yearly profit, issuing out of lands. It must be a profit, but it is not necessary that it should be in money." In Dolph v. White (12 N. Y. 296) the court say: "Rent is defined to be a certain profit issuing yearly out of lands and tenements corporeal. (Co. Litt. 141g*; 2 Bl. Com. 41.)" In Otis v. Conway (114 N. Y. 13) it is said: "Technically, rent is something which a tenant renders out of the profits of the land which he enjoys." Gain means "that which is acquired or comes as a benefit; profit." (Cent. Dict.) In Last v. London Assurance Corporation (10 App. Cas. 438, 450) Lord FITZGERALD says: "We are bound to adopt the interpretation put on 'profits' in the Mersey Docks v. Lucas, that the expression means 'the incomings of the concern after deducting the expenses of earning them,' or 'income of whatever character it may be over and above the costs and expenses of receipt and collection,' and that 'the gains of a trade are what is gained by the trading for whatever purpose it is used.'" This definition is by SELBORNE, L. C., in Mersey Docks v. Lucas (8 App. Cas. 891, 905). This demonstrates that the terms "profits," "gains," "income" and "profits and income" all refer to the annual return from the continuous business of the testator which is to be carried on with his estate and property. There is no such technical or peculiar meaning to the phrase "rents and profits" as to deny a synonym in "profits and gains." A rent is a profit, and the profit in rents and profits is a profit still. Not only does the testator use the words "profits and gains," but also the word "income" to describe the same property. (See, too, Remington v. Field, 16 R. I. 509, 510; Sims's Appeal, 44 Penn. St. 345, 347; Andrews v. Boyd, 5 Maine, 199.) The plaintiff himself on the witness stand says: "By income I mean profits of the business-profits, yes, I suppose is the better * 144.- [REP. App. Div.] SECOND DEPARTMENT, JULY TERM, 1903. word, the profits became income." Thus, Bouvier defines "rents, issues and profits" as the profits arising from property generally. (2 Bouvier Law Dict. [Rawle's Rev.] 878.) As to "income," JESSEL, M. R., in Ex parte Huggins (L. R. 21 Ch. Div. 85, 92), said: "The word 'income' is as large a word as can be used." I think that the words "gains" or "profits" are also equipollent with the terms "interest," "income" or "profits" of personal property. Gains certainly is sufficiently generic to refer to whatever is obtained from the use of that property. In People v. Supervisors of Niagara (supra) BRONSON, J., says: "It is undoubtedly true that 'profits' and 'income' are sometimes used as synonymous terms; but, strictly speaking, 'income' means that which comes in, or is received from any business or investment of capital, without reference to the outgoing expenditures; while 'profits' generally mean the gain which is made upon any business or investment when both receipts and payments are taken into the account." Bouvier defines "income as "the gain which proceeds from property, labor or business." (1 Bouvier Law Dict. [Rawle's Rev.] 1006.) An act of Congress (14 U. S. Stat. at Large, 478, § 13 amdg. 13 id. 281, § 116) used the term "gains, profits and income of every person," and the United States Supreme Court held that the assessment thereby prescribed was to be made upon the annual products or income of one's property or labor, or such gains or profits as may be realized from a business transaction begun and completed during a year. (Gray v. Darlington, 15 Wall. 63, 65.) There is an accurate definition of "income" given by LEARNED, P. J., in People ex rel. Cornell v. Davenport (30 Hun, 177, 186): "That which it earns, remaining itself intact." In fine, whatever this business continuously earned as rent or profits or interest or income or profit, is contemplated and described by the words "profits and gains" and "income" used by the testator, for rent is a profit, and profit is a gain; interest is a profit or income; income is a gain or a profit, and profit is a gain, and, generally, whatever is received for the hire or for the use of property is a gain. In this case the estate was mainly cotton mills and print works and the other assets of a business. The business house of Garner & Co. was a commission house which acted for the mills. That business has been continued to the present day, and the real and personal estate has been employed APP. DIV.-VOL. LXXXVI. 27 |