Helen Emery Dyer Smith, daughter of decedent, John R. Emery, and a life beneficiary under a trust set up in his will, takes exception to the account of the Montclair Trust Company, trustee under said decedent's last will. Other exceptions were taken to the trustee's account but they have since been compromised.
During the period of the current accounting, the trustee has taken, and charged the income of the trust fund with, commissions on $18,973.39, representing gross rents collected in the management of three parcels of real estate owned by the decedent. The trustee calculated its commissions under R.S. 3:11-2.2 on the basis of gross rents collected, claiming credit against the gross receipts for taxes, fire insurance premiums, repairs, upkeep, etc.
It is the contention of the exceptant that the commissions of five per cent should be taken, within the meaning of the statute, on net rents or net income (which in this case would be on $8,106.62), that is, on the amount that will be made available to the life tenant, including what might be deducted by operation of law or the terms of the will. The exceptant claims that the trustee erred in computing his commissions on gross rent receipts; that gross rents do not represent the earnings on real estate; and that the trustee should be surcharged for the difference between the commissions
taken and what, she claims, should have been taken, namely, $543.34.
R.S. 3:11-2.2, the authority pursuant to which the commissions on income were calculated, provides that commissions of a trustee, executor, etc., over and above their actual expenses shall be computed upon the following rates:
"On all income that comes into their hands, five per centum (5%), and such executors, administrators * * * and trustees under a will may take such income commissions as of the time or when the income was or is received by them without court allowance thereof."
Under the statute the allowance is on "income that comes into their hands," not on income the amount of which is reduced by taking from the amount "that comes into their hands" such sums as may have to be paid out for carrying charges and the like. The statute would seem to indicate that commissions are to be determined on the basis of gross income, inasmuch as the reference is to income collected and not income paid out to beneficiaries. Certainly, if the Legislature had intended commissions to be calculated on net rather than gross income it would not have employed the term "all income" but would have made more specific provision in regard to the basis of computing the commissions.
The fact, too, that this statute authorizes trustees, etc., to take their commissions without prior allowance thereof by the court negates the idea that the Legislature intended a trustee to take commissions on net income. It would be utterly inconsistent to hold that the Legislature intended that the trustee might take his commissions "on all income that comes into their hands * * * as of the time or when the income was or is received by them without court allowance thereof" if, as would be the case, the trustee could not know on what amount he might take commissions until his account of not only the income that comes into his hands, but all disbursements made therefrom by him, has been submitted to and approved by the court. The object of the Legislature was to
make available to the trustee, far in advance of the time when an accounting may be had, the ...