ing the remainder-man, is strictly analogous to that which the trustee in the case at bar has pursued. These estates, which are terminable on a life or lives, or at the end of fixed terms, are renewable, sometimes by express contract, and sometimes by custom which has been recognized as legal, upon the payment of certain fines and other expenses. It is held to be the duty of the trustees to preserve the leasehold estates by renewing, at the usual periods, for the benefit of the parties in remainder. In the absence of other direction by the settler, the fine, etc., for renewal is to be paid out of the rents and profits in the proportion in which the cestuis que trust enjoy the estate. If a renewal becomes impracticable, the tenant for life does not reap the whole advantage of non-payment of the sum properly due for renewal, if there was an express trust for renewal. His interest, minus the expenses of the renewal, is all that was given him, and his proportion of the amount fairly to be paid for renewal is still a proper charge on the leasehold estate for the benefit of the remainder. When the leasehold estate is for years, the amount to be paid is readily ascertainable by the proportion which the tenant for life enjoys of the leasehold estate; and when it is for lives, and there is no express fund created for the renewal, it is more difficult, and the court has sanctioned the plan of insuring the lives of the cestuis que vie to an amount sufficient to cover the usual expense of renewing on the dropping of a life. Hill, Trusts, 436. While the cases on this subject are complicated by the express provisions made in the settlements, and appear in some respects confused, they establish fully the position that, in the absence of direction otherwise, the property received is to be turned over by the tenant for life as he received it, and that his income is not the full rent and profit, but those after deducting therefrom, as accurately as it can be ascertained, his just proportion of the expense of maintaining the security by renewal of the lease.

The tenants for life rely much upon Hemenway v. Hemenway, 134 Mass. 446. This was a bill in equity by which was brought before us the whole management of a large estate, in which very ample discretionary powers had been given to trustees. The testator had left, subject to the trust, bonds payable at a fixed period. As between the tenant for life and the remainder-man, it was decreed that the trustees, by the authority conferred by the clause of the will "to hold the said property as they may receive the same, or at their discretion to sell the same," were entitled to continue their investments as such, and to retain these bonds until they were paid off, and that "the whole net income of the investments thus authorized must go to the tenants for life, by the terms of the will." There was also an investment made by the trustees in certain bonds, having nearly 18 years to run, on which a small premium had been paid. The case was decided upon its own peculiar circumstances, which, so far as disclosed, were held to show no special reason why the tenant for life should not receive the interest paid on the bonds. The investment constituted "a very small proportion of a large estate," and Mr. Justice HOLMES remarks:

"We have no reason to doubt that, taking the whole administration of the trust into account, the balance has been evenly held between the two parties, and the relation between the remainder-man and the life-tenants is such that there is less. call than there might be in some other cases for treating the life-tenant with great strictness."

It certainly was not held that the trustee might not, for the trust estate, purchase, under some circumstances, at a premium, bonds payable at a fixed time, and, exercising his discretion honestly and for the purpose of dealing fairly with both parties, might not reserve, as received, some portion of that paid as interest, sufficient at the end of the period to restore the premium to the capital, by the loss of which it would otherwise be depleted.

Upon the account rendered by the trustee in the case at bar, as heretofore said, the question whether, by virtue of our supervision over trusts, the trustee should be ordered to change his investments, is not sought to be brought before us. Upon these, as they exist, the deduction from the full interest reserved to restore the premium at the end of the term was properly made. It is only thus that the property can be turned over to the remainder-man undiminished. If the estate of the tenant for life terminates before the bond expires, the cost of effacing the premium will be borne in the right proportion by the respective cestuis que trust. In the opinion of the majority of the court the entry should be, "Decree reversed.”

HOLMES, J., (dissenting.) If the opinion of the majority rests on the ground that, so far as appears, the trustees might have made their investments with the intent to keep them until the trust expired or the bonds matured, and in the exercise of its discretion as a business manager, in view of the particular circumstances of the case, thought it necessary to retain a fund in suspense against a probable loss of premium, speaking for myself alone, I should have been disposed to acquiesce in that opinion. But from the main line of reasoning actually adopted, I must dissent, upon grounds both of principle and authority.

Shortly stated, I understand that reasoning to be this: That if a bond is bought at a premium, it must be assumed that the premium is paid, for the single reason that the rate of interest on the bond is higher than the market rate, because it must be assumed that the investment is absolutely safe; that, therefore, the analogy of wasting investments, such as leaseholds, applies, and that an annual deduction from interest is proper.

So far, this is precisely the argument that was pressed upon us with much force in Hemenway v. Hemenway, and which was rejected after the gravest deliberation. A great part of the opinion wás devoted to answering it, and it still seems to me that the discussion was necessary to the decision of the case. Hemenway v. Hemenway, did not bring before us the whole administration of the estate, but certain specific questions, one of which was whether the interest should make good the premium paid by trustees for bonds purchased by them above par. If the rule now adopted had been recognized, it would have been unnecessary

and improper to look beyond the particular bonds to the rest of the account. It was because that rule was repudiated that it was said, and deliberately said, that nothing showed that the premium was paid for interest above the market rate, and that the whole administration of the trust might be considered. The latter principle is not the law in jurisdictions when authorized investments are limited in number, as in New York, but each investment is dealt with separately. The only reason for departing from the precedents elsewhere was that in the latitude allowed trustees in this commonwealth it was thought impossible to assume that premiums were paid in respect of interest alone. I think, therefore, that the opinion of the majority is opposed to one of the points directly decided in Hemenway v. Hemenway, as it certainly is to the whole course of reasoning in that case, and I am confirmed in my opinion by the fact that two other of the four surviving justices who took part in the decision are of the same mind. I must suppose that Hemenway v. Hemenway has been accepted by trustees as expressing the settled opinion of the court. I cannot foresee the extent or nature of the evil that may follow from our abandoning what has been acted on as law. But I should be most unwilling to overrule a decision which I supposed to have been accepted as a guide in dealing with property, even if I thought it wrong. I do not, however, think either the decision or the reasoning in Hemenway v. Hemenway wrong, and I refer to that case for what I do not deem it necessary to repeat here.

But I understand the opinion of the majority not to stop with overruling Hemenway v. Hemenway. In this case the bonds thus far have not depreciated, but have risen, in value. No part of the premium has been lost as yet; but the argument is either that it is to be presumed that the bonds will be kept until the premium is lost, or else that the approach to maturity is a constantly acting cause which depreciates the bond so much each year with mathematical certainty, and that even if the depreciation is disguised by a more powerful motion the other way, it must be allowed for, because the rise in value belongs wholly to the corpus, and would have been so much greater but for the counteracting influence. I think I fully appreciate the logical force of this argument, but it appears to me to illustrate the danger of relying on logic when your premises are fictitious. The necessary premise for casting the whole burden of repaying premiums upon interest is that the premium is paid solely for interest above the market rate. If that premise is a fiction, as I think it is, and if considerations of policy are held, nevertheless, to justify its adoption, at least the conclusion to be drawn from it should be guarded and restrained by considerations of a similar nature. I can hardly think that if the trust had been terminated, or the bonds sold, at the date of the account, when the coupons had actually gained by the investment, the sums retained from interest would be paid over to the remainder-man. Yet that conclusion would follow from the reasoning. I think, in other words, that the question of holding the balance even between tenant for life and remainder-man is a problem so dependent on the particular facts, and so complex, that while we cannot hope to solve

it with perfect accuracy, every one would feel that to cut the knot with a formula, in the case I have supposed, would be an unnecessary abandonment of the discriminations within our power, and, as a practical judgment, would be as likely to work injustice as justice.

If I am right so far, what difference can it make that the trustee has not sold? Whether it is or is not true, as is said in Hemenway v. Hemenway, that a determination not to sell, if a sale is possible, stands on much the same footing as a purchase, I apprehend that if a trustee, having the usual powers, sells and reinvests 20 times in as many days, he is not ipso facto guilty of a breach of trust, and that if the reinvestments are proper and profitable his conduct would not be open to animadversion. On this point the English books can give us no light. At all events this trustee might sell now if it saw fit. On what ground is the determination of the trustee not to sell-a determination which the court cannot revise to change the relative rights of the cestuis que trust?

Let us look a little further into the rule adopted. Suppose a sale to have taken place, and other bonds to have been bought at a price above par. The trustee will, of course, compute the rate of interest to be received by the tenant for life in the future, by deducting the annual sums necessary to replace the new premium paid. But there is no particular sanctity in the rate which happened to prevail at the moment of purchase; still less in the rate artificially determined by the premium paid. If there has been no sale, but the market price of the bonds has risen, ex hypothesis the rate of interest is conclusively proved to have fallen, because the fall in the current rate of interest is the only recognized ground for a rise in price. Why is not the remainder-man entitled to have a new computation started on that footing? Why is not the tenant for life entitled to have the reservation diminished if the rate of interest rises? And, pushing the principle to its logical result, why is not the trustee bound to follow the fluctuations of the market from day to day, attributing them all to the fluctuations of interest, as he is bound to do?

I now recur to the premises of the argument which I am opposing. I repeat what was said in Hemenway v. Hemenway, that I do not see how we can start with the assumption that all proper investments are absolutely safe, when the leading case in this state is to the very point that an investment may be unsafe, and yet justifiable. Lovell v. Minot, 20 Pick. 116. But the assumption appears to me to be inconsistent with facts which we must notice, and to lead to the conclusion not yet mentioned which we could not accept. Within a few years the first mortgage 4 per cent. bonds of a flourishing railroad have sold at 85, while at the same time United States 4 per cents stood at 120 or more, and city 4 per cents of a high rank stood at about par. The differences were not to be accounted for by the difference of time which the bonds had to run, or by exemption from taxation. I should be surprised to learn that either bond was not a proper investment. If they all were proper investments, the difference in price could not be referred to difference in interest.

Again, if the fiction of safety be adopted, I still do not see why it does not follow that if a bond is bought below par the tenant for life is equally entitled to an annual increment on the interest received by him as the bond gradually approaches maturity. This was argued in Hemenway v. Hemenway, but I must believe that such a doctrine would disconcert trustees not a little. Of course it would call for sales of capital from time to time to produce funds for the tenant for life beyond the amount received on the bonds. There is a well-known bond which was purchased by trustees a few years ago at 50 per cent. and which now stands at 120 or over. How is a case like that to be dealt with?

If it be said that the consequences' suggested follow only upon an attempt to carry logic too far, and that they are to be controlled by practical judgment, I agree. But I think that the same thing ought to be true of the step now taken, as I have said already. If we are to start with a fiction, and then apply logic, I think these results follow. If we are to use our judgment, I do not see why we should not use it at every step, and I believe that, to make the tables referred to the universal arbiter between tenant for life and remainder-man, is not so near an approach to justice as we may hope to make. I am much more disposed to regard trustees as a sort of domestic tribunal ex necessitate between the parties, subject to the control of the courts in case of a want of good faith or reasonable judgment.

Finally, I must repeat what was said in Hemenway v. Hemenway, after an elaborate examination of the English books, that, in my opinion, the English cases do not apply the principle of wasting investment to premiums on authorized permanent investments. But, even if they did, I should consider that, in view of the latitude of investment allowed in Massachusetts and the great fluctuations of American securities, it would be undesirable to accept that principle at present, and still more so to adopt the simple device of the tables as the means of working out that principle.

I express no opinion upon the question of jurisdiction, which I have not thought it necessary to examine, as both parties desire to have the case dealt with upon its merits now.

I am authorized to state that the chief justice and Mr. Justice CHARLES ALLEN concur in the views which I have expressed.