and 85 New York State Reporter.

As the questions in this case are interesting and highly important, and to some extent novel, and as the action seemed necessary for the proper construction of this will, we think it an appropriate case in which the costs of all the parties that are represented by attorneys in the case should be paid out of the fund in controversy. All concur, except FOLLETT, J., not voting.

HARDIN, P. J. Besides the authorities cited in the opinion of WARD, J., I have looked at the following cases: Moore v. Lyons. 25 Wend. 119; Mitchell v. Knapp, 54 Hun, 500, 8 N. Y. Supp. 40; Nelson v. Russell, 135 N. Y. 140, 31 N. E. 1008; Corse v. Chapman, 153 N. Y. 466, 47 N. E. 812; and I concur in the conclusion stated in his opinion.

VEERHOFF v. MILLER et al.

(Supreme Court, Appellate Division, Second Department. May 24, 1898.) MORTGAGE-EXTENSION BY PAROL.

The time for the payment of the amount secured by a mortgage of real property may be extended by parol.

2. JAME-RIGHTS OF PURCHASER OF EQUITY.

The interest of one who has purchased the equity in mortgaged premises is such as to enable him to stipulate with the mortgagee for an extension of the time of payment.

3. SAME FORECLOSURE.

A stipulation to extend the time for paying the principal of a mortgage debt does not prevent foreclosure in respect to interest unpaid pending the extended period.

4. SAME-APPOINTMENT OF RECEIVER.

Where the security is inadequate, the mortgagor insolvent, and the rents are being collected by a person not liable to pay the debt, the mortgagee is entitled to the appointment of a receiver of the rents.

Appeal from special term, Kings county.

Actions by Mary E. Veerhoff, executrix of Ernest H. Veerhoff, deceased, against Mary E. Miller and others. From orders denying a motion for appointment of receiver of the rents of the premises on foreclosure of mortgage, plaintiff appeals. Reversed.

Argued before GOODRICH, P. J., and CULLEN, BARTLETT, HATCH, and WOODWARD, JJ.

Samuel Cohn, for appellant.

John J. Crawford, for respondent Marion Thompson.

HATCH, J. The moving papers disclose that the mortgages which are the subject of foreclosure by their terms became due and payable on the 24th day of February, 1898, at which time there was due and unpaid upon each the sum of $8,500, with interest thereon from August 24, 1897. It further appears that the persons who executed the mortgages are pecuniarily irresponsible, and that the premises are not sufficient in value to pay the mortgage liens thereon. Default has been made in the actions by the mortgagors, and the only person who interposes an answer is a purchaser from the mortgagors, and the owner of the equity of redemption. In and

by her answer it is averred that, prior to the time when said mortgages became due and payable by their terms, she entered into an agreement in writing with the plaintiff, wherein and whereby the plaintiff agreed to extend the time of payment of said mortgages for a period of one year from the date when, by their terms, they became due and payable; and it is upon this agreement that the defendant Thompson, who alone appears, relies.

The letters which passed between the mortgagor and the owner of the equity of redemption contained a proposal to extend the time of payment of the mortgages for one year by the mortgagee, and the acceptance of such extension upon the part of the owner of the equity of redemption. These letters, therefore, contained material stipulations of the parties that the time for the payment of the mortgages should be extended for one year, and such stipulations were binding upon the parties thereto. It is the general rule that contracts under seal cannot be modified or released before breach by an unexecuted agreement. Farrington v. Brady, 11 App. Div. 1, 42 N. Y. Supp. 385. Such rule, however, is subject to an exception in respect of the time of performance (Homer v. Insurance Co., 67 N. Y. 478), where it is said by Judge Allen:

"The time for the performance of contracts by specialty, as well as simple contracts, may be extended by parol, and when so extended it is as if the extended time was written in and made a part of the original contract, every other provision remaining intact, and to be carried out with the single modification as to time."

This doctrine proceeds upon two theories: First. That the promises contained in the agreement of extension being mutual in character, the one is a consideration for the other, and, even though there be no express promise by one, the agreement to forbear raises an implied promise on the part of the other party. Wyman v. Insurance Co., 119 N. Y. 274, 23 N. E. 907. As applied to the present case, the proposal to extend by the mortgagee, and the acceptance by the owner of the equity of redemption of such proposal, created the contract that demand of payment of the principal of the mortgages would not be made, and that payment could not be, unless the mortgagee consented, until the expiration of the extended time of payment. The acceptance of the proposal implied such promise upon the part of the owner. Second. It is the general rule that he who permits a thing to be done shall not avail himself of any benefits by nonperformance which has been occasioned by his act. Upon this principle has arisen the doctrine of waiver and estoppel. finds application here for the reason that by virtue of the arrangement to extend the time of payment the owner has been led into the belief that payment would not be demanded, and thereby was induced to forego making provision to meet the payment which would otherwise have fallen due. Such is the allegation contained in the answer of the defendant, which is to be regarded as true upon this application. Whether the act of the mortgagee is to be denominated a waiver of the time, or he is held to be estopped by reason of the promise and its acceptance, is of small matter. The result is the same, and both may be said to follow as a consequence of the act.

It

and 85 New York State Reporter.

De Frece v. Insurance Co., 136 N. Y. 144, 32 N. E. 556; Boutwell: O'Keefe, 32 Barb. 434; Clark v. Dales, 20 Barb. 64; Grange Palmer, 56 Hun, 481, 10 N. Y. Supp. 201. The doctrine of thes cases also goes upon the theory that it is unnecessary that the should be a parting with value, by payment or otherwise, in order to constitute a consideration. The mutual promises are sufficiett for that purpose, or, if insufficient, the agreement which has misied the party to his prejudice is available. Such is the equitable rule. Van Syckel v. O'Hearn, 50 N. J. Eq. 173, 24 Atl. 1024. The defendant Thompson being the owner of the equity of redemption, the mortgages can be enforced against her land. She therefore pos sessed an absolute property interest which would be affected, and consequently stood in such relation to the mortgagee as enabled the parties to stipulate as they did. This conclusion, however, does not lead to an affirmance of the orders, but, in view of the facts, a contrary result must obtain. It is undisputed that the interest re mained due and unpaid. There was no agreement for an extension of payment of the interest, in consequence of which the same became due and payable as provided in the mortgages. Default in this respect authorized the maintenance of an action to foreclose for the sum due. Burt v. Saxton, 1 Hun, 551. The mortgages are not set out in the record, but it was stated upon the argument, and not denied, that the clause relating to the payment of interest did not make the principal sum payable by the mortgages due unless the default had existed for 30 days. Such time had not run when these actions were begun. This leaves the right to enforce the mortgages for the interest due, and no more. It is undisputed that the mortgaged premises are insufficient in value to pay the mortgage liens, and that the persons responsible for any deficiency are wholly insolvent. The rents of the premises are being collected by the defendant Thompson, who is under no liability to pay the mortgage debt. view of these facts, the plaintiff shows herself entitled to the appointment of a receiver, even though she may not be entitled to enforce her mortgages to their full extent at this time, as, upon the facts now appearing, there is liable to be a future deficiency upon the enforcement of the whole mortgage. Ross v. Vernam, 6 App. Div. 246, 39 N. Y. Supp. 1031. It therefore follows that the motion should have been granted.

In

The order should be reversed, with $10 costs and disbursements, and the motion for a receiver granted. All concur.

In re STEWART et al.

(Supreme Court, Appellate Division, Second Department. May 24. 1898.)

WILLS-CONSTRUCTION.

A testator, who left a very large estate, devised and bequeathed a great part thereof to trustees, in trust to divide the same into shares representing each of his children, with a direction to invest each share, and apply the income, so far as necessary, to the use of the respective children during minority, all accumulations to cease as each should come of age, and with per

Held,

mission to invest the "estate" in certain special classes of security. upon an accounting by the trustees, that the term "estate" was intended to include accumulated income pending the respective minorities.

Appeal from surrogate's court, Westchester county.

In the matter of the judicial settlement of the account of John A. Stewart and others, trustees of John B. Trevor, deceased. From a lecree approving the account, the special guardian of the minor apDeals. Affirmed.

Argued before GOODRICH, P. J., and BARTLETT, HATCH, and WOODWARD, JJ.

George W. Wickersham, for appellant.

E. D. Cowman, for respondents.

*

*

HATCH, J. The will of the deceased directed that one-third of his estate be set apart and held in trust for the benefit of his wife during her life. The remainder of his estate he devised and bequeathed to trustees, with direction that the same be divided into four equal parts, to represent each of his living children, respectively. By the terms of the seventh clause of the will the trustees were "to hold and invest each share, and apply the income therefrom as it shall be received, or so much thereof as shall be necessary to the support, maintenance, and education of the child whom it represents, during the minority of any child, and until such child shall attain the age of twenty-one years, when all accumulations of interest shall cease, and the accumulated interest shall be paid to such child." By the tenth clause of the will the executors and trustees were directed to invest such funds forming a part of the estate in bonds and mortgages of a certain character, and also to make investments of the estate in United States bonds, or in bonds of certain other states, or in "bonds of railroad corporations in the Northern, Middle, or Eastern states of the United States, secured by mortgage on real property and railroad tracks or terminal properties in cities of such corporations." This clause also authorized the executors and trustees to subscribe to any issue of capital stock of corporations necessary, in their judgment, or beneficial for the protection or enhancement of any interest held by the testator at the time of his death, and to make any subscription for stocks or bonds or other securities which, in view of the investments held by the testator at the time, as his trustees should think advisable. Uninvested funds of the estate were required to be kept in certain trust companies, except such as should be required for the payment of debts, legacies, and expenses. The testator adds: "This clause of my will to be taken as advisory, and not directory, and temporary loans may be made on first-class bond or stock securities with ample margin." By the eleventh clause the executors and trustees were authorized in their discretion to retain such investments as the testator had made in his lifetime in real estate as well as in railroad bonds or other securities, and to hold the same on account of the trusts provided for in the will. The executors and trustees proceeded to carry out the terms of the will, and set apart a portion of the property, as directed in the will, to represent the share of John B. Trevor, an infant son

and 85 New York State Reporter.

of the deceased. In respect of this interest the executors and trustees have rendered an intermediate account, which has been passed and settled. On July 6, 1897, they rendered and filed a further account of their proceedings from the date of the former decree to July 5, 1897. In the last-mentioned account, inter alia, they set out in an appropriate schedule, called "F," attached to their petition, a statement of all investments of income for the beneficiary under the trust since the date of the last accounting. Reference to this schedule shows that the investments therein mentioned consist of first mortgage bonds of various railroad companies and of other securities. It is not contended but that these investments are such investments as are authorized to be made of the funds of the estate in pursuance of the terms of the will. Objection was made to this account and to these particular investments by the special guardian of John B. Trevor, upon the ground that the trustees were not authorized to invest the accumulated income held for the benefit of John B. Trevor in such securities. The basis of this objection rests in the claim that there is no direction in the will respecting the character of the investments which the trustees shall make of the accumulated income; that the will which enlarges the scope and character of the investments which the trustees are authorized to make is limited to the capital of the estate, and does not embrace the surplus income. As to it the trustees are limited to such investments as are trustees exercising general authority, which would not embrace such securities. King v. Talbot, 40 N. Y. 76. This objection has been overruled, and the learned surrogate has found that the authority to invest, conferred by the tenth article of the will, extends to the accumulation of the income held for the benefit of John B. Trevor.

The sole question, therefore, which confronts us for determination is, does the accumulated income, under the provisions of the will, form a part of the estate of the testator? It may be observed at the outset that he who creates a trust requiring the investment of money may direct how the investment shall be made, and what securities shall be taken, or he can dispense with any security. Denike v. Harris, 84 N. Y. 89. The question always is, what was the direction of the testator, and have the trustees fairly obeyed such direction? This right in the creator of the trust is not limited to the corpus of the estate. He has equal authority and control over the income arising therefrom. Smith v. Parsons, 146 N. Y. 116, 40 N. E. 736. The terms of this will conferring power upon the trustees in making investments is quite broad. It is evident from the character of the trust fund that the testator had been largely mterested and had invested heavily in railroad securities, and, in a general sense, it is quite evident that the testator intended to invest his trustees with much the same power in this respect as he had exercised in the management of his estate. This is evinced by his ref erence in the will to the character of his own investments, and the advisory direction which he inserts in the tenth clause. The direc tion to invest covered quite a wide range outside of the securities in which trustees exercising general authority might invest, and seems to indicate a purpose upon the part of the testator to trust the man