Lane v. Ferrari

WOOD (Fred B.), J. pro tem.* This is an appeal by life income beneficiary and trustee from an order denying his petition for distribution to him, as income, of a portion of the proceeds of a fire insurance policy upon the loss by fire of a certain theater building which comprised a part of the corpus of the trust estate.

In the inventory of the estate this property was appraised at $30,000. Subsequently, and before the fire, it was depreciated to $19,921.28. The insurer paid the trustees $73,-334.29. The appellant claims that the difference between the last two sums, $53,413.01, is a capital gain which is income and should be distributed to them as the beneficiaries who are entitled to receive the income of the trust as provided by the will.

In denying the petition, the trial court found that the allegations of the petition “are not true in that monies realized from the payment of insurance on the burning and destruction of the Niles Theatre property . . . over and above the original inventory value of said property and the depreciated value thereof, was not, in fact, income, and therefore not distributable to the life income beneficiaries of the Trust Estate . . . and that such monies so paid to their Estate were, in fact ... a substitution of money for improvements on real property, and should be retained in said Trust Estate. ’ ’

There is no claim that the insurance policy made the loss, if any, payable to the life beneficiaries or any of them. Respondents in their brief state that the trustees took out this insurance “for the benefit of the trust” and not “for benefit of either the tenant or the remainderman alone”; that it was taken out “by the trustees, paid for with trust income, and maintained for the benefit of the trust, and not of any separate class of beneficiaries thereof.” (Emphasis added.) Appellant in his reply brief takes no exception to this statement.

[416]We think the order under appeal is correct and should be affirmed.

The provisions of the Principal and Income Law (Civ. Code, §§ 730-730.15) are applicable. This testamentary trust became legally effective after September 13, 1941. (See § 730.02 of the code.) “All receipts of money ... as proceeds of insurance upon property forming a part of the principal except where such insurance has been issued for the benefit of either tenant or remainderman alone . . . shall be deemed principal unless otherwise expressly provided in this chapter. ” (§ 730.-05.) We are aware of no such other provision.