Case Name: Pollock's Estate
Court: Philadelphia County Orphans' Court
Jurisdiction: Pennsylvania
Decision Date: 1931-05-01
Citations: 15 Pa. D. & C. 147
Docket Number: No. 554
Parties: Pollock’s Estate.
Judges: 
Reporter: Pennsylvania District and County Reports
Volume: 15
Pages: 147–166

Head Matter:
Pollock’s Estate.
John F. Headly, Henry P. Erdman and Robert T. McCracken, for Roland D. Pollock.
Ira Jewell Williams, Jr., A. Carson Simpson and Ira Jewell Williams, for the executors of Margaret Pollock.
May 1, 1931.

Opinion:
Gest, J.,
The facts of this case appear so fully in the adjudication of the Auditing Judge that it is not necessary to repeat them in detail. Two questions are raised by these exceptions of Roland Pollock and of the executors of Margaret Pollock to the adjudication: First, whether Roland Pollock stood in a fiduciary relation to his mother, Margaret Pollock, in connection with the agreement made between them of February 8, 1923; and if this first question is decided in favor of the executors of Margaret Pollock, the second question arises, to what relief are they entitled?
The majority of the five judges who were present at the argument are of opinion that the exceptions of Roland Pollock relative to the first question should be dismissed. It may be conceded for the purpose of the argument that Roland Pollock was not a technical trustee of the 2370 shares of stock of the Pollock-Huston Company bequeathed by the will of the testator to him under the condition annexed to the bequest, and it may be further conceded that the declaration of the stock dividend was in accordance with sound financial policy. It should be pointed out, however, that, in the absence of a stock dividend, it would probably have been necessary for the corporation to pay a heavy federal tax on the undivided surplus. The action of the son saved the corporation from the tax and in substance transferred this burden to the mother by compelling her to give up her one-half interest in this stock dividend. This large surplus was build up out of the earnings of the business, accruing since the death of the testator. While the widow had no legal right to any of it until the declaration of a dividend, her moral right to a share thereof, potential and inchoate though it was, entitled her to full and complete independent advice before she should be deprived of her share thereof.
It is clear to us that Roland Pollock stood in a confidential relation to his mother, which required from him the exercise of uberrima fides; that one-half of the stock dividend, or 1185 shares, belonged to her absolutely under the provisions of the will, which specified "dividends of any kind or nature;" that Roland Pollock failed in his duty by insisting upon his mother waiving her rights to the stock dividend without consideration and without independent advice, and further by stating that the dividend would not be declared unless a gift of it was first made to him. Consequently, he became a trustee ex maleficio of the said 1185 shares of stock; and the contract was voidable by her and after her death by her executors. The recital in the will of Mrs. Pollock, as can be seen by reference thereto, of the son's interest in the corporation had reference solely to the provisions of the will of Mr. Pollock. By oral testimony it was attempted to enlarge this reference to cover the alleged gift of the stock dividend; this testimony was ordered stricken out without objection. As the adjudication discusses the facts of the case very fully in this regard, we do not consider it necessary to supplement it, and pass to the second question.
The Auditing Judge surcharged the accountant, Roland D. Pollock, with $162,179.10, as representing the "actual value" of 1185 shares of stock as of March 17, 1923, the date of the declaration of the stock dividend, or approximately $137 per share. In his first adjudication the Auditing Judge awarded the 1185 shares of stock in kind to the executors of Margaret Pollock, and we are of opinion that this was right. The present is a case of a trust arising ex maleficio, and a court of equity, which we are, should replace the parties in the positions they occupied before the trust arose.
It is beyond dispute that the stock of the Pollock-Huston Company had never at any time any market value, for the reason that there was no market for it. Had the bequest been of such stock, as, for example, Pennsylvania Railroad, which is bought and sold every day on the exchange, the award of the Auditing Judge might have been correct, but "value" in a case like this means nothing. Sir Edward Coke said, 3 Inst. 105: "Concerning the value (to speak it once for all) tantum bona valent quaMtum vendi possunt," which some one has put into rhyme:
"The real worth of anything Is just as much as it will bring."
To talk of "actual value," "liquidation value," or the like, is simply to becloud the question and run the risk of doing serious injustice to Roland Pollock. Ordinarily, as the Auditing Judge says, "the option is with the complainant; and if property has been wrongfully taken away, . . . she can have relief in money or kind." But suppose that Mrs. Pollock, immediately after the transaction, had repudiated it and brought suit against Roland Pollock, would any court have awarded her $162,179.10, thus turning the trustee into a purchaser? The court would simply have said: "We cancel the agreement and give you back your stock. You are not entitled to money damages because the thing which was the subject of the agreement had no market value." Margaret Pollock received all the dividends to which she was entitled; she was not damnified in money; she lost the thing, and it should be the object of a court of equity to put the parties in the same position as that which would have been theirs had the transaction not occurred.
In fact, although in this discussion we necessarily speak of stock, yet the stock represented merely an undivided and indivisible interest in the business. Divested of its corporate shell, the Pollock-Huston Company was but a carpet factory, and its value .depended for the purposes of this case principally on profits divisible in the form of dividends.
In our opinion, the contract being voidable, the damages, if any be awarded, should be calculated from the date when the contract was repudiated and the executors of Margaret Pollock demanded their rights, so that it was error to calculate them on the basis of value existing in March, 1923. Mrs. Pollock received the share of the dividends to which she was entitled, so that her executors were entitled, at most, to nominal damages, for she suffered no money loss by Roland Pollock's retention of the stock. Consequently, her executors were entitled to have the 1185 shares of stock awarded to them and nothing more.
The exceptions filed by both parties are very numerous, seventy-three being filed by Roland Pollock and twenty-nine by the executors of Margaret Pollock, and need not be disposed of seriatim. The exceptions of Roland D. Pollock relative to the first of the above questions are dismissed, and those relating to the second question are sustained. The exceptions filed by the executors of Margaret Pollock are dismissed. The adjudication is amended by striking out the money award to the executors of Margaret Pollock and sub stituting in lieu thereof an award to them of 1185 shares of stock of the Pollock-Huston Company.
The Auditing Judge authorizes us to say that he concurs in this modification of his adjudication and award.