Court Opinion

ID: 5694528
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:32:01.982952+00
Date Added: 2024-06-11T08:40:12.581702
License: Public Domain

Breitel, J.
(dissenting). I dissent and vote to affirm the order of Special Term.
*8Legalistics, not law, suggests modification of the order, and the construction that the stock-split declared by Standard Oil Co. of New Jersey, must, contrary to the wish of the settlor, be allocated largely to principal rather than income.
The governing paragraph of the trust indenture is far from clear. Its clumsy draftsmanship is evident on superficial examination. The first clause, in referring to “ dividends ” of every nature, allocates them to income during the life of the first life beneficiary, who was also the settlor and cotrustee. The second clause, however, in referring to dividends mentions “ stock dividends ” and allocates them to principal after the death of the first life beneficiary. But this specific reference is omitted from the first clause, although obviously intended to be included, and in fact included by reason of the generality of the language. Hence, on any view, the reference'to “dividends ” is hardly to “ true dividends ”, whatever that may mean.
Stock-splits, of course, are not referred to in either clause in express language, so the question that has arisen is left unanswered—• unless the word “ dividends ” in this context be deemed to include it. The settlor, whose intent is to be divined, thought it was; and he expressed that understanding in the most unequivocal fashion, namely, by his action in treating the additional shares resulting from the stock-split as income. Lest one fear that this stemmed from ignorance of the legal mysteries, his lawyer and cotrustee, at the then peril of surcharge, concurred in his action.
Those learned in the law may see a monumental difference between a two for one stock-split and a 100% stock dividend, but to the investor or even to the corporate financier, there is no such marked difference. Either form of distribution is divided among the stockholders — and to that extent is a “ dividend ”— ; and much more than a superficial classification of accounts is required to determine the economic effect. Where there is no specific guide the decisional precedents and the pertaining statutes resolve the problem nicely, because it must be resolved.
But here we require no forced resolutions. We have unclear and clumsy language, and the clearest expression of intent by the settlor while he yet lived, concurred in by his lawyer and cotrustee. To undo his action is destructive of intent and understanding, and makes a fetish of a paper that was ambiguous or silent in the first instance, on the question which atuse, Thg result is not only destructive, but ludicrous, because *9the settlor and his lawyer-cotrustee could so easily have accomplished the same result by writing some more words on paper, addressed to themselves. For the trust indenture reserved to the settlor unlimited power to revoke or modify, in whole or in part, the trust created by him and that power had indeed been exercised from time to time.
While Special Term made some rather sweeping remarks about corporate bookkeeping in referring to how “stock-melons ” are divided, the result was quite correct, when applied to an instrument of the character here involved with: (1) unclear language, (2) unlimited power to modify or revoke and (3) settlor’s unequivocal expression of intent and understanding by his action, concurred in by the lawyer-cotrustee. Thus the shares involved are now being rediverted from the settlor’s estate and the beneficiaries under his will, to the trust and the beneficiaries therein mentioned, in contradiction of his wish and deed. This is, in truth, law losing contact with reality.
The order should be affirmed.
Peck, P. J., Botein, Rabin and Cox, JJ., concur in Per Curiam opinion; Brbitel, J., dissents and votes to affirm in opinion.
Order modified in accordance with the opinion herein and, as so modified, affirmed. Settle order on notice.