Court Opinion

ID: 6378431
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:57:46.98804+00
Date Added: 2024-06-11T15:50:16.093947
License: Public Domain

Van Dusen, J.,
dissenting. — At the time of testator’s death, he held 1150 shares of stock of Virginia Coal and Iron Company which passed to his trustees, and which had a book value of $145.9259 per share. In 1918 a stock *380dividend of 33! per cent, was declared, of which thé trustees received 383 shares. After the dividend, each share had a book value of $218.332 per share, so that intact value was not impaired. The stock dividend was noted in an account, filed and audited in 1919, and the question of its allocation was raised in the petition for distribution with a prayer for an award to principal. The adjudication does not notice or decide the question, but the schedule of distribution awards these shares to principal at no value. The record at that time is barren of information as to why this was done. There is no testimony or agreed statement of facts or findings of fact or law in the record. Now an agreement of parties interested is produced, which was executed at that time, whereby it was agreed that these shares might be awarded to principal.
I agree that this judgment is conclusive as to the fact accomplished by it, whether it was right or wrong, and whatever the reason for it. So much of the surplus of 1918 as was made available for income at that time by the action of the directors in declaring a stock dividend has been put into principal, and there it must stay.
When, then, a 100 per cent, stock dividend was declared in 1928, of which the trust received 1595 shares, the amount to be preserved for principal was as follows:
Intact value of original 1150 shares at $145.9259......$167,814.785
Book value of 383 shares stock dividend of 1918 at $218.332 ........................................ 83,621.539
Cost of 62 shares purchased......................... 14,836.26
(Stipulation 14 b) $266,272.584
Contributed surplus per share..............$20.31
Capital gains per share.................... 5.7004
1595 x................................$26.0104 41,486.588
$307,759.172,
or $192.9525 per share for 3190 shares (17 b). The stock dividend is prima fade income. After the 1928 dividend, the book value of each share was $121.0939, and of the whole 3190 shares $386,289.54. Therefore, the equivalent of $78,530.37 goes to income, which, at $121.0939 a share, is 648 shares and $61.75 in cash.
The award of the Auditing Judge is based on the conclusion that the 1919 adjudication awarded to principal all the surplus as it existed at the time of the 1918 dividend. This cannot be. It is obvious from the figures now furnished that there was a very large surplus which was not distributed by the 1918 dividend. If it had been, after-dividend value would have been $145.9259, whereas it was in fact $218.332. So much of the surplus as is represented by the difference between $145.9259 and $218.332 had not been put by the directors of the Virginia Coal and Iron Company in such form that it could have been allotted to .either principal or income; and was not and could not have been adjudicated.
I would sustain the exceptions of Edna D. Browne numbered 1, 2, 5 (b), 6 (b), 7, 10 and 15, and award to her one-seventh of income as ascertained above, to wit, ninety-two shares of Virginia Coal and Iron Company at $121.0939 per share, and $78.01 in cash, less commissions to the trustees.