Court Opinion

ID: 6376006
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:55:13.320634+00
Date Added: 2024-06-11T15:50:10.496687
License: Public Domain

Thompson, J.,
At the time of testator’s death, the value of his stock in the corporation in question was $142.61 a share, the assets consisting of the original capital and undistributed earnings.
The adjudication clearly sets forth the financial history of the corporation since. There were successive issues of new stock, and the new stockholders paid not only the par value, but a premium — the latter being carried on the books as contributed surplus. However, the new stockholders were not entitled to the benefit of that premium or surplus, exclusive of or as against the original stockholders. These premiums or contributed surplus merged in and became part of the general assets of the corporation; and all stockholders, new and old, had an interest therein in proportion to their holdings. The income therefrom, as well as the income from the original stock and from the *5par of new- stock and whatever surplus there was at the time the new stock was issued, went into the treasury of the corporation as earnings. These earnings, at the time of the declaration of the stock dividend in question, amounted to $1,910,269.41, of which $1,000,000 only was distributed as a stock dividend. Had the dividend been in cash, no question as to the right of the life-tenant to take it could arise; for there still remained in the hands of the corporation the whole capital, the surplus accumulated during testator’s lifetime, the premium or cash contributed as surplus, and some undistributed income.
The distribution of the surplus earnings being, however, in the form of new stock, the holders of which, upon its issue, becoming at once entitled to their proportionate share of the remaining assets of the corporation, it became necessary to ascertain by the best method available what was the actual value of each share of stock as increased. This was done by ascertaining its book value, and thus found by the Auditing Judge as $161.44, which is in excess of the value at the time of testator’s death. As it clearly appears that the par value, not only of the stock in existence at testator’s death, but the par value of the successive increases and as increased by the stock dividend, the surplus at the time of testator’s death, and the contributed surplus, remain unimpaired, and there are surplus earnings besides, it is impossible to see how the Auditing Judge could have done anything else than award the entire stock dividend to the life-tenant.
• The exceptions filed as to commissions are sustained, a stipulation respecting same having been filed. The other exceptions are dismissed and the adjudication confirmed.
Lamorelle, P. J., did not sit.
Van Dusen, J., did not take part in the decision, as he was interested in the questions involved.