In re the Accounting of Osborne

Eugene La Grove died a resident of this state October 4, 1908, leaving a will which was duly probated and by the fourth paragraph of which a trust was created as "follows:

“ All the rest, residue and remainder of my property and estate, real, personal and mixed of every description and wheresoever situated of which I may die seized or possessed * * * I give, devise, and bequeath to my executor and trustee hereinafter named in trust, to hold said property and estate and invest and reinvest the same and to collect the rents, issues, income and profits therefrom, and to pay the net rents, issues, income and profits therefrom quarterly to my wife, Ivy Lee La Grove from the time of my death during the term of her natural life, and, upon her death, to divide the principal into as many shares

as my wife shall leave children by our marriage her surviving * * * but in the event that my said wife shall die leaving no issue her surviving, then at her death the principal so set apart for her benefit shall be paid to such person or persons as would be entitled to share in her estate were she to die intestate under the statute of distribution in force at the time of her death in the State of New York.”

The testator did not leave any descendants. Ivy Lee La Grove, who was his wife, is living. The rest, residue and remainder of the property, as provided by the fourth paragraph of the will, is held in trust by James W. Osborne as trustee pursuant to the provisions of such paragraph.

The will also provides in the fifth paragraph thereof as follows:

“I hereby request my executor and trustee under this my will not to sell any stocks that I may hold at the time of my death in the Singer Manufacturing Company, unless the remainder of my property and estate is insufficient to pay my just debts and funeral expenses and the specific legacies and charges in this my will contained; and in case such remainder of my estate is insufficient to pay such debts and funeral expenses and the specific legacies in this my Will contained, then and in that event I request my Executor to sell only so much of the stock of said Company as is necessary to be sold in order to pay such debts, legacies and charges. ■ I authorize, however, my Executor and Trustee created under this my Will that should he so elect, he may sell said stock or any of the same and in his discretion change the investment of said trust funds and should my Executor and Trustee elect to sell said stock or any part thereof, that he shall at all times keep the proceeds thereof as well as any other-part of the trust funds herein devised or bequeathed invested in stocks and bonds of the United States or of the State of New York and such stocks and bonds or other

investments as may be at the time legal investments for trust funds in the State of New York.”

The principal part of the estate of the testator consisted of three thousand shares of the stock of the Singer Manufacturing Company, a corporation organized and existing under the laws of the state of New Jersey. The capital stock of the Singer Manufacturing Company at the time of the death of the testator was $30,000,000. On that day it had a surplus of accumulated earnings arising exclusively from the business of the company amounting to $37,604,206.

On June 17, 1910, such surplus had increased to $51,560,757. On March 31, 1910, the executor sold eighty shares of the stock of said company. On June 2, 1910, the board of directors of said company passed a resolution as follows: “Whereas this corporation now has a capital stock of thirty millions of dollars issued and outstanding and a surplus of thirty millions of dollars and upwards, and, whereas, it is desirable that said surplus to the extent of at least thirty millions of dollars should be retained by the corporation as working capital, and to that end that its capital stock should be increased to sixty millions of dollars and a stock dividend of thirty millions of dollars be declared out of such increase, therefore, be it resolved:

“First. That it is advisable to increase the capital stock of this corporation to sixty millions of dollars, and “Second. That it is advisable to declare and pay to the stockholders of the corporation a stock dividend of thirty millions of dollars out of such increase of stock.

“And the board does hereby call a special meeting of the stockholders to be held at the company’s office at the Singer Building in the City of Elizabeth on the sixteenth day of June, 1910, at three o’clock in the afternoon, to take action upon the above resolution and decide whether or not such increase of stock shall be made. ”

On said 16th day of June, 1910, the stockholders

On June 17, 1910, the board of directors of said company adopted a further resolution as follows: “ Resolved, that the directors declare and they do now declare a stock dividend of thirty millions of dollars, or one hundred per cent on the present issued capital stock of this company payable forthwith to the stockholders of record on the 16th day of June instant out of said increase of stock, and that the president and treasurer be and they hereby are authorized and directed to issue forthwith to the several stockholders of record on the said 16th day of June instant, certificates for so many shares of fully paid and non-assessable stock as said shareholders shall severally be entitled to in payment of said dividends.”

Thereupon and on the same day, June 17, 1910, said company paid over and delivered to James W. Osborne as such executor a stock dividend of 2,920 shares of the par value of $100 each, being one share of increased capital stock of said company for each share of old stock theretofore held by said Osborne as executor, and said stock remains in the possession of said Osborne as such executor and trustee.

After the death of La Grove and prior to the payment to Osborne as such executor of the stock dividend, regular cash dividends had been paid on said stock amounting in the aggregate to $242,564.18, which has been paid from time to time by said executor to said Ivy Lee La Grove, the beneficiary under the trust, as provided by said will.

The question has been considered by the courts in this and other states and countries in many and various forms from time to time since the decisions and opinions of the courts have been published. It has been said that no question before the courts has been more troublesome. Certainly none has resulted in greater contrariety of views. Decisions that are apparently contradictory either in the same court or in the courts of different states and countries have, however, been caused in part by different facts and circumstances existing in the cases decided, and the effect necessarily given to the language of the will or instrument creating the trust in the particular cases in which the decisions have been rendered.

In determining who is entitled to a dividend upon stock held in trust the intention of the testator or the maker of the trust must be carried out when such intent is clear, so far as such intent does not result in an unlawful accumulation of income. Very many cases arise, however, where the testator or maker of the trust had not considered the possibility of enormous dividends being declared by corporations to effectuate their reorganization or in the division of accumulated profits made necessary by new statutes, changed circumstances and modern rules and conditions, or, if such testator or maker of the trust had considered such possibility he failed to express himself in the instrument creating the trust so as to show any clear intention regarding the same.

In England, as far back as 3/799, it was established as a rule that all extraordinary or unusual dividends declared during the continuation of a life estate whether payable in cash or in stock belong to the corpus of the fund and not to the income. (Brander v. Brander, 4 Ves. Jr. 800.) ' The decision in the case cited was repeat

In Massachusetts, in Minot v. Payne, reported in 99 Mass. 108 , it is said: “A simple rule is to regard cash dividends, however large, as income, and stock dividends, however made, as capital.” The courts of that state have followed such rule, taking unto themselves, however, the right to determine whether a stock dividend is in effect a distribution of cash to be treated the same as a cash dividend.

In Pennsylvania it was held in Earp’s Appeal, reported in 28 Penn. St. 368 , that ordinary dividends on stock held in trust belong to the person entitled to the income of the trust fund, but that extraordinary dividends should be apportioned between the life estate man and the remainderman in accordance with the amount thereof accumulated before and after the creation of the trust.

The question has been considered by the courts of nearly every state in the Union and by the Federal courts. It would be quite impossible to reconcile the many reported decisions. An effort to determine the weight of authority would be difficult and extend this opinion to unjustifiable length. It is not our purpose, therefore, to analyze or attempt to state the decisions of other jurisdictions or to refer to them except as we have herein to illustrate the extent of the conflict regarding the question now considered.

In this state the question was considered in Clarkson v. Clarkson ( 18 Barb. 646 [1855]). In that case one Clarkson died in September, 1845, leaving a will by which he left parts of his estate in trust for two of his children respectively. The trustees were directed to invest the

In January, 1846, the trustees invested $12,600 in the capital stock of the Utica and Schenectady Railroad Company by purchasing one hundred shares thereof at the price of $126 per share, and in February, 1853, the further sum of $6,000 in the capital stock of the Mohawk Valley Railroad Company by purchasing sixty shares of its stock of $100 each at par. The shares of the Utica and Schenectady Company thereafter paid an annual dividend of ten per cent upon their par value, which annual dividend was paid from time to time by the trustees to the cestui que trust. On the 30th day of December, 1850, there was paid to the trustees on the shares of the Utica and Schenectady Company an extra dividend of sixty per cent on the par value of. its stock in the capital stock of said corporation at par amounting to $6,000. In May, 1853, a consolidation of the Utica and Schenectady Railroad Company, the Mohawk Valley Railroad Company and other railroad companies took place and a new corporation was created called The New York Central Railroad Company. By the terms and conditions of such consolidation the trustees received shares of said Central Company equal ’ in number to those held in the two other companies, being two hundred and twenty shares of ‘$100 each, and also received bonds of the Central Company to the amount of $55 on each of the 220 shares held by them in the two other companies. It appears that the stock of the Central Company was then worth $115 per share and the bonds ninety per cent of their par value. The court in its opinion after referring to English and other authori

It will be seen that the price paid for the stock was treated as the capital invested by the trustees and that it was held that the cestui que trust was entitled to all dividends of every kind declared upon the stock so far as the same did not intrench upon such capital of the trust fund. An apportionment of the dividends was provided for if necessary to preserve the principal of such trust fund.

In Simpson v. Moore ( 30 Barb. 637 [1859]) one Wilson died in 1837 leaving a will by which he gave one-sixth of his estate in trust “ to retain and invest, and keep invested from time to time upon real estate security or in stocks by them deemed safe, and to apply and pay over the income thereof, from time to time, as it may be received, to my wife, * * * during her life.”

The will directed that after the death of his wife such one-sixth of the estate be divided among the children of the testator. The trustee in the year 1844 purchased 69 shares of the national bank at $50 per share, that being the par value thereof. The charter of the bank expired January 1, 1857. The bank was reorganized, and preparatory thereto it declared a dividend of eighteen per cent. The trustee took the dividend in new stock. The trustee also in 1848 purchased fifty shares of the stock of the Merchants’ Bank at $50 each, that being the par value thereof. The charter of that bank expired January 1, 1857, and preparatory to reorganization it declared a dividend of twenty-six per cent and the trustee took such dividend in new shares of the bank. A question arose as to whether the stock constituting such dividends should be delivered to the wife, who was entitled to the income for life, or be held for the benefit of the remaindermen. The court say: “ The testator intended all the income of the property which he ordered to be invested

In Matter of Woodruff (1 Tucker, 58 [1865]) a testator died in 1855 leaving a wife, five sons and four daughters.. He left the residuum of his estate in trust for the benefit of his widow and the remainder over to his sons. There came into the hands of his executor from his estate nine hundred and four shares of the capital stock of the Manhattan G-as Light Company. Two days after the testator’s death the legislature authorized an increase of the capital stock of the corporation from two to four millions of dollars. Thereafter and in 1855 the corporation declared an extraordinary dividend out of the surplus profits of the corporation of eighteen dollars per share. The executor and trustee accepted new stock and the dividend was credited thereon. It was held that the dividends belonged to the widow. In this case, however, the question of the impairment of capital was not considered and the decision purports to be based on Clarkson v. Clarkson.

In Goldsmith v. Swift ( 25 Hun, 201 [1881]) a person by deed of trust in 1856 transferred one hundred shares of the New York Central Railroad Company to a trustee to pay to the maker of the trust all dividends declared on said stock during his life and after his death to his daughter during her fife with remainder over to the descendants of the daughter. In 1868 the company issued to its shareholders certificates to the amount of eighty per cent

In 1869 the company was consolidated with the Hudson Eiver Eailroad Company, and the new company to equalize the values of the two companies issued new stock in place of the stock held under the deed of trust, the certificate for the eighty per cent thereof and an additional twenty-seven shares, making two hundred and seven shares in all.

The court held that the twenty-seven shares were a part of the corpus of the trust fund, but that the eighty shares were a dividend belonging to the cestui que trust. It does not appear that any part of the earnings was accumulated prior to the creation of the trust.

Cragg v. Riggs (5 Redfield, 82 [1880]) was a proceeding in Surrogate’s Court for an accounting. The will of the testator provided a trust by which the net interest, dividends, or other periodical income thereof was given to a daughter for life, and after her decease to her descendants. The question arose as to what should be done with certain stock dividends declared upon stock held in the trust. The court, referring to many cases in this and other states, and particularly to the decision in the case of Clarkson v. Clarkson, says: “ The real inquiry is how much of the stock dividend was capital, or made to represent an increase in the value of the property, and how much came from income or earnings, and also, how much of the stock dividend was made up of accumulations before, and how much from earnings after, the investment. And this, it seems to me, is the rational and equitable rule, by which to determine the question as to the relative rights of the life tenant and remainderman.” The court further says “ that the trustee, in the adjustment of those rights, should look to the real question, whether the dividends represent income or profits, or capi

This case was appealed and the decision in the General Term is reported in 26 Hun, 89 (1881), and in the opinion the court say: “Under the resolution which was adopted it was stated that the funds of the company had been accumulating for twenty years past, and that a special dividend of $50 a share should be declared * * * when this •accumulated fund was acquired, was not otherwise made to appear than by the statement of it contained in the resolution. * * but if evidence of that nature had been given it could not very well have produced any. change in the determination, for the reason already stated, that dividends are not apportionable, but are legally considered as accruiiig only from the time when they may be declared. This dividend was declared nine years after the estate had passed into the hands of the executors. ” (p. 102.)

An appeal was then taken to this court and it is reported in 89 Hew York, 479 (1882), where the judgment of the General Term and the decree of the surrogate were reversed for lack of jurisdiction. In the opinion of the court it is said: “Are stock dividends, representing earnings and profits of a corporation, expended in construction or improvements of the corporate property, declared during the life tenancy, to be regarded as between the

In Matter of Kernochan ( 104 N. Y. 618 [1887]) it appeared on an accounting by executors that a corporation had declared a dividend of $24.26 on each share of certain capital stock held in trust by the executors. The court, referring to the action of a referee appointed in the proceeding, say: “The referee made the apportionment in question by ascertaining how much was earned before and how much after the death of the testator, and so doing applied a rule which may be founded on general equity, namely: that when a fund is given for life to one beneficiary, and remainder over, the first shall .have its earnings after his life tenancy begins, and the remainder-man the balance. I find nothing in the will which indicates that the testator intended any such investigation or division, or that any other than the ordinary rule, which gives cash dividends declared from accumulated earnings or profits to the life tenant, should be applied. The direction to his executors is to receive the rents, interest and income of his estate, and apply the net amount of such rents or other income (with certain exceptions not now material) to the use of his wife. From the shares in question no income could accrue, no profits arise to the holder until

In Matter of Warren (2 Con. Surr. 411 [1890]) the testator died in 1879. He had subscribed at the organization of the Newburgh National Bank in 1864 for fifty shares of the capital stock for which he paid $5,000. The will of the deceased gave to his wife the use, interest and income during her natural life of the rest and residue of his estate and the remainder over to persons named. In 1890 the bank by resolution returned to the stockholders one-half of the capital of the bank at par with premium of forty per cent payable out of the surplus profits. On an accounting in the estate the court says: “This payment of 40 per cent on that part of the capital of the bank which was retired was however an unusual and extraordinary dividend, and there may he a doubt whether it is to be considered as a dividend of earnings to the shareholders, or whether it should not be considered a payment back to the shareholders of capital.” It did not appear when the surplus was earned and the forty per cent was awarded to the widow.

In Matter of Rogers ( 22 App. Div. 428 [1897]) the questions before the court relate to the division of the property of a corporation in liquidation. The opinion is an instructive one and in it the court, referring to a going concern and to extraordinary dividends, say: “When the former declares a dividend the title to the money is taken from the corporation and vested in the shareholder; whether rightly or wrongly declared, as a matter of fact the money is separated from the share of stock; it is no longer a part of the capital of the company. * * * The rule that the courts will not look to see from what

In McLouth v. Hunt ( 154 N. Y. 179 ) a testatrix, Caroline Cuyler, died September 18, 1888, owning 254 shares of the Western Union Telegraph Company stock. A resolution of the board of directors of the telegraph company was adopted at a meeting held September 14,1892, recommending an increase of the capital stock from $86,200,000 to $100,000,000. At another meeting held November 10, 1892, it was further resolved that out of the increased stock amounting to $13,800,000 there be distributed and transferred to the credit of stockholders of record on the 19th day of November, 1892, issuable on and after December 3, 1892, an amount equal to 10% of the stock held by the stockholders respectively, and that the remainder of the increase be held in the treasury subject to the further order of the board of directors. It appears by stipulation that the surplus earnings of the telegraph company on September 30, 1888, were $7,766,380.81, andón September 30, 1892, $14,455,757.16. The new stock distributed amounted to $8,620,000, being more than the difference between the surplus of September 30, 1888, and that of September 30, 1892, but per

In this case the appellant sought to have a different rule applied in the case of a stock dividend than would be applied in the case of a cash dividend. He did not attempt to show that the stock dividend was for an amount in excess of the earnings of the corporation accumulated subsequent to the death of the testatrix. The respondent insisted that the stock dividend should be given to the beneficiaries for years of the trust because the testatrix intended as shown by her will that such beneficiaries should have all dividends regardless of the question as to whether such dividend had been earned after or prior to her death, and he also contended that it should be given to the defendants as such beneficiaries because it represented earnings accumulated after the death of the testatrix.

The court clearly holds that no distinction should be made between a stock dividend and a cash dividend on that ground alone. It did not discuss the question as to whether a dividend partly earned before the death of a testator and partly earned after the death of a testator, whether the same was payable in cash or in stock, should be apportioned between the beneficiaries for years or life, and those entitled to the residue.

In Chester v. Buffalo Car Mfg. Co. ( 70 App. Div. 443 ) it is held that a stock dividend therein considered was but an increase of the capital stock in order to" make such capital stock correspond with the actual working capital of the corporation. In the opinion, the court say:, “ While it is subject to modification and variation, the natural and fundamental idea of life income payable under a will is of that current income which accrues and becomes payable from time to time during the life tenancy upon a

In Lowry v. Farmers’ Loan & Trust Company ( 172 N. Y. 137 ) John Lowry, the testator, died January 26, 1895, the owner of fifty shares of the capital stock of the Pullman Palace Oar Company. The Farmers’ Loan and Trust Company became a trustee under his will. While holding the trust and in the fall of 1898 the car company declared a stock dividend of fifty per cent payable to the owners of its capital stock on the 15th day of November, 1898. The court held that the dividend belonged to the life beneficiary. The testator provided by his will that “The entire income from such securities shall be applied as income, irrespective of the price paid for the securities or the subsequent value thereof; it being my will that no part of such income shall be diverted to form a sinking fund to replace any loss to the principal by depreciation in value of the securities.” (p. 138.) The decision in that case might well have proceeded on the language of the will, for it was entirely within the power of a testator to make that income which by law without testamentary disposition, would be principal, , though a testator has not that power in the reverse direction. (Pray v. Hegeman, 92 N. Y. 508 ; Hascall v. King, 162 id. 134.)

The decision in this case may well have been left upon the construction of the will as stated by the court.

In Thayer v. Burr ( 201 N. Y. 155 ) it appears that Frances A. C. Headley died March 25, 1884, and by her will created a trust. She died owning fifty-eight shares of the stock of the Adams Express Company, which were thereafter held in said trust. On February 9, 1898, the express company distributed $12,000,000 of its bonds among its stockholders, being $100 per share, and on June 17, 1907, another distribution of $24,000,000 of its bonds was made, being $200 per share.' When the trust came into being the assets of the company amounted to $14,050,000. When the last distribution of bonds was made it amounted to $40,800,000. The court in the opinion say: “The difference between these two sums is $26,750,000. The total distribution of bonds was $24,000,000. On this statement the amount distributed did not equal the amount of the earnings during the trust period but the result is modified by the stipulated fact that in the valuation of the assets at the termination

In Matter of Harteau ( 204 N. Y. 292 , 298) a dividend from the surplus earnings of the Metropolitan Plate Glass-Insurance Company was considered. As stated by Judge Bartlett in the opinion the questions involved

It is conceded that the capital of a corporation cannot be divided among the life beneficiaries. It is not alone the capital of the corporation that should be preserved, but the capital of the trust fund whether invested by the trustees in stocks of corporations at a premium, or acquired from the testator or maker of. the trust. The surplus of the corporation existing at the formation of the trust or when the stock is purchased represents a part of the capital of the estate as fully as does the capital of the corporation. The division by corporations of their surplus accumulated through a long period of years in very lai’ge amounts is now comparatively common, when until within a very recent time such division of enormous amounts was seldom, if ever, made.

Recently a well-known bank in this state with a capital of $300,000 and a large surplus divided its surplus by declaring an extra dividend of $2,700,000, or 900 "per cent, and increased its capital stock to $3,000,000, allowing its stockholders to subscribe for the increase and pay for the same by the dividend thus declared.

Another well-known bank in this state with a capital of $500,000 and a very large surplus divided its surplus by declaring an extra dividend of $9,500,000, or 1900 per cent, and increased its capital stock to $10,000,000, allowing its stockholders to subscribe for the increase and to pay

We refer to these cases simply to illustrate the great injustice that may be done to the ultimate beneficiaries of a trust, fund if a large part of such fund as invested must necessarily by reason of an extraordinary dividend and an arbitrary rule be paid over to the life beneficiaries of the trust. If dividends by a corporation payable out of surplus earnings whenever accumulated must be paid to the life beneficiaries of the trust unless special provision to the contrary is made in the will or instrument creating the trust, it will make the retention or purchase of stocks by a trustee in corporations having a large surplus a matter of questionable propriety. It must also be remembered that if all such dividends are adjudged to constitute income as a matter of law then their retention in the trust even by direction of the testator or maker of the trust would in many instances amount to an unlawful accumulation of income.

We think that in each case the court should look into the facts, circumstances and nature of the transaction and determine the nature of the dividend and the rights of the contending parties according to justice and equity.

In Cook on Corporations (6th edition, chapter 33, section 552) it is said: “Where shares of stock are held by an estate, and the income of the estate is to go to a fife tenant for life, and the remainder to another party, the question of whether the life tenant or the remainderman is entitled to a stock dividend or extraordinary cash dividend is a perplexing one. The stock dividend or extraordinary cash dividend may represent profits which were earned or accumulated before the life tenancy began. In that case it is clear that in justice the remainderman should receive it. If, however, it was earned after the life tenancy began, it is clear that the

In Thompson on Corporations (2nd edition, section 5414) it is said: “The courts now inquire into the actual nature and source of dividends for the purpose of determining their character, and as between the life tenant and remainderman if they are found to represent earnings that accrued prior to the creation of the trust they belong to the corpus of the trust; or if they represent the natural growth and increase in the value of the corporate plant and business, whether that growth and increase took place before or after the trust was created, they are to such extent capital. The court, in making the inquiry, concerns itself with the substance of the transaction, and not the form in which the corporation has seen fit to clothe it, and the fact that a dividend is distributed in cash or stock is said to be of little importance in determining whether it is capital or income. * * * The object of the inquiry in every case should be to do justice to the life tenant and remainderman, and at the same time effectuate the intention of the creator of the trust; and on this theory, in order to effectuate such intention and to do justice between the parties, a court may, under the circumstances of a given case, apportion a dividend between the life tenant and the remainderman.”

It is manifest that any apportionment of a dividend is more or less troublesome in the practical handling of trust estates. It may be necessary in many cases to make the apportionment of dividends in an accounting by the trustee where all the parties interested are bound thereby. The dividends usually declared by corporations are the ordinary dividends such as are declared from year to year or at other regular dividend periods. Extraordinary dividends are the exception. In all cases of ordinary dividends the courts uniformly hold that they

Notwithstanding the difficulty in many cases of apportioning dividends, it is wiser and better to leave an apportionment to courts of equity, in preference to adhering to a rule that depends more upon its simplicity and convenience of enforcement than upon justice and right. The distinction between ordinary and extraordinary dividends is necessary to make a workable rule and at the same time preserve the integrity of the trust fund. The integrity of the trust fund and rights of the fife beneficiary under the trust should each be considered, determined and preserved by a court of equity. As far as the courts in this state have made statements to the contrary, it has been in opinions where such statements have been unnecessary to the determination of the case then under consideration, and such statements are disapproved. It should beheld:!. Ordinary dividends, regardless of the time when the surplus out of which they are payable was accumulated, should be paid to the life beneficiary of the trust. 2. Extraordinary dividends, payable from the accumulated earnings of the company, whether payable in cash or stock, belong to the life beneficiary, unless they entrench in whole or in part upon the capital of the trust fund as received from the testator or maker of the trust or invested in the stock, in which case such extraordinary dividends should be returned to the trust fund or apportioned between the trust fund and the life beneficiary in such a way as to preserve the integrity of the trust fund.-

This case is one that requires an apportionment of the dividend. There is no dispute about the portion thereof that was earned prior to the creation of the trust, and the decree of the surrogate and order of the Appellate Division should be modified so as to award -}lHttIt parts of the stock dividend to the respondent and directing that the remainder thereof be retained as a part of the capital of the trust fund, and as thus modified the order and decree should be affirmed, with costs to the appellant and respondent payable out of the estate.

(dissenting). I think we should affirm the determination made below. The question presented by this appeal relates to the application by the trustee of a testamentary trust of a stock dividend and, in reaching a determination, the court below, unanimously, concurred in following the rule laid down by this court in the cases of McLouth v. Hunt, ( 154 N. Y. 179 ), Lowry v. Farmers’ Loan & Trust Co., (172 ib. 137), and Robertson v. de Brulatour, (188 ib. 301).

Eugene La Grove, deceased, by will, gave his residuary estate to a trustee, in trust, to hold the same and “to collect the rents, issues, income and profits therefrom and to pay the net rents, issues, income and profits therefrom, quarterly, to my wife from the time of my death, during the term of her natural life.” Upon the ■wife’s death, the will provided for the division of the

The question should no longer be regarded as an open one. The cases, which the court below has followed, laid down a rule, which is precisely applicable to the facts in the present case, and when the question first came up for decision, in McLouth v. Hunt, (supra), its determination was imperatively demanded. It had become necessary that a rule should be established upon a fundamental principle and the members of this court agreed in that decision. Prior thereto, in the case of Riggs v. Cragg, ( 89 N. Y. 479 , 487), a decision of the question was not required; but Judge Andrews, speaking for the court, observed that the decisions upon the subject in other states and in England were conflicting and that

I, therefore, advise an affirmance of the order and decree appealed from.

Cullen, Ch. J., Willard Bartlett, Cuddeback, Hogan and Miller, JJ., concur with Chase, J.; Gray, J., reads dissenting opinion.

Judgment accordingly.

Motions to amend remittitur

1. By the respondent in regard to the method of apportioning extraordinary dividends.

2. By the appellant, to recite the appearance on this appeal of the remaindermen and their consent to be bound by the judgment.

3. By the appellant, to permit the trustee to sell part of the stock received from the dividend for the purpose of paying commissions to the trustee thereon.

(Argued December Í0,1913; decided December 16, 1913.)

The proposition decided by us in this case is, that in all cases of extraordinary dividends, either of money or stock, sufficient of the dividend must be

The direction that the life beneficiary should be awarded parts of the dividend was erroneous, and the number of shares awarded to her must he ascertained in the method hereinbefore described, which will give to the life beneficiary 999.1 shares, and to the corpus of the trust 1,820.9 shares.

The motion of the appellant to amend the remittitur so as to recite the appearance on this appeal of the remaindermen and their consent to he bound by the judgment herein should be granted. So far as the stock dividend is retained in the corpus of the estate, the trustee is not entitled to commissions thereon. The very purpose of our decision is to make the corpus of the trust fund have

The remittitur should be amended as herein provided.

Ordered accordingly.