Appeals, Nos. 53, 97 and 98, Jan. T. 1954, from decree of Orphans' Court of Northampton County, No. 144-44, in Estate of H. J. Steele, deceased. Decree affirmed.
Thomas B. K. Ringe, with him Miles W. Kirkpatrick, David B. Skillman and Morgan, Lewis & Bockius, for appellants.
William White, Jr., with him Edward J. Fox, Jr., Fox & Oldt, Sanford D. Beecher and Duane, Morris & Heckscher, for appellee.
Before Stern, C.j., Stearne, Jones, Bell, Musmanno and Arnold, JJ.
OPINION BY MR. JUSTICE BELL
Three charities which are remaindermen under Mr. Steele's will vigorously contend that a stock dividend which is admittedly income should not be distributed to the life tenant but should be retained in the trust, and its equivalent in cash be distributed to the life tenant.
H. J. Steele died March 19, 1933. He created 5 other trusts in his will in which he clearly disclosed that his wife and daughter were the primary objects of his
bounty. The trust here involved covers the stocks and bonds of the Easton Publishing Company, which at the time of his death were a part of his residuary estate. In the Ninth Paragraph of his will the testator gave and bequeathed his residuary estate "... in trust to pay the net income thereof in equal shares to my wife and daughter during their natural lives and upon the death of either then to the survivor and upon the death of both then to pay the principal thereof as follows: one fourth to the issue of my daughter and if there be no such issue living at that time then to the Easton Childrens Home, one fourth to St. Johns Lutheran Church of Easton; one fourth to Lafayette College and one fourth to the Easton Hospital as part of its endowment fund." Mrs. Fretz, testator's only daughter, is still living but has no issue.
Testator appointed his wife, his daughter, Mrs. Fretz, and The First National Bank and Trust Company of Easton as Trustees of his estate. Although his widow died in June, 1937 no successor trustee was appointed; The First National Bank and Trust Company was succeeded as trustee by the Easton National Bank.
Part of the principal of Mr. Steele's trust consisted, at the time of his death, of 3,925 shares and $105,000 par value bonds of the Easton Publishing Company. The shares of stock then outstanding totaled 8,000 shares. On March 14, 1951 the Easton Publishing Company declared a 25% stock dividend, of which the Steele Estate received 981 1/4 shares. The trustees thereafter filed an account in order to have the Court determine, as between life tenant and remaindermen, who, was entitled to this stock dividend. The intact value of each share of Easton Publishing Company at Mr. Steele's death was $114.55. On March 14, 1951, after declaration of the stock dividend in question, the intact value had increased to $135.42 a share. Even after
payment of the stock dividend and the transfer from surplus to capital of $200,000 to cover the dividend, the company had a surplus of $354,000 as ...