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HARVEY ESTATE. (01/12/59)

January 12, 1959

HARVEY ESTATE.


Appeals, Nos. 209, 236, and 240, Jan. T., 1958, from decree of Orphans' Court of Philadelphia County, Dec. T., 1957, No. 3165 of 1940, in re estate of R. Wistar Harvey, deceased. Decree, as modified, affirmed.

COUNSEL

Oscar M. Hansen, with him J. Harry Wagner, Jr., and Morgan, Lewis & Bockius, for life tenant.

Philip A. Bregy, with him MacCoy, Evans & Lewis, for remainderman, The Contributors to the Pennsylvania Hospital.

George B. Clothier, with him Obermayer, Rebmann, Maxwell & Hippel, for remainderman, Philadelphia Museum of Art.

Before Jones, C.j., Bell, Musmanno, Arnold, Jones and Cohen, JJ.

Author: Jones

[ 395 Pa. Page 64]

OPINION BY MR. JUSTICE BENJAMIN R. JONES

These appeals present questions as to the propriety, as well as the manner, of the apportionment between a life tenant and remaindermen of certain stock distributions received by the Girard Trust Corn Exchange Bank, surviving trustee under a trust created by the will of R. Wistar Harvey who died October 21, 1939.*fn1

The decedent-settlor owned shares of stock in the General Electric Company and the Insurance Company

[ 395 Pa. Page 65]

    of North America which were subsequently awarded to the corpus of the trust. Some years subsequent to decedent's death the trustee received from both corporations certain stock distributions as a consequence of decedent's original stock holdings and the present controversy arises over the division of this stock between the life tenant and remaindermen.*fn2

After decedent's death 925 shares of no par common stock of General Electric Company were awarded to the trust. The General Electric Company stock distribution of 1954, presently in issue and described by the corporation as a "change and conversion", involved the issuance of three new shares of stock with a par value of $5.00 for each old share of stock with a stated value of $6.25. The required par value of $15.00 for the three new shares was obtained by a "write-down" to the par value of the new shares of the stated value of each old share and a transfer of the necessary balance from "reinvested earnings" to the capital stock account. The life tenant urged and the court below held that this capitalization of earnings furnished a proper occasion for an apportionment. In Cunningham Estate, 395 Pa. 1, 149 A.2d 72, we held that such a corporate transaction did not constitute an event requiring an apportionment, and, for the reasons set forth in Cunningham, we reach a like conclusion in the instant case.

The Insurance Company of North America stock distribution presents a different problem. All parties agree that this stock distribution involved an extraordinary

[ 395 Pa. Page 66]

    stock dividend, and, therefore, constituted an ...


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