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PEW TRUST. (03/15/60)

March 15, 1960

PEW TRUST.


Appeal, No. 79, Jan. T., 1959, from decree of Orphans' Court of Montgomery County, No. 50,940 of 1958, in re deed of trust of Mary C. Pew. Decree affirmed. Audit of second account. Adjudication filed directing distribution of principal, certain exceptions to adjudication sustained and decree entered, opinion by TAXIS, JR., P.J. Life tenant appealed.

COUNSEL

Oscar M. Hansen, with him Samuel W. Morris, Vernon L. Stover, John Russell, Jr., and Morgan, Lewis & Bockius, for life tenant, appellant.

H. Ober Hess, with him Bruce L. Castor, Norman H. Brown, and Ballard, Spahr, Andrews & Ingersoll, for adult contingent remaindermen, appellees.

M. Paul Smith, guardian ad litem for minor contingent remaindermen and trustee ad litem for unascertained persons, appellee.

Before Jones, C.j., Bell, Musmanno, Jones, Cohen, Bok and Mcbride, JJ.

Author: Jones

[ 398 Pa. Page 524]

OPINION BY MR. JUSTICE BENJAMIN R. JONES

This appeal presents a problem in the field of apportionment; does a common stock distribution in 1954 by the Sun Oil Company to its stockholders, including this trust, unaccompanied by a contemporaneous capitalization of earnings, constitute an apportionable event under the Pennsylvania Rule of Apportionment?

On June 2, 1932, Mary C. Pew created an inter vivos trust to which she transferred 40,000 shares of the common stock of the Sun Oil Company (herein called Company).*fn1 Under the provisions of the trust instrument the settlor actually created two trusts, one for her grandson, Arthur E. Pew, Jr., and the other for her grandson, Walter C. Pew, each trust having an original corpus consisting of 20,000 shares of the Company's common stock.*fn2 Each grandson is to receive the net income from the corpus of his trust during his lifetime; upon the death of a grandson, the net income from the corpus of his trust is to be paid to his child or children until the child or children reaches the age of 24 years. Distribution of the corpus is to be made to each grandson's child or children in three stages:

[ 398 Pa. Page 525]

    twenty percent at age 24, thirty percent at age 28 and the balance of fifty percent at age 32. In the event a grandson dies without child or children surviving, then the trust provides for a gift over to the child or children of the other grandson and, in the event both grandsons die without child or children surviving, then a gift over to charity is provided. That which now commands our attention is the trust created for the grandson, Arthur E. Pew, Jr.

When the trustees filed their second account of the administration of this trust, the life tenant, Arthur E. Pew, Jr., filed several objections thereto; the only objection presently relevant is that the trustees failed to apportion to income 6359.75 shares of the common stock of the Company received by the trustees on December 30, 1954 and that such shares were carried in principal. The Orphans' Court of Montgomery County dismissed this objection and entered a decree nisi; exceptions filed thereto were dismissed by a final decree entered July 2, 1958. From that decree the life tenant appeals.

An adequate understanding of the instant problem requires a brief recital of some of the Company's financial background with particular reference to the past history of the Company's common stock ...


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