Appeal, No. 73, March T., 1960, from decree of Court of Common Pleas of Allegheny County, July T., 1953, No. 272, in case of Commonwealth Trust Company of Pittsburgh, administrator c.t.a. of the estate of Rose Givens, deceased v. Austin Givens, Inc. et al. Decree affirmed.
James A. Danahey, with him J. I. Simon, for appellant.
Frank W. Ittel, with him Reed, Smith, Shaw & McClay, for appellees.
Before Jones, C.j., Musmanno, Jones, Cohen, Bok and Eagen, JJ.
OPINION BY MR. JUSTICE BENJAMIN R. JONES.
Austin Givens, the owner of a large wrecking business, died on July 6, 1935 survived by his widow, Rose Givens, and twelve children.
Shortly after Austin Givens' death, Rose Givens and the children entered into a written agreement relative to the disposition of his estate, an agreement approved by all the parties and by the Orphans' Court of Allegheny County. Under the terms of that agreement it was provided, inter alia: (1) that Rose Givens and four named sons would form a corporation - Austin Givens, Inc. - to carry on the decedent's business, said corporation to have "a single class of capital stock, in such amount and of such par value as the said Rose Givens (Widow) may determine"; (2) Rose Givens, as personal representative and as an individual, was to transfer to the new corporation all the assets of decedent's business and receive in return therefor capital stock of the new corporation having a total par value equal to the value of the assets transferred; the ownership of this stock was to be in five named sons in equal parts but the stock was to be issued to Rose Givens who would hold the stock for herself and the five sons under a declaration of trust attached to and made a part of the agreement; (3) Rose Givens was to be Chairman of the Board of Directors and Treasurer of the new corporation so long as she desired and to have "complete control over the affairs of said corporation"; (4) three sons and a daughter of decedent, who were owed $38,600 in back salaries by decedent's business at that time, agreed to relinquish, such claims against the decedent's estate and the new corporation would assume such obligations, provided that "said debts and obligations shall be payable only out of surplus or profits of said corporation applicable to the payment
of dividends, but having a preference over dividends and over the payment of surplus or profits to Rose Givens"; (5) " The decision as to what constitutes surplus or profits of said corporation applicable to the payment of dividends shall be made by said Rose Givens (Widow) solely, and any determination thereof made by her shall be binding on all parties hereto".
The declaration of trust provided, inter alia, that Rose Givens would hold the stock of the new corporation in trust during her lifetime and, upon her death, the trust would terminate and the stock would be distributed to her five named sons. Under the terms of this trust before any dividends were paid on the stock or any surplus or profits of the corporation paid to Rose Givens, the $38,600 owing to the three sons and a daughter would first be paid, without interest, and "the decision as to what constitutes surplus or profits of said corporation applicable to the payment of dividends shall be made solely by [Rose Givens], and any determination thereof made by her shall be final and conclusive". Upon the payment*fn1 of the debt to the four children, "all dividends, or all surplus or profits applicable to the payment of dividends" were to be paid to Rose Givens "for her sole and exclusive use" during her lifetime.
The stock of the new corporation was issued, in accordance with the terms of the agreement and the trust, to Rose Givens. Rose Givens received a salary, annually, from the corporation from that time until her death. Rose Givens until the time of her death controlled and "bossed" the corporation in every respect. Rose Givens, outside of her salary, never received any dividends, ...