Appeal, No. 98, March T., 1963, from decree of Orphans' Court of Allegheny County, No. 4751-A of 1957, in re estate of Annabel D. McEldowney, deceased. Decree affirmed.
Tillman K. Saylor, Jr., with him William McC. Houston, and Spence, Custer, Saylor & Wolfe, and Houston & Houston, for appellant.
John G. Buchanan, Jr., with him Buchanan, Ingersoll, Rodewald, Kyle & Buerger, for appellee.
Before Bell, C.j., Jones, Cohen, Eagen, O'brien and Roberts, JJ.
OPINION BY MR. CHIEF JUSTICE BELL
Testatrix died on October 27, 1957, leaving a Will dated February 26, 1953. She created a testamentary trust of one-third of her residuary estate to pay the income to her son Robert for life, with the remainder to his issue. Robert was not only the life tenant, he was also Executor. Robert died on March 18, 1961. Ninety-six percent of the trust consisted of stock in the Mellon National Bank and Trust Company. The Mellon Bank paid a 2% common stock dividend in 1958, in 1959, in 1960, and in 1961.
At the Audit of the Trustee's Account, Robert's Executrix claimed that the 2% stock dividends which had
been carried in Principal by the Trustee, were apportionable and should be allocated to income. From the Decree of the Orphans' Court, which confirmed the Account and dismissed the exceptions, Robert's Executrix took this appeal.
The Principal and Income Act of July 3, 1947, P.L. 1283, Section 2 and Section 5, 20 P.S. §§ 3470.2, 3470.5, provide: "Section 2. Application of the Act; Powers of Settlor. - This act shall govern the ascertainment of income and principal ...: Provided,*fn* That the person establishing the principal may himself direct the manner of ascertainment of income and principal ... or grant discretion to the trustee or other person, to do so and such provision and direction, where not otherwise contrary to law, shall control, notwithstanding this act."
"Section 5.*fn** Corporate Dividends and Share Rights. -
(1) All dividends on shares of a corporation, forming a part of the principal, which are payable in the shares of the corporation itself of the same kind and rank as the shares on which such dividend is paid shall be deemed principal. Subject to the provisions of this section all dividends payable otherwise than in such shares of the corporation itself, including ordinary and extraordinary dividends and dividends payable in shares or ...