Appeals, Nos. 88, 89 and 90, March T., 1964, from decree of Orphans' Court of Allegheny County, No. 4403-A5 of 1940, in re estate of Florence Tack Norvell, deceased. Decree affirmed.
R. J. Cleary, for appellants.
Robert B. McKinley, with him John G. Frazer, Jr., and Marsh, McKinley & Bowman, and Kirkpatrick, Pomeroy, Lockhart & Johnson, for appellees.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.
OPINION BY MR. JUSTICE ROBERTS
Florence Tack Norvell died August 24, 1921. Her will, dated August 9, 1919, created a trust out of which the present controversy arises. Appellants are life tenants under the trust and are entitled by its provisions to receive all of the income. The trust also establishes alternative remainders over in named and unascertained persons.*fn1
On March 4, 1960, the trustees filed their fifth account. The petition for distribution, filed June 1, 1960, requested the court to approve distribution to the life tenants of the proceeds from the sales of stock subscription rights and of certain shares of stock received by the trustees as stock dividends.*fn2 Following our decision in Catherwood Trust, 405 Pa. 61, 173 A.2d 86 (filed July 26, 1961), the trustees withdrew the
suggested schedule of distribution. On December 20, 1961, the trustees filed a supplemental petition for distribution and took the position that, in view of Catherwood, "the entire apportionment matters referred to in the Petition for Distribution need not be presented."
The Orphans' Court of Allegheny County, by decree of April 29, 1963, approved the distribution to principal of cash from the sale of rights and the shares of stock received as stock dividends. This allocation was made under the Principal and Income Act of July 3, 1947, P.L. 1283, which Catherwood Trust, supra, held constitutionally applicable to trusts created prior to the effective date of the Act.*fn3
Specifically, this appeal challenges the constitutional validity of Sections 3(1), 5(1) and 5(2) of the Act. Section 3(1) provides: "All ... dividends on corporate shares, payable other than in shares of the corporation itself of the same kind and rank as the shares on which such dividend is paid, ... shall be deemed income, unless otherwise expressly provided in this act."*fn4
Prior to September 30, 1963, Section 5(1) directed: "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. ..."*fn5
Section 5(2) reads: "All rights to subscribe to the shares or other securities or obligations of a corporation, accruing on account of the ownership of shares or other securities in such corporation, and the proceeds of ...