63 A. 351 | Conn. | 1906
There are two questions presented upon the record. The first grows out of the conflicting claims of life tenants and remaindermen to the fruits of stocks held in trust. It arises upon the demurrer of the remaindermen to the answer and claim of the life tenants. The pertinent facts involved, as they are admitted by the demurrer, are the following: By the will of Harriet N. Wilcox, who died in April, 1893, Sherwood F. Raymond was given the residuum of her estate "during his life, and after his decease . . . . to be equally divided" among certain remaindermen. Among the property received by Raymond as a part of the corpus of this trust fund were 259 shares of the stock of the Berlin Iron Bridge Company, of the appraised value of $7,122.50. Subsequently for a period of years the Company did a large business, paid regular dividends, and accumulated a large surplus out of its earnings, and its stock came to have a largely increased market value. In this situation the Company, by the unanimous vote of its stockholders, voted to discontinue its business and wind up its affairs, and to sell its entire plant and all its materials, merchandise, assets, *528 business, contracts and good-will, except its cash on hand, bills and accounts receivable, and cash due on completed contracts, to the American Bridge Company, in consideration of the receipt by the selling company of certain preferred and common shares of the vendee corporation and certain cash. This vote was carried out and the Berlin Iron Bridge Company received said stock and cash. The assets retained by the Berlin Company in this transaction were all, in the process of liquidation under the vote, turned into cash, and all debts and claims paid, leaving in the treasury a considerable sum in cash. All the stockholders of the Berlin Company agreed to accept in the distribution of its effects their proportional shares of said American Bridge Company stock, and such distribution was made. The cash in the treasury as the result of the payment by the Bridge Company and the liquidation as aforesaid, was by the directors voted to the shareholders in cash in the form of dividends. Said Raymond received his proportional share of both said stock and cash. The amount received in cash was $6,151.25, and the admission of the demurrer is that it was paid out of assets representing surplus earnings. The American Bridge stock thus received by Raymond was later, and during his lifetime, exchanged for stock of the United States Steel Company as the result of the absorption of the former company by the latter. Raymond subsequently died. The defendant executors of his will make no claim to said stock, but do claim said cash payments as rightfully belonging to his estate. The other defendants claim them as remaindermen.
The claim in behalf of the Raymond estate is based upon the admissions of fact that the cash received represented surplus earnings, and the general rule of law laid down inSmith v. Dana,
The remaindermen in their behalf assert the proposition that all assets distributed in the process of the liquidation of a corporation attach to the capital interest, and they appeal to the cases of Second Universalist Church v. Colegrove,
Apparently the courts must assume one of two attitudes, to wit: (1) adopt and apply the rule appealed to by the remaindermen as one of general application, or (2) adopt some theoretical rule determinative of the conflicting rights and claims of those who assert income and capital interests in respect to assets held by corporations in liquidation, and in each case enter upon a sorting-out process by means of which and through a minute examination into the affairs of the corporation, the source, quality and character of the corporate assets shall be discovered and determined, and those assets which, within the adopted rule, attach to the income interest be aparted from those which properly belong to the capital interest. The latter attitude, it will be seen, involves as the first step the adoption of a just and equitable rule to be applied, and this will be found to be no easy task, as courts and legal writers have discovered. The life tenants commend the rule referred to upon the closing page of Smith v.Dana as that which alone leads to exact justice. It has indeed a plausible sound, but it would be easy to point out its shortcomings. But we have no occasion to pursue this subject. Let it be assumed that a rule of assortment is established. It requires little imagination to picture some of the practical results which would attend the judicial attempt to "hunt back," to borrow Lord Loughborough's suggestive phrase, through the mazes of corporate history to discover the source of present assets. Under such a system no one could know his own rights or those of others. Litigation would offer the only open door to knowledge. That litigation would be such as would involve the bringing into the field of most critical and intimate investigation all the affairs *531
of the corporation, covering possibly a long period of years in the attempt to trace assets to their origin. How expensive, harassing to parties and the corporation, impracticable, speculative and impossible of intelligent result such proceedings would be, is apparent. The consequences of such conditions, to both the interested parties and the disinterested corporation, would be scarcely endurable, and such as would amount to a practical denial of justice to those who could not afford to litigate. The necessity of some plain, simple and workable rule for the prevention of controversies and the guidance of all concerned, is as pronounced in the situation under review as we have indicated it to be in the case of dividends by going concerns, and for the same reasons.Smith v. Dana,
The necessities of the situation, therefore, compel the adoption, for general application, of the rule that assets distributed by corporations in liquidation are to be regarded as capital and not income, as the one which is on the whole the most safe, just and practical in its operation of any which can be devised. The Supreme Court of Massachusetts has recently given its adhesion to this rule.Brownell v. Anthony, 75 Northeastern Rep. (Mass.) 746.
The operation of this rule is criticised as inequitable in the present case, and such criticism of it is often made. These criticisms will generally be found to be colored by the mistaken conception that undeclared earnings, as such, and while unaparted from the corporate assets, are from the point of view of the shareowners' interests to be regarded as income. Curiously enough we have recently had urged upon us the claim on behalf of remaindermen, that earnings not declared but retained in the corporate treasury belonged of right and in equity to capital and not to income. Boardman
v. Boardman,
The second question presented arises out of the claim of the Worthington Ecclesiastical Society to share in the division of the residue of which Mr. Raymond had the life use. Paragraph 22 of the will, which gives to Mr. Raymond this life estate, directs that upon his decease the property shall *533 be "equally divided among the schools and missionary societies mentioned in the above will." The paragraphs of the will preceding the 14th contain legacies in favor of individuals. The 14th gives $2,000 to the Worthington Ecclesiastical Society, thus designated. The seven succeeding paragraphs, being 15 to 21 inclusive, give various sums of money to or for the benefit of the seven corporations, boards, or societies designated in the will, as follows, to wit: the American Board of Commissioners for Foreign Missions, the Woman's Board of Missions, the American Home Missionary Society, the American Home Missionary Association of New York City, the Mount Holyoke Female Seminary, the Hampton School in Virginia, and the Northfield Seminary in Northfield, Massachusetts. It is conceded that the seven corporations last named are entitled to share in the distribution of the residue, as being either missionary societies or schools. The claim of the Ecclesiastical Society to enjoy the same privilege is based upon the nature of its purpose and work, which, it is said, is such as to fairly entitle it to be embraced within the descriptive term "missionary society." The statement of claim which was filed and demurred to, sets out the society's incorporation in 1772 by an Act of the General Assembly, that it is "engaged in an organized effort for the spread of religion by the maintenance and support of a church known as the Congregational Church, at Berlin, Connecticut," that the testatrix and her ancestors have from the beginning been members and staunch supporters of said society and its church, which have always been the chief objects of their bounty, and that by her will, drafted by her, she intended to include the society among those who were to share the residue of her estate upon the decease of the life tenant.
The testatrix has limited her bounty, as respects the division of her residuary estate, to "schools and missionary societies." It is said that by the term "missionary society" she intended to describe the claimant ecclesiastical society, as well as the other societies and boards confessedly described by her. This intent, if it appears from the will *534
when read in the light of the surrounding circumstances, must be controlling in the interpretation of the instrument; if it does not so appear, it is immaterial. Weed v. Scofield,
The society's statement of claim assigns to the word "missionary" a specified signification. As courts take judicial notice of the meaning of English words, the assigned definition places no limitations upon our inquiry. Nix v.Hedden,
The terms "missionary" and "missionary society" are of common use, and have a well accepted meaning. This meaning is the same whether the use is intended to be precise and technical, or merely that of every day speech. By universal acceptance the word "missionary," whether as a noun or adjective, embraces not only the conception of a religious, charitable or educational work or worker, but also of such a work done through philanthropic motives, for the welfare of others too poor, too unappreciative or too indifferent to do it themselves, and by persons supported or means furnished in part at least by some agency of which those for whom the work is done do not form a sustaining part. The derivation of the word implies a sending, and so it is that in both technical and common speech the idea of a sending forth, a sending forth to the service of others, the doing of a work for others, is associated with its meaning. Sometimes it is used to characterize the agency sent; sometimes of the agency sending; but always there is associated with the notion of a benevolent service for others, that of such service sent, whether far or near, by those who maintain it to those who need it. We are aware of no use of the term as descriptive of self-supporting religious effort in the maintenance by, within and for an ecclesiastical society or parish, of churches, church services, Sunday-schools, and *535
the ordinary agencies of worship or religious activity according to the usual practice, and especially the practice of Congregational societies in the country towns of New England. Take the Worthington Ecclesiastical Society. Its history carries it back to colonial times and colonial conditions, when it was created a corporate subdivision of the Colony and stood as its representative in the performance of its then conceived public duty of ministering to the religious needs of the people within its limits. Jewett v. ThamesBank,
There is no error.
In this opinion the other judges concurred.