Opinion by
The question raised by these appeals relates to apportionment of corporate stock between life tenant and remaindermen. Its answer depends upon the effect of a corporate recapitalization and the merger by the corporation with two оf its wholly owned corporate subsidiaries.
For the purpose of this opinion it will be unnecessary to recite the provisions of the testamentary trusts or the detailed facts and figures pertaining to the corporate recapitalization and merger. It is sufficient to state that one of thе trusts is for the benefit of the widow of a deceased son, for her life, with remainder to her sons. The other trust is for the benefit of named grandsons, who are аll living. The trustee is the same in both trusts. Each trust contained shares of common and preferred stock of a corporation. The preferred stоck had arrearages for dividends undeclared. The corporation effected a recapitalization and merger with two of its wholly ownеd subsidiaries. The trustee exchanged each share of preferred stock, with accrued dividend arrearages, for one-half share of 5% cumulаtive preferred stock, Series A., one-half share of 5% cumulative convertible preferred stock, Series B., and one and one-quarter sharеs of no-par common stock; each share of $100. par *29 common stock was exchanged for one share of no-par common stock. The recapitalization and merger did not affect the capital nor increase or decrease the surplus. The assets and financial situation of the corporation remained unchanged. The trustee, owner of the stock, neither gained nor lost by the transaction. The same property interest was represented by the new certificates of stock that had been indicated by the old. There have been no stoсk dividends declared, no corporate dissolution, no distribution of corporate assets, and no sale of any of the new stock by the trustee.
Upon an audit of the trustee’s account, the orphans’ court allocated part of the new common stock to corpus and part to income. Both the life tenant and the trustee have appealed. The life tenant is dissatisfied with the number of shares awarded to her. The trustee objects to any allocation at this time. After careful examination of the record, we are required to reverse the action of the court below.
There is probably no more difficult and intricate branch of the law than the
application
of what is termed the Pennsylvania, or American, Buie of Appоrtionment. The principle of equitable apportionment was early established (see
Earp’s Appeal,
*30
The life tenant has made an analysis of the assets and liabilitiеs of the corporation in question. She notes that arrearages for dividends are owing to her on the preferred stock,
if and when
such dividends are deсlared and paid; her able counsel induced the court below to find that there were sufficient assets after the merger to preserve the intаct value and distribute shares of the new common stock to the life tenant. The life tenant insists that such stock be
presently
awarded to her representing the amount of the undeclared dividends in arrears and all accumulated profits and earnings above the intact value. The court below,
in part,
made this awаrd. This action was premature and should not have been taken. Before the corporate reorganization, the trustee on behalf of thе life tenant could not have required the corporation to declare and pay arrearages of dividends except in circumstanсes not herein averred. The new shares, or any part of them, were not issued
in payment
of such arrears. The new stock was issued
in exchange
for the old stock. In the reorganization the value of the arrearages for dividends was considered. But it is only upon the sale or distribution of the stock, or upon the declaration of a stock dividend, or where othеrwise the interest of the trustee or beneficiaries ceases in the stock, or where there is a distribution of accumulated profits and earnings, that these matters may be adjudicated. The rule of apportionment, however, requires the intact value of the principal to be presеrved. If an apportionment is made
at this time,
it is clearly within the realm of possibility that there could be a change in the corporation’s financial status before the stock is sold or distributed. Such change might impair the intact value of the principal and there would then exist no assets with which to recоup the loss. In
Buist’s Estate,
The learned counsel for the life tenant relies chiefly upon what Mr. Justice Parker wrote in
Fisher’s Estate,
Reliance is also placed upon what we stated in
Daily’s Estate,
*32 The decree of tbe court below, as herein modified, is affirmed. The corporate stock in question is to be held by the trustee in accordance with this opinion. One-half the costs to be paid by the appellant life tenant and the other half out of the principal of the estate.