182 A.D. 216 | N.Y. App. Div. | 1918
The question at issue, which arises under the will of Josiah Macy, Jr., who died on October 5, 1876, is the disposition to be made, as between the life beneficiary and the remainder-men, of the shares of the capital stock of certain subsidiary corporations owned by the Standard Oil Company of New Jersey, which were distributed among the stockholders of that company in 1911, pursuant to a decree of the United States Circuit Court, adjudging that company and its constituent companies to be an unlawful combination or conspiracy in restraint of trade and enjoining the continuance of the combination. The judgment appealed from held that all of the stocks thus distributed represented a dividend which must be regarded as income of the trust fund created under the will. The ■ question involved is determined in this court by the decision in United, States Trust Co. V. Heye (181 App. Div. 544), decided by this court at
As to the 2,000 shares of the Borne-Scrymser Company, purchased March 30, 1893, there is no evidence that these shares were purchased out of earnings accumulated prior to the formation of the trust, and the time of the purchase was so soon after the formation of the trust as to tend to indicate the contrary. Where stocks are purchased out of earnings for the purpose of increasing the business of the company, and not as a mere investment, and the property is used for such purposes and practically treated as a part of the company's plant, the burden of showing that the payment was made out of earnings accumulated after the formation of the trust ought to fall on the party claiming such a distribution as this to be a division of profits.
■It is contended on behalf of- the appellants that the judgment in this case should be more favorable to the remaindermen than in the Heye case, mainly because of a judgment of the Supreme Court heretofore entered in an action brought for a construction of the Macy will. It appears that the executors and trustees of the Macy estate, having doubt as to their power to sell certain real estate which came into their hands on the-death of the testator, filed a complaint in the Supreme Court for the construction of the Macy will
The judgment should, therefore, be modified by allotting ,to the principal of the trust fund instead of to income: (!)• The stocks of the thirty-three companies received by the plaintiffs from the Standard Oil Company of New Jersey ‘pursuant to the decree of December, 1911, except (a) the stocks and stock increases of the Colonial Oil Company, Standard Oil Company of California and Standard Oil Company of Nebraska; (b) stock increases of the following corporations acquired for cash by the Standard Oil Company of New Jersey out of accumulated earnings between March 23, 1892, and December, 1911: Anglo-American Oil Company, Crescent Pipe Line Company, Northern Pipe Line Company, Ohio Oil Company, Southern Pipe Line Company, Standard Oil Company of New York, Union Tank Line Company, Standard Oil Company of Kansas, Continental Oil Company, Swan & Finch Company and Vacuum Oil Company; (c) stock dividends declared and paid to the Standard Oil Company of New Jersey between March 23, 1892, and December, 1911, by the Crescent Pipe Line Company, Indiana Pipe Line Company, Northern Pipe Line Company, Southern Pipe Line Company,, Vacuum Oil Company; (.2) the proceeds of the sale of rights to subscribe to new shares of stock of various companies received by the plaintiffs’ predecessors in the trust and by the plaintiffs declared Or offered prior to December, 1911; (3) the shares of stock of the Continental Oil Company of Colorado received by the plaintiffs in exchange for shares of the stock of the Continental Oil Company of Iowa; (4) the proceeds of the sale of the shares of stock of the Waters Pierce Oil Company received by the plaintiffs as a part of the dis
Clarke, P. J., Scott, Smith and Davis, JJ., concurred. -'
Judgment modified as stated in opinion and as so modified affirmed, with costs to all parties who have appeared on this appeal payable out of the fund. Order to be settled on notice.