94 N.J. Eq. 60 | New York Court of Chancery | 1922
This bill was filed by the widow of Edward A. McCoy, deceased, to have his will construed and her rights thereunder declared. The principal asset of his estate was two hundred and ninety shares of five hundred shares of the capital stock of J. B. McCoy & Sons, a Few York corporation, which, by the fifth paragraph of his will, he gave to three trustees to hold during the lives of his two children and the survivor of them, unless the trust should, sooner be terminated by the dissolution of the corporation or the sale of the stock, in trust, for the following uses and purposes, viz.:
*62 “To collect and, receive all dividends, income and profits which may be declared and paid upon said shares of stock during the continuance of this trust and to pay and apply the same as follows:
“(a) The income and profits upon two hundred and fifty-five shares thereof to my wife, Ada 0. McCoy, so long a® she shall remain unmarried, and in the event of her remarriage, during the term of this trust, said income and profits shall thereafter be divided into two equal parts and one of said parts shall be paid to my said wife, Ada C. McCoy, and the other of said parts shall be paid in equal shares to my s'aid children, Mary Catherine McCoy and Frances McCoy.”
Then follows provision for the disposition of the income upon the death of the widow, and of either of the children. The income of the remaining thirty-five shares of stock was given to the testator’s two sisters. The trustees were given discretionary power to sell the stock or to dissolve the corporation and liquidate its affairs, and upon the happening of either event, the trust was to terminate “and the proceeds which may be received by my trustees by reason of such sale, or by reason of such dissolution or liquidation upon the two hundred and fifty-five shares of such stock,” were to be held in trust under the provision of paragraph 6 of the will, wherein he gave to his trustees all the residue of his estate, “including the proceeds when received upon the two hundred and fifty-five sharesof said capital stock of J. B. McCoy & Son,” in trust during the lives of his two children for the following uses and purposes: “To invest and reinvest the same and to collect and receive all the rents, income, issues and profits therefrom, and to pay and apply the same in manner following:”
The disposition of the income of this second trust is the same as the first. Provision is also made for the disposition of the corpus upon the death of the surviving child. The testator died January 24th, 1916. The trustees carried on the business of the corporation until the first of January, 1920, when they began to liquidate its affairs, and shortly afterwards effected a dissolution. During the administration of the first trust, the corporation earned $71,233.17 and declared and paid dividends amounting to $75,000, thus invading the capital to the sum of $3,766.83, and upon the
There is no obscurity in the testamentary scheme. During the period of the first trust the widow was to receive two hundred and fifty-five two hundred ninetieths of the income and profits derived from the operation of the business of the corporation. The corpus of the estate, represented by the holdings in the corporation, was to remain unimpaired, and when that trust came to an end, by the sale of the stock or the dissolution of the corporation, the proceeds were to pass to and become the corpus of the second trust, of which the widow was to receive the rents, income, issues and profits in the same proportion.
The only other question is this: A $60,000 purchase-money mortgage was taken by the corporation in payment of some of its assets. This mortgage formed a part of the $200,000 liquidation dividend and was divided by issuing participation certificates to.the stockholders, of which the trustees obtained their share. Upon default in the payment of one year’s interest, foreclosure proceedings were begun, and pending the suit, the mortgaged premises were surrendered and conveyed by the mortgagor to an appointee of the participation certificate holders. The evidence indicates that the property has since ’ greatly increased in value, and the widow claims that the increase is income and profits, under the terms of the second trust, and that she is entitled to a