*1 right to such property. Indeed, assessment of bis tbe ness tbe actually hearing tax are is not foreclosed until tbe boobs duty with of collect- intrusted delivered the officers tbe Equal- though Board Even action of State ing the taxes. up may opened assessment, its completes decisions ization through tbe opon showing, mediation of rehearing, proper tbe & Co. Savings Trust Tax Commission. State [Brinkerhoff-Faris Hill, (2d) 746, 19 W. v. S. 751.] appear not grievance, does Assuming' respondent had a
ii, statutory in order remedies attempted make use respect show not in that pleading therefore does to obtain relief: its Savings Trust & equitable relief. it entitled to [Brinkerhoff-Faris Hill, supra.] Co. v. re- the cause is reversed judgment circuit court All bill. plaintiff’s dismiss to that court to with directions
manded concur.
Douglas Company, Trustee W. Robert et al. v. Mercantile Appellants. 23 S. under Will W. S. Robert, al., Edward et (2d) 32. One,
Division December 1929. *2 Bakewell, Jr., appellants. Paid *3 respondents. Doitglas W. Bobert *6 320 (re-
SEDDON, plaintiffs is an in equity, C. This action wherein spondents by here), as life'beneficiaries of a trust estate created deceased, com- last testament of seek Robert, will Edward S. pel Louis, Missouri, the Mercantile Company of St. testamentary dis- will, trustee of said estate under said trust 532 tribute and deliver life beneficiaries said trust estate no-par-value shares of common stock of Scullin Steel Com- pany, a Missouri 532 corporation, which shares of common to- gether 133 seven-per-cent with shares cumulative (par share) per $100 Company, said Scullin were of the ($25 par-value delivered said trustee in lieu of shares share) per of said which were adminis- by part tered and held said trustee as of the trust plaintiffs created will estate said of Edward S. Robert. The claim that said common stock of the represent Scullin Steel constitute and a stock dividend of immediately said Missouri corporation, and are distributable estate, estate, trustee of said trust as income of the trust life to the trust beneficiaries said estate. plaintiff are parties Douglas W. Robert, Robert and Lee E.
surviving brothers testator and creator of Robert; S. respective children; their wives and Eliza- .Edward H. Robert, Robert, beth Woodson widow of Dent a deceased brother parties of the testator. The defendant are the Mercantile Trust Louis, testator; of St. trustee the will under John Robert, a surviving testator; G. brother of Minnie Robert and Moser, daughter, wife and respectively, Edwa of said G. Rob- John ert; III grandchildren and Leo Moser and John Moser, Robert said John G. Robert. equitable
A trial and submission of the action the chancellor entry in the below resulted a decree favor the several life (plaintiffs), wherein beneficiaries the Mercantile Trust by as trustee of the trust estate created will of Edward Rob- S. deceased, pay was ordered to over ert, respective deliver beneficiaries, proportions they life respectively are to receive income of entitled the trust estate under the will of stock of no-par-value common all of 532 shares testator, said been have if Company; or, said said Scullin Steel pay trustee shall stock, the then, said sold in lieu of trustee, proportions, the cash in the same respective beneficiaries, life to the said stock. After from the sale of proceeds received the trustee (except the trial, new the defendants motion for a an unsuccessful *7 court. appeal an to this Company) were allowed Mercantile Trust appeal value of said jurisdiction because the This retains court the sum herein, record exceeds stock, as disclosed shares of $7,500. join appropriately raise and pleadings parties The the several single by, the chancellor to, and determined issue submitted unnecessary state substance it is herein the Hence, below. to respective parties. pleadings testate on De- that Edward S. Robert died
The evidence discloses no his descend- wife, was survived but left cember and in his will. The heirs other than those mentioned ants, and left no time of his owned and held testator, death, share) (par value, per of the Scullin Com- $100 common stock part estate, and was delivered pany, which stock was testator’s held Mercantile Trust as the trustee of the to, by, the and by testator’s will. trust estate created pro- following will of Edward S. contains the Robert :
visions my personal All real, “Second. the rest and residue of property, bequeath mixed, give, I and A. Madill devise unto Charles Douglas lease, powers sell, W. with fullest Robert, trust, to trade, dispose convey, mortgage, pledge, exchange or encumber, any any any property in time property, or all of said which at property of said shall be with the same proceeds vested, free- absolutely right if they own, would have the it were their dom that they my first provided, however, obtain the consent wife writing.
“(a) pay prop- shall out of the income of said Said Trustees expenses executing erty necessary this trust and thereafter monthly my pay shall over installments entire income to request wife, my pay my of which said I out income wife to Robert, him, G. and to his wife if she survives brother, John two ($200) per month, dollars less whatever sum shall paid hundred be my monthly by Robert, pay him Dent IT. brother, and also to out of Seventy-five per ($75) said income the sum of Dollars month my brother, belong my Lee. The rest said shall income wife absolutely during her I I life. While have indicated what wish her give my brothers, Lee, payments John these shall in no- charges my wise be real if the same is sold, it shall pass charges. of all free
“(b) A. Madill my wife, On the death of. said said Charles Douglas Robert, pay Trustees, my shall sell real estate and W. Company Louis, over and deliver to the St. Mercantile Trust trust, of said fund.
“(c) Louis, Said Mercantile Trustee, of St. pay my long shall brother, John, lives, over to so as he out installments, monthly income said property, sum Five ($5000) per provided, however, Thousand Dollars annum, that said shall sum not exceed one-half income from said property, net if income, pay does exceed one-half of the net it shall then long lives, my over to him one-half income, but of the net as he so being year my John, $5,000 shall brother, per intention receive that, if and if one-half of the income amounts to one-half of said $5,000, income exceeds said then all over shall that sum dis- among pro- tributed the other of this trust beneficiaries portions respective paragraphs. mentioned in the After the death my pay brother, John, said Trust shall his over share of long lives, income his wife, Minnie, net as she so after Edwa, long her death daughter, separate to her as she so as a lives, *8 interference, control, any from all free use or of husband. charge power shall property Said Edwa have to. said with any no debt, now or incurred, assign, anticipate hereafter or to forestall or any way in any whatsoever, income nor shall the be same liable for any fit, may of if the debts, her and said trustee sees it use the in- pay living’ giving expenses, directly come to her without it to her. leaving dies, If the said Edwa or children, child one-half corpus said estate shall be delivered such children, to child or right none, my but if leaves to she then heirs. If the said Edwa shall leaving Minnie, before no die the said child or children, then on the go corpus Minnie said my death the said one-half of the shall to right heirs.
“(d) Said Mercantile St. pay Trust shall Louis monthly installments, over one-fourth of my said income to death, life, during brother, Douglas, his and his after to his wife, Eliza, during her and life, after the death of both, then their to during life, two children their or survivor if them, to the one children, separate estate, die without as from control, free all use upon any husband; or death, interference their and one-fourth corpus of said shall he to estate delivered their descendants capita. per stirpes per my brother, and If not the said children of children, leaving no child Douglas, or then said one-fourth die right corpus go my heirs. shall to brother, my Douglas, “Said children shall no power have to charge any property with debt now or incurred, said hereafter or any income anticipate any or forestall assign, way to whatsoever, if the said any of and debts, be liable for their nor shall the same living- may pay expenses, income to their Trustee sees fit it use the directly giving without it them. to pay shall Company of St. Louis “(e) Said Mercantile Trust monthly install- one-eighth estate over the net income of said his brother, life, after during natural my to his Dent, ments upon remarries, she death Elizabeth, his until death, wife, to upon Dent, wife, his his death my Elizabeth, or brother, of both- one-eightli of net income shall remarriage, said and her then said Douglas, children, and my his wife and paid brother, be over to one-eiglith corpus be held and over under paid of said shall said provided (d) of this terms and conditions as Section the same paragraph. remaining one-eighth paid shall
“(f) of said income be net my brother, to Louis over said Mercantile St. monthly his installments, during- life, for and Lee, natural charge any power property have said with debt, he shall now no anticipate or in- incurred, assign, hereafter or forestall any whatsoever, any be liable way nor shall same for come may debts, his the said and if Trustee sees fit use income directly my living giving- it him. If pay his without expenses, having one-eighth married, his said Lee dies without then brother my brother, paid be and his Douglas, income shall over said net one-eiglith of shall be held children, corpus and said said Avife provided paid under same-terms and conditions over marry (d) paragraph. my Lee, If brother, of this should in Section children, death, a wife after his said have leave then one- his eighth paid shall be over said wife for and of said net income remarries, if during until she she 'leave life, her natural my Lee, one-eiglith then brother, children paid to said children, over and delivered but if he shall
estate remarriage no her leaving children, wife and after death- or dies, *9 paid my .one-eighth brother, net income shall be over to of said said children, one-eighth of said Douglas, his wife and said be', paid over under the same terms and as conditions shall held (d) paragraph. of in Section this provided shall Company Trust of Louis have
“(g) Mercantile St. The trade, convey, mortgage, lease, encumber, pledge, sell, to power same property any or as dispose of said trust of it exchange otherwise or any any not owner, shall at time invest but if Averethe sole it speculative stocks, shall securities, bonds but any or proceeds required of by to those trustees law. in investments limited not be my property of to take one-half ab- my If wife decides “Third. shall be turned over to the Mer- other one-half solutely, then my by said Louis, Trustees, of and the Company St. Trust cantile same, sapie persons income distributed proportion in the my wife. as provided hereinbefore the death of the event of If Company prop- real best, may said thinks it Trust own erty my my tenant in is not wish that as common with wife. It my of Trust property sold, be unless the trustees or the Mercantile Company is of speculative think a character.” too
The widow of of es- testator elected take one-half testator’s remaining absolutely, tate of and the one-half testator’s estate was Louis, pro- Company turned over to of St. the Mercantile Trust as vided in paragragh will, the “third” clause or said trustee of which year has 1912. earfy administered the trust since estate Company, trustee, Mercantile Trust as such under received the terms said Scullin will, of shares common stock of of Company par per share, Steel of value of which owned $100 were and held the testator his death. February, 1924, by corporate action of the Steel Com- Scullin par of
pany, the value the common of the Steel was per share, reduced from $100 $25 and the Mercantile Com- as pany, trustee, received shares common stock Scullin par each, exchange value of $25 for said original 133 times, shares of common stock. At all said stock of the Scullin Steel but $1,500,000, and there was class, one kind, or stock—common. January
On stockholders Scullin Steel Com- pany, appropriate corporate proceedings meeting had at a duly adopted called, a stockholders resolution to amend ar- changing increasing ticles association capitalization authorized of the corporation, then con- of 60,000 sisted shares of common stock with par $25 value of each, par value of $1,500,000, 30,000 total shares seven- preferred per-cent-cumulative par stock of the each, $100 value of par 100,000 or a total value $3,000,000, shares of common par nominal foregoing stock without value. Of the amount 15,000 authorized new having par 60,000 value $1,500,000, shares of common stock without par value, nominal or were authorized and ordered to “be issued exchange pro present outstanding stock; rata in for the. preferred, one of new say, no-par- share four shares new exchange common, in for each present value four shares par-value leaving outstanding, $1,500,000 common now thus preferred, and 40,000 par nominal without value, authorized may except issued, be hereafter but not authorized the Board 60,000 Directors, $25 shares, each, outstanding now not canceled and thereafter authorized.” *10 Company- The resolution of the stockholders the Scullin Steel of provided to preferred stock shall be entitled re- the Holders of per per ceive seven cent share cumulative dividends at the rate of per no declared board annum, more, as and when January corporation, quarterly April on payable directors of said July year, any 1 and October before dividends shall be in each paid corporation; or declared, apart, set on common stock paid upon and no dividends shall be declared the common stock or any except corporation providing in after for an- year, purchase (of redemption per par nual or at least two cent tangible value) stock, preferred or which will reduce the net of the equal corporation par assets of the below an amount to twice value outstanding or which will preferred corporation, of the stock of the fifty corporation per below cent current assets of the reduce the net to preferred outstanding. preferred amount of total date, paying quarterly any on dividend be redeemable stock shall plus share, accrued any per entirety time, $110 as at at an liquidation involun- unpaid the event dividends thereon. preferred stock tary of the holders dissolution in vol- per the event share, $100 shall be entitled to receive plus per share, untary $110 receive dissolution shall be entitled to outstanding preferred unpaid thereon. The accrued and dividends two least be and redeemed at the rate of stock is amortized to annually. voting power Exclusive par per cent of the thereof value (ex- stock of vested holders of the common on payment of dividends cept defaults in the event of certain preferred amortization or re- the annual or defaults stock), preferred preferred and no holder of the tirement for, issue, farther receive, be entitled to subscribe is to preferred or common. much of provides: “So resolution further The stockholders’ present stockholders capital presently as is be to increase issued outstanding Company shall exchange present of the for through transfer full-paid be issued and non-assessable account; surplus capital $1,500,000 has heretofore excess from paid capital account, which credit credited to duly been shall $1,500,000 par preferred payment full value stand as for (being $60,000 the sum at the rate issued, to be stock now share) surplus capital be ac- per $1.00 shall from transferred 60,000 full stock with- payment count as all of presently issued, to be so nominal or so out common, shall be shares, presently issued surplus full-paid re- non-assessable, all deducting maining hand, after amount be transferred aforesaid, remain as shall account *11 326 ¡the upon which
after . recapitalization. suck . . The terms outstanding of new shares shall of the shares place be issued in stock, preferred stock are of new stated, as above viz.: share One par nom- $100, value without and four shares new common stock of par value, exchange present inal or stock for each four shares of (par each) outstanding.” $25 value now exchange corporate
After stock, the of the Scullin of the statement Company corpo- Steel shows and status of the the financial structure ration to as follows: be, $9,240,386.92
Total Assets ............................. Reserves) (including 3,378,886.96 Total Liabilities ...... Capital 1,560,000.00 .................................. Surplus.................................. 4,301,499.96 that, The evidence further shows 31, 1911, on December the sur- plus of Company the Steel $127,869.72, was book value of the (common) per the then corporation $108.52 of was share. January 25, 1925, par On the book value of the then stock (common, share) per corporation $25 value per share, $97.75 of the was equivalent computed per per $391 $100 of share aon value of January (following share. On 1925 27, corporate of the action Company January 26, stockholders the Steel had and done on 1925), corporation the book preferred value of the new stock of the per $100 share, was no-par-value’com- book value of new corporation mon of the per $72.75 was be- share. The difference $4,361,499.96 (the tween surplus corporation of the time stock) authorizing' exchange action-of the stockholders $127,869.72 (the corporation at the the trus- time possession original tee took 133 shares of common stock of corporation), or $4,233,630.24, earnings out of created Company 31, 31, the Steel 1911, between December December 1924. paid
No by dividends company years were declared 1911, 1912, 1919. paid Dividends were declared and Company during the Steel years, 1914, other follows: per as five cent; cent; per per cent; cent; 1915, 1916, fifty five 1917, per ten 1921, 1918, thirty-five cent; per 1923, 1920, per ten cent per cent; year; twenty preferred (nine months), each stock, cent; per per $5 share. All of said divi- 5% paid upon shares dends of stock the Steel held the Mercantile as trustee under will of Trust Edward Robert, trustee, S. the said were received as distributed in- come the trust estate.
Following action of stockholders Scullin January had on Mercantile Com- pany Louis, trustee of the trust estate St. created the will to the Robert, May 15, surrendered S. on or of Edward about value (par Company the 532 shares of common Scullin Steel each) Steel Com- from said and received $25 133 shares pany, lieu surrendered - seven-per-cent stock of the new cumulative new com- (par and 532 shares of the each), $100 stock, preferred corporation, all which shares mon stock of the Company now as trustee of common, Mercantile Trust holds claiming *12 Robert, S. hy, will of Edward the trust estate created the principal, part corpus, all of shares of stock are of the that said of estate. said trust presen! respective parties the by agreed,
It is and the between of trustee the trust action, Company, as that the Mercantile Trust respective life bene- paying to the estate, been, is, has and now the income from the will Edward S. Robert ficiaries under the of no-par- 532 of (including from the shares estate the income trust respective Company), in the stock of Scullin Steel value common the provided Robert, that will Edward S. hut proportions said of refuses, Company refused, still to dis- the Mercantile has Trust no- 532 of life beneficiaries the shares tribute and deliver to said Company. par-value stock Scullin Steel common of the hand, plaintiffs one (respondents), is the on the It contention of 532 stock of Scullin ho-par-value the shares of the the Trust Com- Company, which to Mercantile Steel wore delivered hy will Edward the. of pany, as trustee of the trust estate created rep- May dividend, and 1925, are, in a stock Robert, fact, S. earnings Scullin Steel surplus of the a distribution the resent of shares of testator, said death the and that Company since the of pass estate, the trust and should stock comstitute income of the life of estate beneficiaries said trust once. hand, other (appellants), defendants on the contention of
It the fact, dividend, a or dis- not, of are stock such shares earnings but Company, Scullin Steel of the tribution of rearrangement reorganization of merely represent a Company, shares of stock were Steel and that such structure of the Company, under the will by the Mercantile Trust as trustee received exchange of S. in consideration of an other Robert, of Edward no-par- Company; 532 that the shares of retired stock of Steel Company merely represent the in- value common stock the Steel of, crement, original value or increase retired by Company was received and Steel administered such, that, no-par-value the 532 of hew trustee, as com- part corpus, principal, a of the trust mon stock constitute ultimately estate, which is distributable the remaindermen, beneficiaries, hy the life trust estate created not will of Edward S. Robert; though that, shares of no- even par-value common Company stock of the Scullin Steel be deemed represent by a stock Company (as dividend of the Steel contended respondents), nevertheless, part such shares of stock constitute corpus, principal, ox properly estate, trust and do not constitute income which is trust estate distributable life beneficiaries under the will Edward S. Robert.
I. appellants (defendants) insist that the shares of now no-par-value common stock Company of the Scullin were nei- Steel ther issued Company, Steel nor received Mercantile Company,
^rus1: trustee of the trust estate created Robert, will of Edward S. as a stock dividend,-or surplus earnings distribution the Steel Com- represent pany, dividend, and do not constitute or a stock in fact or legal effect; the 532 but that common stock acquired Steel were received Mercantile pursuance as trustee whereby exchanged contract exchange, trustee surrendered and 532 shares of the retired and canceled common equivalent for an new stock, com- *13 mon, Company. of the Steel
When Mercantile Company, charge, the as trustee, early Trust took year 1912, of by the the created the trust estate will of Edward S. Robert, part it received, corpus capital as of of the or trust the value, 133 estate, outstanding (par shares of then the common stock per share) $100 Company. of 33, the On December Steel Scullin 3.911, surplus the earnings of Company Steel the amounted to $127,869.72, and hook outstanding the value of its then common per share, $108.52 stock was original so that 133 the com- shares of mon stock the Company possession Steel which came into the the Company, Mercantile estate, as trustee the trust had a $.14,433.16. book value, December However, there was consequently no market for the stock time, at there that was no stock; by established hut market it conceded original parties hereto 133 that the shares of common stock of Company par value, Scullin Steel were worth their then or $13,300. time, that paid-in capital At the total stock of' the Steel Company represented $1,500,000, by 15,000 amounted to shares of having common par per stock of the a value of $100 1924, by Steel February, Company, appropriate corpo- share. action, par outstanding (all rate reduced the value of its then stock common) per share, 60,000 $100 to $25 from and issued shares share) (par value, per exchange $25 common stock for the then outstanding 15,000 (par per shares of stock $100 common value, Company. of the Steel by the stockholders share) to be surrendered estate, sur- as trustee of trust Company, Mercantile Trust original 133 common Company shares of the Steel rendered to in 1912 as received had Company, of the Steel stock exchange estate, and received corpus part of trust share) (par value, per $25 stock 532 shares of common therefor stock of the 532 shares of the common Company. These the Steel were, by Com- Mercantile Trust Company administered Steel May estate, 1925, until and a cash 15, as trustee of the trust pany, stock, declared twenty per on the value of said dividend cent by the by Company 1924, was received trustee paid Steel 532 shares of stock income on said common and was distributed as respective among Company life beneficiaries of the of the Steel will of Edward S. Robert. No claim pursuant estate, any time, now, by or of the life beneficiaries that made at that was share) (par per $25 value, the common stock said part thereof, dividend, any or a stock Company, the Steel constituted surplus earnings, Company, the Steel or distribution of the represented other than a mere of stock shares original 133 shares of common change form and number of share) acquired (par per Company, of the Steel value, $100 part corpus in 1912 as Mercantile Trust S. Robert. capital estate created the will Edward of the trust January earnings 25, of the Steel On outstanding and the book its then $4,361,499.96, amounted to value of share) share, (all common; par per per value, $25 $97.75 book 532 shares of stock then held so value of the Company, part of and administered the Mercantile Trust $52,003. of the trust On the amounted day, January the stockholders of Scullin Steel next duly meeting adopted called resolution Company, stockholders, amended the articles of association increasing capitalization by changing then authorized 60,000 which consisted of of common *14 share, par per par $1,500,000, $25 value total value of with seven-per-cent preferred 30,000 shares of cumulative stock .of the 100,000 per share, and shares of stock par $100 value of common par value. Of nominal or the total authorized amount of without 15,000 preferred stock, however, only stock, having shares of new 60,000 no-par-value $1,500,000, and shares of value of common par presently issued, remaining were ordered to be authorized stock, except to be stock, preferred common, unissued, as thereafter of directors of Company. By the board the Steel authorized 60,000 resolution, the stockholders’ shares of then terms of out- share) (par value, per $25 standing corporation common stock of the ¡ilO preferred corporation, canceled, new
were to be and the stock of outstanding place “in shares of was to be of the common, issued preferred stock, basis of new .upon stock” of “one share nominal and four shares of new common stock without $100, value exchange present (par value, par value, in for four shares of each) outstanding.” preferred' now order that the new .$25 fully paid non-assessable, resolution common, should be Company Steel and ordered that the stockholders of the authorized per share) (par 15,000 preferred value, $100 new shares of paid presently capital issued should be for account be then amounting $1,500,000, 60,000 corporation, of the and that presently no-par-value common stock be issued should by transferring $60,000 (being per paid $1.00 be at the rate for corpo- share) surplus capital from the account to the account - ration, surplus Company remaining hand,. and that “all on deducting capital to be after transferred to account as amount surplus aforesaid, shall such re- remain after Immediately capitalization.” after the stockholders’ action of Jan- capital uary Company aggregated Steel account surplus aggregated $4,301,499.96. $1,560,000, account On (the day January 27, 1925 after the next action exchange authorizing stock), the stockholders book value of preferred per share, $100 the new stock of the .Steel was no-par-value and the book value the new common stock of the per $72.75 share. Pursuant terms of res- to the Company adopted January olution of the stockholders the Steel on Company, the Mercantile Trust as trustee of the trust es- by the will Robert, May 15, tate created of Edward S. on or about Company, surrendered and delivered the Steel cancel- lation, (par share) value, per the 532 shares of common stock $25 old corporation, having $52,003, a book value of and received in exchange 133 preferred (book therefor shares of new value, $13,300) no-par-value 532 shares (book of new common stock value, $38,703), said shares of new and common, aggregate Thus, having $52,003. an book value will readily Trust Company, seen that the Mercantile. as trustee of the trust Company (for cancellation) to the Steel estate, surrendered corporation, having common stock of said shares of the old a book $52,003, exchange and received in therefor shares of new preferred stock and new equivalent having an book $52,003. value of stock of Furthermore, combined accounts of the immediately after the stockholders’ action Jan- $5,861,499.96, aggregated equivalent which is uary 26, 1925, surplus accounts of capital the Steel Company combined *15 January 26, immediately stockholders on action of before the the result the trust as words, 3925. In of other trustee exchange May 15, on received and held made of the of stock Company which had stock, preferred common, the Steel new and old stock greater aggregate book value than had the larger or no cancellation; Company for surrendered to the Steel which trustee no hand., other made actual dis- on the and the any corporation, such trustee, stockholder of tribution to the as a aggregate earnings of the but part surplus of the surplus accounts the Steel capital of the combined and amount Company exactly still the same as before surrender remained exchange for common stock of the an of the old corporation preferred (book) stock, common, equivalent value of new acquired corporation. say, That is trustee stockholder parted nothing Company more, nothing more, and the Steel with transaction of ex- pecuniary value, reason measured other, new, changing form character of one of stock. form or character meeting
Moreover, proceedings had the action at January Company on Scullin Steel stockholders any purpose stockholders that not disclose intention do earnings corporation any surplus shall distribution stock dividend shall be made, truth, be or that declared. contrary clearly expressed stockholders’ res- intention transferring $60,000 provides after the sum of olution, that, corporation capital surplus account to the account from the 60,000 no-par-value new payment of, for the as full common preferred be.presently all of the issued, so that stock to fully presently the Steel shall be to be issued common, thereupon surplus non-assessable, “all paid and deducting the remaining hand, amount be transferred after aforesaid, shall as remain the Com- account All recapitalization.” done, such or was in- pany after meeting, done, be the stockholders’ was to amend the tended corporation cap- that the of association so authorized articles increased; corporation par shall be the old ital stock corporation canceled; shall be stock of the retired and issued, presently fully paid of stock shall be and non- form new preferred classes, no-par-value assessable, to be divided into two exchange whereby provided, common; a basis the old returned and corpo- stock shall be delivered to value common exchange for the new for cancellation ration presently corporation. issued common, stockholders of the attempt was made No de- lawfully stockholders dividend; could the have done so clare *16 they liad so desired or for the attempted, Corporation of our statute seemingly State right confines and power solely limits that to the directors of corporation. the (in There is no evidence the rec- us) any ord before action of the directors of the Scullin Steel Company, undertaking dividend, to declare a either in cash or in authorizing or a any part distribution of of the surplus earn- ings corporation among the stockholders. (Sec. 1919)
The statute
10153, R. S.
inter
provides,
alia: “Divi
profits
by
dends
the
corporation may
made
the
be declared
every
or directors
trustees
thereof
six months,
oftener,
”
elect;
may
directors
.
.
.
Construing such statute,
Spring
Appeals
field
of.
recently
Milligan
Court
has
said, in
v.
Co.,
Grocer
App.
207
Mo.
484: “Our statute, Section 10153, Eevised Stat
places
power
utes
declare dividends in the board of
directors, and we do not understand that
possess
stockholders
.
power.-
that
.
. The stockholders
not,
could
even
the most
legal
way,
formal
meeting
stockholders’
unanimous vote
payment
declare
dividend and enforce its
without
consent of
the board
directors.
.
.
. Since the
power
stockholders had no
to declare
dividend
the first instance, they
not,
any
could
illegal
form of ratification of the
act of
impart
another,
life to that
they
powerless
were
to create. Ratification
effective
body
must be
same
power
invested with the
to act in the first
&
Corporations,
instance.
Marshall on
682;
sec.
[Clark
Calumet
”
Paper
Prtg.
Co. v.
Co.,
Haskill Show
144
Mo.
252 U. S. has from labor, combined,’ provided from both capital, from derived gained through profit a sale or include con- it be understood to assets, . . . we have essential mat- capital Here version of accruing growth or increment of gain capital, not ter: not a exchange- investment; something gain, profit, in the but value proceeding property, severed able from from being ‘derived,’ coming in, employed, invested however separate benefit use, his hy recipient drawn is, received or Nothing property. else from disposal; is income derived —that opinion learned -author description.” And ansAvers through 214-215) increase “Enrichment (on pages : reiterates meaning proper income capital investment not value of the term.” 15, 135 N. l. c. Foster, Iowa, W. v. Lauman “Any enhancement has said: Supreme Court IoAva earnings entirely withholding inures by reason value of *19 advantage derives life tenant no corpus, and the benefit to the bequeathing stock, Avill ‘Income,’ as used in a . . . therefrom. (Mass.) v. 6 Allen Head, thing ‘dividend.’ as [Reed means the same 524, 62 24 16 L. R. Phillip, 62, Conn. Atl. v. Spooner 177.] ‘ seems to be limited use the stock AArassaid: The A. it 461, “dividends,” if income. The word un receipt dividends money. payable in The word “income” signifies dividends qualified, enough things to include hardly broad meaning, broader but has 336 synonymous is way principal. not from the Tt separated in some
not
by good
may be
the stock
increased
with “increase.” The value.of
But such increase
business,
like.
and the
management, prospects
sur-
an accumulation of
may
is not
It
be increased
income.
also
long
plus; but,
surplus is retained
so
as that
be
can,
proper sense,
in
surplus
either as
or increased
it
no
’
‘‘
’
’’
’
producing,
income.
may become
it is not
called income.
It
but
lately
Hayes
own
in
v.
Louis Union
Our
court has
St.
said,
principal
317
of the Mercantile Trust as trustee of the trust estate, at the commencement of the administration of the
337 orig- appreciation in value of the 1912, and such increase and tliat capital part corpus capital inal is a or investment life estate, belongs to and not to the remaindermen, beneficiaries, of said estate. assuming
III. 532 com- But, shares of new of the trust mon stock received trustee May legal on in' represent, effect, estate constitute and insistently as is contended dividend plaintiffs-respondents herein, nevertheless, such ruling Hayes
under the recent v. of our court St. Louis 1028, Union 317 298 Mo. S. W. is part estate, in- the trust and is not come of the trust estate distributable to the life beneficiaries. Hayes 1046): (1. case, we said c. “A stock dividend is not implies division, true sense a dividend at all. The latter corporate
a severance from subject dividend, assets of the among and a distribution thereof the stockholders. v. [McLaran Planing Co., Crescent Mill 117 App. 819; Mo. 14 S. W. C. 798; Thompson Corporations (2 Bd.) J. p. 84, sec. The 5270.] issuance of a nothing stock dividend in its is, last analysis, more than process corporation an important incident bookkeeping. The step increasing is the capital of the fixed corporation. The outstanding shares of balance, stock are increased to either adding raising to their number or their value. When par value, unnecessary. has Nothing no seems even this is corporation. given taken from the Nothing is to the stockholders contrary, corporate profits —rather the theretofore available for permanently distribution in appropriated dividends are to its fixed capital. The all property title to corpo- remains proportional ration as before. The interest each stockholder con- same; only change tinues the is in the evidence his interest in the is, number of his shares is in- —that creased and the book value correspondingly of each share decreased, face value of his stock is raised to or toward what their intrinsic value . . . was before. ruling The basis our in this case is that the stock dividends were not income of the trust corpus, an but accretion to the because of nature, their they represent because money property no severed from ’’ assets. respondents ruling insist of this Hayes court
ease, principle and the rule or of law (and announced therein an- re- of last
nounced likewise tlie several decisions of tlie courts *21 foreign *n jurisdictions, sork which decisions are °^ier anc^ approvingly case), is ar- and in the cited followed IIa3res inequitable, application of bitrary, unfair in that and the rights question the announced life rule the “subordinates the exaggerated beneficiaries and remaindermen an consideration trustee;” upon the of stock and the dividends the effect usurps jurisdiction judiciary the lawful to determine what corporate earnings shall profits shall constitute what income, and aud estate, by substituting constitute of a action corpus, trust judicial decision; ignores in- investigation the true for and and trust, derogation in tention the creator the the and testator law, (Sec. 555, 1919), the R. and of of this State statute S. requires in execu- courts, “all others concerned the that and regard will, tion last due directions the wills shall have the in meaning and all matters testator, the true intent and brought Wherefore, urged by is re- before them.” this court the opinion Hayes spondents herein to our in overrule decision and the ease. Iiayes argued court,
The case was twice this this Division only printed and did have aid of exhaustive briefs not this court the arguments parties respective representing and of able counsel the by separate cause, but was further and able that this court aided Hayes court, by filed, with leave three amici curiae. The briefs single question case, novelty importance of the because of the and question impression in first presented, and because such one of thorough both consideration, had and careful State, this our most rehearing. sev- upon for upon original submission -and motion variously doctrines, (so-called), stated theories, or “rules” eral bearing upon question jurisdictions, and the applied and other decision, considered, analyzed fully and dis- presented our were for rendered, in by all of the mem- opinion in the and concurred cussed Hayes case; in the this court court, Division of our bers this correct, nearly rule, doctrine, that adopted, as more therein true estate, are not “income” of stock dividends trust meaning term, are an accretion accurate sense and that but such, estate, dis- and, as are not capital of corpus or the trust estate, unless the of the trust among life beneficiaries tributable ex- is be found contrary the creator of trust intention of otherwise, cre- instrument, testamentary or written pressed dispo- providing for its administration ating trust, and b.y language trustee; used the creator of or, if the sition ambiguous uncertain, then as instrument trust in written may he ascertained creator of the intention actual competent illuminated by aided language used as from the objects concerning subjects material extrinsic evidence bequests. areWe with the correctness of reason satisfied ing Hayes expressed conclusion and announced in the case, supra, perceive good departing no reason for from the rule of law case, overruling opinion announced in our therein. recent Hayes The rule or doctrine of law announced case has been lately reaffirmed Division this of our court MacDonald v. O’Day, (2d) Mo. S. W. 374. plaintifi's-respondents, however,
It claimed that 4he present distinguishable Hayes case is from upon ground case and distinction remaindermen of the trust estate in the Hayes living grandchildren case of the testator and w.ere
creator actually of the trust and so were known
testator, whereas the pres- remaindermen in the *22 case ent are the unknown, unborn, remote collateral kin of testator, the Respondents S. Edward Robert. argue (quoting brief) from their : “It cannot be conceived that the testator had in mind preservation the and upbuilding of a corpus, and keeping years it intact and increasing for years, simply keep to an estate alive, ultimately to be used remote collateral kin who would simply know of him as a name. There is not a single Robert) shadow suggestion (of of a in will S. the Edward that preserved the testator intact, to have increased, intended or a fund or mayhap, for the benefit of bo one, thereafter born.”
However, we ambiguity uncertainty language find no in or the respecting used the testator expressing in his intention either
the beneficiaries of the trust or the estate, kind bequeathed the re- property or character remainder, in spective beneficiaries, for life testamentary language, testator, such his oavM estate. The re- to the clearly certainly pay trustee over directed the has designated proportions, the spective beneficiaries, in life certain “income,” income,” estate, the trust and to deliver or the “net designated remaindermen certain “corpus” the of said estate to of the execution designated proportions. in At the time certain remaindermen, kneAV the or some testator well that his the Avill, provided hi's unborn; furthermore in and he least, were them designated should remaindermen that, will in the event that the determina- the ultimate being, should die before come into not propor- estate, designated the the trust distribution tion and bequeathed such estate corpus of the trust the tionate my specific There is right heirs.” nlo go to “shall remaindermen in will to be found the the testator intention of expression of go the life controversy should bene- in corporate stock that therefrom, estate, as income sueh whether ficiaries corporate stock be deemed to evidence an increase value of original capital evidence, deemed investment, or whether and to constitute, a tes- dividend; intention of the such tator is will; not derivable from further- the evidence aliuncle juristic more, agree authorities mere and con- all that surmises jectures respecting intention cannot override testator’s plain unambiguous language the courts cannot will, of his present (cid:127)make will for the testator. not io be We do find the case distinguishable Iiayes upon any ground from the distinguishing case degree a different relationship remaindermen to the upon pro- testator, or real substantial difference Iiayes respective visions case and wills of the testators in the case now before us for decision. Again, plain,tiffs-respondents is present case contend that
distinguishable Iiayes ground cor- unon the from the case that
porate present case, is stock involved in the corpo- (domestic) aof corporation, Missouri while cas,e Iiayes rate stock involved foreign corporation: therefore, urged it is that our and. opinion Hayes upon theory proceeded case that such controlling opinion dependent by, any was not dr affected upon, respecting stock involved. statute of this State corporation (Sec. 1919), R. S. statute our State Missouri applicable to the Scullin company every formed part, reads, as follows: "The stock Hence, . . personal .” this article shall be under deemed opinion this argued respondents that, it is inasmuch as rule Hayes accepts and follows recognizes, court in the case *23 Massachusetts, by in resort or doctrine the courts last announced property jurisdictions, "cash or other effect that and in to the (belong) income, stock dividends belong dividends the the statute, supra, stock of corpus,” and inasmuch our as under deemed corporation, must be Scullin Steel a Missouri Company, property, dividend or distribution personal therefore con- property, and stock of the Steel is a distribution of which, ruling property dividend, under our and decision stitutes a income,” Hayes case, "belongs properly distributable the might be force among life trust There beneficiaries estate. argument present in such if in the and substance portion surplus actually earnings of cor- a case, severed .had poration equal no-par- book (of an value of the new amount corporate corporation) assets, and common of the from the earnings cor- so made an actual distribution of the had among "But, poration its stockholders. as we have heretofore clear- no ac- ly surplus, has severance of the demonstrated, there been earnings corporation undistributed, cumulated and from the actual distribution of such accumulated corporate assets, and no corporate earnings ¡Stem among the stockholders oí Lhe Scullin Company. iNothmg was actually xaffen xrom tne corporation, ana nothing actually was given to the stocffffolders. Bach every sxocKholderoí the corporation, including the Mercantile Trust com- ¡8. pany, trustee oí che by estate created Bdward re- JtCouert, merely ceived a different kind or (new; character of stock m ex- change tor the old stocff by surrendered the stocffhoiders for can- cellation, and the proportional interest of each stockholder of the corporation in the corporate assets continued and exactly remained the same as exchange before the of stock. Thus, facts m the present case are not essentially upon different from the facts whicn Hayes case was ruled and decided this court. respondents The claim furthermore that the new stock received trustee, in lieu of the surrendered and canceled stock of ¡Steel Company, is of wholly a different class and held,
character than the
surrendered
originally
the trustee,
present
and therefore the
case falls within
(majority)
holding of
Supreme
Court of the
United States
announced Marr v.
States,
United
PER CURIAM: —The by Seddon, adopted foregoing opinion of the court. All opinion judges concur. the' Appellants, D. Irvine v. David Administrator Irvine, al., White et et al. 22 McD. with Will Annexed of Estate White, Susan (2d)W. 778. S. One, 30, 1929. Division December