In re the Estate of Leask

S. Samuel Di Palco, S. In this trustee’s accounting objections were filed by the income beneficiary of the trust in question to the action of the trustee in allocating to principal shares of stock received as stock dividends from three corporations. The trust was established prior to the effective date of section 17-a of the Personal Property Law and the parties agree that the stock distributions should be apportioned between principal and income under the rule in Matter of Osborne (209 N. Y. [546] 450). With respect to stock distributions of two of the corporations in question the parties now agree on the apportionment proposed by the income beneficiary and such apportionment is approved by the court. The parties disagree as to the apportionment of two stock distributions of American Cyanamid Company common stock. The 65 shares of common stock of that corporation received by the trustee on June 18, 1952 should be allocated to principal since no part of that distribution represented accumulated profits on earnings. Out of the 130 shares received on June 17, 1957 only so much of the total amount capitalized as was transferred from earned surplus goes to the income beneficiary, the balance transferred from capital surplus is not a true stock dividend. The allocation of 11.42 shares to income and 118.58 to principal as computed by the trustee in its memorandum appears to be correct and will be approved by the court. Such allocation will not affect the trust corpus and is supported by the reasoning in Matter of Fosdick (4 Misc 2d 1003, affd. 3 A D 2d 1000, affd. 4 N Y 2d 646) and Matter of Guaranty Trust Co. of N. Y. (Angelesco) (N. Y. L. J., Nov. 23, 1953, p. 1190). Matter of Harjes (9 Misc 2d 792, 793) cited by the objectant as requiring a holding that these distributions are entirely true stock dividends is not in point for the court there was dealing with a will which directed the trustees to pay to the income beneficiaries not only income but also “ any and all stock or special dividends ” while here the direction is limited to ‘1 net income, interest and profits ’ The objection to the sale of 65 rights of American Cyanamid Company not being urged by the objectant is overruled. Submit decree on notice settling the account accordingly.