Atkins v. Albree

Bigelow, C. J. It seems to us that the proceeds of the sale of the right to take new shares in the corporation are to be regarded as an extraordinary bonus or addition to the stock which was devised in trust for the benefit of the widow of the testator for her life or widowhood, with remainder over to his nephew; and that this increment must be treated as capital and added to the principal fund, the income of which is to be paid to the widow as directed by the will. The right or privilege to take new shares in a corporation upon an increase of the capital stock within the limits fixed by the charter is a benefit or interest which attaches to stock, not as profit or income derived from the prosecution of the corporate business, but as inherent in the shares in their very creation. Gray v. Portland Bank, 3 Mass. 364. It is true that the value of this right must always depend essentially on the success with which the operations of the corporation have been conducted, and on the prospect of future income and profits which the condition of the business of a corporation holds out to its stockholders. But this does not change the nature of the right or interest. It is stiE an original incident or attribute appertaining to each share; a right to a larger participation or ownership in the capacity of the corporation to earn profits; and not the gain or income itself, actually earned by the corporation. In this view, the value of the right must be regarded as a part of the corpus of the property devised in trust. The bequest of the testator is of the income only of the shares during the life or widowhood of his wife. These shares are to be held in trust until her death or marriage, and, on the happening of either of these events, the shares are to vest absolutely in the nephew. The intent is clear that his wife shaE receive only the gains or profits on the shares as they shall “ accrue or be received by the trustees.” This gives her no property in the shares, or in money derived from the sale of an interest which formed a part of the original right appertaining to the shares, but only to receive the entire income to be derived therefrom, whether it continues to be represented by the number of shares 362 held by the testator at his decease, or a portion of it becomes converted into money by the sale of the right to take new shares in the capital stock of the corporation. Nor, on the other hand, did it give to the nephew a right to demand and receive any part of the body of the property, or of any right Jr interest which appertained to the original shares in their creation, merely because a portion of such right or interest had ceased to exist as shares, and had been changed into money. The original shares and the money received from the sale of rights to take new shares in the capital stock of the corporation constitute the body of the trust property, which is to be treated as the capital or principal fund, the income of which is to be paid to the widow as directed by the will, and the whole is to go to the nephew on the happening of either of the events therein designated. Hill on Trustees, 386,446. Paris v. Paris, 10 Ves. 185. Witts v. Steere, 13 Ves. 363. Decree accordingly.