The trustees under the will of Edward W. Jackson seek instructions to determine the rights of the parties in certain securities and cash which came into the possession of the trustees as a result of the liquidation and dissolution of the United Light and Power Company, hereafter referred to as "Power," and certain of its various subsidiaries and their various subsidiaries. Trustees also seek instructions as to the rights of the parties in 400 shares of common stock of American Can Company received by the plaintiffs as a stock dividend on or about April 27, 1952. The trustees were instructed at the hearing that under the will of the testator these 400 shares were to be distributed to the life tenant.
In addition to leaving all of his realty and personalty except cash and securities to his wife, testator, by the fifth paragraph of his will dated March 14, 1939, created a trust for her benefit of the residue of his estate as follows:
"All the rest, residue and remainder of my estate, both real and personal, and of every kind whatsoever and wheresoever situate, of which I shall die seized and possessed, I give, devise and bequeath unto my trustees, or trustee, hereinafter named, and their survivor, in trust nevertheless for the following uses and purposes:
A. To hold, invest and reinvest the same as in their judgment may seem wise, and to receive the rents, proceeds and income thereof, and to pay over the net income thereof unto my wife during her life in quarter annual installments, beginning on the first day of the third month after my death. All dividends whether ordinary or extraordinary, cash or stock, or paid in stock of another corporation, which shall be paid to or received by my executors or trustees after my death on stock of corporations owned by me at the time of
my death or which may at any time constitute part of my estate or the corpus of this trust shall be considered and distributed as income, whether the same shall be declared out of surplus or proceeds accruing prior to the date of my decease. There shall also be considered and distributed as income all moneys obtained from the sale of rights to subscribe to new or additional stock. In the event that in any year or years the annual net income shall be less than Twenty Thousand Dollars ($20,000.00), I authorize and direct my trustees or trustee, at my wife's request, to pay to her in said year or years from the principal of the trust sufficient moneys to make good the difference between the net income and the sum of Twenty Thousand Dollars ($20,000.00)." (Italics added)
At the time of his death in September 1941 testator owned 110 shares of the $100 par value $6 cumulative preferred stock of "Power," with a market value of $2,633.13. There was due on said stock at the time of testator's death the sum of $6,224 representing accrued cumulative dividends. Pursuant to the terms of testator's will said stock was delivered to the trustees.
As a result of proceedings instituted under the Public Utility Holding Company Act the Securities and Exchange Commission, in March 1941, ordered "Power" to dissolve and liquidate. Some years after Mr. Jackson's death numerous dividends were paid in stock and stock rights by "Power" to its stockholders.
Since the dissolution of "Power" some of its subsidiaries, which themselves were holding companies, have been ordered dissolved and liquidated under the same act. As a result they too have distributed stocks and stock rights to original holders of "Power" stock. Today, stock dividends and stock rights which stand in the place of the 110 shares of "Power" have a market value of $36,022 and an adjusted value of $20,781.06.
The question for determination is whether or not the stock dividends, rights, etc., issued for the 110 shares of "Power" were extraordinary dividends within the meaning of Paragraph Fifth of testator's will.
The actual value of the stock involved represents but a very small portion of the total ...