Price, Haneman and Schettino. The opinion of the court was delivered by Haneman, J.A.D.
[50 NJSuper Page 416] This is an appeal from a final judgment of the County Court, fixing the amount of the charge to be imposed upon a remainderman in favor of a life tenant
for stock received by way of a dividend on stock held as part of the corpus of a trust.
The matter is submitted upon an agreed statement in lieu of record.
The facts so disclosed are:
Henry S. Terhune died on January 12, 1942, leaving a last will and testament under the terms of which there was created a trust of which the Long Branch Trust Company is substituted trustee. Under the terms of the trust the income from the residue which formed the corpus was to be paid to certain named cestuis during the lifetimes therein specified. Upon the death of the life tenants the corpus was directed to be paid to named remaindermen. Further details of the trust and the identity of these persons are not necessary to a decision of the issues raised on this appeal.
Among the assets of the trust were 824 shares of the capital stock of Socony Mobil Oil Company, Inc., a corporation of the State of New York (hereafter referred to as Socony).
On April 27, 1956 Socony declared a stock dividend at the rate of one share of capital stock of the par value of $15 per share for each four shares of stock outstanding.
The corporate resolution authorizing the dividend reads, in part:
"Further Resolved, that the proper officers of this Company be and hereby are authorized to record in the Company's records the payment of such stock dividend, (1) by charging Capital Surplus Account $88,960,965 and by crediting Capital Stock Account with the same amount; (2) by charging Earned Surplus Account $443,902,500 or $50 per share for each of the 8,878,050 shares to be issued, the $50 per share having been determined as an approximation of the average market value of the Company's shares over a short period prior to January 16, 1956; (3) by crediting Capital Stock Account $44,209,785; (4) by crediting Capital Surplus Account $399,692,715."
The net result of the above was the transfer from the Earned Surplus and Capital Surplus accounts to the Capital Stock account of $133,170.750. This sum represented the total par value, i.e. , $15 per share, of the stock to be issued.
In addition, the Capital Surplus account was increased by $310,731,750, which sum represents the difference between the par value and approximate market value of the new shares, i.e. , $35 per share. Thus, upon issuance of the new shares of stock Socony transferred to the Capital Stock account $15 for each new share and ...