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Briel v. Moody

Decided: November 29, 1962.

DONALD E. BRIEL, EXECUTOR UNDER THE WILL OF HENRIETTA B. LYNN, DECEASED, PLAINTIFF,
v.
CHARLES G. MOODY, III AND JEAN BRIEL SMITH, DEFENDANTS



Wick, J.s.c.

Wick

This is a suit wherein the plaintiff, Donald E. Briel, executor under the will of Henrietta B. Lynn, deceased, seeks a determination in regard to trust income from certain Wellington Trust Fund shares, power of conversion of assets and limitation of investments.

Henrietta B. Lynn died December 30, 1960 and by her last will and testament of June 6, 1960 created two trust funds. The first trust fund, comprised of 937 shares of Wellington Fund Securities, was set up by the second paragraph of the will as follows:

"SECOND: I give and bequeath to my Executor all my Wellington Fund Securities in trust, nevertheless, to invest the same, to reinvest the same and to keep the same invested and to pay the net income therefrom to my beloved sister Jean Briel Smith for and during the term of her natural life and then at her death to transfer absolutely all such securities to my beloved great-nephew Charles Moody, presently resident at Trapp, Montgomery County, Pennsylvania."

On December 28, 1961 the Wellington Fund paid a cash dividend of $.98 a share, with $.47 designated as income and $.51 as capital gains. The plaintiff contends by this action that the entire distribution from the Wellington shares should be treated as income. The respondents charge that the portion designated as capital gains should not be distributed to the life beneficiary but should accrue to the principal. The complaint also seeks instructions as to the retention of the Wellington shares, the power to sell, and the further investment if sale be made.

The New Jersey Principal and Income Act, N.J.S. 3A:14A-1 et seq. at 3A:14A-1(d) provides:

"'securities' means * * * (4) shares of any open-end or closed-end management type investment company or investment trust registered pursuant to the Federal Investment Company Act of 1940, as from time to time amended; * * *."

There is no question but that the Wellington Fund shares fall within this definition, both as to description and registration under the federal act.

N.J.S. 3A:14A-5, entitled "Ascertainment of Income," provides:

"A. Except as in this act otherwise provided, the following shall be income

(a) all dividends on shares of stock of a corporation held in an estate, payable otherwise than in the stock of the corporation declaring such dividends, including, by way of description and not by way of limitation, cash dividends, extraordinary and ordinary, and dividends payable in securities of a ...


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