Bryan v. Aikin

Citations

• 10 Del. Ch. 1
• 82 A. 817
• 1912 Del. Ch. LEXIS 22

Syllabus

<p>A will, executed by a testator who died in 1884, devised certain corporate stock to trustees, to pay “the net income, interest, and dividends’' to grandsons for life, with remainder over upon the death of the survivor. In 1910 the corporation declared a stock dividend out of the earnings accumulated prior to 1897. Held, that the will showed no intention to dispose of the stock dividends, leaving their disposition to the general rule of law applicable thereto.</p> <p>A corporation has power to either distribute corporate earnings to stockholders, or withhold them for the purpose of extending the corporate business, and in the latter event may increase the capital stock by stock dividends; its power to deal with earnings not being subject to judicial control, in absence of bad faith.</p> <p>A corporation cannot decrease its capital by distributing the same among the stockholders as dividends.</p> <p>The increase in the value of corporate stock resulting from accumulations of earnings becomes a part of the corpus of the fund invested, and the increased value should be added to the corpus if the stock be sold, and the income on any other investments of the proceeds made be paid to the life tenant, leaving the principal as reinvested to go to the remaindermen.</p> <p>Since the value of a stockholder’s right to subscribe at par for new shares, salable for more than par, is an accretion to the capital, if a trustee of stock sells such right, the proceeds should be added to the principal and go to the remaindermen under the trust, and not to the life tenant.</p> <p>Where shares of stock of a corporation are held by trustees as an investment of funds bequeathed in trust to pay the income and dividends to one for life, and then to pay the principal to others, and, as appears by its corporate action, the corporation had during the life tenancy used earnings. to permanently increase the business plant of the company, and had increased its capital stock by issuing new shares