Estate of Eisner

Citations

• 175 Pa. 143
• 34 A. 577
• 1896 Pa. LEXIS 1225

Syllabus

<p>Corporations — Life estate — Remainder man — Principal and income.</p> <p>The property of a corporation, after payment of liabilities, belongs to the existing stockholders, who, therefore, are entitled to any and all enhancements of its original value; and such enhancements belong not to the tenant for life, but to the remainder man.</p> <p>The right to subscribe for new shares at par upon an increase of the capital stock, which is an incident of the ownership of the stock, does not belong, as a privilege, to the life tenant, but such an increment must be treated as capital, and be added to the trust fund for the benefit of the remainder man. This is equally the rule whether the trustee subscribes for the new stock for the benefit of the trust or sells the right to subscribe for a valuable consideration; in either event the increase goes to the corpus.</p> <p>Where a corporation sells a part of its franchise and property and distributes the proceeds of the same as a dividend among its stockholders, such dividend, as between a life tenant and remainder man, is capital and not income.</p> <p>Where a right is given to the stockholders of one corporation to purchase the stock of another corporation, the price brought by the sale of the subscription right is a profit incidental to the ownership of the stock of the first corporation, and is income and not principal.</p>