Nutter v. Andrews

• Decision Date: 14 September 1923
• Citation: 246 Mass. 224,142 N.E. 67
• Parties: NUTTER v. ANDREWS et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

246 Mass. 224

142 N.E. 67

NUTTER

v.ANDREWS et al.^*

Supreme Judicial Court of Massachusetts, Plymouth.

Sept. 14, 1923.

Report from Probate Court, Plymouth County; M. R. Hitch, Judge.

Suit by Maria L. Nutter, trustee, against Mary J. Andrews and others. Reported from the probate court to the Supreme Judicial Court. Decree as stated in the opinion.

J. J. O'Reilly, of Brockton, for respondent Mary J. Andrews, adm'x.

Edward A. MacMaster, of Bridgewater, for respondent First Parish in East Bridgewater.

RUGG, C. J.

A testator gave shares of stock in sundry corporations to his trustee upon divers trusts, one of which was to pay to his daughter after reaching the age of 21 years and during the period here in question ‘the net income’ of the trust estate. The daughter reached the age of twenty-one years on September 17, 1918, and died on February 17, 1922, without leaving issue. A question arises between the administratrix of the estate of the deceased daughter and the residuary legatee of the testator as to the right disposition to be made of dividends on stock in the corporations which have been received by the trustees. The dividends fall into three classes for the purposes of this decision.

1. Dividends declared before the death of the beneficiary for life, payable to stockholders of record on dates prior to her death but payable on dates after her death. It is conceded by all parties that these dividends ought to be paid to the administratrix of the deceased daughter.

[1][246 Mass. 226]2. Dividends declared after the death of the daughter to stockholders of record on dates after her death and payable on still later dates. It presumably does not appear when these dividends were actually earned. There is nothing to indicate that they were payable solely out of earnings made prior to the death of the beneficiary for life. No right became vested as a property right distinct from the general assets of the corporation during the life of the beneficiary for life, and therefore nothing is payable to her estate.

[2] In this class fall payments to stockholders of the American Telegraph & Cable Company leased for fifty years to the Western Union Telegraph Company at a rental equal to five per cent. on the capital stock of the lessor company. These payments are made directly by the lessee company on the first days of March, June, September and December to stockholders of the lessor company of record at the close of business on the preceding day. The dividends are paid under the terms of a long term lease directly to the stockholders of the lessor company by the lessee company without particular vote of declaration by either company. The general custom as to payment took the place of a vote of declaration of dividend. The test here is whether one is a stockholder when according to the established custom the stockholders entitled to payment were to be ascertained. The rights of the beneficiary in this particular are to be determined on the same footing as if she were a direct stockholder.

This payment is properly a dividend. The stockholders did not lease their shares. The company in which they were stockholders leased its property. The lessee company pays its rental by making payments immediately to the stockholders of the lessor company of dividends on their stock. That appears to be merely matter of convenience. It does not affect the substantial fact that the transaction constitutes payment of rent by the lessee corporation and receipt of dividends by stockholders of the lessor corporation. Such dividends are not apportionable under G. L. c. 197, § 27; Granger v. Bassett, 98 Mass. 462, 469.

3. Dividends declared by vote of directors before the death of the beneficiary for life, payable by the terms of such vote to stockholders of record on dates after her death and coming due and payable on still later dates.

[3][4] The general statement of the rule for determining the person to whom a dividend on shares of a corporate stock is payable is that it belongs to the owner of the shares at the time the dividend is declared and not to the owner at the time of its payment. The reason is that when the dividend is declared its amount then is separated from the general assets of the corporation for distribution among the stockholders and becomes their individual property. The right to payment of the proportional part of the dividend attributable to the shares of stock then owned attaches immediately. The right of the stockholder becomes fixed by the declaration. The debt then is established. The payment is postponed for the convenience of the corporation. The stockholder may sue for the amount due if not paid on demand after the time fixed for payment. Ford v. Easthampton Rubber Thread Co., 158 Mass. 84, 32 N. E. 1036,20 L. R. A. 65, 35 Am. St. Rep. 462;Matter of Kernochan, 104 N. Y. 618, 11 N. E. 149;...