Wilmington Trust Company v. Wilmington Trust Co.
| Decision Date | 16 October 1940 |
| Citation | 25 Del.Ch. 193,15 A.2d 665 |
| Court | Court of Chancery of Delaware |
| Parties | WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Succeeding Trustee by appointment of the Chancellor under the Last Will and Testament of William Winder Laird, deceased, v. WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Executor of the Last Will and Testament of Mary A. B. duPont Laird, deceased, Mary Laird Downs, Alletta Laird Downs, William Winder Laird, Jr., Rosa Laird and Wilhelmina Wemyss Laird. WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Trustee under a Deed of Trust, dated July 25th, 1930, v. WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Executor of the last Will and Testament of Mary A. B. duPont Laird, deceased, Mary Laird Downs, Alletta Laird Downs, William Winder Laird, Jr., Rosa Packard Laird and Wilhelmina Wemyss Laird |
BILLS FOR CONSTRUCTION OF WILL AND TRUST DEED.
(1) Bill by the Wilmington Trust Company, succeeding trustee, to construe the last will and testament of William Winder Laird late of Christiana Hundred, New Castle County, deceased.
(2) Bill by the Wilmington Trust Company to construe a trust deed executed during her lifetime by Mary A. B. duPont Laird widow of the said William Winder Laird, deceased, and, also late of Christiana Hundred, and in which she appointed the complainant trustee.
Both cases involved practically the same question, and, by agreement of counsel, were argued together.
Answers were filed in each case, but the allegations of the bills were admitted and no issues of fact were raised thereby. In the first case, it appeared from the allegations of the bill that by Item 3 of the last will and testament of William Winder Laird, deceased, the residue of his estate was bequeathed and devised to his wife, Mary A. B. duPont Laird and to Walter J. Laird and Philip D. Laird, as co-trustees in trust to pay over the net income therefrom to the testator's wife, the said Mary A. B. duPont Laird, for and during the term of her life. Upon the death of Mrs. Laird, the trustees were directed to divide the corpus of the trust into as many equal parts, per stirpes, and not per capita, as the testator had children then living, and lawful issue of any children then deceased, and to pay to each of said children the net income arising from the shares of the trust fund so set aside for them, as was more fully set forth in the last will and testament of the deceased.
On or about November 14, 1928, the Chancellor appointed the Wilmington Trust Company trustee under the will of Mr. Laird in place of the trustees therein named. That corporation duly qualified as such trustee and was acting in that capacity when the bill was filed. Mrs. Laird died August 27, 1938, at which time all of the children of the said William Winder Laird were living, namely, Mary Laird Downs, Alletta Laird Downs, William Winder Laird, Jr., Rosa Laird and Wilhelmina Wemyss Laird. In the second case, it appeared from the undisputed allegations of the bill that on or about July 25, 1930, the said Mary A. B. duPont Laird executed a deed of trust, in which she appointed the Wilmington Trust Company, the complainant, trustee, and that corporation had accepted the trust and was administering it when the bill was filed. Mrs. Laird died August 27, 1938, leaving a will which was subsequently probated, and in which the Wilmington Trust Company was, also, named executor; and that corporation subsequently qualified and was acting as such when the bill was filed.
By Paragraphs (3) and (4) of the deed of trust, executed by Mrs. Laird, the trustee was directed to pay to her for life the net income arising from the trust estate created thereby, and upon her death to pay such net income in equal shares to her five children, the said Mary Laird Downs, Alletta Laird Downs, William Winder Laird, Jr., Rosa Packard Laird and Wilhelmina Wemyss Laird, and unto the lawful issue of any of such children who might then be dead leaving lawful issue surviving. All of the said children survived Mrs. Laird and were living when the bill was filed.
The deed in question provided that the trust thereby created was to terminate upon the death of the last survivor of Mary A. B. duPont Laird, Pierre S. duPont and Alice Belin duPont; two of whom were still living when the bill was filed.
Because of certain provisions of both the will of William Winder Laird and the trust deed of July 25, 1930, it may be material to point out that, though not alleged, the statement was made and not denied that William Winder Laird, Jr., one of the children of the said William Winder Laird and Mary A. B. duPont Laird, his wife, was between twenty-five and thirty years of age when the bills in these cases were filed.
On and prior to August 27, 1938, certain shares of corporate stock composed a part of the trust estates created both by the will of William Winder Laird and by the deed of Mary A. B. duPont Laird, and on both of which estates Mrs. Laird was entitled to the income during her life. Prior to her death, on August 27, 1938, various cash dividends had been declared on these stocks by the corporations which had issued them. Each of the resolutions declaring such dividends fixed dates on which the stockholders then of record would participate in them, and the trustee administering the corpus of the trust involved in these actions was the record owner of such stocks on those dates. But, by the same resolutions, such dividends were not actually payable until certain fixed dates subsequent to August 27, 1938, and were therefore, not received by the trustee until after the death of Mrs. Laird. The cash dividends so received by the trustee of the estate created by William Winder Laird amounted to $ 39,464.54; and the amount so received by the trustee named in the deed of the said Mary A. B. duPont Laird amounted to $ 24,873.75. The question to be determined, therefore, was whether these dividends were payable by the trustee to the executor of Mrs. Laird, as income belonging to her estate, or whether they were payable to the five children of the said William Winder Laird and Mary A. B. duPont Laird, who were the ultimate beneficiaries of both of such trust funds.
Charles F. Richards and Caleb S. Layton, for Wilming-Trust Co., trustee, and executor of last will and testament of Mary A. B. duPont Laird, deceased.
Robert H. Richards, for Mary Laird Downs, Alletta Laird Downs, William Winder Laird, Jr., Rosa Laird and Wilhelmina Wemyss Laird.
Mary A. B. duPont Laird, widow of William Winder Laird, deceased, was the life beneficiary of the income from both of the trust funds involved in these actions. During her lifetime cash dividends, payable to stockholders of record on specified dates, were declared on certain shares of corporate stock, which were owned on the requisite dates by either one, or the other of said trust estates. By the provisions of the resolutions passed by the corporate boards declaring these dividends, they were not payable, however, until certain specified future dates. They were duly paid to the trustee at the proper times, but Mrs. Laird had died prior to the receipt of them. The question to be determined, therefore, is whether these dividends are payable to Mrs. Laird's executor as income belonging to her estate, or whether they are payable to the beneficiaries of both trust funds after her death.
Interest accrues from day to day, and in apportioning income of that nature between the equitable life tenant and those entitled in remainder, it is ordinarily calculated to the date of the death of the life tenant. Wilmington Trust Co. v. Chapman, 20 Del. Ch. 67, 171 A. 222, affirmed by the Supreme Court on Appeal, Massey v. Wilmington Trust Co., 20 Del. Ch. 454, 180 A. 927. A different rule usually applies, however, to dividends on corporate stock held by the trust estate. There, the general rule is that the estate of the life beneficiary of the income is entitled to all regular cash dividends that have been declared during her lifetime, for the benefit of stockholders of record on dates prior to her death, though such dividends are not actually payable or received by the trustee until dates subsequent thereto. In re Northern Cent. Dividend Cases, 126 Md. 16, 94 A. 338, 339; Ward v. Blake, 247 Mass. 430, 142 N.E. 52; Wright v. Tuckett, 1 J. & H. 266, 70 Eng. Rep. 747; 2 Scott on Trusts, § 236.2; Restat. Trusts, § 236. This is apparently because of the theory that when a dividend is declared, it is, in effect, set aside by the corporation, as money in hand, for the benefit of the stockholder entitled, though it is not then payable. Wheeler v. Northwestern Sleigh Co., (C. C.) 39 F. 347; Cogswell v. Second Nat. Bank, 78 Conn. 75, 60 A. 1059; 38 Harv. Law Rev. 247. This creates a debtor and creditor relation, and if such dividend is not paid when due it may be recovered in an appropriate action by the stockholders. Id.
The children of William Winder Laird and Mary A. B. duPont Laird, the parties in interest under both trusts after the death of the life tenant, do not deny that this is a correct statement of the general rule. They contend, however, that a different rule applies in this case because of the language of the particular instruments creating the trusts. But I am unable to agree with that contention.
It is pointed out that "Item 4" of the last will and testament of William Winder Laird contains two consecutive sentences in the same paragraph:
1. "I direct that the principal or corpus of the residue of my estate and the income therefrom, so long as the same are held by my trustees, shall be free from the control, debts liabilities and engagements of any one...
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