lien therefor upon the securities and proper- | are now in the hands of the executors. In ty held by it hereunder." the share set out to the fund of which Russell is a life beneficiary no bonds of the express company are included. This distribution does not designate any of the property described therein, either as part of the principal of said trusts or as part of the income thereof or of said estate, and the same was received and filed by the court of probate without notice to any of the parties in interest, being marked by said court: "Return of Partial Distribution. Return accepted Jany. 28, 1908." Prior to the votes of June 14, 1907, the stock of the express company had a market value of from $275 to $300 a share. Immediately after June 27, 1907, when the right to share in the bond issue became aparted from the stock, the market value of the shares declined to about $150 a share. In the administration account filed October 14, 1907, as stated, the executors credited themselves with $1,281.27, being the amount of the succession and transfer tax laid and collected by the state of New York; the same being a tax assessed at 1 per cent. upon the net value of all the property of the estate subject to such tax, to wit, $128,126.95, and being laid and collected with reference to the interest of all of Mrs. Bishop's children and said grandchild, Julian, as beneficiaries under her will. All of them were in the same class and degree of relationship according to the law of New York, and said tax was laid as a single assessment in the amount named, against all of said property in the aggregate, without division or discrimination, by reason of the fact that the interests of the two first named were in fee simple and of the others for life only. They also credited themselves with the sum of $1,405.37, a sum paid to the city of Bridgeport as taxes upon the list of 1906 upon real estate of the deceased locat The stocks, bonds, and evidences of indebtedness which passed under this deed were acquired by the express company from time to time from the excess of its receipts over its disbursements and from the income of stocks and bonds owned by it, and constituted assets which had not been set aside or devoted to any particular purpose or fund. Pursuant to the votes and action above outlined, the executors of Mrs. Bishop's will received $40,000 face value of these bonds. October 14, 1907, they filed an administration account, in which they charged themselves with them in addition to the amount of the original inventory of the estate, and also with the dividends, interest, income, and other receipts of the estate to date. This account, after notice to the children, Russell, Mary, and William, and to the Knickerbocker Trust Company, was heard, approved, and accepted by the court of probate on October 18, 1907. None of the parties in interest who were of legal age, as all of Mrs. Bishop's children were, interposed any objection to the acceptance of this account, which was filed to comply with the laws of the state with regard to the taxes imposed upon the estates of deceased persons, but this absence of objection was upon the understanding and agreement between them that the questions now presented were to be presented to the superior court for determination, and that the rights of the parties were not to be prejudiced by either the acceptance of the account or the failure of the parties to appeal therefrom. About December 1, 1907, the executors received $800 as six months' interest on the bonds which they now held pending the advice of the superior court. Mrs. Bishop's estate is amply sufficient to pay all debts and expenses of administration without a resort to said bonds or interest. On or about Janu-ed therein, and payable April 1, 1907. Upon ary 28, 1908, the executors, pursuant to the direction of the will, filed in the court of probate a division and distribution, in part, of the assets of the estate, setting out stocks, bonds, and cash in five shares as provided in the will, each share being $126,480.16 in value, and in this distribution they set out and distributed among other securities certain of the said bonds, $10,000 in face value, to the Connecticut Trust & Safe Deposit Company as trustee for the defendant William D. Bishop; certain others in equal face amount, to said trust company as trustee for the defendant Mary F. Bishop, and an equal amount to Nathaniel W. Bishop and to Henry A. Bishop. The distributions to the trust company in the case of both the William D. and Mary F. Bishop funds have appended to them the following note. "Less 10 $1,000 Adams Express Company Collateral Trust 4% distribution gold bonds of 1907; due June 1, 1947; interest June and December; held William B. Boardman, for William D. and pending decision of the courts as to whether Russell T. Bishop. Arthur M. Marsh, for the recommendation of the board of directors of the Westinghouse Air Brake Company made at a meeting on September 11, 1908, and the approval of its stockholders at a meeting on December 3, 1907, the board of directors on December 11, 1907, declared a stock dividend of 25 per cent., payable in the stock of the company January 31, 1908, to stockholders of record December 31, 1907. Pursuant to this vote, the executors received on or about January 31, 1908, 106 shares of the capital stock of said company, and they have since delivered the same to the distributees of the original 426 shares of that stock in the distribution of January 28, 1908, in proportion to the number of said shares then distributed to each, so that to 4 of the distributees 25 shares each of the new issue were given, and to the fifth, that in which Russell had a life interest, only 62 shares were given. Redden, for Julian T. Bishop. Arthur P. distinguished from principal, and that on- PRENTICE, J. (after stating the facts as above). Mary F. Bishop, as the life beneficiary of one of the trusts created by her mother's will in a one-fifth share of the latter's estate, claims to be entitled to receive in her own right one-fifth of both the Adams Express Company bonds and the Westinghouse Air Brake Company stock which came into the hands of the executors as original issues, whether or not they are to be regarded as income of the testatrix's estate in that sense which would entitle them as life tenants to share in their division. William D. Bishop, the life beneficiary of the trust similarly created in another one-fifth, asserts a like claim. These two join with the cestuis que trust under the third trust created by the will in asserting that the express company bonds are to be regarded as income of the testatrix's estate in which they are entitled to share pursuant to the trust provisions of the will regulating the appropriation of income. The second claim resolves itself into two propositions, to wit: (1) That the life beneficiaries under each trust are entitled to the benefit of one-fifth of the net income of the testatrix's estate from the time of her decease; and (2) that the express company distribution partook of the character of what is called a cash dividend, and is therefore to be regarded as income. "It is well settled in this state, as it is in many other jurisdictions, that where there is a bequest of the whole or of an aliquot part of the residue of an estate to a legatee for life, remainder over, and no time is fixed by the will for the commencement of such life use, the legatee is entitled to the use or income of the clear The first of these two claims rests solely residue so bequeathed, as the same may at upon the language of the will, which in the last be ascertained, to be computed from the case of the two life beneficiaries first men- death of the testator." Webb v. Lines, 77 tioned provides that the trustee in the one Conn. 51, 53, 58 Atl. 227; Bancroft v. Secupay over to the life tenant "the net amount rity Co., 74 Conn. 218, 222, 50 Atl. 735; Lawof the increase, income, profits and interest" rence v. Security Co., 56 Conn. 423, 439, 15 of the share, and in the other "the net in- Atl. 406, 1 L. R. A. 342; Bartlett v. Slater, crease, income, profits, and interests." An 53 Conn. 102, 106, 22 Atl. 678, 55 Am. Rep. examination of the will shows that the tes- 73. This will contains no express provision tatrix in seven different places in it used upon the subject. If any time other than language descriptive of the interest of life that of the testatrix's decease is fixed by tenants, and that five different forms of ex-it as that from which income for the benpression were employed by her for that pur-efit of life beneficiaries is to be computed, pose. Twice it is simply "income"; twice "net income and profits"; once "net income, profits and interest"; and once each the phrases already recited. In the directions to the executors as trustees, they are directed to collect "the income, profits and interest" of the fund in their hands. In those to the Knickerbocker Trust Company it is directed to collect "the increase, income, profits, and interest." In the case of each of the two trusts in question in respect to which the more extended phraseology is used, the testatrix describes that which is given to the life tenants as "the life use" of the trust fund. The testatrix's general scheme for the bestowment of her bounty evidences a distinct purpose to treat her five children and their children with equality, except so far as she was led to create ordinary trusts with respect to two of them and a spendthrifth trust with respect to a third, with the natural incidents of such trusts. Wolfe v. Hatheway, 81 Conn. 181, 70 Atl. 645. It is thus evident from the will that the testatrix used the differing forms of expression noticed with no intent to create preferences or to discriminate between the several life beneficiaries, and that whichever of the formulæ she used to express her meaning she it results by implication from the facts that the executors were directed to divide the estate as soon after the testatrix's decease as might be conveniently and lawfully done, that shares thus ascertained were given to the several trustees, and that it was either the income thereof or sums set out of such income which the trustees were either required or permitted to pay to the cestuis que trust. That these matters are not sufficient to raise an implication of a direction contrary to the general rule stated clearly appears from the consideration given to this subject in Bancroft v. Security Co., 74 Conn. 218, 222, 50 Atl. 735. The life beneficiaries are therefore right in this branch of their claim. Preliminary to the question involved in the second proposition is one as to the character of the express company. It was organized in 1854 under the statute laws of New York as a joint-stock association. It is an association of individuals in the nature of a partnership and possessing the element of personal liability. The courts of New York have apparently had difficulty in defining the exact status and character of associations similarly organized. They have, however, said that almost the full measure of corpo V. until the difference, if there be one, is ob- that of the shareowners. Boardman scure, elusive, and difficult to see and de- Mansfield, 79 Conn. 634, 639, 66 Atl. 169, 12 scribe. People v. Coleman, 133 N. Y. 625, 30 L. R. A. (N. S.) 793, 118 Am. St. Rep. 178; N. E. 1150; People v. Wemple, 117 N. Y. Green v. Bissell, 79 Conn. 547, 552, 65 Atl. 136, 22 N. E. 1046, 6 L. R. A. 303. In Lock- 1056, 8 L. R. A. (N. S.) 1011, 118 Am. St. wood v. Weston, 61 Conn. 211, 215, 23 Atl. Rep. 156. In the present case what the 9, we said of the shares of stock of similar stockholders received in hand was the bonds associations that, for all practical purposes of the corporation-its obligations, therefore, and so far as the question of taxation is con- and not its assets. A money dividend decerned, we were of the opinion that they clared creates a debt. Beers v. Bridgeport should be considered and treated as if they Spring Co., 42 Conn. 17, 25. It is quite poswere shares of stock in private corporations. sible, therefore, that it would not necessarily The same is equally true of the shares held militate against the validity of a cash diviby the stockholders of the Adams Express dend declaration that it provided, as an inCompany as representing their interests in cident of it, for the issue of evidences of the assets of the association, and as defin-indebtedness, provided that proper conditions ing their relation to them and their rights and limitations were observed. It is unnecresulting from the incidents of its manage essary, however, for the purposes of this ment in so far as any question here present-case, to determine this question, or to ated is concerned. The association has prop-tempt to formulate the principles applicaerty devoted to and utilized in the conduct ble to such a situation, since the conditions of its business which serves as its capital, and limitations which must attend any such and is called its capital, although the pre- transaction in order that its character as a cise amount of it may not be easily ascer-cash dividend declaration may be preserved tainable. The managers are authorized to are here palpably absent. Such a dividend declare dividends out of the profits to such extent as they may from time to time determine. There is no question about the existence of assets which would have justified the division to the shareowners of $24,000,000 out of accumulated profits, and without encroaching upon anything which could be called its capital fund. The only question is whether such a division and distribution was made as to entitle life beneficiaries to its fruits. Into its determination there can enter no factor aris- | ing from the peculiar character of the company to differentiate the situation in any essential particular from that which would be presented were it a true corporation. D'Ooge v. Leeds, 176 Mass. 558, 57 N. E. 1025. The general rule, subject, perhaps, to possible exceptions, is that persons having a right to the income of trust funds invested in stocks are entitled to the enjoyment of those dividends declared by the directors of the respective corporations which partake of the character of cash dividends, not including, however, those which may be so declared in the process of liquidation or reduction of capital, and that their rights are limited to such dividends. Smith v. Dana, 77 Conn. 543, 548, 556, 557, 60 Atl. 117, 69 L. R. A. 76, 107 Am. St. Rep. 51; Boardman v. Mansfield, 79 Conn. 634, 637, 66 Atl. 169, 12 L. R. A. (N. S.) 793, 118 Am. St. Rep. 178. "Cash dividends," as that term is applied in this connection, include all distributions of the surplus assets of a corporation, whether the same be in the form of cash or property, which are made to shareholders pro rata through the medium of dividend declarations in such manner that the assets so distributed are aparted from the body of the assets of the corporation to become the property of the shareholders, and thus pass out of the by a corporation can be declared out of surplus assets only. It will not be permitted to reach the capital. Davenport v. Lines, 73 Conn. 118, 128, 44 Atl. 17; Smith v. Dana, 77 Conn. 543, 553, 60 Atl. 117, 69 L. R. A. 76, 107 Am. St. Rep. 51. The authority of the managers of this company is expressly limited to the declaration of dividends out of profits, and no one would venture to assert that their right to distribute all the assets of the association in the form of dividends declared greater than that of corporation directors to do the same thing. The bonds issued to the stockholders are its unlimited obligations. As such, they are a charge upon all the assets of the company. Their holders are empowered, in case of need, to exhaust its entire property in their satisfaction, leaving the shareholders nothing to give value to their stock. Clearly a distribution of income or profits cannot be made to embody such contingencies, and as clearly, if it could, some adjustment of accepted principles would be necessary to protect the rights of remaindermen against those of life tenants. But the life tenants contend that the bonds are only one feature of a larger transaction, which must be looked at and judged as a whole. And they say that when the action of the company which involved the issue of the bonds as one of its incidents is examined in its entirety, and with a correct appreciation of the interrelation of the bonds and their collateral, and of the rights of the parties created by the trust indenture, it will be found that it presents all the essential characteristics of a distribution of surplus assets such as satisfies the requirements of a cash dividend. Certain of the provisions of the trust instrument are pointed out in support of this position. The remaindermen, on the other hand, in two of the will, and the second for the disposition of net income. To this end a separate accounting as to principal and income is necessary. In such an accounting the Connecticut succession tax and New York state tax count. The item for taxes paid to the city of Bridgeport is chargeable to the income account. As to the 106 shares of the air brake com. pany stock form a part of the principal of Mrs. Bishop's estate, it is apparent that the division made of that stock proceeded upon a mistaken theory and resulted unjustly to the Russell Bishop share, and too favorably to the other shares. demonstration that no asset of the company, the division and distribution under article has been set out to become the property of shareholders, and so apart from its general assets as to pass out of its dominion and control into that of the shareholders. They insist that under the agreement, there is no item of the company's assets concerning are properly chargeable to the principal acwhich it can be affirmed that shareholders now have or ever will have any control over it or property in it, or now have or ever will have a right to the proceeds of its sale either directly or indirectly. It requires no very careful examination of the trust deed to appreciate the force of this contention. But there is no occasion to pursue the line of inquiry thus suggested and thus cumulate reasons, since it is clear that there is nothing in the deed which serves to qualify or The partial distribution of personal estate limit that provision of the bonds already no- filed January 28, 1908, is to be interpreted as ticed which makes them payable in case of setting out to the Connecticut Trust & Safe need out of any of the company's assets and Deposit Company as trustee of the two shares thus a contingent charge upon all such as- of which Mary F. and William D. were the sets down to the last penny of them. This respective life beneficiaries the items of propcondition being present, it cannot be said erty enumerated in the schedule of property that the company's action which brought the assigned to each of these shares, including bonds into the hands of the stockholders was the Adams Express Company bonds, subject one in the nature of the declaration of a cash only to the condition attached to these bonds dividend. that they be not judicially declared to be inCounsel for the remaindermen have at- come. As that condition must fail, the transtempted to fix the character of the transac-fer of the title to these bonds is to be regardtion. It is suggested that it constituted ed as having been equitably complete, carryeither a reduction of capital, and a returning with it the right of the life tenants to of a part thereof to the stockholders, or a enjoy the income thereof which has accrued capitalization of certain of the company's since the date of the distribution. assets by the virtual creation of preferred stock. Another pertinent query would be whether or not it was anything more than it purported to be upon its face, to wit, an issue of the obligations of the company secured by collateral, with certain unusual provisions as to rights in respect to the collateral and its appropriation reserved to the assignor or granted to the trustee or the bondholders. We, however, have no occasion to enter upon any of the lines of inquiry thus indicated. It is immaterial to the claim of these life tenants what the essential character of the transaction was, provided it was not the declaration of a cash dividend. As the life beneficiaries are entitled to share in the net income of the testatrix's estate from the time of her decease, the administration account filed October 14, 1907, in which there was no separation of principal from income items, is inadequate for all purposes. It seems to disclose the total amount of the estate and income funds in the hands of the executors, but does not reveal what of that total is to be regarded as principal and what net income. A correct adjustment of the rights of the parties requires the ascertainment of these two factors of the total funds in hand, the first for the purposes of The superior court is advised to render its judgment of advice that both the 106 shares, new issue, of the capital stock of the Westinghouse Air Brake Company, and the $40,000 par value of Adams Express Company bonds form a part of the principal of Mrs. Bishop's estate; that the language of the trust provisions of her will whereby income is disposed of in favor of life beneficiaries comprehends the just proportion of the net income of her estate from the date of her decease; that the distribution of January 28, 1908, was effective to set out to the Connecticut Trust & Safe Deposit Company as trustee the Adams Express Company bonds therein allotted to the two shares of which Mary F. Bishop and William D. Bishop are the respective life beneficiaries; that these beneficiaries are entitled to the income which has accrued thereon since said distribution was made; and that the sum of $1,405.37 paid by the executors to the city of Bridgeport for taxes is to be charged by them against income, while the sums of $3,722.22 and $1,281.27 paid to the states of Connecticut and New York, respectively, are to be charged against principal. No costs in this court will be taxed in favor of any party. The other Judges concurred. LOWE et al. v. MOLTER. (Supreme Court of Rhode Island. Jan. 13, 1909. On Reargument, Feb. 3, 1909.) 1. VENDOR AND PURCHASER (§ 129*)-REFUSAL OF CONVEYANCE-DEFECTIVE TITLE. Where, when a deed was to be delivered under a contract of sale, the period within which the land might be sold by the executrix of the vendor's ancestor had not elapsed, and claims had been allowed against the estate, and no inventory filed, such claims being unpaid, the vendee was not required to accept the title. [Ed. Note.-For other cases, see Vendor and Purchaser, Cent. Dig. § 238; Dec. Dig. § 129.*] 2. SPECIFIC PERFORMANCE (8 130*)-ANSWER - RELIEF TO DEFENDANT PENSES. may be entered upon proof of the discontinuance of the suit at law now pending for the recovery of the amounts above set forth. The parties will present a draft decree for the consideration of the court. On Motion for Reargument. The record shows that claims amounting to more than $3,500 had been duly allowed against the estate of the testator and remained unpaid at the time named for the delivery of the deed, which was within the period for which the land was liable to be sold therefor, and there was no record evidence that the compromise referred to had been completed. This constituted such a cloud upon the title that the respondent was not DEPOSIT Ex-bound to complete the purchase. The motion for reargument is denied. Where, in a suit to compel performance of a land contract, vendee showed an unmarketable title, he was entitled to recover his deposit, taxes paid, and expense of searching the title, under Court and Practice Act 1905, § 316, providing that respondent may in an equity suit avail himself of any matter which would be open to him on a cross-bill, by setting up the matter in his answer. [Ed. Note.-For other cases, see Specific Per formance, Cent. Dig. §§ 424, 425; Dec. Dig. 8 130.*] WASHINGTON REAL ESTATE CO. Y. WACHENHEIMER BROS. (Supreme Court of Rhode Island. Jan. 15, 1909.) PAYMENT (§ 22*)-PAYMENT BY CHECK. A tender of a check for a part of a debt, which is not accepted by the creditor, but is not returned to the debtor, and is not cashed, does not constitute a payment of the amount of the check, so as to prevent the creditor from re Appeal from Superior Court, Providence and Bristol Counties; William H. Sweet-covering judgment for the entire debt. land, Presiding Justice. Action by Isabel E. Lowe and others against Henry T. Molter. Judgment for plaintiffs, and respondent appeals. Reversed. Decree for defendant. Page & Page & Cushing, for appellant. John W. Hogan and Philip S. Knauer, for appellees. PER CURIAM. It is undisputed that on November 15, 1908, the day when the deed to the premises was to be delivered, the period of two years and six months within which the land was liable to be sold by the executrix to satisfy debts of the testator had not elapsed, and that claims of more than $3,500 in amount had been allowed against the estate, and that no inventory of the estate had been filed in the probate court. It is also conceded that said claims were not paid until after November 15, 1908. We are of the opinion that the record title to the premises in question was such that the respond ent was not obliged to accept said deed, and that the relief sought by the complainants should have been denied. The respondent claims by his answer affirmative relief, under the provisions of Court and Practice Act, § 316, in respect of the sum of $435, being the amount of the deposit paid by him on the day of sale, and the further sum of $216.15, being the amount of the tax on the premises for the year 1907, and the cost of searching the title thereto, which is shown by the evidence to have been $35. We are of the opinion that the respondent is entitled to the repayment of these several sums, with interest thereon. [Ed. Note. For other cases, see Payment, Cent. Dig. § 87; Dec. Dig. § 22.*] Exceptions from Superior Court, Providence and Bristol Counties; George T. Brown, Judge. Action by the Washington Real Estate Com pany against Wachenheimer Bros. for rent. Defendant tendered a check for part of the rent due, and claimed damages by reason of a leaky roof equal to the balance of the rent. The check was not returned, nor was it ever cashed, and plaintiff brings action for the entire amount of the rent, and defendant asks to have the amount of the check deducted from the amount of the verdict. There was a verdict for the entire amount of the rent, and defendant excepts. Exception overruled, and case remitted for judgment. J. Jerome Hahn and James C. Collins, Jr., for plaintiff. Waterman, Curran & Hunt, for defendants. defendants' exception, and the same is overruled. The case is remitted to the superior court for judgment on the verdict. PER CURIAM. There is no merit in the RILEY v. RHODE ISLAND CO. (Supreme Court of Rhode Island. Jan. 13, 1909.) APPEAL AND ERROR (§ 1005*)-REVIEW-CONFLICTING EVIDENCE. Where the evidence is conflicting, and the trial court has overruled the motion for new trial for insufficiency of the evidence, its ruling will not be disturbed on appeal. [Ed. Note. For other cases, see Appeal and Error, Cent. Dig. §§ 3948-3954; Dec. Dig. § 1005.*] The respondent's appeal must be sustained, Exceptions from Superior Court, Provi and the decree of the superior court must be dence and Bristol Counties; Willard B. Tanreversed. A decree in accordance herewithner, Judge. |