
    In the Matter of the Judicial Settlement of the Accounts of James W. Osborne, as Executor and Trustee under the Last Will and Testament of Eugene La Grove, Deceased. James W. Osborne, as Executor and Trustee, etc., Appellant; Ivy Lee La Grove and Others, Respondents.
    Second Department,
    March 12, 1915.
    Trust—right of trustee to appeal from decree in final accounting — corporations — basis for declaration of stock dividend — effect of cash dividend authorized at same meeting as stock dividend — when right to stock dividend vested.
    The fact that on an accounting by a trustee the life tenant and her hus- ’ band, father, mother, brother and sisters, being all the persons entitled to the remainder, appeared, but all failed to appeal, is not a ground for a dismissal of an appeal by the trustee, as the remainders may be contingent.
    Where directors of a corporation after directing a stock dividend which had previously been authorized by the stockholders at the same meeting adopt a resolution authorizing a cash dividend out of the profits of the corporation, the amount of the cash dividend should not be considered as having been deducted from the surplus of the corporation used as a basis for the declaration of the stock dividend.
    The right to a stock dividend becomes vested when it is authorized even though the certificates are actually delivered thereafter.
    Appeal by James W. Osborne, as executor and trustee, etc., from part of a decree of the Surrogate’s Court of the county of Kings, entered in the office of said Surrogate’s Court on or about the 18th day of June, 1914.
    
      Gilbert D. Lamb [Robert D. Petty with him on the brief], for the appellant.
    
      Jerry A. Wernberg, for the respondents.
   Carr, J.:

This is an appeal from a decree of the Surrogate’s Court in Kings county. It is the last phase of a litigation which has been before this court in 153 Appellate Division, 312, and before the Court of Appeals in 209 New York, 450. In the Court of Appeals certain rules were declared as to the apportionment of a corporation stock dividend between a life tenant and the trustee of a fund held for her life, with remainder over on her death to such persons as would take her property at her death under the Statute of Distributions. She is yet alive, and she has a husband, a father, mother, brother and sisters. The remainder seems to us contingent, as none of these persons may survive the life tenant, in which event her next of kin would take directly and not by representation. All these persons were brought into the accounting proceeding, none of them has appealed and, therefore, the life tenant urges that this appeal by the trustee should he dismissed. We think this contention is .not good under the facts of this case.

The Singer Sewing Machine Company declared a stock dividend in which this estate is interested to the extent of 2,920 shares. Under the decision of the Court of Appeals, this stock dividend is apportionable between the life tenant and the trustee in proportions depending upon the amount of the suplus of the corporation at the time the stock dividend was authorized. The life tenant claims 65212¡£r2ir shares; while the trustee contends that the life tenant is entitled to but 52Y¡R2jl. shares. As the shares of this corporation are very valuable, the money value in dispute is very substantial.

The controversy arises as follows: On June 2, 1910, the directors of the Singer Company adopted a resolution to call a special meeting of the stockholders to pass upon the question of a stock dividend; on June sixteenth the special meeting of the stockholders authorized the stock dividend and ‘ to issue forthwith in payment thereof certificates of fully paid non-assessable stock to the stockholders of record at this date in the amounts in which they are respectively entitled to the same.”. On June seventeenth the directors met and declared the stock dividend, and directed the certificates “to issue forthwith.”

As a matter of fact, the certificates were not delivered until some days later. There is no dispute as to the law by either counsel, that the right to the stock became vested when the dividend was authorized, even though the certificates were actually delivered later. If there was no other circumstance in this case then the surplus of the corporation would be computable at the time the stock dividend was authorized, and the life tenant would be right incontestably in her claim as to the proportion of the stock dividend to be allotted to her. However, at the same meeting of the directors of the Singer Company, but after the stock dividend was authorized, a resolution was adopted authorizing a cash dividend of the sum of $1,800,000 out of the profits of the corporation. The trustee contends that as both resolutions were adopted at the same meeting they must be considered as but one transaction, and that the amount of the cash dividend of $1,800,000 must be considered as having been deducted from the surplus of the corporation as a basis for the declaration of the stock dividend. We think not. The cash dividend was declared by the directors in the fullness of their power as directors. The stock dividend was authorized by the stockholders at a prior special meeting and in making the stock dividend the directors but carried out the authorization of the stockholders, and when that dividend was declared the transaction was consummated and all rights were vested. The subsequent declaration by the directors of a cash dividend, later in order, is not to be transferred from its actual order, so as to give it an effect qualifying the declaration of the stock dividend. The facts are unusual and no direct precedents are cited by any party to the appeal.

The decree of the Surrogate’s Court of Kings county, in so far as appealed from, should be affirmed, with costs to the trustee and the life tenant, payable out of the estate.

Burr, Thomas and Rich, JJ., concurred; Jenks, P. J., taking no part.

Decree of the Surrogate’s Court of Kings county, in so far as appealed from, affirmed, with costs to the trustee and the life tenant, payable out of the estate.  