dissenting. — The question before the court arises under the will of the testator’s grandson, Isaac G. Waterman, who died Sept. 7, 1920, and who, at the time of his death, had a vested interest in two-sixteenths of 7100 shares of the Kingston Coal Company, which form the corpus of the trust here accounted for; in accordance with the provisions of the will of the grandfather, Isaac S. Waterman, the trust will not terminate until one year after the death of his last surviving grandchild who shall have been living at the time of his death. (See the twentieth paragraph of the will, which, so far as it relates to the share of Isaac G. Waterman, must be read in conjunction with the fifth and sixth paragraphs of the will. Reference may also be made to the adjudication filed Feb. 16, 1922, at the audit of the trustee’s sixteenth account.)
On Nov. 9, 1922, that is, after the death of Isaac G. Waterman, the Kingston Coal Company declared an extraordinary dividend of $1,000,000 out of profits earned by the company during the lifetime of Isaac G. Waterman, the dividend being payable in Liberty Bonds in which the company had previously invested a part of its surplus, the dividend thus passing to the trustees by virtue of their holdings of the company’s stock, amounting to $355,000 of Liberty Bonds at par. The share of this dividend held for the benefit of the estate of Isaac G. Waterman, deceased, amounts to $57,376.20, and as he left a will in which he created estates for life with directions to pay the “issues and profits” to certain life-tenants, it became necessary for the auditing judge to determine whether this sum should be distributed as principal or income.
The finding of the auditing judge was to the effect that the declaration of the extraordinary dividend depleted the corporation’s surplus to the extent of the dividend, and that this depletion was necessarily reflected in the value of the stock; and while recognizing the general rule that under such circumstances the dividends should be awarded as principal (see Sloan’s Estate, 258 Pa. 368; McKeown’s Estate, 263 Pa. 78), the auditing judge took the view that Waterman’s will showed an intention to bequeath the stock in kind to the trustees, and the issues and profits thereof in kind to the life-tenants, and that, therefore, the case was ruled by Roberts’s Estate, 2 D. & C. 667, in which we held that corporate dividends declared out of royalties received for mining coal from mines which were open and in operation at the time of the testator’s death belonged to the life-tenant.
I am of the opinion, however, that the facts in Roberts’s Estate differentiate it from the case at bar. In Roberts’s Estate the dividends there discussed were not declared as extraordinary dividends, but, on the contrary, as *448to the particular corporation declaring them, were the usual and ordinary ones; they represented royalties from mines being worked to exhaustion, and were similar to dividends which, for fifty years before she made her will, testatrix had been in the habit of receiving herself, so that when she directed her trustees to pay to her nephews and nieces “the interest, income and profits” of her residuary estate, coupled with a direction to her trustees to retain investments, we believed it to have been her intention that her nephews and nieces, as life-tenants, should receive all dividends of the same character as those which she had been in the habit of receiving during her lifetime; but in the case now under discussion, the dividends which Isaac G. Waterman had been in the habit of receiving during his lifetime were ordinary dividends in the usual acceptation of that term, declared out of earnings, and did not impair the capital or surplus of the corporation, and to hold that because he directed “that if practical the same (i. e., the stock held as principal) be not converted into money or sold,” and gave the “issues and profits” to the life-tenants, he thereby anticipated and intended to give to the life-tenants an extraordinary dividend which materially lessens the value of the estate in remainder, would, in my opinion, give these expressions a more comprehensive scope than the testator intended. “Issues and profits” ordinarily relate to earnings, and are interchangeable terms with “income,” although, of course, these terms are not necessarily coextensive or identical (In re Stevens, 95 N. Y. Supp. 297, 305; Boyer’s Appeal, 224 Pa. 144, 153) ; the general rule that “profits” should not be distributed as income to the extent of impairing capital was distinctly recognized in Boyer’s Appeal, 224 Pa. 144 (explained in Stokes’s Estate, 240 Pa. 277, 282), where it is said, at page 153: “It is to be presumed that the settlor meant to indicate by the use of those three words, ‘dividends,’ ‘income’ and ‘profits,’ pretty much everything in the way of advantage or benefit which might accrue from the stock without decreasing the original value of the capital which it represented.”
I would, therefore, distribute the dividend represented by the sum of ¥57,376.20 to the trustee under the will of Isaac G. Waterman, deceased, as principal.
Gest, J., concurs in this dissent.