This appeal is from a decree on a bill of conformity filed by a trustee acting under the provisions of a will, creating a trust, for advice and instruction as to whether a stock dividend declared on certain shares of the capital stock of the Wheeling Steel and Iron Company shall be delivered over and transferred to the life tenant of the estate or retained and kept as part of the corpus of the estate for the benefit of the remainder-man. The court decreed the new shares representing the stock dividend to the life tenant, holding them *702to be income, interest or profits within the meaning of the will, and the trustee has appealed.
The will places the fund in the hands of the trustee in trust for the use and benefit of Frank R. Wheat, the testator’s son, for and during his natural life, the trustee to pay over to him the "income, interests and profits therefrom,” for and during his natural life, and, at his death, to pay over, transfer, convey and deliver the principal to his child or children begotten by him in lawful wedlock and living at his death and the descendants of such children so begotten as may be dead, and, in default of such children .and descendants, to the testator’s heirs. Another provision absolves the sums paid to the life tenant from liability for his debts.
Among the assets placed in the hands of the trustee, there were certificates for 334 shares of the capital stock of the Wheeling Steel and Iron Company, a corporation. In February, 1917, a twenty per cent, stock dividend was declared out of earnings made by the corporation, as shown on its books, Jany. 4, 1913, a date prior to that of the death of the testator. As to this dividend, no question arises. It is retained by the trustee and swells his holdings to 401 shares. The dividend in question, one of twenty-five per cent., amounting to 1OO1/^ shares, was declared on or about March 1, 1918, out of a surplus shown on the books, as of Jany. 30, 1918, and earned after the death of the testator.
In many jurisdictions, dividends declared in cash, bills, notes, stocks of other corporations and other property, unless clearly amounting to a distribution of capital, as in the ease of liquidation of the corporation and distribution of its assets, are regarded as income and go to the life tenant, under such a trust as the one involved here, and stock dividends, as parts of the capital belonging to the corpus of the trust estate and going to the remainder-man, without reference to the date or manner of the accumulation of the fund in respect of which the cash dividend is declared and .paid or the stock dividend declared and issued, Gibbons v. Mahon, 136 U. S. 549; Towne v. Eisner, 245 U. S. 426; Adams v. Adams, 139 Mass. 449; Hemenway v. Hemenway, 181 Mass. 406; Lyman v. Pratt, 183 Mass. 58; Bromwell v. An*703thony, 189 Mass. 442; Brinley v. Grou, 50 Conn. 66; Boardman v. Mansfield, 79 Conn. 634; Boardman v. Boardman, 78 Conn. 451; Smith v. Dana, 77 Conn. 543; Billings v. Warren, 236 Ill. 281; Bluin v. Gullett, 208 Ill. 473; De Koven v. Alsop, 205 Ill. 309. Re Brown et al. 14 R. I. 371; Richardson v. Richardson, 75 Me. 570, 574; Bouche v. Sproule C. R. 12 App. Cas. 385, decided by tbe House of Lords; Brander v. Brander, 4 Ves. 800; Irving v. Haristoun, 4 Pat. Sc. App. 521; Paris v. Paris, 10 Ves. 185; Clayton v. Gresham, 10 Ves. 288; Witts v. Steere, 13 Ves. 363; Re Hodgens, 11 Sr. Eq. 99; Barclay v. Wainewright, 14 Ves. 66, 80; Preston v. Melville, 16 Sim. 163.
The theory of these decisions is that, until actually severed from its corporate assets, the earnings of a corporation cannot be deemed or held to be in any sense, an income accruing to the holders of its shares. As profits or income, they legally belong to the corporation. It has full and complete title to them and dominion over them and right to treat them as its capital and use them as such in its business. In point of fact, they are generally so used, although sometimes carried on the books as surplus. They are not the property of the shareholder until divided and paid or delivered to him in such manner and to such an extent as to effect a transfer of the title and possession from the corporation to him. While they remain the property of the corporation, they enhance the value of the shares, but that does not make them the property of the shareholders nor an accrual to them as income any more than the enhancement of the value of real estate or personal property owned by an individual constitutes income. Issuance of shares representing it neither increases nor diminishes the value of the shareholder’s interest in the corporation. It merely divides that interest, not its assets, title to which he does not hold, into a greater number of shares of less value per share. Nor can he, by any means short of dissolution of the corporation and distribution of its assets, obtain its earnings or make them, individual income, against the will of the corporation.,, He cannot compel the declaration of a dividend, however great the earnings may be. When a distribution of assets occurs *704as a result of liquidation and winding up of the corporation, it is regarded as a distribution of capital, not profits or earnings, even though earnings of the corporation may constitute part of the assets. The creator of the trust is deemed to have had this legal relation in mind and to have contemplated only severed and paid over earnings or even capital, as income or profits accruing upon the stock. In other words, he is deemed to have meant and intended the life tenant to have only what passes, in point of title and possession, from the corporation to the trustee and all of it, except in clear cases of distribution of capital.
In some other jurisdictions, the courts look beyond what they seem to regard as a technical basis of solution of the question, and give weight to the practical and equitable aspect of the situation. Of course, they class all ordinary cash dividends as income. In dealing with stock dividends, they make the disposition thereof as between the life tenant and the remainder-man depend upon the origin of the assets represented by the dividend certificates. If they are based principally upon earnings since the • creation of the trust estate, they go to the life tenant, because they are deemed to be practically and equitably, though perhaps not legally, earnings of the original shares or profits accruing thereon. Thus in McLouth v. Hunt, 154 N. Y., 179, it was held that “The courts must determine them according- to the nature and substance of the thing, and are not concluded from treating such earnings as income by the form of their distribution or by the terms employed by the corporation.” This case adheres to numerous decisions of the courts of New York previously decided and referred to in the opinion. The rule enunciated and applied by them seems to have been somewhat modified by the decision in Re Osborn, 209 N. Y., 450, holding that “Extraordinary dividends, payable from the accumulated earnings of the company, whether payable in cash or stock, belong to the life beneficiary, unless they entrench. in whole or in part upon the capital of the trust fund as received from the testator or maker of the trust, or invested in the stock, in which case such- extraordinary dividends should be returned to the trust fund or apportioned *705between tbe trust fund and tbe life beneficiary in sncb a way as to preserve the integrity of the trust fund.” So limited, the New York rule practically agrees with that of Pennsylvania, under which the supposed income is ascertained by taking the difference between the market value of all the original shares and the aggregate market value of all the shares after the addition of those issued for dividends. Earp’s Appeal, 28 Pa. St. 368; Boyer’s Appeal, 224 Pa. St. 144; Smith’s Appeal, 140 Pa. St. 344. The apportionment, feature of the so-called Pennsylvania Rule is a mere modification of the equitable practice referred to, having for its purpose more accurate enforcement of the principle in its application. Its purpose is to give the trust fund and the life tenant, respectively, as nearly exact right respecting accumulated profits as is practicable. It does not affect the main question, beyond its tendency to prove practicability of an equitable and fair distribution or transfer of stock dividends to the life tenant. What is sometimes termed the American Rule, allowing stock dividends to go to the life tenant, is recognized and enforced in several other states. Hite v. Hite, 93 Iiy. 257, 19 L. R. A. 173; Thomas v. Gregg, 78 Md. 545; Lord v. Brooks, 52 N. H. 72; Pierce v. Burroughs, 58 N. H. 362; Van Horen v. Olden, 19 N. J. Eq. 176; Ashurst v. Field, 26 N. J. Eq. 11; Blarcom v. Hoger, 31 N. J. Eq. 793; Cobb v. Fant, 36 S. C. 1; Bryan v. Aiken, (Del.) 86 Atl. 674; Re Heaton, (Vt.) 96 Atl. 21; Soehulein v. Soehulein, (Wis.) 131 N. W. 739; Pritchett v. Nashville Trust Co., (Tenn.) 33 L. R. A. 856.
The criticisms of the so-called Massachusetts Rule, aside from the charge of inequity, are that it is one of mere convenience and follows English decisions, some of which have been criticised occasionally by English jurists, particularly Lord Eldon, who once remarked that the distinction drawn between cash dividends and stock dividends was “too thin.” In Earp’s Appeal, cited, the court having ascertained the earnings represnted by the stock dividend, said: ‘ ‘ That sum is rightfully the property of the appellants. The managers might withhold the distribution of it for a time, for reasons beneficial to the interests of the parties entitled. But *706they could not, by any form of procedure whatever, deprive the ■ owners of it, and give it to others not entitled. The omission to distribute it semi-annually; as it accumulated, makes no change in the ownership. The distribution of it among the stockholders in the form of certificates has no effect whatever upon the equitable right to it.” This is the substance of the argument in support of the rule, found in practically all of the decisions that have adopted it. They make a distinction between the capital of the trust estate and the capital of the corporation, which it is contended, the Massachusetts rule overlooks or ignores.
In no other connection has it ever been claimed that any person other than the holder of the shares of a corporation has any equitable interest in its assets, whether treated by it as capital, earnings or profits, wherefore the assumption of equitable title to accumulated earnings or profits, in the life tenant who does not hold the shares, seems to lack foundation in either legal or equitable principle. The shares belong to the trust fund and all equitable right in the assets belong to the shares and goes to the holder thereof. If they appreciate in value, the appreciation is his, and, if they depreciate, the loss falls upon him. All corporate enterprises are more or less hazardous and the risks attending the use of the capital invested in them, whatever its origin may have been, do not end until it is withdrawn. When anything may be' taken out of the assets and distributed to the stockholders as individual property, consistently with the interests of the corporation, is left to the judgment and discretion of the directors or stockholders acting as a body, and the real value of capital stock held in the form of shares is not safely determinable either by the state of its books or business at any particular time,' or the market value of its shares. Hence, to hand over to the life tenant certificates representing assets of the corporation still in use by it and technically converted into capital, by the issuance of the •certificates, obviously affects the actual and ultimate value •of the original shares, in a manner entirely different from that incident to the declaration and payment of a cash dividend equal to the stock dividend declared. A stock dividend *707is often declared under circumstances that would not permit the declaration of a cash dividend of an equal amount. Stock dividends are generally based upon mere estimated values of assets that might prove to be far too high in an effort to realize on them in cash. In such cases, and they are numerous, the award of a stock dividend to the life tenant is 'nothing more nor less than a transfer to him of part of the capital of the trust fund. Take the instance in which an industrial plant starts with a deficiency of capital, runs largely on borrowed money, invests that money in grounds, buildings, machinery and the establishment of a business, pays off the debts out of the profits, has no actual money beyond what is necessary for working capital, and cannot pay a cash dividend, but declares a stock dividend to the end that the magnitude of its profits may not be so apparent, that cash dividends, which the company cannot well afford to pay, may not be demanded and that the capital actually invested may be represented by stock. • Continued operation works rapid depreciation in the valuation of practically all of the property represented by the new stock. Losses may occur, sufficient to prevent payment of cash dividends on the stock so increased, depreciate its market value, discourage the stockholders and directors, and impair the financial standing of the company, but not of such magnitude as- would have produced any of these results, if the stock dividend had not been declared. These.are some of the inequities of a division of what is technically, legally, logically and substantially both trust fund capital and corporation capital, between the trust fund and the life tenant, by the award of a stock dividend to the latter. Ordinarily, a stock dividend is declared for reasons of eonvénience and prevention of withdrawal of assets from the corporate business. A cash dividend is declared -with unequivocal intent and express purpose to permit withdrawal of such assets. In hard!y any case in which a stock dividend is declared, would a cash dividend be permitted or found to be even possible. The bases and purposes of the two classes of dividends are radically different.
As has been suggested, a mere enhancement of the value *708of property is not income in any sense. A farm, timber land, coal land, or vacant property suitable for business or residence purposes and advantageously located, may immensely increase in value and yet not yield any income at all, or not increase the income from it a penny. Increased value of corporation stock due to accumulations of net earnings of ithe corporation bears a very strong analogy to these cases. There are earnings and gains, it is true, but they are not the gains of the shares. The • increased value of the shares is a mere incident of the gains of the corporation, while the increased value of land may be an incident of general development or the yield of a larger income for some reason. The greater the dividends actually paid on stock, the higher its value, provided the dividends are legally and economically justified. Likewise, the larger the rental or other income yielded by real estate, the higher its value, provided it is not so used as to work physical injury to it. When corporate profits are not distributed in the form of cash dividends, but merely estimated and used as capital, they bear a close analogy to the profits derived from the use of land or other property and expended on it in the effectuation of repairs and improvements. They are not separable, severed or available income, and, therefore, not ordinarily regarded as income at all. There are profits and an enhancement of the value of the corporate assets and the shares, but whether the stock so enhanced will ever produce a distributable income is problematical. The accumulated earnings remain in the hands of the corporation and may be lost ultimately, and the life tenant, given a voice in the management of the corporate business by the award of shares to him, may contribute to the disaster.
Stock dividends are so exceptional in character and utterly different from cash dividends, interest, rents and other sources of ordinary income, that the creator of a trust fund in shares of corporation stock, with a provision for payment of the income thereof to a life tenant or tenant for years, cannot be deemed to have intended to include stock dividends in the income so to be disposed of, in the absence of designation thereof as income. This conclusion is based *709upon well settled rules of interpretation. Things exceptional in character are never legally deemed to be included or embraced in general terms of disposition, prohibition or regulation of a class or classes of normal or ordinary subjects mentioned. This principle is the basis or meaning of the rule ejusdem generis. Take the numerous cases of implied exceptions from, the operation of statutes referred to in the opinion in Coal and Coke Ry. Co. v. Conley and Avis, 67 W. Va. 129, at pages 159 to 166. A British statute defining the jurisdiction of the admiralty courts extended, in terms, to the case of “any sea-going ship.” The owners of one American ship sued another American ship in a British court of admiralty, on account of injuries resulting from a collision of the two ships. The court said: ‘ ‘ This is a British Act of Parliament, and it is not, I think, to be presumed that the British Parliament could intend to legislate as to the rights and liabilities of foreigners. In order to warrant such a conclusion, I think that either the words of, the Act ought to be express or the context of it to be very clear.” Cope v. Doherty, 2 De G. & J. 614. This is a rule of plain common sense, applying in the interpretation of contracts as well as statutes. The sources of ordinary income are well and commonly known and a disposition or gift of “income, interest and profits,” without more, cannot be deemed, under the rules and principles of construction, to carry anything but that which is ordinarily known as income, interest and profits. A stock dividend, if income at all, is not of that class. It does not segregate. It merely gives an undivided interest in something not separated nor distributed. It admits the owner to corporate rights and privileges that do not accompany or attend a cash dividend. It is founded upon an estimate of values, not ability to pay. It is generally declared to avoid payment of cash and because of inability to do so. It may represent, nothing but appreciation in the values of property bought with the original capital, not earnings at all. Nobody can tell what it represents without resort to the books, accounts and assets, of the corporation. If these circumstances and elements do not make it excep*710tional and abnormal, it would be difficult to find an exceptional income.
Tbe decree complained of is erroneous and will be reversed and tbe shares in question will be decreed to be a part of tbe trust fund and awarded to the trustee. '
Reversed.