The opinion of the court was delivered by
Lewis, C. J.
By the will of Robert Earp, deceased, the appellants are entitled to receive, during their respective lives, the “rents, income, and interest” of his residuary estate. That estate consisted in part of 540 shares of stock in the “Lehigh Crane-' Iron Works,” a company incorporated under the Act of 16th June, 1836, entitled “ An Act to encourage the manufacture of iron with coke, or mineral coal, and for other purposes.” .Robert Earp died on the 17th November, 1848. At that time a surplus fund had accumulated, arising from the profits of the business, which had increased the value of the stock from $50 per share, the sum originally paid for it, to $125 per share. This increased value was ascertained by an actual sale of forty shares shortly after the death of the testator. This surplus fund continued to increase until the year 1854, when, instead of dividing it in money among the stockholders, it was given to them in new certificates of stock. This was done in the case under consideration by cancelling the old certificates granted to Robert Earp, deceased, and issuing new ones to his executors, to the number of 1350 shares. The shares last named are of the value of $80 per share. It thus appears that at the time of the death of Robert Earp, the 540 shares of stock then held were worth $67,500, and that at the time the new certificates were issued for 1350 shares the latter were worth $108,000. The difference, $40,500, is the amount of profits arising since the death of the testator. Nothing has occurred to produce any change in these estimates, or to show that they are in any respect incorrect.
The simple statement of these facts shows that the testator’s interest in the iron works amounted to the sum of $67,500. If the executors had sold it at auction it would have produced that sum. If invested in mortgages or stocks, the appellants could have claimed nothing more than the interest or dividends. They could not have impaired the principal sum. The omission to sell the stock and to invest it for the purposes of the trust cannot change the rights of the parties. The value of the stock, at the time of the testator’s death, could, in no just sense, be regarded as the “interest or income” of it. It is true that if the stock had [374] been sold tbe transfer would have carried with it to the purchaser a right to a just proportion of the surplus fund. But this, instead of proving the case for the appellants, proves that the surplus fund was so essentially a part of the stock itself that it passed by a sale of the stock alone. In the case before us the testator has not made a bequest of the stock itself to the appellants. On the contrary, he has given them only the “ income” of it for life. Their interests commence after the death of the testator. They have no right whatever to claim the “ income” which had accumulated before his death. If they may go back of that event, for a single day, to seize upon “income, rents, or interest,” which had accumulated in his lifetime, they may ransack the transactions of his whole life, and end by showing that his whole fortune consisted of “rents, interest, and income,” arising from a very small capital, which has since been lost. It is equally clear that the profits arising since the death of the testator are “income” within the meaning of the will, and should be distributed among the appellants. These profits amounted, at the time of the issue of new certificates of stock, to the sum of $40,500, exclusive of the current semi-annual dividends which had been previously declared and paid. That sum is the rightful 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 they 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 its ownership. The distribution of it among the stockholders in the form of new certificates has no effect whatever upon the equitable right to it. It makes no kind of difference whether this fundís secured by 540 or by 1350 certificates. Its character cannot be changed by the evidences given to secure it. Part of it is principal — the rest is “income,” within the meaning of the will. The principal must remain unimpaired during the lives of the appellants, and the “ income” arising since the death of the testator is to be distributed among them. Standing upon principle and upon the intent of the testator, plainly expressed in his will, we have no difficulty whatever in making this disposition of the fund. But it is alleged that this would be contrary to the rules of law as settled by the authorities. We do not think so. It is true that there is a general rule of law which forbids apportionment in respect of time in cases of periodical payments becoming due at fixed intervals.
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The opinion of the court was delivered by
Lewis, C. J.
By the will of Robert Earp, deceased, the appellants are entitled to receive, during their respective lives, the “rents, income, and interest” of his residuary estate. That estate consisted in part of 540 shares of stock in the “Lehigh Crane-' Iron Works,” a company incorporated under the Act of 16th June, 1836, entitled “ An Act to encourage the manufacture of iron with coke, or mineral coal, and for other purposes.” .Robert Earp died on the 17th November, 1848. At that time a surplus fund had accumulated, arising from the profits of the business, which had increased the value of the stock from $50 per share, the sum originally paid for it, to $125 per share. This increased value was ascertained by an actual sale of forty shares shortly after the death of the testator. This surplus fund continued to increase until the year 1854, when, instead of dividing it in money among the stockholders, it was given to them in new certificates of stock. This was done in the case under consideration by cancelling the old certificates granted to Robert Earp, deceased, and issuing new ones to his executors, to the number of 1350 shares. The shares last named are of the value of $80 per share. It thus appears that at the time of the death of Robert Earp, the 540 shares of stock then held were worth $67,500, and that at the time the new certificates were issued for 1350 shares the latter were worth $108,000. The difference, $40,500, is the amount of profits arising since the death of the testator. Nothing has occurred to produce any change in these estimates, or to show that they are in any respect incorrect.
The simple statement of these facts shows that the testator’s interest in the iron works amounted to the sum of $67,500. If the executors had sold it at auction it would have produced that sum. If invested in mortgages or stocks, the appellants could have claimed nothing more than the interest or dividends. They could not have impaired the principal sum. The omission to sell the stock and to invest it for the purposes of the trust cannot change the rights of the parties. The value of the stock, at the time of the testator’s death, could, in no just sense, be regarded as the “interest or income” of it. It is true that if the stock had [374] been sold tbe transfer would have carried with it to the purchaser a right to a just proportion of the surplus fund. But this, instead of proving the case for the appellants, proves that the surplus fund was so essentially a part of the stock itself that it passed by a sale of the stock alone. In the case before us the testator has not made a bequest of the stock itself to the appellants. On the contrary, he has given them only the “ income” of it for life. Their interests commence after the death of the testator. They have no right whatever to claim the “ income” which had accumulated before his death. If they may go back of that event, for a single day, to seize upon “income, rents, or interest,” which had accumulated in his lifetime, they may ransack the transactions of his whole life, and end by showing that his whole fortune consisted of “rents, interest, and income,” arising from a very small capital, which has since been lost. It is equally clear that the profits arising since the death of the testator are “income” within the meaning of the will, and should be distributed among the appellants. These profits amounted, at the time of the issue of new certificates of stock, to the sum of $40,500, exclusive of the current semi-annual dividends which had been previously declared and paid. That sum is the rightful 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 they 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 its ownership. The distribution of it among the stockholders in the form of new certificates has no effect whatever upon the equitable right to it. It makes no kind of difference whether this fundís secured by 540 or by 1350 certificates. Its character cannot be changed by the evidences given to secure it. Part of it is principal — the rest is “income,” within the meaning of the will. The principal must remain unimpaired during the lives of the appellants, and the “ income” arising since the death of the testator is to be distributed among them. Standing upon principle and upon the intent of the testator, plainly expressed in his will, we have no difficulty whatever in making this disposition of the fund. But it is alleged that this would be contrary to the rules of law as settled by the authorities. We do not think so. It is true that there is a general rule of law which forbids apportionment in respect of time in cases of periodical payments becoming due at fixed intervals.
But this rule is founded on convenience, and not on the equitable rights of the parties in interest. It is therefore subject to exceptions wherever the purposes of justice require the correction of injuries arising from the unifoimity of the law. The instances of this are numerous. Where a debt is secured by bond or mortgage, [375] although the interest be expressly made payable half-yearly, it may be apportioned, because the interest is earned from day to day: Wilson v. Harman, Ambl. 279; Sherrod v. Sherrod, 3 Atk. 502; Banner v. Lowe, 13 Ves. Jr. 135; 2 P. Wms. 176. So annuities for the maintenance of infants (Hay v. Palmer, 2 P. Wms. 501; Rhenish v. Martin, MS.), or of married women living separate from their husbands (Howell v. Hanforth, 2 Bl. 1016; 2 Sch. & Lefr. 303), or for “tabling” a son (Cro. El. 756), may be apportioned in respect of time. In the cases last named the necessities of the parties entitled to the annuities are sufficient to dispense with the rule of convenience. In the case of interest there is no difficulty in making the apportionment, and therefore no necessity for the rule which forbids it. But in ordinary dividends on stock, periodically declared, the intervals between the times of payment are so brief, and the sums divided so small, that no great injustice can be done in following the rule of convenience, while, on the other hand, the necessity for’ it is usually very strong, arising from the difficulty of ascertaining the exact amount of profits made during fractions of the period. But where the profits of a manufacturing or banking corporation have been accumulating for many years, until the market value of the stock is more than double its original price, and the owner dies, directing the “income” of his estate to be applied to particular objects for limited periods, these extraordinary accumulations are as much a part of his capital as any other portion of his estate, and must, therefore, be regarded as forming a part of the principal from which the future income is to arise. In this case the sum accumulated is entirely too large to be disposed of on the principle of judicial convenience, applicable only to ordinary and current dividends and payments. Where the income is given merely for a limited period, and the stock itself is otherwise disposed of, a bequest of the income is not in any respect like a bequest of the stock itself. So far from giving such extraordinary accumulations to the persons entitled to the income for life, the English Courts of Chancery have in some cases given them to the remaindermen, even where they arose from profits made during the time of the beneficiary for life: Branden v. Branden, 4 Ves. Jr. 800, decided in 1799; Paris v. Paris, 10 Ves. Jr. 185, in 1804; Irvine v. Hornton, in 1802. Lord Chancellor Eldon, in Paris v. Paris, followed these decisions with reluctance, because he had “ great difficulty in stating the principle that lead to them.” And it is apparent from the opinions of the English Chancellors on this subject, that Branden v. Branden, and the cases founded upon it, have been followed merely for the sake of adhering to the practice there, and not because that practice is founded on sound principles. The distinction between an extra dividend paid in stock, and one paid in money, was repudiated by Lord Eldon in Paris v. Paris. [376] If he was correct in doing so, his decision in Barclay v. Wainright, 14 Ves. Jr. 76 (in 1807), must he understood as overruling the decision of Branden v. Branden and those which followed it. Be that as it may, however, it is very certain that these objectionable decisions, made since the Revolution, are not authorities in Pennsylvania ; and as they cannot be supported upon any just principle, we have no excuse for adopting them as a part of our law.
The Orphans’ Court has directed that 844 shares (valued at $67,500) be retained by the executors, as the principal fund from which future income is to arise for distribution among the appellants, and has decreed immediate distribution among them of 506 shares (valued at $40,500). That decree is to be affirmed.
Decree affirmed.