Opinion
September 19, 1958
Gifford, Woody, Carter Hayes for petitioner.
Davis, Polk, Wardell, Sunderland Kiendl for respondent.
In this proceeding for the settlement of the second intermediate account of a trustee, the petition requests a construction of the trust agreement with respect to certain distributions in the stock of corporations held by the trustee which distributions were received during the accounting period. The vexed question as to the proper allocation as between principal and income of these distributions was thus presented. Though the trust agreement was executed after the effective date of section 17-a Pers. Prop. of the Personal Property Law, it is not controlling here, for the trust agreement directs that all dividends received, other than liquidating dividends, whether cash or stock, shall be treated as income; notwithstanding this provision, the parties were in disagreement as to whether the stock distributions here in question were to be regarded as dividends. At the instance of one of the two guardians for infant remaindermen, extensive negotiations were conducted which happily have resulted in the execution by the adult parties in interest of an agreement resolving not alone the immediate controversy concerning the allocation of the particular distributions but also prescribing the method of allocating like distributions hereafter to be received by the trustee. Both guardians approve this agreement and request the court to authorize them to join in it on behalf of their respective wards. The trustee, likewise, recommends approval of the agreement by the court. The court is persuaded that the parties have accomplished a constructive end in arriving at this solution of the controversy and thereby avoiding the risk of a judicial determination of the complex questions to which it gives rise. The agreement is fair and should eliminate future dispute; accordingly, the court approves the agreement of April 23, 1958, and authorizes the two guardians to execute the same on behalf of their respective wards. The order hereon will effectuate the agreement. The allowances will be fixed in the order and affidavits of services are to be presented on the settlement of the order.
Settle order.