Seifert v. Kepner & Central Trust Capital Bank

Henderson, J., delivered the opinion of the Court. This appeal presents the question whether there was an ademption of a legacy of the proceeds of stock owned by a testator, where the corporation had distributed a liquidating dividend shortly prior to the testator’s death. Alfred A. Seifert, 78 years of age, died on September 21, 1959. His will, dated July 18, 1952, and two codicils dated February 29, 1956, and September 24, 1956, respectively, were duly admitted to probate.

While his personal estate in Baltimore County only amounted to about $41,000, his total estate for Federal tax purposes, including real estate in Pennsylvania, amounted to about $110,000. Mr. Seifert’s wife had predeceased him, and his closest relatives were a sister, Bertha S. Kepner, one of the appellees, and a nephew, two nieces and a grandnephew, the children and grandchild of a deceased brother, who are the appellants. After making several pecuniary legacies, Item V of the will directed “my executors to dispose of all the stock of the Harrisburg Automobile Company, Inc., that I may own at the time of my death and to distribute the proceeds thereof in equal one-fourth (J4) parts or shares to” the appellants. Item VI of the will set up a trust of certain mortgages and real properties for the benefit of his sister Bertha for life, with remainder to the appellants.

Item VII left the ⁵¹⁹ rest and residue to Bertha, who was also named as co-executor, with a further provision that the appellants should take the remainder, if Bertha predeceased him. The codicils did not alter the plan of the will, but simply revoked or reduced some of the pecuniary bequests, and enlarged the powers of the trustee. When the testator executed his will, and thereafter until his death, he was the owner of 100 shares of the capital stock of Harrisburg Automobile Company, Inc. Of the 250 shares outstanding, 150 shares had been owned by William P. Hain until his death in 1957. Thereafter the Hain stock was held by his executor, Central Trust Capital Bank.

The stock was admittedly worth $160 per share. At a meeting of the stockholders in December, 1957, a liquidation of the corporate assets was discussed, but no action taken. On August 21, 1959, notice of a special meeting of the stockholders and directors was sent out, and the meeting was held on September 15, 1959. Mr. Seifert was ill and unable to attend, but sent in his proxy to vote his stock.

The directors proposed and the stockholders approved a resolution recommending “complete liquidation and dissolution of this Corporation as soon as possible.” On the same day a second meeting of the directors adopted a resolution declaring a cash liquidating dividend of $140 per share. A check in the amount of $14,000 and dated September 15, 1959, was mailed to Mr. Seifert. When Mr. Seifert died on September 21, 1959, there were found among his papers certificates for 100 shares of Harrisburg Automobile stock and the check for $14,000, which had not been indorsed, cashed or deposited. After the testator’s death his executors negotiated the check and it was duly paid.

In their first administration account they allocated to the appellants the 100 shares of stock, valued at $20 per share, or $2,000. The appellants filed exceptions claiming that they were also entitled to $14,000, representing the “proceeds” of the stock. The Orphans’ Court overruled the exceptions and this appeal