Case Digest (G.R. No. L-2659)
Facts:
In Mary McDonald Bachrach v. Sophie Seifert et al., the testator, Emil Maurice Bachrach, died leaving his widow, Mary McDonald Bachrach, as his sole forced heir. In his will dated before his death, he bequeathed various cash legacies and granted his wife a life usufruct over the remainder of his estate, with the corpus to pass upon her death equally to his legal heirs, excluding his brothers. At the time of his death, the estate owned 103,000 shares of Atok-Big Wedge Mining Co., Inc. On declaration of a fifty percent stock dividend, the corporation issued 54,000 additional shares. On June 10, 1948, the widow, as usufructuary, petitioned the trial court for authority to transfer the 54,000 shares to her, arguing that the stock dividend constituted fruits or income of the usufruct. Contrary thereto, Sophie Seifert and Elisa Elianoff, his remaindermen, opposed the petition on the ground that a stock dividend is capital, forming part of the corpus, and appealed the lower court’s ordCase Digest (G.R. No. L-2659)
Facts:
- Decedent’s will and testament
- Emil Maurice Bachrach died leaving no forced heirs except his wife, Mary McDonald Bachrach.
- His will provided:
- Payment of various cash legacies.
- “Sixth: It is my will and do herewith bequeath and devise to my beloved wife Mary McDonald Bachrach for life all the fruits and usufruct of the remainder of all my estate after payment of the legacies… she may enjoy said usufruct and use or spend such fruits as she may in any manner wish.”
- Upon her death, one half of the estate to be divided share and share alike among his legal heirs, to the exclusion of his brothers.
- Estate assets, dividend event, and lower court proceedings
- The estate owned 103,000 shares of Atok-Big Wedge Mining Co., Inc. and received 54,000 additional shares as a 50% stock dividend.
- On June 10, 1948, Mary McDonald Bachrach, in her capacity as usufructuary, petitioned the lower court to transfer the 54,000 dividend shares to her, claiming they were fruits/income of the estate.
- Opponents Sophie Seifert and Elisa Elianoff (remaindermen) objected, conceding that cash dividends are income but arguing stock dividends are capital, citing the Massachusetts rule (Minot v. Paine) that treats stock dividends as corpus.
- Mary McDonald Bachrach relied on the Pennsylvania rule (Earp’s Appeal; In re Thompson’s Estate), which regards all declared dividends—cash or stock—as income to the life tenant.
Issues:
- Classification of a stock dividend
- Is a stock dividend “fruit” or income belonging to the usufructuary (life tenant)?
- Or is it capital, part of the corpus of the estate, belonging to the remainder men?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)