Savannah morning news. [volume] (Savannah) 1868-1887, 1881-12-23
AN INTERESTING DRCIsIoN.
The Dividends and Certificates OF I'm.
debtedness OF the Central Rail-
road.

terested, and we commend It to earnest at
tention:
Emma Millen ct al. vs.. John NJ. Guerar'
ct al.
By THE COURT, JACKSON, G. j.
| Certain shares of Central and South
western Railroad stock were left by the will
of Mrs Millen to Guerard in trust 70
George r. Millen and bis children, the in
come to be paid to Millen during life
aud remainder to his children, with con
tingent remainder over in the event OF theil
death.
After probate of this will the Directors o.
the Central Railroad Company declared {
dividend 10 certificates OF Indebtedness II
| addition to a cash dividend of $40 pc
share on the Central and $32 per share OF
the Southwestern stock, the Central Rail
road having leased the latter road some
years before on certain terms specified IL
the Lease
The question made In this case is, de-
these dividends 90 to George r. Millen. the
life tenant, or to the remainder men The
will directs the income of the stock TO bG
psid to the life tenant. Are dividends on
stock the income of the stocks II not
what are they? They are certainly no par
of the corpus. They do not increase the
shares one iota. Nor could these dividends
have been so applied by the directors al
the stock, because the limit upon the mum.
Der of shares allowed the company by itE
charter is exhausted. These dividends
could not be so used as to increase the
corpus, and hence the directors declared
the dividends and gave them to the stock
holders as dividends, and not as corpus.
What did the testatrix mean when she
gave to George r Millen for life the income
of this stock Most clearly she meant the
l. - o.
there is, there can be no income from the
stock of railroad COMPANY except the divi
dends declared thereon. Nor does the tes-
tatrix limit the amount or value of this in
come to be enjoyed for life by this life ten
ant. 1t matters not how little or how large
the dividend declared, It is income from the
stock, and it goes to the life tenant. Nc
matter 10 what 1t be declared, whether
in cash or in bonds; no matter whether
it be the accumulation of years
or Of one year, II it be the
income from the stock, and not the corpus,
the stock itself by the terms of the will
which is the law of this case, it goes to the
life tenant. No matter what, therefore
may be the law in respect to cases generally
which may arise under this action of the
directors of the Central Railroad Company
in this case, under this will. these dividends
in the shape of these interest bearing cerd-
fcates, are income and not corpus, and &c
to the life tenant and not to the remainder
men.
But, suppose that the will be not in the
case, and that by any sort of deed or In.
strument of conveyance this stock were the
property OF one for life and of others IL
remainder, where would these dividends
go? Whose property would they then hes
That question will turn on the resolu
tions OF the directors and the Code of this
State, that.is, upon the true meaning and
construction of those resolutions and oil
section 2256 of the Code.
The resolutions show that dividends due
these shares of stock had been "withheld''
for past years; that the owners of the stock
had not received anything "to represent
their dividends and income thus withheld
and that therefore these certificates of in
debtedness are issued; clearly, there.
fore, these certificates represent, as de.
clared on the face of the preamble and
resolutions, past dividends withheld,
and are declared in lieu of those dividends
and that income from this stock which
were withheld. 1t is as much as to say that
the income from this stock was made In
certain years but not declared in those
years for prudential reasons. Those rea-
sons do not now exist. Therefore this, the
income of those years, will be declared as
dividends now and be paid now. Suppose
It bad been declared in cash, would there be
a doubt that the cash would be the money
of the life tenant? We think rot. Suppose
it had been declared in bonds on other
persons-on the State or the United
States, or a city, or other railroad cor
porsiions, would it not go just as
cash would have gone? Most certainly, 1t
seems to US. What diff 4rerce then can It
make T. the company gave It's own bonds or
evidences of debt as dividends represent
ing past income None logically so far as
we can discern 1t. The dfrtcto thus call
iUg these certificates of iDdebte dness divi-
dehds, and issuing them as dividends, we
come to the question where do they go
under the Code of Georgia, to the life ten
ant or to the remainder men? The Code
| (section 2256) enacs that the natural in
creases Of the property belongs to the ten
ant for life. Any extraordinary accumula-
ton sof the corpus-such as issue of new
stock upon the share of an incorporated or
| joint stock cOmpany-attaches to the corpus
and goes with 1t 10 the remainder man.
Are dividends, though unusually large be
cause withheld when they might have been
declared, but for prudential reasons, an
| extraordinary accumulation OF the corpus,
or are they the natural increase Of the prop
| ertV in the sense of this statute? We take
| it that the words ''natural increase" are
used in antithesis to the subsequent words,
"extraordinary accumulation" and they
| mean the ordinary accommodations of the
property, that Is, in case OF stock, the
| ordinary increase of its value by larger divi-
dends declared, whereby it may be worth
much more In the income of the holder
from it, goes to the life tenant But any
| extraordinary increase or accumulation, by
donation or grant from The State of lands
or other outside property, will go to
the remsinderman. That property thus
accumulated, not from the ordinary use
of the means of the company, but
from extraordinary ouGside Accommodations
attaching to the former means or corpus of
the company, and adding to that corpus or
those means sssimilates with that, be-
comes part OF it, makes 1t larger and pro-
ductive OF more fruit, and cannot be cut off
by the life tenant, but must stand tied 10
corpus and with the corpus pass to the re-
mainderman.
But really dividends are the ordinary-the
natural-the only natural income or increase
of this sort of property. There can be no
natural birth from this parent except
dividends be born of her womb.
Railroad stock produces that naturally, in
the very order of its creation, according to
the very law of its existence, breathed into
1t by the Legislature when 1t became liv-
ing entity. It's maker then said to it: fBe
fruitful aud multiply dividends" SO that,
according to its organic nature, it makes
and distributes dividends, and their birth is
no more extraordinary or unnatural than
he birth of twins. We think, therefore,
that these terms-natural and extra
Ordinsry-are not in the way Of
carrying into effect the intention of the tes-
tsirix aud Of the directors. 1t is proper
TO remark that the increase of mother who
was slave was made an exception to this
rule in the Code and under the old law.
Nor are the words "such as issue of new
stock upon the share of an incorporated or
joint stock company" They are a mere
Illustration of the extraordinary accumula-
tiOns. 1t, the issue of new stock, is not an
ordinary increase. 1t is not a natural in
crease. In this case 1t would have been very
unnatural, because the law OF the creation
of this corporation prohibited this issue.
The corporation must receive new powers
from its maker before It could do this ex-
traordinary, and, as It now stands chartered,
wholly unnatural and illegal thing. 1t
could not produce new stock, but 1t could
declare any number and amount of divi-
dends.
Besides. the corpus of this property is the
shares OF this stock. The only way to accu-
mulate on this corpus is to increase
these shares. II this corporation
had possessed the power to do
so ard had carried out that power, then the
new stock would have assimilated to the
old, become part and parcel OF the corpus,
and could not have been severed from il by
the life tenant, but by the Code it would
have gone over to the remainder man. Nor
do we see any other possible way Of adding
to this corpus-the old stock-except the
issue of new stock. That Is the only thing