New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1883-10-03
responding value, 10 answer to the stock ds-


Initiation. or 20 nse phrase much IN vogue, a
watering of stooks-would lie condemned by the law
but when stock has been lawfully created ana IS he Dy
corporation and which It has right to Issue for value
then stock dividend may be made provided that tne
stock always represents property n Is conceded that
the directors of the Western Union legraph Company
could have issued this stock for noucy TO Dc paU ny
its asuTy. II could h8 issued 1t FOR properly 10 D'
received by for the purpose OF it, legitimate
But here 1t s found thai over anI ABOVE Sor ~
upward of Sl5,OOO.OOO, and we know of no law
sSmn1 70 tbe siocEhoiders stock 10 represent that
property, rather than in any mode 10 uNldo
il IN and distribute it among them II it could issue
stock i'm payment of property to be obtained by II RS
part OF Its capital for IFS legitimate uses, why may IL hO
in effect purchased OF them and added permanent
capital, and winch they reingusAed lhe rlshI 20 nave
dvidrdi so long every dollar OF stock Issued D!
corporation IS represented by dollar OF properly 10
harm result TO individual or pOlc from uiS
conspiracy no unlawful combination. and are bound
under the findings OF the Court at special Term 10
assume that all this done in good taitn ana we
statute that condemns a stock dividend uhuer such
lit is true that this dividend largely increases the
capital stock Of the company but that Is no a-ic y Of
policy OF our laws be against lhe pOcE Oh
the which the law expressly permits Ihere IS no
limit tue capital which business cofpordtons ~ tS
State may have, aud there IS no nil h tue "a" 10 Mo
they may their capital: All that can ne
In any is that there shall be an actual CdPta ~
property representing theamOuntoI snare 80
Indeed so Far "a the sOycuCY and responsibility uI
corporation Is concerned Ihey are Increase. w ',I
DIVIDEND where II ha5 surplus property 10 tSa
10 the amount shares issued. In such case the surplus
J.
creditors oil cue corporation anu l9i J't a. ar
thereafter 1t can never be legally DIVIDED "ILaI""h Ut
dlssipated in any way.
NOT A DIVIDEND OF PROPERTY
"But ii it can ne conceived that tIis was dividend
Of propcrv within the meaning Of the section OF the Re-
ysci Statutes above set out hen what property dd II
divide Not any portion OF the capital OF the company
that rcmaincd intact. After subtracttug the div
ldend there remained to the company the
ful amount Of its prior capital stock 10 VII;
f,-g IA g,1ot, {r f,a Nr,f,
log of the and mat cannot mere he dsph'd
The company had madc surplus earnings Whch II colu
have divided but instead OF dividing mem II na n
vestcl them in property TO facilitate enlarge us
business aud such property was found 10 De worm Sl1
mingled with the property Of the company ana
used for corporate purposes but IL was nor be OH te
reach Of the divldendnahns power ui Imc TIiVrlur
They could reclaim il for division among me STOCK
holders ana practicable convert 1t into cash for that
purpose. They could borrow money on e ace % ~
divide that they could issue 10 me slOcAaOidefs
certificates of Indebtedness reieemaOe IN the luLuIe'
represenuc their respective interests IN such surplus
thus effect borrowing the same OF the Ht'chhciuerS
Desiring to use the surplus ana add II TO lle eraanen
capital Of the company, aud having la"'uy CFcdicu
shares OF stock they could issue to the sockhlGrIs
such shares to represent ene n mo- law Would be-
Violated capital would be kept intact ana no STOCK
holder or creditor would have any legal right 10 come
this however depends the finding Of the trial
court that surplus equal to the dividend existed That
finding Is not open to criticism here. IL not dts
trbed at the General Term, and therefore concludes
US. When acOrpoIauon mas surplus whether GIIl-
dend hail he made, and, If made now much IL shall be.
and en- and where IT shall be payable rest IN the flir
and honest discretion OF the directors uhcOhtroaoo Dy
tue courts. 5000,
graph companies, or IN companies generally, 10 be made
In csb Whether they shall be made IN ca5n or property
must also rest the discretion OF the directors There
is no rule OF Law, reasOn based upon public policy,
| which condemns property dividend Tue directors
could convert tue properly into Clsh before dividend
and divide that 30 tue slOCkouel5 eau Iao '.t prop
cry divided 10 them aldEe IT, ana thuS rcaZe the cash.
| Within the domain OF Law, II can make no material
difference when course T. pursued IT, however Uyi-
dend be made payable In casa, or payable generally the
corporation becomes debtor and must discharge such
debt as II IS bound 10 us'IaILe an ils "i"e 1.ls' IN
lawful currency. is trnc that stakeholder cannot DC
nor b. 10 AXE cash dividend. Ia case Of his
refusal 10 lake "a cash dividend the corporation may r."
refuse 10 take properly dividend the corporation may
reaiu it holu itm trus, Tor him. or possibly sell lt
! win ind some way to dead VITA H.
| ACCEPTANCE OF STOCK NOT COMPULSORY
| $50 TINS pl4mf cannot bo compelled 20 accept The
atoc, divided 70 him aud thus incur the possible lDy
which it may impose upon An as siockloIsr I ease
Of his re usa the corporation will find some way 10 del
WITT the stock whir the law VII stncl1n, bui "hIch
need not now DE puintcl ont We nave 10 ocea ion 90
scrutulzC tine motives OF the CtiennaHlN Inc IyNi-.
| refused mud the alleged ,raui auI
| conspiracy aud his finding conc,Haes u.s..
! Id his opinion said; 4 nave also found tIai the
oIher allegations of fraud and conspiracy MAZE n tar
complaint ~ dust the decndnus aud others were no.
proved the trial once iha very dp.g ''ht',i Tor
tine plaintiff hi argument al the close uf lI. MAJ ln
this sad tudl ne was MOI s'uE 70 Ltl'I ''1 ''
that lac Adj lolco 20 sac" 5'l-i ,''''
had not able 10 prove certain ihu, DIV the dc end
| ant
| a 10 the same effect The compliant among other
things CHARGES tIHr the corporate arlOn complained u"
wa, Ihe result of a rauIucHJ conspiracy on the part OF
te yidual dtleuaauts huI the legations IN ll IT,,
-poct were AIMED by the proof at the ulI nor
the present appeal are therefore of opinion, upon
the iact found the Special Term, tIa the stock I
| deud was authorized b. law and therefore, valid
The Court then enters discussion Of technical
question OF practice holding that the Western Union
Telegraph Company had the right to appeal alone 10
| the Court OF Appeals on giving the stipulation for
Judgment absolute against It IN the order OF Gen
eral Term should be affirmed. The opinion conclude,
| as follows:
"Our attention uDon the argument was called TO GER
pOraucc when have given careful attention, and
we 40 not think that any OF them pom on. any
prelude cal TO the plaintiff We nave not considered and
90 not determine the point e by the defendants tIat
| the paintin as individual stOcknOldCr, pIrcIurlHg
his stock while the OF winch uC Cppu uUd
we're IN Rcr and after no had motto" 81 tuc.H
not In any aspect the maintain ms acton upon
The fac existing for the relief which nc Sc .E. We
prefer 20 rest oar decision upon tue broader ground
| upon which We have paced IT,
| owe are. therefore, OF opinion that TIE order Of
tine General Term should be and The judgment
| OF the Special Term atirned win costa
! "A similar order should be entered In Hatch
| The Western Union Telegraph Company anu Others ;
and as these decisions the injunction orders,
tue appeals from those orders should be dismissed
! without COs,S.'