The Roanoke times. [volume] (Roanoke, Va.) 1890-1895, 1892-12-10
INTERESTING LEGAL OPINION
Delivered by the Celebrated
Justice Chitty.
Roanoke Land and Improvement Com.
p@ny stock In an English Court-The
Work of the Company Reviewed-Its
Handsome Prohts-The Declsion Proh.
ably Good In Virginia.

a well-known Roanoke investment
stock, and the legal principles laid down
by the celebrated Justice Chitty will
probably hold good in Virginia. The
report is taken from tho London Times.
of November "a 1892.
HIGH COURT OF JUSTICE.
CHANCERY DIVISION.
(Before MIR JUSTICE CIuIrY.)
hh LORD ALFRED FACET, DECEAsED-
IISTowEI. v. FACET.
MIR. Justice Gritty delivered iudg.
mont in the above case. which raised 4
difficult question as to how far the an.
portionment by company Of it's profits
to share or capital accounts affects the
distribution of trust funds consist sting
Oh shares OF tho company held in trust
Tor persons for life with remainder oyer.
Mr.. Charles Mitchell and Mr.. Eve
appeared for the parties.
Mr Justice Chitty said: Tho question
is whether sum OF $50 las Cd, re.
ceived in 1891 by tho trustees OF tho tes.
tator's estate from the Roanoke Land
ana improvement Company, is income
or capital. The tenant for life claims
me sum as income. The tcstator, at his
NS"eH' W hiSh lOOh place III august, 1888.
was entitled to rs shares in the company
OF 500 each. These shares tho trustees
have retained as an investment, being
authorized so to do by the will. The
Will contains general trust for CONVEX
sion, with power for the trustees to
postpone the conversion, and directs
that, until conversion, tho rcnts, divi.
bends, interest and other yearly pro.
duce should be deemed annual income
OF his estate. applicable az such for tho
purposes OF the trusts without regard to
the amount of such income or the nature
OF the investments yielding the same.
Tho company was Incorporated in 1881
under tho laws of tho State of Virginia,
where it's head office was situated. The
capital OF tho company under it's charter
was $4,000 with liberty to increase
the same to $4,000, 900, to be divided
into shares of 500 each. The objects
OF the company were. in effect, to buy,
Improve and sell land within the State.
Its affairs were, under tho bylaws, to
DO managed by board OF directors.
Before tho testator's death tho company
had increased its capital to s4OO. OOn CT
this capital 100000 were paid back to
the shareholders in the testator's life
time, and TWEEN ty-fve Of the ono hundred
shares no had originally acquired wero
thus redeemed. At his death the CAPT.
tai stood at $500, 900, and it has not since
been Increased. Tho company has made
very large profits by ita operations in
buying, improving and selling land.
They amount to moro than $3.50, 600,
after providing for the subscribed CAM.
tai of S4OO, 600.
The company is obviously a trading
company, dealing with land just as any
other trading commodity might be dealt
with. The constitution OF tho company
Is such that it has the right to pay off
It's subscribed capital, and this it has
been doing for some years past. The
company will shortly close it's opera
tions and be dissolved. In the distribu.
tlons OF money made by the company
the trustees have received sums equal
to the amount Of so of the testators rs
shares and to 90 per cent. on his re.
been redeemed wholly and tho % shares
to tho extent OF 90 per cont. Besides
these sums, which are plainly capital
as between the tenant for life and the
persons entitled in remainder, the
trustees have received other largo sums
from tho company. Tho directors re-
ports and tho accounts of the company
for many years past arc before the court
il will not be necessary to go through
them in detail. The result appears TO
me to be this:
inc company has not at any time
made any final capitalization of its
profits OF ;ourso the mere acquisition
of land was not capitalization. The
company has from time to time distri-
buted among tho shareholders a certain
amount OF the profits and has, in the
prudent management OF its affairs, tenn
porarily withdi avn from immcdi late dis.
tribution the balance OF the potts.
This balance is represented BIZ unsold
land securities and other assets Tho
cheme OF 1856 was much commented
upon in the argument on both sides
The subSta &c Of the scheme wes that
the shareholders were asked TO sur
render their then present stock and to
receive in exchange therefor new stock
OF equal amount, but divided into seven
series, six OF which, to be known as SCR
los a, b, c, d, e, +, to be OF $50 600
each, AMI seventh, series G.. to be
for 100000 The proposed exchange
was made. 1t was part OF the scheme
that certain special accounts should be
opened in the company's books, such as
"a special absorption account" lin
proyement fund" and especial profit
loss account" (see particularly tho re-
ports for 1856 and 1887.
So soon as the special absorption &C
count or fund reached the sum OF $780,
600, the directors were to call in and
tho stakeholder to surrender the series
OF stock beginning with series A, re-
ceiving in payment tho face value and
interest thereon as the dividend last
paid on the stock. The final series G.
was entitled to receive tho benefit of
whatever property might ROMAN to the
company when The six series OF $50, 600
each had been retired. Thus" (as was
state d in the report of 1886 recommend.
ing the schemel, "as tho property i,
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