The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1900-03-06

the pay thereof to the life for life
and then the corpus to the remainderan Bouch
Sprou supra Under this rule under the other rules the
question considered is what Is the intention of the of
the trustl Then, if in the present he has given
special directions presumed have intended that things
shall take their under corporation law. The que
ton then becomes of corporation law The reasoning then
this The shareholder distinct from the corporation; nothing
income him declared by the corporation; the
poration may determine whether earnings shall be capital
dividend therefore earnings that the corporation says shall b.
capital are capital that says shall be dividends
dividends Therefore the prime question under this rule Is what
was the intention Of the corporation!
The presumption is that distribution earnings
dividend and income, for such usually the
and ordinarily corporation pay its capital except
when in liquidation distribution of stock representing
earnings intended capitalization of those earnings for
stock dividend takes nothing from the property of the corpora
ton and adds nothing the interests of the shareholders ami
both before and after such dividend the corporation the
entire property and the aggregate interests of the shareholders
represented by the whole number of shares and their proper
ona interests the ame there is change merely the
evidence Of the ownership larger number of shares being held
by the person but representing the interest The sub
rather than the form of the transaction regarded The
real intention Of the corporation acertained from what does
rather than from what says.
In BOuch SprOule SUPRA there distribution of stock
and called dividend, but the court after considering all
the circumstances held that capital because the company
did really intend pay dividend but intended
y permanently capitalize part of Its earnings In Re ALsbWy
L. r. Is Oh d. 237, $780, several extraordinary dividends
paid in cash and the held that they income and
capital because the company intended In each of these
cases. the considered immaeral when the profits
earned. In Re Armdge, 1S93), CHI 337, company
wound up and sold It's for enough pay in cash it,
shareholders the of capital paid in and additional
representing profits 1t all held be capital because the
company had declared dividends could after go
ing into liquidation The surplus held be capital Just
the premium that might have been realized in the
had sold the stock premium while the company going
would have been capital just the surplus would
have been capital the life had died before the dis
rbuon made For nothing income of the stock until
so declared by the company In Re Halqm Qs9 CHI SIS
dividend declared half of winch paid cash. and the
other half Of which offered In stock the shareholders but
such preferred could take cash instead of stock The
pany in position pay cash The trustee elected TO take
stock The held that the company really intended pay
dividend and that much of the value of the shares
represented the dividend applied by the trustees taking the
stock income and the capital.
The present English rule is followed in Massachusetts In
MiHo Paine 90 Mass 1O1, stock dividend held to be
capital The said among other things: ~ simple rule
regard cash dividends however large income and stock
dividends however made capital This generally called
the Massachusetts, characterized possessing the
merit of simplicity but the demert of injustice But shown
by other cases. that the rule followed i'll Massachusetts In
that State in England the substance and not merely the form
Is regarded but also in England the action of the corporation
in deciding whether earnings shall be capital
elusive DaGad Williams, 1O1 Mass. ST. the company
could under the declare stock dividend it wished
do and declared dividend be received back pay
for stock The company not in a position pay
the cash and did expect expected that share
holder would keep instead of the stock the stock
was above and it was assumed that shareholders did have
the alternative Of selling the right to take the stock The
held that declaration of the cash dividend merely
comply with of the law and that the company
really intended capitalize its earnings and that therefore the
ealSO
1lj 461 In Leland Hayden, 102 Mass 542 the
ranv declared stock dividend of its stock which had
purchased in the market with its earnings and which owned
by in its corporate capacity ike other property This
held income the if the stock had been stock i'll
different company other property or had been sold and the pro
ceeds paid The company also issued stock which the
shareholders could take par allow to be sold for their benefit
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