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

sell the right the stock par proceeds will be
held for the remanderInan the income thereof 90 life
of direct stock dividend company should
pay cash dividend with the privilege the part Of the
holder Of turning around and taking stock par
evident that life tenant would be entitled the amount of
the cash dividend only and that if @ exercised sold
the right to take the par all the value that rceiy
ed above the par value that he received the sale would
be held for the rmandernan The only theory upon which
life tenant l. entitled dividend all that amounts
substantially TO the payment Of cash dividend Of earnings
and Its payment back the company
quenty the life tenant entitled than amount
which he would have received ease the dividend had been paid
in cash And the other the right to take new stock al
par incident of the corpus the trust belonging 70 tho
holder OF that corpus and the corporation could
law under ordinary circumstances give to any one else There
fore distribution of earnings Is made the of new
stock and the stock above par necessarily follows that the
life tenant Is entitled only much of the stock as equals in
value the earnings appropriated and that the rest of it must b.
held by the part of the corpus trust This fol
lows necessarily from the reasoning of all the courts whether
they follow the present English or the rule or the
rule Of the Middle States For instance in England in Re
Nda"', 1850 Oh. 57s the corporation issued new stock
and gave the shareholders the privilege taking the stock or AN
amount equal Its par value in cash The stock was at pre
mm The court held that the life entitled only to
much of the shares represented the dividend applied in
taking them up and that the value formed part Of
the corpus of the To the r. Jackson
l52 Mas -, Brincy Grou, 30 Conn 80 See also Thomas
Gregg, (Nld) supra Hitc Hc (Iy) supra; Eisner's
Ippod (a) supra Simpson Moore Barb 637; Walker
Walker On H. 80 Att 432; Cook Stock and Stakeholder
$3.50; Elliott Railroads, S307 Am Il Eng Enc u.s. Mora
wez says Il Corp. S46s):
1T should be observed however that the distribution Of
stock dividend permanently captaze only much of the accu
INFLATED surplus applied in paying mp new shares Any
additional amount would be retained by the corporation as sur
plus after the increase of its nominal capital and might still be
used pay dividends Hence of shares never
entitled to receive than the par dividend
although the shares worth than par entire
surplus of the company earned during the existence OF the
life estate He entitled receive only much Of the surplus
earned during the life used paving up the new
shares"
In the present 100000 of earnings were appropriated
payment for the par value 1000 shares of new stock Of the
value of 500 each The value of the old stock in conse
of the issue of the stock dropped from be-
tween $500 and $3.50 share between 1885 and $3.50 share
The shares Immediately the latter amount This
value represented the of the dividend paid plus the de
probation in the value of the old shares It represented the
amount of earnings paid in effect dividends to which the life
tenants entitled and the right take new stock at par
which incident of the corpus no wav income from
the stock or due to the earnings appropriated dividend
the dividend had been paid cash. trustees would have been
obliged pay and only the life tenants They would then
have had remaining the right the new stock at par which
they might exercise sell representing corpus The $50
shares held by the portion of the new stock
allotted respect Of the SIS shares stock held by them
represents S5s3OO of earnings over twice that amount "a
the value of the right take the stock at par or as the de
probation the value of the old stock much of the new stock
as was of the value of Immediately its issue should
be aPPoroned to the life tenants the should be held
by the trustees part of the corpus of the trust
The decree of the Circuit Judge awarding the whole Of the
stock held by the life tenants reversed and
the case IS RENTED to him with directions make apporon
and decree in accordance with the foregoing views
Robertson d Wilder for plaintiffs
Thurston Carter and L. Andreies for defendants