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

L
another What then shall be done with dividends in regard to
which had special thought the oher In other
words what be considered income from the stock within
meaning of the creating the trust and within the
general intention of the creator of the trust!
OF socaled dividend made of the whole part
of the capital of corporation, whether in cash other prop
erty if stock dividend is made represent merely the III
in value of the property of the corporation through natural
and apart from accumulated earnings 1t Is considered
of the corpus Of the be kept for the rmane
only the thereof go meanwhile to the life tenant or
although called dividend it is in fact not dydeli proper
(Which be paid only from earnings but Distribution OF
capital change the evidence OF the ownership OF
and everywhere agree that they should look through t
form the substance of this kind dividend OF TINS
kind not only not the shareholder not even PAM
ont Of what is income to the corporation and the of the
trust supposed have intended that 1T should be con
dered dividend merely because the corporation or IT,
directors have called it by that name
So on hand if dividend paid from earnings and
is an ordinary cash dividend there doubt as to woin
should go For the of the trust having such DIVIDENDS
principally in mind be presumed in the absence OF any
Indication the contrary, intend that they should follow he
usual familiar and go the entitled at the time tney
are declared Accordingly such dividends are held not aPpo
onab If declared during the life they go wholly to
the life tenant though earned by the corporation wholly
in mart before the creation of the trust If declared after the
termination of the life tenancy they go to the
though earned during the life tenancy The authorities agree
upon this also This naturally follows from the DISTINCTION De
tVepn
, arr, not income TO the shareholders until dividend Is de
ered Those earnings variable and cannot be assumed
have earned at the same rate daily through a!
nerod Of time nor is feasible investigate the affairs OF
corporation whenever ordinary dividend pad IN order 10
ascertain when the profits of which it is paid were earned
for the purpose Of apporoning between successive owners OF
the stock.
u with regard to unusual dividends there great diversity
of opinion There at least four different views as 10 me
general rule that should be followed
Il L, oufaIf shed
~ Rondy Yes 500 adopted few years later by the House
Of Lords in Irug Houston, Paton Sc App 32l and FOL
lowed many subsequent cases 10y this rule all
dividends or bonuses they called cash well as Stock
were held for the remandeman Che life tenant meanwhile re-
eving only thereof There has been some
onn;on as to the extent which this rule applied and as to
he reasoning upon which it based but as shown by what
NAV now be considered the principal English case upon TINS S
iect Boch Spouc L. t. II App Cas- $780, decided by the
House Of Lords in 1887 the following the view taken In
ENGLAND as to this early Certain corporations had no power
increase their stock this nconvenent especially as cir
emstances might compel them to reduce their ordinary r
dends therefore they accumulated profits and used he l
capa purposes often INVESTING them in securities that could be
turned into cash peaure who had to do with so
knew this and person gave stocks trustee IN trust TO pay
the income to e he could scarcely intend that the NE
tenant should away with the bonus that had been
pg perap years and that had been regarded In the nature
capa and if profits had accumulated after the creation OF
tho trust and were paid during the life tenancy unless that
fact clearly appeared the action of the corporation and sc
profits were paid expressly profits they were s rearde
"a capta on the presumption that they had been accumuan
for some time and considered converted into capital
and because impractcablity of ascertanng what was
earned and accumulated before and what after the creation OF the
st Under this rule the dividend in question would all
no hold for the remandemen And would 1t II 1t ad
n maid in cash this rule has been regarded as UNJUST 70
tho life tenant and cash dividends in conflict with
the principles of copOraonaw that earnings are not
ona and that dividends may always be paid out OF them 50
long as they have converted into capital represented by
stock and that dividends when declared the entitled
h the time irrespective of when they earned Accordingly
this e has never followed the United States and Is now
regarded with such disfavor in England that 1t considered as
resting solely authority and not to be extended beyond the
class Of cases in respect of which it was established namely those
ncrca.e ID. stock