The Bridgeport evening farmer., 1910-02-07
STOCK DIVIDENDS
 DECLARED LEGAL,
Not Barred By Incorporation Law Passed in 19O3-Text of Decision
 by Chief Justice Baldwin.

Not Barred By Incorporation Law | Passed in 19O3-Text of Decision by Chief Justice Baldwin.
 | Among the decisions given oy the Supreme court on Thursday was one in the suit Of the Stamford Trust Company against the Yale & Towne Manufacturing Company, also Of i Stamford, which is of interest to all l large corporations in the state, as 1t at1rmS the fact that stock dividends l are not contrary to the provisions of the general corporation act of 1903. | The decision does not lay down a new principle but upholds one which has been questioned in. some. quarters since the passa ge of the actsreitrred to.
 The Stamford Trust Company holds as trustee eighty-two shares Cf the stock of the Yale & ToWne Manufac- 1 turing Company, and, when the dl- rectQrs of. the latter corporation pro- posed to declare @ stock dividend lIi accordance with the vote of the share holders last October, the trust conn pany secured temporary injunction restraining the Yale 6l ToWnG cor poration from such an act oil the ground that 1t was in violation of the i incorporation law, which provides
 
 certificates until they have been sub scribed ard paid for in full. It was 1 also set forth in the petition that the proposed action would be an lDj | to the trust company as trustee and that it had no adequate remedy in 1 law.
 In his opinion Chief Justice Bald 1 win says that the Yale & ToWne Manufacturing Company was original ly incorporated under the general in ! corporation laws of the state with a capital of $650,000, but received a special charter in 1882, which gave it power to increase it's capital stock
 from time to time to an amount not exceeding on the whole S2,00O,O 900 and ] to use and dispose of the same in such manner as the stockholders may 1 oirect." In an amendment to its charter granted April IS, 1907, it i was authorized to increase it's capi- ! tai stock from time to time to an 1 amount not exceeding in the aggre-
 gate $5,000,000 subject to all the 1 provisions of the statute laws con- l corning the issue and increase of cap i ital stock by specially chartered cor ! porations." Tn October, 1909, it then ! having a capital stock of Is, ,000 shares
 of the par value of $1O0 each, all of
 which had been issued, its sharehold- ! CTS voted to sauthorize, approve and ! recommend a transfer to the amount | of $500,000 in value of Q portion of 1 the surplus now used as working cap ! ital, to and the conversion and mer- ger of the same into the permanent | capital stock, of this corporation, by l the increase of the capital stock in
 that amount and the issue of 5000 | Q dditional shares each of the par | value of $190, and the distribution | thereof among the stockholders in 1 the proportion of one new share to i aIo I,r t,+o T i,o,, 1 capital stock''-and the transfer from
 the surplus account to the capital ! stock account of the said sum of ! $500,0 900 in payment for such issue of 1 increased capital stock' and that "the i capital stock of this corporation be l 000,0 900 by the issue of said 5000 ad- 1 djtional shares of stock each of the par value of $100 which additional shares, together with the present
 share capital, aggregating in the
 whole $2,C O,000 shall be and remain
 capital stock
 This action was approved by a
 stock vote of 13,9SS shares in it's | favoreand 92 against. The Stam- ord
 Trust Company owned eighty-two of
 the ninety-two shares and the rest
 was owned by one other person. They 1 were the only ones out of IA share
 holders who have manifested any dis | approval Ol lne proposed 1ncTodSO or
 capital.
 Chief Justice Baldwin quotes va
 rious sections of the general incorpo-
 ration law of 1908, including Section 12, which provides that no corpora
 tion shall issue certificates for stock
 until it has been subscribed for and
 paid in full, and, if paid for other
 wise than in cash. that majority of the directors shall sign upon the rec ! ord book a statement showing of what the property received in pay ment consists, and that it has an | actual value equal to the amount for which it is so received. The sections 1 regulating increases of capital stock l are also quoted.
 Chief Justice Baldwin says:-
 ''The company has been in busi-
 ness for over forty years. The mark ct for it's manufactures is extensive and
 to hold it, the prudent conduct of l affairs has required and will require | the permanent use in such business
 of Q much greater amount in value of
 assets than the amount of it's present
 capital stock. It has, therefore for
 many years, been it's policy and prac-
 tice to accumulate a surplus above
 it's capital stock and indebtedness
 and use it for additions to it's plant
 and extension of it's business, invest
 ing much of it in buildings, machin-
 cry, tools and fixtures, which cannot
 he withdrawn or turned into cash
 without great loss.'' He found that
 the directors made record of the fact
 that the company had declared a
 stock dividend of 33 1-3 per cent;
 that the actual surplus of the com
 p2ny exceeded $500.000 and that
 there had been received in payment
 for the stock and script so issued
 ,000 in actual value of the sur
 plus of the company, which is paying Il 1 70 Q of o
 year. The capital stock of a cor
 poratior is the fund. property or oth-
 er~means, contributed or agreed to be contributed by the stockholders as
 the financial basis for the prosecution
 of the business of the corporation
 and which becomes irrevocably devot- l ed to the sole execution of all the