Opinion ID: 272506
Heading Depth: 2
Heading Rank: 4

Heading: The Cash Dividends on Air-Way Common.

Text: 46 Blau maintains that the 30cents per share cash dividend paid by Air-Way on August 1, 1955, to holders of record of Air-Way Common on July 20, 1955 should have been included as part of the 'profit realized' on the following transactions: the 10,500 shares of old Air-Way Common 'purchased' on June 6, 1955, and sold on October 13, 1955; the 6,500 shares of old Air-Way Common 'purchased' on June 6, 1955, and the 6,500 shares of new Air-Way Common 'sold' on October 13, 1955; and the 300 shares of old Air-Way Common 'purchased' on June 6, 1965, and sold on September 15, 1955. Preliminarily we note that the cash dividends with respect to the first two transactions are not recoverable, because, as we previously have held, the acquisition by Enterprises on June 6, 1965 was not a Section 16(b) purchase and thus those paired transactions were not covered by Section 16(b). See note 22 supra. The claim for recovery of the cash dividend of 30cents per share is, nevertheless, relevant to the transaction involving 300 shares of Air-Way Common. As to that issue we affirm the district court's conclusion that the cash dividend was, 'too incidental and not 'so inextricably connected' with defendant's purchases-and-sale transactions to be included in the amount recoverable.' 242 F.Supp. at 161. See Adler v. Klawans, 267 F.2d 840 (2 Cir. 1959). Air-Way had paid regular quarterly dividends since June of 1954; the 30cents per share dividend declared on June 30, 1955 was an increase of only 5cents per share over these prior quarterly dividends. In view of this dividend payment history we cannot say that the lower court erred in concluding that the June 1955 dividend was not par of a scheme of short-swing speculation. 47