Court Opinion

ID: 8786675
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:37:16.346096+00
Date Added: 2024-06-11T17:03:06.901909
License: Public Domain

WARD, Circuit Judge
(dissenting). The general principle is that all stockholders share equally in net profits, except as their relations. are altered by statute or contract. If a preference is given to one class of stockholders over the rest, it should be construed consistently with this general principle as far as possible. For instance, if the preferred stockholders are given the right to receive a dividend of a fixed amount before the common stockholders get anything, the latter should next receive an equal amount, and then the surplus, if any, be equally divided between the preferred and common stockholders. Where the privilege is intended to be restrictive, the intention should be expressed as by saying that the preferred stockholders are to be paid a certain dividend before the common stockholders get anything and are to receive nothing more. In this case the certificate of the company provided that the preferred stockholders should be paid an annual cumulative dividend of 8 per cent, before the common stockholders received anything. There were no words of restriction. Therefore I think they were entitled to receive their proportion of the stock dividend in question. It is true that dividends had for many years been declared and paid as if the privilege to the preferred stockholders were restrictive, the question never having been raised, but I think this does not prejudice the rights of the preferred stockholder who now for the first time raises the question.