Court Opinion

ID: 5248568
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:06:36.742762+00
Date Added: 2024-06-11T08:27:54.446556
License: Public Domain

Laughlin, J. (concurring):
I concur in the opinion of Mr. Justice Shearn, but notwithstanding the number and length of the opinions written on this appeal I deem it proper to add a few sentences to emphasize my views on the point on which Mr. Justice Page and Mr. Justice Shearn differ.
If the combination of these companies had been legal the investment of the surplus earnings of the constituent companies by the Standard Oil Company of New Jersey in the organization of the Colonial Oil Company and the Standard Oil Companies of California and Nebraska would have remained capital on the theory very lucidly developed and discussed in the opinion of Mr. Justice Page. The decree of dissolution evidently proceeded upon the theory that the acts of the Standard Oil Company of New Jersey in representing the various companies whose stock it held were to be deemed valid until the date of the decree, for there was no annulment of the corporations it organized and by the decree of dissolution it was permitted to distribute the stock of all the corporations including those it organized among its shareholders in the proportion to which they were equitably entitled. This presumptively was on the theory that during the period of the illegal combination it was necessary to *570regard the Standard Oil Company of New Jersey as acting for and representing the constituent companies as agent, and doubtless any other course would have been impracticable. But after the decree of dissolution which decided that the combination was illegal it was no longer competent for the board of directors of 'the Standard Oil Company of New Jersey, in my opinion, to act for or represent the constituent companies. It was then merely authorized to carry out the decree of dissolution and, therefore, the action of its board of directors can be given only that effect. Undoubtedly, if the constituent . companies whose surplus earnings were used in the purchase of this stock had themselves purchased it with their surplus earnings they could have subsequently disposed of it and have distributed the proceeds as dividends, but by operation of the decree that power is now necessarily gone owing to the fact that it severed the relations of the constituent companies. If the decree of dissolution had annulled these three corporations and directed that-the assets be returned to the respective companies with whose funds they were organized such assets in the hands of the respective companies to which they would be returned would still remain capital until action by the respective boards of directors authorizing their distribution as dividends; but in that event they might have been distributed as dividends. As already observed that power is gone and forever, and neither the funds nor the stock representing the investment could under the decree of dissolution be returned to the respective companies whose funds were used in the organization of these three companies. We have then a case of the surplus earnings of the respective corporations invested in the organization of other corporations and permanently severed from the companies whose funds they were. Under the decree of dissolution which leaves these three companies validly organized no one is now authorized to distribute as dividends the moneys with which the three companies were organized. The investment is no longer beneficial to the companies whose funds were thus invested. They can neither hold these investments as capital, nor distribute them as dividends, and no longer have any ownership in or control over such investments. Those moneys are as definitely and permanently *571severed from the’respective companies from which they came as if they had been distributed as dividends. Their distribution it is true has not been through action of the respective boards of directors but has been by operation of the decree of dissolution. The stock, therefore, of these three companies now coming into the hands of the trustee by virtue of the decree of dissolution represents surplus earnings of the companies whose funds were used to organize them and under the decision of this court in Matter of Schaefer (178 App. Div. 117) and of the Court of Appeals which affirmed on the opinion of. Mr. Justice Scott here (222 N. Y. 533), it seems to me they must be deemed to represent surplus earnings to which the life beneficiaries are entitled. In the opinion in that case Mr. Justice Scott said: “ Where the trust fund consists of corporate stock, the life tenant will ordinarily be limited to receiving only so much of the profits as the corporation sees fit to distribute in dividends, but when the accumulated profits come into the hands of the trustee in any form or manner the life tenant is entitled to receive them.” Here the shares in these three companies represent accumulated profits only and have now come into the hands of the trustee. I am of opinion, therefore, that the life beneficiaries are entitled thereto.