Court Opinion

ID: 3601518
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:47:51.599445+00
Date Added: 2024-06-11T13:57:20.262540
License: Public Domain

The plaintiff was entitled to have his bonds converted into stock whenever he should demand it, and deliver his bonds at Terre Haute, at the office of the company. He chose the agency of the mail to make the demand and delivery; and, although he mailed the bonds *Page 207 
on the twenty-sixth of November, they did not reach the defendant's office until the third of December; and hence, they were not delivered to the company for conversion until that day. For the purposes of this action, therefore, the plaintiff must be treated as if he had delivered the bonds, demanded their conversion, and received his stock on that day. The plaintiff cannot maintain this action upon the theory that a dividend was actually declared to him upon his stock, because the justice has found, upon facts abundantly warranting it, that the dividend was declared upon the stock of the company as it stood on the thirtieth day of November. The action must then be maintained, if at all, upon the theory that a wrong was done the plaintiff by not including his eighty shares in the stock upon which the dividend was declared; and that involves the question whether he was legally entitled to a dividend upon his stock from the profits and surplus earned before the stock was in existence. Upon what principle is he legally or equitably entitled to such a dividend? Prior to December third he was a creditor of the corporation, and not, as to this stock, a member. Neither his capital nor his skill had in any way contributed to the profits which had been earned; they had been earned by the capital and skill of others, and upon every principle of equity and justice, it seems to me, belonged to the other stockholders. On the third of December he was entitled to become a stockholder; but it does not follow that that gave him the right to share in all the profits that had been earned up to that time. He was informed by the company, before his bonds were converted, that he would not share in those profits, and he took his stock with this knowledge. How can he justly complain? The company had agreed that he could take stock at par for his bonds; and it would follow that from the time he became a stockholder he would be entitled to all the privileges and benefits of a stockholder, on a footing of equality with his associates. But the company never agreed with him, and it is not implied, from what they did agree, that when he became a stockholder, his rights should *Page 208 
reach both backward and forward, and he should be entitled to share in the profits which had been earned while he was a creditor of the company, receiving interest upon his bonds. I infer that plaintiff had been paid the interest upon his bonds, to September, for three months of the period for which the cash dividend was declared. Suppose his interest for six months had fallen due and been paid December first, could he the next day have demanded a conversion of his bonds and a share in a dividend to be made for the same time? It seems to me clearly not.
The directors of this company were its general agents and trustees for the management of its business, and, in the exercise of their discretion, as an inducement to the conversion of the bonds, they probably had the right to agree with the plaintiff that he might share with all the other stockholders in the profits which had been earned; and such an agreement would not have involved a breach of trust on their part. But they did not, and were not obliged to make, such an agreement, and were guilty of no breach of trust in refusing to permit the plaintiff thus to share.
I do not see upon what theory the courts below could allow the plaintiff to share in the cash dividend and not in the stock dividend. His right to each depends upon precisely the same principle; and if he was entitled to either he was entitled to both. It is probable that the difference was made because of the wording of the resolution as to the cash dividend. The resolution, in terms, confined the stock dividend to those who were stockholders on the thirtieth of November; whereas the cash dividend is general. But the resolution is not a record nor a contract which cannot be contradicted or explained; and the facts of the case showed and the justice expressly found, that both dividends were declared upon the stock as it existed November thirtieth.
In any view, therefore, I can take of this case, the plaintiff was not entitled to either of the dividends, and the judgment should be reversed and new trial granted, costs to abide event. *Page 209 
For judgment in accordance with opinions of LOTT, Ch. C., and REYNOLDS, C., LOTT, Ch. C., REYNOLDS and DWIGHT, CC.
For the reversal, EARL and GRAY, CC.
Judgment affirmed as to cash dividend, and reversed and new trial granted as to stock dividend.