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and 118 New York State Reporter place between W. L. Bass and the defendant corporation, and the bookkeeper, under the orders of the president and Mr. Milliken, secretary and treasurer, amended the dividend of December, 1896, making it $132 and some cents per share upon the stock which was actually issued at the time of the declaring of the dividend of November 25, 1896, thus conforming the transaction to the theory of W. L. Bass and to the requirements of justice. The resolutions of October 22, 1896, in view of the manner of their adoption and what subsequently transpired, are without any force or effect. They could not afford the basis of any action on the part of Mr. Mecke in making the entries of credit to himself and his fellow purchasers in December, 1896, and the dividend directed in November was upon the interests of the several stockholders as they appeared before the transfer of the 70 shares of stock to the plaintiff and others, and was purely a matter of mathematics. The dividend was to provide a sum of money, based upon the interests of Messrs. Milliken, Hartley, and Mecke, to enable them to purchase these 70 shares of stock, not to make them a present.
The determination of the learned trial court that the plaintiff had failed to establish his right to share in the dividend upon the 20 shares of stock which were transferred to him in December, 1896, is justified by the evidence, and the judgment appealed from should not be disturbed.
The judgment appealed from should be affirmed, with costs.
HOOKER, J. (dissenting). This action is brought to recover the amount of a dividend on 20 shares of the plaintiff's stock in defendant corporation, which he claims was declared in the year 1898, and not paid to him. The defendant contends that in the year 1898 no such dividend as the plaintiff insists upon was declared by the defendant. The action was tried before the court without a jury.
The undisputed evidence in the case established these facts: That in the month of October, 1896, the defendant found itself lawfully possessed of 70 shares of its own capital stock, which it had purchased from the estate of one Franke, deceased; that some talk was had between the several stockholders in relation to disposing of this stock to the stockholders Milliken, Mecke, and this plaintiff, and that the directors of the defendant held a meeting on October 22, 1896, when Milliken and this plaintiff favored declaring a dividend of $87.39 per share upon the capital stock of the defendant so as to allow themselves and Mecke to purchase, at $257.17 each, the said 70 shares known as the Franke stock. For some reason one of the stockholders opposed this action. On November 25, 1896, at a meeting of the stockholders, the matter was under consideration again, and, although done with a degree of informality, it was resolved by the board of directors that "a dividend be declared, so that the seventy shares at present unissued can be taken up by Messrs. Milliken, Hartley, and Mecke.” The resolution further provided that the portion of the dividend accruing from the interests of Milliken, Mecke, and the
plaintiff should go toward paying for the 70 shares, and that the dividends accruing from the interests of all the other stockholders should be credited to an indebtedness of one of them to the defendant, known as the Consuelo indebtedness. At that time letters consenting to this whole action were filed on behalf of all the stockholders who were not present at the meeting, and those who were present gave verbal assent.
It is to be noticed that the resolution did not name any sum which should be paid by the defendant as a dividend upon the shares of its stock, although all of the stockholders consented to the declaring of a dividend to enable Milliken, Mecke, and the plaintiff to pay for the stock which they were then acquiring, nor was a price for the stock named; but the books of the corporation are in evidence, showing that the account of each stockholder was, on the ist day of December, 1896, credited with a dividend of $87-39 per share. Of the 70 Franke shares, Milliken took 48, Mecke 2, and the plaintiff 20, and their accounts are charged with the purchase price of such shares, respectively, at $257.17 per share.
The entries so made in the books of the company remained unobjected to and unchanged for nearly two years. In July, 1898, some of the other stockholders raised an objection to the amount of the dividend of December 1, 1896, and claimed that as the entries appeared upon the books of the company the three stockholders who acquired the Frarke shares were given the benefit of $87-39 dividend upon the shares of stock they were then acquiring, as well as upon the stock of the defendant which they held prior to the acquisition of the Franke stock, and they insisted that the accounts of all the stockholders be changed so these three stockholders should not reap the benefit of my dividend on the 70 Franke shares. In other words, they claimed that the Franke stock was sold "ex dividend,” whereas the books of the defendant showed it to have been sold "dividend on."
A meeting of the directors was held on July 12, 1898, but no formal action was taken in relation to correcting the books in the particular indicated, although the matter seems to have been discussed. There is no evidence that any resolution or direction was made to that effect, but one of the stockholders, who considered himself aggrieved by the sale of the Franke shares of stock with the dividend on, directed the bookkeeper to enter as of the date December 1, 1896, a revision of the $87.39 dividend, so as to make the dividend appear to have been $132.367 per share, and directed him to amend the accounts so that no dividend should appear to have been allowed upon the Franke stock. These changes were made on the books, with the result that the credit of this dividend upon the shares of stock owned by the three stockholders in question, prior to acquiring their portion of the 70 shares, was about equal to a sum sufficient to pay for their respective shares of the Franke stock acquired December 1, 1896, at $257.17. The impossibility of adjusting the amount of this amended dividend so as to balance the accounts of the purchasers led to a credit of $6.29 on the plaintiff's account, and the defendant forwarded him a check for that sum, which he retained without using, promptly
and 118 New York State Reporter demanding a credit of $132.367 upon each of the 20 shares he purchased in December, 1896.
These new entries in the books, of course, gave all of the stockholders except Milliken, Mecke, and the plaintiff a dividend much larger than they received in 1896, and this division of profits, made informally by the entries in the books, did not materially benefit Milliken, Mecke, or the plaintiff. The dividend of December, 1896, was about $42,000, while the amendment sought to be made in July, 1898, entailed a division of some $54,000, thus dividing in 1898 for the first time about $12,000 of profits. From the 12th of July, 1898, to the time of the commencement of this action, in October, 1900, none of the stockholders objected to this revision of the dividend of 1896 except the plaintiff. It appears from the dividend that Milliken and Mecke acquiesced in it by either paying or accepting in cash the small difference in the balancing of their accounts owing to the new rate of dividend. The plaintiff, however, has ever since July, 1898, objected to the revision of the prior dividend, and has insisted that he is now and always was entitled to a dividend upon the 20 shares of Franke stock he bought from the defendant in December, 1896; that the attempted revision of the dividend of December, 1896, was actually a division of profits upon the basis of a dividend upon each share of stock amounting to a sum equal to the difference between the dividend as made, $87-39, and as sought to be amended, $132.367. The defendant insists that the intention in 1896 was that the 70 Franke 'shares of stock should be sold by the company without the divfdends then declared, and that the purchasers should not enjoy the fruit of that dividend by reason of their ownership of that block of stock; but there is in the case no direct evidence whatever, either documentary or otherwise, offered by either party, as to what the intention of the parties was at that time, and the resolutions and the other documentary evidence are also silent upon the question. There being no direct evidence of the intention of the parties in November, 1896, what that intention was must be gathered, if possible, from the course of dealing and the circumstances.
The court dismissed the complaint on the merits, on the ground that the Franke stock was unissued, and it should not be found, without affirmative evidence, that it was the intention to declare a dividend on such unissued stock. I think it must be held that the entries made December 1, 1896, remaining unchanged for one and one-half years, although no claim is made that the books were not open to the inspection of all the stockholders, established the fact that the intention of these parties in November, 1896, was to sell the Franke stock with the dividend declared on the ist day of the month following. The defendant had the power to sell the stock, and how it was to be sold was a question of intention. The City Bank of Columbus v. Bruce and Fox, 17 N. Y. 507. The direction to the bookkeeper on July 12, 1898, to make changes in the books as of the ist day of December, 1896, was therefore unauthorized and improper; but it appears that all the stockholders except the plaintiff acquiesced in this action. Milliken and Mecke sanctioned the amendment by actually adjusting the balances of their accounts reached upon the basis of this unauthorized change, and all the other stockholders except the plaintiff received and accepted the benefit of the large credits upon their accounts. These acts cannot be construed otherwise than to be a division of the profits of the defendant company upon the basis per share of the difference between $132.367 and $87-39, or $44.977.
It has been said that "a division of profits without the formality of declaring a dividend is equivalent to a dividend. A division of the profits is a dividend, even though not called such, and not considered such by the directors and stockholders.” 2 Cook on Corporations (4th Ed.) § 534; Rorke v. Thomas, 56 N. Y. 559, 564. I believe this to be a correct statement of law as applicable to this case, in which the division of profits was unobjected to by all the stockholders, and actually instigated by one who, as the evidence shows, represented a class which would profit substantially by such a division.
Reaching the conclusion, therefore, that the $12,000, divided for the first time in July, 1898, was a dividend, the rule applies "that every shareholder of the same class is entitled to the same pro rata dividends from the profits of the corporation." 9 Am. & Eng. Ency. of Law (2nd Ed.) 683. And it must be held from the evidence as it is presented in the record that this division of profits was a dividend of $44.977 upon each share of stock, and that plaintiff was entitled to maintain an action for that sum upon each of his 39 shares.
These views lead to the conclusion that the judgment should be reversed, and a new trial granted, costs to abide the event.
JENKS, J., concurs.
SCIURBA 7. METROPOLITAN ST. RY. CO. (Supreme Court, Appellate Division, First Department. October 23, 1903.) 1. STREET RAILROADS-INJURIES TO PEDESTRIANS-NEGLIGENCE-EVIDENCE.
Plaintiff's deceased, a child five years of age, as he was coming from school with a companion, broke away from his companion, and ran across the street in front of an approaching car, was struck by the car, and killed. The companion testified that just as deceased got on the track he tripped and fell. The motorman had stopped at the preceding street crossing, and, though the car was going rapidly it was under control, and the speed was not excessive. There was no evidence that the motorman was not attending to his business, or that he did not stop the car as soon as possible after he had reason to suppose that deceased would attempt to cross in front of the car. One witness testified that deceased fell on the track when the car was only three feet distant, and the motorman testified that as soon as he saw the boy start to run across the street he applied the brake, put on the reverse, and used the sand box, and succeeded in stopping the car within five or six feet after deceased was struck. Held, that the evidence was insufficient to establish negligence on the part of the motorman.
Appeal from Trial Term, New York County.
Action by Carmelo Sciurba, as administrator of the estate of Antonio Sciurba, deceased, against the Metropolitan Street Railway and 118 New York State Reporter Company. From a judgment in favor of plaintiff, defendant appeals. Reversed.
See 76 N. Y. Supp. 772.
Argued before VAN BRUNT, P. J., and HATCH, MCLAUGHLIN, O'BRIEN, and INGRAHAM, JJ.
Arthur Ofner, for appellant.
INGRAHAM, J. This action was brought to recover for the death of Antonio Sciurba, which was caused by one of the defendant's cars. The deceased, at the time of the accident, was about five years of age. He attended a primary school on the corner of 129th street and Amsterdam avenue. On the 12th of March, 1901, a few minutes before 12 o'clock, the deceased left the school in company with a child about 12 years of age. After leaving the school, they walked on Amsterdam avenue towards 129th street, when the deceased broke away from his companion, ran across the street in front of the approaching car, was struck by the car and killed. The deceased's companion testified that as the deceased got to the track he tripped and fell down; that the witness saw the car approaching, noticed the motorman of the car, who was standing on the front platform; that she could not say what the motorman was doing, but the only thing she remembered was that when he saw the child on the track he tried to stop, but could not. There were other witnesses who saw the accident, but none of them testified that the child fell. There is testimony that the car was going rapidly, but nothing to show that the speed was excessive, or that the motorman did not have the car under control; and there was nothing to show that the motorman was not attending to his business, and did not stop the car as quickly as possible as soon as, from the situation, he would have reason to suppose that the child would run in front of the car. There is, as usual in cases of this kind, considerable confusion in the minds of the witnesses as to the exact distance of the car from the deceased when he started from the sidewalk to run across the street. The deceased's companion further testified that as he ran on the track his toe caught in the slot on the track and he fell down; that the deceased was on the track, and the motorman was trying to stop the car; that it seemed to her that he slipped in the slot and fell down when the car was within a distance of three feet from where he fell. Another witness called by the plaintiff testified that she saw the boy step off the curb; that the car was then leaving the bakery on its way downtown; that it was going fast; that the boy was killed 25 feet below the main schoolhouse door; that the car was going at a downgrade, and was going fast, when the children were walking on the sidewalk. On behalf of the defendant the motorman testified that he stopped on the corner of 130th street; that he then started his car at half speed-about four miles an hour; that between 129th and 130th streets he was ringing his gong, and had the car under perfect control; that he noticed a boy running from the gutter in a southeasterly direction across the avenue; that as he went across the car was opposite him, and the bumper of the car,