| N.Y. Sup. Ct. | Nov 2, 1868
Lead Opinion
Before proceeding to consider the questions arising on this appeal, it is necessary to ascertain the points decided by the Court of Appeals in the case of Ehle v. The Chittenango Bank, (24 N. Y. Rep. 548.)
In that case the bank declared a dividend payable in New York state currency. This currency was offered to the plaintiff, but he refused it, as it was then at a discount of one fourth of one per cent, and demanded that he be ■ paid in gold and silver or its equivalent. The general term of the Supreme Court held that the plaintiff was bound to receive the dividend in the property in which it was declared, and that he was not entitled to demand gold
The bank bills, it will be remembered, were tendered and refused. They were not money, and nothing but money could satisfy the plaintiff’s claim.
It necessarily follows that if a dividend cannot be paid in bank bills, which circulate as money, it surely cannot be paid in the worthless bills of an equally worthless government.
I am unable tó perceive why, within the case cited, the plaintiff was not entitled to recover for the dividends expressly declared to be payable in Confederate bills. I had supposed that it was competent for a corporation that had acquired property other than money sufficient in amount to authorize a division of it among the stockholders, to make such division, and that the stockholders were bound to receive it in the property appropriated to them. But if nothing but money will pay a dividend, then, of course, a dividend in property other than money cannot be made.
It is supposed that a different rule prevails where the property divided is the same identical property earned; that when this fact appears, then a dividend in property is admissible. This presents the question, preliminarily, whether the evidence that the earnings of the corporation were received in property other than money is competent; or whether it is not altering the resolution of the directors declaring the dividend, which is the evidence of the indebtedness of the corporation to its stockholders, and is, therefore, inadmissible. If the resolution declaring the dividend is the written admission of an indebtedness, payable in legal currency of the country, and the property
If the resolution declaring the dividend should contain a recital that it was made from the same property which it had earned in its business, this technical difficulty might be obviated; but if the corporation can only divide money, as would seem to have been held in the case cited, then it could make no difference whether the recital was incorporated in the resolution or not.
It is not necessary, however, to discuss the question as to the effect of such a recital. It is not in the case, and I am quite certain that the fact cannot be proved by parol, so as to enable the company to lessen the amount to be paid to the stockholder. ' It is a matter of very little importance to the corporation whether it divides the property earned, or converts it into money and divides it. The loss, if any, falls on the stockholders; and as they only are to be affected, I am unable to perceive any reason why a dividend in property is not lawful.
It is conceded that a stockholder must prove a dividend before he can maintain an action for a dividend. And the only remaining question is whether a dividend is proved, in this suit.
The only evidence on the point is that of the stockholder himself, who swears that he went to Savannah in February or March, 1865, and was unable to find the defendant; its place of business was occupied by the Federal army, and the officers had gone, as he was' informed, into South Carolina. In August, 1865, after the return of Crowell from the South, he addressed to the defendants a letter in Which he stated that he still held his stock in the company; that he had received no dividends during the war, and knew nothing of the condition of the company. He desired
It was not true that all the dividends after June, 1861, were declared or made payable in Confederate currency. When this letter was written, that currency was utterly valueless, and demand would not have made it any more valuable^
But if I am right in supposing that the defendants were liable for the four dividends above referred to, then a demand was necessary, unless the defendants by misleading Crowell, have precluded themselves from insisting upon a demand. I do not think that misleading Crowell, if he was misled, could estop the defendants from insisting on proof constituting so essential an element in the plaintiff’s cause of action. Ho demand was proved. The letter of Crowell does not demand the payment of the dividends. He wanted information which was necessary to enable him to make a demand. Ho one reading the letter would imagine that the writer was calling for the payment of dividends; and surely so important a matter should not be left to conjecture. It should be proved by as high evidence as is required to establish any other fact in the case. .
The defendants’ president, in his reply, was not as ingenuous as a man in his position should have been, when dealing with one of his stockholders; but that does not relieve the plaintiff from the performance of a manifest legal duty.
Concurrence Opinion
I concur in the result'of the opinion of brother Mullen, in this case, and upon the ground assumed ; but with great respect I differ with him on the first ground presented.
It is in proof that the dividends recovered by this judgment, of the defendant, were all made from its profits, and that those profits were all in the currency of the so called Confederate government; that every dollar was in that currency. The defendants had nothing whatever to divide, except Confederate notes. In such a state of facts the defendants made the dividends recovered. They were made, in terms, out of the profits of the defendants. I think they were, under these circumstances, payable in Confederate currency. The case cited, of Ehle v. The Chittenango Bank, (24 N. Y. Rep. 548,) in my judgment sustains that position. There the dividend was declared payable in “ Hew York State currency.” The Court of Appeals, however, held that the bank had $6000 surplus money to divide, and the dividend should be, and should be held to be of that money, and payable only in money— in the current coin of the United States. So here, the dividend could only be held to be of the thing in the defendants’ possession to be divided; which was Confederate money.
Under the circumstances prevailing in Georgia at the times of these dividends, there being open war by the Southern states against the government, and a separate and peculiar currency established there, in which alone the dealings of the people there were transacted, the dividends would be understood by all as payable in Confederate currency. The defendants would not have been able to have declared them payable in the coin or currency
To my mind it would he wholly unjust in such a case to hold that these dividends must be held to be payable in the currency of the United States, and that the truth of the case could not be shown by the surrounding circumstances, as to the real thing to be divided. It should be borne in mind that the stockholders of this company were substantially the company, and they had these profits to divide among themselves. * The corporation is the mere machinery through which the business is transacted.
Concurrence Opinion
I can see no reason why the resolutions of the corporation as to the dividends made do not conclude them. The corporation had the power to declare in what the dividend should be made, unless the case of Ehle v. The Chittenango Bank, (24 N. Y. Rep. 548,) may be considered as prohibiting such a dividend. That relates to a bank organized under the law of this state, and seems to be decided on the supposition that a bank could only divide its profits in money. Wright, J. says: “There was no authority to declare a dividend of the cash profits of the bank payable in depreciated bank notes.” In -the former part of the opinion he says: “ The dividend declared was not of uncurrent bills or property possessed by the bank, which might be specifically divided among the stockholders, but was a portion of the surplus or net earnings.” The reasonable construction of this case is, that the corporation might divide any specific property it held among the stockholders, but when it made a dividend of profits or surplus, it must be made payable in money.
Whether there is any thing in the laws of Georgia which confines dividends to profits, does not appear in this case, but it does appear that the defendants did make the four dividends, payable in dollars, without any limitation, and without specifying the payment to be in any currency
I think, also, the letter of the stockholder was, under the circumstances, sufficient proof as to a demand. He had been to the place of business of the company and found the same closed and the officers departed from the same. Ho demand could then be made, and no other was necessary. The subsequent letter, inquiring what they intended to do about the dividends, was answered by saying that the corporation had made all the dividends payable in Confederate currency, (which was not true,) and that the United States government had seized all their Confederate notes, bonds, &c. He had a right to conclude from this letter that a further demand was unnecessary.
I think the judgment should be affirmed.
Judgment reversed, and new trial granted. ■
Ingralmn, Mullin and Feckhmn, Justices.]