*1 1955; 28, tenant, died March the life who RAILWAY ST. LOUIS SOUTHWESTERN plaintiffs are “that herein and defendants Plaintiff, COMPANY, corporation, Marion Nunn all of the heirs of L. v. them, Mary Nunn, survivor C. of Marion now and at time of the death Cook, Execu Louis LOEB A. M. and John Meyer, Nunn”; E. E. Nunn tors Walter E. that defendant James Under the Will of Defendants-Appellants al., deceased, et all of the described claims title in fee to (Common Louis South Stockholders of St. Deed, property under the' Collector’s Railway Company), western quitclaim alleged deed therein and the Nunn; Lulu from Marion E. Nunn G. on its corporation 'Collector’s Deed was void Company, et Southern Pacific Defendants-Respondents (Preferred al., face for the reason hereinbefore discussed' Southwestern Louis Stockholders of St. plain- grounds; and on and that the Railway Company), tiffs and defendants were the owners Chubb, al., Frank et Mabel R. Walston proportions fee of said lands Default. Defendants out, petition set interests said amended “subject only possession No. 46105. Lulu Nunn in the of Sec- G. NW}4 SWJ4 Missouri, Supreme Court of 60, Twp. 33, Range 6 for her
tion West En Banc. prayer life or until remarries.” she 10, Nov. 1958. petition quieted title respective accordance with interests of the Rehearing 8, Dec. 1958. Denied out; parties therein set and that the partitioned according to their lands be partition interest,
respective and if cannot prejudice great
be had in kind without parties lands be sold and the
proceeds distributed in accordance with respective parties. interest No
complaint is made the amended motion because of the fact that actions
to dismiss partition joined quiet title petition. both counts of the said petition sufficiency of a to state a granted which relief can be
claim determined the facts stated
must be Service Comm. v. Kansas
therein. .Public City Light & Power Mo. 67, 70(4). In view of al-
31 S.W.2d reviewed, ap- hereinbefore
legations plaintiffs stated a
parent cause of 527.150,supra.
action under Section Titus Tolle, 284 S.W. Mo.
v. Nat. Bank St. Louis
Boatmen’s 352 Mo.
Rogers, S.W.2d is reversed and judgment the cause
remanded. concur.
All *2 Louis, McNulty, appel-
George A.
St.
Koenigsberg' et al.
lants
Mitchell, Thompson Doug-
&
Thompson,
Douglas, Shepley, Kroeger,
las,
M.
James
Kroeger,
Harry
Rob-
Shepley,
W.
&
Fisse
Lord,
Elam,
Louis,
Day
Lord,
St.
&
P.
erts
Baldwin,
Daly,
L.
Thomas F.
Saul
Sherman
declared a further dividend of
each
City,
appellants
Sherman,
$1
York
New
Then,
class of
deeming
matter
stock.
M. Loeb et al.
Louis
controversial,
present interplead-
filed
*3
Louis,
Strauss,
Abraham K.
&
Gleiclc
St.
suit,
er
and
purpose
set aside for
City,
Weber,
Yaeger, New York
William H.
payment $370,648, which
later
sum was
appellant
Yaeger.
for
Louis
paid into
registry
All
of the court.
Louis,
Stern,
Croft,
Mudge,
&
St.
Coburn
prop-
concede
stock may
D.
Todd,
City, Paul
&
York
Baldwin
New
erly
%;
its 1
common stock-
City,
Co-
Miller,
Richmond C.
New York
holders
deny
is entitled
Nemtzow,
Louis,
New
burn,
Bernard
St.
'to
participation after
receiving
Louis,
Booker,
City,
St.
Frank
York
n 5%
already paid
prior
to it.
appeal
The
counsel,
respondents
Pac. Co.
Southern
judgment
and the
rendered here thereon
al.
et
did not involve the
present
merits of the
controversy. The trial court
deter-
here
EAGER, Judge.
par-
mined that the
stock should
November,
in
filed
This suit was
ticipate,
later,
for reasons to be mentioned
by
Railway
Louis Southwestern
Com
St.
and
appealed.
common stockholders have
corporation,
an inter-
pany,
a Missouri
pleader proceeding.
defend
Certain
necessary
will
give
history
plaintiff’s right to maintain the
denied
ants
point.
present
at this
plaintiff,
The
com-
suit,
Court sustained the
but the Circuit
monly known
Belt,”
as “The Cotton
discharged plaintiff. On
interpleader and
incorporated
January 16, 1891,
pursuant
Many
appeal,
judgment
affirmed.
plan
ato
of reorganization.
over,
It took
history of the
and- considerable
facts
foreclosure,
following
prop-
assets and
appear
in that
controversies
financially
erties of two
rail-
embarrassed
Thereupon
1057,
security without Sundry with or rules of construction are' Amer.Law statutory urged authorization. us stockhold Min Quicksilver ers, authority. Reg. 634-1881; Kent There with citations of Morawetz, Private ing controversy N.Y. need be no about these. Gen But erally, gather we must intent Corporations (1886), Vol. seek legislature meaning ordinary consent procured. used, always considering assumed or of the words whole could legislative history, Act and its nec 1871 statute conferred and if essary, considering to issue also railroad directors the circumstances *7 ex majority time; of usages a upon consent of and the and we must majority promote purpose consent objects This seek to and of stockholders. isting statute, by eliminated any was to avoid phase statute and or strained XII, meaning. V.A. (Art. 10), absurd Authorities cited are also 1875 Constitution required errors, consent unanimous to the effect that clerical in M.S. which errors spelling, punctuation, & St. grammar Hannibal or In 1864 The and “in thereafter. may by Special accuracies” in a statute authorized corrected Joseph Co. was R. 1863-1864, its p. 482) to issue by (Laws Act the courts. State ex rel. Consolidated thereupon issued stock, Hackmann, and 302 Mo. School Dist. No. 7% par 1011; for express provisions Brinkley, that stock with State v. S.W. 1871Act that the ticipation. It Mo. ex rel. seems 189 S.W.2d State part, Koeln, Banc, the benefit passed, in Mfg. American Co. v. 278 Mo. at least (Special true, Railroad 28, 211 but that Missouri S.W. 31. Such the North is exercised, was in power which prohibited), sparingly and being then should be Laws condition; there purpose only to the intent and financial then effect embarassed an and issued reorganized change legislature, it was it. to upon, in —never express but this stock basic difference between the men participating. have We made ly whether or not this statute here is parties individual and isolated two these tioned participating rights grant a constitutes possible historical as of instances stock, or whether it consti may prefei-red to It construing the statute. in benefit corporations railroad to grant a en tutes primarily this statute well be that right terms certainly stock on would most to issue include the choice choosing, with limitations of making preferred their own participating or cor- participation proviso which the any nonparticipating. (as we shall poration Clearly might the first it) confer. concerning participation sometimes call organ- sentence, “Any appears company group railroad within a of limitations and imposed upon power under this state issue conditions general ized the laws of amount, it, conferred. stock for such As we it is construe upon conditions, applicable (as stated) such terms and as where “a dividend ” * * * may prescribe, per per board directors ten cent annum” has been act, stock; enabling upon declared the nature an at least we do recognizing, conferring, if not right to feel to the words authorized insert sentence, “up (as to” did), issue such stock. second the trial “not or attempt require exceeding,” phrase per amended “ten consent, cent.” beyond any unanimous That very go awkward far judicial expressing purpose. interpretation” Then “minor urged follow upon by preferred stock; clauses: a limitation us (1) on the use of it would proxies major meetings; operation. opin- constitute a (2) much In our “provided” partici- proviso ion any pre- apply controverted clause re does not pation; any ferred stock (3) the renunciation of intent give have not been given year control to declared in statute; is, by (singly or in the (4) aggregate), virtue of the a re- and it therefore, simply quirement applicable of- to the first stockholders; present pro attempt stock. rata to common We shall not fered here follow, requirement by adopt, repudiate (5) distinguish news- notice paper publication the various meanings written affirmative by notice to attributed clause, pro holding clerks of counties stock. and con. We hold that For con- venience, repeat prevent by intention was (except here the controverted “ * * * “delayed” participation “provided” after the common (2-supra): clause caught up, provided, per- it is also where otherwise that when cent, mitted) any payments and all excess ten annum shall dividend of upon preferred been declared given year, company, preference whether pursuance stated issued in 10%, section, preference excess of of this then all a stated other dividends less, plus participation shall be declared distributed excess rata controlling say dividends. is not until the dividends common stock *8 (as equal is now that done) there shall the dividends on was then stock, prefer- no railroad with a among of such 10%; may ence over the legislature corporation; well ”. considering, time,
have been as of that fu- impossible It will be to possibilities. proviso awkward; discuss ture The is constructions, possibilities, various simply and ref it been could have more stated many of the impart utations briefs. We (1) have as: to an so grant affirmative conr “provided” ques eluded that the clause in participating intended; if rights, (2) or limitation, tion a an is and not affirmative clearly pure to so as be more a limitation. participating rights grant of argue claimed It is for us to or suggest what by done; here stock. legislature might We do not have we legislature purported written, think intended the statute us as and we usurp to the functions of perhaps impossible direc construe it. must tors; gave completely to it such directors full a discre to make harmonious whole Respondents to statute. tion issue out their more or conditions,” power proviso “terms own that this assume less constitutes 254 in only change made The Clause,” refer to it. they “Participation
a clause understand, “participation” so-called such, meaning, as we it as (as “after” change of the word partici- positive grant of affirmative “until,” so version) to Therein pation preferred stocks. here) it was (controlling version indi- see think are mistaken. We be dis that all dividends attempting cation that legislature (after was declared tributed rata equality ultimate presuming, an to fix divi preferred) until the on the in all events between rage preferred. Battles equalled wish dends railroads; simply did it stocks of word; pre in the briefs over this preferred stock to let an it constitutes insists that direc- ferred stock by unlimited action version longhand copying tors, common error disadvantage of the sup Act, of errors by evidences still held which was much of elsewhere; perhaps posedly phase appearing governmental The latter units. sup seeks The common stock by the does. precisely indicated the matter is port by a construction word verbatim requirement clerks of counties notice “to follow. do not which we admit that we partici- This limitation holding stock.” effect, controlling in its If this word were after the pation even remained in effect it as inclined consider con- we should be required unanimous 1875 Constitution error, at writing, or one either in the preferred stock sent for the issuance of pro- quirk in mind tributable to some agree cannot generally. We Giving to author of the amended version. con- necessary (particularly when viso was ordinary meaning, the word “until” its the stat- sidered with the first sentence divi perfectly obvious to us permit ute) bring into or to effect never on the common stock could directors dends participation. The element of pre proviso be made to the dividends power. could had that ferred; earnings all distributable expressly made if apply to a pre “pro which were distributed rata’’ after by (or to one participating contract start, gotten running ferred had participating). We the law construed as 10%' always lag. there would remain proviso could have fail to see how particular word meaning or use of this financing of help designed been general in view of par- becomes immaterial our affirmatively for- providing railroads proviso the statute construction that more (allegedly ticipating Bailey applicable here. The is not case al- if the directors attractive) and when C.C.Mo., Joseph Hannibal R. & power virtue ready had St. Fed.Cas.No.736, 174; certainly Dill. 17 Wall. provision; enabling was decided U.S. 21 L.Ed. “attractions” nature of the the form and trial court in. the decision be left to the might of a better stock issue case, pendency, well have or its individual case. directors in each causing the contro had some influence argue proviso be included the stat verted incorporators followed this statute here ute, controversy the case involved a *9 they “slavishly,” are entitléd to its and thát participation expressly of an when the as to participation. Per proffered benefits preferred stock participating begin, should did, or another they for one reason haps e., immediately after it had received its i. a fear that a failure (possibly because of (immediate participa dividend preferential preferred comply might invalidate a is to the common had or recéived tion), 'after unanimously agreed to), sue, though (delayed even participation), an itself, statute, if the in and allowing up.” but to “catch common thus confers participation, they Considering statute from right angle, this affirmative apparently chose the by compliance legislature latter right a acquire no such could rights upon the not plan method as a limitation intended to identical. The be made been makes no preferred had participation all which reference to stocks preferred il would, argued, any surplus be participating. earnings, It stock affirma nor provide does other document. logical for the to The reso- statute by a lution tively participation adopted for consent Arti- after the 10%, not already filed, cles were provided 200,000 which had received shares capital a lesser provide stock should be “as on stocks issued so construction, dividend, 5%; say stock” and that the should on our holders but require be year “entitled provide not in each to receive divi- the statute did merely per dends all; per at the rate of five any participation at cent * * * annum, The com it, extent. before mitted and limited its paid shall be statute declared or mon stockholders liken p. stock year”; (RSMo specific for such usury then followed statutes § similarity, provisions making 4582); perhaps stock noncumulative. there is The that. The discuss form of unnecessary but it is stock certificate times,” e., substantially to was i. identical to the resolution. so-called “trend of the railroads, provided The does promote financing of stock certificate “subject common stock legislature was not convince us that functions of holders of stock to usurp 1871 intended to the. requirement receive in impose year each dividends (noncumu- railroad directors and stocks; lative) not exceeding five participation cent us, terms used dividend shall be declared contrary that is Act, con on the common'' very stock.” and to the structure forms of duly hold that the certificates stock as a whole. We thus sidered approved. applicable. statute corpo little to read difficult
We must consider next people minds who drew con these whether dis rate contract to ascertain 1889-1891; tract documents in must intent that the closes an governed doing largely by we shall what participate. In so wrote. nothing We see on the face of the con corpo confine our consideration to pre tract formally provid indicate intent that resolution minutes and rate participate ferred stock should in dividends the issuance of the ing for plan of re after receiving year; its stated look also we shall but indeed, exceeding,” surround the term as used the circumstances “not organization, certificate, pertinent at least adoption, and all ing Machen, nonparticipation, leans Corpora Law of toward more Modern but papers.. 549, p. Bailey will of that later. Vol. said Counsel for (1908), tions rely here strongly Joseph & St. R. Wall. Hannibal “general 96, 106, understanding” (and L.Ed. a “funda U.S. plan assumption”) pre mental promulgated this had 1891 that the committee possessed pre participating meetings minutes and its many contrary expressed; or, plan for the unless issuance served. expressed Per Preferred “Five Cent Stock it in trial court its memoran part integral opinion, as an partici dum (lion-cumulative)” plan light lay “in pating legal This reorganization. adopted security opinions time.” actually by the of that fur hold Counsel have thing bibliography approxi very from the us with we see that nished Thus ers. *10 texts, capital mately and articles, 50 treatises all the new some inception § Now 408.030. Y.A.M.S. 256 participation”). The preference (“delayed historical. and some
legal, financial partici “delayed” ruled of in favor of those have read We sure, pation. sit text writers have confused These, fur we are available to us. group. uations where the contract speaks picture comprehensive nish subject Pierce nor where it writings those is silent. Some, legal being neither participa apparently “delayed” refers to being (many even properly in evidence usually consider, anyway. plan adopted.” Wood tion as “the offered), we would not indi primarily stating as and Rorer to be facts cited seem These texts are say Bailey expressly without understanding presumption case an or cating so, con ing referring Of to its question. without participation time in at the tract Cam terms. the case of Elkins v. cited, In were written texts four 233, Co., 1882, 1891, Beach, N.J.Eq. of Rail den & A. 36 namely: Law R. ; question Wood, (1885) whether Railway Law ways (1890); Pierce, were A cumulative under the terms (1884); Rorer on Railroads particular corporate Coun Mora- (1881). Law charter. Victor Treatise on Railroad wetz, incor- eminent who was in to be that theory sels’ seems authorities, present reorganization, and of strumental porators knew of these writing Corporations” on “Private “understanding” generally, an 1886, intent of implied and its presumed relied or discussed Wood, generally Pierce do nature participation. and indicated Rorer depended contract; but, statements, differing forms and make so see, preferred stock far as we can manner, gave he no indication presumed earnings implied of a participate any surplus participation. or Bailey He knew case, after the common stock has been cited cer preference. writers, himself, tain text equal Pierce cited it but adopted,” plan usually establishing not as implied right refers to “the an this as applied participation. adjudicated There ambiguous but the text as seems no cases, uncited, plan wholly partici which is silent cited which at the time Beach, corporate supported pation. supra, general par refers to a statements of ticipation bylaw participa specifically providing for in certain made texts. of those Co., (Hazeltine tion v. Belfast & M. S. R. Counsel also cite numerous 411, 328, Am.St.Rep. 10 A. Maine texts, law articles, review and financial but, 330), see, far we so can makes (some treatises written after long after) implied participation. general statement of 1891, supporting theory presumed Bailey Hannibal Wood cases of v. cites the participation; this, bearing their 96, Co., Joseph & 17 Wall. St. R. 84 U.S. prior “understanding.” will 96, 611, and Elkins Camden L.Ed. wholly impossible these, to discuss all of Co., N.J.Eq. 233; & A. R. Rorer and or even part substantial of them. only Bailey. Pierce Neither cite Among are: Cook these on Stock & Stock Bailey support any case nor Elkins case 269; (1894), Conynton, holders Manual § implied participation. statement of Corporate Organization 73; p. (1905), Bailey Joseph & v. Hannibal St. R. Harrison, Corpora Manual New York 174, C.C.Mo.1871, Fed.Cas.No.736, 1 Dill. pp. 75-76; (1906), Cooper, tion Law affirmed Wall. 84 U.S. e Enterpris Financing (1907), Vol. 21 L.Ed. was ex 573; p. Corporation Lough, Finance pressly very participating made 72; Marshall, (1909), p. 2 Clark & contract; Private question in terms 417c; Corporations (1901), participate Machen, § whether volved was Corporations (1908), Modern Law its stated .divi immediately receiving Analysis Bogen, dend, “caught Railroad commonhad Securi after the 385-386; Couse, (1928), pp. Law up” by ties receiving a dividend
257
p.
contrary
provided,
Corporations
(1914),
Private
in Ohio
citing only
Bailey
is
762; Kirshman, Principles of Investment
etc.,
case and
Londonderry,
Ry.
Allen v.
123; Stock,
Co.,
Fi
p.
Corporation
(1924),
(1877);
(1917
Conyngton
W.R. 524
194; 27
(1932), p.
statement,
nance
Ed. at
66)
and Investments
makes a similar
§
Rocky
(1929);
only
269,
Mich.Law Review 731
citing
Cook (1893),
Machen
§
Corporations,
Mt.L.Rev.
(1934).
(1908),
Machen
§
“
*
*
*
I,
555,
that
Vol.
recognizes
stockholders here state
“a
poses
that this
§
beginning
a diver
question,”
sometime after 1910
serious
questions
discusses and
Scott,
legal
gence developed
proper
but
as to the
cites
the old English case
presumption
applicable
Co.,
149,
of a
Alexandra
grant
to the
Palace
21 Ch.D.
157,
preference
support
but
presumed participa
dividend
of a
tion;
quote
subsequent
cite and
from these
Machen then advances the novel
theory
“persistency”
writers
show the
the common
concept
of 1891. One
as much
well-established
as the
has received
post-1891
period
issue,”
first of
texts
“over the
these
whole
since the
(3d
not,
Cook
the first whether
Ed.1894);
then for
or
cumulative
time,
editions,
prior
equality.
after
he
two
states
establish
We mention this
269,
365,
merely
p.
“It
unless
seems that
to illustrate the complicating
§
views
otherwise,
expressly provides
contract
text
“equality.”
writers on
We
fail
participate in
to see that
either the Allen case or
surplus profits
proper
remaining after the
Alexandra
case
Palace
real
prefer
bearing upon
dividend has been
on the
participation
declared
red and an
where the
contract
is silent.
In Clark &
stock.”
authority
(1907),
529b,
He cites as
his own Marshall
pp.
Vol.
1640-1641
§
(a
subsequent
cited),
dealing
sections
the cumu-
is stated: “Preferred
lso
spe
lation of
may,
dividends in the
absence of
terms of
provisions,
contract,
entitled,
gives
cific
but
real citation
after payment of the
proposition
dividend,
for the
thus some
equally
share
cautiously
Cook,
what
advanced.
stockholders in
Ed.,
(4th
p.
repeated
declared,
dividends that
527)
this state
§
to share
surplus
ment but set
two
payment
out
forms for
after
specified
of a
certificates,
making
one
dividend on the
(Italics
common stock.”
expressly participating,
ours.)
expressly
articles,
The law
review
con,
nonparticipating.
chiefly
that he
consist
adju
seem
of reviews of
cases,
was somewhat
dicated
doubtful of the existence
most of which will be men
any controlling presumption.
1903 tioned later.
per
As
1891 there were
Cook,
haps
after the
three
decision
Scott
Balti
text writers who had advanced
supposed
theory
more & O. R.
participation
93 Md.
A. 327
later),
provisions
(to be
cites that case as
absence of
discussed
contrary;
but
states,
part,
analyzed,
view, but
in when
opposed to his
these statements
seem
Ed.,
I,
pp. 589-590):
actually
(Vol.
5th
a footnote
“
constitute recitals or summaries
***
Theoretically it is
from one or more
participa
difficult
cases where
conclusion,
expressly conferred,
practically
tion was
justify
certainly
but
public
any authority
investing
assume
none
them cite
actually
true
is,
view.
sustaining
These
and understand
were follow
specified
than
more
ed
others
advocating
never entitled
dividends,
greater
though
extent,
even
to a
fixed
cer
view
lesser
but
theory,
dividends,
and,
largely
to further
still
is silent as
tificate
for some
* n »_
cited,
years,
support
Among
adjudicated
the other texts
without
authority.
pertinent
I,
For
casually
a rather
(1897),
analysis
Vol.
indi
Elliott
participation
see
right of
unless
of the texts
Cornell1 Law
Quarterly,
cates
*12
365,000
merely
Incorporation
authorized
(We shall
(1925-26), p. 235.
Vol. XI
thereafter,
stock”;
“capital
that
upheld
shares of
later,
mention,
cases which
200,000
by
consent,
resolution
the
coun
theory,
dates.) While
and their
the
preferred
“carved
of
were
law shares
stock
change in
state
a
the
sel admit
with an ad-
out” of the total
endowed
fail
century, we
turn
after
preferential
right
(the
dividend).
ditional
what
expression
indication of
any
or
find
And,
they
continuing,
this
suggest
that
when it ocurred.
change
constituted
cases,
procedure
method
an intent
be
of
indicated
adjudicated
we read the
As
preferred
accord to the
all the
stock
next,
majority view
discussed
common,
rights
except
expressly
presumed right
always
opposed to
been
negated.
Inherently, preferred
find
stock does
wholly fail to
participation.
of
We
any legally
differ
common
in dividend
stock
law or
any
such state
rights, and the
can never
understanding” ex
two classes
be
“general
substantiated
entirely equal.
delayed participation
afford the basis
isting in
which
theory
expression
any
is not an
real
implied
intent that
presumed
for an
equality,
per-
but of a
sur
created method to
participate in
preferred stock should
delayed
mit
“catching up.”
ex
earnings,
of an
And
true
the absence
plus
equality
by
never
could
be attained here
subject.
pression
that
suggested,
the method
for the
Murphy
point
the case of
note
At
aggregate
had received
64J4'%
Co., Banc,
Dry
Richardson
Goods
during
period
years,
of 57
while
72, 74,
1, 31
relied
326 Mo.
S.W.2d
nothing.
the common received
It seems
stockholders, and
by the common
principle
reorganization
the time of this
con.
involved
discussed
rather common
to create
partici-
by resolution,
filing
surplus to be distributed
pate in the
Perhaps
statute,
Articles.
au-
cumu-
voluntary liquidation, and also to
thorizing
by
issuance of
had
These stockholders
lative dividends.
resolution, had created some doubt as to
of their stock.
par value
been
superseded
law,
whether it had
com-
been no dividends
had
There
incorporators
thought
so
it best
years.
ten
mon
to resolve the doubt and create the stock
in-
argument
advanced
there
by
Be that
may,
pre-
resolution.
as it
capital
equality
stock.
of all
herent
long
had
created,
ferred stock
since been
upon a
distribution
contract
actuality, by
plan
reorganization
assets
acceptance
full
plan,
of that
“
paid in full before
be first
prior
been consummated
had
applied
assets
said
incorporation.
actual
We do
find the
The court held that
stock.”
mere
or manner
pre-
form
in which the
paid in
had
been
ferred stock
authorized to
thus
value,
par
received
full when
controlling.
incorporators,
Nor would the
par-
they were
no further
entitled to
agents of the depositing security
as mere
in a
dissented
ticipation.
Judge Walker
holders,
authorized
to add to or detract
facts
con-
opinion. The
and the
separate
from the
selecting
class
ours
divergent
from'
there
so
tract
procedure.
a mode of
partic-
of no
case to be
we deem the
here. No
Missouri
ular
deposited
doubt that
those who
We
se-
remotely
point.
is even
case
plan
under
had
inkling
curities
“understanding”
participation by
an
to the contract
Referring
impressed
preferred stock. We are
itself,
argue
counsel
argument of “unfairness”
equality
respects
bondholders, supposed-
mortgage
the Articles
old second
because
*13
ly
they
tees,
arising from
the fact
re-
lawyers
other eminent
linquished
and received a
time participated.
bonds
There,
here,
pre
preferred stock, par
par. They
for
also
ferred stockholders contended that all the
received,
rata,
mortgage
capital
new second
stock was on
equality
strict
ex
paid,
cept
bonds for cash
and a
assessments
as expressly restricted, and that
preference
reorganized
in dividends in a
participate, by
should
way of
company.
voluntary plan
dividends,
This was
of
surplus
in all
earnings. Some
reorganization,
by a
of
not one dictated
court
the facts
particu
there make the case
larly
compensation might
where
applicable;
stricter rules of
there had
reorgani
been a
prevail.
necessary balancing
There
zation
was a
and an exchange of old securities
equities
complicated
new,
for
among all the
consummated in 1899. The con
conflicting
million
tract
interests. Six
seven
there hundred
thousand dollars
second
old
“up to,
dividends
but
mortgage
not
bonds had been sold
the Gould
exceeding
four
centum before
Syndicate
approximately 30 cents
dividends shall
apart
be set
paid upon
is also obvious that
the dollar.
stock.” The
there
immediately
expressly
also
holders
made noncumulative.
control of the
thereby
voting
applicable
There was
acquired
no
statute. Many of
company, a consideration
reorganized
arguments
same
were made there as
here,
highly material.
It is a little
made
probably
including
upon
a reliance
mortgage bond-
the text
the old second
presumed
late for
writers for a
participa
years that
complain
tion. The
holders to
unanimously
held
that the
par-
unfairly
if
they
then
treated
participate
could
allowed.
ticipation
beyond
That
is not now to
its
per year.
stated 4%
the Referring
decided
question
argument
will have
to the
presumed
for a
applicable.
participation,
and law otherwise
(93
principles
court said
Md. loc.
“*
grants
contract
cit.
that the
49 A.
329):
hold
loc.
We
cit.
When
it is
participation
borne in
problem
mind
terms,
of its
before
fair construction
them
adjustment
involved
either
just
claimed “under-
by implication
equitable
various,
principles
conflicting
many
doubtless
standing” of the times.
interests of
persons,
complicated
and multifarious
already
opinion
long we must
too
anTo
properties
relations of the
of other com
the decided
reference to
add
now
panies, and the combination of all these
doc
cases,
whether
establish
see
varied
plan,
interests in one harmonious
—to
participation. The com
presumed
trine of
it
is difficult to conceive how in one of
op
features,
containing dictum
cites as
mon stock
important
its most
there should
doctrine,
as the
posed to such
left anything
been
to construction.
”
* * *
1891, the
case decided
applicable
Then, following a
reference
App.
Cropper, 14
of Birch v.
English case
texts,
noting
that no decided case
Lords, 1889).
When
(House
Cas.
found,
had been
the court said
unreported decision
also
consider
(93
502-503,
Md. loc. cit.
49 A.
does, by
Appeal, the case
Court of
loc. cit.
“So that
there is
329):
no room
theory
dictum,
seem to refute
argument
for the
here
in declaring
course,
not, of
It is
participation.
presumed
o'f the
stock it was
The first
sense.
controlling here
necessary
particularly
state
was that of Scott v.
substance
attributes,
case
should have such
because of the
Co., 1901,
93 Md.
R.
& O.
Baltimore
reason
under
that'
well
principles
settled
Morawetz,
Mr.
one
Therein
49 A.
law
vigore
entitled proprio
to such
* * *
present reorganiza
participation.
authors
proposL
where
voting trus-
tion of law has not
definitely
for certain
been
counsel
tion,
settled
But, be
was dictum.
and that neither
he
person
each
the mind
but lies in
question
may,
that as it
himself, it
matter for
reason out the
understanding”
supposed “general
assume
would be most unreasonable
rea-
highly presuasive;
if for no other
$40,000,-
the issue
when
schedule
is the
son,
case
true
this is
because'
included
stock was
000 of
1891, and
point
one
of time to
closest
put
there
then
plan,
was not
everything
*14
the 1890’s
counsel of
because most eminent
be there.
parties intended
that
should
* * *
very seriously
in it.
were
concerned
stock, it was
As
common
to the
should
necessary
that its characteristics
the whole
foundation of
doubtful
by
definitely
they
fixed
(cid:127)be
were
stated
theory
presumed participation is shown
necessary in
supremely
law.
But was
by
the fact that the
stockholders
make
reference
own minds
were not
in their
Scott
sure
clearly in
description
of it as would
they
participation
type
to what
rights would
just what
form
its holders
to,
entitled
therefore made alternative
”
**
ownership.
attach to its
e.,
claims,
(a) “immediate,” i.
share
theory
present
disposed
court
thus
equally
they
received
all dividends
pre
“general understanding” and
of a
4%;
e.,
“delayed,”
share
(b)
i.
1890’s.
sumption
participation
equally in
after the
all dividends
common
construction of the
Proceeding
then
similarly,
see,
like
And
4%.
that,
contract,
upon the
the court stated
Co.,
Envelope
119
v. United States
Stone
theory
advanced
536,
394,
Me.
111
261 adversity, N.P., -in greater takes the risk times of 18 Ohio Co., & Tack Screw Miller, 56 or nothing (as often here for 569; Foundry getting Co. v. N.S., Powers 842; years), preferred, v. Will whereas the 590, 171 A. 166 Md. Co., (1912), earnings, Ltd., promised from the first United Lankat Plantations certainly risk; L.T.,N.S., that, com- affirmed takes a lesser Ch. pensate v. L.T.,N.S., (1913); Duwelius for their Com.Pl.1924, greater risk, Champion preferred’s and in return for Fibre Ohio preferential certify consideration, con N.P.,N.S., 107, the courts 25 Ohio motion Rep. sider that 1924, 22 Ohio Law record overruled agreed participate surplus not to earn (W.D.Pa., Steel Co. Keith Carbon ings; highly stock would be unreported). unpopular compensating unless it had Contra, *15 the stock counsel for benefits; under general there is no cite, cases: Stern among
holders standing among investors that Brock, 1909, 279, Pa. 74 A. bergh v. 225 and that a participating; stock shall be 1078; 166, L.R.A.,N.S., Trust Fidelity 24 providing contract Co., 1906, Valley 215 Pa. Lehigh Co. v. R. preferential no with a fixed dividend (and 829; 610, 64 Sterling A. H. F. Watson v. regarding participating rights) statement 297; Co., 1913, 105, Eng 241 A. Pa. 88 fixing be as whole should considered the Osborne, 366, 1918, 104 lander v. 261 Pa. to the dividend 800; 614, A. 6 Publishing A.L.R. Star Co. distributions, by nothing be to added Ball, 1922, 285; 158, v. 192 Ind. 134 N.E. implication. regard “participa Some the Coggeshall & Georgia v. Land Investment theory attempt tion” as to an add some Co., 1914, 637, Ga.App. 14 82 S.E. to thing the which framers nev contract Lyman 1928, v. Co., Southern R. 149 Va. thought er of. 274, 141 designated S.E. 240. We have Pennsylvania by pre The cases cited the the above cases as men deserving those adopt, equivo ferred tion, without among many authorities cited cation, theory that the obviously con. It will impossible be participating contrary to unless discuss these individual cases in de expressed. is case, Fidelity The first by tail. As pre stated counsel for the 1906, Lehigh Valley Co., Trust Co. v. R. in seeking distinguish to 610, 829, 215 Pa. 64 A. group above, first announced rule of cases cited the word with no citation of ing of whatever various contracts referred to differs (case text). (Sternbergh, next case from ours. To some true, extent this is 166, course; opinion by A. some, Judge) same cit the distinctions are not only ed four Fidelity texts and all material. case. Those group, cases aas The next (Sterling, two particular 88 A. facts, and on their renounce the Englander, 614) 104 A. prior cite theory implied presumed an participa Pennsylvania cases, Cyc. and 10 surplus tion in earnings by These opinions contain little or no stock to which no discussion of participation problem. the real A expressly somewhat granted, been reticent hold that the Pennsylvania Federal Court impelled felt surplus common is entitled to all earnings reject Pennsylvania to be view payment distributed Keith after v. of the fixed Co., Carbon Steel an unreported preferred. on dividend decision of These decisions the District Court range in date from Western Dis substantially (April 30, trict time; 1917). present The case of Star some of these cases Publishing Ball, Co. v. Ind. involved contracts made 285, 288, They N.E. 1890’s. relied come from also on. several There different Generally, proceed jurisdictions. expressly partici made “pro logic: pating following that the common rata” dividends of 5% '262 appellate equality on court paid preferred and
had been capital at stock in the absence restrictions question arose common. fully A (although adopting preferred. the trial court’s tempted redemption of the opinion hardly go which did so can far) preferred dividends statute limited * regarded necessary as the decision. “before shall be And, in construing ar the contract on the common stock.” court riving at an intent precluding participation, be construed held that the statute should the court beyond incorpora- noted in 1894 permit participation so tors, doubt, 8%; contemplated never here actual means little decision corporation profits “as express pro when earn such we note contract opin participation, earning.” The trial court’s although vision for now did, is entitled perhaps unnecessarily, express the view “preferred to all stock holder rights of the common * n by proval, several ion cited and discussed, stockholders, including the cases here apparently relied ap v. holder, prior Virginia statute case of except modified Johnson Johnson quoted Inc., Briggs, & 138 Va. 122 S.E. A statement and contract.” certainly opposed Coggeshall language contains counsel fully Ga.App. implied participation. When & Inv. Georgia Land *16 “* * * analyzed authority un 156, 157, namely: the case is no- real 82 S.E. participation well-recog In expressly provides other here. recent the contract less corporate the participate nized texts it is indicated that wise, preferred stockholders presumed preferred participation of profits, after the view in sur surplus a the by preferred e., plus pre (i. in the on the had been declared express definitely absence of stock, provision) the and an dividend on ferred minority stock,” only Corpora the view. constitute on common could Ballantine (1946), 506-507; dictum, 216, pp. tions purest for the issue there Fletcher § of Cyclopedia Corporations (1957), of Rev. stated whether a certain certificate con was 12, 5448, pp. Vol. From in preferred 263-266. our stituted a share or an indebted dependent cited, authority examination of ness. whatever the authorities No agree. we except preferred stock, 1 generally as to seq. Corporation (6th Ed.) 731 Cook on et Lyman Co., 1928, R. 149 Va. Southern impossible for to It has been us 240, 242, by the on S.E. also relied in specifically all of contentions discuss stockholders, the court held that They have all been in the briefs. cluded entitled was not We are convinced that considered. gave language which of because participate not, by a fair con corporate does contract pay and power declare the directors terms, grant pre of struction any “any stock” dividends participation ferred remaining after stated surplus profits of claim; apparent, no such intent is nor paid; had been preferred dividend any understanding” “general does pay aas mandate to construed this by implication. right We time create any dividends and all hold com might well terms surplus. In view declared out such stating pre mon stock certificate emphasis placed ruling, and also
(cid:127)this year “in shall receive each dividends precise upon construing (non-cumulative) exceeding per the court five component contract,3 being part generalizations cent terms 3. The cess any adopted, that in provision dividends would trial said some cases court, as to part: whose participating the failure to make naturally be con may “* n n It in ex- nial of while such strued as provision in other cases the participation. granting such * * failure held as a de participation, ” make contemporaneous with and the and common received a like divi- contract documents, expressed an intent dend.” the other beyond Scott See the nonparticipation 5%. opinion, In the history full hold, cases, supra. prefer and Hatch We the reorganization of Louis, the St. Arkan-
however, And contract silent. that the sas and Railway Texas Company of Texas majority adopt what we deem to be the and Louis, the St. Arkansas Texas view, supra, to the effect Railway Company of Mis- Arkansas and case, create, law does not souri which culminated organization rather, but, presumed participation, St. Railway Louis Southwestern- view, prefer on the denies it. both We Company (referred to as the “Cotton weight logic. decided Belt”), it is stated that the certificates of necessarily provision follows: stock, preferred common, correctly re- dividends as contained flected agreement understanding corporate full contract statement parties of the reorganization nego- stock, the dividend tiations. “prefer- not a mere of its statement ence”; that, under both the law it stood certificates, in ref- since, contract dividends, erence to read: “The holders permits participation of no further in earn- each are entitled in ings year to receive rate of paid after it has been its stated dividend of per annum, payable five cent out of ;. and declaration of a dividend profits the net Company on the made No- dividends shall be declared on the vember, 1951, is in contravention of the year, stock for such but if in contract and therefore void. We so hold. year dividends amounting to five cent shall payable pre- not be declared judgment herein is and decree re- *17 ferred the holders shall not there- versed, and the cause is remanded any receive further dividends judgment enter directions to in accord- year, said preferred the on dividends the ance with expressed opin- views the in this being stock not cumulative.” ion.
The certificates of the common stock
provided that: “The
stock of the
common
HOLLINGSWORTH,
HYDE,
J.,
J,
C.
Company subject
is
of the hold-
the
STONE, Sp. J.,
DALTON,
LEEDY and
of
ers
the
stock to
in
JJ-, concur.
year
(non-cumulative)
each
dividends
not
per
exceeding
any
five
cent before
divi-
WESTHUES, J., dissents.
paid
year
dend shall be declared or
for that
on the common stock.”
WESTHUES, Judge (dissenting).
Section
RSMo
in
force
*
“*
cannot
part:
I
concur in the result reached
read
is
and it
opinion
provided,
this
case
the
EA-
that
Judge
also further
when dividend
opinion
per
per
GER
ten
cent
annum shall
whose
shall hereafter re-
have been
opinion.”
the
fer to
“the
As stated in the
declared
stock of
question
company,
pursuance
sole
opinion, “The
issued
of this sec
involved here
tion, then all other dividends
whether the
shall be de
is
participate
are entitled
and distributed
rata
plaintiff
clared
until the
on
dividends after the
shall
dividends
common
preferred stock,
among
received the stated
dividends
the
preferred stock
the
5%
any given year,
corporation;
the stockholders of such
dividend
preferential
**
consideration
At the
conclusion
word “un
ours to
(Emphasis
opinion
subject,
it
is stated in
this
til.”)
the terms
might well
that
that "We
hold
say that Sec-
preferred stockholders
stating that
of the
stock certificate
case.
governs
RSMo
tion
year
each
shall receive ‘in
that
intent
They
claim
exceeding
(non-cumulative)
dividends
not
when
parties
times
in view
*,’
component
being a
five
cent
was that
issued
part
contemporaneous
of the
contract
pre-
that
participating;
should be
documents, expressed an
with the other
in-
presumed to
legally
stock was
non-participation beyond
In
tent
5%.”
stock-
The common
rights.
participating
quoted
place,
portion
first
from
contrary,
that
exact
holders contend the
complete.
the stock
is
certificate
not
apply;
2558, supra,
not
is,
does
that Section
reads that
receive “in
shall
reorganiza-
appears
the 1891
that
(non-cumulative)
each
not
have no
preferred stock should
that
tion
exceeding five
cent
divi-
and that
beyond the
declared
dend shall be
opinion
reorganization,
at
time of
year on
That
stock.”
there
persons
understanding
investors
ques-
general understanding
was no
that un-
finances
dealing with railroad
fact
tion in 1891 is obvious. The
provided preferred
expressly so
less
opinion
pages
fourteen
are devoted
participating.
not
question
determining what
side
authority
weight
refutes
had
question
what the
opinion,
In
general
contention that there was a
under-
time
understanding” was at
“general
standing.
length
reorganization
considered at
concluding on
page 14 and
(beginning
Furthermore,
parties directly
con-
263).
255 to
29, 318
page
S.W.2d
cerned,
is, the
stockholders and the
“gen-
directors,
conclusion reached
board
were uncertain what
understanding” was that
eral
the status of
stockholders was con-
but that
non-participating
stock should
rights.
cerning dividend
Had the board
it should
weight
held
been of the
expressly
participate
so stated
unless
was not entitled
dividend ex-
reaching
conclusion
would,
year,
contract.
ceeding
one
*18
the side
weight
was on
doubt,
excess
have ordered the
dividend
stockholders,
the writer
of the common
paid to the common
to be
stockholders.
opinions of a
opinion
removed the
this
dissent was the
writer
au-
subject from
number of
writers on the
text
opinion
thor of the
written Division One
the scales
the side of the
was concurred
all of the judges
theory
on the
stockholders. This is done
reading
that division. After
and con-
text did
that
cited
authorities
opinion
EAGER,
sidering
Judge
I am
support
they were
not
authors
that
and
than
convinced
ever
more
that Section
prior
ex-
written
If
authors
to 1891.
supra,
applicable.
is
The following
pressed
subject,
should
opinion
it
opinion
from the
in Division
taken
One
is
given
weight.
least some
“General
repetition
is some
there
what
(wherein
understandings”
being
into
do
come
supra)
stated
which in my
writer
this
suddenly
gradually
but come into existence
ruling.
be our
Note
should
opinion
what
years
through
so the fact
that
said:
written
texts were
before 1891 added
theory
that
weight
the contention of
“It
is
stockholders,
shall hereafter
whom we
call
participate.
2SS8,
gov- way
and
supra,
Company
the issuance of the St.
respondents,
Sec.
that
Company’s
Railway
case;
Louis Southwestern
that the
erns this
preferred stock,
legal
pursuance
light
section
of the
was issued
that
Further,
lay
time,
opinions
and
that
also
would
controlling.
that it is
statute,
participating.
render such stock
apart
from the
contend
times
parties in
of the
view
intent of
“ ‘Consequently,
preferred stock-
issued,
that the
the stock was
when
holders of the
Louis Southwestern
St.
participating
preferred stock should be
Railway Company
partici-
are entitled to
stock;
is no evidence
that even if there
pate
in the
common stockholders
parties,
as to
intent
1951.’
declared on November
presumed
participating
legally
to have
rights.
“Appellants say
the trial court
holding
in error in
that a
con-
reasonable
stock-
“The contention
struction
of the documents and
holders,
shall
refer
whom we
hereafter
relating
reorganiza-
circumstances
2558, supra,
appellants,
does
is that Sec.
opin-
light
lay
tion in
legal
upon
any rights
confer
pre-
ions of that time would render the
stock;
case
be decided
must
Respondents
participating.
contract;
clearly
the terms of
contend that
the trial
was correct
parties
appears that the
intention of
ques-
ruling.
so
Both sides
briefed
reorganization was that
to the 1891
at length.
tion
Each side introduced evi-
preferred stock should have no dividend
subject.
dence on the
view we have
rights. beyond
in the
mentioned
taken of
unnecessary
this case renders
They further contend
stock certificate.
question.
determination of that
mayWe
that,
reorganization,
time of
at the
say in passing that the trial court’s view
opinion
understanding
investors
supported
by good authority.
persons dealing with
finances
railroad
unless otherwise
was that
opinion
“It is our
above-quoted
for,
participate
expressly provided
did not
portions taken from the certificates of stock
specified
beyond
dividend in
one
statute,
and the
2558, supra,
Sec.
are con-
year.
trolling.
It is admitted that the recitation
in the certificates of
correctly
reflect
heard
trial court
evidence
“The
harmony
are in
with the resolutions
questions and in a memoran-
of those
proceedings
pursuance
-in
of which the
opinion
held
‘The Court is of
dum
stock certificates were
provi-
issued. The
a reasonable
construction
sions of these certificates as to dividends
Missouri,
Revised Statutes
of Section
plain, specific,
and unambiguous. The
history,
light
legislative
in the
provision
stock certificate
applicable
to a railroad com-
make
provides that
*19
the holders of such stock
preferred stock
while it was
pany
issued
are entitled to dividends
year
each
5%
preference
providing
up
and
force
in
before the common stockholders are to re-
10%,
participat-
render such stock
and
any
quoted
ceive
dividend. The other
por-
equal
preference
to the
dividend
ing after a
preferred
tion from the
stock certificate
on
common stock.
declared
the
had been
provides that
the dividends shall not be
then, it
Necessarily,
would have that effect
provision
cumulative. This
has no bear-
preferred
of the St. Louis
on
question
ing on the
to be decided in this
Railway Company. Aside
Southwestern
lawsuit.
statute, the Court is
said
further of
from
provision above-quoted
reasonable
“The
opinion that a
construction
from the
interpretation
simply
of the
provides
documents
certificate
reorganization
subject
common stock
relating to the
that
is
circumstances
Louis,
preferred
Texas
Arkansas &
Rail-
St.
to be
1871, p.
They
that
at
exceeding
say
the attitude
year
53.
in
dividends
each
(in 1871)
as
shall
that time
was liberal
evidenc-
such common stockholders
5%
permit-
by
provisions
ed
provision was
statute
dividend. No
vote
ting
in
stock to
issued
done
be
concerning
made
what was
be
majority
‘a
votes
stock-
interest of all the
case
by
cast’
The Constitution
hblders
dividend
stockholders.
each had received
n adopted
1875,
XII,
10, provided
Art.
year
Belt
Sec.
one
and the Cotton
be issued
stock could not
declare a dividend
same
approval
this without
of all stockholders.
It
excess of
on all stock.
is
Sec. 780 of the 1879 statutes was amended
point
governs the situation.
statute
pre-
2558, supra, of
25S8, supra,
special
statute
and became Sec.
Sec.
was
pre-
Among
statutes.
one
scribing
the amendments was
under which
conditions
by
rail-
provision
is-
changing
authorizing
be
stock could
issued
company
laws of
suance
stock.
statute
organized
road
under
An
reor- was amended to conform the Constitution
this state.
examination
required
proceedings
by
of all
ganization
Cotton
favorable vote
stock-
taken
So,
.authorizing preferred
holders
stock.
Belt
the issuance of
apparent
legislation,
provisions of the
that the trend of
stock shows
statute,
appellants;
2558, supra,
as
about
were followed.
stated
Sec.
years thereafter,
place
and for some
persons controlling
is evident that
restrictions
limitations
issuance
reorganization
were well aware
on the
provis-
companies.
of its
railroad
statute and therefore knew
section,
2558,
argue that
later to
Appellants
When
become
ions
to dividends.
enacted,
provisions quoted
construing
first
in error
the trial court was
supra,
same,
exception,
read
the statute limits
one
the statute and
did
the Revisions of 1879
rather
adds to
than
brief,
1939,
revisions
In their
.1889 and
thereafter.
(cid:127)the
stockholders.
re-
follow-
Sec. 2558
Sec. 5149 and it was
appellants quote
cite the
became
from and
pealed
statutory
in 1945 when a new section
construction:
ing cases on
1945, p.
enacted in
Laws
lieu thereof.1 See
‘“
legislative intent
in the enact-
“The
sought
effectu-
law to
ment
“In the Revision of
'un-
the word
Life Ins.
O’Malley
ated.”
v. Continental
til,’
quotation
which we italicized in the
S.W.2d
[1934], 335 Mo.
Co.
above, was
for the word
substituted
‘after’
837, 839.
originally
the statute as
so that
enacted
“ ‘
legislative
construing a statute the
‘then
dividends
“In
all other
shall be
read
mind,
may
if
kept in
must be
and distributed
rata after the
intent
declared
portions
act
ascertained,
and the whole
common stock
shall
materia,
pari
should be
are in
thereof as
the dividends
Elms
together.”
corpora-
Holder v.
the stockholders of such
among all
construed
**
857, 862,
tion;
338 Mo.
[1936],
*.’
Hotel Co.
‘The a employed among words and all the * * tion; statute should given be a -reasonable and ruling Under carry out, sensible pos opinion construction to EAGER, certainly if a Judge it is sible, legislature. preferred “pre- the intention The of the misnomer to call stock statutory fact, words should be so ferred.” In would construed common stock give meaning preferred. them stat be the It author- is said that the ity pur- ute some force and effect. Uncertain or to issue stock is as, ambiguous pose tempting help words be construed so finance will investors possible, produce if building a reasonable result and improving of railroads. harmony purpose of the act.’ opinion, with the As said in “The Judge EAGER’S general support rules above-stated are issuance of railroad regarded ‘hybrid’ ed cases ex rel. from Missouri. State sometimes as a sort of Daues, 1126, Dean v. raising capital, 321 Mo. 14 S.W.2d method of be- somewhere 990, 1001, (6-8); (with tween mortgage Con bonds burden- their 1[oc.] c[it.] Hackmann, solidated charges) School Dists. v. 302 some fixed and common stock 558, Hayes, Mo. Hayes (which very apparently S.W. v. had at- not been tractive).” Mo. 583, buyer S.W.2d A of such 1[oc.] c[it] ; 327(2) pur- Kidd Puritana Cereal v. Food have at the time thought he was 502, 122 145Mo.App. peach reality chasing Georgia S.W. when 1[oc.] c[it.] opinion 788. We are of the that the trial opin- under the ruling Judge EAGER’S question.” correctly ion, ruled the green persimmon. he received a point I should like to out wherein the opinion, considering Section ruling Judge opinion may EAGER’S re- states, supra, it, “As we construe gross injustice sult stock- only applicable it is (as stated) where ‘a keep pre- us in mind that holders. Let dividend of ten cent annum’ has ferred stock in this case is non-cumula- stock; been declared tive, meaning paid that if dividend is construing So the statute would year, one no dividend shall be de- absurdity. lead to an I do not believe that thereafter for that for the ben- clared legislature ap- intended such a limited Suppose, stock. efit plication of the statute. mean would example, that the common stockholders of parties had organization corporation, through railroad the board the “Cotton pre- Belt” directors, have control financial paid ferred be in- dividend 10% company. The affairs dividend, stead of a then the statute 5% is, case, as in this non-cumulative. apply. agree prefer- I that then the dividend, board then could declare providing red stock for a 40%; every years, say, preferred. reality would be in Does that and no more would receive good make sense? I think I not. desire I Here is common stock where 35%. quotation to add a adopted from an pre- protection to the the statute is a think by this court banc in en the case of State applied If the stat- stockholders. Kollenborn, Mo.Sup., 304 S.W.2d 5%, ute, preferred stock would receive page bottom of 864: “What is not stock would then 5% good sense be the law.” says when that has been the statute I done, respectfully dividends shall dissent. “then