123 Neb. 289 | Neb. | 1932
This action arises out of the receivership and liquidation of the Nebraska State Bank of O’Neill, Nebraska, an insolvent institution. S. S. Welpton, as trustee, and a stockholder therein, for and on behalf of himself and stockholders like situated, by a petition in intervention, set forth the creation out of the earnings of this institution of a fund which was commenced in 1912 and thereafter from time to time was added to until such contributions aggregated $42,743.91, and which fund from the time of its inception was carried as a general deposit in said bank under the name of S. S. Welpton, Trustee. As to the contributions thus made, it is further alleged that the Nebraska State Bank had no interest, right, or title therein; that they were the property of the stockholders thereof, for whose benefit the trust was created. It alleges the misapplication of this trust fund by the bank and its officers and the expenditure thereof by them for the bank’s own use and benefit, in violation of the terms of the trust. It prays for an accounting and an order requiring the receiver to deliver to the petitioner all property in his possession which represented the fruits of this fund thus unlawfully disposed of, including a certain promissory note in the sum of $7,524.86. It further asks for judgment for so much of such fund as is not otherwise accounted for.
To this pleading the receiver filed his answer containing, in addition to a general denial, an admission of the deposit of the various amounts in the Nebraska State Bank in the name of S. S. Welpton, Trustee, substantially as alleged by intervener, but further alleges that said
The intervener’s reply in effect denied generally all new matter alleged in the answer. A trial to the court resulted in a finding that the intervener “is not entitled to a trust fund or a claim, either general or preferred, against said bank or the assets thereof,” and a judgment dismissing his petition. Thereafter the intervener presented his motion for a new trial, and from the judgment overruling the same appeals.
The controlling question in this case is whether this fund in suit, and the benefits proceeding therefrom, is the property of the stockholders represented by the trustee, or constitutes assets of the bank to which the depositors thereof, represented by the receiver, have prior claims under the provision of statutory liens in their behalf. There is no question in the record as to the source of $40,351.98 of the moneys in dispute. Each of seventeen^ annual deposits to the credit of the account of S. S. Welpton, Trustee, in this bank, which together make up this sum, were wholly derived from the earnings and profits of this institution preceding the dates of such deposits.
It is not denied that at least one of the purposes sought to be provided for by the creation of the fund carried on the books of this institution in the name of S. S. Welpton, Trustee, was the erection of a new brick building for the Nebraska State Bank of O’Neill. It also appears that this account was first opened on March 31, 1912, and that annual credits were thereafter regularly made therein to and including March 1, 1928, inclusive; that the aggregate of the funds thus entered in said account is $40,351.98. Each one of these entries evidencing such transfers, it appears, was authorized and made pursuant to resolutions duly adopted at the annual meeting of the
While it is not entirely clear, it is assumed to be established, for the purpose of this case, that the three ad
There is no evidence in the record that the stockholders of this bank, as such, were ever notified of the creation of the trust fund in suit by the board of directors, or ever approved that action, or, as a body, in any manner assented to its continued maintenance.
It also appears that by regular and continued course of dealing, which was begun not later than 1919 and continued substantially without interruption at least until May 9, 1928, said fund, excepting the sum of $222.93, was wholly disbursed by O’Donnell while serving as cashier and president, and being then the executive officer in immediate charge of the business of the bank. As to the method employed, it appears that it was paid out on checks executed in the name of S. S. Welpton, Trustee, or upon debit slips, all of which were either executed and actually signed by O’Donnell, or the signatures thereto authorized by him.
It must be said, however, that the proceeds thus withdrawn from this fund were employed in removing “bad” or “dead” paper from the bank; in aiding it to carry its excess loans; in paying and discharging its indebtedness, its guaranty fund assessments, and other like charges; and in general providing for the payment of the bank’s obligations. It may be said that, excepting the sum of $1,100, all moneys thus distributed may fairly be said to have been actually “utilized and expended in the interest of the bank.” Indeed, intervener alleges “that all of said funds were appropriated by the Nebraska State Bank and expended for its use and benefit.” It must be further noted that no concealment of what had occurred appears to have been practiced, and that the several transactions
It is to be remembered that earnings and profits in the possession of a corporation “belong to the corporation the same as the property generally, and for this reason there is nothing due and owing a stockholder from the profits as a matter of debt, until a dividend is declared in some appropriate manner. Until the time the dividend is declared it is only a potentiality, something that may possibly come into existence; * * * It accordingly follows that a stockholder has no legal title to the profits of the corporate business until dividends have been sufficiently declared; until such time a stockholder has only the right to receive his proportionate share of all profits. * * * The dividend before declaration and the right thereto is an incident of the stock and passes with it on sale of the stock.” 7 Thompson, Corporations (3d ed.) sec. 5307. “When a dividend is declared by an appropriate and sufficient resolution there is then a severance of so much of the accumulated earnings from the corpus of the corporation’s property or funds and it then becomes the individual property of the stockholders.” 7 Thompson, Corporations (3d ed.) sec. 5308.
It is also true as a general rule that, after the dividend is declared, “it is no longer the profits of the corporation or undivided surplus; and while the distribution is based
It is also obvious that the essential nature of the fund in suit must be determined by consideration of the language of the several resolutions, each considered as an entirety, and interpreted in the light of the surrounding circumstances. The fairly expressed intent of the board of directors, if not unlawful, must control. It may be conceded that, when considered as a technical term without regard to context in which it may be found, the word “dividend” is properly defined, as already indicated, as “that portion of the profits and surplus funds of a corporation which has been actually set apart, by a valid act of the corporation, for distribution among the stockholders according to their respective interests, in such a sense as to become segregated from the property of the corporation, and to become the property of the stockholders distributively.” 14 C. J. 798. However, as well expressed by one of the distinguished English Judges: “The word ‘dividend’ carries no spell with it. Applicable to various subjects, it is not intelligible without knowing the matter to which it is meant as referring, and of course, where there is a context, it is liable to be affected by that context.” Henry v. Great Northern R. Co., 1 De Gex & Jones, 605, 641.
Here we have not only “a context” associated with the term “dividend,” as employed in each of the resolutions adopted by this board of directors, but, in addition, a practical, uninterrupted, harmonious, and consistent interpretation of the language employed by the users thereof, as carried out in the actual business transacted by the bank extending over a period of more than nine years. During that time, and indeed prior thereto, all interests
It follows that the judgment of the trial court is correct, and is
Affirmed.