Page:Federal Reporter, 1st Series, Volume 2.djvu/47

 40 FEDERAL REPORTER. �unless, indeed, their conclusions ov inferences are fairly war- ranted by the acts themselves. It is said in the certificates that the preferred stock was to be and remain a first claim «pon the property of the corporation after its indebtedness. The natural inquiry is, what indebtedness does this refer to ? Does it mean the then subsisting indebtedness, or any indebt- ness which might exist against the corporation, and might be a valid lien against its property, although created after- wards ? The certificates also say that the holder should be entitled to receive from the net earnings of the company 7 per cent., payable semi-annually, and that such interest should be paid before any payment of dividend upon the common stock ; and that whenever the net earnings of the corporation ■which should be applied in payment of interest on the preferred stock, and to dividends on the common stock, should be more than sufficient to pay both, for the years in which said net earn- ings are so applied, then the excess of such net earnings after Buch payments should be divided upon the preferred and com- mon shares equally, share by share. Now, waa the object of this to create a specifie lien as against ail subsequent creditera of the property, and a priority over them, or was it merely an agreement made to indicate the distinction between the pre- ferred and common stockholders, and would it bave been, if the former was the intention of the parties, natural that they would have contented themselves merely with a certificate of preferred stock in this form rather than some clear, unmis- takable declaration which should constitute an unquestioned lien upon the property as against ail subsequent creditors ? �It seems to me that the more natural construction of the certificate, and of ail the acts which took place between the company and the stockholders who were thus preferred, was that they were providing a mode by which a preference should be given to particular stockholders over others, and that they did not contemplat e that the indebtedness which was referred to, after which theirs was to be a first claim, was the indebtedness only which was then existing against the property. They were to be entitled to 7 per cent, from the net earnings of the company before any payment of divi- ����