Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/804

 § 798.] THE LAW OF PRIVATE CORrO RATIONS. [CHAP. XV. if the assignee of the certificate has or is affected with notice of the rights of persons other than the holder. Thus, it has been held, that a person purchasing shares from an administra- tor at an illegal private sale, will be liable to the distributees of the estate for dividends received by him. 1 § 798. Individual shareholders have no right to profits made by the corporation until a dividend is declared. Ac- cordingly, a dividend belongs to the owner of the shares at the time when it is declared, whether it was earned before he acquired the shares or subse- quently. 2 And a sale of shares after a dividend has been declared, does not carry the dividend, although it is not payable until after the sale. 3 Similarly it is held, where the directors " vote to pa f a dividend of four per cent, this da}', and another of like amount from earnings of last year," that the person who owns the shares when the dividends are thus voted is entitled to both dividends although he sell the shares Right to dividends, as between transferrer and trans- feree. 29 N. J. Eq. 98. But see semble con- tra, Brewster v. Sirae, 42 Cal. 139; Winter v. Belmont M'f Co., 53 Cal. 428. Compare Winter v. Montgom- ery Gas L. Co., 89 Ala. 544. 1 Nutting v. Thomasson, 57 Ga. 418. 2 Jermain v. L. Shore, etc., Ry. Co., 91 N. Y. 483; Board man v. L. Shore, etc., Ry. Co., 84 N. Y. 157; Brundage v. Brundage, 65 Barb. 397; Timberlake v. Compress Co., 72 Miss. 323. See Hyatt v. Allen, 56 New York, 553; March v. Eastern Rail- road Co., 43 N. H. 515. A bequest of shares does not carry a scrip dividend received by the testator during his life; but such a dividend declared after testator's death, be- longs to the legatee. Brundage v. Brundage, supra. When preferred or guaranteed dividends .should have been paid at a certain time, but were not declared, and the shareholder entitled to them did not enforce their declaration, they remain payable to the holder of 784 the stock, and pass with a transfer of it. Jermain v. Lake Shore, etc., Ry. Co., 91 N. Y. 483; Manning v. Quicksilver M'g Co., 24 Hun, 361. Pledgee of shares in whose name the stock stands is entitled to divi- dends. Boyd v. Worsted Mills, 149 Pa. St. 363; Central Neb. Nat. Bank b. Wilder, 32 Neb. 454; Guarantee Co. v. East Rome Co., 96 Ga. 511. 3 Bright v. Lord, 51 Iud. 272; Spear v. Hart, 3 Rob. (N. Y.) 420; compare Phinizy v. Murray, 83 Ga. 747. Contra semble, Burroughs v. North Carolina R. R. Co., 67 N. C. 376. A shareholder is not liable for divi- dends received by him, in the first instance, to a person claiming to be the owner of the stock, but whose claim the company ignores. Such a person must first establish his claim against the company. Peckham v. Van Wagenen, 83 N. Y. 40. This proposition might be affected, how- ever, by relations between the plain- tiff and defendant.