Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/805

 CHAP. XV.] LEGAL RELATIONS AMONG SHAREHOLDERS. [§ 799. before the day for the payment of the second dividend has been fixed. 1 § 799. Difficult and still unsettled questions respecting the ownership of dividends, arise when the shares are As between left in trust by will, the income of the trust to go life-tenant •f ' o and re- to a life-tenant, and the principal, at his death, to mainder- a remainder-man. There is little doubt that a rea- sonable amount of profit, earned before the testator's death, but declared in the shape of an ordinary cash dividend after that event, is income and belongs to the life-tenant. 2 But an ordinary cash dividend earned before, but declared after the testator's death, is to be distinguished from a distribution in the shape of a cash dividend — consequent, perhaps, on a change of policy in the body corporate — of long accumulated profits. " Where the profits of a corporation have been accumulating for many years, till the market value of the stock is double its original price, and the owner dies, directing the ' income ' of his estate to be applied to particular objects for limited periods, these extraordinary accumulations are as much a part of his capital as any other portion of his estate, and must therefore be regarded as forming part of the principal from which the future income is to arise."" 3 Likewise, when after the testator's death, the corporation sells a portion of its property or franchises, and distributes the 1 Hill v. Newichawanick Co., 8 Hun, 459, aff'd 71 N. Y. 593. 2 Bates v. Mackinley, 31 Beav. 280; Milieu v. Guerrard, 67 Ga. 284. sEarp's Appeal, 28 Pa. St. 368, 375, opinion of the court per Lewis, C. J. But all profit arising after the death of the testator is " in- come." Wiltbank's Appeal, 64 Pa. St. 256; Biddle's Appeal, 99 Pa. St. 278, 282; Earp's Appeal, 28 Pa. St. 368; Van Doren v. Olden, 19 N. J. Eq. 176. See Moss's Appeal, 83 Pa. St. 264. " It is well settled in this state that when the stock of a cor- poration is by the will of a decedent given in trust, the income thereof for the use of a beneficiary for life, 50 with remainder over, the surplus profits, which have accumulated in the lifetime of the testator but which are not divided until after his death, belong to the corpus of his estate; whilst the dividends of earnings made after his death are income, and are payable to the life- tenant, no matter whether the divi- dend be in cash, or scrip, or stock." Smith's Estate, 140 Pa. St. 344, 352, opinion of court per Clark, J. Con- nolly's Estate, 198 Pa. St. 137. This distinction is discarded in Richard- son v. Richardson, 75 Me. 570, where the rule is stated to be, that all cash dividends, declared from profits, go to the person holding the stock at 785