Dividend

A portion of the princial or the profits of a thing divided among s several owners.* 1. In bankruptcy and insolvency law, asits apportioned among creditors.

2.

In the administration of the estates of ecedents, a distributive share.'

See Equal. 3.

A distribution of the funds of a corpoition among its members, pursuant to a ote of the directors or managers.i^ Corporate funds derived from the business lid earnings of a corporation, appropriated y a corporate act to the use of, and to be ivided among, the stockholders.' Referring to a corporation engaged in busi- Bss, and not being closed up and dissolved, — fund which the corporation sets apart > See 4 Bl. Com..54; State v. Oskins, 38 Ind. 364 (1867),,ses; Wall v. Lee, 34 N. Y. 141 C1865), cases. ' [3 Bl. Com. 236. ' L. diversus, different. ' Commonwealth v. Butts, 134 Mass. 453 (1878), cases. » [Parker v. Griswold, 17 Conn. *399 (1845). ■ [Commonwealth v. Erie, &c. R. Co., 10 Phila. 466 173). ' University v. North Carolina R. Co., 76 N. C. 105 177). 'Williston V. Michigan, &c. E. Co., 13 Allen, 404 i66). ' [Hyatt V. Allen, 56 N. Y. 556 (1874), Andrews, J.; laffee v. Rutland R. Co., 55 Vt. 139 (1883); Pierce, from its profits to bo divided among its members.! The dividends declared by a corporation in business are, and, except under special circumstances, always tehould be, from profits. Hence, the word frequently carries with it the idea of a division of profits; but that is not necessarily its only meaning. Its special signification, in a particular case, Is dependent upon the character of the thing divided." Does not necessarily imply aproraiadistribution.a Preferred dividend. A dividend paid to one class of shareholders in priority to that to be paid to another class.* Preferential dividend. A preference to a limited extent in the division of the sum to be divided.5 Dividends on preferred stock are payable only out of net earnings applicable thereto: they are not payable absolutely and unconditionally, as is interest. Until declared, the right to a dividend is not a debt; and the obligation to declare it does not arise until there is a fund from which it can properly be made. When to declare a dividrind, and the amount thereof, is, ordinarily, a matter of internal management. Unless it appears that somebody in particular will be injured, a court of equity will not interfere.' A dividend declared out of earnings is not an asset of the company, but belongs to the shareholder. The corporation holds it as his trustee. Before the dividend is declared, each share of stock represents the owner's whole interest; when he transfers the share, he transfers his entire right; hence, a dividend subsequently declared belongs to the new holder." A stock dividend does not diminish or interfere with the property of a corporation. It simply dilutes the shares as they existed before. The corporation is just as capable of meeting demands upon it; the aggregate of the stockholders own the same interest they had previously. When stock has been lawfully created, a dividend may be made, provided the stock represents property. There is no statute in New York which requires dividends to be made in cash; and there is no rule or policy of law which condenms a property dividend. The stockholders can take the property divided to them and sell it for cash. But a dividend payable in cash, or payable generally, makes the corporation a debtor. ^ See Ex, 3; Stock, 3 (3), Preferred. 1 Lockhart v. Van Alstyne, 31 Mich. 79 (1875), Cooley, J.; 108 U.S. 899. 'Eyster v. Centennial Board, 94 U. S. 504 (1876), Waite, C. J. See Gary v. Savings Union, 23 Wall. 41 (1874); 18 Barb. 667; 8 R. I. 333; 1 De G. & J. •630-37. s Hall«. Kellogg, 13 N. Y. 335 (1855). « Tatt V. Hartford, &c. B. Co., 8 R. 1. 333 (1866), Bradley, C. J. See55Vt. 129, m/ra. » See Henry t>. Great Northern Ey. Co., 1 De Gex & J. *mn (1857). « Chaffee v. Rutland R. Co., 55 Vt. 126, 137, 133 (1883), cases, ' Jermain v. Lake Shore, &c. R. Co., 91 N. Y. 493 (1883).