City of Allegheny v. Federal Street & Pleasant Valley Passenger Railway Co.

Citations

• 179 Pa. 424
• 36 A. 320
• 1897 Pa. LEXIS 659

Syllabus

<p>Corporations — Street railways — Dividend—Increase of stock.</p> <p>A nominal or arithmetical increase of shares, without transferring to the stockholders anything out of the treasury or property of the corporation, and which is not a cover for distribution of accumulated profits, is not a dividend.</p> <p>■ Three street railway companies agreed to consolidate. The first company’s stock was worth per share five times as much as that of the second company, and ten times as much as that of the third company. To obtain a convenient divisor of the consolidated stock, the first company increased its shares, and the new stock was issued in proportion of ten shares for each one of the first company', two for each one of the second company, and one for each of the third company, thus preserving the proportionate value of each to the other. Held, that the issue of the increased stock to the stockholders of the first company was not a dividend within the meaning of a law which required the company to pay a tax to a city on dividends declared.</p>