City of Allegheny v. Pittsburgh, Allegheny & Manchester Passenger Railroad

Citations

• 179 Pa. 414
• 36 A. 161
• 1897 Pa. LEXIS 658

Syllabus

<p>Corporations — Dividend—Definition of dividend.</p> <p>A dividend is the share of a sum divided that falls to each individual; a distributive sum, share or percentage, applied to the profits as apportioned among stockholders. It differs from profits in being taken by a competent authority out of the joint property of the partnership or company and transferred to the separate property of the individual partners or stockholders.</p> <p>Street railways — Corporations—Dividend—Discretion of directors.</p> <p>Where a street railway company is authorized by its charter to declare dividends “ of so much of the profits of said conpany as shall appear advisable to the directors thereof,” but in no case to exceed the amount of the net profits of the company, it is discretionary with the directors to declare such dividends as “shall appear advisable” to them, not exceeding net profits.</p> <p>Where a street railway company is required by its charter to pay to a city a tax upon “dividends declared,” and discretionary power is given by the charter to the directors to declare dividends, the tax can only be levied upon the dividends declared by the directors, and not upon the par or market value of the stock, or on profits earned.</p> <p>A street railway .company was required by its charter to pay a tax to a city upon “ dividends declared.” A traction company leased the property and franchises of the street railway company. At the time of the lease the market value of the shares of the railway company was eight times that of the shares of the traction company. The stockholders of the street railway company transferred their stock to the traction company and received eight shares of the traction company’s stock for one share of the railway company’s stock. The railway company’s stock became an asset of the traction company, and was pledged as collateral security for its bonds. Held, that the whole transaction was a change of ownership of the same property, and neither in form no