Fidelity Trust Co. v. Lehigh Valley Railroad

Citations

• 215 Pa. 610
• 64 A. 829
• 1906 Pa. LEXIS 859

Syllabus

<p>Corporations — Stock—Preferred and common stock — Dividends—Cumulation.</p> <p>Where the holders of preferred stock of a corporation are declared by the charter of the company to be entitled to a fixed sum per annum, without limiting the sum to be paid as dividends to profits earned when made within a designated period, the holders of the preferred stock have a prior claim over the common stockholders on subsequent dividends to make up the deficiency.</p> <p>The Act of March 4, 1850, P. L. 129, incorporating the Beaver Meadow Railroad and Coal Company, authorized the issue of preferred stock, and provided a§ follows: “And the said additional stock so issued shall be entitled to a preference over all the other stock of the said company, in every future dividend of profits which may be declared by the said company, until the holders of such additional stock shall have been paid from the funds applicable to the payment of such dividend, ten per cent per annum on the amount of the capital stock of the company represented by said shares of additional stock so held by them respectively; and the holders of the other stock of the company shall not be entitled to participate in any future dividend of the profits of the company until the holders of said additional stock shall have been paid from the funds applicable to such dividend, ten per cent per annum on the amount of the capital stock of the company represented by said additional shares so held by them respectively.” Held, that the dividends on the preferred stock were cumulative.</p> <p>Where in three particular years the preference stock was paid a ten per cent dividend, and a like dividend was paid on the common stock, and an extra dividend was also divided equally between the preferred and common stock, and there followed a series of years in which no dividends were paid, the preference shareholders, on the resumption of dividends, are entitled to arrearages without any deduction for the share of the extra divide