Northern Bank & Trust Co. v. Day

Citations

• 83 Wash. 296
• 145 P. 182
• 1915 Wash. LEXIS 666

Syllabus

<p>Corporations — Stock—Stock Dividends — Legality. Stock dividends, by increasing the capital stock of a corporation and issuing the increase to its stockholders, are lawful, where the same are in good faith and the company’s assets exceed its debts and the amount of the capital stock, including the increase so distributed.</p> <p>Same — Legality of Stock Dividends — Evidence of Good Faith— Sufficiency. Such stock dividends are not shown to be in bad faith, by reason of the failure of the company a year and a half later, where the company at the time was doing a good business, and was in good condition, there was need of increasing the capital stock, persons acquainted with its affairs and business invested in the stock, and there was nothing to indicate that the stockholders were not honest in the belief that the undivided profits exceeded the par value of that portion of the increase which was distributed as a stock dividend.</p>