Sternbergh v. Brock

Citations

• 225 Pa. 279
• 74 A. 166
• 1909 Pa. LEXIS 649

Syllabus

<p>Corporations — Stock—Preferred stock — Dividends.</p> <p>1. Where, in a contract for the creation of preferred stock, there is no stipulation to the contrary, the weight of authority clearly favors the right of preferred stockholders to share with the common stockholders in all profits distributed, after the latter have received an amount equal to the stipulated dividend on the preferred stock.</p> <p>2. Where a resolution authorizing the issue of preferred stock of a corporation provides that such stock shall be entitled “to receive a cumulative yearly dividend of five per cent in each year before any dividends shall be set apart or paid on the common stock,” such stock after it has received its preference in dividends and after the common stock has received an equal amount as dividend, is entitled to participate with the common stock in the distribution of the remaining profits, if any.</p> <p>3. In such a case the fact that for a series of years the preferred stockholders were paid without objection on their part only five per cent per annum, and the entire balance of profits was paid to the common stockholders, is not to be considered in determining the rights of the parties, if it appears that while the dividend paid to the common stock was much more than five per cent on the amount paid in, it was much less than five per cent on the par value of the stock.</p> <p>4. Cotemporary construction of a contract by acts of the parties is entitled to very great weight, but it ought to appear with reasonable certainty that they were acts of both parties, done with knowledge, and in view of a purpose at least consistent with that to which they are now sought to be applied.</p> <p>5. If a contract is ambiguous in meaning, the practical construction put upon it by the parties thereto is of great weight, even though the contract is in writing, and ordinarily is controlling. The practical interpretation of the parties is to be regarded, however, only when the contract is