(dissenting):
. The defendant was incorporated in 1.871 with an authorized capital .stock of $25,000, represented by 1,000 shares of $25 each. ■ This action is brought to recover $935.29, being.the aggregate amount of various scrip dividends represented by one certificate issued, between the years 1875 and 1884, and which is in the following.form:
“No. 67. $935.29
. “E. P. Gleason.. Manufacturing Co. ;.
“ This certifies that F. Billingham is entitled to Nine Hundred Thirty-five. 29/100 Dollars, Scrip Dividend, representing the undivided earnings on Certificate No. of the E. P. Gleason Manufacturing Co .for the year 18 . [seal]. . _
“ This dividend is payable at the pleasure.of the Company, and .in case of surrender? of Certificate of stock on which it. is; issued, this Certificate is to be surrendered-with it.
“F. W. BELMONT, Secretary.
“E. P. GLEASON, President"
*482From the .incorporation of the defendant until 1875 it paid cash dividends upon its capital stock, but in the month of Ju'ly' of the latter year* deeming- it unwise to divide and pay to its respective stockholders all of its net earnings, it instead issued scrip dividends. representing in part, at least, such net earnings, and from that time until 1884, when such undivided earnings-amounted to $194,524.23, it ceased to issue such scrip. The scrip was issued in pursuance of a resolution passed on the 27th day of 'July, 1875, which' provided for a regular cash dividend and for-'the creation of a surplus, and after declaring the cash dividend, the resolution provided that .'the “ scrip for amount of surplus be issued to stockholders in . proportion to stock now held and subject to same conditions and - payable at the pleasure of the company.”
The plaintiff is the sole legatee under the will of Francis Billing-ham, who, from the time of the; incorporation of the defendant down’to liis death in 1902, held live shares of the capital stock of the company, during which 'time he was a director and as such took part in 'its management and acquiesced in the resolution referred to. After the passage of the resolution of 1875 nothing further appears to have been done with reference to the scrip issued in pursuance thereof until 1881, when, at the annual meeting held in that year, a resolution was passed by the. stockholders instructing the. treasurer of the company ‘‘to pay interest at the rate of .4 per cent per annum on the scrip dividends now held by members of, this company. That the payments be semi-annual, commencing December 30th, 1881; that said payments be chargpd on the books of the company and also endorsed on the back of each certificate,” • No provision Was made for the payment of interest on such scrip from 1875 until 1881, nor does there seem to have been any corporate act indicating, so far as it was concerned, any obligation to pay such interest. - Upwards of ninety-five per cent of .the capital stock of the company during this time, and in fact down to the date of the trial,, was held by E. P. Gleason or his estate* and to have, paid all- of the scrip'.' issued, purporting to.represent the surplus, would, according to the uncontradicted, testimony, have bankrupted the company. In confirmation of this proof evidently a statement was made at the trial, which was not- contradicted, to the effect that, the Gleason estate had offered to sell to the plaintiff any- or all of the scrip which it' held *483for fifteen cent’s on the dollar, and an offer was then made to take ten cents on the dollar for it.
The corporation, acting through its board of directors, had the right to determine whether its net. earnings should be divided among its.stockholders in the form of a dividend, or whether stock or certificates with conditions attached should be issued representing the same. (Williams v. Western Union Telegraph Co., 93 N. Y. 162.) The surplus or ne.t earnings of the company, represented by the certificate sued on, was never actually divided and there never was any intent, so far as appears, on the part of the corporation to divide such surplus among its stockholders; on the contrary, such certificate was intended to be, in effect, and I think was nothing more nor less than a certificate of stock, and this intent is so clearly manifested by the resolution of 1875 that it seems unnecessary to resort to argument to show it. The company, it will be remembered, by that resolution provided for a cash dividend and also for the issuance of the scrip to stockholders “ in proportion to stock now held and subject to same conditions and payable at the pleasure of the company.” To give effect to the scrip in the manner done by the Special Term and approved in the prevailing opinion is to entirely eliminate from the resolution the words “ subject to same conditions ” and also to overlook or ignore the fact that a cash dividend was then declared and that the scrip was made subject to payment “ at the pleasure of the company.” Not only this, but the further fact must be overlooked that the corporation itself did not consider it a binding and enforcible obligation, as evidenced by the resolution in 1881, when it provided for the payment of four per cent interest on such scrip, making no provision whatever, if it were a binding obligation, for the payment of interest between 1875 and that year, and that the plaintiff’s testator was then a director of the corporation, took part in its management and acquiesced in the passage of the resolution; also, that the payment of all the scrip would have bankrupted the company.
It is true that in a few instances stockholder’s were paid in full for the scrip which had been issued to them, but this was in pursuance of a resolution which provided that when stock held by pei-sons was surrendered, the scrip should be paid, or else by way of compromise. Such payment cannot affect in any way the rights of *484tlie plaintiff. They must be determined by the obligation which she holds,. and this obligation, when construed in the light of the resolution under which it. was issued, does not, as it seems to me, entitle her to recover. The corporation has never, in fact, divided the surplus or net earnings represented by this certificate and directed a payment of the same to its respective stockholders. All that has been don'e is to declare that the stockholders have an interest in such surplus according to their respective holdings, the legal-effect of which is nothing more nor less -than issuing certificates of stock for the same. .
For these reásons l am unable to concur in the prevailing opinion. I think the judgment should be reversed and a new. trial ordered, with costs to appellant to abide event. ■" ■
Laughlin, J., concurred. >
Judgment affirmed, with costs.^