The opinion of the court was delivered, July 2d 1873, by
Agnew, J. —The principle governing this case has been stated in the opinion just read in the case of The Commonwealth v. The Pittsburg, Fort Wayne and Chicago Railway Company, and its application to this case'is well disposed of by the learned judge in the court below. It is proper to add a few words to show the fallacy in the reasoning on which the Commonwealth rests. An analysis of the argument will be found to eventuate in this as its foundation, that upon every increase of the stock of a corporation by the act of its directors, under a power conferred by law, the legal presumption is that such increase is a stock dividend — that is to say, a division of the profits or property of the corporation among the stockholders. Hence, in the conclusion of the argu*99meat, we are called on to prescribe the rule that the increased stock shall be taxed at the legal rate, as upon a dividend made ; and it is said if this company be permitted to divide stock on the flimsy pretence of selling it, the corporation will escape taxation by the exerQjse of a little ingenuity. But the very reason thus given for making the presumption refutes it. Whether a thing is real or only a pretence is a question of fact, not of law. It is a pretence only, because the thing asserted or pretended is untrue, and this untruth must be tried by a jury upon evidence which proves its want of truth.
If a corporation, in a division of stock, assert that it is sold and paid for, or in any other manner disposed of without a division of profits or property of the corporation, how can a court assume, as a presumption of law, that the mode adopted is a fraud ? It is competent for the legislature to prescribe such a primfi facie rule, and thus compel the corporation to prove the real character of its increase of stock, in order to exempt itself from taxation ; but we cannot legislate in this wise. The presumption called for is no other than the old rule with men of the world, to believe every man a rogue until he is proved to be honest. It is a solecism in terms to call stock or capital a dividend. A dividend is not stock, but the product of stock or capital. New stock may be, in point of fact, a dividend, or product of the original stock. Its true nature, when probed, may be found to be a cloak to cover a dividend. But the cover must be stripped off before we can see this fact. The duty of lifting the cover and exposing the fraud lies on the officers of the Commonwealth, by producing the evidence. They cannot roll this load over upon the court by asking for a rule which reverses facts without a trial or means of ascertaining their unreality.
A corporation, as well as an individual, is entitled to the ordinary presumption of rightful action .until the contrary is shown. The auditor-general is clothed by law with large powers to compel the production of books, papers, documents and accounts, to take testimony, summon witnesses and compel specifications, and when an account is settled erroneously, may, with the state treasurer and attorney-general, open and revise the settlement. It would be unjust and unwarranted in the courts to draw unnatural presumptions and lay down rules which can be made binding only by the force of law. Judgment affirmed.