This dividend has been declared and paid, and neither the corporation nor any of its shareholders have raised or sought to raise any question as to its validity. That is not in dispute. And it must be treated as a dividend declared and payable in cash and not as a stock dividend. It was simply for the *177convenience of the corporation that payment was to be made in its notes rather than in actual money. It was declared and paid out of the accumulated surplus of net profits, or undivided earnings; its effect was to diminish the net property of the corporation by exactly the amount of the dividend so to be paid out, and to leave the fractional interest represented by each share of stock, whether preferred or common, just what it was before. It had the characteristic features of a dividend from earnings, and not those of a stock dividend properly so called. Gibbons v. Mahon, 136 U. S. 549, 560. Gray v. Hemenway, 212 Mass. 239, 241. Such a dividend, as between tenant for life and remainderman, belongs to the former. Gray v. Hemenway, 206 Mass. 126. Hyde v. Holmes, 198 Mass. 287. Hemenway v. Hemenway, 181 Mass. 406. The rule declared in Minot v. Paine, 99 Mass. 101, 108, has been adhered to by this court.
We do not regard it as material that this dividend included the total amount of past accumulated dividends that might have been declared on this preferred stock. Whatever rights the holders of that stock may have had to compel the directors to declare and pay the stipulated dividends thereon, they still were not entitled to the dividends as such until these dividends should have been declared by the directors. It was the declaration of the dividend which created both the dividend itself and the right of the stockholder to demand and receive it. Adams v. Adams, 139 Mass. 449, 452, and cases cited. Field v. Lamson & Goodnow Manuf. Co. 162 Mass. 388. Williston v. Michigan Southern & Northern Indiana Railroad, 13 Allen, 400. American Steel Foundries v. Lazear, 204 Fed. Rep. 204.
It is manifest that the right to receive the dividends which had accrued but had not been declared on the testator’s shares of preferred stock could not have been regarded as constituting a separate part of his estate or have been made subject to the succession tax. He held the stock. If there was at any time an expectation that accrued dividends would be declared and paid in whole or in part,- that might have enhanced the value of the stock; but it would have had no other effect. A purchaser of the stock before the declaration of the dividend would have taken the dividend as the product, the earnings of his stock. In other words, as we have said, the right to the dividend did not come into existence *178until its declaration. The preferred stockholders, though having the rights of creditors as against the common stockholders, are yet not creditors of the corporation. This is the general rule. Field v. Lamson & Goodnow Manuf. Co. 162 Mass. 388. Miller v. Ratterman, 47 Ohio St. 141. Warren v. Queen & Co. 240 Penn. St. 154. Warren v. King, 108 U. S. 389, 399. Hamlin v. Toledo, St. Louis & Kansas City Railroad, 78 Fed. Rep. 664. Ellsworth v. Lyons, 181 Fed. Rep. 55. Spencer v. Smith, 201 Fed. Rep. 647. The same doctrine will appear upon examination to have been maintained in the decisions to which we have been referred upon the statutes of Indiana, under which this preferred stock was created. Jennings v. Dark, 175 Ind. 332. Grover v. Cavanagh, 40 Ind. App. 340. Shaffer v. McCulloch, 192 Fed. Rep. 801.
We do not deem it necessary to discuss all the questions which have been argued. After careful consideration of the able argument made by the guardian ad litem and of the authorities cited by him, we are clearly of opinion that the whole amount of the notes received by the petitioner should be paid out as income of the estate, and that the decree of the Probate Court to this effect must be affirmed. All questions of costs and allowances for counsel fees to be settled by a single justice.
Decree accordingly.