Whatever may be said of the original power of the respondent corporation to enter into the arrangement with the Gaylord Manufacturing Company which has been stated in the finding, and whatever we might have *161thought it our duty to do had we been called upon seasonably to restrain the corporation from consummating the arrangement, we are clearly of opinion that at this late day, after the contract has been executed, after the company has been permitted for the period of five years to transact business under the arrangement with the knowledge and acquiesence of the petitioner, made large profits therefrom and paid dividends of which the petitioner received his share; after parties have been permitted to buy and sell the stock upon the faith of the validity of the transaction, in which sales the petitioner himself largely participated; after the petitioner has disposed of his own stock with the exception of a single share, at the par value of $25; after it has become impossible to place the parties in statu quo; and more especially as many of the; parties interested are not now before the court—the petitioner has no sufficient standing in court to enforce his demand.
In many instances a court of equity will refuse to interfere with a corporation at the instance of a stockholder, in respect to an unauthorized contract which has been fully executed, when if the same stockholder had applied in season for an order to restrain the execution of the contract it might have felt bound to grant the relief prayed for. And especially is this so where, as in this case, the petitioner has stood by and allowed the alleged illegal transaction to be consummated, and has allowed and even induced others to become interested in the corporation upon the supposition that the existing state of things is legal and proper. If it be conceded therefore that the transaction was originally ultra vires, a point we do not discuss, we should not feel justified in interfering with it at this time except for very strong reasons. Such reasons do not exist in this case. On the contrary, there are pretty cogent reasons why we should not interfere.
It nowhere appeal’s that the transaction has been injurious to the 'petitioner personally. The fair inference from the record is that his stock has been worth more to him by reason of it than it would have otherwise been. He sold his stock presumptively for its full market value,—at least there is nothing to indicate that he sold it at a lower price in consid*162eration of the claim that the transaction, was illegal and invalid. If he sold it for its full market value unaffected by that claim, there is a decided element of bad faith in the attempt now made to get his proportion of the new stock, or its cash value, on the basis of the stock owned by him when the new stock was created. It is difficult to see how he can receive what he now demands without injury to the other stockholders. If he receives it in stock where is it to be obtained? It is absurd to suppose that the former stockholders of the Gaylord Manufacturing Company can now be compelled to surrender their stock, even assuming that they are now the owners of it. They are not individually parties to this proceeding; and even if they were parties it is difficult to see upon what equitable principles their possession could be disturbed. They had a perfect right to sell their stock and receive in return the stock of the Eagle Lock Company; they gave a full equivalent for what they received, and acted in entire good faith. Two other sources remain—by purchase and by creation. If stock is created for the purpose the value of existing stock is thereby diminished; if stock is purchased, or the petitioner is compensated in cash, the assets of the company are thereby reduced. In any event all other stockholders suffer. It operates as a fraud upon those who purchased of the petitioner. In that respect he does not come into court with clean hands; more than that, he comes with a tainted case.
Nor is there any occasion to interfere with the method adopted for the management of the affairs of the Gaylord Manufacturing Company. That method seems to work satisfactorily to the parties interested, and secures,'substantially, to the Eagle Lock Company all that was contemplated by the purchase. We see nothing legally objectionable either in the method or its results.
In respect to that clause in the bill praying that the company may be restrained from manufacturing swords through the Gaylord Manufacturing Company, it is sufficient perhaps to say that it does not appear that the company is now engaged in that business; but if otherwise, under the circum*163stance, as at present advised, we see no good reason why the Gaylord Manufacturing Company may not lawfully engage in any business permitted by its fundamental law,
The view we have taken of this branch of the case renders it unnecessary for us to consider the interesting questions relating to the doctrine of ultra vires, and especially the question how far that doctrine applies to trading and manufacturing corporations under our joint stock laws.
2. The second general question in this case relates to the supposed increase of stock on the 5th day of August, 1875. On that day a meeting of the stockholders of the Eagle Lock Company was' held pursuant to notice, at which a vote was passed increasing the capital stock two thousand shares out of the surplus earnings of the company, which were ample for that purpose. It seems that that increase was made for a special purpose, and that that purpose soon after failed or became impracticable. Thereupon a special meeting of the stockholders was called and held on the 18th day of the same month, and before any action had been taken under the votes of August 5th, at which a vote was passed rescinding the vote increasing the stock. No stock was in fact issued, and no certificate of the increase of stock was ever filed, either with the town clerk or the secretary of the state. This state of things continued until July 26th, 1876, when this petition was brought. During that time fourteen hundred and twenty-four shares of the stock of the corporation changed hands. After this suit was brought the petitioner sold one hundred and sixty shares of his own stock, leaving himself the owner of one share only.
The petitioner now insists that he is entitled to his proportion of the supposed increase of stock on the 5th day of August, 1875, according to the number of shares owned by him on that day; or if that cannot be done, that the company be required to pay him in cash the value of his proportion of such increase.
It is very clear that the alternative prayer of the petition ought not to be granted. That would, be in effect making it a cash dividend, and that the company never intended. It *164would withdraw from the working funds of the company that ■ amount, which would not have been the result had the stock dividend been carried into effect. It is in effect asking the court to make a dividend instead of enforcing one made by the company.
If the petitioner is entitled to receive anything it is stock. But we think he is not entitled to that.
The vote of the company—the first step towards converting the surplus earnings into stock—although absolute in form was nevertheless contingent in substance as understood at the time. When the contingency happened which made it undesirable to complete the process the company immediately retraced its steps, and attempted at least to restore the stock to its former condition. (_The first step only in the process had been taken; the subsequent steps, equally essential—the issuing of the stock and the filing of the certificates—were virtually prohibited by the rescinding votefj
But it is said that the first vote brought the stock into existence, and that the petitioner thereby acquired a vested right to his pro rata share of it. The proceeding is likened to a cash dividend, and the case of Beers v. Bridgeport Spring Co., 42 Conn., 17, is cited.
There is a difference however between a cash and a stock dividend. The former is created by a simple vote of the directors, and the amount thereby becomes severed from the ■ general fund and belongs to the stockholders pro rata. The latter can be initiated only by a vote of the stockholders. That is followed by issuing the stock, and the increase can only be completed legally by filing with the town clerk and with the secretary of the state the certificates required by law. Suppose the vote had been to increase not from the surplus earnings but by a sale of the newly created stock. In such a case it cannot be said that the capital, is actually increased until the new stock is subscribed for at least. Until then there is an element of uncertainty about it. It may never be’taken. It is very clear that the vote to increase is not per se an increase. Nor is it such where the increase contemplated is from the surplus earnings.
*165Again—a cash dividend entitles the stockholder to so much money, the ordinary way in which he receives from time to time the fruits of his investment. Such dividends do not materially affect the value of the stock. A stock dividend is exceptional. It does not add to his ready cash, but it changes the form of his investment by increasing his number of shares, thereby diminishing the value of each share, leaving the aggregate value of all his stock substantially the same. It is of no special importance whether that value be divided into few or many shares. —
These differences are somewhat material, and serve to show that the petitioner’s right, if he has such a right, to an increase of the number of his shares, was at the time a mere nominal right, and one which possessed no appreciable pecuniary value. It is at least doubtful whether a court of equity will in any case aid in enforcing such a right. But however this may bo, there are other reasons of a pretty substantial character why the prayer of the petition should not be granted.
The petitioner’s right, as we have seen, was a mere naked right which he might waive without losing anything, and might enforce, if it could be enforced, without gaining anything. It became a mere question of expediency—shall the surplus bo actually converted into capital, or remain surplus and be used as capital ? The corporation chose the latter; and the petitioner, having nothing to gain or lose in either case, acquiesced in that decision. Instead of proceeding at once to enforce the vote of August 5th, he remained quiet for nearly one year, allowing the company to continue business and the stockholders to buy and sell stock upon the supposition that there was no increase. During that time fourteen hundred and twenty-four shares of the stock changed hands upon the basis of 1150,000 capital instead of |200.000. Each person selling received his full share of the surplus in the enhanced value of the stock sold; and each person purchasing paid for the surplus in proportion to the number of shares purchased. If now the law is so that the surplus can be converted into stock under the vote of August 5th, 1875, for *166the benefit of the then stockholders, it is apparent that those who have sold their stock will receive double their proportion of the surplus, while those who purchased, and thereby purchased and paid for a proportional interest in the surplus, will fail to realize what they purchased. A court of equity cannot, be expected to pass a decree which will result in consequences so inequitable and unjust.
What is here said of third persons applies with equal or greater force to the petitioner himself. The only difference is that he sold his stock after the suit was brought; but that difference does not operate to the petitioner’s advantage, for he had full knowledge of the existence of the suit and the purchasers had not. Presumptively, for the finding shows nothing to the contrary, he received the full market value of his stock. If so, he is now asking a court of equity to assist him in reducing the value of the stock which he sold twenty-five per cent, for his own benefit. He does not ask simply that he may be permitted to perpetrate a fraud, but he asks a court of equity to assist him in doing it. That cannot be done.
The Superior Court is advised to dismiss the bill.
In this opinion Loomis and Granger, Js., concurred; Park, C. J., and Pardee, J., were of opinion that the respondent corporation had no right to revoke the stock dividend which was voted on the 5th of August, 1875, but otherwise concurred ; the former however expressing a doubt whether the transaction of September 11th, 1871, between the respondent corporation and the Gaylord Manufacturing Company could bo sustained.