Image
Copyright & Fair-use Agreement
UNLV Special Collections provides copies of materials to facilitate private study, scholarship, or research. Material not in the public domain may be used according to fair use of copyrighted materials as defined by copyright law. Please cite us.
Please note that UNLV may not own the copyright to these materials and cannot provide permission to publish or distribute materials when UNLV is not the copyright holder. The user is solely responsible for determining the copyright status of materials and obtaining permission to use material from the copyright holder and for determining whether any permissions relating to any other rights are necessary for the intended use, and for obtaining all required permissions beyond that allowed by fair use.
Read more about our reproduction and use policy.
I agree.Information
Digital ID
Permalink
Details
Member of
More Info
Rights
Digital Provenance
Publisher
Transcription
Courts have recogn ized the r ig h t o f corporation s engaged in mining, whose operation s o f course amount to a wasting o f the c a p ita l, to declare dividen ds from the p r o f it s d erived from the business, although such p r o fit s must necess a r ily res u lt in the redu ction o f the amount of the c a p ita l o f the company. One o f the lead in g cases on th is p oin t is th at of E x c e ls io r e t c . Co. v . P ie r c e , 90 C al. 131. In th is case it is s a id : " The tern 'c a p it a l s to ck ' has a double meaning as a p p lied to co rp o ra tio n s. In one sense, i t is the sum mentioned in the a r t ic le s of in co rp ora tio n as the amount o f the c a p ita l stock , in other words, i t is the share c a p ita l or nominal c a p it a l, and does net n e c e s s a rily represent a corresponding amount o f actu al c a p it a l. In case o f mining corp ora tion s, i t is always a r b itr a r y and g e n e ra lly extravagant in amount." "The c a p ita l stock r e fe r r e d to in the s ta tu te , howe v e r, (C iv . Code , Sec .309) is the actu a l p rop erty of the corp oration con tribu ted by the share-holders o f the nominal c a p it a l. In th is case the nominal or share c a p ita l o f the p l a i n t i f f was f i v e m illio n d o lla r s . I t s actu al c a p ita l was it s mining and oth er p ro p erty (le s s the debt w ith which i t was encumbered) re c e iv e d in exchange fo r the shares which i t issued, and th is actual c a p ita l was what i t was forbidden to d iv id e ." "T h is in h ib itio n , however, did net extend to the net proceeds o f i t s mining op eration s; fo r a mining corporatio n , lik e any other corp oration organized fo r the purpose o f u t iliz in g a wasting p ro p e r ty ,- a p ro p erty that can be used only by consuming i t , - as a mine, a le a s e , or a p a ten t, is not deemed to have d ivid ed i t s c a p ita l m erely because i t has d is trib u te d the net proceeds o f i t s mining op eration s, although the necessary r e s u lt i s th at so much has been subtracted from the substance o f i t s e s ta te . (Morawetz on c o rp o ra tio n s , sec1. 442; Lee v . Neughatel Asphalte C o., L.R . 41 Ch. L iv . 2 4 ). I t may d is tr ib u te (4)