Wabash Railway Company v. Barclay, 280 U.S. 197 (1930)

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Wabash Railway Company v. Barclay

Nos. 37 and 38

Argued December 2, 1929
Decided January 6, 1930
280 U.S. 197

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

When the net profits of a corporation out of which a dividend might have been declared for the preferred stock are justifiably applied by the directors to capital improvements, the claim of the stock for that year is gone, if by the terms of the articles of incorporation and the certificates the preferential dividends are not to be cumulative. The fact that there were profits in that year out of which dividends might have been (but were not) declared does not entitle such stock to a correspondingly greater preference over other stock when the profits of a later year are to be divided. P. 203.

30 F.2d 260 reversed.

Certiorari, 279 U.S. 828, to review a decree of the circuit court of appeals sustaining a bill brought against the railway company and its directors by holders of preferred shares to control the apportionment of dividends as between the plaintiffs and shareholders of other classes. The district court had dismissed the bill.