The Big Bend Land Company was in the process of liquidation. The articles of incorporation provided for preferred stock which "in the event of any liquidation . . . " was " . . . entitled to be paid in full the par value thereof, and all accrued unpaid dividends thereon before any sum shall be paid to or any assets distributed among . . ." the common stock. No dividends had ever been declared or paid, nor had there ever been any surplus profits. After discharging all corporate liabilities, including payment of the par value of the preferred stock, the liquidating trustees brought suit for a declaratory judgment as to the disposition of the substantial assets remaining. A Washington statute provided that "It shall not be lawful for the trustees to make any dividend except from the net profits arising from the business of the corporation, nor divide, withdraw, or in any way pay to the stockholders, or any of them, any part of the capital stock of the company . . . Provided, that this section shall not be construed to prevent a division and distribution of the capital stock of the company which shall remain after the payment of all its debts upon the dissolution of the corporation." The trial court found that the "accrued unpaid dividends" should be paid to preferred shareholders from the assets prior to any distribution to the common shareholders. On appeal, held, affirmed. Hay v. Hay, (Wash. 1951) 230 P. (2d) 791 (1951).
Frank M. Bowen, Jr.,
CORPORATIONS-DISSOLUTION-PAYMENT OF "ACCRUED UNPAID DIVIDENDS" TO PREFERRED SHAREHOLDERS FROM CAPITAL,
Mich. L. Rev.
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