Where stockholders, including directors, met and agreed to a division of profits, but without formally declaring a dividend, their action was equivalent to such declaration; Spencer v. Lowe, 198 Fed. 961, 117 C. C. A. 497. Generally courts will not interfere in behalf of a common stockholder to compel the declaration of a dividend except in case of fraud or abuse of discretion ; Howell v. R. Co., 51 Barb. (N. Y.) 378; Pratt v. Pratt, Read & Co., 33 Conn. 446; Smith v. Mfg. Co., 29 Ala. 503; Hunter v. Roberts, Throp & Co., 83 Mich. 63, 47 N. W. 131; nor will equity restrain the declaration of a dividend where the propriety of declaring one is fair ly within the discretion of the directors; 41 Ch. Div. 1. Dividends may be applied by the corporation to debts due by the stock holder where the right of set-off would ex ist with respect to other creditors; Ex parte Winsor, 3 Sto. 411, Fed. Cas. No. 17,884 ; but this right exists only where the dividend has been declared and therefore a stock holder cannot refuse to pay interest due to the corporation in anticipation that a div idend will be declared; Ely v. Sprague, 1 Clarke, Ch. (N.. Y.) 351; It has been held that unpaid dividends are assets of the cor poration available for creditors in case of its insolvency ; Curry v. Woodward, 44 Ala. 305; but this view is disapproved and de clared unsound; 2 Thomp. Corp. § 2134. Dividends improperly declared may be re called; id. § 2135; and even if paid, it has been held that they may be reclaimed ; Lex ington Life, Fire & Marine Ins. Co. v. Page, 17 B. Mon. (Ky.) 412, 66 Am. Dec. 165; but this decision is doubted; 2 Thomp. Corp. § 2135; although approved in a case which did not require the court to go so far but only to hold that the dividend, not having been paid, was not collectible; Slayden v. Coal Co., 25 Mo. App. 439.
But where the directors, in fraud of a stockholder, set aside all the earnings for working capital, equity required the direc tors to declare a dividend out of the net earnings not needed for the corporate busi ness; Lawton v. Bedell (N. J.) 71 Atl. 490. Equity will order a surplus of earnings of a life insurance company to be distributed to stockholders, if not needed for its busi ness and the directors have arbitrarily or unreasonably withheld them ; Blanchard v. Ins. Co., 78 N. J. Eq. 471, 79 Atl. 533.
When the fact that a dividend has been voted by the directors is not made public or communicated to the stockholders, and no fund is set apart for payment, the vote may be rescinded; Ford v. Thread Co., 158 Mass. 84, 32 N. E. 1036, 20 L. R. A. 65, 35 Am. St. Rep. 462. There can be no discrimina tion among stockholders of the same class in respect to dividends, but if one stockhold er is discriminated against, he cannot re cover his share ratably from the others, until at least he has established his right as a creditor of the company and pursued his remedy against it ; Peckham v. Van
Wagenen, 83 N. Y. 40, 38 Am. Rep. 392.
A stockholder cannot recover the profits made by a corporation until a dividend has been declared; Minot v. Paine, 99 Mass. 101, 96 Am. Dec. 705 ; Lockhart v. Van Alstyne, 31 Mich. 78, 18 Am. Rep. 156; Appeal of Moss, 83 Pa. 269, 24 Am. Rep. 164; Goodwin V. Hardy, 57 Me. 143, 99 Am. Dec. 758 ; Bev eridge v. R. Co., 112 N. Y. 1, 19 N. E. 489, 2 L. R. A. 648; but after a dividend has been declared, and a demand made therefor by a stockholder, he may sue in assumpsit for the amount due him; Jones v. R. Co., 57 N. Y. 196; Brown v. Nay. Co., 49 Pa. 270; and a stockholder has been allowed to follow the amount of his dividend into the hands of the receiver of the company ; In re Le Blanc, 14 Hun 8; Beers v. Spring Co., 42 Conn. 17 ; the declaration of the dividend is an admis sion of indebtedness in money ; Ehle v. Bank, 24 N. Y. 548; and it is no defence to show that the earnings were received in other prop erty ; id. The earnings of the corporation are part of the corporate property, and, until separated from the general mass, the inter est of the stockholders therein passes with the transfer of the stock ; and this is irre spective of the time during which earnings have accrued. By the declaration of .a divi dend, however, the earnings, to the extent declared, are separated from the general mass and are to the then stock hqlders, who become creditors of the corpo ration for the amount of the dividend. The earnings represented by the dividend, al though the fruit of the general property of the company, are no longer represented by the stock, but become a debt of the com pany to the individual who, at the time of the declaration of the dividend, was the owner of the stock. That the dividend is payable at a future date makes no distinc tion in the right. The debt exists from the time of the declaration of the dividend, though payment be postponed. This right could of course be transferred, by special agreement, with the stock, but not other wise. The dividend would not pass as an incident of the stock; Wheeler v. Sleigh Co., 39 Fed. 347; Clark v. Campbell, 23 Utah 569, 65 Pac. 496, 54 L. R. A. 508, 90 Am. St.. Rep. 716.
Mandamus will not lie to compel the pay ment of dividends declared by a private cor poration; Van Norman v. Mfg. Co., 41 Mich. 166, 49 N. W. 925.
Dividends must be so declared as to give each stockholder his proportional share of profits; Jones v. R. R. Co., 57 N. Y. 196; Ryder v. R. Co., 13 Ill. 516; L. R. 3 Ch. 262; Atlantic & 0. Telegraph Co. v. Com., 3 Brewst. (Pa.) 366 ; and if one person is ex cepted, he may sue for his dividends, for the reason that such exception is void; Hill v. Coal & Min. Co. (Mo.) 21 S. W. 508. They can properly be declared only out of profits actually earned; ' and when improperly de clared and paid, they may be recovered back ; Comstock v. Drohan, 71 N. Y. 9.