Sec. 14. A creditor whose debtor is the owner of a certificate shall be entitled to such aid from courts of appropriate jurisdiction by injunction and otherwise, in attaching such certificate as is allowed at law or in equity in regard to property which cannot readily be attached or levied upon by ordi nary legal process.
Sec. 15. There shall be no lien in favor of a corporation upon the shares represented by a certificate or any restriction upon their transfer by virtue of any by-law, or other wise, unless the right is stated upon the cer tificate.
Preferred stock entitles the holder to a priority in the dividends or earnings, over common stock. Guaranteed stock is the same thing; Taft v. R. Co., 8 R. I. 310, 5 Am. Rep. 575.
A corporation may issue preferred stock, in the absence of any prohibition; Continen tal Trust Co. v. R. Co., 86 Fed, 930; [1897] 1 Ch. 361; Lockhart v. Van Alstyne, 31 Mich. 76, 18 Am. Rep. 156; Kent v. Min. Co., 78 N. Y. 159; provision therefor is often con tained in the by-laws. If, there is no provi sion in the charter or the law, unanimous consent of stockholders is required; Lind. Comp. 396; Lockhart v. Van Alstyne, 31 Mich. 76, 18 Am. Rep. 156. After a company has been organized, and all or a part of the stock issued, preferred stock cannot be issued against the objection of minority holders of common stock; 4 De G., J. & S. 672; Kent v. MM. Co., 78 N. Y. 159; Cook, St. & Stockh. § 268; its issue will be enjoined in such case; 32 L. J. Ch. 711. But see 2 De G. & S., where an injunction was refused at the suit of five dissenting stockholders, the court declining, howe er, to declare the issue le gal. An objecting stockholder must seek re lief promptly ; Kent v. Min. Co., 78 N. Y. 159 ; Taylor v. R. Co., 13 Fed. 152. Legisla tive power to issue preferred stock may be granted subsequently to the organization of the corporation; Covington v. Bridge Co., 10 Bush (Ky.) 69 ; Rutland & B. R. Co. v. Thrall, 35 Vt. 536. The terms or provision under which preferred stock is issued are matters of contract, to be gathered from the charter, by-laws, votes of Stockholders, or directors, ete.; Bailey v. R. Co., 17 Wall. (U. S.) 96, 21 L. Ed. 611; Gordon's Mfrs v. R. Co., 78
Va. 501, L. R. 20 Eq. 556; Rogers v. Land Co., 134 N. Y. 197, 32 N. E. 27.
There is no condition implied in a mem orandum of association of a company that all shareholders are to be on an equality and a Company whose memorandum and original articles do not authorize the issue of preference shares, can alter its articles so as to do so; [1897] 1 Ch. 361.
The holder of preferred stock is not a cred itor of the corporation; St. John v. R. Co., 22 Wall. (U. S.) 136, 22 L. Ed. 743 ; Doe v. Transp. Co., 78 Fed. 64; Belfast & M. L. R. Co. v. Belfast, 77 Me. 445, 1 Atl. 362 ; Miller v. Ratterman, 47 Ohio St. 141, 24 N. E. 496; 61 L. J. 621; creditors have a priority over preferred stockholders; Warren v. King, 108 U. S. 389, 2 Sup. Ct. 7,_9, 27 L. Ed. 769; Chaffee v. R. Co., 55 Vt. 110. It seems to have been held that a mortgage to secure preferred stock is valid. See Gordon's Ex'rs v. R. Co., 78 Va. 501; Miller v. Ratterman, 47 Ohio St. 141, 24 N. E. 496.
Preferred stockholders are entitled to divi dends only from net earnings ; Lockhart v. Van Alstyne, 31 Mich. 76 ; Warren v. King, 108 U. S. 389, 2 Sup. Ct. 789, 27 L. Ed. 769; Moraw. Pr. Corp. 457; an engagement to pay dividends when not earned, or out of capi tal, is void; L. R. 22 Ch. D. 349; Pittsburg & C. R. Co. v. Allegheny County, 63 Pa. 136 ; though they may be paid out of gross earn ings, if the statute so directs ; Gordon's Ex'rs v. R. Co., 78 Va. 501. A general guarantee of dividends by a railroad company means only when earned; Miller v. Ratterman, su pra.
But dividends may be paid though the company a floating debt; Hazeltine v. R. Co., 79 Me. 411, 10 Atl. 328, 1 Am. St. Rep. 330; but see Chaffee v. R. Co., 55 Vt. 110. Profits of a year can be divided although there was a debit balance in the years be fore; [1901] 2 Ch. 184. The directors may ordinarily exercise a reasonable discretion as to declaring dividends, even though there be net earnings applicable thereto ; New York, L. E. & W. R. v. Nickals, 119 U. S. 296, 7 Sup. Ct. 209, 30 L, Ed. 363 ; but if they act oppressively, equity will interfere ; Ha zeltine v. R. Co., 79 Me. 411, 10 Atl. 328, 1 Am. St. Rep. 330.