Howell Edmunds Jackson

“ This last ground on which the court rested its judgment is manifestly unsound, for the clause in question, that 'no tax shall ever be laid on said road or its fixtures which will reduce the dividends below eight per cent.,' is clearly not so incapable of any reasonable construction as to be void. ”

“ It is undoubtedly a part of the contract of exemption from taxation contained in the eleventh section of the charter, and as such the corporation is entitled to the benefit thereof. The meaning and intent of the provision was clearly a stipulation on the part of the legislature to forego the exertion of its taxing power to the extent of allowing the corporation to pay its shareholders 8 per cent. dividends from the net earnings of the company. The manifest object of the clause was to invite and encourage the investment of private capital in the enterprise of building the road. ”

“ In the present case it appears that the maximum capital stock authorized by the charter was $10,000,000, and that the stock actually issued by the company at various times during the construction of the road, and outstanding, amounted to the sum of $5,320,600, which, together with the company's bonded indebtedness, fairly represented the cost of building and completing the road. The amount of stock being fixed, it was a matter of mere calculation as to when the profits from net earnings would be sufficient to meet the designated dividend. ”

“ Net earnings' are properly the gross receipts, less the expenses of operating the road to earn such receipts. Interest on debts is paid out of what thus remains; that is, out of the net earnings. Many other liabilities are paid out of the net earnings. When all liabilities are paid, either out of the gross receipts or out of the net earnings, the remainder is the profit of the shareholders, to go toward dividends, which in that way are paid out of the net earnings.' This case was affirmed by this court. 22 Wall. 136.
In Railroad Co. ”

“ The pleadings admitted and the proofs established that since the completion of the road to its original northern terminus on the Mississippi river, in April, 1861, the railroad company had neither earned nor declared any dividend, either on its whole line, or upon any portion of its road lying in the state of Tennessee. ”

“ Railroad Co., Mr. Justice Strong expresses this proposition as follows: 'There is always a tendency to construe statutes in the light in which they appear when the construction is given. It is easy to be wise after we see the results of experience. ”

“ Legislative contracts, especially, should be read in the light of the public policy entertained, and the purposes sought to be accomplished, at the time they were made, rather than at a later period, when different ideas and theories may prevail. ”

“ Tennessee, 95 U.S. 681, the charter of the company contained this provision: 'That said company shall pay to the state an annual tax of one-half of one per cent. on each share of the capital stock subscribed, which shall be in lieu of all other taxes.'
In Railroad v. Hicks, 9 Baxt, 445, the charter granted in 1856 contained the following exemption: 'Sec. 33. Be it enacted, that the capital stock of the said company, the dividends thereon, and the road and fixtures, depots, workshops, warehouses, and vehicles of transportation belonging to the said company, shall be forever exempt from taxation ”

“ Again, dividends can be rightfully paid only out of profits. Corporations are liable to be enjoined by shareholders or creditors from making a distribution in dividends of its capital. Tayl. Corp. § 565, and authorities cited.
The term 'profits,' out of which dividends alone can properly be declared, denotes what remains after defraying every expense, including loans falling due, as well as the interest on such loans. Corry v. Railroad Co., 29 Beav. 263.
The 'net earnings' of corporations, out of which profits are distributable in dividends, are thus defined in St. ”