Shareholding

“ When, therefore, all of the property of the corporation is assessed,-its franchise and all of its other property of every character,-then all of the stock of the corporation is assessed, and the mandate of the Constitution is complied with. This property is held by the corporation in trust for the stockholders, who are the beneficial owners of it in certain proportions called shares, and which are usually evidenced by certificates of stock. The share of each stockholder is undoubtedly property, but it is an interest in the very property held by the corporation. ”

“ The language is general, so general that it includes everything, not excepting good will, dividend-earning power, and the like, for they are 'capable of private ownership.' They belong to the corporation. There is no good will in a share of stock over and above the good will which belongs to the corporation, and, if the corporation sells and conveys all that it possesses 'capable of private ownership,' it sells and conveys its good will, and there is nothing left of good will or anything else belonging to the stockholders. ”

“ The general power to perform all corporate acts refers to the ordinary business transactions of the corporation, and does not extend to a reconstruction of the body itself, or to an enlargement of its capital stock. A corporation, like a partnership, is an association of natural persons who contribute a joint capital for a common purpose, and although the shares may be assigned to new individuals in perpetual succession, yet the number of shares and amount of capital cannot be increased, except in the manner expressly authorized by the charter or articles of association. ”

“ Nothing, I submit, can be plainer than the fact that the value of the capital stock of a corporation represents all its property, franchises, good will,-indeed, everything owned by it wherever situated. ”

“ The collective capital of a corporation is divided into shares of equal value. Ownership of a share or shares in a corporation is evidenced by formal certificates of stock. Each share carries with it the same privileges, powers, and duties of ownership as every other share of the same class. It represents a pro rata share of the total interest of its class. There may be several different kinds or classes of ownership within the corporation, these classes will have different privileges, and there may be other points of differentiation. ”

“ They show that he or his assignors, immediate or remote, have contributed capital to the enterprise, that he is entitled to a corresponding interest proportionate to the whole, entitled to have the property and business of the company devoted during the corporate existence to attainment of the common objects, entitled to vote at stockholders' meetings, to receive dividends out of the corporation's profits if and when declared, and, in the event of liquidation, to receive a proportionate share of the net assets, if any, remaining after paying creditors. ”

“ When the farm begins to produce you are to have all you and your family—this is an illustration, you know—can consume for your own use. The balance is to be sold, and one-third of the proceeds is to be paid into the treasury of the company and credited on your purchase of shares. When you have paid for all your shares in this way you will have no further payments to make, except such levy as may be made by the company for running expenses. You, as a shareholder of the company, will have a voice with the other shareholders in determining what that levy shall be. ”

“ The incorporation of a single individual is not legally possible in this country.
The corporation, because of its peculiar advantages over other forms of business organization, has become the accepted form for most large enterprises. The gathering together of large capital funds, the ease and efficiency of management and control, continuous life, the facility of transfer of ownership, and the limited liability of the stockholders, make the corporate form attractive to the investor and absolutely necessary to the large businesses carried on today. ”

“ The owner of the shares of stock in a company is not the owner of the corporation's property. He has a right to his share in the earnings of the corporation, as they may be declared in dividends, arising from the use of all its property. ”

“ Secondly, the directors of a joint stock company have always the management of a large capital, the joint stock of the company, a part of which they may frequently employ, with propriety, in building, repairing, and maintaining such necessary forts and garrisons. But the directors of a regulated company, having the management of no common capital, have no other fund to employ in this way but the casual revenue arising from the admission fines, and from the corporation duties imposed upon the trade of the company. ”

“ For example, if we were to inquire whether or not the profit would have been ordinary income had an enterprise been individually owned, would we treat each taxpaying shareholder differently and look only to his trade or business or would we consider the matter in terms of the trade or business of any or at least a substantial number of the shareholders? ”

“ Therefore, when a distribution of earnings is made by a corporation among its stockholders, the question whether such distribution bution is an apportionment of additional stock representing capital, or a division of profits and income, depends upon the substance and intent of the action of the corporation, as manifested by its vote or resolution; and ordinarily a dividend declared in stock is to be deemed capital, and a dividend in money is to be deemed income, of each share. ”

“ Grant all that, still it is true that the owner of a share of stock in a corporation holds the share with all its incidents, and that among those incidents is the right to receive all future dividends, that is, his proportional share of all profits not then divided. Profits are incident to the share to which the owner at once becomes entitled provided he remains a member of the corporation until a dividend is made. ”

“ Surely the legislative intent that the full value of the stock authorized and required to be subscribed, in other words, the entire capital, shall be, in fact, paid in when required,-that it shall be real, and not merely nominal,-is plain enough when the authority to exist as a corporation and to do business is given on condition that the capital subscribed shall not be less than a specified sum. ”

“ The capital paid in and represented by the stock, is entrusted to the custody and husbandry of the corporation; but, that artificial and transferable commodity, brought into life by the charter, endued with all its faculties by the charter, and denominated bank stock, is just as much the separate property, and at the disposal of the respective owners, clear of all corporate control, as their several lands, chattels and choses in action. ”

“ Reserved and accumulated earnings, so long as they are held and invested by the corporation, being part of its corporate property, it follows that the interest therein, represented by each share, is capital, and not income, of that share, as between the tenant for life and the remainder-man, legal or equitable, thereof. ”

“ In Great Britain it is well settled that where a corporation, whether authorized or unauthorized by law to increase its capital stock, accumulates and invests part of its earnings, and afterwards apportions them among its shareholders as capital, the amount so apportioned must be deemed an accretion to the capital of each share, the income of which only is payable to a tenant for life. ”

“ The economic entity of a railway company may be constituted a special economic corporation for the purpose of mortgage. [2]
(b) In default of payment of the mortgage liability, the whole, i.e. the corporation, may be subjected to auction. This provides the means for transferring, together with the material properties, the original permission of the Government, namely, the licence, to the purchaser, viz. a new company.
(c) A company, which in reality may be taken as a syndicate, may be formed for advancing money by means of debentures. ”

“ The directors of a stock corporation shall not make dividends, except from the surplus profits arising from the business of such corporation, nor divide, withdraw, or in any way pay to the stockholders or any of them, any part of the capital of such corporation, or reduce its capital stock, except as authorized by law. ”

“ When a business corporation, instituted for the purposes of gain or private interest, is dissolved, the modern doctrine is that its property, after payment of its debts, equitably belongs to its stockholders. ”

“ So long as every dollar of stock issued by a corporation is represented by a dollar of property, no harm can result to individuals or the public from distributing stock to stockholders.... All that can be required in any case is that there shall be an actual capital in property representing the amount of share capital issued. ”

“ The immediate gain to corporations, and trustees, and to proprietors who might be disposed to sell, would be considerable, for they would continue to get their present rents, without deductions, and would, besides, be able to sell the proprietary right in the land, and its capacity for future increase in value, for whatever they would fetch in the market. This would suit the share-system, for the land might then be bought with or without the rent, as it might happen in each case. ”

“ Relation of the single tax to socialism. (Young, The Single Tax Movement in the United States, pages 307-312.)
CHAPTER XII PROFIT SHARING AND COÍPERATION A. PROFIT SHARING 110. THE NATURE OF PROFIT SHARING.—The essence of profit sharing is that the workmen in a given enterprise receive, in addition to their regular wages, a share in the profits which would ordinarily go entirely to the entrepreneur. The share going to the employees varies with the establishment, but generally from one quarter to three quarters of the profits are divided among them. ”

“ Much of the property of the country is in the hands of incorporated or joint-stock companies; the business in which they are engaged being of a magnitude requiring an outlay of capital that can be met only by associated wealth. ”

“ But to take a share by transfer on the books means to become a member of the concern. The person who appears on the books of the corporation as the stockholder is the stockholder as between him and the corporation, and his rights with regard to the corporate property are incident to his position as such. ”

“ The capital stock shall be divided into shares of one hundred dollars each, and shall be deemed personal property. The shareholders of the association shall be hald individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such association to the extent of the amount of their stock therein at the par value, in addition to the amount invested in such shares. ”

“ The great carrying trade by land is governed by substantially the same principle; being in the hands of corporate associations, whose members are not personally liable for acts of the employees, but risk only the amount of their capital stock in the corporation. ”

“ The entire country has shown a marked growth in the number of this class, and it would seem that no one is too poor to hold a share in some corporation. Indeed, to read the arguments of the legal retainers of the magnates in the Income Tax case, and in the various trust cases that from time to time arise, one would think that the main body of the shareholders of the nation was composed of workingmen, widows, and orphans. ”

“ Financiers, with the aid of lawyers, devised long ago two different methods by which a corporation can, without increasing its indebtedness, keep for corporate purposes accumulated profits, and yet, in effect, distribute these profits among its stockholders. ”

“ Holders of preferred stock, as there provided, are entitled to receive all the net earnings of the company which may be divided pursuant to the indenture in each year up to $7 per share, and to share in any surplus beyond $7 per share which may be divided upon the common stock, which in substance and legal effect is the same regulation as that contained in the circular or plan, and all the other writings upon the subject which were given in evidence at the final hearing. ”

“ We have a million or a million and a half of capital, and, conducting the business of the bank within the law applied to bankers, we can earn any dividend we like, and we can divide it, even up to 40 or 50 per cent., and it has been done, and nobody finds any fault. Now, we might start a manufacturing establishment and we can divide any profits that we can legally make up to 40 or 50 or 100 per cent., or we can start a mercantile establishment and conduct it so as to bring any profit—there is no limit so long as we are within the laws of trade. ”