This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated.1905 Excerpt: ... Where a corporation had invested earnings in the purchase of its own stock held by a trustee, a distribution of this stock to its shareholders was held to be a dividend of income. (Leland v. Hayden, 102 Mass. 542.) Where a manufacturing corporation had retained a large amount of its earnings, part of which it invested in western lands, in government bonds, and in railroad stocks, it was held that a large cash dividend based upon such floating capital belonged to income. (Matter of Rogers, 161 N. Y. 108; see also Stewart v. Phelps, 71 App. Div. 91, 173 N. Y. 621.) Dividends out of Increases to Working Capital. It is a very common practice for corporations to devote surplus earnings to enlarging and improving the working capital of the concern, without increasing the capital stock. Does the investment of earnings in the working capital of the company permanently capitalize the earnings, so that a subse mere lapse of time, though that may be the practical effect in cases where in consequence thereof it becomes difficult or impossible to distinguish them from capital. So long as their identity is preserved, we do not see why the directors may not regard them as profits and treat them accordingly.... In order to become capital they should be applied, we think, in some effectual way to a permanent increase of the property which is used in the business of the corporation. They may be set aside as matter of bookkeeping for such a nse, but until actually appropriated to that purpose they remain, it seems to us, profits, and the corporation and its directors may deal with them as such." Morton, J., in Hemenway v. Hemenway, 181 Mass. 406, 410. quent cash dividend based upon them is a dividend which a trustee must treat as belonging to principal? The opinions bearing o...