time, it belongs to the corporation precisely as any other property it may own. When a distribution of the funds of a corporation, whether of the whole or of a part, is ordered, it is to be made between those who, at that time, are the owners of its stock. The law on this subject is very clearly stated by Mr. Justice Sargent, in March v. Eastern R. R. Co., 43 N. H. 520. The purchaser of a share of a stock in a corporation,' he remarks, 'takes the share with all its incidents, and among these is the right to receive all future dividends, that is, its proportional share of all profits not then 'divided, and as we understand the law and the usage of such corporations, it is wholly immaterial at what times and from what sources these profits have been earned; they are incident to the share, to which a purchaser becomes at once entitled, provided he remains a member of the corporation until a dividend is made.' * Question 682: The M corporation has on May 20th undivided profits sufficient to declare a 7% dividend. A is owner of stock in M corporation. He sells it to B on May 20th. On May 21st the corporation declares a dividend. The dividend is by its terms made payable July 1st. On June 1st B sells to C, who owns until after July 1st. Who is entitled to the dividend? § 718. (Corporations, Sec. 82.) Dividends upon preferred stock. (See § 665.) PART III THE DIRECTORS AND OFFICERS OF A CORPORATION CHAPTER 90 DIRECTORS A. The Function and Composition of the Directorate. A. The Function and Composition of the Directorate. §§ 719-722. (Corporations, Secs. 83-86.) Case 683. Wight v. R. Co., 117 Mass. 226. GRAY, C. J.: "Although the directors of a railroad corporation are usually chosen by the stockholders from their own number, there is no rule of law that makes the holding of stock an indispensable qualification of a director, unless prescribed by some act of the legislature or by-law of the corporation." Question 683: May one not a stockholder be a director? (Note: It is usual of course, to require that a stockholder be a director, but in the absence of statutory provisions, or charter or by-law requirement, a director need not be a stockholder.) Case 684. Com. v. Hemingway, 7 L. R. A. (Pa.) 360. WILLIAMS, J., delivered the opinion of the Court: "In the case of Detwiller v. Com., ante, p. 357, in which an opinion has been filed at the present term, we have considered the question: Can a citizen of the United States, who is not a citizen of Pennsylvania, become a stockholder in the Farmers & Mechanics Institute of Northampton County?' We are now to push our inquiries one step further, and determine whether one who is not a citizen of the United States, but is, and for many years has been, a resident and property holder in Pennsylvania and in Northampton County, can become a stockholder in the same association; and whether, if he may become a stockholder, he is entitled to vote as such at the stockholders' meetings; and finally, whether he may be legally elected a director of the association. For the reasons given in Detwiller v. Com., supra, we think he may become a stockholder. The stock being personal property, he may acquire it by gift or purchase. An alien could at common law buy personal goods, and sell them; and, except in the case of an alien enemy, there was no restriction upon trade with aliens. If he can acquire the stock, he can acquire with it all the rights and privileges which its ownership confers, among which is the right to have a voice in the control of the enterprise, and the selection of those who are to conduct its affairs. He may therefore vote in the same manner, and with the same effect, as any other stockholder may do. Why may he not become a director? The office is not a political one." Question 684: May an alien be a stockholder? A director? (Note: A stockholder may by the laws of all states be a nonresident or an alien. Ordinarily by by-law or statute a director must be a stockholder and it may be required that he be a resident of the state.) (Note: A director's title to his office may be contested in the courts. The usual action is an action in a court of law (as distinguished from a court of equity) by quo warranto proceedings. But a court of equity will take jurisdiction when the affairs of the corporation are in such condition by reason of the contest that immediate control by receivership or injunction or otherwise is necessary.) B. The Responsibilities and Rights of Directors. §§ 723-725. (Corporations, Secs. 87-89.) Case 685. Twin Lick Oil Co. v. Marbury, 91 U. S. 587. Facts: Marbury was a stockholder and a director in the complainant corporation. The corporation became embarrassed in 1867 and borrowed $2,000 from Marbury, for which a note was given secured by mortgage on all of the property of the corporation. The property was sold under the terms of the mortgage to effectuate the security, and was bought in by defendant Marbury. This bill is filed four years later to have Marbury declared a trustee of such property and for an accounting of the rents and profits. The bill charges that defendant abused his trust relation to the company to take advantage of its difficulties and to buy its property at a sacrifice, concealing material facts. The Court finds from the evidence that defendant loaned the money in good faith, and honestly for the assistance of the company, and took reasonable security, and that when the money was due there was no prospect of it being paid and the property was then sold, as the only means whereby defendant could get back his money, and that defendant took no advantage of his position and made no concealment. Point Involved: Whether a contract by a director with a corporation is voidable or void; whether laches will bar a suit by the corporation (or its stockholders) to set aside a voidable contract by a director. "The first question which arises in this state of the facts is, whether defendant's purchase was absolutely void. "That a director of a joint-stock corporation occupies one of those fiduciary relations where his dealings with the subject-matter of his trust or agency, and with the beneficiary or party whose interest is confided to his care, is viewed with jealousy by the courts, and may be set aside on slight grounds, is a doctrine founded on the soundest morality, and which has received the clearest recognition in this court and in others. Koehler v. Black River Falls Iron Co., 2 Black. 715; Drury v. Cross, 7 Wall. 299; Luxenburg R. R. Co. v. Maquay, 25 Beav. 568; The Cumberland Co. v. Sherman, 30 Barb. 553; 16 Md. 456. The general doctrine, however, in regard to contracts of this class, is, not that they are absolutely void, but that they are voidable at the election of the party whose interest has been so represented by the party claiming under it. We say, this is the general rule: for there may be cases where such contract should be void ab initio; as when an agent to sell buys of himself, and by his power of attorney conveys to himself that which he was authorized to sell. But, even here, acts which amount to a ratification by the principal may validate the sale. "The present case is not one of that class. While it is true that the defendant, as a director of the corporation, was bound by all those rules of conscientious fairness which courts of equity have imposed as the guides for dealing in such cases, it cannot be maintained that any rule forbids one director among several from loaning money to the corporation when the money is needed, and the transaction is open, and otherwise free from blame. No adjudged case has gone so far as this. Such a doctrine, while it would afford little protection to the corporation against actual fraud or oppression, would deprive it of the aid of those most interested in giving aid judiciously, and best qualified to judge of the necessity of that aid, and of the extent to which it may safely be given. "There are in such a transaction three distinct parties whose interest is affected by it; namely, the lender, the corporation, and the stockholders of the corporation. "The directors are the officers or agents of the corporation, and represent the interests of that abstract egal entity, and of those who own the shares of its stock. One of the objects of creating a corporation by law is to |