CHAP. XV.] LEGAL RELATIONS AMONG SHAREHOLDERS. [§ 801. Consequently, since a "stock dividend" is no real dividend or distribution of profits, it would seem that even if such " dividend " were " declared out of profits," the stock so issued could not be regarded as income ; * for it must be conceded that the life-tenant has no right to claim corporate earnings as income of the trust created in his favor until the corporate management has voted to distribute them as a dividend ; and if the corporate management decides on declaring a stock dividend, what it really decides on, is not to declare a dividend at all. 2 down the percentage of dividends, while it increased their amount. But, none the less, the issue of the stock would itself be no dividend. 1 The rule that "stock dividends " are principal seems to be gaining ground. So held in Gibbons v. Mahon, 136 U. S. 549; Spooner v. Phillips, 62 Conn. 62. Regarded as settled in Mills v. Britton, 64 Conn. 4; and see the Massachusetts cases in § 800, note. 2 This rule might seem to work hardship on the life-tenant. But, if so, the real cause of his hardship is the action of the corporate man- agement in not declaring a dividend; and possibly, in an extreme case, the life-tenant might compel the declara- tion of a dividend. 789
