Corporations – Dividends – Date From Which Cumulative Dividends Accrue

Defendant corporation issued preferred stock in 1937 under a charter amendment which provided that such stock should ” … pay dividends at the rate of six percent … , but when not so earned and paid, the dividends so provided shall be cumulative. Said dividends shall be paid annually beginning the Fifteenth (15th) day of March, 1938… ” The plaintiff held 100 shares of defendant’s preferred stock issued in 1945, and the above provision appeared on his certificate. During dissolution of the defendant in 1955, the plaintiff claimed cumulative dividends from 1938 as an innocent purchaser for value, basing his contention on the language of the certificate that dividends would be paid beginning March 15, 1938. In the trial court, held, judgment for the defendant. The language of the certificate did not bind the corporation to pay dividends for any period prior to issuance of the stock. Blandin v. United North and South Development Co., (Del. Ch. 1956) 121 A. (2d) 686.