
    Milton Sutliff v. The Cleveland and Mahoning Railroad Company.
    A railroad company, having a capital stock of $1,500,000, with power, by its charter, to increase the stock to any necessary amount, and with authority to allow and pay interest on its stock, issued its bonds, bearing interest payable semi-annually, and containing a provision that the bonds might, within a specified time, be converted into stock of the road at the option of the holder. Interest was accordingly allowed to the stockholders up to the date of the first dividend, and was paid by issuing to them new stock; the sum so paid, however, not exceeding the net earnings of the road during the time named. Held, that a bondholder, who had been regularly paid the interest on his bonds up to the time of the dividend, and who then elected to convert his bonds into stock, was only entitled to receive stock to the amount of the principal, sum specified in the bonds, and could claim no part of the new stock so issued by the company, nor any compensation or allowance, in stock or otherwise, on account thereof.
    Motion for leave to file a petition in error.
    The plaintiff was the owner of bonds issued by the defendant for the construction and equipment of its road. The bonds bore interest at the rate of seven per cent., payable semi-annually, and contained a provision that the owner might convert them, at any time within ten years from their date, into stock of the company. At the date of the bonds, the capital stock of the company was $1,500,000; but the company had power, by law, to increase it to any necessary amount. The capital stock was subsequently increased to a much larger amount, but not exceeding the actual outlay and necessities of the company. The company was authoi’ized to allow interest upon its stock, and a large part of this additional issue of stock was for interest allowed to the original stockholders on the amount of their stock, from the time of its subscription to the date of the first dividend, amounting to some forty-seven per cent, on their stock, but not exceeding the net earnings of the road. At or about the time of declaring the first dividend, the plaintiff who,up to that time had duly received the interest on his bonds, elected to convert them into stock. He claimed to be entitled to stock equaling in amount the face of his bonds, with forty-seven per cent, interest on the same, so as to place him, as he claimed, on a par with the other stockhol ders. This the directors of the company refused, but tendered him stock to the amount of his bonds. The plaintiff took the stock so offered, and brought his action to recover the remaining stock claimed. The District Court, to which the cause came by appeal, adjudged that he was not entitled to the additional stock, and he now asks leave to file a petition in error to reverse this judgment of the District Court.
    
      Milton Sutliff, attorney for plaintiff in error:
    The plaintiff held bonds of the defendant, convertible into stock of the company at par value; and, when the bonds were presented for conversion, the defendants attempted to comply with their contract to convert by issuing stock of the company previously reduced, or “ watered,” forty-seven per cent.; whereas, the plaintiff was justly entitled to stock at its par value, before it was watered, equal to the principal of his bonds. By the covenant to pay in stock, as expressed in the bonds, and as admitted by the answer, there was due to the plaintiff, of stock, in addition to the watered stock set to his credit by defendants, in their attempted performance, $11,088, and on which there was due at the time of the decree about $6,550, as dividend thereon and interest; and the finding of the Court, that the-plaintiff was not entitled to those amounts, was error.
   "Welch, J.

It seems quite clear to us that the District Court was right in holding that the plaintiff was not entitled to the additional stock claimed. To allow his claim would virtually be to give him interest both upon the stock and upon the bonds. If that was his right, then the longer he delayed his election the more he would receive. The new stock issued to the stockholders took the place of dividends. It might have been declared as dividends, for it appears that it did not exceed the net earnings of the road. Had the plaintiff elected at once to convert his bonds into stock, he would have been entitled to this forty-seven per cent, as interest, or dividends, but would, of course, have received no interest on his bonds. It is to be presumed he received at least an equal percentage, as interest on his bonds. It was for him, and not for the company, to say which he would have. Surely, under his contract, he can not have both. There is no pretense that there was any fraud in the issue of the new stock, that it was not authorized by law, or that it was not founded on a good and sufficient consideration. It took the place of so much money due from the company, and thus inured to the benefit of all the stockholders, the plaintiff included. By the plaintiff's contract, he was entitled to a given amount of “the stock of the company,” and not to that amount of stock with interest or dividends thereon. He has no more right to a part of the stock issued for these dividends than he has to a part of the stock exchanged for bonds, or issued in payment of other debts or. expenditures of the company. It is not pretended that any stock was issued by the company for-which it did not receive fall consideration, unless it be this forty-seven per cent, on the old stock. We think the latter was legitimately issued, and that the plaintiff is entitled to no part thereof.

Motion overruled.

Day, C. J., McIlvaine, Stone, and White, JJ., concurring.  