Latest Important Cases Corporations. Payment of Unearned Dividends Equivalent to Misrepresenta tion. N. Y. The Court of Appeals of New York has handed down a decision reversing the majority decision of the Appellate Division of the Supreme Court for the First Department, and adopting as its own decision the minority decision written by Justice Miller and concurred in by Justice Dowling in the suit of Marx and Moses Ottinger against John R. Bennett and other directors of the American Ice Company. In upholding the sufficiency of the complaint, the court concurred in the minority Appel late Division decision that "one who intentionally deceives another to his injury, no matter how, is accountable for the wrong; that a party is liable for misrepresentations whether by conduct or words, made for another to act upon, if they were calculated to deceive, and if in fact they do deceive such other person into acting in reliance upon them to his injury. It is quite as easy to deceive by acts as by words, and the deed is often more effectual than the word." In the answer to the suit the direc tors of the ice company denied that the dividend had been declared for the pur pose of deceiving any one, and stated that the stock had been publicly sold on the New York and other stock ex changes. With respect to this plan the Court held : "A declaration of a dividend by a going concern implies earnings from which to pay it, and the publication of the fact to such a declaration is calcu lated to induce the public to believe that the dividend has been earned and the corporation is prosperous. . . .
"We have had many illustrations in cases before us of the devices to deceive the public employed by managing di rectors, who misuse their positions to promote stock speculation and the pay ment of dividends out of capital is a familiar one. When that Is done to induce the public to purchase shares of the company and thereby create a ficti tious value, upon which the wrongdoers may trade, they should be held account able precisely as though the like decep tion had been practised by actual misstatements." See Monopolies. Insurance. Construction of Policy — Liability for Damage by Explosion and by Fire. N. Y. In Wheeler v. Phoenix Insurance Co., decided by the New York Court of Appeals, Nov. 3 (N. Y. Law Jour., Nov. 14), a fire insurance policy stated that the company should not be liable for loss occurring from certain causes enumerated "or (unless fire ensues, and in that event, for the damage by fire only) by explosion of any kind." The Court (Haight, J.) held (we quote from the syllabus), that the phrase "unless fire ensues" should be read as meaning "unless fire follows or comes after, or as a consequence of, the ex plosion"; that the words "by explosion of any kind" did not refer to fire as an agency producing the explosion, but to the different kinds of materials which explode, such as powder, gas, dust, etc. If, therefore, as in this case, the prop erty insured is a grain elevator, and a fire starts in one of the rooms causing an explosion of dust which wrecks and destroys the building, the company is liable on the policy.
