Flynn

This was an action at law by Haas Bros., a corporation, to recover certain additional income and profit taxes imposed by the Commissioner of Internal Revenue. A jury was waived by written stipulation of the parties, and the case has been brought here for review on the special findings made by the court below, from which it appears:

That the plaintiff is a corporation organized under the laws of the state of California, engaged in the wholesale grocery business in the city and county of San Francisco, and is and always has been a close family corporation; that until his death, May 31,1916, William Haas was the president and dominant head of the corporation; that on January 1, 1917, and during the year 1917, the capital stock of the corporation was $600,000, divided in 600 shares of the par value of $1,000 each, owned by members of the Haas family, and that during the calendar year 1916 the corporation earned a profit of $290,216.87 in the conduct of its business. That on January 8,1917, the directors of the corporation adopted the following resolutions:

That the resolution declaring a dividend of $288,000 did not express the true intention of the board of directors; that in…

(dissenting). I recognize that, as stated by tbe majority, generally a writing is not conclusive against one who is not a party thereto, and that in a strict sense tbe principle of estoppel is inapplicable. But is that tbe real question here? Admittedly tbe declaration of dividend was effective as to stockholders, for in their brief counsel for tbe corporation say: “We concede that tbe resolution of January 8, 1917, was in terms a legal and effective declaration of dividend.” And again: “In an action by the stockholder against bis corporation to recover a dividend, we concede that tbe vital question would be whether the form (italics mine) of tbe resolution bad tbe quality and effect of a valid dividend declaration. * * * In sueb instances it is not to be supposed that the directors could be beard to say that tbe plain language of their resolution was not intended to mean what it said.”

*513 That being trae, to what possible end the widest inquiry back of the declaration? Being effective to create a dividend, indefeasible as to stockholders, thus constituting a corporate obligation of indebtedness enforceable at law, it was of necessity equally effective to reduce capital…