Computervision International Corp. - Page 44

                                       - 44 -                                         
          Corporations, secs. 750-784 (1992).  Consequently, a                        
          corporation’s board may ratify an unauthorized dividend payment,            
          and, absent intervening rights of third parties, the ratification           
          is retroactive.  Meyers v. El Tejon Oil & Refining Co., 174 P.2d            
          1, 2-3 (Cal. 1946); Milligan v. G.D. Milligan Grocer Co., 233               
          S.W. 506, 510 (Mo. Ct. App. 1921).  In the instant case, no                 
          intervening rights of third parties intervened between                      
          performance and the subsequent ratification.  Although we have              
          found no Massachusetts case directly on point, it appears to us             
          that a corporation could effectively ratify a dividend in                   
          Massachusetts under the circumstances of the instant case.  See,            
          e.g., Town of Canton v. Bruno, 282 N.E.2d 87, 93 n.8 (Mass.                 
          1972);  Shoolman v. Wales Manufacturing Co., 118 N.E.2d 71, 75              
          (Mass. 1954); Rochford v. Rochford, 74 N.E. 299, 300 (Mass.                 
          1905); McDowell v. Rockwood, 65 N.E. 65, 67 (Mass. 1902).  In the           
          instant case, the directors of CVI declared dividends effective             
          as of the last day of each of CVI’s relevant taxable years.  We             
          consider the declarations of dividends to have effectively                  
          ratified the distributions made prior to the close of CVI’s                 
          relevant taxable years.                                                     
               As with the receivables, State law is only one factor to               
          consider.  Other circumstances surrounding the transfers in issue           
          also indicate that ownership of the funds transferred to CV                 
          passed to it by the close of CVI’s relevant taxable years.  Both            
          CV and CVI intended that, prior to each transfer, CVI would                 
          continue to qualify as a DISC and would satisfy the 95 percent of           



Page:  Previous  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  49  50  51  52  53  Next

Last modified: May 25, 2011