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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
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