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the payment o f i t s debts, and they cannot la w fu lly he d is trib u te d among the stock h old ers, even in p a rt, to the p reju d ice o f c r e d ito r s . * * * * * I t is a s e t t le d r u le , th e r e fo r e , even in the absence of any sta tu to ry p r o v i­sion s, th at a corp oration cannot la w fu lly d ecla re dividends out of i t s c a p ita l stock, and thereby reduce the same, or out o f assets which are needed to pay the corporate debts. They can be declared only out of surplus p r o f i t s . " Again, in Sec. 520, i t is s ta te d : MI t is c le a r th at there cannot be surplus or net p r o f it s fo r the purpose of d e cla rin g a d ividen d, unless the t o t a l value of the assets of the corp ora tion a t the time i t is proposed to d ecla re the d ividen d, exceeds the amount^ o f i t s c a p ita l stock a f t e r deducting a l l expenses which have been incu rred, and a l l lo s s e s which have been sustained. I t may be la id down as a gen eral p ro p o si­tio n , th e r e fo r e , su bject to the q u a lific a tio n s shown in the fo llo w in g s ectio n s, th at the surplus or net p r o f it s o f a corp ora tion are the d iffe r e n c e between the t o t a l present value of i t s a s s e ts , a ft e r deducting lo sses and l i a b i l i t i e s , and the amount o f i t s c a p ita l sto ck ." Morawetz on co rp ora tion s, in Sec. 437, e t s e q ., la y s down the same gen eral p rin c ip le . In W illiam s v . Western Union Telegraph Company.93 U. Y. 162, i t is s a id : "In Barry v . Merchants Ex. Co. (Sandf. Ch. 280) Vice C hancellor Sandford sa id : ’ The c a p ita l stock of a corijor-ation is lik e that o f a partn ersh ip or jo in t - s t o c k com­pany, the amount which the partners or a sso cia tes put in as th e ir stake in th e'co n cern ’ . By lo s s or m isfortune or misconduct o f the managing o f f i c e r s o f the corp o ra tio n , i t s c a p ita l stock may be reduced below the amount lim ite d in i t s c h a rte r; but whatever p ro p erty i t has up.to that lim it must be regarded as i t s c a p ita l sto ck ; when i t s p ro p erty exceeds th at lim it , then the excess is surplus. Such surplus belongs to the co rp o ra tio n and is a p o rtio n o f i t s p ro p erty , and in a general sense, may be regarded as a p o rtio n of i t s c a p it a l, but in a s t r i c t l y le g a l sense i t is not a p o rtio n o f i t s c a p ita l and is always regarded as surplus p r o f i t s . " (3)