We show a 'dynamic' Cotton and Mouton effect in magnetic liquids. Experiments consist of a linear polarized light which goes through a very small quantity of liquid, and to apply a sinusoidal magnetic field, perpendicular to the light wave vector k, with a n angle (pi) /4 to light polarization direction for maximizing effects. The alignment of magnetic agglomerates in the field direction creates some birefringence giving induced transversal magneto-optic effects. Emergent light goes through an analyzer, and is detected by a Silicium photo-detector or InGaAs, according to wavelength. A lock-in amplifier measures the amplitude of harmonics in the detected signal. We study, more especially, frequency behavior of the second harmonic, for different magnetic liquids. They consist in Cobalt ferrite particles in different liquid carriers. The theoretical expression of the second harmonic component V2f is calculated. It depends on the physical characteristics of the magnetic liquids. It depends also on the amplitude H0 and the frequency f of the AC magnetic field H(t) equals H0.cos2(pi) ft. According to this study, we can connect this phenomenon to the magnetic liquid Brownian relaxation. For a given frequency, we show the second harmonic behavior in a function of the magnetic field amplitude. One can deduce magnetic liquid magnetization curves. We compare the theoretical and experimental variations of V2f with H0 and f for various ferrofluids. We suggest a theoretical model of the ferrofluid dynamic Cotton and Mouton effect, which confirm experimental results.