UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY
 
 A TREATISE 
 
 ON THB 
 
 Law of Private Corporations 
 
 by 
 
 CHARLES B. ELLIOTT, Ph. D., LL D., 
 
 Judge of the District Court of Minnesota 
 Author of Work on "Public Corporations" 
 
 THIRD REVISED EDITION 
 
 THE BOWEN-MERRILL COMPANY 
 
 INDIANAPOLIS AND KANSAS CITY 
 
 1900
 
 : 
 
 Copyright 1900 
 
 BY 
 
 THE BOWEN-MERRILL COMPANY 
 
 \ 
 
 
 THE HOLLENBECK PRESS 
 INDIANAPOLIS
 
 TO THE 
 
 HON. CUSHMAN K. DAVIS 
 
 OF MINNESOTA 
 SCHOLAK, LAWYER, STATESMAN 
 
 (iii)
 
 This book has been thoroughly revised and rewritten, and 
 the author trusts that in its present form it will be of value to 
 the student, the teacher of law. and the lawyer engaged in the 
 active practice of the profession, 
 
 Minneapolis, November, 1899. 
 
 (*>
 
 TABLE OF CONTENTS 
 
 CHAPTER 1. 
 
 DEFINITION AND CLASSIFICATION. 
 
 Introductory. 
 Definition. 
 
 Origin and growth of corpora- 
 tions. 
 Organization and powers. 
 
 5. Corporations during the Middle 
 
 Ages. 
 
 6. The great trading corporations. 
 
 7. Early incorporation in the 
 
 United States. 
 
 8. The juristic person. 
 
 9. The fiction theory. 
 10. Illustrations. 
 
 §1. 
 2. 
 3. 
 
 4. 
 
 §11. 
 12. 
 13. 
 
 14. 
 15. 
 16. 
 17. 
 18. 
 19. 
 
 20. 
 
 Kinds of corporations. 
 
 Public corporations. 
 
 Municipal and public gwasi-cor* 
 porations. 
 
 Qwcm'-public corporations. 
 
 Private corporations. 
 
 Corporations, aggregate and sole. 
 
 Ecclesiastical corporations. 
 
 Incorporated religious societies. 
 
 Charitable or eleemosynary cor- 
 porations. 
 
 Joint stock companies. 
 
 CHAPTER 2. 
 
 THE CREATION, ORGANIZATION, AND CITIZENSHIP OF 
 CORPORATIONS. 
 
 I. The Creation and Organization. 
 
 § 21. In general. 
 
 22. By what authority. 
 
 23. Essentialsof legal incorporation. 
 
 24. Agreement between incorpora- 
 
 tors. 
 
 25. Acceptance of the grant. 
 
 26. Delegation of power to charter 
 
 corporations. 
 
 27. Delegation of ministerial duties. 
 
 28. Power of congress to create cor- 
 
 porations. 
 
 29. Ratification of claim of corpo- 
 
 rate franchise. 
 
 30. Corporations by prescription. 
 
 (Vii) 
 
 §31. Creation by implication. 
 
 32. Methods of legislative action, 
 
 33. Constitutional limitations. 
 
 34. By consolidation. 
 77. Organization under General Incoi ■ 
 
 poration Laws. 
 
 35. In general. 
 
 36. General requirements. 
 
 37 . Purposes for which corporations 
 may be organized. 
 
 38. Substantial compliance with 
 statutory requirements. 
 
 39. Illustrations. 
 
 40. Conditions precedent to organi- 
 zation of corporation de jure.
 
 Vlll 
 
 TABLE OF CONTENTS. 
 
 1 41. Articles of incorporation — Con- 
 tents. 
 
 42. Filing and publication of arti- 
 
 cles. 
 
 43. Subscriptions for capital stock as 
 
 a condition precedent. 
 
 44. Date of incorporation. 
 
 45. Who may be incorporators. 
 
 46. Number of incorporators. 
 
 47. The corporate name. 
 
 48. Protection of corporate name. 
 
 49. Proof of incorporation — In di- 
 
 rect proceedings. 
 
 50. In collateral proceedings. 
 III. Promoters of Corporations. 
 
 51. Who are promoters. 
 
 52. Fiduciary position of promoters. 
 
 53. Secret profits. 
 
 54. Owners of property as pro- 
 
 moters. 
 
 55. Personal liability of promoters 
 
 on contracts. 
 
 56. Liability to subscribers whose 
 
 subscriptions are obtained by 
 fraud. 
 
 § 57. Fraudulent prospectus. 
 
 58. Liability of corporation on con- 
 
 tracts made by promoters. 
 
 59. Adoption of contract by corpo- 
 
 ration. 
 
 60. Acceptance of benefits under 
 
 the contract. 
 
 61. Limited to obligations of the ac- 
 
 cepted contract. 
 
 62. The expenses and services of 
 
 promoters. 
 
 IV. Corporations as Persons and 
 Citizens. 
 
 63. The citizenship of a corporation. 
 
 64. Incorporation in several states. 
 
 65. Citizenship within the four- 
 
 teenth amendment. 
 
 66. A corporation as an "inhabi- 
 
 tant" of a state. 
 
 67. Place of doing business— Li- 
 
 cense — Effect on citizenship. 
 
 68. A corporation as a person. 
 
 CHAPTER 3. 
 
 CORPORATION EXISTING WITHOUT LEGAL RIGHT. 
 
 § 69. General statement. 
 
 70. Manner of raising the question 
 
 of corporate existence. 
 
 71. Collateral attack upon de facto 
 
 corporation, and the doctrine 
 of estoppel. 
 /. De Facto Corporation. 
 
 72. Definition. 
 
 73. Necessity for a valid law. 
 
 74. Good faith attempt to organize. 
 
 75. User of franchise. 
 
 76. Organization under unconstitu- 
 
 tional statute. 
 
 77. Status after expiration of term 
 
 of existence. 
 
 78. Collateral attack on the right to 
 
 exercise a franchise. 
 
 § 79. Fraudulent organization. 
 
 80. Powers of de facto corporations. 
 
 II. Estoppel to Deny Corporate Exist- 
 ence. 
 
 81. General statement. 
 
 82. The general rule. 
 
 83. In actions against members as 
 
 partners. 
 
 84. Actions on stock subscriptions. 
 
 85. Subscriptions in contemplation 
 
 of incorporation. 
 
 86. Estoppel by acquiescence. 
 
 87. Estoppel limited to de facto cor- 
 
 porations. 
 
 88. The contrary doctrine — Uncon- 
 
 stitutional statutes.
 
 TABLE OF CONTENTS 
 
 IX 
 
 CHAPTER 4. 
 
 THE CORPORATION AND THE STATE — THE CHARTER. 
 
 § 89. The control of the state. § 105. 
 
 90. Visitorial power. 106. 
 
 91. Corporations of a gwasi-public 
 
 character. 107. 
 
 92. Reports. 
 
 93. Consequences of illegal or ultra 108. 
 
 vires acts. 109. 
 
 94. Forfeiture distinguished from 110. 
 
 repeal. 111. 
 
 95. The charter. 
 
 96. The charter as a contract. 112. 
 
 97. The Dartmouth College case. 113. 
 
 98. Contracts contained in charter. 114. 
 
 99. Reservation of right to repeal 
 
 or amend charter. 115. 
 
 100. Exercise of the reserve power 116. 
 
 — Illustration. 
 
 101. Effect of dissolution of corpora- 117, 
 
 tion. 
 
 102. Vested rights — Reservation of 118, 
 
 power. 119, 
 
 103. Acceptance of amendment. 120, 
 
 104. Amendment must not create a 
 
 new charter. 
 
 Offer of amendment. 
 
 Illegal amendments — Reme- 
 dies. 
 
 Implied contracts — Grant of 
 exclusive franchise. 
 
 Eminent domain. 
 
 The police power. 
 
 Statutes affecting the remedy. 
 
 Construction of corporate 
 grants. 
 
 Taxation of corporations. 
 
 Situs of taxable property. 
 
 Restrictions imposed by federal 
 constitution. 
 
 Federal agencies. 
 
 State taxation of national 
 banks. 
 
 Meaning of "other money and 
 capital." 
 
 Telegraph companies. 
 
 Other agencies of commerce. 
 
 Exemption from taxation. 
 
 CHAPTER 5. 
 
 FRANCHISES AND PRIVILEGES. 
 
 §120. 
 121. 
 
 122. 
 
 123. 
 
 124. 
 
 The nature of a franchise. 
 
 Illustrations of franchises — 
 Conditions — Grant of right 
 to use street for railway pur- 
 poses. 
 
 Illustrations — Nature of rights 
 acquired. 
 
 The franchise of being a cor- 
 poration. 
 
 In whom franchises vests. 
 
 § 125. The sale and transfer of fran- 
 chises. 
 
 126. Corporations charged with 
 
 public duties. 
 
 127. Transfer under legislative au- 
 
 thority — Construction. 
 
 128. Franchises pertaining to use of 
 
 particular property. 
 
 129. Forfeiture of franchises. 
 
 130. Constitutional protection of 
 
 franchises.
 
 TABLE OF CONTENTS 
 
 CHAPTER 6. 
 
 POWERS. 
 
 J 131. General statement. 
 I. The Theory of Corporate Power. 
 
 132. The theory of general capacity. 
 
 133. The theory of special capaci- 
 
 ties. 
 
 134. Principles of construction. 
 
 135. Presumption of power and reg- 
 
 ularity. 
 
 136. Place where powers may be 
 
 exercised. 
 
 § 137. Grant of power— Not limited 
 by term of corporate exist- 
 ence. 
 II. Classification of Powers. 
 
 138. Express powers. 
 
 139. Powers implied from express 
 
 powers. 
 
 140. Incidental powers. 
 
 §141. 
 142. 
 143. 
 
 144. 
 145. 
 146. 
 147. 
 
 148. 
 
 149. 
 
 150. 
 151. 
 152. 
 153. 
 
 154. 
 155. 
 
 CHAPTER 7. 
 
 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 
 
 In general. 
 Perpetual succession. 
 To have a seal. 
 
 I. By-Laws. 
 
 Definition. 
 
 Power to make by-laws. 
 
 In whom vested. 
 
 Manner of adoption. 
 
 General requirements — Must 
 conform to charter. 
 
 Must not be repugnant to law 
 of the land. 
 
 Public policy. 
 
 Must be reasonable. 
 
 Must be general. 
 
 Effect of by-laws— As to mem- 
 bers and officers. 
 
 Effect upon third persons. 
 
 By-laws limiting powers of 
 agents. 
 
 § 156. Rules and regulations pub- 
 lished by corporations. 
 
 157. By-laws imposing forfeiture. 
 
 158. Expulsion of members. 
 
 159. Amendment, repeal and waiver. 
 II. Power to Take and Hold Land. 
 
 160. The common law rule. 
 
 161. Statutory restrictions. 
 
 162. Distinction between power to 
 
 take and to hold. 
 
 163. Manner of acquiring title. 
 
 164. Power to take by devise. 
 
 165. Devise to corporation— Statu- 
 
 tory limit. 
 
 166. The doctrine of equitable con- 
 
 version. 
 
 167. The estate which may be taken. 
 
 168. Who can question the right of 
 
 the corporation. 
 
 CHAPTER 8. 
 
 PARTICULAR POWERS. 
 
 §169. 
 170. 
 
 171. 
 
 Power to contract. § 172. 
 
 Manner of acting — Necessity 
 
 for a seal. 173. 
 
 Formalities to be observed in 174. 
 
 contracting. 
 
 Contracts which are against 
 public policy. 
 
 Traffic agreements. 
 
 Pooling arrangements — Con- 
 tracts to prevent competition.
 
 TABLE OF CONTENTS. 
 
 XI 
 
 175. 
 
 Contracts granting special priv- 
 ileges. 
 
 §187. 
 
 176. 
 
 Trust agreements. 
 
 
 177. 
 
 Illustrations of trust agree- 
 
 188. 
 
 
 ments. 
 
 189. 
 
 178. 
 
 Statutes forbidding trust agree- 
 
 
 
 ments. 
 
 190. 
 
 179. 
 
 Contracts by trusts. 
 
 
 180. 
 
 Power to indorse and guaran- 
 
 191. 
 
 
 tee paper. 
 
 192. 
 
 181. 
 
 To enter into a partnership. 
 
 193. 
 
 182. 
 
 To borrow money and make 
 
 
 
 negotiable paper. 
 
 194. 
 
 183. 
 
 Limitations upon amount of in- 
 
 195. 
 
 
 debtedness. 
 
 196. 
 
 184. 
 
 Liability to holder of overis- 
 
 197. 
 
 
 sued negotiable paper. 
 
 198. 
 
 185. 
 
 Power to acquire personal prop- 
 
 
 
 erty. 
 
 199. 
 
 186. 
 
 Power of alienation. 
 
 199a 
 
 Limitations on right of aliena- 
 tion — Corporations charged 
 with public duties. 
 
 Power to give a mortgage. 
 
 Assignment for benefit of cred- 
 itors — Preferences. 
 
 Power to hold stock in another 
 corporation. 
 
 Exceptions to general rule. 
 
 Purchase of its own shares. 
 
 When a corporation may hold 
 its own shares. 
 
 Powers of national banks. 
 
 Consolidation. 
 
 The effect of consolidation. 
 
 Powers of the new corporation. 
 
 Liabilities of the new corpora- 
 tion. 
 
 The loaning of money. 
 . Power to act as a trustee. 
 
 CHAPTER 9. 
 
 THE DOCTRINE OF ULTRA VIRES AND ITS APPLICATION. 
 
 § 200. General statement. 
 
 201. Proper use of phrase ultra 
 
 vires. 
 
 202. The strict rule. 
 
 203. The reason for the rule. 
 
 204. Conflicting theories and decis- 
 
 ions. 
 
 205. Actions in furtherance of ultra 
 
 vires contracts. 
 
 206. Buckeye Marble Co. v. Harvey. 
 
 207. Central Transportation Co. v. 
 
 Pullman Palace Car Co. 
 
 208. Disaffirmance after part per- 
 
 formance. 
 
 209. Recovery of consideration 
 
 paid. 
 
 I. Certain Rules Affecting Doctrine of 
 Ultra Vires. 
 
 210. In general. 
 
 211. Presumption of validity. 
 
 212. Notice of corporate powers. 
 
 213. Limitations upon the authority 
 
 of corporate officers. 
 
 § 214. Restrictions contained in by 
 laws. 
 
 215. Limitations upon general rule. 
 
 II. Estoppel to Assert Defense of Ultra 
 
 Vires. 
 
 216. General statement. 
 
 217. Estoppel — Rule of the supreme 
 
 court. 
 
 218. Partially executed ultra vires 
 
 contracts. 
 
 219. Estoppel — Retention of bene- 
 
 fits. 
 
 220. Acquiescence in ultra vires acts. 
 
 221. Ratification of ultra vires acts. 
 
 III. Contracts Illegal Because Malum 
 Prohibition or Malum In Se. 
 
 222. General statement. 
 
 223. Contracts malum in se. 
 
 224. Contracts against public policy, 
 
 225. Statutory prohibitions. 
 
 226. Illustrations.
 
 Xll 
 
 TABLE OF CONTENTS. 
 
 §227. Liability for benefits received §229. Want of power and neglect of 
 under illegal contracts. formalities. 
 
 230. Reasons for the distinction — 
 IV. Irregular Exercise of Power. Statement of Chief Justice 
 
 228. Effect of irregularities. Sawyer. 
 
 CHAPTER 10. 
 
 LIABILITY FOR TORTS AND CRIMES. 
 
 § 232. General statement. § 236. 
 
 233. Growth of the law. 237. 
 
 234. The modern rule. 238. 
 
 235. Liability for punitive damages. 239. 
 
 The commission of crime. 
 Crimes involving intent. 
 Contempt of court. 
 Proceedings. 
 
 CHAPTER 11. 
 
 EXTRA-TERRITORIAL POWERS OF CORPORATIONS STATE CONTROL 
 
 OVER FOREIGN CORPORATIONS. 
 
 § 240. General statement. 
 
 241. The corporate domicile. 
 
 242. Laws have no extra-territorial 
 
 force. 
 
 243. Submission to state laws. 
 
 244. Conflict of laws. 
 
 245. Obligations imposed by penal 
 
 statutes. 
 
 246. Constitutional rights of corpo- 
 
 rations—Insolvency proceed- 
 ings. 
 
 /. Bight of a Corporation to Exercise 
 its Powers in a Foreign State. 
 
 247. Power of corporation. 
 
 248. Corporate acts out of state. 
 
 II. Power of the State Over Foreign 
 Corporations. 
 
 249. Right to exclude. 
 
 250. Limitations on the power of 
 
 the state. 
 
 251. Insurance not interstate com- 
 
 merce. 
 
 252. No visitorial power over for- 
 
 eign corporations. 
 
 253. Right to compel issue of new 
 
 stock certificate. 
 
 III. The Bides of Comity. 
 § 254.^ The comity of states. 
 
 255. The general rule. 
 
 256. Contracts contrary to the law 
 
 of the forum. 
 
 257. Public policy, how determined. 
 
 258. Discrimination against non- 
 
 residents. 
 
 259. Acts not authorized by charter. 
 
 260. Restrictions imposed by gen- 
 
 eral laws. 
 
 IV. Statutory Bestrictions. 
 
 261. In general. 
 
 262. Conditions which may be im- 
 
 posed. 
 
 263. Retaliatory statutes. 
 
 264. Waiver of constitutional rights 
 
 — Removal of causes. 
 
 265. The granting and revocation of 
 
 a license. 
 
 266. Meaning of "doing business." 
 
 267. Contracts made out of the state. 
 
 V. Effect of Failure to Comply with 
 Statutory Bequirement. 
 
 268. Effect upon validity of con- 
 
 tracts.
 
 TABLE OF CONTENTS. 
 
 Xlll 
 
 §269. Where the statute imposes a §275. 
 penalty. 
 
 270. Where no express penalty is 276. 
 
 provided. 
 
 271. Estoppel to allege non-compli- 277. 
 
 ance. 
 
 Service upon foreign corpora- 
 tions. 
 
 Must be doing business in the 
 state. 
 
 Service upon officer tempora- 
 rily within the state. 
 
 Illustrations. 
 
 Statutory requirements. 
 
 Designation of agent to accept 
 service. 
 
 Service obtained by deception. 
 
 Proceedings by state against 
 foreign corporation. 
 
 CHAPTER 12. 
 
 THE ACQUISITION AND LOSS OF MEMBERSHIP IN A CORPORATION. 
 
 272. Presumption — Burden of 
 
 278. 
 
 proof. 
 
 279. 
 
 
 280. 
 
 VI. Actions by and Against Foreign 
 
 
 Corporations. 
 
 281. 
 
 273. The right to sue. 
 
 282. 
 
 274. Actions against foreign corpo- 
 
 
 rations. 
 
 
 § 283. Non-stock corporations. § 291. 
 
 284. Corporations having capital 
 
 stock. 292. 
 
 285. Who can be members. 
 
 286. Method of obtaining shares. 293. 
 
 287. Effect of delivery of stock cer- 
 
 tificate. 294. 
 
 288. Compliance with conditions. 295. 
 
 289. Estoppel to deny membership. 296. 
 
 290. The holder of illegally issued 297. 
 
 shares. 
 
 298. 
 
 Disfranchisement — Joint stock 
 companies. 
 
 Disfranchisement in non-stock 
 corporations. 
 
 Nature of membership in non- 
 stock corporations. 
 
 Grounds for expulsion. 
 
 The proceedings. 
 
 Notice. 
 
 Incorporate and unincorpo- 
 rated societies. 
 
 Review by the courts. 
 
 CHAPTER 13. 
 
 CAPITAL STOCK. 
 
 299. Capital. 
 
 300. Capital stock. 
 
 301. Shares of stock. 
 
 302. Amount of capital stock. 
 
 303. Dividend stock. 
 
 304. Stock certificates. 
 
 305. Not negotiable instruments. 
 
 /. Classes of Stock. 
 
 306. Different kinds of stock. 
 
 307. Preferred stock. 
 
 308. Power to issue preferred stock. 
 
 309. Power of majority. 
 
 310. Under legislative authority. 
 
 §311. Estoppel. 
 
 312. Status of holders of preferred 
 
 stock. 
 
 313. Rights of holders of preferred 
 
 stock. 
 
 314. Accumulative dividends. 
 II. Nature of Capital Stock. 
 
 315. Personal property. 
 
 316. Statute of frauds. 
 
 317. The trust fund theory. 
 
 318. Meaning of the doctrine. 
 
 319. Criticisms.
 
 XIV 
 
 TABLE OF CONTENTS. 
 
 Ill 
 320. 
 321. 
 
 322. 
 
 323. 
 
 324. 
 
 325. 
 
 326. 
 
 327. 
 
 328. 
 329. 
 
 330. 
 
 Fraudulently Issued Stock. 
 
 Overissue of stock. 
 
 Bona fide holders of fraudu- 
 lently issued stock. 
 
 Estoppel by recital in stock 
 certificate. 
 
 Liability for fraudulent acts of 
 agents. 
 
 Fraudulent acts of agents, con- 
 tinued. 
 
 Liability to innocent purchas- 
 ers only. 
 
 Recovery of money paid for 
 
 void shares. 
 Payment for stock. 
 IV. Watered Stock. 
 
 Meaning of phrase. 
 
 Issue of shares below par — The 
 common law rule. 
 
 As between stockholder and 
 creditor. 
 
 §343. 
 344. 
 
 345. 
 
 345a 
 346. 
 347. 
 
 348. 
 349. 
 350. 
 
 351. 
 
 352. 
 353. 
 354. 
 
 355. 
 356. 
 357. 
 
 331. Recital that shares shall be 
 
 deemed fully paid up. 
 
 332. Bona fide purchaser of shares. 
 
 333. Who may complain. 
 
 334. Liability is to subsequent cred- 
 
 itors only. 
 
 335. Bonus stock given to "sweet- 
 
 en" bonds. 
 
 336. Construction bonds and bonus 
 
 shares. 
 
 337. Stock issued by a going con- 
 
 cern with impaired capital. 
 
 338. Shares accepted as a gratuity. 
 
 339. Illustrations. 
 
 340. Payment in property. 
 
 341. Remedy where there is over- 
 
 valuation. 
 
 342. Constitutional and statutory 
 
 provisions as to payment of 
 shares. 
 
 CHAPTER 14. 
 
 STOCK SUBSCRIPTIONS. 
 
 In general. 
 
 Agreement to take shares in a 
 corporation to be organized. 
 
 When there are no statutory 
 provisions. 
 
 Statement of rules. 
 
 Who may subscribe. 
 
 Subscriptions through an 
 agent. 
 
 The form of the contract. 
 
 The consideration. 
 
 Signing articles of incorpora- 
 tion. 
 
 Application, allotment and no- 
 tice. 
 
 Conditional subscriptions. 
 
 Secret conditions. 
 
 Subscription of amount named 
 in charter or required by law. 
 
 Payment of deposit. 
 
 Tender of certificate. 
 
 Conditional delivery of sub- 
 scription contract. 
 
 §358. 
 
 Performance of condition — 
 Waiver. 
 
 Conditions subsequent. 
 
 Subscriptions upon special 
 terms. 
 
 Subscriptions in excess of au- 
 thorized capital. 
 362. Amount of subscription by one 
 person. 
 
 Who may receive subscrip- 
 tions. 
 
 Subscriptions necessary to ob- 
 tain charter. 
 
 Withdrawal of subscriptions — 
 Notice. 
 
 Implied agreement to pay for 
 shares. 
 
 The New England rule. 
 
 368. Premature contract by corpo- 
 
 ration — Effect upon subscrip- 
 tion. 
 
 369. Effect of fraud upon the con- 
 
 tract of subscription. 
 
 359. 
 360. 
 
 361. 
 
 363. 
 
 364. 
 
 365. 
 
 366. 
 
 367.
 
 TABLE OF CONTENTS. 
 
 XV 
 
 §370. 
 
 The English doctrine. 
 
 §380. 
 
 371. 
 
 The contract voidable merely 
 
 
 
 — Authority of agent. 
 
 381. 
 
 372. 
 
 Fraudulent representations by 
 promoters. 
 
 382. 
 
 373. 
 
 What frauds will vitiate. 
 
 383. 
 
 374. 
 
 Expressions of belief or opin- 
 
 384. 
 
 
 ion. 
 
 385. 
 
 375. 
 
 Remedies of defrauded stock- 
 
 
 
 holders. 
 
 386. 
 
 376. 
 
 Rescission — Necessity for 
 
 387. 
 
 
 prompt action— Laches. 
 
 388. 
 
 377. 
 
 Insolvency — The rights of 
 
 
 
 creditors — English doctrine. 
 
 389. 
 
 378. 
 
 Rule in the United States. 
 
 389a, 
 
 379. 
 
 Right to rescind after insolv- 
 ency continued. 
 
 
 Rights of creditors before in- 
 solvency of corporation. 
 
 Insolvency — Rule of diligence. 
 
 Enforcement of subscription 
 contracts by action. 
 
 Calls. 
 
 Calls— Uniformity— Demand . 
 
 Release of subscriber — By con- 
 sent. 
 
 Release by act of corporation. 
 
 By forfeiture. 
 
 When forfeiture a cumulative 
 remedy. 
 
 Estoppel of subscriber. 
 
 . The statute of limitations. 
 
 CHAPTER 15. 
 
 THE RIGHTS OF MEMBERSHIP. 
 
 §390. Participation in the manage- 
 ment. 
 
 391 . General rights of stockholders. 
 
 392. Rights in the corporate prop- 
 
 erty. 
 
 393. Right to inspect records. 
 
 394. Conditions upon which inspec- 
 
 tion is permitted. 
 
 395. The demand. 
 
 396. Remedy for wrongful refusal 
 
 to permit inspection. 
 
 397. Preference in subscription for 
 
 new shares. 
 
 I. Dividends. 
 
 398. Nature of dividends. 
 
 399. Control of directors over divi- 
 
 dends. 
 
 400. Discretion of directors. 
 
 401. Protection of corporate prop- 
 
 erty. 
 
 402. When dividends may be legally 
 
 declared. 
 
 403. What are profits. 
 
 404. Right to dividends declared. 
 
 405. To whom dividends belong. 
 
 406. Collection of dividends. 
 
 § 407. How payable— No discrimina- 
 tion. 
 
 408. Right of a pledgee of stock to 
 
 dividends. 
 
 409. Unlawful payment of divi- 
 
 dends—Liability of officers. 
 
 410. Set-off by the corporation. 
 
 411. Who entitled to dividends, 
 (a) As Between Successive Absolute 
 
 Owners. 
 
 412. In general. 
 
 413. Conditional sales and transfers. 
 
 414. Transfers made between the 
 
 date of declaration and pay- 
 ment. 
 
 (6) As Between Life Tenant and Be- 
 mainder-Man. 
 
 415. General statement. 
 
 416. The English rule. 
 
 417. The Massachusetts rule. 
 
 418. The Pennsylvania rule. 
 
 419. General adoption of this rule. 
 II. Actions by Stockholders. 
 
 420. Actions against third persons 
 
 — The protection of collective 
 rights.
 
 XVI 
 
 TABLE OF CONTENTS. 
 
 § 421. When a stockholder may sue. § 428. 
 
 422. Conditions precedent to right 429. 
 
 of action. 430. 
 
 423. Exceptions to the rule. 431. 
 
 424. Illustrations— Foss v. Harbot- 
 
 tle. 432. 
 
 425. Mozley v. Alston. 433. 
 
 426. Hawes v. Oakland. 
 
 427. The rights of transferees. 
 
 Discretionary power. 
 
 Acquiescence. 
 
 Parties to the suit. 
 
 Right to restrain ultra vi 
 
 acts. 
 Control by the majority. 
 Limitations on the power 
 
 the majority. 
 
 of 
 
 CHAPTER 16. 
 
 TRANSFER OF SHARES. 
 
 § 434. General statement. 
 
 435. The right to transfer shares. 
 
 436. Power to prohibit transfers. 
 
 437. The regulation of transfers. 
 
 438. Restrictions imposed by by- 
 
 law or express contract. 
 
 439. Regulation of transfers con- 
 
 tinued. 
 
 440. Transfer on books of the cor- 
 
 poration. 
 
 441. Transfer on books, continued. 
 
 442. The rights of attaching cred- 
 
 itors. 
 
 443. Transfers in fraud of creditors. 
 
 444. Manner of making assignment 
 
 and transfer. 
 
 445. Transfer after insolvency or 
 
 dissolution. 
 
 446. Pledge of stock certificates by 
 
 delivery. 
 
 447. Surrender of old certificate — 
 
 Fraudulent reissue. 
 
 448. Evidence of transferee's right. 
 
 449. Indorsement of certificate. 
 
 §450. 
 
 451. 
 
 452. 
 
 453. 
 
 454. 
 
 455. 
 
 456. 
 
 457. 
 
 458. 
 
 459. 
 
 460. 
 461. 
 462. 
 
 Fraudulent transfer — Rights of 
 transferee or purchaser of 
 stock certificate. 
 
 Negligence of owner — Estop- 
 pel. 
 
 Transfer on forged power of 
 attorney — Liability of corpo- 
 ration. 
 
 Forgery of transfer — Negli- 
 gence. 
 
 Rights of purchaser of shares 
 transferred in violation of a 
 trust. 
 
 Transfers in breach of trust — 
 Liability of corporation. 
 
 When the power to sell exists — 
 Presumption of right doing. 
 
 Lien of corporation upon 
 shares. 
 
 Effect of a transfer upon rights 
 and liabilities of parties. 
 
 Remedies for a wrongful re- 
 fusal to transfer. 
 
 An action for damages. 
 
 A suit in equity. 
 
 Mandamus. 
 
 CHAPTER 17. 
 
 CORPORATE MEETINGS AND ELECTIONS. 
 
 §463. In general. §467. 
 
 464. Calling meetings. 468. 
 
 465. The place of meeting. 469. 
 
 466. Regular and special meetings. 
 
 Notice of corporate meeting. 
 Adjourned meetings. 
 Manner of conducting meet- 
 ings.
 
 TABLE OF CONTENTS. 
 
 XV11 
 
 §470. 
 
 Records — Evidence. 
 
 §483. 
 
 Powers of the majority to man- 
 
 471. 
 
 Who entitled to vote. 
 
 
 age the corporation. 
 
 472. 
 
 Right of bondholders to vote. 
 
 484. 
 
 Rights of the minority. 
 
 473. 
 
 Voting by proxy. 
 
 485. 
 
 Power of majority to wind up 
 
 474. 
 
 Personal interest of stock- 
 
 
 business. 
 
 
 holder — Motive governing 
 
 486. 
 
 Power of majority to accept 
 
 
 vote. 
 
 
 amendments. 
 
 475. 
 
 Voting trusts and agreements. 
 
 487. 
 
 Power to accept amendments 
 
 476. 
 
 Voting agreements continued. 
 
 
 continued. 
 
 477. 
 
 Voting agreements continued. 
 
 488. 
 
 Immaterial amendments and 
 
 478. 
 
 The Shepaug Voting Trust 
 
 
 alterations. 
 
 
 cases. 
 
 489. 
 
 Material beneficial amend- 
 
 479. 
 
 Specific enforcement of such 
 
 
 ments. 
 
 
 contracts. 
 
 490. 
 
 Elections — Presumption of reg- 
 
 480. 
 
 Number of votes by each stock- 
 
 
 ularity. 
 
 
 holder. 
 
 491. 
 
 Inspectors of elections. 
 
 481. 
 
 Cumulative voting. 
 
 492. 
 
 Illegal votes. 
 
 482. 
 
 The majority and quorum. 
 
 493. 
 
 Control of courts over corpo- 
 rate elections. 
 
 CHAPTER 18. 
 
 OFFICERS AND AGENTS AND THE MANAGEMENT OF CORPO- 
 RATIONS. 
 
 ,494. 
 
 General statement. 
 
 §508. 
 
 Liability of a corporation for 
 
 495. 
 
 Presumption of authority. 
 
 
 torts of its agents. 
 
 496. 
 
 The general management — Di- 
 
 509. 
 
 Ratification. 
 
 
 rectors — Directors' meetings. 
 
 510. 
 
 Liability for torts in ultra vires 
 
 497. 
 
 Place of directors' meeting. 
 
 
 transactions. 
 
 498. 
 
 Qualifications of directors. 
 
 511. 
 
 Liability of officers for acts in 
 
 499. 
 
 Powers of directors. 
 
 
 excess of authority. 
 
 500. 
 
 Stockholders' control over di- 
 
 512. 
 
 Liability for abuse of trust. 
 
 
 rectors. 
 
 513. 
 
 Degree of care required of di- 
 
 501. 
 
 Delegation of authority — Ex- 
 
 
 rectors. 
 
 
 ecutive committee. 
 
 514. 
 
 Liability of officer is for indi- 
 
 502. 
 
 Relation of officers and direc- 
 
 
 vidual acts or omissions. 
 
 
 tors to the corporation. 
 
 515. 
 
 Supervision of sub-agents. 
 
 503. 
 
 Contracts between a corpora- 
 
 516. 
 
 Knowledge of contents of cor- 
 
 
 tion and its officers. 
 
 
 porate records. 
 
 504. 
 
 When an officer may deal with 
 
 517. 
 
 Liability for care of papers. 
 
 
 his corporation. 
 
 518. 
 
 Liability for mistakes. 
 
 505. 
 
 Right of corporation to repudi- 
 
 519. 
 
 Liability on contracts. 
 
 
 ate such contract. 
 
 520. 
 
 Liability to third persons for 
 
 506. 
 
 Contracts between corporations 
 
 
 torts. 
 
 
 having common officers or 
 
 521. 
 
 Violation of charter or statute. 
 
 
 directors. 
 
 522. 
 
 Liability imposed by statute. 
 
 507. 
 
 The prevailing rule, 
 ii — Private Corp. 
 

 
 xvm 
 
 TABLE OF CONTENTS. 
 
 §523. 
 
 524. 
 
 525. 
 
 526. 
 527. 
 
 528. 
 
 Liability of directors where 
 corporation maintains a nui- 
 sance. 
 
 Liability imposed for benefit of 
 third persons. 
 
 Remedy of the corporation 
 against an officer. 
 
 Statute of limitations. 
 
 No liability to corporate cred- 
 itors. 
 
 Powers of particular officers. 
 
 § 529. The president. 
 
 530. The vice-president. 
 
 531. The secretary. 
 
 532. The treasurer. 
 
 533. De facto officers. 
 
 534. Notice to officers and agents. 
 
 535. Compensation. 
 
 536. Removal from office. 
 
 537. Creditors can not control man- 
 
 agement. 
 
 CHAPTER 19. 
 
 THE COMMON LAW LIABILITY OF STOCKHOLDERS. 
 
 § 538. In general. 
 
 539. Liability to corporation meas- 
 
 ured by the contract of sub- 
 scription. 
 
 540. Acts prior to incorporation. 
 
 541. The incorporation of a partner- 
 
 ship business. 
 
 542. Debts contracted before dis- 
 
 tribution of stock. 
 
 543. Liability resulting from illegal 
 
 or defective incorporation. 
 
 544. Liability as partners. 
 
 545. Conflicting theories and decis- 
 
 ions. 
 
 546. The tendency of the decisions. 
 
 547. Where there is not even a de 
 
 facto corporation. 
 
 548. "One man" corporations. 
 
 §549 
 
 One man corporations, contin- 
 ued. 
 550. Corporations organized to do 
 business exclusively in an- 
 other state. 
 
 Liability for capital wrong- 
 fully distributed. 
 
 Liability upon shares issued 
 below par. 
 
 Fraudulent acts. 
 
 Enforcement — Defenses. 
 
 Enforcement of liability in a 
 foreign jurisdiction. 
 
 Decree determining assets and 
 debts, and making assess- 
 ments — Conclusiveness. 
 
 Conclusiveness of decree, con- 
 tinued. 
 
 551. 
 
 552. 
 
 553. 
 554. 
 555. 
 
 556. 
 
 557. 
 
 CHAPTER 20. 
 
 THE CONSTITUTIONAL AND STATUTORY LIABILITY OF STOCK- 
 HOLDERS. 
 
 § 558. General statement. 
 
 559. Power of legislature to impose 
 
 liability. 
 
 560. Limitations by contract. 
 
 561. Exceptions in favor of certain 
 
 classes of corporations. 
 
 562. Repeal of statute— Rights of 
 
 creditors. 
 
 §563, 
 
 564. 
 565. 
 566. 
 567. 
 
 Constitutional provisions 
 
 — When self-executing. 
 /. Nature of the Liability . 
 
 When contractual. 
 
 When penal. 
 
 Survival of the right of action. 
 
 Liability of officers and direct- 
 ors.
 
 TABLE OP CONTENTS. 
 
 XIX 
 
 77. Against Whom the Liability is En- 
 forcible. 
 
 § 568. As to time of holding stock. 
 
 569. Trustees, pledgees and execu- 
 
 tors. 
 
 570. Unrecorded transfers — Liabil- 
 
 ity of transferrer and trans- 
 feree. 
 
 III. The Debts for Which the Stock- 
 holders are Liable. 
 
 571. The debt of the corporation- 
 
 Release. 
 
 572. Nature of the obligation. 
 
 573. Debts due laborers and em- 
 
 ployes. 
 
 574. Creditors who are also stock- 
 
 holders and officers. 
 
 IV. Enforcement of the Liability. 
 
 575. At the domicile of the corpora- 
 
 tion. 
 
 576. Remedy against the corpora- 
 
 tion — Judgment. 
 
 577. Judgment against the corpora- 
 
 tion — Conclusiveness. 
 
 § 578. By whom the liability is en- 
 forcible. 
 
 579. Enforcement in foreign juris- 
 
 dictions. 
 
 580. Proceedings in the federal 
 
 courts. 
 
 581. Decisions in various states — 
 
 Massachusetts. 
 
 582. Decisions in New Hampshire, 
 
 New York and Illinois. 
 
 583. Where a special statutory rem- 
 
 edy is provided. 
 
 584. Where no statutory remedy is 
 
 provided. 
 
 585. Ancillary proceedings. 
 
 586. Original proceedings in court 
 
 of corporate domicile. 
 
 587. Conclusiveness of the decree of 
 
 the court of the domicile. 
 
 588. Rights of receiver in a foreign 
 
 jurisdiction. 
 
 V. Miscellaneous Eights and Defenses. 
 
 589. The right of set-off. 
 
 590. Statute of limitations. 
 
 591. Contribution among stock- 
 
 holders. 
 
 CHAPTER 21. 
 
 INSOLVENCY AND DISSOLUTION. 
 
 §592. 
 
 Manner of dissolution. 
 
 §601. 
 
 593. 
 
 Impairment of contracts. 
 
 
 594. 
 
 Expiration of term of exist- 
 
 
 
 ence. 
 
 602, 
 
 dvb. 
 
 Dissolution by legislative act. 
 
 
 596. 
 
 Surrender of charter. 
 
 
 597. 
 
 Forfeiture of charter. 
 
 603. 
 
 598. 
 
 Loss of integral part. 
 
 604, 
 
 599. 
 
 Statutory methods of dissolu- 
 
 605 
 
 
 tion — By the state. 
 
 606, 
 
 600. 
 
 Voluntary liquidation. 
 
 
 Statutory provisions for a tem- 
 porary continuance of the 
 corporation. 
 
 Insolvency, sale or loss of 
 property — Abandonment of 
 business. 
 
 Powers of a court of equity. 
 
 Proceedings by state. 
 
 Effect of dissolution, generally. 
 
 Effect upon corporate debts 
 and assets.
 
 TABLE OF CASES 
 
 {References are to Pages. ] 
 
 Abbey v. Long, 44 Kan. 688, 
 Abbott v. Baltimore, etc., Co., 1 
 Md. Ch. 542, 
 v. Hapgood, 22 N. E. Rep. 907, 
 v. N. Y., etc., R. Co., 145 Maes. 
 
 450, 
 v. Refining Co., 4 Neb. 416, 
 Abeles v. Cochran, 22 Kan. 405, 
 Abell v. Pennsylvania, etc., Co., 18 
 
 W. Va. 400, 
 Aberdeen Bank v. Chehalis Co., 
 
 166 U. S. 440, 
 Aberdeen R. Co. v. Blaikie, 1 
 
 Macq. H. L. 461, 
 
 Abrath v. Northwestern R. Co., 
 
 11 Q. B. Div. 440 (1883), 25 
 
 Am. L. Reg. 759, 234, 
 
 Ackerman v. Halsey, 37 N. J. Eq. 
 
 356, 
 Ackerson v. Erie R. Co., 32 N. J. 
 
 L. 254, 
 Adams v. Ft. Plain Bank, 36 N. Y. 
 255 
 v. Goodrich, 55 Ga. 233, 
 v. Mills, 60 N. Y. 533, 
 v. Nashville, 95 U. S. 19, 106, 
 v. Yazoo, etc., R. Co. (Miss.), 
 24 S. Rep. 317, 112, 194, 
 
 v. Yazoo, etc., R. Co. (Miss., 
 1898), 24 S. W. Rep. 371, 
 Adams, etc., Co. v. Deyette, 8 S. 
 Dak. 119, 
 v. Deyette (S. Dak.), 65 N. W. 
 
 Rep. 471, 
 v. Dyette, 5 S. Dak. 418, 59 N. 
 W. Rep. 214, 65 N. W. Rep. 
 471, 189, 
 
 v. Ohio, 165 U. S. 194, 
 v. Senter, 26 Mich. 73, 
 Adams Ex. Co. v. Ohio State Audi- 
 tor, 166 IT. S. 185, 165 U. 194, 
 255, 6 A. & E. Corp. Cas. U. 
 S. 404, 
 
 659 
 
 223 
 52 
 
 195 
 599 
 190 
 
 282 
 
 108 
 
 547 
 
 236 
 
 562 
 
 237 
 
 319 
 635 
 
 581 
 108 
 
 317 
 
 196 
 
 182 
 
 182 
 
 190 
 105 
 554 
 
 103 
 
 Adley v. Whitstable Co., 17 Ves. 
 
 Jr. 315, 463 
 
 Adriance v. Roome, 52 Barb. 
 
 (N. Y.) 399, 147, 216 
 
 ^Etna, etc., Co. v. Black, 80 Ind. 
 
 513, 283 
 
 v. Harvey, 11 Wis. 412, 277, 278 
 iEtna Nat'l Bank v. Charter Oak, 
 
 etc., 50 Conn. 167, 171 
 
 Albany, etc., R. Co. v. Brownell, 
 
 24 N. Y. 345, 91 
 
 Alberger v. Bank, 123 Mo. 313, 182 
 Albers v. Merch. Exch., 45 Mo. 
 
 App. 206, 449 
 
 Albert v. Saving Bank, 1 Md. Ch. 
 
 407, 221 
 
 Albitztigui v. Guadalupe, etc., Co., 
 
 92 Tenn. 598, 341 
 
 Albright v. LaFayette, etc., Co., 
 
 102 Pa. St. 411, 136 
 
 Alcorn v. Hamer, 38 Miss. 652, 268 
 Alcot v. Tioga R. Co., 20 N. Y. 
 
 210, 62 
 
 Alderson v. Dole, 74 Fed. Rep. 29, 653 
 Aldine, etc., Co. v. Phillips (Mich.), 
 
 42 L. R. A. 531, 76 N. W. Rep. 
 
 371, 491 
 
 Aldrich v. Anchor, etc., Co., 24 
 
 Ore. 32, 645, 652 
 
 v. Press Printing Co., 9 Minn. 
 
 133, Gil. 123, 86 Am. Dec. 84, 236 
 Alexander v. Cauldwell, 83 N.Y. 
 
 480, • 581 
 
 v. Rolfe, 74 Mo. 495, 189 
 
 v. Rollins, 84 Mo. 657, 218 
 
 v. Searcy, 81 Ga. 536, 223, 524 
 
 v. Tolleston Club, 110 111. 65, 157 
 Alibone v. Hager, 46 Pa. St. 48, 365 
 Allemong v. Simmons, 122 Ind. 
 
 199, 575 
 
 Allenv. Am., etc., Assn., 49 Minn. 
 
 544, 149 
 
 v. Am., etc., Assn., 55 Minn. 86, 408 
 v. Curtis, 26 Conn. 456, 449, 525, 545 
 
 (xxi)
 
 xxn 
 
 TABLE OF CASES. 
 
 [References are to Pages. ~\ 
 
 Allen v. Fairbanks, 40 Fed. Rep. 
 
 188, 45 Fed. Rep. 445, 661 
 
 v. Railway Co., 150 Mass. 200, 480 
 v. Sewall, 2 Wend. (N. Y.) 327, 
 
 6 Wend. 335, 616 
 
 v. South Boston, etc., R. Co., 
 
 150 Mass. 200, 15 Am. St. Rep. 
 
 185, 327, 330, 331, 469, 476 
 
 v. Walsh, 25 Minn. 543, 617, 651 
 v. Woonsocket Co., 11 R. I. 
 
 Allibone v. Hagar, 64 Pa. St. 48, 367 
 Ailing v. Wenzel, 133 111. 264, 321, 338 
 Allis v. Jones (Neb.), 45 Fed. Rep. 
 
 148, 182 
 
 Alhnan v. Havana, etc., R. Co., 
 
 88 111. 521, 373 
 
 Alta, etc., Co. v. Alta, etc., Co., 
 
 78 Cal. 629, 577, 498 
 
 Altman v. Waddle, 40 Kan. 195, 73 
 Amador, etc., Co. v. Dewitt, 73 
 
 Cal. 483, 15 Pac. Rep. 74, 98 
 
 American Asvlum v. Phoenix 
 Bank, 4 Conn. 172, 10 Am. 
 Dec. 112, . 19 
 
 American Central R. Co. v. Miles, 
 
 52 111. 174, 584 
 
 American, etc., v. Taylor, etc., Co., 
 
 46 Fed. Rep. 152, 167 
 
 American, etc., Assn. v. Rainbolt 
 
 (Neb.), 67 N. W. Rep. 493, 406 
 American, etc., Bank v. First 
 Nat'l Bank, 82 Fed. Rep. 961, 
 48 U. S. App. 633, 539 
 
 American, etc., Co. v. Bayless, 91 
 Ky. 94, 329 
 
 v. Connecticut, etc., Co., 49 
 
 Conn. 352, 44 Am. Rep. 237, 82 
 v. Farmers', etc., Co., 20 Colo. 
 
 203, 25 L. R. A. 338, 244, 264 
 
 v. Haven, 101 Mass. 398, 
 
 189, 191, 507 
 v. Heidenheimer, 80 Tex. 344, 
 
 26 Am. St. Rep. 743, 597, 598 
 v. Klotz, 44 Fed. Rep. 721, 167 
 
 v. Union Pac. R. Co., 1 McCray 
 
 188, 226, 229 
 
 v. Minn., etc., R. Co., 157 111. 
 
 641, 42 N. E. Rep. 153, 67 
 
 v. Oakley, 9 Paige (N. Y.) 496, 578 
 v. Ogdcn, 49 La. Ann. 8, 273 
 
 v. Peirce, 49 La. Ann. 390, 273 
 
 v. State, 46 Neb. 194, 30 L. R. 
 
 A. 447, 81 
 
 v. Tennile, 87 Ga. 28, 153, 157 
 
 v. Wellman, 69 Ind. 413, 278 
 
 v. Wood wort h, 79 Fed. Rep. 951, 
 
 82 Fed. Rep. 209, 643, 638, 646 
 
 American, etc., Com. v. Chicago, 
 
 etc., Exch., 143 111. 210, 291, 299 
 American, etc., Soc. v. Marshall, 
 
 15 Ohio St. 537, 153, 155, 265 
 
 American L., etc., Co. v. East, 
 
 etc., Co., 37 Fed. Rep. 242, 276 
 American Nat'l Bank v. Am., 
 
 etc., Co., 19 R. I. 149, 162 
 
 v. Oriental Mills, 17 R. I. 551, 
 
 23 Atl. Rep. 795, 466, 502 
 
 American Order v. Merrill, 151 
 
 Mass. 558, 8 L. R. A. 320, 41 
 
 American Surety Co. v. Great, 
 
 etc., Co., (N.J.) 43 Atl. Rep. 
 
 579, 671 
 
 American Tube Works v. Boston, 
 
 etc., Co., 139 Mass. 5, 314, 410 
 American Union v. Yount, 101 U. 
 
 S. 352, 262 
 
 Ames v. Lake Superior, etc., R. 
 
 Co., 21 Minn. 241, 29 
 
 Amesbury v. Bowditch, etc., Co., 
 
 6 Gray (Mass.) 596, 142 
 
 Anacosta Tribe v. Murbach, 13 
 
 Md. 91, 305 
 
 Anderson v. Anderson, etc., Co., 
 
 65 Minn. 281, 33 L. R. A. 510, 621 
 v. Blood, 152 N.Y. 285, 485 
 
 v. Kinley (Iowa 1894), 58 N. W. 
 
 Rep. 909, 583 
 
 v. Railroad, 91 Tenn. 44, 17 S. 
 
 W. Rep. 803, 373, 374 
 
 v. South Chicago, etc., Co. (111.), 
 
 50 N. E. Rep. 655, 579 
 
 v. Warehouse Co., Ill U. S. "79, 631 
 
 Andes v. Ely, 158 U. S. 312, 27, 64 
 
 Andrews v. Bovd, 5 Maine 200, 425 
 
 v. Nat'l, etc., Works, 46 U. S. 
 
 App.281,36L. R. A. 139, 64,65 
 Andrews Bros. v. Youngstown 
 
 Coke Co., 86 Fed. Rep. 585, 2, 13 
 Androscoggin, etc., Co. v. Bethel, 
 
 etc., Co., 64 Maine 441, 240 
 
 Angle v.Chicago, etc., R. Co., 151 
 
 U. S. 1, 601 
 
 Anglo-California Bank v. Gran- 
 gers' Bank, 63 Cal. 359, 146, 489 
 Angsburg, etc., Co. v. Pepper, 95 
 
 Va. 92, 27 S. E. Rep. 807, 189 
 
 Anheuser-Busch, etc., Co. v. 
 
 Houch (Tex.), 27 S. W. Rep. 
 
 692, 168, 170 
 
 Annapolis, etc., R. Co. v. Comis, 
 
 103 U. S. 1, 111 
 
 Anthony v. Household, etc., Co., 
 
 Hi R. 1.571, 315 
 
 v. Machine Co. 16 R. I. 571, 213 
 
 Antonio v Mahaffy, 96 U. S. 312, 210
 
 TABLE OF CASES. 
 
 XX111 
 
 [References are to Pages."] 
 
 Anvil, etc., Co. v. Sherman, 74 
 Wis. 226, 42 N. W. Rep. 226, 
 4 L. R. A. 232, 373, 386. 404 
 
 Appeal of Aultinann, 98 Pa.St. 505, 624 
 Goodwin, etc., Co., 117 Pa. St. 
 
 514, 12 Atl. Rep. 736, 520 
 
 Hahn (Pa.), 7 Atl. Rep. 482, 381 
 Kisterbock, 127 Pa. St. 601, 14 
 
 Am. St. Rep. 868, 330, 492 
 
 Lehigh, etc., R. Co., 129 Pa. St. 
 
 405, 177 
 
 Philler, 161 Pa. St. 157, 580 
 
 Pittsburgh Junction R. Co., 122 
 Pa. St. 511, 9 Am. St. Rep. 
 128, 98 
 
 Appleton, etc., Co. v. Jesser, 87 
 
 Mass. (5 Allen), 446, 76 
 
 Arapahoe, etc., Co. v. Stevens, 13 
 
 Colo. 534. 147, 336 
 
 Archer v. Murphy, 26 Wash. L. 
 
 Rep. 98, 509 
 
 v. Rose, 3 Brewster 264, 364 
 
 v. Water- works Co., 50 N. J. 
 Eq. 33, 494 
 
 Ardes Co. v. North American, 
 
 etc., Co., 66 Pa. St. 375, 181, 543 
 Arenz v. Weir, 89 111. 25, 639 
 
 Arkadelphia, etc., Mills v. Trim- 
 ble, 51 Ark. 316, 374 
 Arkansas, etc., Co. v. Farmers', 
 
 etc., Co., 13 Colo. 587, 326, 358 
 Armington v. Palmer (R. I.), 43 
 
 L. R. A. 95, 40,41 
 
 Armour v. Town Co., 98 Ga. 458, 
 
 25 S. E. Rep. 504, 436 
 
 Armour & Co. v. East, etc., T. Co., 
 
 98 Ga. 458, 25 S. E. Rep. 504, 431 
 Arms v. Conant, 36 Vt. 744, 
 
 251, 500, 541, 543 
 Armstrong v. Karshner, 47 Ohio 
 St. 276, 24 N. E. Rep. 897, 
 
 371, 393, 406, 407 
 Arnold v. Ruggles, 1 R. I. 165, 320 
 Arthur v.Willus, 44 Minn. 409, 46 
 
 N. W. Rep. 851, 619,620 
 
 Ashbury, etc., Co. v. Riche, L. R. 
 
 7 H. L. 653, 213, 219 
 
 Ashley, etc., Co. v. Illinois, etc., 
 Co., 164 111. 149, 45 N. E. Rep. 
 410, 132 
 
 Ashley's Case, x,. R. 9 Eq. 263, 396 
 Ashtabula, etc., R. Co. v. Smith, 
 
 15 Ohio St. 328, 367 
 
 Ashton v. Burbank, 2 Dill (C. C.) 
 
 435, 409, 529, 531 
 
 v. Dashaway Assn., 84 Cal. 61, 454 
 Ashuelot, etc., R. Co. v. Elliot, 52 
 
 N. H. 387, 58 N. H. 451, 94 
 
 v. Marsh, 55 Mass. 507, 578 
 
 Ashuelot R. Co. v. Elliot, 58 N. 
 
 H. 451, 86 
 
 Ashurst's Appeal, 60 Pa. St. 290, 
 
 223, 552 
 Ashville Div. No. 15 v. Astor, 92 
 
 N. C. 578, 71, 677 
 
 Association v. Coriell, 34 N. J. 
 
 Eq. 383, 563 
 
 v. Stonemetz, 29 Pa. St. 534, 586 
 v. Walker, 83 Mich. 386, 47 N. 
 W. Rep. 338, 383 
 
 Asylum v. New Orleans, 105 U. S. 
 
 362, 110 
 
 Atchison Co. Bank v. Durfee, 118 
 
 Mo. 431, 144 
 
 Atchison, etc., R. Co. v. Denver, 
 etc., R. Co., 110 U. S. 667, 165 
 v. Fletcher, 35 Kan. 236, 250 
 
 v. Nave, 38 Kan. 744, 5 Am. St. 
 Rep. 803, 84, 90, 117, 125, 667 
 
 Athol, etc., Co. v. Carey, 116 
 
 Mass. 471, 363, 364, 368 
 
 Atkinson v. Foster, 134 111. 472, 473 
 v. Marietta, etc., R. Co., 15 Ohio 
 
 St. 21, 120 
 
 v. Railway Co., 15 Ohio St. 21, 71 
 Atlantic, etc., Co. v. Mason, 5 R. 
 1. 463, 503 
 
 v. Pacific R. Co., 1 Fed. Rep. 
 
 745, 214 
 
 v. Sanders, 36 N. H. 252, 540, 502 
 v. Sullivant, etc., Co., 5 Ohio 
 St. 276, 71 
 
 Atlantic, etc., Mills v. Abbott, 9 
 Cush. (Mass.) 423, 373 
 
 v. Indian, etc., Mills (Mass.), 
 
 17 N. E. Rep. 496, 582 
 
 v. Indian Orchard Mills, 147 
 Mass. 268, 583 
 
 Atlantic, etc., R. Co. v. Dunn, 19 
 
 Ohio St. 162, 237 
 
 Attorney-General v. Aqueduct 
 
 Corporation, 133 Mass. 361, 84 
 v. Bay State, etc., Co., 99 Mass. 
 
 148, 267 
 
 v. Central R. Co., 50 N. J. Eq. 
 52, 24 Atl. Rep. 964, 25 Atl. 
 Rep. 942, 166 
 
 v. Downing, Amb. 550, 1 Dick 
 414, 3 Ves. 714, 5 Ves. 300, 8 
 Ves. 256, 152 
 
 v. Great Eastern R. Co., 5 App. 
 
 Cas. 473, 219 
 
 v. Great Northern R. Co., 5 
 
 App. Cas. 481, 128 
 
 v. Hanchett, 42 Mich. 436, 64 
 
 v. Looker, 111 Mich. 498, 69 N. 
 
 W. Rep. 929, 521 
 
 v. Lorman, 59 Mich. 157, 33
 
 XXIV 
 
 TABLE OF CASES. 
 
 [References are to Pages.'] 
 
 Attorney-General v. Mercantile, 
 
 etc., Ins. Co., 121 Mass. 524, 20 
 v. North American Ins. Co., 82 
 
 N. Y. 172, 28 
 
 v. Petersburg R. Co. 6 Ired. 
 
 (N. C.)456, 82 
 
 v. Superior, etc., R. Co., 93 Wis. 
 
 604, 125 
 
 v. Tudor, etc., Co., 104 Mass. 
 
 239, 83 
 
 v. Utica, etc., Co., 2 John. Ch. 
 
 371, 83 
 
 Auburn Bolt & Nut Works v. 
 
 Schultz, 143 Pa. St. 256, 22 
 
 Atl. Rep. 904, 384 
 
 Auburn, etc., Co. v. Sylvester, 68 
 
 Hun (N. Y.) 401, 671 
 
 Auer v. Lombard, 33 U. S. App. 
 
 438, 72 Fed. Rep. 209, 19 C. C. 
 
 A. 72, 646, 653 
 
 Auerbach v. Le Sueur, etc., Co., 
 
 Minn. 291, 175, 177, 217 
 
 Aurora Society v. Paddock, 80 111. 
 
 264 178, 180 
 
 Austin v. Searing, 16 N. Y. 112, . 
 
 69 Am. Dec. 665, 144, 146, 298 
 v. Tecumseh Nat'l Bank, 49 
 
 Neb. 412, 68 N. W. Rep. 628, 
 
 35 L. R. A. 444, 194 
 
 Aultman's Appeal, 98 Pa. St. 500, 
 
 630, 633 
 Ayers' Case, 25 Beav. 513, 388 
 
 Ayers v. French, 41 Conn. 142, 320 
 Aylesworth v. Curtis, 19 R. I. 516, 
 
 61 Am. St. Rep. 785, 625 
 
 B 
 
 Bagby v. A. M. & O. R. Co., 86 
 
 Pa. St. 291, 658 
 
 Bagg's Case, 11 Co. 93, 297, 303 
 
 Bagley v. Tyler, 43 Mo. App. 195, 
 
 643, 646 
 Bagshaw v. Eastern, etc., R. Co., 
 
 7 Hare 114, 450 
 
 Baile v. Educational Society, 47 
 
 Md. 117, 372 
 
 Bailey v. Champion, etc., Co., 77 
 
 Wis. 453, 311 
 
 v. Clark, 21 Wall. 284, 308 
 
 v. Coke Co., 69 Pa. St. 334, 350 
 
 v. Hannibal, etc., R. Co., 17 
 
 Wall. 96, I Dillon (C. C.) 74, 319 
 v. Strohecker, 38 Ga. 259, 496 
 
 Bainbridge v. Smith, L. R. 41 Ch. 
 Div. 462, 33 Am. and Eng. 
 Corp. Cas. 172, ' 542 
 
 Baines v. Babcock, 95 Cal. 581, 27 
 Pac. Rep. 674, 450, 637 
 
 Baird v. Shipman, 132 111. 16, 7 L. 
 
 R. A. 128, 571 
 
 Baker v. Cotter, 45 Maine 236, 577 
 v. Drake, 66 N. Y. 518, 494 
 
 v. Marshall, 15 Minn. 177 (Gill 
 
 136), 496 
 
 v. Wasson, 53 Tex. 150, 476 
 
 v. Woolston, 27 Kan. 185, 292 
 
 Baker's App., 109 Pa. St. 461, 521, 535 
 
 Balch v. Wilson, 25 Minn. 299, 659 
 
 Baldwin v. Canfield, 26 Minn. 43, 
 
 10, 320, 439, 466, 471 
 v. Hole, 1 Wall. 223, 249 
 
 v. Hosrner, 101 Mich. 119, 25 L. 
 R. A. 739, 610 
 
 Balkis, etc., Co. v. Tompkinson, 
 
 L. R. (1893) A. C. 396, 482, 494 
 Baltimore, etc., R. Co. v. Boone, 
 
 45 Md. 344, 237 
 
 v. Fifth Baptist Church, 108 U. 
 
 a 317 2 
 
 v. Hambleton,77 Md. 341, 431 
 
 v. Hambleton (Md., 1893), 26 
 
 Atl. Rep. 279, 419 
 
 v. Pumphrey (Md.), 21 Atl. Rep. 
 559, 371 
 
 Bandenstein v. Hoke, 101 Cal . 131 , 76 
 Banet v. Alton, etc., R. Co., 13 
 
 111. 504, 528, 531, 532 
 
 Bangor, etc., Co. v. Robinson, 52 
 
 Fed. Rep. 520, 496 
 
 Bangor, etc., R. Co. v. Smith, 47 
 
 Maine 34, 23 
 
 Banigan v. Bard, 134 U. S. 291, 
 
 315, 317 
 Bank v. Alden, 129 U. S. 372, 352 
 
 v. Alvord, 31 N. Y. 473, 228 
 
 v. Bennett, 33 Mich. 520, 577 
 
 v. Bliss, 35 N. Y. 412, 625 
 
 v. Butchers', etc., Bank, 16 N. 
 
 Y. 258, 235 
 
 v. Byers, 139 Mo. 627, 571 
 
 v. Cady L. R., 15 A. C. 267, 487 
 v. Champlain, etc., Co., 18 Vt. 
 
 131, 191 
 
 v. Christopher, 40 N. J. L. 435, 
 
 539, 584 
 v. Clark, 139 N. Y. 307, 36 Am. 
 
 St. Rep. 705, 583 
 
 v. Dandridge, 12 Wheat. (U. S.) 
 
 64, 538 
 
 v. Delaware, etc., Co., 22 N. J. 
 
 Eq. 130, 180 
 
 v. Deveaux, 5 Cranch 61, 62 
 
 v. Dunn, 6 Pet. (U. S.) 51, 575 
 
 v Edgerton, 30 Vt. 182, 180 
 
 v. Flour Co., 41 Ohio St. 552, 
 
 539, 547 
 v. Gibbs, 3 McCord (S. C.) 377, 16
 
 TABLE OF CASES. 
 
 XXV 
 
 [Beferences are to Pages. ] 
 
 Bank v. Graham, 100 U. S. 699, 235 
 v. Gridley, 91 111. 457, 467 
 
 v. Hamilton, 21 111. 53, 80 
 
 v. Kurtz, 99 Pa. St. 344, 326 
 
 v. Laird, 2 Wheat. 390, 294 
 
 v. Lanier, 11 Wall. 369, 458, 476, 489 
 v. Lawrence (Mich.), 76 N. W. 
 
 Rep. 105, 623, 650 
 
 v. Lyman, 20 Vt. 666, 23 
 
 v. Montgomery, 3 111. 422, 281 
 
 v. Owens, 2 Pet. (U. S.) 527, 228 
 v. Palmer, 47 Conn. 443, 595 
 
 v. Patchin Bank, 13 N. Y. 309, 
 
 173, 235 
 
 v. Pierson, 112 Mich. 410, 569 
 
 v. Rindge, 57 Fed. Rep. 279, 
 
 638, 643, 646 
 
 v. Rutland, etc., R. Co., 30 Vt. 
 
 159, 539 
 
 v. Stone, 121 Cal. 202, 576 
 
 v. Tisdale, 84 N. Y. 655, 577 
 
 v. Townsend, 139 U. S. 67, 224 
 
 v. Transportation Co., 18 Vt. 
 
 138, 191 
 
 v. Warren, 52 Mich. 557, 18 N. 
 
 W. Rep. 356, 293 
 
 v. Whitman, 76 Fed. Rep. 697, 
 
 51 U. S. App. 536, 642, 643 
 
 v. Whittle, 78 Va. 737, 181 
 
 v. Young, 37 Mo. 398, 277 
 
 Bank, etc., v. Earl, 13 Peters (U. 
 
 S.) 595, 113 
 
 v. Earl, 13 Pet. 588, 100 
 
 v. Pinson, 58 Miss. 421, 38 Am. 
 
 Rep. 330, 146, 509 
 
 v. Potts, etc., Co., 90 Mich. 345, 
 
 181, 182 
 Bank of Atchison Co. v. Byers, 
 
 139 Mo. 627, 568 
 
 Bank of Atchison v. Durfee, 118 
 
 Mo. 431, 489 
 
 Bank of Attica v. Manufacturers', 
 etc., Bank, 20 N. Y. 501, 
 
 458, 463, 465 
 
 Bank of Augusta v. Earle, 13 Pet. 
 517, 224 
 
 Bank of Columbia v. Page, 6 Ore. 
 431, 278 
 
 v. Patterson, 7 Cranch (U. S.) 
 298, 160 
 
 Bank of Commerce v. Bank of 
 Newport, 11 C. C. A. 484, 63 
 Fed. Rep. 898, 27 U. S. Ap- 
 peal 486, 489, 491 
 
 Bank of Com. Appeal, 73 Pa. St. 
 59, 429 
 
 Bank of England v. Moffat, 3 Bro. 
 
 Ch. 262, 161 
 
 Bank of Ga. v. Harrison, 66 Ga. 
 
 696, 496 
 
 Bank of Genesee v. Patchin 
 
 Bank, 19 N. Y. 312, 171 
 
 Bank of Hindustan v. Alison, L. 
 
 R. 6 C. P. 54, 297 
 
 Bank of Kentucky v. Schuylkill 
 
 Bank, 1 Pars. Eq. Cas. 180, 332 
 Bank of Louisville v. Gray, 84 
 
 Ky. 565, 430 
 
 Bank of Manchester v. Allen, 11 
 
 Vt. 302, 42 
 
 Bank of Mich. v. Niles, 1 Doug. 
 
 (Mich.) 401, 208 
 
 Bank of Montreal v. Potts, etc., 
 
 Co., 90 Mich. 345, 183 
 
 Bank of North America v. Rindge, 
 
 154 Mass. 203, 13 L. R. A. 56, 
 
 645, 650, 652 
 Bank of Pa. v. Commonwealth, 
 
 19 Pa. St. 144, 87 
 
 Bank of Redemption v. Boston, 
 
 125 U. S. 60, 107 
 
 Bank of Shasta v. Boyd, 99 Cal. 
 
 604, 73 
 
 Bank of U. S. v. Planter's Bank, 
 
 9 Wheat. 904, 16 
 
 Bank of Utica v. Smallev, 2 Cowen 
 
 (N. Y.) 770, 471 
 
 Bank of Wilmington v. Wollas- 
 
 ton, 3 Harr. (Del.) 90, 146 
 
 Barbor v. Boehm, 21 Neb. 450, 
 
 277, 278 
 
 Barbot v. Mutual, etc., Assn., 100 
 
 Ga. 681 , 28 S. E. Rep. 498, 146 
 Barclay v. Quicksilver, etc., Co., 
 
 6 Lans. 25, 657 
 
 v. Wainwright, 14 Ves. Jr. 67, 439 
 Bard v. Poole, 12 N. Y. 495, 264 
 
 Bardstown R. Co. v. Metcalf, 4 
 Mete. (Ky.) 199, 81 Am. Dec. 
 541, 180 
 
 Bargate v. Shortridge, 5 H. L. Cas. 
 
 297, 294, 464 
 
 Barker v. Guarantee, etc., Co., 
 
 (N. J.), 31 A-tl. Rep. 174, 
 Barnes v. Brown, 80 N. Y. 527, 
 
 337, 
 v. Brown, 130 N. Y. 372, 
 v. Gas, etc., Co., 27 N. J. Eq. 33, 584 
 Barnhardt v. Star Mitfs (N. C), 
 
 31 S. E. Rep. 719, 579 
 
 Barr v. N. Y., etc., R. Co., 125 
 
 N. Y. 263, 171, 342, 354, 552, 553 
 v. Pittsburg, etc., Co., 51 Fed. 
 
 Rep. 33, 525 
 
 v. Pittsburg, etc., Co., 57 Fed. 
 Rep. 86, . 549 
 
 356 
 
 459 
 494
 
 XXVI 
 
 TABLE OP CASES. 
 
 [References are to Pages."] 
 
 Barr v. Plate Glass Co., 57 Fed. 
 
 Rep. 86, 17 U. S. App. 124, 
 
 551 553 
 v. Railroad Co., 125 N. Y. 263, ' 348 
 Barrick v. Gifiord, 47 Ohio St. 
 
 180, 21 Am. St. R. 798, 
 
 10, 180, 630 
 Barron v. Burnside, 121 U. S. 186, 270 
 v. Burrill, 86 Maine 72, 29 Atl. 
 
 Rep. 938, 292, 293, 629 
 
 Barrow S. S. Co. v. Kane, 170 U. 
 
 S. 100, 281 
 
 Barrow's Case, L. R. 14 Ch. Div. 
 
 432, 341 
 
 Barrv v. Exchange Co., 1 Sandf. 
 
 Ch. (N. Y.) 280, 180, 308 
 
 Barse, etc., Co.v.Roug, etc., Co., 
 
 16 Utah 59, 272 
 
 Barstow v. Savage M. Co. 64 Cal. 
 
 388, 49 Am. Rep. 705, 471, 479 
 Barth v. Backus, 140 N. Y. 230, 
 
 23 L. R. A. 47, 245 
 
 Bartholomew v. Derby Rubber 
 
 Co., 69 Conn. 521, 61 Am. St. 
 
 Rep. 57, 178, 672 
 
 Bartlett v. Drew, 57 N.Y. 587, 321,606 
 Barton v. Association, 114 Ind. 
 
 226, 16 N. E. Rep. 486, 524,526 
 v. Plank, etc., Co., 17 Barb. 
 
 397, 190 
 
 Bash v. Mining Co., 7 Wash. 122, 
 
 34 Pac. Rep. 464, 68 
 
 Bashford, etc., Co. v. Agua, etc., 
 
 Co. (Ariz.), 35 Pac. Rep. 983, 77 
 Bass v. Chicago, etc., R. Co., 42 
 
 Wis. 654, 236 
 
 v. R. N., etc., Co., Ill N. C. 439, 
 
 16 S. E. Rep. 402, 133 
 
 Basshor v. Dressel, 34 Md. 503, 26 
 Bastian v. Modern Woodmen of 
 
 America, 166 111. 595, 252 
 
 Basting v. Northern, etc., Co., 61 
 
 Minn. 307, 474, 632 
 
 Bateman v. Mid-Wales R. Co., 
 
 Lower Courts 1 C. P. 499, 175 
 Bates v. Androscoggin, etc., R. 
 
 Co., 49 Maine 491, 316 
 
 v. Coronado Beach Co., 109 
 
 Cal. 160, 173 
 
 v. Wilson (Colo.), 24 Pac. Rep. 
 
 <J9, 598 
 
 Bates Countv v. Winter, 112 U. S. 
 
 325, 195 
 
 Bath, etc., Co. v. Claffy, 151 N.Y. 
 
 24, 36 L. R. A. 664, 220, 221, 246 
 Bathe v. Society, 73 Iowa 11, 558 
 
 Battelle v. Northwestern, etc., Co., 
 
 37 Minn. 89, 50, 51, 52, 549, 553 
 v. Pavement Co., 37 Minn. 89, 553 
 
 Batty v. Adams Co., 16 Neb. 44, 19 
 Bavington v. Dougherty, 44 Md. 
 
 380, 378 
 
 v. Railroad Co., 34 Pa. St. 358, 384 
 Bawknight v. Liverpool, etc., Co., 
 
 55 Ga. 194, 283 
 
 Baxter v. Coughlan (Minn.), 72 
 
 N. W. Rep. 797, 569, 573 
 
 Bayard v. Farmers' Bank, 52 Pa. 
 
 St. 232, 486 
 
 Bayless v. Orn, Freem. Ch. 161, 
 
 176, 588 
 
 B., etc., R. Co. v. Gallahue, 12 
 
 Grat. (Va.) 655, 65 Am. Dec. 
 
 254, 62 
 
 Beach v. Methodist, etc., Church, 
 
 96 111. 177, 384 
 v. Miller, 23 111. App. 151, 546 
 v. Miller, 130 111. 162, 549, 551 
 v. Miller, 17 Am. St. Rep. 298, 552 
 v. Smith, 30 N.Y. 116, 375 
 
 Bean v. Trust Co., 122 N. Y. 622, 477 
 
 Bear v. Heaslev, 98 Mich. 279, 24 
 
 L. R. A. 6i5, 18 
 
 Beard v. Bayse, 7 B. Mon. 133, 261 
 v. Union, etc., Co., 71 Ala. 60, 272 
 
 Beaston v. Farmers' Bank, 12 Pe- 
 ters (U. S.) 102, 61 
 
 Beatty v. Transportation Co., 12 
 Canada S. C. 598, 510 
 
 Beddit v. Singer Mfg. Co., 32 S. 
 E. Rep. (N. C.) 392, 236 
 
 Bedford R. Co. v. Bowser, 48 Pa. 
 St. 29, 95 
 
 Beecher v. M. & P. Rolling, etc., 
 
 Co., 45 Mich. 103, 217 
 
 Beer Company v. Massachusetts, 
 
 97 U. S. 25, 99 
 Beers v. Bridgeport Spring Co., 42 
 
 Conn. 17, 420, 421, 428, 430, 431 
 v. Hamburg-American, etc., Co., 
 
 62 Fed. Rep. 469, 237 
 
 v. Hanghton, 9 Pet. (U. S.) 329, 621 
 Beesley v. Chicago, etc., Assn., 44 
 
 111. App. 278, 300 
 
 Behrev. National, etc., Co., 100 Ga. 
 
 213, 62 Am. St. R. 320, 235, 236 
 Beitman v. Steiner Bros., 98 Ala. 
 
 241, 515 
 
 Belfast, etc., Co. v. Moore, 60 
 
 Maine 561, 378,385 
 
 Belfast, etc., R. Co. v. Belfast, 77 
 
 Maine 445, 315, 317, 423 
 
 Belknap v. Boston, etc., R. Co., 
 
 49 N. H. 358, 237 
 
 Bell v. Farwell, 176 111. 489, 68 
 
 Am. St. Rep. 194, 
 
 610, 623, 643, 646, 650, 652
 
 TABLE OF CASES. 
 
 XXV11 
 
 [Beferences are to Pages."} 
 
 Bell, etc., R. Co. v. Christy, 79 
 
 Pa. St. 54. 53 
 
 Bell's App. 115 Pa. St. 88, 2 Am. 
 
 St. Rep. 532, 492, 632 
 
 Belleville v. Citizens', etc., Co., 
 
 152 111. 171, 26 L. R. A. 681, 
 
 115, 116, 117, 125 
 Bellows v. Todd, 39 Iowa, 209, 
 
 251, 500, 541 
 Belton v. Hatch, 109 N. Y. 593, 4 
 
 Am. St. R. 495, 17 N. E. Rep. 
 
 225 20, 299 
 
 Benbon v. Cook, 115 N. C. 324, 
 
 44 Am. St. Rep. 457, 178, 672 
 
 Benesh v. Mill-Owners', etc., Co., 
 
 103 Iowa 465, 72 N. W. Rep. 
 
 674, 194 
 
 Bennett v. St. Louis, etc., Co., 19 
 
 Mo. App. 349, 548 
 
 Bentlv Case, 2 Lord Raymond 
 
 1334, 305 
 
 Benwood, etc., Works v. Hutch- 
 inson & Bro., 101 Pa. St. 359, 288 
 Bercich v. Marye, 9 Nev. 312, 494 
 
 Bergeron v. Hobbs, 96 Wis. 641, 
 
 65 Am. St. R. 85, 71 N. W. 
 
 Rep. 1056, 36, 64, 66, 68 
 
 Bergman v. St. Paul, etc., Assn., 
 
 29 Minn. 275, 142, 143 
 
 Bergner, etc., Co. v. Drevfus, 
 
 (Mass. 1899), 51 N. E. Rep. 
 
 531, 249 
 
 Berney Nat'l Bank v. Pinckard, 
 
 etc., Co., 87 Ala. 577, 472 
 
 Bertha, etc., Co. v. Clute (N. Y.), 
 
 27 X. Y. Supp. 342, 272 
 
 Beveridge v. New York, etc., R. 
 
 Co., 112 N. Y. 1, 2 L. R. A. 
 
 648, 415 
 
 v. Railway Co., 112 N. Y. 1, 420 
 Bickley v. Schlag, 45 N. J. Eq. 
 
 533 352 
 
 v. Schlag, 46 N. J. Eq. 533, 354 
 
 Biddle, etc., Co. v. Steel Co., 16 
 
 Wash. 681, 182 
 
 Biddle's Appeal, 99 Pa. St. 278, 
 
 419, 444 
 Biglow v. Gregory, 73 111. 197, 
 
 33, 36, 595, 596, 599 
 Bilcher v. St. Louis, etc., Co., 101 
 
 Mo. 192, 13 S. W. Rep. 822, 153 
 Bill v. Western LTnion, etc., Co., 
 
 16 Fed. Rep. 141, 449, 550 
 
 Billings v. Robinson, 94 N. Y. 
 
 415, 639 
 
 Bird v. Chicago, etc., R. Co., 137 
 
 Mass. 428, 486 
 
 Bird, etc., Co. v. Humes, 157 Pa. 
 
 St. 278, 545 
 
 Birmingham, etc., Co. v. Bank 
 
 (Ala.), 20 L. R. A. 600, 491 
 
 Birmingham Nat'l Bank v. Ro- 
 den, 97 Ala. 404, 11 So. Rep. 
 883, 495 
 
 Bish v. Bradford, 17 Ind. 490, 394 
 Bishop v. American, etc., Co., 51 
 111. App. 417, 170 
 
 v. American, etc., Co., 157 111. 
 
 284, 170 
 
 v. Globe Co., 135 Mass. 132, 282, 489 
 Bissell v. Heath, 98 Mich. 472, 57 
 
 N. W. Rep. 585, 296, 392, 393, 397 
 v. Michigan, etc., R. Co., 22 N. 
 Y 258 
 
 127, 177*, 200, 204, 207, 217, 220, 235 
 v. Spring Valley Township, 110 
 U. S. 162, 162 
 
 Bissit v. Kentucky River Nav. 
 
 Co., 15 Fed. Rep. 353, 658 
 
 Biorngaard v. Goodhue, etc., 
 
 Bank, 49 Minn. 483, 450, 510, 524 
 Blachard v. Kaull, 44 Cal. 440, 596 
 Black v. Caldwell, 83 Fed. Rep. 
 
 880, 260 
 
 v. Canal Co., 24 N. J. Eq. 455, 95 
 v. Canal Co., 24 N. J. Eq. 474, 131 
 v. Delaware, etc., Co., 24 N. J. 
 
 Eq. 455, 193 
 
 v. Homersham, L. R. 4 Excb. 
 
 Div. 24, 436 
 
 v. Zacharie & Co., 3 How. (U. 
 S.) 482, 459, 467 
 
 Black, etc., Soc. v. Vandyke, 2 
 
 Whart. 309, 305 
 
 Black River, etc., Co. v. Holway, 
 85 Wis. 344, 55 N. W. Rep. 
 418, 74, 543 
 
 Blair v. Illinois, etc., Co., 159 111. 
 
 350, 31 L. R. A. 269, 184 
 
 v. Perpetual, etc., Co., 10 Mo. 
 559, 47 Am. Dec. 129, 265 
 
 Blake v. Brown, 80 Iowa 277, 45 
 N. W. Rep. 751, 377 
 
 v. Domestic Mfg. Co.(N. J. Ch.), 
 
 38 Atl. Rep. 241, 171, 580 
 
 v. McClung, 172 U. S. 239, 57, 250 
 Blakeman v. Benton, 9 Mo. App. 
 
 107, 622 
 
 Blanc v. Paymaster Min. Co., 95 
 
 Cal. 524, 284 
 
 Blanchard v. Warner, 1 Blatchf. 
 
 (U. S.) 258, 151 
 
 Blien v. Rand, 79 N. W. Rep. 606, 
 
 292, 296, 366, 410, 462 
 Bliss v. Kaweah, etc., Co., 65 Cal. 
 
 502, 542 
 
 Blisset v. Daniel, 10 Hare 478, 304
 
 XXV111 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages."] 
 
 Bliven v. Peru, etc., Co., 9 Abb. 
 
 N. Cas. 205, 673 
 
 Bloede v. Bloede, 84 Md. 129, 33 
 
 L. R. A. 107, 458, 459 
 
 Bloxam v. Metropolitan R. Co., 
 
 L. R. 3 Ch. App. 337, 452, 461 
 Blue v. Bank, 145 Ina. 518, 586 
 
 Blunt v. Walker, 11 Wis. 334, 78 
 
 Am. Dec. 709, 154, 157 
 
 v. Walker, 11 Wis. 349, 158 
 
 Board v. Montgomery, etc., Co., 
 
 64 Ala. 269, 101 
 
 Board, etc., v. Cooley, 58 N. W. 
 
 Rep. 150 (Minn.), 28 
 
 Board of Education v. Bakewell, 
 
 122 111. 339, 18 
 
 v. Greenbaume, 30 111. 610, 19 
 
 Board of Trade, etc., v. Nelson, 
 162 111. 431, 53 Am. S. R. 312, 
 
 144, 299, 300 
 Boardman v. Cutter, 128 Mass. 
 
 388, 321 
 
 v. Lake Shore, etc., R. Co., 84 
 N. Y. 157, 
 
 317, 319, 428, 430, 434, 435, 493 
 Boatman's, etc., Co. v. Able, 48 
 
 Mo. 136, 458, 473, 476 
 
 Bockover v. Life Assn., 77 Va. 85, 216 
 Bocock v. Alleghany, etc., Co., 82 
 Va. 913, 3 Am. St. Rep. 128, 
 
 147, 215, 216 
 Bogardus v. Trinity Church, 4 
 
 Sandf. Ch. 633, 153 
 
 Bohlen's Estate, 75 Pa. St. 304, 486 
 
 Bohn v. Brown, 33 Mich. 257, 633, 634 
 
 v. Loewer's, etc., Co., 30 N. Y. 
 
 S. R. 424, 147 
 
 Bolton v. Natal, etc., Co., 65 Law 
 
 J. Rep. N. S. 786, 424 
 
 Bon Aqua, etc., Co. v. Standard, 
 
 etc., Co., 34 W. Va. 764, 73 
 
 Bond v. Terrell, etc., Co., 82 Tex. 
 
 309, 18 S. W. Rep. 691, 199,227 
 Bonnell v. Griswold, 80 N. Y. 128, 570 
 Booth v. Bank, 50 N. Y. 396, 236 
 
 v. Clark, 17 How. (U. S.) 321, 
 
 610, 657 
 v. Dear, 96 Wis. 516, 71 N. W. 
 
 Rep. 816, 616, 637 
 
 v. Robinson, 55 Md. 419, 
 
 174, 186, 554 
 v. Wonderly, 36 N. J. L. 250, 
 
 71, 599 
 B. & L. Assn. v. Chamberlain, 4 
 S. Dak. 271, 56 N. W. Rep. 
 897, 67, 73 
 
 B. & O. R. Co. v. Harris, 12 Wal- 
 lace (U. S.) 65, 56, 60 
 v. Koontz, 104 U. S. 5, 60 
 
 Borland v. Haven, 37 Fed. Rep. 
 
 394, 638 
 
 Bosanquet v. St. John, etc., Co. 
 
 (Ch.), 77 Law J. Rep. 266, 424 
 Bosher v. Richmond, etc., Co., 89 
 
 Va. 455, 37 Am. St. Rep. 879, 389 
 Bosley v. National, etc., Co., 123 
 
 N. Y. 550, 236, 395 
 
 Bosshardt, etc., Co. v. Crescent, 
 
 etc., Co., 171 Pa. St. 109, 221 
 
 Boston, etc., Assn. v. Cory, 129 
 
 Mass. 435, 472, 473 
 
 Boston, etc., Co. v. Boston, etc., 
 
 Co., 149 Mass. 436, 40 
 
 v. Coffin, 152 Mass. 95, 8 L. R. 
 
 A. 740, 261 
 
 v. Langdon, 24 Pick. (Mass.) 
 
 49, 662, 665, 669, 671, 673,674, 675 
 v. Massachusetts, 97 U. S. 25, 99 
 v. Mercantile, etc., Co., 82 Md. 
 536, 38 L. R. A. 97, 182 
 
 Boston, etc., R. Co. v. Richard- 
 son, 135 Mass. 473, 482 
 v. Wellington, 113 Mass. 79, 
 
 296, 373, 382 
 Bott v. Pratt, 33 Minn. 323, 573 
 
 Botts v. Simpkinsville, etc., Co., 
 
 88 Ky. 54, 2 L. R. A. 594, 30, 193 
 Boulton Carbon Co. v. Mills, 78 
 
 Iowa 460, 341, 658 
 
 Boulware v. Davis, 90 Ala. 207, 657 
 Bourdette v. New Orleans, etc., 
 
 Co., 49 La. Ann. 1556, 415 
 
 Boutin v. Dement, 123 111. 143, 14 
 
 N. E. Rep. 62, 405 
 
 Bow v. Allentown, 34 N. H. 351, 26 
 Bowe v. Minn., etc., Co., 44 Minn. 
 
 460, 671 
 
 Bowers v. Hechtman, 45 Minn. 
 
 238 579 
 
 Bowie v. Lott, 24 La. Ann. 214, 622 
 Bovce v. Coal Co., 37 W. Va. 73, 205 
 v. Montauk, etc., Co., 37 W. Va. 
 
 73, 214, 217, 223 
 
 v. St. Louis, 29 Barb. 650, 153 
 
 v. Towsontown, etc., Trus.. 46 
 
 Md. 373, 76 
 
 Boyd v. Hall, 56 Ga. 563, 659 
 
 v. Hankinson (C. C. A.), 92 
 
 Fed. Rep. 49, 676 
 
 v. Peach Bottom R. Co., 90 Pa. 
 
 St. 169, 367, 370 
 
 v. Railway Co., 90 Pa. St. 169, 375 
 
 v. Rock port Mills, 7 Gray 406, 471 
 
 v. Worsted Mills, 149 Pa. St. 
 
 363, 24 Atl. Rep. 287, 432 
 
 Boyer v. Bover, 113 TJ. S. 689, 105 
 
 Boynton v. Andrews, 63 N. Y. 93, 349 
 
 v. Hatch, 47 N.Y. 225, 492
 
 TABLE OF CASES. 
 
 XXIX 
 
 [References are to Pages.] 
 
 Boynton v. Lynn, etc., Co., 124 
 Mass. 197, 221 
 
 v. Roe (Mich.), 72 N. W. Rep. 
 257, 181 
 
 Bradbury v. Boston Canoe Club, 
 
 153 Mass. 77, 174 
 
 Braddock v. Philadelphia, etc., 
 
 R. Co., 45 N. J. L. 363, 372 
 
 Bradford v. R. Co., 142 Ind. 383, 
 
 40 N. E. Rep. 741, 74 
 
 Bradley v. Ballard, 55 111. 413, 175 
 v. Ballard, 55 111. 413, 8 Am. 
 
 Rep. 656, 207, 220 
 
 v. Bander, 36 Ohio St. 28, 102 
 
 v. Ohio, etc., R. Co., 78 Fed. 
 
 Rep. 387, 119 N. C. 718, 57 
 
 v. Reppell, 133 Mo. 545, 54 Am. 
 St. Rep. 685, 32 S.W. Rep. 645, 
 
 70,662, 663 
 v. Richardson, 2 Blatchf. (C. 
 C.) 343, 447 
 
 Branch v. Charleston, 92 U. S. 
 677, 111 
 
 v. Jessup, 106 U. S. 468, 123, 317 
 Brand v. Lawrenceville, etc., R. 
 
 Co., 77 Ga. 506, 382 
 
 Brandenstein v. Hoke, 101 Cal. 
 
 131, 69 
 
 Brander v. Brander, 4 Yes. Jr. 
 
 800, 438, 439 
 
 Brandt v. Benedict, 17 N. Y. 93, 672 
 Brant v. Ehlen, 59 Md 1, 
 
 335, 341, 342, 492 
 Breitung v. Lindauer, 37 Mich. 
 
 217, 89, 626 
 
 Brent v. Bank of Wash., 10 Pet. 
 
 (IT. S.) 594, 144 
 
 Brewer v. Boston, etc., Co., 104 
 
 Mass. 378, 450, 525 
 
 Brewster v. Hartley, 37 Cal. 15, 
 
 99 Am. Dec. 237, 142, 505, 506 
 
 v. Michigan C. R. Co., 5 How. 
 
 Pr. 183, 284 
 
 v. Sime, 42 Cal. 139, 487 
 
 Bricklev v. Edwards, 131 Ind. 3, 
 
 30 N. E. Rep. 708, 73 
 
 Bridge Co. v. Woolley, 78 Ky. 523, 56 
 Bridgeport Bank v. New York, 
 etc., R. Co., 30 Conn. 231, 
 
 332, 476, 481 
 Bridgman v. Keokuk, 72 Iowa 42, 310 
 Briggs v. Spaulding, 141 U. S. 132, 
 
 464, 539, 544, 560, 561, 563, 565, 568 
 Bright v. Lord, 51 Ind. 272, 19 
 
 Am. Rep. 732, 428, 435, 436, 437 
 Brinckerhoff v. Bostwick, 88 N.Y. 
 
 52, 447 
 
 Brinckerhoff, etc., Co. v. Home, 
 etc., Co., 118 Mo. 447, 462, 489 
 
 Brinkerhoff-Farris Trust & S. Co. 
 
 v. Home L. Co., 118 Mo. 447, 144 
 Brisbane v. Railway Co., 94 N. Y. 
 
 204, 429, 435 
 
 Bristol v. Scranton, 63 Fed. Rep. 
 
 218, ' 547 
 
 Bristor v. Smith, 158 N. Y. 157, 
 
 53 N. E. Rep. 42, 635 
 
 British, etc., Co. v. Ames, 6 Mete. 
 (Mass.) 381, 
 v. Comm'rs, 31 N. Y. 32, 62 
 
 Broadway Bank v. McElrath, 13 
 
 N. J. Eq. 24, 471 
 
 Brockway v. Innes, 39 Mich. 47, 635 
 Broderipv. Salomon, L. R. (1895), 
 
 2 Ch. Div. 323, 602 
 
 Brooklyn, etc., Co. v. Bledsoe, 
 
 52 Ala. 538, 276 
 
 Brooklyn Steam T. Co. v. Brook- 
 lyn, 78 N. Y. 524. 662 
 B. & S. Smith Society v. Vandyke, 
 2 Whart. (Pa.) 309, 30 Am. 
 Dec. 263, 300 
 Brower v. Passenger R. Co., 3 
 
 Phil. 161, 381 
 
 Brown v. Adams, 5 Biss. (C. C.) 
 181, 467 
 
 v. Corbin, 40 Minn. 508, 32, 33 
 
 v. De Young, 167 111. 549, 47 N. 
 
 E. Rep. 863, 433 
 
 v. Duluth, etc., R. Co., 53 Fed. 
 
 Rep. 889, 344, 346, 358 
 
 v. Eastern Slate Co., 134 Mass. 
 
 590, 618, 621 
 
 v. Grand Rapids, etc., Co. (U. 
 S. C. C App.), 58 Fed. Rep. 
 286, 22 L. R. A. 817, 181 
 
 v. Grand Rapids, etc., Co. (C. C. 
 App.), 22 L. R. A. 817, 58 Fed. 
 Rep. 286, 183 
 
 v. Morrison, etc., Co. (Tenn. 
 
 Ch. App.), 42 S. W. Rep. 161, 182 
 v. Pacific, etc., Co. 5 Blatchf. 
 
 (C. C.)525, 509 
 
 v. Trail, 89 Fed. Rep. 641, 643 
 
 v. Winnisimmet Co., 11 Allen 
 
 (Mass.l 326, 131 
 
 v. Winnisimmet Co., 93 Mass. 
 326, 581 
 
 Brownell v. Old Colony R. Co., 
 
 164 Mass. 29, 29 L. R. A. 169, 125 
 Browning v. Hinkle, 48 Minn. 544, 342 
 Brovles v. McCoy, 5 Sneed (Tenn.) 
 
 602, 594 
 
 Bruce v. Piatt, 80 N. Y. 379, 569, 573 
 Bruff v. Mali, 36 N. Y. 200, 
 
 49, 328, 332 
 Bruffett v. Great Western R. Co., 
 25 111. 310, 664
 
 XXX 
 
 TABLE OF CASES. 
 
 [References are to Pages."] 
 
 Brundage v. Brundage, 60 N. Y. 
 544, 493 
 
 v. Deardorf, 55 Fed. Bep. 839, 18 
 Brunswick, etc., Co. v. United, 
 etc., Co., 35 Am. St. Bep. 390, 122 
 v. United, etc., Co., 85 Maine 
 532, 121, 204, 213 
 
 Brush, etc., Co. v. Montgomery 
 
 (Ala.), 21 So. Bep. 960, 576 
 
 Bryan v. Board, 90 Ky. 322, 13 S. 
 
 W. Bep. 276, 95 
 
 Bryants, etc., Co. v. Felt, 87 Maine 
 
 234, 33 L. B. A. 593, 384 
 
 Bucher v. Dillsburg, etc., B. Co., 
 
 76 Fa. St. 306, 372 
 
 Buck v. Boss, 68 Conn. 29, 57 Am. 
 
 St. Bep. 60, 323 
 
 Buckeve Marble Co. v. Harvey, 92 
 
 Tenn. 115, 18 L. B. A. 252, 209 
 Buckport, etc., B. Co. v. Brewer, 
 
 67 Maine 295, 377, 378 
 
 Bucksport, etc., Co. v. Buck, 68 
 
 Maine 81, 40 
 
 Budd v. Morrison, 58 Md. 423, 143 
 v. Multnomah, etc., B. Co., 15 
 Ore. 403, 15 Pac. Bep. 659, 3 
 Am. St. Bep. 169, 149, 404, 407 
 Buell v. Buckingham, 16 Iowa 284, 
 
 85 Am. Dec. 516, 181, 183, 548, 552 
 Buenaventura, etc.Co.v.Vassault, 
 
 50 Cal. 534, 502 
 
 Buffalo Co. Nat'l Bank v. Sharpe 
 (Neb. 1894), 58 N. W. Bep. 
 734, 584 
 
 Buffalo, etc., Co. v. Standard, etc., 
 
 Co., 106 N. Y. 669, 237 
 
 Buffalo, etc., B. Co. v. Dudley, 14 
 N. Y. 336, 
 94, 313, 362, 363, 380, 384, 406, 
 
 529, 531, 669 
 v. Dudley, 4 Kern (N. Y.) 336, 529 
 v. Gifford, 87 N. Y. 294, 367, 381, 407 
 v. Pottle, 23 Barb. (N. Y.) 21, 
 
 528, 532 
 Buffettv. Bailway Co., 40 N. Y. 
 
 168, 558 
 
 Boffington v. Bardon, 80 Wis. 635, 50 
 Building Assn. v. Lampson, 60 
 
 Minn. 422, 220 
 
 Building, etc., Assn. v. Chamber- 
 lain, 4 S. D. 271, 56 N. W. 
 Bep. 897, 77 
 
 Bulkley v. Whitcomb, 121 N. Y. 
 
 107, 659 
 
 Bullard v. Bank, 18 Wall. (U. S.) 
 
 589, 490 
 
 v. Chandler, 149 Mass. 532, 5 L. 
 B. A. 104, 261 
 
 Bullock v. Falmouth, etc., Co., 85 
 
 Ky. 184, 3 S. W. Bep. 129, 367 
 v. Turnpike Co., 85 Ky. 184, 363 
 Bump v. Butler Co., 93 Fed. Bep. 
 
 290, 672 
 
 Burbank v. Dennis, 101 Cal. 90, 45 
 Burden v. Burden, 40 N. Y. Supp. 
 
 499, 52 
 
 v. Burden (N. Y.),54 N. E. Bep. 
 
 17, 462 
 
 Burford v. Keokuk, etc., Co., 3 
 
 Mo. App. 159, 477 
 
 Burgess v. Seligman, 107 U. S. 20, 593 
 Burgess's Case, L. B. 15 Ch. Div. 
 
 507, 396 
 
 Burke v. Smith, 16 Wall. 390, 
 
 370, 371, 609 
 Burleigh v. Ford, 61 N. H. 360, 543 
 Burnap v. Haskins, etc., Co., 127 
 
 Mass. 586, 594 
 
 Burner v. Brown, 139 Ind. 600, 354 
 Burnes v. Pennell, 2 H. of L. Cas. 
 
 496, 520, 20, 296 
 
 Burnsville, etc., Co. v. State, 
 
 119 Ind. 382, 496 
 
 Burr v. McDonald, 3 Grat. (Va.) 
 
 215 588 
 
 v. Wilcox, 22 N. Y. 551, 366 
 
 Burrall v. Bushwick B. Co., 75 N. 
 
 Y. 211, 458 
 
 v. Bailroad Co., 75 N. Y. 211, 
 
 308, 309 
 Burrill v. Dollar, etc., Bank, 92 
 
 Pa. St. 134, 34 Am. Bep. 669, 148 
 v. Nahant Bank, 2 Met. (Mass.) 
 
 163, 542 
 
 Burrows v. North Carolina B. Co., 
 
 67 N. C. 376, 428, 435, 436, 437 
 v. Smith, 10 N. Y. 550, 53, 380 
 
 Burt v. Lodge, 66 Mich. 85, 33 N. 
 
 W. Bep. 13, 303 
 
 Burton v. Schildbach, 45 Mich. 
 
 504, 8 N. W. Bep. 497, 69, 77 
 
 v. St. George Society, 28 Mich. 
 
 261, 300, 303 
 
 Burton's App., 93 Ba. St. 214, 481 
 
 Busenback v. Attica, etc., Co., 43 
 
 Ind. 265, 35 
 
 Busey v. Hooper, 35 Md. 15, 293, 384 
 Bushnell v. Consolidated, etc., 
 
 Co. (111. 1891), 27 N. E. Bep. 
 
 596, 598 
 
 v. Consolidated, etc., Co., 138 
 
 111. 67, 74 
 
 v. Machine Co., 138 Til. 67, 27 
 
 N. E. Bep. 596, 70,71,663 
 
 Buswell v. Sup. Sitting, etc., 161 
 
 Mass. 224, 23 L. B. A. 846, 610
 
 TABLE OF CASES. 
 
 XXXI 
 
 [Beferences are to Pages.] 
 
 Butchers' Bank v. MacDonald, 
 
 130 Mass. 264, 73 
 
 v. Robinson, 52 Wis. 308, 10 N. 
 
 W. Rep. 512, 71 
 
 Butler v. Robbins Co., 151 111. 
 
 588, 182 
 
 Butler University v. Scoonover, 
 
 114 Ind. 281, 376 
 
 Butte, etc., Co. v. Montana, etc., 
 
 Co. (Mont.), 55 Pac.Rep. 112, 576 
 Butterfield v. Beardsley,28 Mich. 
 
 412, 20 
 
 Butternuts, etc., Co. v. North, 1 
 
 Hill (N. Y.) 518, 370, 371 
 
 Butterworth v. Kritzer Mills Co. 
 
 (Mich.), 72 N. VV. Rep. 990, 
 
 37, 173 
 Button v. Hoffman, 61 Wis. 20, 20 
 
 N. W. Rep. 667, 50 Am. Rep. 
 
 131, 10, 523, 672 
 
 Buttrick v. Nashua, etc., R. Co., 
 
 62 N. H. 413, 13 Am. St. Rep. 
 
 578, 471, 498, 583 
 
 v. Railroad Co., 62 N. H. 413, 539 
 Buxton v. Hamblem, 32 Maine 
 
 448, 277 
 
 Byers v. Franklin Coal Co. 106 
 
 Mass. 131, 620 
 
 v. Rollis, 13 Colo. 22, 333 
 
 Byrnes v. Mfg. Co., 65 Conn. 365, 
 
 28 L. R. A. 304, 184 
 
 Byron v. Carter, 22 La. Ann. 98, 465 
 
 C 
 
 Cable v. Marsh, 11 Neb. 243, 634 
 
 Cady v. Sanford, 53 Vt. 632, 247 
 
 Oesar v. Capell, 83 Fed. Rep. 403, 
 
 273, 276 
 Cahaill v. Insurance Co., 3 Doug. 
 
 (Mich.) 123, 141 
 
 Cahill v. Kalamazoo, etc., Co., 2 
 
 Doug. (Mich.) 124, 43 Am. 
 
 Dec. 457, 581 
 
 Calarels River Bridge v. Warren 
 
 Bridge, 7 Pick. (Mass.) 344, 35 
 Calcutta Jute Co. v. Nicholson, L. 
 
 R. 1 Ex. Div. 428, 244 
 
 Calder, etc., Co. v. Pilling, 14 
 
 M. & W. 81, 141 
 
 Caledonia, etc., Co. v. Helens- 
 burg, etc., Trustees, 2 Macq. 
 
 H. L. Cas. 391, 51 
 
 Caley v. Philadelphia, etc., R. 
 
 Co., 80 Pa. St. 363, 382, 370, 609 
 California v. Central, etc., Co., 
 
 127 U. S. 40, 114 
 
 v. Central Pac. R. Co., 127 U. S. 
 
 1, 25, 104 
 
 California v. Pac. R. Co., 127 U. 
 
 S. 139, 25 
 
 California Bank v. Kennedy, 167 
 
 U. S. 362, 186, 204, 213, 219 
 
 California, etc., Co. v. Callender, 
 
 94 Cal. 120, 377 
 
 v. Russell, 88 Cal. 277, 26 Pac. 
 
 Rep. 105, 382 
 
 v. Schafer, 57 Cal. 396, 362 
 
 Calkins v. State, 18 Ohio St. 366, 
 
 98 Ann. Dec. 121, 42 
 
 v. State, 18 Ohio St. 370, 43 
 
 Callaway, etc., Co. v. Clark, 32 
 
 Mo. 305, 135 
 
 Calumet, etc., Co. v. Haskell, etc., 
 
 Co., 144 Mo. 331, 66 Am. St. 
 
 Rep. 425. 539 
 
 Calumet Paper Co. v. Statts Ins. 
 
 Co., 96 Iowa 147, 64 N. W. 
 
 Rep. 782, 186 
 
 Camden, etc., R. Co. v. Elkins, 
 
 37 N. J. Eq. 273, 505 
 
 v. May's Landing, etc., Co., 48 
 
 N. J. L. 530, 202, 220, 221 
 
 Camden v. Stuart, 144 U. S. 104, 
 
 321, 322, 335, 338, 355 
 Camden, etc., Co. v. Swede, etc., 
 
 Co., 32 N. J. L. 15, 284,285 
 
 Came v. Brigham, 39 Maine, 35, 637 
 Cameron v. Kenvon-Connell, etc., 
 
 Co. (Mont.), 44 L. R. A. 508, 
 
 56 Pac. Rep. 358, 564, 567, 571 
 Camp v. Byrne, 41 Mo. 525, 252 
 
 Campbell's Case, 9 Ch. App. Cases 
 
 1, 297 
 
 Campbell v. American, etc., Co., 
 
 122 N. Y. 455, 11 L. R. A. 96, 
 
 315, 316, 494 
 
 v. Merchants', etc., Co., 37 N. 
 
 H. 41, 145 
 
 v. Morgan, 4 111. App. 100, 329, 496 
 Canada, etc., R. Co. v. Gebhard, 
 
 109 U. S. 527, 250, 255 
 
 Canal Co. v. Raby, 2 Price (Ex.) 
 
 93, 383 
 
 Canal St. Gravel Road v. Paas, 95 
 
 Mich. 372, 43 
 
 Canfield v. Gregory, 66 Conn. 9, 75 
 Capital City, etc., Co. v. State, 105 
 
 Ala. 406, 29 L. R. A. 743, 82, 668 
 Capps v. Hastings Prosp. Co., 40 
 
 Neb. 470, 58 N. W. Rep. 956- 
 
 958, 24 L. R. A. 25, 34, 63, 74, 75 
 Cardwell v. Kelly, 95 Va. (1898) 
 
 570, 28 S. E. Rep. 953, 40 L. R. 
 
 A. 240, 75, 492, 609 
 
 Carev, etc., v. Bliss, 151 Mass. 364, 
 
 25 N. E. Rep. 92, 85
 
 XXX11 
 
 TABLE OF CASES. 
 
 [References are to Pages. 1 ] 
 
 Carey, etc., v. Mining Co., 81 
 
 Iowa 674, 47 N. W. Eep. 882, 50 
 
 v.Morrill, 61 Vt. 598, 33 
 
 v. Williams, 79 Fed. Rep. 906, 506 
 
 Carey & Co. v. Morrill, 61 Vt. 598, 371 
 
 Carmody v. Powers, 60 Mich. 26, 
 
 26 N. W. Rep. 801, 48 
 
 Carnahan v. Western, etc., Co., 89 
 
 Ind. 526, 247 
 
 Carothers v. Philadelphia Co., 118 
 
 Pa. St. 468, 101 
 
 Carpenter v. Black Hawk, etc., 
 
 Mining Co., 65 N. Y. 43, 120, 180 
 v. New York, etc., R. Co., 5 
 
 Abb. Pr. 277, 437 
 
 Carr v. Le Fevre, 27 Pa. St. 413, 
 
 335, 351 
 Carroll v. Mullanphy, etc., Bank, 
 
 8 Mo. App. 249, 141, 465 
 
 Carson Citv, etc., Bank v. Carson 
 
 Citv, etc., Co., 90 Mich. 550, 
 
 30 Am. St. Rep. 454, 221, 223 
 
 Carson v. Gaslight Co., 80 Iowa 
 
 638, 453 
 
 v. Mining Co., 5 Mich. 288, 385, 409 
 Carson-Rand Co.. v. Stern, 129 Mo. 
 
 381, 32 L. R. A. 420, 275 
 
 Carsten v. Leidigh, etc., Co., 18 
 
 Wash. 450, 39 L. R. A. 548, 285 
 Cartan v. Father Matthew, etc., 
 
 Society, 3 Daly 20, 142 
 
 Carter, etc., Co. v. Hazzard, 65 
 
 Minn. 432, 407 
 
 v. Howe, etc., Co., 51 Md. 290, 
 
 34 Am. Rep. 311, 235 
 
 v. Ford, etc., Co., 85 Ind. 180, 447 
 Cartwright v. Dickinson, 88Tenn. 
 
 476, 7 L. R. A. 706, 17 Am. St. 
 
 Rep. 910, 12 S. W. Rep. 1030, 
 
 311, 313, 383, 405 
 Carver v. Manufacturing Co., 2 
 
 Story 432, 634 
 
 Cary, etc., Co. v. Thomas, 92 Tenn. 
 
 587, 277 
 
 Casco Nat'l Bank v. Clark, 139 N. 
 
 Y. 307, 582, 584 
 
 Case v. Bank, 100 U. S. 446, 489 
 
 v. Beauregard, 101 U. S. 688, 324 
 v. Kelley, 133 U. S. 21, 
 
 100, 132, 151, 153, 157 
 Case Mfg. Co. v. Soxman, 138 U.S. 
 
 431, 580 
 
 Case of Sutton's Hospital, 10 Rep. 
 
 23a, 140 
 
 Casey v. Galli, 94 U. S. 673, 658 
 
 Cashman v. Brownlee, 128 Ind. 
 
 260, 196 
 
 Cass v. Railroad Co., 80 Pa. St. 
 
 31, 377, 404 
 
 Cassaday v. American, etc., Co., 
 
 72 Ind. 95, 277, 280 
 
 Cassell v. Lexington, etc., Co., 
 
 (Ky.),9S. W. Rep. 502, 503 
 
 Castle v. Belfast, etc., Co., 72 
 
 Maine 167, 577 
 
 Castner v. Twitchell, etc., Co., 91 
 
 Maine 524, 523 
 
 Catlin v. Eagle Bank, 6 Conn. 233, 181 
 Cattle Co. v. Frank, 148 U. S. 603, 589 
 Cazeauxv.Mali,25Barb.578(N.Y.), 49 
 Caulkins v. Gas, etc., Co., 85 Tenn. 
 
 683, 4 Am. St. Rep. 786, 486, 567 
 Clearwater v. Meredith, 1 Wall. 25, 95 
 Cecil Nat'l Bank v. Watsontown 
 
 Bank, 105 U. S. 217, 432 
 
 Cedar Rapk.o, etc., Co. v. Butler, 
 
 83 Iowa 124, 398 
 
 Celluloid, etc., Co. v. Cellonite, 
 
 etc., Co., 32 Fed. Rep. 94, 40 
 
 Central City, etc., Bank v. Walk- 
 er, 66 N. Y. 424, 596 
 Central, etc., Assn. v. Ala., etc., 
 
 Co., 70 Ala. 130, 76 
 
 Central, etc., Co. v. Atlantic, etc., 
 
 R. Co. 50 Ga. 444, 494 
 
 v. Calif, 162 U. S. 91, 105 
 
 v. Citizens', etc., R. Co., 80 Fed. 
 
 Rep. 218, 89 
 
 v. Cullen, 40 Ga. 582, 185 
 
 v. Lowell, 4 Gray 474, 98 
 
 v. Smith, 76 Ala. 572, 173, 558 
 
 v. State (Ga.), 42 L. R. A. 518, 81 
 Central Nat'l Bank v. Williston, 
 
 138 Mass. 244, 471 
 
 Central Nebraska Nat'l Bank v. 
 Wilder, 32 Neb. 454, 49 N. W. 
 Rep. 369, 432, 435 
 
 Central, etc., R. Co. v. Ashling, 
 
 160 111. 373, 194 
 
 v. Brewer, 78 Md. 394, 27 L. R. 
 
 A. 63, 236, 557 
 
 v. Papot, 59 Ga. 342, 67 Ga. 675, 43 
 v. Pennsylvania, etc., R. Co., 
 31 N. J. Eq. 475, 184 
 
 Central Land Co. v. Obenchain, 
 
 92 Va. 130, 22 S. E. Rep. 876, 45 
 Central R. Co. v. Carr, 76 Ala. 
 
 388 282 
 
 v. Clark, 23 Minn. 422, 29 
 
 v. Collins, 40 Ga. 582, 454 
 
 V.Georgia, 92 U.S. 665, 31 
 
 v. Pennsylvania R. Co., 31 N. J. 
 Eq. 475, 39 
 
 Central Trans. Co. v. Pullman, 
 etc., Co., 139 U. S. 24, 11 Sup. 
 Ct. 478, 
 179, 187, 202, 205, 209, 210, 213, 215
 
 TABLE OF CASES. 
 
 XXX111 
 
 [References are to Pages."] 
 
 Central Trust Co. v. Columbus, 
 
 etc., R. Co., 87 Fed. Rep. 815, 181 
 Central Union, etc., Co. v. Brad- 
 bury, 106 Ind. 1, 82 
 Chaffee v. Rutland, etc., R. Co., 
 
 55 Vt. 110, 315, 318 
 
 Chaffin v. Cunnnings, 37 Maine 
 
 76, 296, 376 
 
 Chamberlain v. Broniberg, 83 Ala. 
 
 576, 181, 543 
 
 v. Hugenot, etc., Co., 118 Mass. 
 
 532, 432, 639 
 
 v. Pacific, etc., Co., 44 Cal. 103, 548 
 
 v. Painesville, etc., R. Co., 15 
 
 Ohio St. 225, 499 
 
 Chambers v. Falkner, 65 Ala. 448, 199 
 
 Champion v. Memphis, etc., R. 
 
 Co., 35 Miss. 692, 95 
 
 Chandler v. Bacon, 30 Fed. Rep. 
 538, 45 
 
 v. Sheep, etc., Co., (Utah) 49 
 Pac. Rep. 535, 404 
 
 Chapin v. School Dist., 35 N. H. 
 
 445, 199 
 
 Chapman, etc., Co. v. Oconto, etc., 
 Co., 89 Wis. 264, 46 Am. St. 
 Rep. 830, 122 
 
 Chappell's Case, L. R. C. Ch. App. 
 
 902, 464 
 
 Charles River Bridge v. Warren 
 Bridge, 11 Pet. (U. S.) 420, 
 
 35,96, 131 
 Charter Oak, etc., Co. v. Sawver, 
 
 44 Wis. 387, 281 
 
 Charlottsville, etc., v. Mahan, 136 
 
 U. S. 548, 435 
 
 Chase v. Curtis, 13 U. S. 452, 176, 247 
 v. Tuttle, 55 Conn. 455, 3 Am. 
 St. Rep. 64, 
 
 181, 522, 539, 540, 541, 543 
 ' Chas. Higgins Co. v. Higgins, etc., 
 Co., 144 N. Y. 462, 27 L. R. 
 A. 133, 41 
 
 Chattanooga, etc., R. Co. v. War- 
 then, 98 Ga. 599, 406, 407 
 Cheetham v. McCormick, 178 Pa. 
 
 St. 186, 342 
 
 Cheever v. Myer, 52 Vt. 66, 471 
 
 Cheltenham, etc., R. Co. v. Dan- 
 iel, 2 Q. B. Ad. & E. 281, 42 
 Eng. C. L. 675, 296 
 
 Chemical, etc., Bank v. Colwell, 
 SSandf. Ch. (N. Y.) 1, 539 
 
 v. Wagner, 93 Ky. 525, 20 S. W. 
 Rep. 535, 580 
 
 Chemical Nat'l Bank v. Colwell, 
 
 132 N. Y. 250, 466, 469, 542 
 
 iii— Private Corp. 
 
 Cherokee, etc., Co. v. Jones, 52 
 
 Ga. 276, 454 
 
 Cherokee Nation v. Kansas R. 
 
 Co., 135 U. S. 641, 25 
 
 Chesapeake, etc., R. Co. v. Miller, 
 
 114 U. S. 176, 124 
 
 Chester, etc., Co. v. Dewev, 16 
 
 Mass. 94, 220, 313, 376 
 
 Chestnut Hill, etc., Co. v. Rutter, 
 4 S. & R. (Pa.) 6, 8 Am. Dec. 
 675, 235 
 
 Chew v. Bank, 14 Md. 299, 283 
 
 Chewacla Lime Works v. Dis- 
 
 mukes, 87 Ala. 344, 135. 159, 221 
 Chicago v. Cameron, 120 111. 447, 447 
 Chicago Board of Trade v. People, 
 
 91 111. 80, 115 
 
 Chicago, etc., Assn. v. Ford, 46 111. 
 
 App. 576, 169 
 
 Chicago, etc., Co. v. Creamery 
 Co. (Ga.), 31 S. E. Rep. 809, 52 
 v. Chicago Nat'l Bank, 176 111. 
 
 224, 580 
 
 v. Fav, 164 111. 323, 482 
 
 v. Marsailles, 84 111. 145, 191 
 
 v. Needles, 113 U. S. 574, 99, 665 
 v. People's, etc., Co., 121 111. 
 530, 531, 2 Am. St. Rep. 124, 
 
 120, 121, 167, 204 
 v. Yerkes (111.) 30 N. E. Rep. 
 667, 524 
 
 Chicago, etc., R. Co. v. Allerton, 
 
 18 Wall. (U. S.) 233, 310 
 
 - v. Colman, 18 111. 297, 579 
 
 v. Hall, 135 Ind. 91, 23 L. R. 
 
 A. 231, 198 
 
 v. Howard, 7 Wall. (U. S.) 392, 172 
 v. Minn., etc., Co., 29 Fed. Rep. 
 
 337, 60 
 
 v. Moffatt, 75 111. 524, 196 
 
 v. People, 73 111. 541, 115 
 
 v. Suffern, 129 111. 274, 165 
 
 v. Union Pac. R. Co., 47 Rep. 15, 202 
 Child v. Boston, etc., AVorks, 137 
 
 Mass. 516, 50 Am. Rep. 328, 633 
 v. Hudson Bav Co., 2 Peere Wil- 
 liams 207 (1723), 8 
 v. Iron Works, 137 Mass. 516, 634 
 Childs v. Boston, etc., Works, 137 
 
 Mass. 516, 176 
 
 v. Harris, etc., Co., 104 N. Y. 
 
 477, 286 
 
 v. Hurd, 32 W. Va. 99, 9 S. E. 
 Rep. 362, 34, 35, 37, 64 
 
 Chittenden v. Thannhauser, 86 N. 
 
 Y. 95, 569 
 
 Chollar, etc., Co. v. Wilson, 66 
 Cal. 374, 523
 
 XXXIV 
 
 TABLE OF CASES. 
 
 [References are to Pages.'] 
 
 Chouteau, etc., Co. v. Floyd, 74 
 
 Mo. 286, 403, 406 
 
 Chouteau, etc., Spring Co. v. Har- 
 ris, 20 Mo. 382, 
 
 460, 469, 473, 475, 632 
 Christensen v. Colby, 43 Hun 
 
 (N.Y.)362, 412 
 
 v. Eno, 106 N. Y. 97, 60 Am. 
 
 Rep. 431, 308, 337, 340, 348, 492 
 v.Qumtard,36 Hun (N. Y.)334, 412 
 v. Quintard, 8 N. Y. Supp. 400, 348 
 Christian v. American Freehold, 
 i etc., Co., 89 Ala. 198, 277, 280 
 v. Bowman, 49 Minn. 99, 598, 599 
 Christian, etc., Co. v. Fruitdale, 
 etc., Co. (Ala.), 25 So. Rep. 
 566, 71 
 
 Christian Union v. Yount, 101 U. 
 
 S. 352, 155, 260, 280 
 
 Chubb v. Upton, 95 U. S. 665, 74 
 
 Church v. Citizens', etc., R. Co., 
 78 Fed. Rep. 526, 342 
 
 v. Cementico Co. (Minn.), 77 
 
 N. W. Rep. 548, 566 
 
 v. Coke Co., 6 Ad. & El. 846, 160 
 Chubb v. Upton, 96 U. S. 328, 321 
 
 Cincinnati v. Cameron, 33 Ohio 
 
 St. 336, 231 
 
 Cincinnati, etc., Co. v. Bate, 96 
 
 Ky. 356, 49 Am. St. R. 300, 40 
 v. Rosenthal, 55 111. 85, 278 
 
 Cincinnati, etc., R.Co.v. Citizens' 
 Nat'l Bank, 56 Ohio St. 351 , 43 
 L. R. A. 777, 328, 330, 334, 480 
 Citizens', etc., Assn. v. Coriell, 34 
 
 N. J. Eq. 383, 559 
 
 Citizens', etc., Co. v. Sortwell, 8 
 
 Allen (Mass.) 217, 499, 521, 534 
 Citizens', etc., R. Co. v. Robbins, 
 
 128 Ind. 449, 485 
 
 Citizens' Nat'l Bank v. Elliott, 55 
 
 Iowa 104, 39 Am. Rep. 167, 584 
 City Bank v. Bruce, 17 N. Y. 507, 
 
 190, 191 
 v. Bartlett, 71 Ga. 797, 396, 398 
 
 City of Ellsworth v. Rossiter, 46 
 
 Kan. 237, 231 
 
 City of Lexington v. Butler, 14 
 
 " Wallace (U. S.) 282, 177 
 
 City of Lincoln v. Sun, etc., Co., 
 59 Fed. Rep. 756, 8 C. C. A. 
 253, 538 
 
 City of St. Louis v. Western Union, 
 
 etc., Co., 63 Fed. Rep. 68, 117 
 
 City Ins. Co. v. Bank, 68 111. 348, 675 
 
 City, etc., Co. v. Carrugi, 41 Ga. 
 
 660, 230 
 
 v. State, 88 Tex. 600, 32 S. W. 
 
 Rep. 1033, 179 
 
 City, etc., R. Co.v. Bank, 62 Ark. 
 
 33, 31 L. R. A. 535, 174 
 
 City Water Co. v. State, 88 Tex. 
 
 600, 180 
 
 Claflin v. Farmers', etc., Bank, 25 
 
 N. Y. 293, 331 
 
 Clapp v. Astor, 2 Edw. Chan. 379, 437 
 v. Oberlin, etc., Assn., 35 Ohio 
 
 St. 258, 190 
 
 v. Peterson, 104 111. 26, 191, 606 
 Claremount, etc., Co. v. Royce,42 
 
 Vt. 730, 260 
 
 Clark v. American, etc., Co., 86 
 Iowa 436, 17 L. R. A. 557, 
 
 313,342,551, 584 
 v. Barnard, 108 U. S. 436, 57 
 
 v. Bever, 139 U. S. 96, 321, 322, 348 
 v. German, etc., Bank, 61 Miss. 
 
 611, 471 
 
 v. Insurance Co., 6 Cush. 342, 150 
 v. Lincoln, etc., Co., 59 Wis.655, 334 
 v. Middleton, 19 Mo. 53, 276 
 
 v. Mutual, etc., Co. (D. C), 43 
 
 L. R. A. 391, 80, 145, 257 
 
 v. Turner, 73 Ga. 1, 326, 380 
 
 Clark Co. v. Winchester, etc., Co. 
 
 (Ky.), 43 S. W. Rep. 716, 311 
 Clarke v. Blackmar, 47 N. Y. 150, 98 
 v. Central, etc., R. Co., 50 Fed. 
 
 Rep. 338, 15 L. R. A. 683, 506, 508 
 v. Cold Spring, etc., Co. (Minn. 
 
 1894), 59 N. W. Rep. 632, 616 
 
 v. Jones, 87 Ala. 474, 6 So. Rep. 
 
 362, 74 
 
 v. Lincoln, etc., Co., 59 Wis. 655, 
 
 18 N. W. Rep. 492, 358 
 
 v. Thomas, 34 Ohio St. 96, 409 
 
 Clarkson v. Clarkson, 18 Barb. 
 
 646, 445 
 
 Clay, etc., Co. v. Huron, etc., Co., 
 
 31 Mich. 346, 276, 280 
 
 Clayton v. Ore Knob Co., 109 N. 
 
 C. 385, 352, 353, 354 
 
 Clearwater v. Meredith, 1 Wall 
 
 (U. S.) 25, 31, 88, 192, 422, 425 
 Cleeg v. Hamilton, etc., Co., 61 
 
 Iowa 121, 33, 36, 37 
 
 Clem v. Newcastle, etc., R. Co., 9 
 
 Ind. 488, 68 Am. Dec. 653, 393 
 Clemet v. City of Lathrop, 18 Fed. 
 
 Rep. 885i 40 
 
 Cleveland City, etc., Co. v. Tay- 
 lor Bros., etc., Co., 54 Fed. 
 Rep. 85, 663 
 
 Cleveland, etc., R. Co. v. Prewitt, 
 
 134 Ind. 557, 33 N. E. Rep. 367, 196 
 v. Robbins, 35 Ohio St. 483, 435 
 
 Cleveland, etc., Co. v. Texas, 
 etc., R. Co., 27 Fed. Red. 250, 356
 
 TABLE OF CASES. 
 
 XXXV 
 
 [Beferences are to Pages. ] 
 
 Clinch v. Financial Corp., L. R. 
 
 4 Ch. App. 117, 525 
 
 Clow v. Brown, 150 Ind. 185, 569 
 
 Close v. Cemetery, 107 U. S. 477, 77 
 
 v. Greenwood, etc., Co., 107 
 
 U. S. 466, 89, 92 
 
 Coats v. Donnell, 94 N. Y. 168, 
 
 181, 182 
 Coburn v. Boston, etc., Co., 10 
 
 Gray (Mass.) 243, 671 
 
 Cochran v. Phila. Stock Exch., 
 180 Pa. St. 289, 301 
 
 v. Wiechers, 119 N. Y. 399, 29 
 N. Y. St. Rep. 388, 7 L. R. A. 
 553, 626, 631 
 
 Cochrane v. Arnold, 58 Pa. St. 
 
 399, 74 
 
 Cockburn v. Union Bank, 13 La. 
 
 Ann. 289, 419 
 
 Cockrill v. Abeles, 86 Fed. Rep. 
 
 505, 433 
 
 Coe v. Col., etc., R. Co., 10 Ohio 
 St. 372, 75 Am. Dec. 518, 
 
 120, 122, i23 
 v. East, etc., R. Co., 52 Fed. 
 Rep. 531, 554 
 
 Coffin v. Ransdell, 110 Ind. 417, 
 
 335, 352, 354 
 v. Reynolds, 37 N. Y. 640, 635 
 
 v. Rich, 45 Maine 507, 71 Am. 
 Dec. 559, 592, 621 
 
 Coffing v. Dodge, 167 Mass. 231, 
 
 610, 650 
 Coit v. Amalgamating Co., 119 
 
 U. S. 343, 335 
 
 v. Gold, etc.,Co., 119 U. S. 343, 
 14 Fed. Rep. 12, 343, 351, 352 
 
 Colbert v. Sutton, 5 Del. Chan. 
 
 294, 471 
 
 Cole v. Adams (Tex.), 49 S. W. 
 Rep. 1052, 353 
 
 v. Cassidv, 138 Mass. 437, 568 
 
 v. Millerton, etc., Co., 133 N.Y. 
 
 164, 192, 322 
 
 v. Satsop R. Co., 9 Wash. 487, 649 
 Coleman v. American Bible, etc., 
 Co., 49 Cal. 517, 156 
 
 v. Coleman, 78 Ind. 344, 
 
 595, 596, 599 
 v. Howe, 154 111. 458, 45 Am. 
 St. Rep. 133, 340, 341, 353, 356 
 Coles v. Iowa, etc., Co., 18 Iowa 
 
 425, 144 
 
 Colfax, etc., Co. v. Lyon, 69 Iowa 
 
 683, 29 N. W. Rep. 780, 313, 367 
 Colman v. Land Co., 25 W. Va. 
 148, 579 
 
 v. Railway Co., 10 Beav. 1, 159 
 
 Colonial Bank v. Whinney, 30 
 
 Ch. Div. 261, 321 
 
 Colorado, etc., Co. v. Grand Val- 
 ley, etc., Co. (Colo.), 32 Pac. 
 Rep. 178, 221 
 
 Colorado Fuel, etc., Co. v. Western, 
 etc., Co. (Utah), 50 Pac. Rep. 
 628, 184 
 
 Colorado I. Works v. Sierra Grande, 
 
 etc., Co., 15 Colo. 499, 272 
 
 Colt v. Ives, 31 Conn. 25, 471, 472 
 
 v. Owens, 90 N. Y. 368, 494 
 
 Columbia, etc., Co. v. Bucyrus, 
 
 etc., Co., 60 Minn. 142, 290 
 
 v. Dixon, 46 Minn. 463, 
 
 73, 75, 292, 313, 376, 394 
 v. Kinton, 37 N. J. L. 33, 274 
 
 v. Meier, 39 Mo. 53, 522 
 
 Columbus, etc., Co. v. Walsh, 18 
 
 Mo. 228, 276 
 
 Columbus, etc., R. Co. v. Powell, 
 
 40 Ind. 37, 196 
 
 Combes v. Keyes, 89 Wis. 297, 46 
 Am. St. Rep. 839; 27 L. R. A. 
 369, 92, 125, 675 
 
 Commercial Bank v. Kortright, 22 
 
 Wend. (N. Y.) 348, 471 
 
 v. Lockwood, 2 Harr. (Del. ) 8, 676 
 v. Pfeiffer, 108 N. Y. 242, 15 N. 
 E. Rep. 311, 73 
 
 Commercial Nat'l Bank v. Burch, 
 
 141 111. 519, 31 N. E. Rep. 420, 189 
 v. Motherwell, etc., Co., 95 
 Tenn. 172, 29 L. R. A. 164, 676 
 Commissioners v. Atlantic, etc., 
 R. Co., 77 N. C. 289, 135, 174 
 
 v. Webb, 47 Kan. 104, 231 
 
 Common v. Boston, etc. R. Co., 
 
 18 Mass. 142, 192 
 
 Commonwealth v. Atlantic, etc., 
 R. Co., 53 Pa. St. 9, 31, 193 
 
 v. Biddle, 139 Pa. St. 605, 274 
 
 v. Boston, etc,, R. Co., 142 Mass. 
 
 146, 312, 358 
 
 v. Bringhurst, 103 Pa. St. 134, 
 
 49 Am. Rep. 119 508 
 
 v. Building, etc., 90 Va. 790, 101 
 v. Coal Co., 97 Ky. 238, 269 
 
 v. Crompton, 137 Pa. St. 138, 473 
 v. Cullen, 53 Am. Dec. 461, 94 
 
 v. Cullen, 13 Pa. St. ]33, 93,524 
 v. Detwiller, 131 Pa. St. 614, 18 
 Atl. Rep. 990, 7 L. R. A. 357, 
 
 509, 520, 588 
 v. Dalzell, 152 Pa. 217, 34 Am. 
 
 St. Rep. 640, 505, 506 
 
 v. Eastern, etc., R. Co., 103 
 Mass. 254, 91
 
 XXXVI 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages.'} 
 
 Commonwealth v. Essex Co., 13 
 Gray (Mass.) 289, 93 
 
 v. German Society, 15 Pa. St. 
 
 25, 301 
 
 v. Hemmingway, 131 Pa. St. 614, 
 
 18 Atl. Rep. 990, 365, 541 
 v. Iron Co., 105 Pa. St. Ill, 417 
 v. Lehigh, etc., R. Co., 165 Pa. 
 
 St. 162, 238 
 
 v. New York, etc., R. Co., 129 
 
 Pa. St. 463, 254 
 
 v. New York, etc., Co., 114 Pa. 
 
 St. 340, 153 
 
 v. Pass. R. Co., 134 Pa. St. 237, 
 
 19 Atl. Rep. 629, 416 
 v. Pennsylvania, etc., Soc, 2 
 
 Serg. & Rawle 141, 303 
 
 v. Pennsylvania R. Co., 117 Pa. 
 
 St. 637, 239 
 
 v. Philadelphia Co., 157 Pa. St. 
 
 527, 104 
 
 v. Phoenix, etc., Co., 105 Pa. St. 
 
 Ill, 23 Am. Law Reg. (N. S.) 
 
 388, 415, 417, 418 
 
 v. Prop. New Bedford Bridge, 2 
 
 Gray (Mass.) 339. 240 
 
 v. Pulaski, etc., Assn., 92 Ky. 
 
 197, 17 S. W. Rep. 442, 238, 239 
 v. Railway Co., 132 Pa. St. 591, 153 
 v. Railwav Co., 139 Pa. St. 457, 153 
 v. St. Patrick's, etc., 2 Binn. 
 
 (Pa.) 441, 4 Am. Dec. 453, 298 
 v. Smith, 10 Allen (Mass.) 448, 
 
 87 Am. Dec. 672, 180 
 
 v. Standard, etc., Co., 101 Pa. 
 
 St. 119, 102, 267, 272 
 
 v. Suffolk, etc., Co., 161 Mass. 
 
 550, 37 N. E. Rep. 757, 221 
 
 v. Union, etc., Co., 5 Mass. 230, 675 
 v. Union League, 135 Pa. St. 
 
 301, 19 Atl. Rep. 1030, 141, 301, 302 
 v. Wickersham, 66 Pa. St. 134, 522 
 v. Woelper, 3 S. & R. (Pa.) 30, 
 
 504, 534 
 
 v. Worcester, 3 Pick. 462, 142 
 
 Conant v. Van Schaick, 24 Barb. 
 
 89, 88 
 
 Cone, etc., Co. v. Poole, 41 S. C. 
 
 40, 24 L. R. A. 289, 280 
 
 Congregational, etc., Soc. v. Ev- 
 
 eritt, 85 Md. 79, 36 Atl. Rep. 
 
 654, 35 L. R. A. 693, 157, 246 
 
 Connecticut, etc., Bank v. Fiske, 
 
 60 N. H. 363, 176, 221, 229 
 
 Connecticut, etc., R. Co. v. Bailey, 
 
 24 Vt. 465, 375, 392, 409 
 
 Conn. River, etc., Co. v. Way, 62 
 
 N. H. 622, 275 
 
 Connolly v. Davidson, 15 Minn. 
 519, Gil. 428, 425 
 
 Connor v. Vicksburg R. Co., 36 
 Fed. Rep. 273, 1 L. R. A. 331, 55 
 
 Consolidated, etc., Co. v. Kan- 
 sas, etc., Co., 45 Fed. Rep. 7, 583 
 
 Consolidated Tank Line v. Kansas 
 City, etc., Co., 45 Fed. Rep. 7, 183 
 
 Constant v. University, 111 N. Y. 
 
 604, 584 
 
 Continental, etc., Co. v. Toledo, 
 etc., R. Co., 82 Fed. Rep. 642, 
 
 67, 192 
 
 Continental Ins. Co. v. Richard- 
 son, 72 N. W. Rep. 458 
 (Minn.) 43, 43 
 
 Continental Nat'l Bank v. Eliot 
 Nat'l Bank, 7 Fed. Rep. 369, 
 
 466, 471 
 
 Conway v. Halsev, 44 N. J. L. 
 
 462, 449 
 
 v. John, 14 Colo. 30, 471 
 
 Cook v. Chittenden, 25 Fed. Rep. 
 544, 382 
 
 v. Detroit, etc., R. Co., 43 Mich. 
 
 349, 123 
 
 v. Kuhn, 1 Neb. 472, 161 
 
 v. Munroe, 45 Neb. 349, 428 
 
 v. Southern, etc., Co. (Miss.), 
 
 21 So. Rep. 795, 45 
 
 Cooke v. Town of Orange, 48 
 
 Conn. 401, 658 
 
 Cooney v. A. Booth, etc., Co., 
 
 169 111. 370, 48 N. E. Rep. 406, 157 
 Cooper v. Corbin, 105 111. 224, 
 
 195, 320 
 
 v. Oriental Sav. Assn., 100 Pa. 
 
 St. 402, 671 
 
 Cooper, etc., Co. v. Ferguson, 113 
 
 U. S. 727, 255, 271, 272, 273 
 
 Copeland v. Copeland, 7 Bush 
 
 (Ky.)349, 320 
 
 v. Johnson, etc., Co., 47 Hun 
 
 235, 548 
 
 v. Manufacturing Co., 47 Hun 
 
 235, 550 
 
 Coppage v. Hutton, 124 Ind. 401, 
 
 7L.R. A. 591, 369 
 
 Coppin v. Greenless & Ransom 
 
 Co., 38 Ohio St. 275, 189 
 
 Coquard v. National, etc., Co., 
 
 171 111. 480, 667 
 
 v. Prendergast, 35 Mo. App. 
 
 237, 659 
 
 Corey v. Wadsworth, 99 Ala. 68, 
 
 23 L. R. A. 618, 183 
 
 Corinne, etc., Co. v. Joponce, 152 
 
 U.S. 405, 584
 
 TABLE OF CASES. 
 
 XXXV11 
 
 [References are to Pages. ^ 
 
 Cormac v. Western, etc., Co., 77 
 
 Iowa 33, 632 
 
 Cornell and Michler's Appeal, 114 
 
 Pa. St. 153, 6 Atl. Rep. 258, 
 
 374, 377, 411, 609 
 Cornell, etc., v. Fiske, 136 U. S. 
 
 152, 156 
 
 Corning v. McCullough, 1 N. Y. 
 
 47, 616 
 
 Corrigan v. Coney Island Jockey- 
 Club (N. Y.), 2 Misc. Rep. 
 
 512, 16 
 
 Corry v. Londonderry, etc., R. 
 
 Co., 29 Beav. 263, 7 Jur. 
 
 (N. S.) 508, 30 L. J. Ch. 290, 319 
 Cory v. Lee, 93 Ala. 468, 597, 598 
 
 Cottage St., etc., Church v. Ken- 
 dall, 121 Mass. 528, 368 
 Cotton v. Miss., etc., Co., 22 Minn. 
 
 372, 28, 29, 40 
 
 Cottrell v. Manlove, 58 Kan. 405, 635 
 County of Bates v. Winter, 97 U. 
 
 S. 83, 195 
 
 County of Scotland v. Thomas, 94 
 
 U.S. 682, 111,195 
 
 Courtright v. Deeds, 37 Iowa 503, 
 
 313, 376 
 Covington v. Covington, etc., Co., 
 
 10 Bush (Ky.) 69, 316 
 
 Covington, etc., Co. v. Sanford, 
 
 164 U. S. 592, 57, 93 
 
 Covington v. Sandford, 164 N. S. 
 
 578, 93 
 
 Cowell v. Springs Co., 100 U. S. 
 
 55, 218, 251 
 
 Cowling v. Zenith Iron Co., 65 
 
 Minn. 263, 33 L. R. A. 508, 
 
 186, 620 
 Cox v. First Nat'l Bank, 119 N. C. 
 
 302, 488 
 
 v. Robinson, 82 Fed. Rep. 277, 579 
 Coxe v. State, 144 N. Y. 396, 39 
 
 N. E. Rep. 400,* 69 
 
 Coy v. Indianapolis, etc., Co., 146 
 
 Ind. 655, 36 L. R. A. 535, 81 
 
 Coyote, etc., Co. v. Ruble, 8 Ore. 
 
 284, 423 
 
 Cracker v. Railway Co., 36 Wis. 
 
 657, 556 
 
 Crafford v. Supervisors, 87 Va. 
 
 110, 10 L. R. A. 129, 61 
 
 Craft v. South Boston R. Co., 150 
 
 Mass. 207, 5 L. R. A. 641, 22 
 
 N. E. Rep. 920, 580 
 
 Crafts v. Belden, 99 Mass. 535, 283 
 Craig v.First Presbyterian Church, 
 
 88 Pa. St. 42, 509, 522 
 
 v. Hesperia, etc., Co., 113 Cal. 7, 491 
 
 Cragie v. Hadley, 99 N. Y. 131, 582 
 
 Crandall v. Lincoln, 52 Conn. 73, 
 
 189, 310, 606 
 Cravens v. Cotton Mills, 120 Ind. 
 
 6, 21 N. E. Rep. 981, 74, 369, 406 
 Crawford v. Longstreet, 43 N. J. 
 
 L. 325, 139, 153, 161 
 
 v. Prov., etc., Co.,8U. C.(C. P.) 
 
 263, 496 
 
 Crease v. Babcock, 23 Pick. 334, 
 
 90, 593 
 Credit Co. v. Howe, etc., Co., 54 
 
 Conn. 357, 8 Atl. Rep. 472, 171 , 580 
 Crescent City v. Deblieux, 40 La. 
 
 Ann. 155, 471 
 
 Cresswell v. Oberly, 17 Bradw. 
 
 (111.) 281, 37 
 
 Crocker v. Crane, 21 Wend. (N. 
 
 Y.) 211, 375,380, 381 
 
 Cromford, etc., R. Co. v. Leacey, 
 
 3 Y. & J. 79, 296 
 
 Cross v. Railwav Co., 35 W. Va. 
 
 172-174, 88, 91, 521 
 
 v. Sackett, 2 Bosw. 617 (N. Y.), 49 
 v. West Va., etc., R. Co., 37 W. 
 
 Va. 342, 16 S. E. Rep. 587, 18 
 
 L. R. A. 582, 143, 541 
 
 Crouch v. Gridley, 6 Hill 250, 634 
 
 Crumlish's Adm'rs v. Central, 
 
 etc., Co., 38 W. Va. 390, 23 L. 
 
 R. A. 120, 245, 584 
 
 Crump v. United States, etc., Co., 
 
 7 Grat. (Va.) 352, 56 Am. Dec. 
 
 116, 389, 395 
 
 Crutcher v. Kentucky, 141 U. S. 
 
 47, 110, 255, 256 
 
 Culver v. Reno R. Co., 91 Pa. St. 
 
 367, 171 
 
 Cumberland, etc., Co. v. Portland, 
 
 56 Maine 77, 240 
 
 v. Schell, 29 Pa. St. 31, 150 
 
 v. Sherman, 30 Barb. 553, 544 
 
 Cumberland Valley R. Co. v. Get- 
 tysburg, etc., R. Co., 177 Pa. 
 
 St. 519, 198 
 
 Cummings v. Hollis (Ga.), 33 S. 
 
 E. Rep. 919, 677 
 
 v. Webster, 43 Maine 192, 146 
 
 Cunningham's Appeal, 108 Pa. St. 
 
 546, 419 
 
 Cunningham v. Vermont, etc., R. 
 
 Co., 12 Gray 411, 318 
 
 Curran v. Arkansas, 15 How. 
 
 (U. S.) 304, 663' 
 
 Currie v. Bowman, 25 Ore. 364, 577 
 v. White, 45 N. Y. 822, 428, 436 
 
 Currierv. New York, etc., R. Co., 
 
 35 Hun (N.Y.)355, 550,553 
 
 v. Lebanon, etc., Co., 56 N. H. 
 
 262, / 189
 
 xxxvm 
 
 TABLE OF CASES. 
 
 [.References are to Pages.] 
 
 Curtis v. Gokey, 68 N. Y. 300, 214 
 v. Mining Co., 109 N. C. 401, 162 
 Curtiss v. Leavitt, 15 N. Y. 9, 
 
 134, 174, 180, 227, 228 
 Currv v. Scott, 54 Pa. St. 270, 316 
 
 v. Woodward, 44 Ala. 305, 427 
 
 v. Woodward, 53 Ala. 371, 411 . 
 
 Cushing v. Perot, 175 Pa. St. 66, 
 34 L. R. A. 737, 
 
 624, 639, 643, 646, 647, 650 
 Cushrnan v. Thayer, etc., Co., ,76 
 
 N. Y. 365, 476, 494, 495 
 
 Custar v. Titusville, etc., Co., 63 
 
 Pa. St. 381, 390 
 
 Cutting v. Dernerel, 88 N. Y. 410, 4/1 
 Cuvkendall v. Miles, 10 Fed. Rep. 
 342, 610 
 
 D 
 
 Dabney v. Stevens, 40 How. Pr. 
 
 (N.Y.)341, 578 
 
 v. Stevens, 10 Abb. Pr. N. S. 39, 147 
 Dade, etc., Co. v. Haslett, 83 Ga. 
 
 549, 541 
 
 Daggs v. Orient, etc., Co., 136 Mo. 
 
 382, 35 L. R. A. 227, 245 
 
 Dailev v. National, etc., Co., 64 
 
 Ind. 1, 25 
 
 Dallas, etc., Co. v. Crawford 
 
 (Tex.) 44 S. W. Rep. 875, 578 
 
 Dallas v. Columbia, etc., Co., 158 
 
 Pa. 444, 579 
 
 Danbury & N. R. Co. v. Wilson, 
 
 22 Conn. 456, 75 
 
 Dane v. Dane, etc., Co., 14 Gray 
 
 (Mass.) 488, 626 
 
 v. Derby, 89 Am. Dec. 736, 306 
 
 v. Young, 61 Maine 160, 459, 469 
 Daniels v. Hart, 118 Mass. 542, 
 
 121, 180 
 Daniell's Case, 1 De J. J. 372, 340 
 Danna v. Bank of the U. S., 5 
 
 Watts & S. 223, 543 
 
 v. St. Paul Bank, 4 Minn. 385, 
 Gil. 291, 162 
 
 Darst v. Gale, 83 111. 136, 220, 221 
 Dartmouth College v. Woodward, 
 
 4 Wheat. 518, 636, 2, 19, 85, 126 
 Dauchy v. Brown, 24 Vt. 197, 
 
 139, 475, 629 
 Davenport v. Dows, 18 Wall. 626, 453 
 Davenport Bank v. Board, etc., 
 
 123 U. S. 83, 106, 107 
 
 Davenport, etc., R. Co. v. O'Con- 
 nor, 40 Iowa 477, 378 
 Davidson v. Gillies, L. R. 16 Ch. 
 Div. 347, 423 
 v. Mexican, etc., R. Co., 58 Fed. 
 Rep. 653, 554 
 
 Davidson v. Old Peoples', etc., 
 Soc.,39 Minn. 303, 1 L. R. A. 
 482, 145 
 
 v. Rankin, 34 Cal. 503, 625 
 
 Davis v. Bank of England, 2 
 
 Bing. 393, 482 
 
 v. Creamery Co., 48 Neb. 471, 
 
 67 N. W. Rep. 436, 11 
 
 v. Grav, 16 Wall. 203, 658 
 
 v. Jackson, 152 Mass. 58, 23 
 
 Am. St. Rep. 801, 440, 442 
 
 v. Memphis, etc., R. Co., 22 
 
 Fed. Rep. 883, 578 
 
 v. Memphis, etc., R. Co., 87 
 
 Ala. 633, 133 
 
 v. Mining Co., 2 Utah 74, 426 
 
 v. Old Colony R. Co., 131 Mass. 
 258, 41 Am. Rep. 221, 
 
 159, 171, 174, 176, 204, 205, 215 
 v. Peabody, 170 Mass. 397, 453 
 
 v. Ravenna, etc., Co., 48 Neb. 
 
 471, 67 N. W. Rep. 436, 50 
 
 v. Railroad Co., 22 Fed. Rep. 
 
 883, 550 
 
 v. Second Universalist, etc., 8 
 
 Met. (Mass.) 321, 463 
 
 v. United States, etc., Co., 77 
 Md. 35, 507 
 
 Davis Bros. v. Montgomery, etc., 
 Co., 101 Ala. 127, 8 So. Rep. 
 496, 351, 358 
 
 Davis, etc, Co. v. Davis, etc., Co., 
 20 Fed. Rep. 699, 583 
 
 v. Fowler Bros., 47 N. Y. Supp. 
 
 205, 120 
 
 v. Hillisboro, etc., Co., 10 Ind. 
 App. 42, 54 
 
 Davis & Co. v. Dumont, 37 Iowa 
 
 47, 395 
 
 Dawkins v. Antrobus, L. R. 17 
 Ch. Div. 615, 44 Law T. Rep. 
 (N. S.) 557, 150, 297, 300, 305 
 
 Dayton v. Borst, 31 N. Y. 435, 
 
 369, 610 
 Day v. Essex Bank, 13 Vt. 97, 281 
 v. Ogdensburg, etc., Co., 107 N. 
 
 Y. 129, 250 
 
 v. Spiral Spring, etc., Co., 57 
 Mich. 146, 58 Am. Rep. 352, 
 
 205, 207, 208, 209, 213 
 v. Worcester, etc., R. Co., 151 
 Mass. 302, 30, 197 
 
 Dean v. Davis, 51 Cal. 406, 27 
 
 Dearborn v. Washington, etc., 
 
 Bank, 38 Wash. 8, 471,489 
 
 Dearborn, etc., Co. v. Augustine, 
 
 5 Wash. 67, 276,279 
 
 De Bost v. Albert Palmer Co., 35 
 Hun (N. Y.) 386, 147
 
 TABLE OF CASES. 
 
 XXXIX 
 
 [References are to Pages."] 
 
 De Camp v. Alward, 52 Ind. 473, 
 
 181, 543 
 v. Dobbins, 29 N. J. Eq. 36, 155 
 Decatur, etc., Co. v. Palm, 113 
 
 Ala. 531, 39 Am. St. Rep. 140, 
 
 447, 456 
 Decree v. Hankinson (C. C. A.), 
 
 92 Fed. Rep. 49, 84 Fed. Rep. 
 
 876, 675 
 
 Dedham Inst. v. Slack, 6 Cush. 
 
 408, 581 
 
 De Gendre v. Kent, L. R. 4 Eq. 
 
 283, 435 
 
 De Lacy v. Neuse River, etc., Co., 
 
 1 Hawks 274, 9 Am. Dec. 636, 303 
 Deland v. Williams, 101 Mass. 571, 440 
 Delaney v. Rochereau & Co., 34 
 
 La. Ann. 1123, 44 Am. Rep. 
 
 456, 571 
 
 Delano v. Butler, 118 U. S. 634, 410 
 Delaware, etc., Co. v. Pennsylva- 
 nia, etc., Co., 21 Pa. St. 131, 582 
 Delaware R. Tax Case, 18 Wall. 
 
 206, 101, 103, 111, 112 
 
 Demarest v. Flack, 128 N. Y. 205; 
 
 28 N. E. Rep. 645, 13 L. R. A. 
 
 854, 
 
 39, 67, 71, 93, 255, 259, 267, 605 
 DeNeufville v. New York, etc., 
 
 R. Co., 81 Fed. Rep. 10, 51 
 
 U. S. App. 374, 454 
 
 Denike v. Cement Co., 80 N. Y. 
 
 599, 673 
 
 Denny v. Bennett, 128 U. S. 489, 249 
 Denny Hotel Co. v. Scbram, 6 
 
 Wash. 134, 36 Am. St. Rep. 
 
 140, 32 Pac. Rep. 1002, 
 
 184, 187, 365, 373, 382 
 Densmore, etc., Co. v. Densmore, 
 
 64 Pa. St. 43, 46 
 
 v. Shepard, 46 Minn. 54, 48 N. 
 
 W. Rep. 528, 619, 620 
 
 Dent v. Holbrook, 54 Cal. 145, 494 
 v. Tramwavs Co., 16 Ch. Div. 
 
 344, 2 Cum. Cas. Pri. Corp. 
 
 225, 318 
 
 Denton v. Jackson, 2 John. Ch. 
 
 320, 8 
 
 Denver, etc., Railroad Co. v. Har- 
 ris, 122 U. S. 597, 
 
 235, 237, 240, 556 
 Denver, etc., Co. v. McClelland, 
 
 9 Colo. 11, 222 
 
 DePass's Case, 4 De G. & J. 544, 475 
 Deringer v. Deringer, 5 Housten 
 
 (Del.) 416, 1 Am. St. Rep. 
 
 150, 135 
 
 Dern v. Salt Lake City R. Co. 
 
 (Utah), 56 Pac. Rep. 556, 666 
 
 Derrickson v. Smith, 27 N. J. L. 
 166, 626 
 
 v. Smith, 3 Dutcher (27 N. J. L.) 
 166, 246 
 
 Derry v. Peek, 14 App. Cas. 337, 49 
 Desperv. Continental Water, etc., 
 
 Co., 137 Mass. 252, 282 
 
 Des Moines Bank v. Colfax Hotel 
 
 Co., 88 Iowa 4, 367 
 
 Des Moines, etc., R. Co. v. Graff, 
 27 Iowa 99, 378 
 
 v. Tilford, etc., Co. (Iowa), 70 
 N. W. Rep. 839, 575 
 
 Des Moines Nat'l Bank v. Bank, 
 
 97 Iowa 204, 490 
 
 Detroit v. Dean, 106 U. S. 537, 
 
 448, 449, 451 
 v. Detroit, etc., Co., 43 Mich. 
 
 140, 84, 93 
 
 v. Detroit, etc., R. Co., 37 Mich. 
 558, 117 
 
 Detroit Driving Club v. Fitzgerald, 
 
 109 Mich. 670, 67 N. W. Rep. 
 899, 33 
 
 Detroit, etc., Co. v. McArthur, 16 
 
 Mich. 447, 237 
 
 Detroit, etc., R. Co. v. City of De- 
 troit, 64 Fed. Rep. 628, 26 L. 
 
 R. A. 667, 117, 133 
 
 Detroit St. R. Co. v. Detroit, 110 
 
 Mich. 384, 156 
 
 Dettra v. Kestner, 147 Pa. St. 566, 397 
 Dewev v. Toledo, etc., R. Co., 91 
 
 Mich. 351, 207, 221, 222 
 
 De Witt v. Hastings, 69 N.Y. 518, 74 
 Dexter v. Edmands, 89 Fed. Rep. 
 
 467, 640, 643 
 
 Diamond Match Co. v. Roeber, 
 
 106 N. Y. 473, 169, 281 
 
 Diamond, etc., Co. v. Powers, 51 
 
 Mich. 145, 265 
 
 Dickenson v. Chamber of Com., 
 
 29 Wis. 45, 150 
 
 Dickinson v. Central Nat'l Bank, 
 
 129 Mass. 279, 466, 471 
 
 Diligent, etc., Co. v. Comm., 75 
 
 Pa. St. 291, 142, 303 
 
 Dill v. Wabash, etc., R. Co., 21 
 
 111. 90, 403 
 
 Dimpfell v. Ohio, etc., R. Co., 
 
 110 U. S. 209, 223, 448, 453 
 Directors v. Kisch, L. R. 2 H. L. 
 
 99, 388, 393 
 
 Discount Co. v. Brown, L. R. 8 
 
 Eq. 381, 559 
 
 Dispatch Line v. Bellamy Mfg. 
 
 CO., 12 N. H. 205, 161, 540, 542 
 Distilling, etc., Co. v. People, 156 
 
 111. 448, 167
 
 xl 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages.'] 
 
 Diven v. Lee, 36 N. Y. 302, 631 
 
 Diversev v. Smith, 103 111. 378, 625 
 Dobson v. Simonton, 86 N. C. 493, 
 
 67, 70, 675 
 Dock v. Cordage Co., 167 Pa. St. 
 
 370, 191 
 
 Dodge v. Woolsey, 18 How. (U. 
 
 S.) 331, 448, 453, 525, 543 
 
 Doe v. Norton, 11 M. & W. 913, 40 
 v. Taniere, 12 Q. B. (Ad. & 
 EL N. S.) 998, 7 Eng. Rul. Cas. 
 366, 160 
 
 v. Transportation Co., 78 Fed. 
 Rep. 62, 586 
 
 Donnally v. Hearndon, 41 W.Va. 
 
 519, 429, 433 
 
 Donohoe v. Mariposa, etc., Co., 
 
 66 Cal. 317, 542 
 
 Donovan v. Halsey, etc., Co., 58 
 
 Mich. 38, 147 
 
 Doolittle v. Marsh, 11 Neb. 243, 634 
 Doris v. Sweeny, 60 N. Y. 463, 75 
 
 Dorsev Match Co. v. McCaffrey, 
 
 139 Ind. 545, 236, 400 
 
 Doty v. First Nat'l Bank, 3 N. D. 
 9, 53 N. W. Rep. 77, 17 L. R. 
 A. 259, 465, 471, 494 
 
 Doud v. Wisconsin, etc., R. Co., 
 
 65 Wis. 108, 447 
 
 Dougan's Case, 28 L. Times N. S. 
 
 60, 30 
 
 Douglass v. Ireland, 73 N. Y. 100, 
 
 335, 349, 352 
 v. Kraft, 9 Cal. 562, 494 
 
 v. Merchants', etc., Co., 118 N. 
 Y. 484, 7 L. R. A. 822, 
 
 143, 146, 147, 588 
 Dousman v. Wisconsin, etc., Co., 
 
 40 Wis. 418, 419 
 
 Dow v. Gould, etc., Co., 31 Cal. 
 
 629, 429 
 
 v. North, etc., R. Co., 67 N. H. 
 1, 617 
 
 Dowing v. Mt. Wash. R. Co., 40 
 N. H.230, 
 
 131, 134, 159, 163, 205, 214 
 Downie v. White, 12 Wis. 176, 372 
 Downing v. Board. 129 Ind. 443, 
 28 N. E. Rep. 123, 85 
 
 v. Marshal], 23 N. Y. 366, 80 
 
 An.. D. 290, 154, 155, 156 
 
 v. Potts, 23 N. J. L. 66, 292, 504 
 
 v. St. Columba'e, etc., Soc, 10 
 
 Dalv (N. Y.) 262, 303 
 
 Dows v. Napier, 91 111. 44, 77 
 
 Dovle v. Continental, etc., Co., 
 
 94 U. S. 727, 271 
 
 v. I Qaurance Co., 94 U. S. 535, 270 
 
 v. M issuer, 42 Mich. 332, 34 
 
 Drake v. Hudson, etc., R. Co., 
 
 7 Barb. 508, 140 
 
 Draper v. Harvard College, 57 
 
 How. Pr. (N. Y.) 269, 155 
 
 Driscoll v. Manufacturing Co., 59 
 
 N. Y. 96, 146, 473, 489 
 
 Drury v. Milwaukee, etc., R. Co., 
 
 7 Wall. 299, 184 
 
 Dubs v. Egli, 167 111. 514, 47 N. 
 
 E. Rep. 766, 18, 64 
 
 Ducat v. Chicago, 10 Wall. 410, 271 
 v. Chicago, 48 111. 172, 104 
 
 Ducbemin v. Kendall, 149 Mass. 
 
 171, 3 L. R. A. 784. 486 
 
 Duckworth v. Roach, 81 N. Y. 49, 570 
 Dudley v. Collier, 87 Ala. 431, 13 
 
 Am. St. Rep. 55, 277 
 
 v. Kentucky High School, 9 
 
 Bush (Ky.) 576, 455, 524 
 
 Duffield v. Barnum, etc., Co., 64 
 
 Mich. 293, 397 
 
 v. Wire Works, 64 Mich. 293, 401 
 Duggan v. Colorado, etc., Co., 11 
 
 Colo. 113, ' 67, 71 
 
 Duke v. Markham, 105 N. C. 131, 499 
 v. Taylor, 37 Fla. 64, 31 L. R. 
 
 A. 484, 67, 500 
 Dukes v. Love, 97 Ind. 341, 335 
 Duluth, etc., Co. v. Witt, 63 Minn. 
 
 538, ' 373 
 
 Dummer v. Smedley, 110 Mich. 
 
 446, 38 L. R. A. 490, 343, 348 
 
 Dunn v. State Bank, 59 Minn. 221, 
 
 390, 397, 403 
 v. University of Oregon, 9 Ore. 
 
 357, , 27 
 
 Dunphy v. Travelers', etc., Assn., 
 
 146 Mass. 495, 447 . 
 
 Dunston v. Imperial, etc., Co., 3 
 
 B. & Ad. 125, 141 
 Dupee v. Boston, etc., Co., 114 
 
 Mass. 37, 178, 189, 191, 464, 622 
 DuPont v. Tilden, 42 Fed. Rep. 87, 352 
 Durfee v. Old Colony, etc., R. Co., 
 
 5 Allen (Mass.) 230, 
 
 94, 95, 455, 456, 524, 529 
 Durham v. Mon., etc., Co., 9 Ore. 
 
 41, 496 
 
 Durkee v. People, 155 111. 355, 46 
 
 Am. St. Rep. 340, 508 
 
 D. S. Morgan & Co. v. White, 101 
 
 Ind. 413, 272 
 
 Dutch, etc., Co. v. Moses, 1 Str. 
 
 612, 280 
 
 Dwelling-house, etc., Co. v. Wild- 
 er, 40 Kan. 561, 271 
 Dwenger v. Geary, 113 Ind. 106, 145 
 Dwinelle, etc., R. Co. v. Railway 
 
 Co., 120 N. Y. 117, 556
 
 TABLE OF CASES. 
 
 xli 
 
 [Beferences are to Pages.] 
 
 Dyer v. Osborne, 11 R. I. 321, 320 
 
 v. Power, 39 N. Y. St. Rep. 136, 657 
 
 Dynes v. Shaffer, 19 Ind. 165, 398 
 
 E 
 
 Eagle, etc., Co. v. Ohio, 153 U. S. 
 
 446, 99 
 
 Eakright v. Logansport, etc., R. 
 
 Co., 13 Ind. 404, 33 
 
 Earl v. Rowe, 35 Maine 414, 425 
 
 Earp's Appeal, 28 Pa. St. 368, 442, 443 
 East Anglian R. Co. v. Eastern, 
 
 etc., R. Co., 11 C. B. 775, 7 
 
 Eng. Law and Eq. Rep. 505, 
 
 154, 204, 227 
 East Birmingham Land Co. v. 
 
 Dennis, 85 Ala. 565, 313, 479, 482 
 East Tennessee R. Co. v. Insur- 
 ance Co., 49 Fed. Rep. 608, 59 
 Eastern, etc., Co. v. Vaughan, 14 
 
 N. Y. 546, 36 
 
 Eastern, etc., R. Co. v. Broom, 6 
 
 Ex. (Wels. H. & G.) 314, 
 
 225, 235, 240, 557 
 v. Hawkes, 4 H. L. C. 331, 218 
 
 Eastern R. Co. v. Railway Co. ; 111 
 
 Mass. 125, 542 
 
 Easterly v. Barber, 65 N. Y. 252, 625 
 Eaton, etc., R. Co. v. Avery, 83 
 
 N. Y. 31, 38 Am. Rep. 389, 328 
 v. Robinson, 19 R. I. 146, 29 L. 
 
 R. A. 100, 587 
 
 v. United States, etc., Co., 76 
 
 Mich>579, 6 L. R. A. 102, 599 
 
 v. Walker, 76 Mich. 579, 43 N. 
 
 W. Rep. 638, 6 L. R. A. 102, 
 
 66, 67, 68, 69, 76 
 Easun v. Buckeye Co., 51 Fed. 
 
 Rep. 156, 184 
 
 Eby v. Guest, 94 Pa. St. 160, 471 
 
 Eckman v. Chicago, etc., R. Co., 
 
 169 111. 312, 220 
 
 Eckstein v. Downing, 64 N. H. 
 
 248, 9 Atl. Rep. 626, 519 
 
 Edelhoff v. State, 5 Wy. 19, 36 
 
 Pac. Rep. 627, 43 
 
 Edison, etc., Co. v. Canadian, etc., 
 
 Co., 8 Wash. 370, 276 
 
 Edgerly v. Emerson, 23 N. H. 555, 
 
 539, 540 
 Edgerton Tobacco, etc., Co. v. 
 
 Croft, 69 Wis. 256, 34 N. W. 
 
 Rep. 143, 297 
 
 Edge worth v. Wood, 58 N. J. L. 
 
 463, 3, 27 
 
 Edwards v. Carson, etc., Co., 21 
 
 Nev. 469, 577 
 
 Edwards v. Warren, etc., Works, 
 
 168 Mass. 564, 38 L. R. A. 791, 
 
 20, 224 
 Ehrman v. Insurance Co., 1 Fed. 
 
 Rep. 471, 280 
 
 v. Teutonia etc., Co., 1 MCrary 
 
 123, 276 
 
 v. Union, etc., Co., 35 Ohio St. 
 
 324, 157 
 
 Eidman v. Bowman, 58 111. 444, 
 
 11 Am. Rep. 90, 310, 419, 542 
 
 Eingartner v. Illinois, etc., Assn., 
 
 94 Wis. 70, 34 L. R. A. 503, 261 
 Einstein v. Rochester, etc., Co., 
 
 146 N. Y. 46, 310 
 
 Elder v. Bank, etc., 12 Kan. 238, 199 
 Eldridge v. Smith, 34 Vt. 484, 123 
 
 Electric R. Co. v. Common Coun- 
 cil, 84 Mich. 257, 117 
 Elevator Co. v. Memphis, etc., 
 
 Co., 85 Tenn. 703, 4 Am. St. 
 
 Rep. 798, 204, 215 
 
 Elizabeth City Cotton Mills v. 
 
 Dunstan, 121 N. C. 12, 61 Am. 
 
 St. Rep. 654, 149 
 
 Elizabethtown, etc., Co..v. Green, 
 
 46 N. J. Eq. 118, 18 Atl. Rep. 
 
 844, 71,125, 674 
 
 Elkhart Nat'l Bank v. Northwes- 
 tern, etc., Co., 87 Fed. Rep. 
 
 252, 643, 653 
 
 Elkins v. Camden, etc., R. Co., 
 
 36 N. J. Eq. 241, 164, 214, 319 
 
 Ellerman v. Chicago, etc., R. Co., 
 
 49 N. J, Eq. 217, 23 Atl. Rep. 
 
 287, 135 
 
 Ellis v. Marshall, 2 Mass. 279, 93, 94 
 v. Essex Bridge, 19 Mass. 243, 429 
 v. North Carolina Inst., 68 N. 
 
 C. 423, 582 
 
 v. Ward, 137 111. 509, 25 N. E. 
 
 Rep. 530, 560, 574, 575 
 
 Ellison v. Brandstrator (Ind.), 54 
 
 N. E. Rep. 433, 538, 579, 580 
 
 v. M. & O. R. Co., 36 Miss. 572, 394 
 Ellsworth v. St. Louis, etc., Co., 
 
 98 N. Y. 553, 217 
 
 Ellsworth, etc., Co. v. Faunce, 79 
 
 Maine 440, 522, 523 
 
 Elston v. Piggott, 94 Ind. 14, 259, 276 
 Elyton, etc., Co. v. Birmingham, 
 
 etc., Co., 92 Ala. 407, 12 L. 
 
 R. A. 307, 353 
 
 Embury v. Conner, 3 N. Y. 511, 270 
 Emerson, etc., Co. v. McCormick, 
 
 etc., Co., 51 Mich. 5, 282 
 
 v. Skidmore, (Tex. 1894), 25 S. 
 
 W. Rep. 671, 238
 
 xlii 
 
 TABLE OF CASES. 
 
 [References are to Pages."] 
 
 Emery v. Burbank, 163 Mass. 326, 
 
 28 L. R. A. 57, 261 
 
 v. Candle Co., 47 Ohio St. 320, 166 
 v. Parrott, 107 Mass. 95, 45 
 
 Emma, etc., Co. v. Grant, 11 Ch. 
 
 Div. 918, 45 
 
 v. Lewis, 4 C. P. Div. 396, 11 
 
 Ch. Div. 918, 44 
 
 Empire, etc., Co. v. Alston, etc., 
 
 Co., 4 Tex. App. Civ. Cas. 
 
 346, 12 L. R. A. 366, 15 S. W. 
 
 Rep. 505, 261, 595 
 
 v. Ex Parte Bagshaw, L. R. 4 
 
 Eq. 341, 30 
 
 Empire Mills v. Alston, etc., Co. 
 
 (Tex.), 15 S. W. Rep. 200, 
 
 71, 599, 604 
 Employers', etc., Corp. v. Em- 
 ployers', etc., Co. 16 N. Y. 
 
 Supp. 397, 290 
 
 Engine Co. v. Green, 143 Pa. St. 
 
 269, 13 Atl. Rep. 747, 384 
 
 England v. Dearborn, 141 Mass. 
 
 590, 10, 180, 523, 577 
 
 Engelhardt v. Fifth Ward, etc., 
 
 Assn., 148 N. Y. 281, 35 L. R. 
 
 A. 289, 140 
 
 E. Norway, etc., Church v. Frois- 
 
 lie, 37 Minn. 447, 64, 65 
 
 Erd v. Bavarian, etc., Assn., 67 
 
 Mich. 233, 303 
 
 Erickson v. Nesmith, 4 Allen 233, 
 
 645, 652 
 Erie City Iron Works v. Barber & 
 
 Co., 106 Pa. St. 125, 236 
 
 Erie, etc., R. Co. v. Casey, 26 Pa. 
 
 St. 287. 84, 90 
 
 Erlanger v. Phosphate Co., L. R. 
 
 3 App. Cas. 1218, 45 
 
 Ernest v. Loma, etc., Co., 75 Law 
 
 T. Rep. N. S. 317, 509 
 
 Ernest v. Nicholls, 6 H. L. Cas. 
 
 401, 553 
 
 Ernst v. New Orleans, etc., Co., 
 
 39 La. Ann. 550, 2 So. Rep. 
 
 415, 81 
 
 Estate of Smith, 140 Pa. St. 344, 23 
 
 Am. St. Rep. 237, 444 
 
 Estes v. German Nat'l Bank, 62 
 
 Ark. 7, 576, 577 
 
 Eureka, etc., Works v. Bresna- 
 
 ban, 60 Mich. 332, 180 
 
 Ewing v. Composite, etc., Co., 169 
 
 Mass. 72, 30 
 
 Excelsior, etc., Co. v, Brown, 74 
 Fed. Rep 321, 42 U.S. App. 55, 450 
 v. Lacey, 63 N. Y. -422, 432, 
 v. Pierce, 90 Cal. 131, 27 Pac. 
 Rep. 44, 424.427 
 
 Ex parte Bagge, 13 Beav. 162, 632 
 Brown, 19 Beav. 97, 566 
 
 Hale, 55 L. T.N. S. 670, 398 
 
 Holmes, 5 Cowen (N. Y.) 426, 
 
 189, 507 
 Murray, 7 Cowen (N. Y.) 153, 534 
 Nicol, 5 Jur. N. S. 205, 388 
 
 Penney, L. R. 8 Ch. App. Cas. 
 
 446, 460, 464 
 
 Peru, etc., Co., 7 Cow. 540, 214 
 
 Pritz, 9 Iowa 30, 28 
 
 Sargent, L. R. 17 Eq. 273, 496 
 
 Schollenberger, 96 U. S. 369, 287 
 Spring Valley, etc., Works, 17 
 
 Cal. 132, 33 
 
 Wilcox, 7 Cowen (N. Y.) 402, 
 
 505, 522 
 Winsor, 3 Story C. C. 411, 434 
 
 Express Co. v. Railroad Co., 99 
 
 U. S. 191, 217 
 
 Evans v. Bailey, 66 Cal. 112, 186, 187 
 v. Heating Co., 157 Mass. 37, 
 
 31 N. E. Rep. 698, 180, 503 
 
 v. Interstate, etc., R. Co., 106 
 
 Mo. 594, 676 
 
 v. Lewis, 30 Ohio St. 11, 634 
 
 v. Osgood, 18 Maine 213, 499 
 
 v. Philadelphia Club, 50 Pa. St. 
 
 107, 150, 297, 300, 301, 306 
 
 Evansville, etc., Co. v. Bank 
 
 (Ind.), 42 N. E. Rep. 1097, 555 
 Evansville, etc., R. Co. v. Evans- 
 ville, 15 Ind. 395, 317 
 Evenson v. Ellingson, 67 Wis. 634, 69 
 Everhart v. Westchester, etc., R. 
 
 Co., 28 Pa. St. 339, 316, 475, 531 
 Eyster v. Centennial Board, 94 
 U. S. 500, 425 
 
 F 
 
 Factors', etc., Co. v. Marine, etc., 
 
 Co., 31 La. Ann. 149, 476 
 
 Fairfield, etc., Bank v. Chase, 72 
 
 Maine 226, 584 
 
 Fall River v. Cornes, 125 Mass. 
 
 567, 101 
 
 Falls v. United States, etc., Assn., 
 
 97 Ala. 417, 24 L. R. A. 174, 
 
 73, 251, 261, 263 
 Fanning v. Insurance, etc, Co., 
 
 37 Ohio St. 339, 362, 367 
 
 Farg.» v. Michigan, 121 U. S. 230, 109 
 Farmer v. National, etc., Assn., 
 
 50 Fed. Rep. 829, 289 
 
 Farmers' and Mechanics' Bank v. 
 
 Colby, 64 Cal. 352, 559
 
 TABLE OF CASES. 
 
 xliii 
 
 [Beferences are to Pages. ] 
 
 Farmers', etc., Bank v. Baldwin, 
 23 Minn. 198, 100, 132 
 
 v. Payne, 25 Conn. 444, 584 
 
 v. Wasson, 48 Iowa 336, 30 
 Am. Rep. 398, 458, 459, 465, 489 
 Farmers', etc., Co. v. Chicago, 
 etc., R. Co., 68 Fed. Rep. 412, 276 
 v. Curtis, 7 N. Y. 466, 157 
 
 v. Floyd, 47 Ohio St. 525, 567 
 
 v. Lake, etc., R. Co. (111.), 51 
 
 N. E. Rep. 55, 271 
 
 v. Toledo, etc., R. Co., 67 Fed. 
 Rep. 49, 73 
 
 Farmers' Loan and Trust Co. v. 
 New York, etc., R. Co., 150 
 N. Y. 410, 34 L. R. A. 76, 184 
 Farmers' Nat'l Bank v. Backus 
 (Minn.), 77 N. W. Rep. 142, 671 
 v. Suton, etc., Co., 52 Fed. 
 Rep. 191, 171 
 
 Farmington Sav. Bank v. Falls, 
 
 71 Maine 49, 228 
 
 Farnsworth v. Robbins, 36 Minn. 
 
 369, 189 
 
 v. Wood, 91 N. Y. 308, 640 
 
 Farnum v. Ballard, etc., Shop, 12 
 Cush. (Mass.) 507, 637 
 
 v. Blackstone, etc., Corps., 1 
 Sum. C. C. 46, 30 
 
 Farrar v. Walker, 3 Dill (C. C.) 
 
 506, 389 
 
 v. Perley, 7 Maine 404, 504 
 
 Farrell Foundry Co. v. Dart, 26 
 
 Conn. 376, 584 
 
 Farrington v. Railroad Co., 150 
 Mass. 406, 15 Am. St. Rep. 
 222, 330, 333 
 
 v. Putnam, 90 Maine 405, 155 
 
 v. Tennessee, 95 U. S. 679, 
 
 101, 102, 110 
 
 v. Tennessee, 95 U. S. 686, 309 
 
 Farrior v. NewEng., etc., Co., 88 
 
 Ala. 275, 272, 277 
 
 Farwell v. Boston, etc., Corp., 4 
 Mete. (Mass.) 49, 38 Am. 
 Dec. 339, ' 572 
 
 Faulds v. Yates, 57 111. 416, 515 
 
 Faulker v. Railway Co., 48 Kan. 
 
 577, 456 
 
 Faulkner v. Hyman, 142 Mass. 53, 
 
 261, 264 
 Fawcett v. Sup. Sitting of I. H. 
 
 (Conn.), 24 L. R. A. 815, 610 
 
 Fay v. Noble, 7 Cush. (Mass.) 188, 
 
 73, 596 
 v. Noble, 12 Cush. (Mass.) 1, 
 
 146, 147 
 
 Fear v. Bartlett, 81 Md. 435, 33 L. 
 
 R. A. 721, 323, 396, 398, 402 
 
 Feckheimerv. National Exchange 
 
 Bank, 79 Va. 80, 459, 460, 462, 465 
 Fee v. Fee, 10 Ohio 469, 36 Am. 
 
 Dec. 103, 430 
 
 Feeter v. Heath, 11 Wend. (N. Y.) 
 
 478, 567 
 
 Felch v. Bugbee, 48 Maine 9, 77 
 
 Am. Dec. 203, 249 
 
 Fenton v. Livingston, 3 Macq. 
 
 H. L. 497, 261 
 
 Ferguson v. Ann Arbor, etc., R. 
 
 Co.,45N. Y. Supp. 172, 194 
 
 v. Gill, 19 N. Y. Supp. 149, 569 
 
 v. Sherman, 116 Cal. 169, 37 L. 
 
 R. A. 622, 246, 630, 643, 646 
 
 Fertilizer Co. v. Hyde Park, 97 
 
 U. S. 659, 131 
 
 Field v. Field, 9 Wend. (N. Y.) 
 
 394, 522 
 
 v. Lamson, etc., Co., 162 Mass. 
 
 388, 27 L. R. A. 136, 317, 318 
 
 Fietsamv. Hay, 122111. 293,3 Am. 
 
 St. Rep. 492, 17, 119, 120 
 
 Fifth Avenue, etc., Bank v. Forty- 
 second St., etc., Co., 137 N. Y. 
 
 231, 330, 332, 333, 480, 556 
 
 Fifth Nat'l Bank v. Navassa, etc., 
 
 Co., 119 N. Y. 256, 577 
 
 Fifth Ward Sav. Bank v. First 
 
 Nat'l Bank, 48 N. J. Law 513, 
 
 174, 580 
 Field v. Pierce, 102 Mass. 253, 309 
 Filli v. Railway Co., 37 Fed. Rep. 
 
 65, 60 
 
 Filon'v. Brewing Co., 38 N. Y. St. 
 
 602, 539 
 
 Finnegan v. Noerenberg, 52 Minn. 
 
 239, 66, 68, 598, 599 
 
 Finney's App., 59 Pa. St. 398, 471 
 
 Fire Ins. Patrol v. Boyd, 120 Pa. 
 
 St. 624, 6 Am. St. R. 745, 19, 235 
 Firemen's, etc., Co. v. Thompson, 
 
 155 111. 204, 284, 288 
 
 First M.E. Church v. Dixon (111.), 
 
 52 N. E. Rep. 891, 131, 152 
 
 First Nat'l Bank v. Almy, 117 
 
 Mass. 476, 494, 596 
 
 v. Council Bluffs, etc., Co., 9 N. 
 
 Y. Supp. 859, 581 
 
 v. Davies, 43 Iowa 424, 34 
 
 v. Dickson (Colo App.), 36 Pac. 
 
 Rep. 618, 471 
 
 v. De Morse (Tex.), 26 S. W. 
 
 Rep. 417, 434 
 
 v. Exchange Nat'l Bank, 92 U. 
 
 S. 122, 187
 
 xliv 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages.] 
 
 First Nat'l Bank v. F. C. Frebein 
 Co., 50 Ohio St. 316, 71 
 
 v. Gifford, 47 Iowa 575, 313 
 
 v. Greene, 64 Iowa 445, 412 
 
 v. Gustin, etc., Co., 42 Minn. 
 327, 6 L. R. A. 676, 
 
 324, 336, 338, 343, 344, 593 
 v. Hastings, 7 Colo. App. 129, 472 
 v. Hingham Mfg. Co., 127 Mass. 
 
 563, 631, 639 
 
 v. Hoch, 89 Pa. St. 324, 578 
 
 v. Harford, 29 Iowa 579, 392 
 
 v. Kiefer, etc., Co., 95 Ky. 97, 
 
 23 S. W. Rep. 675, 176, 215, 223 
 v. Lanier, 11 Wall. 369, 332, 471 
 v. Nat'l Broadway Bank, 156 N. 
 
 Y. 459, 42 L. R. A. 139, 485 
 
 v. Nat'l Exchange Bank, 92 U. 
 
 S. 122, 186 
 
 v. Salem, etc., Co., 39 Fed Rep. 
 
 89, 191 
 
 v. Winona, etc., Co., 58 Minn. 
 167, 59 N. W. Rep. 997, 619, 629 
 First Parish v. Stearns, 21 Pick. 
 
 (Mass-.) 148, " 523 
 
 Fisher v. Brown, 104 Mass. 259, 486 
 v. Bush, 35 Hun (N. Y.) 641, 
 
 462, 513 
 v. Essex Bank, 5 Gray 373, 
 
 309, 320, 468, 471 
 v. Keane, L. R. 11 Ch. Div. 353, 
 
 301, 303 
 v. Lord, 63 N. H. 514, 264 
 
 v. W. V. & P. R. Co., 39 W. Va. 
 366, 23 L. R. A. 758, 121 
 
 Fisher, etc., Co. v. Jones, 82 Ala. 
 
 117, 471 
 
 Fisk v. Chicago, etc., Co., 53 Barb. 
 
 (N. Y.) 513, 337 
 
 v. Railroad, 10 Blatchf. 518, 663 
 Fister v. La Rue, 15 Barb. (N. Y.) 
 
 223, 231 
 
 Fitch v. Steam Mill Co., 80 Maine 
 
 34, 161, 180 
 
 Fitchburgh, etc., Bank v. Torrey, 
 
 134 Mass. 239, 468 
 
 Fitzgerald v. Fitzgerald, etc., Co., 
 
 44 Neb. 463, 553 
 
 v. Fitzgerald, etc., Co., 41 Neb. 
 
 374, 59 N. W. Rep. 838, 235 
 
 v. Mo., etc., R. Co., 45 Fed. 
 
 Rep. 812, 30 
 
 v. Weidenbeck, 76 Fed. Rep. 
 695, 627 
 
 Fitzgerald^ etc., Co. v. Fitzgerald, 
 
 137 U. S. 98, 284, 285, 577, 584 
 Fitzhugh v. Land Co., 81 Tex. 
 306, 176 
 
 Fitzpatrickv. Rutter, 160 111. 282, 
 
 43 N. E. Rep. 392, 73 
 
 Flagg v. Manhattan, etc., R. Co., 
 
 10 Fed. Rep. 413, 554 
 
 Flanagan v. Great Western R. 
 
 Co., L. R. 7 Eq. 116, 135 
 
 Flash v. Conn, 109 U. S. 371, 
 
 247, 592, 625, 626, 637, 
 
 642, 643, 646 
 Fleener v. State, 58 Ark. 98, 23 S. 
 
 W. Rep. 1, 43 
 
 Fleitas v. New Orleans (La.), 24 
 
 So. Rep. 623, 676 
 
 Flenniken v. Marshall, 43 S. C. 
 
 80, 28 L. R. A. 402, 634 
 
 Fletcher v. Insurance Co., 13 Fed. 
 
 Rep. 526, 280 
 
 v. Peck, 6 Cranch (U. S.) 87, 92 
 v. U. S. Bank, 8 Wheat. 358, 161 
 Flitcroft's Case, L. R. 21 Ch. Div. 
 
 519, 559 
 
 Flinn v. Bagley, 7 Fed. Rep. 785, 339 
 Flint v. Pierce, 99 Mass. 68, 96 
 
 Am. Dec. 691, 140, 145, 147, 592 
 Flint & Fentonville Plank Road 
 Co. v.Woodhull, 25 Mich. 99, 
 
 90, 91, 664 
 Florida Land, etc., Co. v. Merrill, 
 2 U. S. App. 434, 52 Fed. Rep. 
 77, 401 
 
 Florsheim, etc., Co. v. Lester, 60 
 
 Ark. 120, 27 L. R. A. 505, 273 
 Flynn v. Brooklyn, etc., R. Co., 
 
 9 N. Y. App. Div. 269, 354 
 
 v. Brooklyn, etc., R. Co., 158 N. 
 Y.493, 447 
 
 Fogg v. Blair, 133 U. S. 534, 321, 324 
 v. Blair, 139 U. S. 118, 321, 322, 344 
 v. Boston, etc., R. Co., 148,513, 
 12 Am. St. Rep. 583, 236 
 
 Folger v. Columbian, etc., Co., 
 
 99 Mass. 267, 672, 673 
 
 Foils' Appeal, 91 Pa. St. 434, 495 
 
 Forbes v. Memphis, etc., R. Co., 
 
 2 Woods C. C. 323, 414 
 
 Ford v. Bank, 87 Wis. 363, 182 
 
 v. Buckeye Co., 6 Bush (Ky.) 
 
 133, 278 
 
 v. Chicago, etc., Assn., 155 111. 
 
 166, 169 
 
 v. Easthampton, etc., Co., 158 
 Mass. 84, 35 Am. St. Rep. 462, 
 
 428, 430 
 v. Hill, 92 Wis. 188, 66 N. W. 
 Rep. 115, 161,577 
 
 Foreman v. Bigelow, 4 Cliff.' C. C.) 
 
 508, 341 
 
 Forrester v. Boston, etc., Co. 
 
 (Mont.), 55 Pac. Rep. 229, 449
 
 TABLE OF CASES. 
 
 xlv 
 
 [Beferences are to Pages."] 
 
 Fort Edward, etc., Co. v. Payne, 
 
 17 Barb. 567, 384 
 
 Fort Edwards, etc., Road Co. v. 
 
 Payne, 15 N. Y. 583, 370 
 
 Fort Madison Bank v. Alden, 129 
 
 IT. S. 372, 607 
 
 Fort Madison, etc., Co. v. Batavia 
 
 Bank, 71 Iowa 270, 32 N. W. 
 
 Rep. 336, 60 Am. Rep. 789, 471, 472 
 Foss v. Harbottle, 2 Hare 461, 450 
 Foster v. Bank, 16 Mass. 245, 671 
 
 v. Betcber Lumber Co. (S. Dak.), 
 
 23 L. R. A. 490, 283 
 
 v. Charles Betcher, etc., Co. (S. 
 
 Dak.), 23 L. R. A. 490, 289 
 
 v. Comrs., etc., 1 Q. B. 516, 11 
 
 v. Moulton, 35 Minn. 458, 599 
 
 v. Mullanphv, etc., Co., 92 Mo. 
 
 79, 522 
 
 v. White, 86 Ala. 467, 6 So. Rep. 
 
 88, 415, 416, 419 
 
 Fouche v. Brower, 74 Ga. 251, 181 
 
 Fourgeray v. Cord, 50 N. J. Eq. 
 
 185, 421. 323 
 
 v. Cord (N. J. Eq.), 24 Atl. Rep. 
 
 499, 461, 524 
 
 Fourth Nat'l Bank v. Francklyn, 
 
 120 U. S. 747, 
 
 621, 624, 637, 638, 643, 652 
 Fowler v. Lampson, 146 111. 472, 37 
 
 Am. St. Rep. 163, 622,637,646,652 
 Franco-Texan, etc., Co. v. Laigle, 
 
 59 Tex. 339, 250, 252, 500 
 
 Franco, etc., Co. v. McCormick, 
 
 85 Tex. 416, 204, 229 
 
 Franey v. Vv x arner, 96 Wis. 222, 46, 391 
 Frankfort, etc., Co. v. Churchhill, 
 
 6T. B. Mon. 427, 17 Am. Dec. 
 
 159, 52 
 
 Franklin Bank v. Commercial 
 
 Bank, 36 Ohio St. 350, 184 
 
 Franklin Bridge Co. v. Wood, 14 
 
 Ga. 80, 24 
 
 Franklin Sav. Bank v. Bridges, 
 
 (Pa.) 8 Atl. Rep. 611, 411 
 
 Franklin Co. v. Lewiston Inst. 
 
 for Sav., 68 Maine 43, 
 
 134, 159, 184, 202, 215, 365 
 Fraser v. Ritchie, 8 Brad. (111.) 
 
 554, 191 
 
 Fredenberg v. Lyon Lake M. E. 
 
 Ch., 37 Mich. 476, 68 
 
 Freeland v. Ins. Co., 94 Pa. St. 504, 77 
 Freeman v. Alderson, 119 U. S. 
 
 185, 284 
 
 v. Machias, etc., Co., 38 Maine 
 
 343, 252, 253 
 
 v. Sea View, etc., Co. (N. J. Eq.) 
 
 40 Atl. Rep. 218, 153 
 
 Freidenburg v. Lynn, etc., Church, 
 
 37 Mich. 476, 74 
 
 French v. Andrews, 145 N.Y. 441, 182 
 
 v. Donahue, 29 Minn. Ill, 173 
 
 v. Fuller, 40 Mass. 108, 429 
 
 French v. Ryan, 104 Mich. 625, 
 
 387 395 
 Frenkel v. Hudson, 82 Ala. 158, ' 584 
 v. Teschemaker, 24 Cal. 518, 622 
 Freon v. Carriage Co., 42 Ohio 
 
 St. 30, 496 
 
 Frick Co. v. Norfolk Bank, 86 
 Fed. Rep. 725, 57 U. S. App. 
 286, ' 541 
 
 Friedman v. Gold, etc., Co., 32 
 
 Hun (N. Y.) 4, 82 
 
 Fritts v. Palmer, 132 U. S. 282, 
 
 157, 276, 279 
 Fromm v. Sierra Nevada, etc., Co., 
 
 61 Cal. 629, 494 
 
 Frost v. Walker, 60 Maine 468, 
 
 19, 20, 592 
 Fulgam v. Macon, etc., R. Co., 44 
 
 Ga. 597, 376 
 
 Fuller & Johnson, etc., Co. v. 
 Foster, etc., Co., 4 Dak. 329, 
 30 N. W. Rep. 166, 272 
 
 Fuller v. Ledden, 87 111. 310, 625 
 
 v. Rowe, 57 N. Y. 23, 595 
 
 Funk v. Anglo-American, etc., 
 Co., 27 Fed. Rep. 336, 289 
 
 G 
 
 Gade v. Forest, etc., Co., 165 111. 
 
 367, 311 
 
 Gaff v. Flesher, 33 Ohio St. 107, 475 
 Gage v. Fisher, 5 N. Dak. 297, 31 
 
 L. R. A. 557, 65 N. W. Rep. 
 
 809, 509, 513, 520 
 
 Gainey v. Gilson, 149 Ind. 58, 48 
 
 N. E. Rep. 633, 592 
 
 Galena, etc., R. Co. v. Ennor, 116 
 
 111. 55, 372 
 
 Gallagher v. Germania, etc., Co., 
 
 53 Minn. 214, 11, 660 
 
 Galveston Hotel v. Bolton, 46 
 
 Tex. 633, 367 
 
 Galveston, etc., R. Co. v. Cow- 
 
 drev, 11 Wall.(tJ. S.) 459, 251, 501 
 v. Donahoe, 56 Tex. 162, 238 
 
 v. Gulf City, etc., R. Co., 63 
 
 Tex. 529, 117 
 
 Gamble v. Caldwell (Ala.), 12 So. 
 
 Rep. 424, 277 
 
 v. Queen's County, etc., Co., 123 
 
 N. Y. 91, 25 N. E. Rep. 201, 
 
 9L. R. A. 227, 
 
 325, 350, 351, 352, 456, 510, 524, 526
 
 xlvi 
 
 TABLE OF CASES. 
 
 [References are to Pages.'] 
 
 Ganser v. Firemen's Fund Ins., 
 
 34 Minn. 372, 277 
 
 Gardener v. Butler, 37 N. J. Eq. 
 
 702, 552 
 
 Garesche v. Lewis, 63 Mo. 197, 411 
 Garnett v. Richardson, 35 Ark. 
 
 144, 34, 595, 596 
 
 Garrett v. Belmont Land Co., 94 
 
 Tenn. 549, 161 
 
 v. Burlington, etc., Co., 70 Iowa 
 
 697, 59 Am. Rep. 461, 
 
 177, 546, 551 
 
 v. Kansas City, etc., Co., 113 
 
 Mo. 330, 213 
 
 v. Plow Co., 70 Iowa 697, 549 
 
 v. Plow Co., 70 Iowa 667, 552 
 
 v. Railroad Co., 78 Pa. St. 465, 384 
 
 Garrison v. Howe, 17 N. Y. 458, 569 
 
 Gartside, etc., Co. v. Maxwell, 22 
 
 Fed. Rep. 197, 598 
 
 Gashwiler v. Willis, 33 Cal. 11, 498 
 Gates v. Tippecanoe, etc., Co., 75 
 Ohio St. 60, 63 Am. St. Rep. 
 705, 353 
 
 Gaynor v.Williamsport,etc.,R.Co. , 
 
 189 Pa. St. 5/41 Atl. Rep. 978, 575 
 Gebbard v. Eastman, 7 Minn. 56, 
 
 Gil. 40, 629 
 
 Gemmell v. Davis & Co., 75 Md. 
 
 546, 428, 432, 433, 435, 489 
 
 Genesee Sav. Bank v. Michigan, 
 
 etc., Co., 52 Mich. 438, 217 
 
 Gentv. Mfg. Ins. Co., 107 111. 652, 
 
 37,50 
 
 George H. Hammond & Co. v. 
 
 Hastings, 134 U. S. 401, 489, 491 
 
 etc., Co. v. 
 Range, etc., Co., 16 Utah 59, 
 
 471, 472 
 
 Georgetown, etc., v. Brown, 34 
 
 Md. 450, 199 
 
 Georgia, etc., R. Co. v. Wilks, 86 
 
 Ala. 478, 195 
 
 German Nat'l Bank v. Kentucky 
 
 T. Co. (Ky.), 40 S. W. Rep. 
 
 458, 490 
 
 German Sav. Bank v. Wulfekuh- 
 
 ler, 19 Kan. 60, 190 
 
 Germania, etc., Co. v. Boynton, 
 
 71 Fed. Rep. 797, 19 C. C. A. 
 
 118, 171,204 
 
 v. King, 94 Wis. 439, 36 L. R. A. 
 
 r,i, 404 
 
 v. Swigert, 128 111. 237, 4 L. R. 
 
 A 173, 268 
 
 Germantown, etc., R. Co. v. Fil- 
 ler, HO Pa. St. 124, 100 Am. 
 
 Dec. 546, 404, 407 
 
 Germantown, etc., Co. v. Dhein, 
 43 Wis. 420, 28 Am. Rep. 549, 
 
 159, 217, 220 
 Gerry v. Bismark Bank, 19 Mont. 
 
 191, 450 
 
 Gery v. Hopkins, 7 Mod. 129, 418 
 
 Getty v. Devlin, 54 N. Y. 403, 45 
 
 v.Devlin, 70 N.Y. 504, 391 
 
 Gibbons v. Anderson, 80 Fed. 
 
 Rep. 345, 561 
 
 v. Ellis, 83 Wis. 434, 374 
 
 v. Mahon, 4 Mackey 130, 312 
 
 v. Mahon, 136 U. S. 549, 
 
 415, 421, 440, 441, 446 
 Gibbs v. Consolidated, etc., Co., 
 
 130 U. S. 396, 167 
 
 v. Queen, etc., Co., 63 N. Y. 
 114, 20 Am. Rep. 513, 285, 288 
 Gifford v. N. J. R. Co., ION. J. 
 
 Eq. 171, 95 
 
 Gilbert v. Hole, 2 S. Dak. 164, 49 
 N. W. Rep. 1, 152, 157 
 
 v. Insurance Co., 49 Fed. Rep. 
 884, 59 
 
 Gilchrist v. Helena, etc., R. Co., 
 
 47 Fed. Rep. 593, 272 
 
 Gilford v. Western Union, etc., 
 Co., 59 Minn. 332, 61 N. W. 
 Rep. 324, 476, 477 
 
 Gill v. Balis, 72 Mo. 424, 190 
 
 Gillingham v. Ohio, etc., R. Co., 
 35 W. Va. 588, 14 L. R. A. 
 798. 237 
 
 Gillis v^ Bailey, 21 N. H. 149, 543 
 
 Gilman v. Lockwood, 4 Wall. 409, 249 
 Gilman, etc., R. Co. v. Kelly, 77 
 
 111. 426, 338, 547 
 
 Ginn v. New Eng., etc., Co., 92 
 
 Ala. 135, 272 
 
 Girard Will Case, 2 How. (U. S.) 
 
 127, 262 
 
 Given v. Hilton, 95 U. S. 591, 156 
 
 Glamorganshire, etc., Co. v. 
 
 Irvine, 4 Fost. & Fin. 947. 393 
 Gleason v. McKay, 134 Mass. 419, 20 
 Glenn v. Bread, 35 La. Ann. 875, 32 
 v. Dorsheimer, 23 Fed. Rep. 
 
 695, 24 Fed. Rep. 536, 411 
 
 v. Liggett, 47 Fed. Rep. 472, 506 
 v. Liggett, 135 U. S. 533, 
 
 405, 411, 612, 613, 638 
 Glenn v. Marbury, 145 U. S. 499, 
 
 411, 613 
 v. Orr, 96 N. C. 413, 2 S. E. Rep. 
 
 538, 43 
 
 v. Rosborough, 48 S. C. 272, 376 
 v. Sexton, 68 Cal. 353, 613 
 v. Springs, 26 Fed. Rep. 494, 
 
 612, 038
 
 TABLE OF CASES. 
 
 xlvii 
 
 [References are to Pages.] 
 
 Glenn v. Williams, 60 Md. 93, 612 
 Glidden, etc., Co. v. Bank, 69 Fed. 
 
 Rep. 912, 32 U. S. App. 654, 580 
 Globe Pub. Co. v. State Bank 
 (Neb.), 59 N. W. Rep. 683, 
 
 624, 625, 626 
 Globe, etc., Co. v. State Bank, 41 
 
 Neb. 175, 27 L. R. A. 854, 625,637 
 Gloniger v. Railroad Co., 139 
 
 Pa. St. 13, 226 
 
 Gloucester, etc., Co. v. Pennsyl- 
 vania, 114 U. S. 196, 255 
 Glover v. Lee, 140 111. 102, 181, 182 
 Goddard v. Crefeld Mills, 45 U. S. 
 
 App. 84, 278 
 
 v.Grand Trunk R. Co., 57 Maine 
 
 202, 237 
 
 v. Merchants' Exchange, 9 Mo. 
 App. 290, 142, 143, 150 
 
 Godsden v. Woodward, 103 N. Y. 
 
 242, 625 
 
 Goebic Invest. Co. v. Iron Chief, 
 
 etc., Co., 78 Wis. 426, 351 
 
 Gold v. Clyne, 134 N. Y. 262, 31 
 N. E. Rep. 980, 17 L. R. A. 
 767, 569, 570 
 
 Gold, etc., Co. v. National Bank, 
 
 96 U. S. 640, 199 
 
 Golden v. Morning News, 42 Fed. 
 
 Rep. 112, 156 U. S. 518, 285, 286 
 Golden Gate, etc., Min. Co. v. Su- 
 perior Court, 65 Cal. 187, 241 
 Goldsmith v. Home, etc., Co., 62 
 
 Ga. 379, 268 
 
 Gooch v. Faucette, 122 N. C. 270, 
 
 30 L. R. A. 835, 261 
 
 Good Hope Co. v. Railway, etc., 
 
 Co., 22 Fed. Rep. 635, 285 
 
 Goodin v. Cincinnati, etc., Co., 18 
 Ohio St. 169, 98 Am. Dec. 95 
 
 554, 556 
 Goodrich v. Reynolds, 31 111. 490, 
 
 83 Am. Dec. 240, 392 
 
 Goodspeed v. Bank, 22 Conn. 530, 
 
 235, 236 
 Goodwin v. Colo, etc., Co., 110 
 
 U. S. 1, 289 
 
 v. Hardy, 57 Maine 143, 99 Am. 
 
 Dec. 758, 428, 434, 435, 440 
 
 v. McGehee, 15 Ala. 232, 659 
 
 v. Ottawa, etc., R. Co., 13 U. C. 
 
 (C. P.) 254, 496 
 
 v. Providence, etc., Assn., 97 
 
 Iowa 226, 245 
 
 v. Screw Co., 34 N. H. 378, 161 
 
 v. Sleeper, 67 Wis. 577, 630 
 
 v. Union, etc., Co., 34 N. H. 378, 538 
 
 Goodvear Rubber Co. v. Goodyear, 
 
 etc., Co., 21 Fed. Rep. 276, 40 
 
 Gorder v. Plattsmouth, etc., Co., 
 
 36 Neb. 548, 214, 538 
 
 v. Plattsmouth, etc., Co. (Neb. 
 
 1893), 41 Am. & Eng. Corp. 
 
 Cas. 87, 549 
 
 Gordon v. Richmond, etc., R. Co., 
 
 78 Va. 501, 315 
 
 Gordon's Exrs. v. Railroad, 78 
 
 Va. 501, 318, 319 
 
 Gormon v. Russell, 14 Cal. 532, 305 
 Gormully, etc., Co. v. Pope Mfg. 
 
 Co., '34 Fed. Rep. 818, 60 
 
 Gould v. Head, 41 Fed. Rep. 240, 494 
 v. Little Rock, etc., R. Co., 52 
 
 Fed. Rep. 680, 181 
 
 v. Oneonta, 71 N. Y. 298, 404 
 
 v. Railway Co., 52 Fed. Rep. 
 680, 682, 182, 183 
 
 Govenor v. Allen, 8 Humph. 
 
 (Tenn.) 176, 17 
 
 Gowen, etc., Co. v. Tarrant, 73 
 
 111. 608, 161 
 
 Graham v. Birkenhead, etc., R. 
 Co., 2 McN. &G. 156, 528 
 
 v. First Nat'l Bank, 84 N. Y. 
 
 393 429 
 
 v. Railroad Co., 118 U. S. 161, 
 
 57, 502 
 v. Railroad Co., 102 IT. S. 148, 
 
 321, 322, 323, 325, 590 
 Graham & Anderson Co. v. Hen- 
 dricks, 22 La. Ann. 523, 272 
 Grand Lodge v. Waddell, 36 Ala. 
 
 313, 199 
 
 Grand Rapids Sav. Bank v. War- 
 ren, 52 Mich. 557, 621, 631 
 Grand Rapids, etc., Co. v. Prang, 
 
 35 Mich. 400, 70 
 
 Grand Trunk R. Co. v. Cook, 29 
 111. 237, 26 
 
 v. Wayne Circuit Judge, 106 
 Mich. 248, 288 
 
 Granger v. Bassett, 98 Mass. 462, 437 
 Granger, etc., Co. v. Turner, 61 
 
 Ga. 561, 395 
 
 Grangers, etc., Co. v. Kamper, 73 
 
 Ala. 325, 310, 311 
 
 Grannan v. Westchester, etc., 
 
 Assn., 153 N. Y. 449, 115 
 
 Grant v. Duluth, etc., R. Co., 66 
 
 Minn. 349, 69 N. W. Rep. 23, 577 
 v. Mechanics' Bank, 15 Serg. & 
 
 R. 140, 
 v. Ross (Ky.), 37 S. W. Rep. 
 263, 421, 
 
 Grape, etc., Co. v. Small, 40 Md. 
 
 395 
 Gratz v'. Redd, 4 B. Mon. 178, 
 
 426, 432, 575, 606 
 
 490 
 433 
 
 52
 
 xlviii 
 
 TABLE OF CASES. 
 
 [References are to Pages.] 
 
 Graves v. Slaughter, 15 Pet. (U.S.) 
 
 449 
 Gray v.' Bennett, 3 Met. 522, 
 v. Christian, etc., Soc, 137 
 Mass. 329, 50 Am. Rep. 310, 
 v. Coffin, 9 Cush. (Mass.) 192, 
 v. National Steamship Co., 115 
 U. S. 116, 30, 
 
 v. Navigation Co., 2 Watts & 
 Sarg. 156, 406, 
 
 v. Portland Bank, 3 Mass. 364, 
 161,419, 
 Great Falls, etc., Co. v. Harvey, 
 
 45 N. H. 292, 
 Great Northern R. Co. v. Eastern, 
 etc., R. Co., 21 L. J. Chan. 
 837 
 Great Western, etc., Co. v. Burn- 
 ham, 79 Wis. 47 ; 47 N. W. 
 Rep. 373, 
 v. Gray, 122 111. 630, 
 v. Purdv, 162 U. S. 329, 612, 613, 
 Great West, R. Co. v. Rushout, 5 
 
 DeG. & Sm. 290, 
 Great, etc., Co. v. Loewenthal, 154 
 111. 261, 372, 
 
 Greaves v. Gonge, 69 N. Y. 154, 
 Green v. Biddle, 8 Wheat. (U. S.) 
 1, 
 v. Board of Trade, 174 111. 585, 
 51 N. E. Rep. 599, 141, 144, 
 v. Brokins, 23 Mich. 48, 
 v. Dennis, 6 Conn. 298, 
 v. Graves, 1 Doug. (Mich.) 351, 
 v. Knife River Falls Boom Corp., 
 35 Minn. 155, 22, 29, 
 
 v. London, etc., Co., 7 C. B. N. 
 
 S. 290, 
 v. Omnibus Co., 7 C. B. N. S. 
 290, 
 Green Mont, etc., Co. v. Bulla, 45 
 
 Ind. 1, 
 Green Co. v. Blodgett, 159 111. 169, 
 v. Conners, 109 U. S. 104, 111, 
 Greenberg v. Whitcomb, etc., Co., 
 
 90 Wis. 225, 28 L. R. A. 439, 
 Greenbrier v. Rodes (W. Va.), 17 
 
 S. E. Rep. 305, 
 Greenbrier Ind. Expo. v. Rodes, 
 
 :\1 W. Va. 738, 
 Greenbrier, etc., Co. v. Ward, 30 
 
 W. Va. 43, 
 
 Greene v. Board, etc. (111.), 51 
 
 N. E. Rep. 599, 301, 
 
 Greenville, etc., Co. v. Planters', 
 
 etc., Co., 70 Miss. 669, 204, 
 
 Greenwood v. Freight Co., 105 U. 
 
 S. L3, 89, 90,91,92 
 
 v. Law, 55 N. J. L. 168, 
 
 622 
 634 
 
 302 
 617 
 
 590 
 
 532 
 
 496 
 
 145 
 
 120 
 
 405 
 613 
 654 
 
 526 
 
 613 
 450 
 
 621 
 
 299 
 
 321 
 
 26 
 
 77 
 
 113 
 
 236 
 
 236 
 
 496 
 159 
 195 
 
 568 
 
 95 
 
 369 
 
 674 
 
 302 
 
 213 
 
 , 98 
 321 
 
 518 
 292 
 296 
 
 Gregg v. Mass. Med. Society, 111 
 
 Mass. 185, 150, 306 
 
 Gregory v. Bank, 3 Colo. 332, 571, 626 
 v. German Bank, 3 Colo. 336, 88 
 Grenell v. Detroit, etc., Co., 112 
 
 Mich. 70, 70 N. W. Rep. 413, 197 
 Gresham v. Island City, etc., 
 
 Bank (Texas Civ. App. 1893), 
 
 21 S. W. Rep. 556, 494 
 
 Gridley v. Railroad Co., 71 111. 
 
 200, 586 
 
 Griffith v. Chicago, etc., R., 74 
 
 Iowa 85, 578 
 
 v. Jewett, 15 Weekly Law Bui 
 
 letin 419, 509, 517 
 
 Grindle v. Stone, 78 Maine 176, 
 Griswold v.Seligman, 72 Mo. 110, 
 Grommes v. Sullivan, 53 U. S. 
 
 App. 359, 81 Fed. Rep. 45, 
 1 ■ 174, 180 
 
 Grosse, etc^ v. I' Anson's Exrs., 
 
 43 N. J. L. 442, 403 
 
 Grvmes v. Hone, 49 N. Y. 17, 466, 471 
 Guaranty Co., etc., v.. East, etc., 
 Co., 96 Ga. 511, 23 S. E. Rep. 
 503, 432, 435 
 
 Guckert v. Hacke, 159 Pa. St. 303, 599 
 Guernev v. Moore, 131 Mo. 650, 
 
 643, 646 
 
 Guernsey v. American, etc., Co., 
 
 13 Minn. 278 (Gil. 256), 287 
 
 v. Black, etc., Co., 99 Iowa 471, 578 
 
 v. Cook, 120 Mass. 501, 
 
 Guest v. Worcester R. Co., L. R. 
 
 4 C. P. 9, 
 Guilford v. Western, jetc, Tel. 
 Co., 43 Minn. 434, 
 v. Western Union, etc., Co., 59 
 Minn. 332, 61 N. W. Rep. 324, 
 
 257, 282 
 
 Gulf, etc., R. Co. v. Morris, 67 
 Texas, 692, 121 
 
 v. Newell, 73 Texas 334, 15 Am. 
 
 St. R. 788, 30 
 
 v. State. 72 Texas 404, 164 
 
 Gunmakers', etc., Co. v. Fell, 
 
 Willes 384, 142 
 
 Gunn v. Central R. Co., 74 Ga. 509, 
 
 173, 235, 558 
 
 v. White, etc., Co., 57 Ark. 24, 
 
 18 L. R. A. 206, 
 Guthrie v. Oklahoma, 1 Okla. 188, 
 
 21 L. R. A. 841, 
 Gutta Percha, etc., Co. v. Ogalallo, 
 
 40 Neb. 775, 
 G. N. B. Mining Co. v. Nat'l Bank 
 
 (C. C. App.), 95 Fed. Rep. 23, 577 
 
 325 
 476 
 
 256 
 
 67 
 
 230
 
 TABLE OF CASES. 
 
 xlix 
 
 [References are to Pages."] 
 
 H 
 
 Hackensack Water Co. v. Dekay, 
 
 36 N. J. Eq. 548, 163, 332 
 
 Haden v. Farmers', etc., Co., 80 
 
 Va. 691, 147 
 
 v. Farmers', etc., Assn., 80 Va. 
 
 683, 216 
 
 Hadden v. Linville (Md.), 38 Atl. 
 
 Rep. 37, 182 
 
 Hadley v. Freedman's Saving, 
 
 etc., Co., 2 Tenn. Ch. 122, 25 
 
 Hafer v. New York, etc., R. Co., 
 
 14 Weekly Law Bulletin 68, 
 
 513, 517 
 
 Hagan v. Providence, etc., R. Co., 
 
 3 R. I. 88, 237 
 
 Hagar v. Union Nat'l Bank, 63 
 
 Maine 509, 420, 430, 433 
 
 Hagerman v. Empire Slate Co., 97 
 
 Pa. St. 534, 289 
 
 Hale v. Hardon, 95 Fed. Rep. 747 
 
 (C. C. A. May 31, 1899), 
 
 II, 611, 638, 642, 643, 647,654, 
 
 656, 658 
 v. Republican, etc., 8 Kan. 466, 431 
 Hall v. Rose Hill, etc., Co., 70 
 
 III. 673, 429, 479 
 Hallam v. Indianola, etc., Co., 
 
 56 Iowa 178, 9 N.W. Rep. Ill, 
 
 549, 551 
 Hallenbeck v. Powers, etc., Co. 
 
 (Mich.), 76 N. W. Rep. 119, 146 
 Hallmark's- Case, L. R. 9Ch. Div. 
 
 329, 565 
 
 Halsev v. McLean, 12 Allen 
 
 (Mass.) 438, 90 Am. Dec. 157, 
 
 247, 645 
 Halstead v. Dodge, .19 J. & S. 
 
 (N. Y.) 169, 139 
 
 Hamilton v. Clarion, etc. R. Co., 
 
 144 Pa. St. 34, 64, 73, 74, 374, 410 
 Hamilton County v. Mighels, 7 
 
 Ohio St. 110, 15 
 
 Hamlin v. Toledo, etc., R. Co., 78 
 
 Fed. Rep. 664, 47 U. S. App. 
 
 422, 36 L. R. A. 826, 315 
 
 Hamm v. Drew, 83 Tex. 77, . 5§ 
 Hammond, etc., Co. v. Best, 91 
 
 Maine 431, 42 L. R. A. 528, 
 
 57 79 248 249 313 
 Hammond v. Straus, '53 Md. 1, 23, 34 
 Hamsherv. Hamsher, 132 111. 273, 
 
 8 L. R. A. 556, 157 
 
 Hanan v. Sage, 58 Fed. Rep. 651, 671 
 Hanauer v. Doane, 12 Wall. (U. 
 
 S.) 342, 170 
 
 iv- Private Corp. 
 
 Hancock Nat'l Bank v. Farnum, 
 (R. I. App. 1898), 40 Atl. Rep. 
 341, 646 
 
 v. Ellis, 166 Mass. 414, 42 L. R. 
 A. 396, 55 Am. St. Rep. 414, 
 172 Mass. 39, 
 
 610, 624, 639, 642, 
 
 643, 645, 650, 652 
 Hand v. Coal Co., 143 Pa. St. 408, 161 
 Handley v. Stutz, 139 IT. S. 417, 
 321 , 322, 339, 340, 343, 
 
 344, 348, 501,505,609 
 Hanover, etc., R. Co. v. Halde- 
 
 man, 82 Pa. St. 36, 371, 377 
 
 Hanson v. Davison (Minn.), 76 
 N. W. Rep. 254, 
 
 640, 653, 654, 655, 656 
 v. Donkersley, 37 Mich. 184, 616 
 Harben v. Phillips, L. R. 23 Ch. 
 
 Div. 14, 509 
 
 Hardin v. Trustees, 51 Mich. 137, 
 
 47 Am. R. 555, 18 
 
 Hardon v. Newton, 14 Blatchf. 
 
 376, 673 
 
 Hardware Co. v. Phalen, 128 Pa. 
 
 St. 110, 221 
 
 Harper v. Carroll, 66 Minn. 487, 
 69 N. W. Rep. 610, 
 
 492, 629, 630, 635, 640, 661 
 Harpold v. Stobart, 46 Ohio St. 
 397, 15 Am. St. Rep\ 618, 21 
 N. E. Rep. 637, 469, 616, 630, 633 
 Harrington v. Liston, 47 Iowa 
 
 11, 539 
 
 Harris v. Lemming, etc., Co. 
 
 (Tenn.), 43 S. W. Rep. 869, 585 
 v. McGregor, 29 Cal. 124, 36 
 
 v. Norvell, 1 Abb. N. Cas. 127, 635 
 v. Tumbridge, 83 N. Y. 92, 494 
 
 v. Stevens, 7 N. H. 454, 436 
 
 Harrison v. Arkansas, etc., R. 
 
 Co.. 4 McCrary 264, 348 
 
 v. Mexican R. Co., L. R. 19 Eq. 
 358, 319 
 
 Harshman v. Bates Cotfnty, 92 TJ. 
 
 S. 569, 195 
 
 Harter v. Kernochan, 103 U. S. 
 
 562, 195 
 
 Hartford, etc., R. Co. v. Boorman, 
 
 12 Conn. 530, 492 
 
 Hartford, etc., R. Co. v. Croswell, 
 5 Hill (N. Y.)383, 
 
 406, 528, 529, 532 
 
 v. Kennedy, 12 Conn. 499, 385 
 
 v. New York, etc., R. Co., 3d 
 
 Robertson (N. Y.) 411, 164 
 
 Hartford, etc., Co. v. Matthews, 
 
 102 Mass. 221, 275
 
 TABLE OF CASES. 
 
 [Beferences are to Pages. ] 
 
 Hartford, etc., Co. v. Raymond, 
 
 70 Mich. 485, 254, 267, 275 
 
 Hartnettv. Plumber's Sup. Assn., 
 
 169 Mass. 229, 38 L. R. A. 194, 
 
 47 N. E. Rep. 1002, 82, 668 
 
 Harts v. Brown, 77 111. 226, 
 
 549, 550 
 Harvard College v. Boston, 104 
 
 Mass. 470, 153 
 
 Harvey v. Linville, etc., Co., 118 
 
 N. C. 693, 32 L. R. A. 265, 
 
 515, 535 
 Harwood v. Railroad, 17 Wall. 
 
 (U. S.) 78, 224 
 
 Haselman v. Mfg. Co., 97 Ind. 
 
 365, 64 
 
 Haskell v. Sells, 14 Mo. App. 91, 372 
 Hassey v. Gallagher, 61 Ga. 86, 150 
 Hassinger v. Ammon, 160 Pa. St. 
 
 245, 73 
 
 Hassler v. Philadelphia, etc., 14 
 
 Phila. 233, 302, 303 
 
 Hastings v. Brooklyn, etc., Co., 
 
 138 N. Y. 473, 579 
 
 Hastings, etc., Co. v. Iron Range, 
 
 etc., Co., 65 Minn. 28, 
 
 343, 353, 356 
 Hatch v. Dana, 101 U. S. 205, 609 
 
 v. Glenn, 131 U. S. 319, 339 
 
 Hatcher v. Toledo, etc., R. Co., 
 
 62 111. 477, 198 
 
 Hathaway v. Addison, 48 Maine 
 
 440, 534 
 
 Hauer v. Carmichael, 82 Iowa 
 
 288, 595 
 
 Hause v. Mannheimer, 67 Minn. 
 
 194, 69 N. W. Rep. 810, 73, 74, 410 
 Havemyer v. Havemyer, 11 J. & 
 
 S. 506, 86 N. Y. 618, 515 
 
 Haven v. Asylum, 13 N. H. 532, 140 
 Haverhill, etc., Co. v. Prescott, 
 
 42 N. H. 547, 278 
 
 Hawes v. Anglo-Saxon, etc., Co., 
 
 101 Mass. 385, 594 
 
 v. Oakland, 104 U. S. 450, 
 
 448, 449, 453, 455 
 Hawk v. Marion Countv, 48 Iowa 
 
 472, 231 
 
 Hawkins v. Glenn, 131 U. S. 319, 
 
 293, 609, 611, 612, 613, 638, 654 
 Hawley v. Brumagin, 33 Cal. 394, 313 
 v. Upton, 102 U. S. 314, 292, 338 
 Hawthorn v. Calef, 2 Wall. 10, 88, 621 
 Hayden v. Atlantic Cotton Fac- 
 tory, 61 Ga.233, 335 
 v. Middlesex T. Co. 10 Mass. 
 
 397, 161 
 
 Hayes v. Coal Co., 29 Ohio St. 
 
 330, 174 
 
 Hays v. Citizens' Bank, 51 Kan. 
 
 535, 183 
 
 v. Comw., 82 Pa. St. 518, 88, 521 
 v. Houston, etc., R. Co. 46 Tex. 
 
 272 237 
 
 Hay's Case, L. R. 10 Ch. App. 
 
 593, 340 
 
 Hayward v. Davidson, 41 Ind. 
 
 212, 157 
 
 Haywood v. Lincoln, etc., Co., 
 
 64 Wis. 639, 26 N. W. Rep. 
 
 184, 182, 184, 546 
 
 Hazard v. Bank, 26 Fed. Rep. 94, 471 
 Hazelhurst v. Savannah, etc., R. 
 
 Co., 43 Ga. 13, 315, 316, 317 
 
 Hazeltine v. Belfast, etc., R. Co., 
 
 79 Maine 411, 1 Am. St. Rep. 
 
 330, 317, 319 
 
 v. Mississippi Valley Co., 55 
 
 Fed. Rep. 743, 288 
 
 Hazlet v. Butler University, 84 
 
 Ind. 230, 40 
 
 Hazleton, etc., Co. v. Hazleton, 
 
 etc., Co., 142 111. 494, 28 N. 
 
 E. Rep. 245, 41 
 
 Heacock v. Sherman, 14 Wend. 
 
 (N. Y.)59, 634 
 
 Headv. Insurance Co., 2 Cranch 
 
 127, 162 
 
 v. Tattersall L. R. 7 Exch. 7, 116 
 Heard v. Eldredge, 109 Mass. 258, 
 
 12 Am. Rep. 687, 426, 440 
 
 v. Talbot, 7 Gray (Mass.) 113, 674 
 Heaston v. Cincinnati, etc., R. 
 
 Co., 16 Ind. 275, 67, 69, 76, 405 
 Heath v. Barmore, 50 N. Y. 302, 156 
 v. Silverthorn, etc., Co., 39 Wis. 
 
 146, 502 
 
 Heaton v. Eldridge & Higgins, 56 
 
 Ohio St. 87, 36 L. R. A. 817, 245 
 Hebberd v. Southwestern, etc., 
 
 Co., 55 N. J. Eq. 18, 36 Atl. 
 
 Rep. 122, 336, 344 
 
 Hedge's App., 63 Pa. St. 273, 19 
 
 Hebgen v. Koeffler (Wis.), 72 N. 
 
 W. Rep. 745, 46 
 
 Heeg v. Licht, 80 N. Y. 579, 36 
 
 Am. Rep. 654, 572 
 
 Heims, etc., Co. v. Flannery, 137 
 
 111. 309, 207 
 
 Heinig v. Adams & Westlake, 
 
 etc., Co., 81 Ky. 300, 33 
 
 Heintzelman v. Druids, etc., Assn., 
 
 38 Minn. 138, 141, 540, 542 
 
 Heiskell v. Chickasaw Lodge, 87 
 
 Tenn. 668, 4 L. R. A. 699, 256 
 
 Hekking v. Pfaff, 91 Fed. Rep. 60, 
 
 50 U. S. App. 484, 654
 
 TABLE OP CASES. 
 
 [References are to Pages.] 
 
 Helena Nat'l Bank v. Rocky, etc., 
 Co., 20 Mont. 379, 63 Am. St. 
 Rep. 628, 576 
 
 Heman v. Britton, 88 Mo. 549, 677 
 Hencke v. Twomey, 58 Minn. 550, 625 
 Hendee v. Pinkerton, 14 Allen 
 
 (Mass.) 381, 178 
 
 Henderson v. Indiana, etc., Co., 
 143 Ind. 561, 182 
 
 v. Railway Co., 17 Texas 560, 
 
 67 Am. Dec. 675, 395 
 
 v. Royal Brit. Bank, 7 El. and 
 B1.356, 396 
 
 Hendrix v. Academy of Music, 73 
 
 Ga. 437, 373 
 
 Henriques v. Dutch, etc., Co., 2 
 
 Ld. Raymond 1532, 280 
 
 Henry v. Elder, 63 Ga. 347, 447 
 
 v. Great Northern R. Co., 1 De 
 G. & J. 606, 319 
 
 Hepburn v. School Directors, 23 
 
 Wall(U. S.) 480, 106,107 
 
 Hern v. Nichols, ISalk. 289, 481 
 
 Herrick v. Wardwell, 71 Conn. 50, 492 
 Herring v. N. Y., etc., R. Co., 105 
 
 N. Y. 340, 671 
 
 Herrod v. Hamer, 32 Wis. 164, 35 
 Hersey v. Tully, 8 Col. App. 110, 
 
 44 Pac. Rep. 854, 48 
 
 v. Veazie, 24 Maine 9, 525 
 
 Hervev v. Railroad Co., 28 Fed. 
 
 Rep. 169, 276 
 
 Hester v. Rasin, etc., Co., 33 S. C. 
 
 609, 287 
 
 Hibernia, etc., Co. v. Harrison, 
 
 93 Pa. St. 264, 142, 143, 145 
 
 Hickling v. Wilson, 104 111. 54, 74 
 Hickory, etc., Co. v. Buffalo, etc., 
 
 R. Co., 32 Fed. Rep. 22, 157 
 
 Higenia Water Ice Co., 140 N. Y. 
 
 94, 41 
 
 Higgins v. Downward, 8 Houst. 
 (Del.) 227, 40 Am. St. Rep. 
 141, 90,662 
 
 v. Hoyden (Neb.), 73 N. W. 
 
 Rep. 280, 563 
 
 v. Hopkins, 3 Exch. (W. H. & 
 
 G.) 163, 48 
 
 v. Lansingh, 154 111. 301, 315 
 
 v. Lansingh (111.), 40 N. E. Rep. 
 362, 342 
 
 Hightower v. Thornton, 8 Ga. 
 
 486, 677 
 
 Hill v. Atoka, etc., Co. (Mo. 1893), 
 21 S. W. Rep. 508, 429, 430, 494 
 v. Beach, 12 N. J. Eq. 31, 71, 604 
 v. Mining Co. (Mo.), 21 S. W. 
 
 Rep. 508, 124 Mo. 153, 434 
 
 v. Nisbet, 100 Ind. 341, 31, 186 
 
 Hill v. Pine River Bank, 45 N. H. 
 300, 490 
 
 v. Pioneer, etc., Co , 113 N. C. 
 
 173, 21 L. R. A. 560, 183 
 
 v. Spear, 50 N. H. 255, 9 Am. 
 
 Rep. 205, 264 
 
 v. The Newichawanick Com- 
 pany, 71 N. Y. 593, 428, 432, 493 
 Hiller v. Burlington, etc., R. Co., 
 
 70 N. Y. 223, 286 
 
 Hillesv. Parrish,14 N. J. Eq. 380, 502 
 Hills v. Carlton, 74 Maine 156, 249 
 v. Richmond, etc., R. Co., 37 
 Fed. Rep. 660, 284 
 
 Hillyer v. Min. Co., 6 Nev. 51, 539 
 Hilton v. Eckersley, 6 El. & Bl. 
 
 47, 166 
 
 Hinsdale Sav. Bank v. N. H. 
 Banking Co., 59 Kan. 716, 68 
 Am. St. Rep. 391, 616 
 
 Hirsche v. Sims (H. L. 1894), L. 
 
 R. (1894), A. C. 654, 550 
 
 Hirshfield v. Bopp, 145 N. Y. 84, 637 
 Hiss v. Bartlett, 3 Gray 468, 63 
 
 Am. Dec. 772, 297, 298 
 
 Hitch v. Hawley, 132 N. Y. 212, 673 
 Hitchcock v. Galveston, 96 U. S. 
 
 341, 221 
 
 Hite v. Hite, 93 Ky. 257, 19 L. R. 
 
 A. 173, 445 
 
 Hoag v. Lamont, 60 N. Y. 96, 161 
 
 Hoagland v. Bell, 36 Barb. (N.Y.) 
 
 67, 506 
 
 Hobbs v. Nat'l Bank of Com., 96 
 
 Rep. 396, 660 
 
 Hockett v. State, 105 Ind. 250, 16 
 
 Hodges v. New England, etc., Co., 
 1 R. I. 312, 53 Am. Dec. 624, 
 
 187, 566, 573, 574 
 Hodgson v. Cheever, 8 Mo. App. 
 318, 652 
 
 v. Duluth, etc., R. Co., 46 Minn. 
 454, 252, 447, 501, 502, 541 
 
 Hoffman, etc., Co. v. Cumberland, 
 etc., Co., 16 Md. 456, 77 Am. 
 Dec. 311 55^ 
 
 Holbert v. St. L., etc., R Co., 45 
 
 Iowa 23, 262 
 
 Holbrook v. Ford, 153 111. 633, 27 
 L. R. A. 324, 674 
 
 v. New Jersey, etc., Co., 57 N. 
 Y. 616, 332, 476, 477 
 
 Holder v. Aultman, etc., Co., 169 
 
 U. S. 81, 275 
 
 Holland v. Duluth, etc., Co., 68 
 
 N. W. Rep. 50, 375 
 
 v. Duluth, etc., Co., 65 Minn. 
 
 324, 292, 368, 637 
 
 Holliday v. Elliott, 8 Ore. 84, 191, 365
 
 lii 
 
 TABLE OF CASES. 
 
 [References are to Pages.] 
 
 Hollins v. Brierfield, etc., Co., 150 
 
 U. S. 371, 323, 324, 325, 589 
 
 Hollis v. Drew Theolog. Semin- 
 ary, 95 N. Y. 166, 260 
 
 Hollowell, etc., Bank v. Hamlin, 
 
 14 Mass. 178, 578 
 
 Holly Mfg. Co. v. New Chester, 
 etc., Co., 48 Fed. Rep. 879, 583 
 
 Holman v. State, 105 Ind. 569, 381 
 
 Holmes v. Gilliland, 41 Barb. (N. 
 Y.) 568, 35 
 
 v. Holmes, etc., 37 Conn. 278, 
 
 9 Am. Rep. 324, 40 
 
 v. Willard, 125 N. Y. 75, 171, 560 
 
 Holmes, etc., Co. v. Holmes, 127 
 
 U. S. 252, 186 
 
 v. Holmes, etc., Co., 127 N. Y. 
 252, 187, 207, 208, 220, 665 
 
 Holt v. Bennett, 146 Mass. 437, 
 
 549, 552 
 
 v. Winfield Bank, 25 Fed. Rep. 
 
 812, 382 
 
 Holton v. Newcastle R. Co., 138 
 
 Pa. St. Ill, 447 
 
 Holyoke Co. v. Lyman, 15 Wall. 
 
 511, 100 
 
 Home, etc., Co. v. Sherwood, 72 
 
 Mo. 461, 76, 367 
 
 v. Swigert, 128 111. 237, 4 L. R. 
 
 A. 473, 268 
 
 Hooper v. California, 155 U. S. 
 
 648, 275 
 
 Hope v. International, etc., Soc, 
 
 L. R. 4 Ch. Div. 327, 188 
 
 Hope, etc., Co. v. Perkins, 38 N. 
 
 Y. 404, 265 
 
 v. Flynn, 38 Mo. 483, 90 Am. 
 
 Dec. 438, 621 
 
 Hoper v. Carroll, 62 Minn. 152, 630 
 Hopkins v. Roseclare, etc., Co., 
 
 72 111. 373, 523 
 
 Hopper v. Sage, 112 N. Y. 530, 8 
 
 Am. St. Rep. 771, 428, 435 
 
 Hoppin v. Buffum, 9 R. I. 513, 
 
 505, 506, 507 
 
 v. Flower, etc., Co., 22 Vt. 274, 293 
 Horn v. Ivy, 1 Modern 18, Plow. 
 
 91/>, 160 
 
 v. Silver, etc., Co., 42 Minn. 196, 561 
 Horn, etc., Co. v. Ryan, 42 Minn. 
 
 196, 562, 574 
 
 Hornor v. Henning, 93 U. S. 228, 247 
 Horton v. Wilder, 48 Kan. 222, 535, 541 
 Hospes v. Northwestern, etc., Co., 
 48 Minn. 174, 15 L. R. A. 470, 
 
 324, 325, 339, 340, 343, 631 
 
 Hotchkiss, etc., Co. v. Union Nat'l 
 Bank, 37 U. S. App. 86, 472 
 
 v. Union Nat'l Bank, 27 U. S. 
 App. 86, 491 
 
 Hotel Co. v. Wade, 97 U. S. 13, 552 
 Hough v. Cook Co., etc., Co., 73 
 
 HI. 23, 24 Am. Rep. 230, 157 
 
 House of Mercy v. Davidson, 90 
 
 Tex. 529, 265 
 
 Houston v. Thornton, 122 N. C. 
 
 365, 65 Am. St. Rep. 699, 564, 567 
 Houston R. Co. v. Van Alstyne, 
 
 56 Tex. 439, 476 
 
 Hovelman v. Kansas City, etc., R. 
 
 Co., 79 Mo. 643, 118 
 
 Howard v. Glenn, 85 Ga. 238, 531, 612 
 v. Turner, 155 Pa. St. 349, 397, 398 
 Howarth v. Angle, 25 Misc. Rep. 
 (N. Y.) 551, 39 App. Div. 
 (N. Y.) 151, 649, 657, 660 
 
 v. Ellwanger, 86 Fed. R. 54, 611, 638 
 Howe v. Boston, etc., Co., 16 
 
 Gray (Mass.) 493, 186 
 
 v. Carpet Co., 16 Gray 493, 187 
 
 Howe, etc., Co. v. Sanford, etc., 
 
 Co., 44 Fed. Rep. 231, 183 
 
 Howell v. Chicago, etc., R. Co., 
 
 51 Barb. (N. Y.) 378 313 
 
 v. Manglesdorf & Co., 33 Kan. 
 194, 624, 646 
 
 Hoyle y. Plattsburg, etc., R. Co., 
 
 54 N. Y. 314, 542, 544, 549, 552 
 Hubbard v. Manhattan Trust Co., 
 87 Fed. Rep. 51, 57 U. S. App. 
 730, 30 C. C. A. 520, 466, 468 
 
 v. Weare, 79 Iowa 678, 425, 426 
 
 Hubbell v. Drexel, 11 Fed. Rep. 
 
 115, 313 
 
 Hudson v. Carman, 41 Maine 84, 42 
 v. Greenhill, etc., Corp., 113 111. 
 
 618, 69 
 
 v. Tower, 156 Mass. 82, 30 N. E. 
 Rep. 465, 161 Mass. 10, 36 N. 
 E. Rep. 680, 382 
 
 v. Tower, 36 N. E. Rep. 680, 383 
 v. Weir, 29 Ala. 294, 321 
 
 Hughes v. Antietam Mfg. Co., 34 
 
 Md. 316, 34, 408 
 
 v. Drovers', etc., Bank, 86 Md. 
 
 418, 478 
 
 v. Parker, 20 N. H. 58, 504 
 
 v. Vermont, etc., Co., 72 N. Y. 
 207, 430 
 
 Hughesdale Mfg. Co. v. Vanner, 
 
 12 R. I. 491, 34 
 
 Huguenot Bank v. Studwell, 570 
 
 Humble v. Mitchell, 11 Ad. & 
 El. 205, 321
 
 TABLE OF CASES. 
 
 liii 
 
 [References are to Pages."] 
 
 Humboldt, etc., Assn. v. Stevens 
 
 (Neb.), 52 N. W. Rep. 568, 419 
 Humboldt, etc., Co. v. American, 
 etc., Co., 62 Fed. Rep. 357, 10 
 C. C. A. 415, 172 
 
 v. American, etc., Co., 62 Fed. 
 Rep. 361, 130 
 
 Humphrey v.Mooney, 5 Colo. 2S2, 
 
 33, 39, 597 
 v. Patrons', etc., Assn, 50 Iowa 
 607, 176, 205, 215, 217, 221 
 
 Hun v. Cary, 82 N. Y. 65, 37 Am. 
 
 Rep. 546, 561, 562 
 
 Hunt v. Columbian, etc., Co., 55 
 Maine 290, 92 Am. Dec. 592, 674 
 v. LeGrand, etc., Co., 143 111. 
 118, 673 
 
 Hunter v. New Orleans, etc., Co., 
 
 26 La. Ann. 13, 146 
 
 v. Roberts, etc., Co., 83 Mich. 
 
 63, 47 N. W. Rep. 131, 421, 543 
 v. Sun, etc., Co., 26 La. Ann. 13, 587 
 Huntington v. Attrill, 146 U. S. 
 
 657, 246, 625, 627, 646 
 
 v. Attrill, L. R. (1893) A. C. 
 150 (P. C), 627 
 
 Huntley v. Merrill, 32 Barb. 626, 275 
 Hurd v. Kelley, 78 N. Y. 588, 34 
 
 Am. Rep. 567, 397 
 
 Hurlbut v. Marshall, 62 Wis. 590, 538 
 Huron, etc., Co. v. Kittleson, 4 
 S. Dak. 520, 57 N.W. Rep. 233, 
 
 51, 582, 583 
 Hurt v. Salisbury, 55 Mo. 310, 
 
 34, 593 
 Huse v. Ames, 104 Mo. 91, 579 
 
 Hussey v. Manufactures, etc., 
 
 Bank, 10 Pick. 415, 494 
 
 v. Norfolk, etc., R. Co., 98 N. C. 
 34, 2 Am. St. Rep. 312, 235, 236 
 Hutchinson v. Green, 91 Mo. 367, 181 
 v. Lawrence, 67 How. Pr. 38, 304. 
 v. Railway Co., 6 Heisk. 
 (Tenn.) 634, 558 
 
 Hutton v. Hotel Co., 2 Drew & 
 
 Sm. 514, 525 
 
 v. Joseph Bancroft & Sons Co., 
 
 83 Fed. Rep. 17, 447 
 
 v. Scarborough, etc., Co., 2 
 Drew & Sm. 521, 316 
 
 Huylar v. Cragin Cattle Co., 40 
 N. J. Eq. 392, 2 Atl. Rep. 274, 
 
 415, 418, 419 
 Hyatt v. Allen, 56 N. H. 553, 
 
 420, 437 
 
 Hyde v. Goodnow, 3 N. Y. 266, 275 
 
 v. Ward, 94 U. S. 23, 141, 299 
 
 Hyman v. Coleman, 82 Cal. 650, 660 
 
 Iasigi v. Chicago, etc., R. Co., 
 
 129 Mass. 46, 494 
 
 Illinois, etc., Bank v. Pacific R. 
 Co., 115 Cal. 287, 49 Pac. Rep. 
 196, 181 
 
 Illinois, etc., Co. v. Hough, 91 111. 
 63, 585 
 
 v. O'Donnell, 156 111. 624, 31 L. 
 
 R. A. 265, 182 
 
 v. Pearson, 140 111. 423, 41 
 
 Illinois, etc., R. Co. v. Zimmer, 
 
 20 111. 654, 206, 367, 375, 532 
 
 v. Zimmer, 20 111. 658, 95 
 
 Illinois, etc., Soc. v. Baldwin, 86 
 
 111. 479, 305 
 
 Imperial, etc., Hotel Co. v. Hamp- 
 
 son, L. R. 23 Ch. Div. 1, 587, 588 
 Inderwick v. Snell, 2 Mac. & G. 
 
 216, 300 
 
 Indiana, etc., Co. v. Willis, 18 
 Ind. App. 525, 48 N. E. Rep. 
 646, 236 
 
 Indiana v. United States, 148 U. 
 
 S. 148, 25 
 
 Indianapolis, etc., Co.v. Citizens', 
 etc., Co., 127 Ind. 369, 131 
 
 V. Herkimer, 46 Ind. 142, 
 
 34 37 75 
 v. St. Louis, etc., R. Co., 120 U. ' 
 S. 256, 577 
 
 Indianapolis, etc., R. Co. v. Jones, 
 
 29 Ind. 465, 196 
 
 Indianapolis R. Co. v. Morgan- 
 stern, 103 111. 149, 139 
 Ingwersen v. Edgecombe (Neb.), 
 
 60 N. W. Rep. 1032, 545 
 
 Innerarity v. Bank, 139 Mass. 
 
 332, 584 
 
 In re Ambrose, etc., Co., 14 Ch. 
 
 Div. 390, 325 
 
 Argus Co., 138 N. Y. 557, 
 
 513, 534, 540 
 Argus Pt. Co. (N.Dak.), 48 N. 
 
 W. Rep. 347, 505 
 
 Argus, etc., Co., 1 N. D. 434, 26 
 
 Am. Rep. 639, 506 
 
 Anglo-Austrian, etc., Co., 61 L. 
 J. Ch. 481, 7 Eng. Rul. Cas. 
 600, 584 
 
 Asiatic Banking Corp., L. R. 4 
 
 Ch. App. 252, 186 
 
 Bahia, etc., R. Co., L. R. 3 Q. 
 
 B. 584, 483 
 
 Barneds Banking Co., L. R. 3 
 
 Ch. 105, 38, 186 
 
 Barker, 6 Wend. (N. Y.) 509, 
 
 506, 510
 
 I1V 
 
 TABLE OF CASES. 
 
 [References are to Pages.'] 
 
 In re Barned's Banking Co., L. 
 
 R. 3 Ch. App. 105, 186 
 
 Barton's Trust. L. R. 5 Eq. 238, 439 
 Belton, 47 La. Ann. 1614, 30 L. 
 
 R. A. 648, 672 
 
 Bingham, 10 N. Y. Supp. 325, 
 
 32 N. Y. St. Rep. 782, 631 
 
 Bridgeport, etc, Co., L. R. 2 Ch. 
 
 191, 503 
 
 Brockway, etc., Co., 89 Maine 
 
 121, 56 Am. St. Rep. 401, 323 
 
 Brooklyn, etc., R. Co., 75 N. Y. 
 
 335, 664 
 
 Burton, L. J. 31 Q. B. 62, 418 
 
 Cameron's, etc., R. Co., 18 
 
 Beav. 339, 544 
 
 Cawley & Co., L. R. 42 Ch. Div. 
 
 209, 405 
 
 Cecil, 36 How. Pr. (N. Y.) 477, 509 
 Chenango, etc., Co., 19 Wend. 
 
 (N.Y.) 635, 533, 534, 535 
 
 Columbia Bank, 147 Pa. 422, 23 
 
 Atl. Rep. 626, 189 
 
 Comstock, 3 Sawyer (U. S.) 
 
 218, 278, 279 
 
 Cooper, 93 N. Y. 507, 270 
 
 Cork, etc., R. Co., L. R. 4 Ch. 
 
 748, 213 
 
 Denham & Co., 25 L. R. Ch. 
 
 Div. 752, 562 
 
 Director Germicide Co., 55 Hun 
 
 606, 509 
 
 Dronfield, etc., Co., 17 Ch. Div. 
 
 76, 325 
 
 Durham County, etc., Soc, 
 
 Lower Courts, 12 Eq. 516, 174 
 
 Election of Directors, etc., 19 
 
 Wend (N. Y.) 135, 533, 534 
 
 Empire City Bank, 18 N. Y. 199, 
 
 658, 659 
 Forest, etc., Co., L. R. 10 Ch. 
 
 Div. 450, 562 
 
 Gibbs' Estate, 157 Pa. St. 59, 22 
 
 L. R. A. 276, 2, 44 
 
 Glenn Salt Co., 17 App. Div. 
 
 234, 153 N. Y. 688, 505 
 
 Globe, etc., Assn., 63 Hun (N. 
 
 Y.) 263, 38 
 
 Glory, etc., Co., L. R. (1894) 
 
 3 Ch. 473, 542 
 
 Griffing, etc., Co. (N. J.), 41 Atl. 
 
 Rep. 931, 587 
 
 Haebler, 149 N. Y. 414, 44 N. E. 
 
 Rep. 87, 111,144,299,301 
 
 Hohorst, 150 U. S.653, 59 
 
 Horburv, etc., Co., L. R. 11 Ch. 
 
 Div. 109, 504 
 
 Howe, l Paige 214, 199 
 
 Insurance Co., 3 Biss. 452, 191 
 
 In re Jarvis, etc., Co., 11 Lav» 
 
 Times Rep. 373, 374 
 
 Keasby & M. Co., 160 U. S 
 
 221, 60 
 
 Kernochan, 104 N. Y. 618, 
 
 415, 428 435 
 Klaus, 67 Wis. 401, 145,458 196 
 Lands, etc., Co., L. R. (1894) 1 
 
 Ch. 616, 7 Eng. R. Cas. 614, 574 
 Le Blanc, 75 N. Y. 598, 428 
 
 Lignthall Mfg. Co., 47 Hun 258, 142 
 Lloyd Generale Italiano, L. R. 
 
 29 Ch. Div. 219, 673 
 
 London, etc., Co. (Wallace's 
 
 Case), L. R. 24 Ch. Div. 149, 398 
 Long Island Co., 19 Wend. (N. 
 Y.) 37, 32 Am. Dec. 429, 
 
 149, 297, 408, 505 
 McGraw's Estate, 111 N. Y. 66, 
 
 2 L. R. A. 387, 152, 154, 155, 156 
 Matheson Brothers, Limited, L. 
 
 R. 27 Ch. Div. 225, 674 
 
 Millward-Cliff, etc., Co. (Pa.), 
 
 28 Atl. Rep. 1072, 580 
 
 Minneapolis, etc., R. Co., 36 
 
 Minn. 481, 98 
 
 Murphy, 51 Wis. 519, 471 
 
 Newcomb (N. Y.), 18 N. Y. 
 
 Supp. 16, 503 
 
 New York, etc., Co., 70 N. Y. 
 
 327, 24 
 
 Northern, etc., Co., Ch. Div. 8 
 
 R. Corp. L. J. 177, 369 
 
 Pat. File Co., L. R. 6 Ch. App. 
 
 83, 7 Eng. Rul. Cas. 668, 180 
 
 Pendleton, etc., Co., 24 Ore. 
 
 330, 220 
 
 People's, etc., Co., 56 Minn. 180, 
 
 314, 640 
 Prospect Park, etc., Co., 67 N. 
 
 Y. 371, 
 Providence R. Co., 17 R. I. 324, 
 
 21 Atl. Rep. 965, 
 Reading Iron Works, 149 Pa. 
 
 St. 182, 24 Atl. Rep. 202 
 Rochester, etc., R. Co., 50 Hun 
 
 29, 370 
 
 Sage, 70 N. Y. 220, 417, 419 
 
 St. Lawrence, etc., Co., 44 N. J. 
 
 L. 529, 293, 505, 506, 509, 535 
 
 Steinway, 159 N. Y. 250, 53 N. 
 
 E. Rep. 1103, 415, 418 
 
 Suburban, etc., Co., L. R. 2 Ch. 
 
 App. 737, 527 
 
 Townsend, 18 N. Y. Supp. 905, 509 
 ITtica. etc., Co., 154 N. Y 268, 
 
 48 N. E. Rep. 521, '97,577 
 
 U. S. Merc. Rep. Co., 115 N.Y. 
 176, 41 
 
 193 
 
 495
 
 TABLE OF CASES. 
 
 lv 
 
 [Beferences are to Pages."] 
 
 In re West Devon Great Consols 
 Mine, L. R. 27 Ch. Div. 106, 418 
 Western, etc., Co., L. R. 1 Ch. 
 Div. 115, 351 
 
 In Reliance, etc., Co. v. Sawyer, 
 160 Mass. 413, 36 N. E. Rep. 
 59, 278 
 
 Instone v. Frankfort, etc., Co., 2 
 
 Bibb (Ky.) 576, 409 
 
 Insurance Co. v. Dhein, 43 Wis. 
 
 420, 230 
 
 v. Elliott, 5 Fed. Rep. 225, 280 
 
 v. Jenkins, 3 Wend. 130, 559 
 
 v. Kennedy, 96 Tenn. 711, 275 
 
 v. Matthews, 102 Mass. 221, 280 
 v. McCain, 96 U. S. 84, 163 
 
 v. McMillen, 24 Ohio St. 67, 280 
 v. Morse, 20 Wall. 445, 269, 271 
 
 v. New Orleans, 1 Woods 85, 267 
 v. Walsh, 18 Mo. 229, 280 
 
 Intermountain, etc., Co. v. Jack, 
 
 5 Mont. 568, 76 
 
 Int., etc., Assn. v. Wallace, 83 
 
 Mich. 336, 47 N. W. Rep. 338, 363 
 Int. Trust Co. v. Loan, etc., Co. 
 
 (Minn.), 65 N.W. Rep. 78, 640 
 International Bank v. Faber, 86 
 Fed. Rep. 443, 57 U. S. App. 
 153, 570 
 
 International, etc., Co. v. Inter- 
 national, etc., Co., 153 Mass. 
 271, 10 L. R. A. 758, 41 
 
 International Fair, etc., Assn. v. 
 
 Walker, 88 Mich. 62, 373 
 
 International Frat. All. v. State, 
 86 Md. 550, 40 L. R. A. 187, 
 
 666, 668 
 Iowa, etc., R. Co. v. Perkins, 28 
 
 Iowa 281, 367, 374 
 
 Iowa Lumber Co. v. Foster, 49 
 
 Iowa 25, 186, 191 
 
 Ireland v. Globe, etc., Co., 20 R. 
 I. (Part I) 192, 38 L. R. A. 
 299 462 
 
 v. Globe, etc., Co. (R. I), 38 Atl. 
 ■ Rep. 116, 38 L. R. A. 299, 50, 52 
 v. Globe, etc., Co. (R. I.), 29 L. 
 
 R. A. 429, 459 
 
 v. Palestine, etc., Co., 19 Ohio 
 St. 369, 617 
 
 Iron City Bank v. Pittsburg, 37 
 
 Pa. St. 341 89 
 
 Iron Co. v. Drexel, 90 N. Y. 87, 349 
 Iron R. Co. v. Lawrence, etc., 
 Co., 49 Ohio St. 102, 30 N. E. 
 Rep. 616, 308 
 
 Irons v. Mfg. Bank, 6Biss. (C. C.) 
 
 301, 182 
 
 Irrigation Co. v. Warner, 72 Cal, 
 
 379, 77 
 
 Irvin v. Railway Co., 27 Fed. Rep. 
 
 626, 524,525 
 
 Irving, etc. v. Houstoun, 4 Paton 
 
 (Scotch), App. Cas. 521, 438, 439 
 Isharn v. Buckingham, 49 N. Y. 
 
 216, 466 
 
 v. Buckingham, 49 N. Y. 222, 508 
 Ishman v. Post (N. Y.), 35 N. E. 
 
 Rep. 1084, 563 
 
 Isle Royal, etc., Corp. v. Secretary 
 
 of State, 76 Mich. 162, 255, 267, 271 
 
 Jackson v. Campbell, 5 Wend. 
 571, 581 
 
 v. Ludeling, 21 Wall. 616, 184 
 
 v. McLean, 36 Fed. Rep. 213, 550 
 v. Meek, 87 Tenn. 69, 10 Am. 
 
 St. Rep. 620, 636 
 
 v. Newark, etc., Co., 31 N. J. L. 
 
 277, 313, 429, 458 
 
 v. Stockbridge, 29 Texas 394, 
 
 94 Am. Dec. 290, 394 
 
 v. Traer, 64 Iowa 469, 20 N. W. 
 
 Rep. 734, 348, 349, 356 
 
 v. Walsh, 75 Md. 304, 23 Atl. 
 Rep. 778, 23, 89 
 
 Jacksonville, etc., R. Co, v. 
 
 Hooper, 160 U. S. 514, 135 
 
 Jacobs Pharmacy Co. v. Southern, 
 etc., Co., 97 Ga. 573, 25 S. E. 
 Rep. 171, 171, 175 
 
 Jacobson v.Allen, 20 Blatcbf. 525, 639 
 Jacoby-Mickolas Co. (Minn.), 70 
 
 N. W. Rep. 1085, 171 
 
 James v. R. Co., 46 Fed. Rep. 47, 56 
 v. Western, etc., Co., 121 N. C. 
 
 523, 672 
 
 v. Woodruff, 2 Denio 574, 475 
 
 Jameson v. People, 16 111. 257, 26 
 Jarvis v. Manhattan Beach Co., 
 148 N. Y. 652, 31 L. R. A. 776, 
 
 327, 328, 331, 332 
 Jefferson v. Hewitt, 95 Cal. 535, 393 
 Jefferson Branch Bank v. Skelly, 
 
 1 Black (U. S.) 436, 110 
 
 Jefferson County Sav. Bank v. 
 
 Francis, 115 Ala. 317, 453 
 
 Jeffersonville, etc., R. Co. v. Hen- 
 dricks, 41 Ind. 48, 196 
 v. Rogers, 38 Ind. 116, 237 
 Jefts v. York, 10 Cush. (Mass.) 392, 
 Jemison v. Citizens' Bank, 122 N. 
 
 Y. 135, 19 Am. St. Rep. 482, 216 
 Jenne v. Sutton, 43 N. J. L. 257, 
 39 Am. Rep. 578, 571
 
 lvi 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages."] 
 
 Jennings v. Bank, 79 Cal. 323, 5 
 
 L. R. A. 233, 489, 492 
 
 Jermain v. Lake Shore R. Co., 91 
 
 N. Y. 483, 309, 428, 435, 437 
 
 Jerrnan v. Benton, 79 Mo. 148, 
 
 622, 659 
 Jersey Citv, etc., Co. v. Consum- 
 ers', etc., Co., 40 N. J. Eq. 
 427, 100 
 
 Jervis-Conklin, etc., Co. v. Will- 
 
 hoit, 84 Fed. Rep. 514, 276 
 
 Jessopp's Case, 2 De G. & J. 638, 475 
 Jessup v. Carnegie, 80 N. Y. 411, 
 
 36 Am. Rep. 643, 610, 652 
 
 Jesup v. Illinois Central R. Co., 
 
 43 Fed. Rep. 483, 554 
 
 Jewelers', etc., Agency v. Doug- 
 lass, 35 111. App. 627, 281 
 Jewell v. Rock River P. Co., 101 
 
 111. 57, 295, 372 
 
 Jewett v. Valley R. Co., 34 Ohio 
 
 St. 601, 387, 395 
 
 John C. Graffin Co. v. Woodside, 
 
 87 Md. 146, 489, 490 
 
 John Hancock, M. L. I. Co. v. 
 Worcester, etc., R. Co., 149 
 Mass. 214, 30, 197 
 
 John V. Farwell Co. v. Wolf 
 
 (Wis.), 70 N. W. Rep. 289, 64 
 
 Johns v. Johns, 1 Ohio St. 250, 320 
 
 Johnson v. Brooks, 93 N. Y. 337, 495 
 
 v. Bush, 3 Barb. Ch. 207, 190 
 
 v. Crawfordsville, etc., R. Co., 
 
 11 Ind. 280, 37 
 
 v. Corser, 34 Minn. 355, 25 N. 
 
 W. Rep. 799, 36, 596, 599 
 
 v. Dexter, 2 MacArthur 530, 475 
 v. First Nat'l Bank, 79 Wis. 440, 
 
 24 Am. St. Rep. 722, 582 
 
 v. Kessler. 76 Iowa 411, 37, 377 
 
 v. Lullman, 15 Mo. App. 55, 88 
 
 Mo. 567, 341, 593 
 
 v. Lytle, etc., Agency, L. R. 5 
 
 Ch. Div. 687, 408 
 
 v. Schulin (Minn. 1897), 73 N. 
 
 W. Rep. 147, 36.42,66 
 
 v. Shar, !» S. Dak. 536, 373 
 
 v. Sliortridge (Mo.), 6 S. W. 
 
 Rep. 64, 582 
 
 v. CTnderhill, 52 N. Y. 202, 469 
 
 Johnston v. Gumbel (Miss.), 19 
 So. Rep. 100, 74 
 
 v. Laflin, 5 Dill. 65, 103 U. S. 
 800, 458, 460, 465, 468 
 
 Johnstone v. Jones, 23 N. J. Eq. 
 
 216, 588 
 
 v. Trade, etc., Co., 132 Mass. 
 432, 282 
 
 Jones v. Aspen, etc., Co., 21 Colo. 
 263, 29 L. R. A. 143, 67,76,77 
 v. Avery, 50 Mich. 326, 635 
 
 v. Bank of Leadville, 10 Colo. 
 
 464, 665 
 
 v. Barlow, 62 N. H. 202, 569, 570 
 v. Concord, etc., R. Co., 67 N. 
 H. 119, 38 Atl. Rep. 120, 
 
 310, 419, 503 
 v. Davis, 35 Ohio 474, 309 
 
 v. Guaranty Co., 101 U. S. 622, 174 
 v. Indemnity Co., 101 U. S. 622, 180 
 v. Morrison, 31 Minn. 140, 
 
 192, 419, 446, 456, 552, 584, 585, 586 
 v. Nat., etc., Assn., 94 Pa. St. 
 
 215, • 161 
 
 v. Ogle, L. R. 14 Eq. 419, 437 
 
 v. Pearl, etc., Co., 20 Colo. 417, 253 
 v. Planter's Bank, 9 Heisk. 
 
 (Tenn.) 455, 226 
 
 v. Railway Co., 57 N. Y. 196, 
 
 430, 434, 437 
 v. Sisson, 6 Gray 288, 405 
 
 v. Smith, 3 Gray 500, 277 
 
 v. Surprise, 64 N. H. 243, 261 
 
 v. Terre Haute, etc., R. Co., 57 
 
 N. Y. 196, 429 
 
 v. Whitworth, 94 Tenn. 602, 356 
 v. Williams, 139 Mo. 1, 37 L. R. 
 A. 682, 61 Am. St. Rep. 437, 
 
 575, 577 
 Joslyn v. St. Paul, etc., Co., 44 
 
 Minn. 183, 328, 466, 471, 477, 481 
 Jossey v. George, etc., R. Co., 102 
 
 Ga. 706, 541 
 
 Joy v. Manion, 28 Mo. App. 55, 
 
 369, 390 
 Juilliard v. Greeman, 110 U. S. 
 
 421, 445, 24 
 
 Juker v. Commonwealth, 20 Pa. St. 
 
 484, 140 
 
 Junction R. Co. v. Reeve, 15 Ind. 
 236, 378 
 
 K 
 
 Kadish v. Garden Citv, etc., 
 
 Assn., 47 111. App. 602, 199 
 
 v. Garden Loan Assn., 151 111. 
 
 531, 207, 220, 223 
 
 Kaiser v. Bank, 56 Iowa 104, 599 
 
 Kalamazoo, etc., Co. v. McAlis- 
 
 ter, 36 Mich. 327, 581 
 
 Kamp v. Wintermute, 107 Mich. 
 
 635, 629 
 
 Kane v. Bloodgood, 7 Johnson's 
 
 Ch. 90, 428, 437 
 
 Kankakee, etc., Co. v. Kampe, 38 
 
 Mo. App. 229, 182
 
 TABLE OF CASES. 
 
 lvii 
 
 [References are to Pages.] 
 
 Kansas City, etc., R. Co. v. Alder- 
 man, 47 Mo. 349, 378 
 Kansas City, etc., Co. v. Harris, 
 
 51 Mo. 464, 410 
 
 v. Hunt, 57 Mo. 126, 410 
 
 v. Phillips, 98 Ala. 159, 235 
 
 Kansas, etc., R. Co. v. Smith, 40 
 
 Kan. 192, 30, 194 
 
 Kansas, etc., Co. v. DeVol, 72 
 Fed. Rep. 717, 577 
 
 v. Topeka, etc., R. Co., 135 
 Mass. 34, 46 Am. Rep. 439, 
 
 282, 645 
 
 v. Wilder, 43 Kan. 731, 271 
 
 Katama, etc., Co. v. Holley, 129 
 
 Mass. 540, 385 
 
 v. Jernegan, 126 Mass. 155, 373, 409 
 
 Katzenberger v. Aberdeen, 121 U. 
 
 S. 172, 26 
 
 Kaufman v. Woolen Mills Co , 93 
 Va. 673, 25 S. E. Rep. 1003, 
 
 421, 427, 429, 435 
 Kean v. Johnson, 9 N. J. Eq. 401, 
 
 525, 528 
 v. Union, etc., Co., 52 N. J. Eq. 
 813, 535 
 
 Kearney v. Andrews, 10 N. J. Eq. 
 
 70, 140 
 
 Keener v. Harrod, 2 Md. 63, 567 
 
 Keenev v. Converse (Mich. 1894), 
 
 58'N. W. Rep. 325, 549 
 
 Keintzelman v. Druid, etc., Assn., 
 
 38 Minn. 138, 150 
 
 Kellar v. Eureka, etc., Co., 43 Mo. 
 
 App. 84, 483 
 
 Kelley v. Newburyport, etc., Co., 
 
 141 Mass. 496, 547 
 
 Kellogg v. Schuvler, 2 Denio, 634 
 
 v. Stockwell, 75 111. 68, 469 
 
 Kelly v. Board, etc., 75 Va. 263, 158 
 v. Fourth of July, etc., Co. 
 (Mont.), 53 Pac. Rep. 959, 42 
 L. R. A. 621, 352 
 
 Kelner v. Baxter, L. R. 2 C. P. 
 
 174, 593 
 
 Kelsey v. Fermentation Co., 51 
 
 Hun (N. Y.) 636, 416 
 
 v. Northern, etc., Co., 45 N. Y. 
 505, 378 
 
 Kennebec, etc., R. Co. v. Jarvis, 
 34 Maine 360, 368 
 
 v. Kendall, 31 Maine 470, 142, 385 
 v. Palmer, 34 Maine 366, 362 
 
 v. Portland, etc., R. Co., 59 
 
 Maine 9, 180 
 
 v. Portland, etc., R. Co., 59 
 Maine 23, 120 
 
 Kennedy v. Cal. Sav. Bank, 101 
 Cal. 495, 186,187,217 
 
 Kennedy v. Gibson, 8 Wall. (U. 
 S.), 498, 658 
 
 v. McKay, 43 N. J. L. 288, 390 
 
 Kennett v. Wood worth Mason Co. 
 
 (N. H.), 39 Atl. Rep. 585, 36 
 
 Kent v. Freeland, etc., Co., L. R. 
 
 4 Eq. 588, 393 
 
 v. Quicksilver, etc., Co., 78 N. 
 Y. 159, 142, 143, 174, 218, 315, 316 
 Kenton, etc., Co. v. McAlpin, 5 
 
 Fed. Rep. 737, '336, 502, 607 
 
 Keokuk & W. R. Co. v. Missouri, 
 
 152 U. S. 301, 111,112,194 
 
 Kerr v. Dougherty, 79 N. Y. 327, 265 
 
 v. Urie, 86 Md. 72, 38 L. R. A. 
 
 119, 631 
 
 Keyser v. Hitz, 133 U. S. 138, 366, 658 
 
 Keystone, etc., Co. v. Bate, 187 
 
 Pa. St. 460. 549 
 
 v. McCluney, 8 Mo. App. 496, 341 
 Kid v. Mitchell, 1 Nott & McC. 
 
 334, 494 
 
 Kilgore v. Smith, 122 Pa. St. 48, 280 
 Kilpatrick v. Bridge Co., 49 Pa. 
 
 St. 118, 586 
 
 Kimball v. Union, etc., Co., 44 
 
 Cal. 173, 496 
 
 Kincaid v. Dwinelle, 59 N. Y. 
 
 548, 664, 672 
 
 Kindel v. Beck, etc., Co., 19 Colo. 
 310, 35 Pac. Rep. 538, 276 
 
 v. Lithograph Co., 19 Colo. 310, 277 
 King v. Bank, etc., 2 Barn. & Aid. 
 620, 423 
 
 v. Barnes, 109 N. Y. 267, 381, 515 
 v. Int., etc., Assn., 170 111. 135, 142 
 v. National, etc., Co., 4 Mont. 1, 
 
 276 
 v. Paterson, etc., R. Co., 29 N. 
 
 J. Law 504, 430, 433 
 
 v. Railroad Co., 29 N. J. Law 
 
 82, 428 
 
 v. Westwood, 4 Barn. & C. 798, 141 
 Kingsley v. New England, etc., 
 
 Co., 8 Cush. (Mass.) 393, 144 
 
 Kisseberth v. Prescott, 95 Fed. 
 
 Rep. 357, 640 
 
 Kisterbrock's App., 127 Pa. St. 
 
 601, 483 
 
 Kitchen, etc., Co. v. St. Louis, etc., 
 
 Co., 69 Mo. 224, 555 
 
 Kittel v. Augusta, etc., R. Co., 78 
 
 Fed. Rep. 855, 193 
 
 Kneeland v. Braintree, etc., R. 
 Co., 167 Mass. 161, 45 N. E. 
 Rep. 86, 174 
 
 v. Gilman, 24 Wis. 39, 231 
 
 Knight v. Barber, 16 Mee. & W. 
 66, 321
 
 lviii 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages. ] 
 
 Knights of Honor v. Mickser, 72 
 
 Tex. 257, 303 
 
 Knox v. Baldwin, 80 N. Y. 610, 
 
 570, 571, 625 
 v. Eden Musee, etc., Co., 148 
 
 N. Y. 441, 31 L. E. A. 779, 
 
 327, 331, 333, 478, 479, 480, 557 
 v. Protection, etc., Co., 9 Conn. 
 
 430, 25 Am. Dec. 33, 62 
 
 Knowles v. Sandercock, 107 Cal. 
 
 629, 184, 187 
 
 Knowlton v. Congress, etc., Co., 
 
 57 N. Y. 518, 334 
 
 Koehler v. Black River Falls, 
 
 etc., Co., 2 Black (U. S.) 715, 
 
 184, 544, 545, 547 
 v. Dodge, 31 Neb. 328, 584 
 
 Koenig v. Chicago, etc., R. Co., 
 
 27 Neb. 699, 153 
 
 Kohl v. Lilienthal, 81 Cal. 378, 606 
 Kolff v. St. Paul, etc., Exchange, 
 
 48 Minn. 215, 142, 144 
 
 Kortright v. Buffalo, etc., Bank, 
 
 L'O'Wend. 90, 494 
 
 Kothe v. Krag-Reynolds Co. 
 
 (Ind. App.), 50 N. E. Rep. 
 
 594, 415 
 
 Kraniger v. People's Building 
 
 Soc, 60 Minn. 94, 176, 215 
 
 Kroeger v. Pitcairn, 101 Pa. St. 
 
 311, 47 Am. Rep. 718, 567 
 
 Kurtz v. Paola, etc., Co., 20 Kan. 
 
 397, 70, 675 
 
 Labouchere v. Earl of Wharn- 
 cliffe, L. R. 13 Ch. Div. 346, 
 
 303, 305, 306 
 
 La Burgogne, 79 L. T. Rep. 331 
 
 (1898-99), 283 
 
 Ladywell, etc., Co. v. Brookes, 
 ':;.-) Ch. Div. 400, 17 Am. & 
 Eng. C. C. 22, 44 
 
 La Farge v. Exchange, etc., Co., 
 22 N. Y. 352, 62 
 
 !.:i Fayette Ins. Co. v. French, 18 
 
 How. (U.S.) 404, 56,269,271, 288 
 
 Laffin v. Travelers', etc., Co., 121 
 
 N. Y. 713, 289 
 
 I.. i Grange, "tc, R. Co. v. Rainey, 
 7 Coldw. (Tenn.) 432, 70 
 
 Laing v. Burley, 101 111.591, 632 
 
 Lake Ontario, etc., R. Co. v. Our- 
 tiss, 80 N. V. 219, 363, 368, 385 
 v. Mason, 16 N. Y. 451, 369, 405 
 
 Lake Roland, etc., R. Co. v. Hal- 
 tin .on-, 77 Md. 352, 20 L. I;. 
 A. 126, 116, 177 
 
 Lake Shore R. Co. v. Hutchins, 
 37 Ohio 282, 196 
 
 v. Prentice, 147 U. S. 101, 235 
 
 Lake Shore, etc., R. Co. v. Smith, 
 
 173 U. S. 684, 89, 91 
 
 Lake Superior, etc., Co. v. Drexel, 
 
 90 N. Y. 87, 190 
 
 Lamb v. Bowser, 7 Biss. C.C.372, 275 
 
 v. Bowser, 7 Biss. 315, 280 
 
 v. Cecil, 25 W. Va. 288, 181 
 
 v. Lamb, 6 Biss. 420, 613 
 
 Lamsom v. Beard (C. C. App.), 
 
 94 Fed. Rep. 30, 579 
 
 Lancaster v. Amsterdam Imp. Co., 
 
 140N.Y.576, 35N.E.Rep.964, 
 
 24 L. R. A. 322, 
 
 39, 65, 67, 71, 260, 262, 605 
 v. Armstrong, etc., Co., 140 N. 
 
 Y. 576, 24 L. R. A. 322, 260 
 
 Land Grant R. Co. v. Coffey Co., 
 
 6 Kan. 245, 251, 604 
 
 Land, etc., Co. v. Lord Fermoy, 
 
 L. R. 5 Ch. 763, 563 
 
 Landis v. Saxton, 105 Mo. 486, 24 
 
 Am. St. Rep. 403, 430 
 
 Lane County v. Oregon, 7 Wall. 
 
 (U.S.) 71, 102 
 
 Lane v. Brainerd, 30 Conn. 565, 378 
 Lang v. Lang's Exrs. (N. J.), 41 
 
 Atl. Rep. 705, 445 
 
 Langan v. Francklyn, 29 Abbott 
 
 N. Cas. 102, 554 
 
 Langer's Case, 37 L. J. Ch. N. S. 
 
 292, 387 
 
 Lare v. Westmoreland, etc., Co., 
 
 155 Pa. St. 33, 395 
 
 Lamed v. Andrews, 106 Mass. 435, 277 
 
 v. Beal (N. H.), 23 Atl. Rep. 149, 598 
 
 Larrabee v. Baldwin, 35 Cal. 155, 622 
 
 Larson v. James (Colo.), 29 Pac. 
 
 Rep. 183, 626 
 
 Lasher v. Stimpson, 145 Pa. St. 30, 567 
 Late Corp. of Church of Jesus 
 
 Christ v. United States, 136 
 
 U.S.I, 677 
 
 Lathrop v. Commercial Bank, 8 
 
 Dana (Ky.) 114, 33 Am. Dec. 
 
 481, 260 
 
 v. Kneeland, 46 Barb. 432, 380 
 
 Latimer v. Citizens' State Bank, 
 
 102 Iowa 161, 186,637 
 
 v. Railway Co., 43 Mo. 105, 97 
 
 Am. Dec. 378, 285, 286 
 
 Lauder v. Peoria, etc., Soc, 71 
 
 111. App. 475, 157 
 
 Lauman v. Lebanon Valley R. 
 
 Co., 30 Pa. St. 42, 22, 88, 95, 527
 
 TABLE OF CASES. 
 
 lix 
 
 [References are to Pages.~\ 
 
 Laurel Springs, etc., Co. v. Fouge- 
 
 ray, 50 N. J. Eq. 756, 421 
 
 Lauter v. Jarvis-Conklin, etc., 
 Co., 85 Fed. Rep. 894, 29 C. 
 C. A. 473, 276 
 
 Lea v. Iron, etc., Co. (Ala.), 24 
 So. Rep. 28, 353 
 
 Leavenworth Co. Com. v. Chicago, 
 
 etc., R. Co., 134 U.S. 688, 554 
 
 Leavenworth Co. v. Chicago, etc., 
 
 R. Co., 25 Fed. Rep. 219, 31, 193 
 
 Leavitt v. Mining Co., 3 Utah 265, 540 
 v. Oxford, etc., Co., 3 Utah 265, 
 
 542, 543 
 v. Palmer, 3 N. Y. 19, 228 
 
 Leazure v. Hillegas, 7 Serg. & 
 
 Ravvl. (Pa.) 313, 152,153 
 
 Lebanon Sav. Bank v. Hollen- 
 
 beck, 29 Minn. 322, 260 
 
 Lee v. Imbrie, 13 Ore. 510, 377 
 
 Leebke v. Knapp, 79 Mo. 22, 335 
 
 Leech v. Harris, 2 Brewst. 571, 304 
 
 Leekins v. Nordyke, etc., Co., 66 
 
 Iowa 471, 161 
 
 Leese v. Atchison, etc., R. Co., 24 
 
 Neb. 143, 8 Am. St. Rep. 179, 666 
 
 LeFrance, etc., Co. v. Mt. Ver- 
 non, 9 Wash. 142, 279 
 
 Leegett v. Bank, 24 N. Y. 283, 490 
 v. Ladd, 23 Ore. 26, 151 
 
 v. New Jersey, etc., Co., 1 N. J. 
 Eq. 541, 23 Am. Dec. 729, 152 
 
 Legendre & Co. v. Association, 45 
 
 La. Ann. 669, 419 
 
 LeGrange, etc., R. Co. v. Rainey, 
 
 7 Coldw. (Tenn.) 420, 664 
 
 Lehman, etc., Co. v. Glenn, 87 
 
 Ala. 618, 612 
 
 Lehigh Valley, etc., Co. v. Agri- 
 cultural Works, 63 Wis. 45, 
 
 135, 180, 218 
 
 Lehigh, etc., R. Co. v. Pennsyl- 
 vania, 145 U. S. 192, 104 
 
 Lehigh, etc., Co. v. Lehigh, etc., 
 Co., 4Rawle (Pa.) 9, 669 
 
 v. Northampton Co., 8 Watts & 
 S. (Pa.) 334, 112 
 
 Leighton v. Campbell, 17 R. I. 51, 176 
 
 Leitch v. Wells, 48 N. Y. 585, 471 
 
 Leland v. Havden, 102 Mass. 542, 
 
 191, 312, 440 
 
 Leloup v. Mobile, 127 U. S. 640, 109 
 Lemcke v. Tredway, 45 Mo. App. 
 
 507, 94 Mo. 410, 611 
 
 Leonard v. American Ins. Co., 97 
 
 Ind. 299, 162 
 
 LeRoy v. Insurance Co 2 Edw. 
 
 Ch. (N. Y.) 657, 427 
 
 Lesseps v. Architect's Co., 4 La. 
 
 Ann. 316, 407 
 
 Lester v. Howard Bank, 33 Md. 
 
 558, 229, 278 
 
 v. Webb, 1 Allen 34, 480 
 
 Levenworth v. Chicago, etc., Co., 
 
 134 U. S. 688, 549 
 
 Luxton v. North River Bridge 
 
 Co., 153 U. S. 525, 25 
 
 LeWarne v. Meyer, 38 Fed. Rep. 
 
 191, 213 
 
 Leweys Island R. Co. v. Bolton, 
 
 48 Maine 451, 373, 381 
 
 Lewis v. American, etc., Assn., 
 
 98 Wis. 203, 73 N. W. Rep. 
 
 793, 39 L. R. A. 559, 
 
 132, 223, 251, 674 
 
 v. Brainerd, 53 Vt. 510, 416 
 
 v. Brainerd, 53 Vt. 519, 415, 419 
 v. Berryville, etc., Co., 90 Va. 
 
 683, 492 
 
 v. Fisher, 80 Md. 139, 26 L. R. 
 
 A. 278, 182 
 v. Mill Co. (Tex. Civ. App.), 23 
 
 S. W. Rep. 338, 382 
 
 v. Publishing Co., 77 Mo. App. 
 
 434, 578 
 
 v. Tilton, 64 Iowa 220, 19 N. W. 
 
 Rep. 911, 52 Am. R. 436, 20, 567 
 Lexington, etc., Co. v. Bridges, 7 
 
 B. Mon. (Ky.) 556, 46 Am. 
 Dec. 528, 409, 432 
 
 v. Page & Richardson, 17 B. 
 Mon . ( Kv. ) 412, 183, 426, 433, 546 
 Leyson v. Davis, 17 Mont. 220, 31 
 
 L. R. A. 429, 467 
 
 Lewis v. Wilson, 121 N. Y. 284, 
 
 24 N. E. Rep. 474, 305 
 
 Libbey v. Hodgdon, 9 N. H. 394, 
 
 281,283 
 
 Libby v. Tobev, 82 Maine 397, 
 
 356, 492, 637 
 
 Liblong v. Kansas, etc., Co., 82 
 
 Pa. St. 413, 289 
 
 Lickbarrow v. Mason, 2 D. & E. 70, 481 
 Life Assn. v. Fassett, 102 111. 315, 
 
 671, 676 
 Life Ins. Co. v. Mechanic, etc., 
 Co., 7 Wend. (N. Y.) 31, 
 
 132, 199, 201, 577 
 
 Liggett v. Glenn, 2 C. C. A. 285, 506 
 Lilly v. Tobbein, 103 Mo. 477, 23 
 
 Am. St. R. 887, 18 
 
 Limer v. Traders' Co., 44 W. Va. 
 
 175, 575 
 
 Lincoln Bank v. Richardson, 1 
 
 Greenl. 79, 10 Am. Dec. 34, 23
 
 lx 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages.] 
 
 Lincoln, etc., Co. v. Sheldon, 44 
 
 Neb. 279, 62 N. W. Rep. 480, 
 
 85, 374 
 Linev. Bellamy, etc., Co., 12 N. 
 
 H. 205, 37 Am. Dec. 203, 582 
 
 Linkauf v. Lombard, 137 N. Y. 
 
 417, 220, 221 
 
 Lionberger v. Rouse, 9 Wall. (U. 
 
 S.) 468, 108 
 
 Lipnitt v. American, etc., Co., 15 
 
 R. I. 141, 2 Am. St. Rep. 886, 
 
 467, 468, 471, 492 
 Litchfield Bank v. Church, 29 
 
 Conn. 137, 398 
 
 Little Rock, etc., R. Co. v. Page, 
 
 35 Ark. 304, 547 
 
 Liverpool, etc., Co. v. Massachu- 
 setts, 10 Wall. (U. S.) 566, 
 
 27, 256, 267 
 Livesey v. Omaha Hotel, 5 Neb. 
 
 50, 373 
 
 Livezev v. N. P. R. Co., 157 Pa. 
 
 St." 75, 494 
 
 Livingston v. Lynch, 4 John. Ch. 
 
 573, 525, 528 
 
 Livingston Co. v. First Nat'l Bank, 
 
 128 U. S. 102, 195 
 
 Lloyd v. Preston, 146 U. S. 630, 355 
 v. Washington, etc., Co., 1 
 
 Mackey (D. C.) 331, 81 
 
 Lockhart v. Van Alstyne, 31 
 
 Mich. 76, 176, 316, 317, 319, 420 
 Lockwood v. Mechanics' Nat'l 
 
 Bank, 9 R. I. 308, 141 489 
 
 Lodge v. Graham, 96 Iowa 592, 31 
 
 L. R. A. 133, 40 
 
 v. Weller (Va.), 25 S. E. Rep. 
 
 891, 140 
 
 Loftus v. Farmers', etc., Assn., 
 
 87 S. Dak. 201, 448 
 
 Logan Co., etc., Bank v. Town- 
 send, 60 Vt. 459, 213 
 Lombardo v. Case, 45 Barb. (N. 
 
 Y.) 95, 435 
 
 Lone Co. v. Oregon, 7 Wall. 
 
 (U.S.) 71, 102 
 
 Long v. Georgia, etc., R. Co., 91 
 
 Ala. 519, 24 Am. St. Rep. 931, 
 
 204. 208, 212 
 v. Gird wood, 150 Pa. St. 413, 
 
 23 L. R. A. 33, 250 
 
 Longmont, etc., Co. v. Coffman, 
 
 II Coin. 551, 498, 539 
 
 Longworlliv, Receiver, v. Gard- 
 
 mg I Minn.), 77 N. W. Rep. 
 
 207, 277, 280, 612 
 
 Lonkcv v. Keyes, etc., Co., 21 
 
 Nev. 312, 17 L. R. A. 351, 288 
 Lord v. Brooks, 52 N. H. 72, 445 
 
 Lord v. Yonkers, etc., Co., 99 N. 
 
 Y. 547, 180 
 
 Lorillard v. Clyde, 86 N. Y. 384, 336 
 
 Loring v. Brodie, 134 Mass. 453, 582 
 
 v. Boston, 7 Mete. (Mass.) 409, 384 
 
 v. Salisbury Mills, 125 Mass. 
 
 138, 486 
 
 Loubat v. Leroy, 15 Abb. (N. C.) 
 
 1, 304 
 
 Louisville Banking Co. v. Eisen- 
 man, 94 Ky. 83, 42 Am. St. 
 Rep. 335, 19 L. R. A. 684, 
 
 39, 600, 662, 672 
 
 Louisville, etc., Co. v. Carson 
 
 (111.), 38 N. E. Rep. 140, 549 
 
 v. Kaufmann (Kv.), 48 S. W. 
 
 Rep. 434, 601,672 
 
 v. Louisville, etc., Co., 92 Ky. 
 
 233, 14 L. R. A. 579, 248 
 
 Louisville, etc., R. Co, v. Boney, 
 
 117 Ind. 501, 3 L. R. A. 435, 196 
 v. Carson, 151 111. 444, 551 
 
 v. Flannagan, 113 Ind. 488, 3 
 
 Am. St. Rep. 674, 221 
 
 v. McNay, 98 Ind. 391, 575 
 
 v. N. A. & C. R. Co., 75 Fed. 
 
 Rep. 433, 56 
 
 v. Railway Co., 75 Fed. Rep. 
 
 433, 47 
 
 Louisville Gas Co. v. Citizens', 
 
 etc., Co., 115 U. S. 683, 88, 96 
 Louisville Trust Co. v. Louisville, 
 
 etc., R. Co. (C. C. App.), 75 
 
 Fed. Rep. 433, 43 U. S. App. 
 
 550, 23, 132, 173, 186, 195 
 
 Louisville Water Co. v. Clark, 143 
 
 U. S. 1, 85 
 
 Love v. Sierra, etc., Co., 32 Cal. 
 
 639, 91 Am. Dec. 602, 180 
 
 Low v. Conn., etc., R. Co., 45 N. 
 
 H. 370, 54 
 
 v. Railway Co., 52 Cal. 53, 172 
 
 Lowe v. Pioneer, etc., Co., 70 Fed. 
 
 Rep. 646, 189 
 
 Lowndes v. Cooch, 87 Md. 478, 
 
 40 L. R. A. 380, 320 
 
 Lowry v. Bank, Taney 310, 485 
 
 Lubroline Oil Co. V. Athens Sav. 
 
 Bank (Ga.),30 S. E. Rep. 409, 181 
 Lucas v. White Line, etc., Co., 70 
 
 Iowa 541, 59 Am. Rep. 449, 
 
 176, 205 
 Lucky, etc., Co. v. Abraham, 26 
 
 Ore. 282, 578 
 
 Luling v. Atlantic, etc., Co., 45 
 
 Barbour (N. Y.) 510, 431 
 
 Lumbard v. Aldrich, 8 N. H. 31, 
 
 38 Am. Dec. 381, 260
 
 TABLE OF CASES. 
 
 lxi 
 
 [Beferences are to Pages. ~\ 
 
 Lund v. Wheaton, etc., Co., 50 
 
 Minn. 36, 52 N. W. Rep. 268, 
 
 466, 471, 477 
 Luttrel v. Martin, 112 N. C. 593, 217 
 Lycoming, etc., Co. v. Wright, 55 
 
 Vt. 526 278, 658 
 
 Lyndonville Nat'l Bank v. Tolson, 
 
 7 N. M. 611, 472 
 
 Lynn v.Freemansburg,etc.,Assn., 
 
 117 Pa. St. 1, 143 
 
 Lyon v. American, etc., Co., 16 
 
 R. I. 472, 17 Alt. Rep. 61, 
 
 416, 417, 418 
 Lyon-Thomas H. Co. v. Perry, 
 
 etc., Co., 86 Texas 143, 22 L. 
 
 R. A. 802, 182, 183 
 
 Lyons v. Orange, etc., R. Co., 32 
 
 Md. 18, 23 
 
 Mc 
 
 McAllen v. Woodcock, 60 Mo. 174, 549 
 McAllister v. Kuhn, 96 U. S. 87, 320 
 v. Plant, 54 Miss. 106, 180 
 
 McArthur v. Times, etc., Co., 48 
 
 Minn. 319, 50, 51 
 
 McAuley v. Colo., etc., R. Co., 83 
 
 111. 348, 27, 71 
 
 McCall v. American, etc., Co., 99 
 
 Ala. 427, 12 So. Rep. 806, 280 
 
 v. California, 136 U. S. 104, 110, 255 
 v. Manufacturing Co., 6 Conn. 
 
 428, 541 
 
 McCallion v. Hibernia, etc., Co., 
 
 70 Cal. 163, 35 
 
 McCanna, etc., Co. v. Citizens', 
 
 etc., 76 Fed. Rep. 490, 39 
 
 IT. S. App. 332, 35 L. R. A. 
 
 236, 277 
 
 McCartee v. Orphans' Asylum 
 
 Soc, 9 Cow. (N. Y.) 437, 18 
 
 Am. Dec. 516, 151, 154, 156 
 
 McCarthy v. Lavasche, 89 111. 270, 
 
 31 Am. Rep. 83, 69, 73, 77, 295 
 McClelland v. Whitely, 15 Fed. 
 
 Rep. 332, 366 
 
 MeClure v. People's, etc., Co., 90 
 
 Pa. St. 269, 95, 293, 363 
 
 McComb v. Barcelona, etc., Assn., 
 
 134 N. Y. 598, 555, 577 
 
 McCormick v. Market Nat'l Bank, 
 
 165 U. S. 538, 205, 215 
 
 McCrary v. Beaudry, 67 Cal. 120, 81 
 McCulloch v. Maryland, 4 Wheat. 
 
 (U. S.) 316, 24, 25, 104, 108 
 
 McCul lough v. Massachusetts, 5 
 
 Denio (N. Y.) 567, 524 
 
 v. Norwood, 58 N. Y. 562, 676 
 
 McCutcheon v. Merz, etc., Co., 71 
 
 Fed. Rep. 787, 187 
 
 McDaniels v. Flower Brook, etc., 
 
 Co., 22 Vt. 274, 502, 534 
 
 McDonald v. Williams, 174 U. S. 
 
 397, 433, 606 
 
 McDonnell v. Alabama, etc., Co., 
 
 85 Ala. 401, 88 
 
 McDowall v. Sheehan, 129 N. Y. 
 
 200, 636 
 
 McDowell v. Ackley, 93 Pa. St. 
 
 277, 150 
 
 McFadden v. Los Angeles Co., 74 
 
 Cal. 571, 144, 146 
 
 McFall v. Buckeye, etc., Assn. 
 
 (Cal.), 55 Pac. Rep. 253, 474 
 
 v. McKeesport, etc., Co. (Pa.), 
 
 16 Atl. Rep. 478, 594 
 
 McGee v. Pacific, etc., Co., 98 
 
 Cal. 678, 221 
 
 McGinty v. Athol, etc., Co., 155 
 
 Mass. 183, 462 
 
 McGourkey v. Toledo, etc., R. 
 
 Co., 146 U. S. 536, 546 
 
 McGowan v. American, etc., Co., 
 
 121 U. S. 575, 594 
 
 McGregor v. Home, etc., Co., 33 
 
 N. J. Eq. 181, 317, 319 
 
 McGrew v. Citv Produce Exch., 
 
 85 Tenn. 572, 4 Am. St. Rep. 
 
 771, 595 
 
 Mclndoe v. St. Louis, 10 Mo. 575, 173 
 McKean v. Biddle, 181 Pa. St. 
 
 361, 426 
 
 McKenney v. Haines, 63 Maine 
 
 74, 494 
 
 McKierman v. Lenzer, 56 Cal. 61, 159 
 
 McKim v. Glenn, 66 Md. 479, 630 
 
 v. Odom, 3 Bland's Ch. 407, 15 
 
 v. Odom, 3 Bland's Ch. 418, 9 
 
 McKinley v. Chicago, etc., R. Co., 
 
 44 Iowa 314, 24 Am. Rep. 748, 240 
 McLaren v. Pennington, 1 Paige 
 
 (N. Y.) 102, 38, 90 
 
 McLaughlin v. O'Neill (Wvo.), 51 
 
 Pac. Rep. 243, 655 
 
 v. Railroad Co., 8 Mich. 99, 427 
 
 McLellan v. File Works, 56 Mich. 
 
 579, 171,578 
 
 McLeod v. American, etc., Co., 
 
 100 Ala. 496, 14 So. Rep. 409, 267 
 McLonth v. Hunt, 154 N. Y. 179, 
 
 39 L. R. A. 230, 438, 439, 445 
 
 McMahon v. Morrison, 16 Ind. 
 
 173, 79 Am. Dec. 418, 30, 194 
 
 McMillan v. Railway Co., 15 B. 
 
 Mon. 218, 370, 407 
 
 McNabb v. McNabb, etc., Co., 62 
 
 Hun (N. Y.) 18, 421 
 
 McNeely v. Woodruff, 13 N. J. L. 
 
 352, 507
 
 lxii 
 
 TABLE OF CASES. 
 
 [References are to Pages. ] 
 
 McNeil v. Boston Chamber of 
 
 Com., 154 Mass. 277, 580 
 
 v. Tenth Nat'l Bank, 46 N. Y. 
 325, 7 Am. Rep. 341, 
 
 293, 332, 466, 471, 481, 506 
 McQueen v. Middleton, etc., Co., 
 
 16 John. (N. Y.) 5, 283 
 
 McTighe v. Macon, etc., Co., 94 
 Ga. 306, 32 L. R. A. 208, 
 
 67, 69, 158 
 McVicker v. Jones, 70 Fed. Rep. 
 
 954, 638, 643, 646 
 
 M 
 
 Macedon, etc., Co. v. Lapham, 18 
 
 Barb. (N. Y.) 312, 528 
 
 Machinists' Nat'l Bank v. Field, 
 
 126 Mass. 345, 479, 482 
 
 Mack v. DeBardeleben, etc., Co., 
 
 90 Ala. 396, 9 L. R. A. 650, 
 
 506, 520 
 Mack's Appeal (Pa.), 7 Atl. Rep. 
 
 481, 377 
 
 Mackey v. Bank of New Bruns- 
 wick, 5 P. C- 394, 236 
 Mackintosh v. Flint, etc., R. Co., 
 
 34 Fed. Rep. 582, 317 
 
 Macomber v. Wright, 108 Mich. 
 
 109, 65 N. W. Rep. 610, 629 
 
 Macon, etc., Co. v. Vason, 57 Ga. 
 
 314, 404, 408, 409 
 
 Madden v. Electric Light Co., 181 
 
 Pa. St. 617, 282 
 
 v. Pennsylvania, etc., Co., 181 
 
 Pa. St. 617, 38 L. R. A. 638, 257 
 Madow v. Gray, 30 Maine 547, 76 
 
 Magee v. Improvement Co., 98 
 
 Cal. 678, 207, 222 
 
 Mahan v. Wood, 44 Cal. 462, 368 
 
 Main v. Casserly, 67 Cal. 127, 
 
 218, 221, 576 
 v. Mills, 6 Biss. (C. O.) 98, 
 
 424, 426, 433 
 Maine v. Railroad Co., 142 U. S. 
 
 217, 104 
 
 Maine, etc., Co. v. Cox, 146 Ind. 
 
 107, 276 
 
 v. Southern, etc., Co. (Maine), 
 13 Atl. Rep. 24, 629, 634 
 
 Malecfe v. Tower Grove, etc., R. 
 
 Co., 57 Mo. 17, 238 
 
 Mallet v. Simpson, 94 N.C. 37, 55 
 
 A in. Rep. 594, LSI, 152, 157 
 
 Mallory v. Oil Works, 86 Tenn. 
 
 698, 173, 183 
 
 Malone v. Lancaster Gas Co., 128 
 
 Pa. St. :;()'.», 135 
 
 v. Trans. Co., 77 Cal. 38, 539 
 
 Manchester, etc., R. Co. v. Coil- 
 cord R. Co., 66 N. H. 100, 20 
 Atl. Rep. 383, 208, 220, 221 
 
 v. Fisk, 33 N. H. 297, 543 
 
 Mandel v. Swan, etc., Co., 154 
 111. 177, 27 L. R. A. 313, 
 
 246, 409, 610 
 
 Mandlebaum v. Mining Co., 4 
 
 Mich. 464, 466, 471, 482 
 
 Manhattan, etc., Co. v. Fields 
 
 (Tex. 1894), 26 S. W. Rep. 
 
 280, 251 
 
 v. Forty-second St., etc., Co., 
 
 139 N. Y. 146, 557 
 
 v. Harned, 27 Fed. Rep. 484, 329 
 Manheim, etc., Co. v. Arndt, 31 
 
 Pa. St. 317, 529 
 
 Manning v. Ancient, etc., 86 Ky. 
 
 136. 5 S. W. Rep. 385, 150 
 
 Mann v. Cooke, 20 Conn. 178, 610 
 Manning v. San Antonio Club, 63 
 
 Tex. 166, 51 Am. Rep. 639, 303 
 Mansfield, etc., R. Co. v. Brown, 
 
 26 Ohio. St. 223, 384 
 
 Manson v. Jacobs (Mo.), 6 S. W. 
 
 Rep. 246, 634 
 
 Manufacturers', etc.. Bank v. Big 
 
 Muddy, etc., Co., 97 Mo. 38, 547 
 Manufacturers', etc., Co. v. Loud, 
 
 99 Mass. 146, 101 
 
 Manufacturing Co. v. Beecher, 97 
 
 N. Y. 651, 625 
 
 v. Runnells, 55 Mich. 130, 20 N. 
 
 W. Rep. 823, 78 
 
 Marble Co. v. Harvey, 92 Tenn. 
 
 115, 184 
 
 Marbury v. Ehlen, 20 Am. St. 
 
 Rep. 467, 286, 478, 485 
 
 March v. Railway Co., 40 N. H. 
 
 548, 525 
 
 v. Eastern R. Co., 43 N. H. 515, 
 
 423, 434, 435, 437, 454 
 Marcy v. Clark, 17 Mass. 330, 475 
 
 Maria v. Garrison, 13 Abb. New 
 
 Cas. (N. Y.) 210, 509 
 
 Marine Bank v. Ogden, 29 111. 
 
 248, 173 
 
 Marine, etc., Exchange v. West- 
 ern Union, etc., Co., 22 Fed. 
 
 Rep, 23, 82 
 
 Marion, etc., Co. v. Perry, 74 
 
 Fed. Rep. 425, 41 U. S. App. 
 14, 33 L. R. A. 252, 
 
 92, 259, 664, H7. r > 
 
 Market St. R. Co. v. Hellman, 
 
 109 Cal. 571, 186,503,507,509 
 
 Markham v. Jaudon, 41 N. Y. 
 
 235, 494
 
 TABLE OF CASES. 
 
 lxiii 
 
 [Beferences are to Pages. ] 
 
 Marlborough, etc., Co. v. Smith, 
 
 2 Conn. 579, 414, 471 
 
 Marshall v. Bank, 108 N. C. 639, 
 13 S. E. Rep. 182, 43 
 
 v. Baltimore, etc., R. Co., 16 
 
 How. (U. S.) 314, 226 
 
 v. Sherman, 148 N. Y. 9, 34 L. 
 R. A. 727, 51 Am. St. Rep. 
 654, 246, 610, 623, 624, 641, 
 
 648, 649, 658 
 Marshall Foundry Co. v. Killiam, 
 99 N. C. 501, 6 Am. St. R. 539, 
 
 31, 321 
 Marson v. Deither, 49 Minn. 423, 
 
 313, 376, 404, 611 
 Marten v. Burns, etc., Co., 99 Cal. 
 
 355, 397 
 
 Martin v. Deetz, 102 Cal. 55, 36 
 
 Pac. Rep. 369, 34, 64, 68 
 
 v. Fewell, 79 Mo. 401, 73, 595, 597 
 v. Nashville, etc., Assn., 2 
 
 Coldw. (Tenn.) 418, 140 
 
 v. Niagara, etc., Co., 122 N. Y. 
 
 165, 171, 577 
 
 v. Pensacola, etc., R. Co., 8 Fla. 
 
 370, 372 
 
 v. Railway Co., 14 Phila. 10, 542 
 v. South Salem, etc., Co., 94 Va. 
 28, 26 S. E. Rep. 591, 75, 400 
 
 Martindale v. Wilson-Case Co., 
 134 Pa. St. 348, 19 Am. St. 
 Rep. 706, 584 
 
 Martine v. International, etc., Soc, 
 
 53 N. Y. 339, 605 
 
 Marve v. B. & O. R. Co., 127 U. 
 
 S. 117, 102, 103 
 
 Maryland, etc., Works v. West 
 End Imp. Co., 87 Md. 207, 39 
 L. R. A. 810, 34, 76, 77 
 
 Marysville, etc., Co. v. Johnson, 
 
 93 Cal. 538, 363, 382 
 
 Mason v. Alexander, 44 Ohio St. 
 
 318, 7 N. E. Rep. 435, 630 
 
 v. Davol Mills, 132 Mass. 76, 419 
 v. Haile, 12 Wheat. (U. S.) 370, 621 
 v. Mining Co., 133 U. S. 50, 671 
 
 v. Supreme Court, 77 Md. 483, 673 
 Masonic Temple Assn. v. Chan- 
 nel!, 43 Minn. 353, 372, 373, 374 
 Massachusetts & R. R. B. Co. v. 
 
 Prince, 34 Minn. 79, 23 
 
 Masson v. Decker, 72 N. Y. 595, 321 
 Masurv v. Arkansas Nat'l Bank, 
 
 87" Fed. Rep. 381, 471,472 
 
 Mathews v. Columbus Nat'l Bank, 
 
 79 Fed. Rep. 558, 510 
 
 Mathias v. White, etc., Assn. 
 (Mont.), 48 Pac. Rep. 624, 577 
 
 Mathis v. Pridham, 1 Tex. Civ. 
 
 App. 58, 20 S. W. Rep. 1015, 
 
 397, 658 
 Matson v. Alley, 141 111. 284, 579, 581 
 Matter of Cecil, 36 How. Pr. (N. 
 
 Y.)477, 534 
 
 Waite, 99 N. Y. 433, 657 
 
 Matthews v. Associated Press, 136 
 
 N. Y. 333, 142, 144, 149 
 
 v. Hoagland, 48 N. J. Eq. 455, 
 
 473, 480 
 v. Kinker, 62 Mo. 339, 153 
 
 v. Massachusetts Nat'l Bank, 1 
 
 Holmes 396, 478 
 
 Maurer v. Staples, 32 Minn. 284, 406 
 Maux, etc., Co. v. Branegan, 40 
 
 Ind. 361, 584 
 
 Maxim-Nordenfelt, etc., Co. v. 
 
 Nordenfelt, 2 The Reports 
 
 298, 11 The Reports 1, 169 
 
 May v. Black, 77 Wis. 101, 650, 651 
 v*. Cleland (Mich.), 44 L. R. A. 
 
 163, 471 
 
 Mayer v. Child, 47 Cal. 142, 321 
 
 v. Thompson, etc., Co., 104 Ala. 
 
 611, 28 L. R. A. 453, 568, 571 
 
 Mayor v. Inman, etc., Co., 57 Ga. 
 
 370, 355, 550 
 
 v. Norwich, etc., R. Co., 109 
 
 Mass. 103, 91, 124 
 
 Mayor, etc., of New York v. New 
 
 York, etc., Co., 64 N. Y. 622, 241 
 Mayor of Norwich v. Norwich R. 
 
 Co., 4 El. & Blk. 443, 162 
 
 Mead v. New York, etc., R. Co., 
 
 45 Conn. 199, 27, 193 
 
 Meadow Dam Co. v. Gray, 30 
 
 Maine 547, 528 
 
 Mechanics' Bank v. Merchants' 
 
 Bank, 45 Mo. 513, 100 Am. 
 
 Dec. 388, 465 
 
 v. New York, etc., R. Co., 13 N. 
 
 Y. 599, 314, 328, 329, 497 
 
 Mechanics', etc., Bank v. Burnet, 
 
 etc., Co., 32 N. J. Eq. 236, 535 
 Mechanics', etc., Co. v. Hall, 121 
 
 Mass. 272, 385, 409 
 
 Mechanics' Sav. Bank v. Fidelitv, 
 
 etc., Co., 87 Fed. Rep. 113, 640, 646 
 Medford, etc., R. Co. v. Somer- 
 
 ville, 111 Mass. 232, 117 
 
 Medical and Surgical Soc. v. 
 
 Weatherlv, 75 Ala. 248, 302, 303 
 Medill v. Collier, 16 Ohio St. 599, 608 
 Medlerv. Albuquerque, etc., Co., 
 
 6 N. Mex. 331, 354 
 
 Meeker v. Winthrop, etc., Co., 17 
 
 Fed. Rep.-48, 109 U. S. 180, 
 
 524, 552
 
 lxiv 
 
 TABLE OF CASES. 
 
 {^References are to Pages."] 
 
 Meherin v. San Francisco, etc., 
 
 Exch., 117 Cal. 215, 306 
 
 Melhado v. Porto Alegre, etc., R. 
 
 Co., L. R. 9 C. P. 503, 51 
 
 Melhads v. Hamilton, 29 L. T. 
 
 (N. S.) 364, 315 
 
 Melvin v. Insurance Co., 80 111. 
 
 446, 379 
 
 v. Lamar, etc., Co., 80 111. 446, 372 
 Memphis City v. Dean, 8 Wall. 
 
 (U. S.) 64, 448, 449 
 
 Memphis, etc., Co. v. Gaines, 97 
 
 IT. S. 697, 111 
 
 v. Memphis, etc., R. Co., 85 
 
 Tenn. 703, 5 S. W. Rep. 52, 171 
 v. Shelbv Co., 109 TJ. S. 398, 110 
 v. William, 9 Heisk. (Tenn.) 
 314, 453 
 
 Memphis, etc., R. Co. v. Beck- 
 
 with, 129 U. S. 26, 80 
 
 v. Dow, 120 U. S. 287, 359 
 
 v. Railroad Com'rs, 112 U. S. 
 
 609, 113, 122, 133, 124 
 
 v. Woods, 88 Ala. 630, 16 A*m. 
 St. Rep. 81, 7 L. R. A. 605, 
 
 187, 508, 510, 546, 554 
 Menashav. Hazard, 102 U. S. 81, 195 
 Mendelsohn v. Anaheim, etc., 
 
 Co., 40 Cal. 637, - 237 
 
 Menier v. Hooper's, etc., Works, 
 
 L.-R. 9 Ch. App. Cas. 350, 456, 512 
 Menson v. Manufacturing Co., 9 
 
 Met. (Mass.) 562, 240 
 
 Mercantile Bank v. New York, 
 
 121 U. S. 139, 106, 107, 108 
 
 Mercantile Co. v. Hulnre, 7 Mont. 
 
 566, 28 
 
 Mercantile, etc., Co. v. Kneale, 
 
 51 Minn. 263, 95 
 
 Mercantile Nat'l Bank v. Parsons, 
 
 54 Minn. 56, 11 
 
 Mercantile Trust Co. v. Kiser, 91 
 
 <4a. 636, 171 
 
 Merc»r Co. v. Hackett, 1 Wall. 
 
 (U. S.) 83, 162 
 
 Merchants' Bank v. Bliss, 35 N. 
 
 Y. 412, 569, 660 
 
 v. Cook, 4 Pick. 405, 11, 293, 507 
 v. Shoase, 102 Pa. St. 488, 489 
 
 v. State Bank, 10 Wall. (U. S.) 
 ci 1 1, L9 Led. 1008 230,332 
 
 Merchants' Nat'l Bank v. Citi- 
 sftns', etc., Co., 159 Mass. 505, 
 
 538, 580, 581 
 v. Detroit, etc., Works, 68 
 
 Mich. 620, 171 
 
 v. Livingston, 74 N. Y. 223, 481 
 v. Lovitt, 114 Mo. 519, 582, 584 
 
 Merchants' Nat'l Bank v. North- 
 western, etc., Co., 48 Minn. 
 349, 624, 625, 660 
 
 v. Richards, 6 Mo. App. 454, 74 
 Mo. 77, 471 
 
 Merchants & P. Line v. Wagner, 
 
 71 Ala. 581, 662, 665 
 
 Meredith v. New Jersey, etc., 
 
 Co., 55 N. J. Eq. 211, 420, 456 
 
 Meroney v. Atlantic, etc., Assn.,* 
 
 112 N. C. 842, 263 
 
 Merrick v. Van Santvoord, 34 N. 
 
 Y. 208, 250, 259, 605 
 
 Messenger v. Pennsylvania R. 
 Co., 37 N. J. Law 531, 165 
 
 Metcalf v. Arnold, 110 % Ala. 180, 71 
 
 Methodist E. Church V Pickett, 
 19 N. Y. 482, . 73 
 
 Metropolitan, etc., Exchange v. 
 Chicago Board of Trade, 15 
 Fed. Rep. 847, 82 
 
 Metropolitan, etc., R. v. Manhat- 
 tan, etc., Co., 14 Abbott N. C. 
 103, 11 Daly 373, 553 
 
 Metzner v. Bauer, 98 Ind. 425, 658 
 
 Mexican Central R. Co. v. Pink- 
 
 ney, 149 TJ. S. 194, 283 
 
 Meyer v. Blair, 109 N. Y. 600, 
 
 372, 379 
 
 v. Child, 47 Cal. 142, 321 
 
 Miami, etc., Co. v. Hotchkiss, 17 
 
 111. App. 622, 68 
 
 Middlebrooks v. Springfield, etc., • 
 
 Co., 14 Conn. 301, 283 
 
 Middlesex, etc., Corp. v. Locke, 
 
 8 Mass. 268, 532 
 
 Middlesex, etc., R. Co. v. Boston, 
 
 etc., R. -Co., 115 Mass. 351, 120 
 • v. Boston, etc., R. Co., 115 Mass. 
 
 347, 121 
 
 Middletown Bank v. Magill, 5 
 
 Conn. 28, 629 
 
 Midland, etc., R. Co. v. McDe- 
 
 mid, 91 111. 170, 284, 287 
 
 Mikolas v. Hiram Walker & Sons 
 
 (Minn.), 76 N. W. Rep. 36, 285 
 Milam, etc., Co. v. Gortem, 93 
 
 Tenn. 590, 26 L. R. A. 135, 
 
 256, 272 
 
 Milbank v. Railwav Co., 64 How. 
 
 Pr. (N. Y.) 320, 184 
 
 Mildam Foundry v. Hovey, 38 
 
 Mass. 417, 378 
 
 v. Hovev, 21 Pick. 417, 634 
 
 Miller v. Barber, 66 N. Y. 558, 48 
 
 v. Bradish, 69 Iowa 278, 426, 427 
 
 v. Coal Co., 31 W. Va. 836, 663 
 
 V. English, 21 N. J. L. 317, 503
 
 TABLE OF CASES. 
 
 lxv 
 
 [Beferences are to Pages."] 
 
 Miller v. Ewer, 27 Maine 509, 46 
 Am. Dec. 619, 23, 252, 500 
 
 v. Great Republic, etc., Co., 50 
 
 Mo. 55, 458 
 
 v. Guerrard, 67 Ga. 284, 439 
 
 v. Hanover Junction, etc., R. 
 
 Co., 87 Pa. St. 95, 372 
 
 v. Hillsborough, etc., Co., 44 
 . N. J. Ea. 224, 144 
 
 v. Houston City R. Co., 16 C. C. 
 
 A. 128, 69 Fed. Rep. 63, 459 
 
 v. Insurance Co., 92 Tenn. 167, 
 
 21 S. W. Rep. 39, 93, 135, 213 
 
 v. Murray, 17 Colo. 408, 506 
 
 v. Newburgh, etc., Co., 31 W. 
 
 Va. 836, 70, 71, 671 
 
 v. New'York, 15 Wall. 478, 89 
 
 v. Pittsburgh, etc., R. Co., 40 
 Pa.St.237, 80 Am. Dec. 570, 318,379 
 v. Railroad Co., 8 tfeb. 219, 235 
 v. Rattermau, 47 Ohio .St. 141, 
 
 24 N. E. Rt»p. 496, 317, 318„506 
 
 y. White, 50 N^Y. 137, 570, 625 
 
 v. Wildcat, 57 Ind. 241, 390 
 
 Mills v. Railway Co., L. R. 5 Ch. 
 
 App. 622, " '589 
 
 v. Stewart, 41 N. Y. 384, 385 
 
 Milroy v. Spurr Mountain, etc., 
 
 Co., 43 Mich. 231, 636 
 
 Milwaukee, etc., Co. v. Armes, 91 
 
 U. S. 489, 237 
 
 v. Dexter, 99 Wis. 214, 74 N. 
 W. Rep. 976, 40 L. R. A. 837, 46 
 Miner v. Belle Isle Ice Co., 93 
 Mich. 97, 17 L. R. A. 412, 
 421,525, 527, 540, 546, 550, 552, 585 
 Miners' Bank v. United States, 1 
 Greene 553 (Iowa), 43 Am. 
 Dec. 115, 90 
 
 Miners' etc., Co. v. Zellerbach, 37 
 Cal. 543, 99 Am. k Dec. 300, 
 
 16, 205, 230 
 Mining Co. v. Anglo Cal. Bank, , 
 104 IT. S. 192, 580 
 
 v. Field, 64 Md. 151, 20 Atl. 
 Rep. 1039, 257 
 
 Minneapolis v. Swinburne Co., 66 
 
 Minn. 378, 640 
 
 Minneapolis, etc., Co. v. City 
 Bank, 66 Minn. 441, 38 L. R. 
 A. 415, 640 
 
 v.Crevier, 39 Minn. 417, 385 
 
 v. Davis, 40 Minn. 110, 
 
 362, 372, 377, 381, 382, 385 
 v. Libby, 24 Minn. 327, 376 
 
 v. Nimocks, 53 Minn. 381, 540 
 
 Minneapolis, etc., R. Co. v. Beck- 
 
 with, 129 U. S. 26, 32L. ed. 585, 248 
 v — Private Corp. 
 
 Minneapolis, etc., Co. v. Railroad 
 Commissioners, 44 Minn. 336, 
 46 N. Y. Rep. 559, 81 
 
 Minneapolis Paper Co. v. Swin- 
 burne Co., 66 Minn. 378, 637 
 Minnehaha, etc.,' Assn. v. Legg, 
 
 50 Minn. 333, 149 
 
 Minn., etc., Co. v. Denslow, 46 
 
 Minn. 171, 73 
 
 Minnesota, etc., Co. v. Langdon, 
 
 44 Minn. 37, 433, 606 
 
 v. Langdon, 44 Minn. 43, 202 
 
 Minot v. Paine, 99 Mass. 101, 96 
 
 Am. Dec. 705, 439, 440 
 
 Miss. & M. R. Co. v. Cromwell, 
 
 91 U. S. 643, 495 
 
 Missouri, etc. R. Co. v. Faulkner, 
 
 88 Texas 649, 579 
 
 v. Reinhard, 114 Mo. 218, 
 
 251, 252, 605 
 v. Richards, 8 Kan. 101, 236, 587 
 v. Richmond, 73 Tex. 568, 15 
 
 Am. St. Rep. 794, 236 
 
 v. Sidell, 67 Fed Rep. 464, 576 
 
 Missouri Pac. R. Co. v. Mackey, 
 
 127 U. S. 205, ' 57 
 
 v. Meech, 69 Fed. Rep. 753, 30 
 
 L. Pfc," A. 250, * 56 
 
 v. Tygard, 84 Mo. 263, 378 
 
 Mitchell v. Beckman, 64'Cal. 117, 
 
 » 313, 376 
 
 v. Hotchkiss, 48 Conn. 9, " 626 
 
 v. Lycoming, etc., Co., 51 Pa. 
 
 St. 402, 144 
 
 v. Reynolds, 1 P. Wms. 181, 142 
 v. Rubber Co. (N. J. Ch.), 24 
 Atl. Rep. 407, 417 
 
 . v. Vermont, etc., Co., 67 N. Y. 
 280, 252 
 
 v. Vermont, etc., Co., 8 Jones 
 & Spen. 406, 408 
 
 Mobile, etc., R. Co. v. Nicholas, 
 98 Ala. 92, ' 514, 515 
 
 v. Tennessee, 153 U. S. 486, 424 
 
 Mobile, etc., Co., v. Gilmer, 85 
 
 Ala. 422, 198 
 
 Moffatt v. Farquhar, L. R. 7 Ch. 
 
 Div. 591, 460, 464 
 
 Mohawk Nat'l Bank v. Schenec- 
 tadv Bank, 28 N. Y. Supp. 
 1100, 78 Hun 90, 489 
 
 Mobrv. Elevator Co., 40 Minn. • 
 343, 41 N. W. Rep. 1074, 620, 633 
 Mok v. Association, 30 Mich. 511, 77 
 Mokelumne Hill, etc., Co. v. 
 
 Woodbury, 14 Cal. "425, ' 34 
 Monongahela, etc., Co. v. Coon, 
 6 Pa. St. 352, 89
 
 lxvi 
 
 TABLE OF CASES. 
 
 [References are to Pages. ] 
 
 Montgomery v. Forbes, 148 Mass. 
 249, 19 N. E. Eep. 342, 
 
 600, 603, 604 
 Montgomery, etc., Assn. v. Rob- 
 inson, 69 Ala. 413, 631 
 Montgomery, etc., Co. v. City 
 
 Council (Ala.), 4 L.R. A. 616, 116 
 v. Dienelt, 133 Pa. St, 585, 590 
 
 Montgomery, etc., R. Co. v. 
 Matthews, 77 Ala. 357, 54 Am. 
 Rep. 60, 394 
 
 v. Baring, 51 Ga. 582, 197 
 
 Montpelier, etc., R. Co. v. Lang- 
 don, 46 Vt. 284, 369 
 Monument Nat'l Bank v. Globe 
 Works, 101 Mass. 57, 
 
 171, 175, 177, 217 
 Moore v. Bank, 52 Mo. 377, 460 
 
 v. Bank of Commerce, 52 Mo. 
 
 377, 458, 490 
 
 v. Hanover, etc., R. Co., 94 Pa. 
 
 St. 324, 532 
 
 v. Mayor, etc., 73 N. Y. 238, 29 
 
 Am! Rep. 134, 230 
 
 v. Metropolitan Nat'l Bank, 55 
 
 N. Y. 41, 41 Am. Rep. 173, 332 
 v. Moore, 4 Dana (Ky.) 354, 29 
 
 Am. Dec. 417, 152 
 
 v. Schoppert, 22 W. Va. 282, 664 
 v. Wayne Ct. Judge, 55 Mich. 
 84, 284 
 
 Moore, etc., Co. v. Towers, etc., 
 Co., 87 Ala. 206, 13 Am. St. R. 
 23, 6 So. Rep. 41, 11,52 
 
 Moores v. Citizens' Nat'l Bank, 
 111 U. S. 156, 28 L. ed. 385, 
 
 330, 333, 476, 557 
 Morehead v. Western, etc., R. 
 Co., 96 N. C. 362, 2 S. E. Rep. 
 247, 471, 494 
 
 Morgan v. Allen, 103 U. S. 498, 321 
 v. Bank, 8 Serg. & R. (Pa.) 73, 489 
 v. E. Tenn. R. Co., 48 Fed. 
 
 Rep. 705, 60 
 
 v. Louisiana, 93 TJ. S. 223, 113 
 
 v. Louisiana, 93 U. S. 217, 124 
 
 v. Skiddy, 62 N. Y. 319, 49,568 
 
 Morgan Co. v. Thomas, 76 111. 120, 
 
 579 
 Morley v. Thayer, 3 Fed. Rep. 
 
 737, 622 
 
 Morrill v. Boston, etc., R. Co., 55 
 N. H.531, 453 
 
 v. Little Fall", etc., Co., 53 
 Minn. 371, 21 L. I!. A. 174, 
 
 502, 505, 522, 523 
 
 v. Smith Co., 89Tex. 529, 193 
 
 Morris v. Glenn, 87 Ala. 028, 610 
 
 v. Hall, 41 Ala. 510, 264 
 
 Morris v. Keil, 20 Minn. 531, 139 
 
 v. Metalline, etc., Co., 164 Pa. 
 
 St. 326, 27 L. R. A. 305, 408 
 
 v. St. Paul, etc., R. Co., 19 
 Minn. 528, Gil. 459, 
 Morris, etc., R. Co. v. Sussex, 
 
 etc., R. Co., 20 N. J. Eq. 542, 227 
 Morrison v. Dorsey, 48 Md. 462, 141 
 v. Mullin, 34 Pa. St. 12, 411 
 
 Morrow v. Nashville, etc., Co., 87 
 Tenn. 262, 3 L. R. A. 37, 
 
 336, 345, 348, 372, 380 
 v. Superior Court, 64 Cal. 383, 625 
 Morton v. Hamilton College (Ky.), 
 38 S. W. Rep. 1, 35 L. R. A. 
 275, 48, 52 
 
 Morton, etc., Co. v. Wysong, 15 
 
 Ind. 4, 141 
 
 Morville v. Tract Soc, 123 Mass. 
 
 129, 213- 
 
 Moseby v. Burrow, 52 Tex. 396, 
 
 671, 672 
 
 Moseman v. Heitshousen,50Neb. 
 
 420, 69 N. W. Rep. 957, 18 
 
 Moses v. Scott, 84 Ala. 608, 4 So. 
 
 Rep. 742, 517 
 
 v. Tompkins, 84 Ala. 613, 404, 639 
 Moss' App., 83 Pa. St. 264, 24 
 
 Am. Rep. 164, 443 
 
 Mossv. Averell, ION. Y. 449, 135, 505 
 v. Oakley, 2 Hill (N. Y.) 265, 
 
 616, 629 
 v. Syers, 32 L. J. Ch. Div. 
 
 (N. S.) 711, 315 
 
 Mott v. Railroad Co., 30 Pa. St. 9, 110 
 Moulin v. Trenton, etc., Co., 24 
 
 N. J. L. 222, 285, 287 
 
 Mount v. Radford, etc., Co., 93 
 
 Va. 427, 448 
 
 Mt. Holly, etc., Company's App., 
 
 99 Pa. St. 513, 326 
 
 Mt. Holly, etc., Co. v. Ferree, 17 
 
 N.J. Eq. 117, 471,481 
 
 Mt. Pleasant v. Beckwith, 100 U. 
 
 S. 514, - 196 
 
 Mowbrav v. Antrim, 123 Ind. 24, 
 
 23 N. E. Rep. 858, 561,566 
 
 Mower v. Staples, 32 Minn. 284, 454 
 Mowing, etc., Co. v. Caldwell, 54 
 
 Ind. 270 278 
 
 Mowrey v-. Farmers', etc., Co., 76 
 
 Fed. Rep. 38, 356 
 
 v. Indianapolis, etc., R. Co., 4 
 
 Biss. <C. C.) 78, 95,454 
 
 Mover v. Fast Shore, etc., Co., 41 
 
 S. C. 300, 25 L. R. A. 48, 147 
 
 v. Pennsylvania Slate Com- 
 pany, 7i Pa. St. 293, 635
 
 TABLE OF CASES. 
 
 lxvii 
 
 [References are to Pages."] 
 
 Mozley v. Alston, 1 Ph. Ch. 790, 
 
 450, 451 
 Mugler v. Kansas, 123 U. S. 623, 99 
 Mullanphv Bank v. Schott, 34 111. 
 
 App. 500, s. c. 26 N. E. Rep. 
 
 640, 549 
 
 Mullen v. Beech Grove Park, 64 
 
 Ind. 202, 393 
 
 v. Reed, 64 Conn. 240, 24 L. R. 
 
 A. 664, 246 
 
 Muller v. Dows, 94 U. S. 444, 55 
 
 Mulligan v. New York, etc., R. 
 
 Co., 14 L. R. A. 791, 237 
 
 Mulrev v. Insurance Co., 4 Allen 
 
 (Mass.) 116, 151 
 
 Mulrov v. Supreme Lodge, etc., 
 
 28 Mo. App. 463, 297 
 
 Mulvane v. O'Brien, 58 Kan. 463, 544 
 Mumford v. Hawkins, 5 Denio 
 
 355, 578 
 
 Mumnia v. Potomac Co., 8 Pet. 
 
 '(U.S.) 281, 91,663,675 
 
 Muncie, etc., Co. v. Green, 143 
 
 Pa. St. 269, 13 Atl. Rep. 747, 382 
 Munger v. Jacobson, 99 111. 349, 639 
 Mann v. Illinois, 94 U. S. 113, 16 
 
 Munson v. Syracuse R. Co., 103 
 
 N. Y. 58, 50, 52, 547, 552 
 
 Murdock's Case, 7 Pick. (Mass.) 
 
 303, 304 
 
 Murphy's App., 51 Wis. 519, 472 
 
 Murray v. Bush, L. R. 6 H. L. 37, 296 
 
 v. Charleston, 96 U. S. 432, 521 
 
 v. Stevens, 110 Mass. 95, 496 
 
 Muscatine, etc., v. Funck, 18 Iowa 
 
 469, 675 
 
 Muscatine, etc., Co. v. Muscatine, 
 
 etc., Co., 85 Iowa 112, 139 
 
 Musgrave v. Morrison, 54 Md. 161, 
 
 296, 374 
 Mustard v. Union Nat'l Bank, 86 
 
 Maine 177, .430 
 
 Mut. Ben. Assn. v. Warner, 24 
 
 111. App. 357, 145 
 
 Mut. Endow. Soc. v. Essenden, 59 
 
 Md. 463, 145 
 
 Mutual, etc., Co. v. Bales, 92 Pa. 
 
 St. 352, , 277 
 
 v. House, 89 Tenn. 438, 271 
 
 v. Phoenix, etc., Co., 108 Mich. 
 
 170, 62 Am. St. R. 693, 34 L. • 
 
 R. A. 694, 11, 405. 610, 612 
 
 v. Swigert, 120 111. 36, 11 N. E. 
 
 Rep. 410, 271 
 
 Mylrea v. Railroad Co. (Wis.), 67 
 
 N. W. Rep. 1138, 665 
 
 Myrick v. Brawley, 33 Minn. 377, 90 
 M. B. Faxon Co. v. Lovett Co., 60 
 
 N. J. 128, 274 
 
 M. & St. L. R. Co. v. Bassett, 20 
 Minn. 536, 375 
 
 v. Beckwith, 129 U. S. 26, 57 
 
 M. S. O. Co. v. Hawkins, 4 Hurl. 
 & N. 146, 417 
 
 •N 
 
 Nagle v. Alexandria, etc., R. Co., 
 
 83 Va. 707, 121 
 
 Nash v. Minnesota, etc., Co., 163 
 
 Mass. 574, 236 
 
 Nashua, etc., Corp. v. Boston, etc., 
 Corp., 157 Mass. 268, 31 N. E. 
 Rep. 1060, 223 
 
 v. Boston, etc., Corp., 136 U. S. 
 356, 56 
 
 Nashua, etc., R. Co. v. Boston, 
 
 etc., R. Co., 164 Mass. 222, 213 
 Nashua R. Co. v. Lowell R. Co., 
 
 136 U. S. 356, 55 
 
 Nashville, etc., R. Co. v. Starnes, 
 
 9 Heisk. 52, 236 
 
 Nassau Bank v. Jones, 95 N. Y. 
 
 115, 184,221,365 
 
 Natchez v. Mallerv, 54 Miss. 499, 221 
 Nathan v. Tompkins, 82 Ala. 437, 588 
 v. Whitlock, 9 Paige (N. Y.) 
 152, 475 
 
 Nat'l Bank v. Atkinson, 55 Fed. 
 Rep. 465, 171 
 
 v. Case, 99 U. S. 628, 187, 630 
 
 v. Colby, 21 Wall. (U. S.) 609, 676 
 v. Com., 118 U.S. 526, 110 
 
 v. Exchange Nat'l Bank, 92 
 
 U. S. 122, 189 
 
 v. Gustin, etc., Co., 42 Minn. 
 327, 6 L. R. A. 678, 18 Am. 
 St. Rep. 510, 650 
 
 v. Insurance Co., 104 U. S. 54, 671 
 v. I. & W. L. Co., 101 Wis. 247, 352 
 v. McDonnell, 92 Ala. 387, 366 
 
 v. Matthews, 98 U. S. 621, 
 
 228, 229, 678 
 v. Port Townsend, etc., Co., 6 
 
 Wash. 597, ' 471 
 
 v. Rochester, etc., Co., 172 Pa. 
 
 St. 614, 490 
 
 v. Savward, 86 Fed. Rep. 45, 655 
 v. Stewart, 107 U. S. 676, 192 
 
 v. Van Drewerker, 74 N. Y. 234, 367 
 v. Watsontown Bank, 105 U. S. 
 
 217, 313, 474, 490 
 
 v. Wells, 79 N. Y. 498, 171 
 
 v. Whitman, 76 Fed. Rep. 697, 624 
 v. Whitney, 103 U. S. 99 
 
 157, 220, 228 
 Nat'l Bank of Republic v. Young, 
 41 N. J. Eq. 531, 7 Atl. Rep. 488, 
 171, 175
 
 ixviii 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages."] 
 
 Nat'l Com. Bank v. McDonnell, 
 92 Ala. 387, 9 So. Rep. 149, 
 
 366, 367, 630 
 Nat'l Park Bank v. German, etc., 
 
 Co., 116 N. Y. 281, 171, 175 
 
 Nat'l Security Bank v. Cushman, 
 
 121 Mass. 490, 583 
 
 Nat'l State Bank v. Vigo, etc., 
 
 Bank, 141 Ind. 352, 538, 577 
 
 National Ben. Co. v. Union Hos- 
 pital Co., 45 Minn. 272, 169 
 National, etc., Co. v. Ballou, 146 
 
 U.S. 517, 637 
 
 v. Du Bois, 165 Mass. 117, 30 L. 
 
 R. A. 628, 281 
 
 v. Grav, 12 App. Cas. (D. C.) 276, 481 
 
 v. Quick, 67 Fed. Rep. 130, 166, 170 
 
 v. Rockland Co. iC. C. A.), 94 
 
 Fed. Rep. 335, 538, 585 
 
 National Tube Works v. Ballou, 
 
 146 U. S. 517, 651 
 
 Natusch v. Irving. Gow on Part- 
 nership (3d ed.) 576, Lindley 
 on Partnership 511, 528 
 
 Naugatuck Water v. Nichols, 58 
 
 Conn. 403,-8 L. R. A. 637, 387 
 Neal v. Moultrie, 12 Ga. 104, 247 
 
 Neall v. Hill, 16 Cal. 145, 76 Am. 
 
 Dec. 508, 535, 588 
 
 Neb., etc., Co. v. Nine, 27 Neb. 
 
 507, 43 N. W. Rep. 348, 40 
 
 Neiller v. Kelley, 69 Pa. St. 403, 
 
 309, 320 
 Nelligan v. Campbell, 20 N. Y. 
 
 Supp. 234, 559, 567 
 
 Nelms v. Edinburg, etc., Co., 92 
 
 Ala. 157, 289 
 
 Nelson v. Blakey, 54 Ind. 29, 373 
 
 v. Hubbard, 96 Ala. 238, 17 L. 
 R. A. 375, 92, 671 
 
 Nesbit v. Macon, etc., Co., 12 Fed. 
 
 Rep. 686, 475 
 
 Nesmith v. Washington Bank, 6 
 
 Pick. (Mass.) 324, 462 
 
 Nester v. Brewing Co. (Pa.), 29 
 
 Atl. Rep. 102, 168 
 
 Neucbatel, etc., Co. v. The Mayor, 
 30 N. Y. Sup. 252, 155 N. Y. 
 373, 275 
 
 Neunev v. Waddill (Texas 1894), 
 
 25 8. W. Rep. 308, 297 
 
 Neustadt v. Railroad Co., 31 111. 
 
 is), 110 
 
 New Bedford, etc., R. Co. v. Old 
 
 Colony R. Co., 120 Mass. 397, 197 
 Newberrv v. Detroit, etc., Co., 17 
 
 Midi. 1 in, 471 
 
 v. Fox, 37 Minn. 141,51 Am. St. 
 Rep. 830, 207 
 
 New Buffalo v. Iron Co., 105 U. 
 
 S. 73, 195 
 
 Newburg, etc., Co. v. Weare, 27 
 
 Ohio St. 343, 250, 281 
 
 Newby v. Colts, etc., Co., L. R. 
 
 7 Q. B. 293, 283 
 
 Newcastle, etc., R. Co. v. Simp- 
 son, 21 Fed. Rep. 533, 345 
 Newell v. Great, etc., R. Co., 19 
 Mich. 336, 285 
 v. Williston, 138 Mass. 240, 472 
 New England Com. Bank v. New- 
 port Steam Factory, 6 R. I. 1, 
 75 Am. Dec. 688, 631 
 New England, etc., Co. v. Abbott, 
 162 Mass. 148, 27 L. R. A. 271, 
 
 462, 465, 495 
 v. Farmington, etc., Co., 84 
 
 Maine, 284, 538 
 
 v. Phillips, 141 Mass. 535, 535 
 
 v. Robinson, 25 Ind. 536, 158 
 
 New Hampshire, etc., R. Co. v. 
 
 Johnson, 30 N. H. 390, 386 
 
 New Haven Nail Co. v. Linden 
 Spring Co., 142 Mass. 349, 
 
 610, 624, 645 
 New Jersey v. Wilson, 7 Cranch 
 
 164, 88 
 
 New Orleans, etc., Co. v. Dela- 
 
 more. 114 U. S. 501, 117,123 
 
 NewOrleans, etc., R. Co.v. Bailey, 
 
 40 Miss. 395, 237 
 
 v. Burke, 53 Miss. 200, 237 
 
 v. Wallace, 50 Miss. 244, 282 
 
 New Orleans Gas Co.v. Louisiana, 
 
 etc., Co., ,115 U. S. 650, 96, 98, 195 
 Newton v. Fay, 10 Allen (Mass.) 
 
 505, 475 
 
 Newton Nat'l Bank v. Newbegen, 
 20 CCA. 339, 74 Fed. Rep. 
 135, 33 L. R. A. 727, 399 
 
 New York Cable Co.v. Mayor, 104 
 
 N. Y. 1, 35 
 
 New York, etc., Co. v. Ely, 5 
 
 Conn. 560, 199 
 
 v. Fulton Bank, 7 Wend. (N. Y.) 
 
 412 156 
 
 v. Higgins, 29 N. Y. Supp. 416, 563 
 
 v. Martin, 13 Minn. 417, 384 
 
 v. Van Horn, 57 N. Y. 473, 375 
 
 New York, etc., R. Co. v. Boston, 
 
 etc., R. Co., 36 Conn. 196, 90 
 
 v. Bristol, 151 U. S. 556, 99 
 
 v. Haring, 47 N. J. L. 137, 
 
 235, 558, 559 
 v. Ketchum, 27 Conn. 170, 54, 584 
 v. Nickals, 119 U. S. 296, 
 
 318, 319, 421 
 v. Pennsylvania, 158 U. S. 431, 109
 
 TABLE OP CASES. 
 
 lxix 
 
 [Beferences are to Pages."] 
 
 New York, etc., R. Co. v. Schuy- 
 ler, 34 N.Y. 30, 294, 310, 326, 
 
 327,329,330,332,471,481, 482 
 v. State, 50 N. J. L. 303, 53 N. 
 J. L. 244, 239 
 
 Niantic, etc., Bank v. Town of 
 Douglass, 5 111. App. (Brad.) 
 579, . 195 
 
 Nichols y. Northampton Co., 42 
 
 Conn. 103, 110 
 
 v. Railroad Co., 42 Conn. 193, 111 
 v. Stevens (Mo.), 27 S. W. Rep. 
 613, 637 
 
 Nickels v. Building Assn., 93 Va. 
 380, - 280 
 
 Nickerson v. Wheeler, 118 Mass. 
 
 295, 247 
 
 Nickum v. Burckhardt, 30 Ore. 
 
 464, 60 Am. St.Rep. 822, 407, 411 
 
 Nicoll v. New York, etc., R. Co., 
 
 12 N. Y. 121, 156, 157, 178 
 
 Nicollet Nat'l Bank v. City Bank, 
 38 Minn. 85, 8 Am. St. Rep. 
 643, 466, 494, 507 
 
 v. Fisk-Tumer Co., 71 Minn. 
 413, 621 
 
 Nicols' Case, 3 DeG. & J. 387, 398 
 
 Nimick v. Mingo, etc., Co., 25 W. 
 
 Va. 184, 592, 651 
 
 Nims v. Mt. Hermon Boys' 
 School, 160 Mass. 177, 22 
 L. R. A. 364, 225, 236, 557, 558 
 
 Nippenose, etc., Co. v. Stadon, 68 
 Pa. St. 256, 372 
 
 Noble v. Turner, 69 Md. 519, 16 
 Atl. Rep. 124, 471 
 
 Nolan v. Hozen, 44 Minn. 1178, 631 
 
 Norfolk, etc., R. Co. v. Pennsyl- 
 vania, 136 U. S. 114, ,110, 248, 255 
 
 Norris v. Irish, etc., Co., 8 El. & 
 Bl. 512, 496 
 
 v. Stops, Hobart 211a, 140 
 
 v. Wrenschall, 34 Md. 492, 88, 621 
 
 North v. Forest, 15 Conn. 400, 321 
 v. Phillips, 89 Pa. St. 250, 494 
 
 v. State, 107 lnd. 356, 8 N. E. 
 Rep. 159, 64 
 
 Northampton Bank v. Peopoon, 
 
 11 Mass. 288, 539 
 
 North Carolina, etc., Co. v. Caro- 
 lina, etc., R. Co., 83 N. C. 
 489, 124 
 
 N. C. R. Co. v. Comm., 91 N. C. 
 
 454, 102 
 
 North Chicago, etc., R. Co. v. 
 Gastka, 128 111. 613, 556 
 
 N. Cent. R. Co. v. Eslow, 40 
 Mich. 222, 368 
 
 Northern, etc. R. Co. v. Com- 
 monwealth, 90 Pa. St. 300, 238 
 Northern Trust Co. v. Columbia, 
 
 etc., Co., 75 Fed. Rep. 936, 336 
 North, etc., Co. (Wis.), 45 L. R. 
 
 A. 174, 611 
 
 v. People, 147 111. 234, 24 L. R. 
 
 A. 462, 666 
 
 North, etc., R. Co. v. Miller, 10 
 
 Barb. (N. Y.) 260, 529 
 
 v. Spullock, 88 Ga. 283, 403, 405 
 North Hudson, etc., Assn. v. 
 
 Childs, 86 Wis. 292, 52 N. W. 
 
 Rep. 600, 563, 568 
 
 v. Childs, 82 Wis. 460, 52 N. W. 
 
 Rep. 600, 544, 498, 560 
 
 North Mo. R. Co. v. Akers, 4 
 
 Kan. 453, 283 
 
 v. Maguire, 20 Wall. (U. S.) 46, 110 
 North Point, etc., Co. v. Utah, 
 
 etc., Co., 16 Utah 246,40 L. 
 
 R. A. 851, 52 Pac. Rep. 168, 
 
 35, 85, 224 
 Northwestern, etc., Ins. Co. v. 
 
 Cotton, etc., Co., 70 Fed. Rep. 
 
 155, 352 
 
 Northwestern, etc., Co. v. Hyde 
 
 Park, 97 U. S. 659, 99 
 
 v. Overholt, 4 Dillon (C. C.) 
 
 287, 276, 277 
 
 v. Shaw. 37 Wis. 655, 213, 214 
 
 Nortin v. Berlin Bridge, 51 N. J. 
 
 Law 442, 283 
 
 Norton v. Shelby Co., 118 U. S. 
 
 426, 67 
 
 Nulton v. Clayton, 54 Iowa 425, 
 
 369, 384 
 Nugent v. Supervisors, 19 Wall. 
 
 (U. S.) 241, 193, 531 
 
 Nunnelly v. Southern, etc., Co., 
 
 94 Tenn. 397, 28 L. R. A. 421, 
 
 567, 568, 571 
 Nute v. Hamilton, etc., Co., 6 
 
 Gray 174, 142 
 
 Nye v. Storer, 168 Mass. 53, 46 N. 
 
 E. Rep. 402, 153 
 
 N. O. R. Co. v. Delamore, 114 
 
 U. S. 501, 119, 120 
 
 N. W. F. Co. v. Hyde Park, 97 
 
 U. S. 659, 100 
 
 
 
 Oak Bank, etc., Co. v. Crum, L. 
 
 Rep. 8 App. Cas. 65, 431 
 
 Oakdale, etc., Co. v. Garst, 18 R. 
 
 I. 484, 23 L. R. A. 639, 28 Atl. 
 
 Rep. 973, 281, 605
 
 lxx 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages."] 
 
 Oakes v. Cattaraugus, etc., Co., 
 
 143 N. Y. 430, 26 L. R. A. 544, 51 
 v. Hill, 14 Pick. (Mass.) 442, 
 
 662, 673 
 v. Turquand & Harding, L. R. 
 2 H. L. 325, 388, 396 
 
 Oakland, etc., Bank v. State 
 
 Bank, 113 Mich. 284, 489 
 
 Oakland R. Co. v. Oakland, etc., 
 R. Co., 45 Cal. 365, 13 Am. 
 Rep. 181, 90, 125 
 
 O'Bear, etc., Co. v. Volfer & Co., 
 
 106 Ala. 205, 28 L. R. A. 707, 324 
 O'Brien v. Grant, 146 N. Y. 163, 299 
 v. Wetherell, 14 Kan. 616, 251 
 
 Occidental, etc., Co. v. Ganzhorn, 
 
 2 Mo. App. 205, 387, 395 
 
 Ochiltree v. Railroad Co., 21 Wall. 
 
 (U. S.) 249, 621 
 
 O'Conner, etc., Co. v. Coosa, etc., 
 Co., 95 Ala. 614, 36 Am. St. 
 Rep. 251, 548, 552, 553 
 
 Odd Fellows v. Bank, 42 Mich. 
 
 461, 581 
 
 O'Donald v. Railroad Co., 14 Ind. 
 
 259, 377 
 
 O'Donnell v. Johns, 76 Tex. 363, 40 
 Ogden v. St. Joseph, 90 Mo. 522, 3 
 
 S. W. Rep. 25, 102 
 
 Oglesby v. Attrill, 105 U. S. 605, 
 
 134. 453, 455 
 
 Ogilvie v. Currie, 3 L. J. N. S. 
 
 541, 398 
 
 v. Knox, etc., Co., 22 How. 
 (U. S.) 380, 396, 398 
 
 O'Herron v. Gray, 168 Mass. 573, 
 
 40 L. R. A. 498, 313 
 
 Ohio College v.- Rosenthal, 45 
 
 Ohio St. 183, 318 
 
 Ohio, etc., Co. v. Merchants', etc., 
 Co., 11 Humph. (Tenn.) 1, 53 
 Am. Dec. 742, 265, 309, 617 
 
 v. Nunnemacher, 15 Ind. 294, 419 
 Ohio, etc., R. Co. v. Indianapolis, 
 etc., R. Co., 5 Am. Law Reg. 
 N. S. 733, 164 
 
 v. McPherson, 35 Mo. 13, 86 
 
 Am. Dec. 128, 501, 582 
 
 v. People, 123 111. 467, 30 
 
 v. State, 49 Ohio St. 668, 514 
 
 Ohio R. Co. v. Weber Co., 102 Pa. 
 
 St. 190, 308 
 
 Oil City, etc., Co. v. Porter, 99 Ky. 
 
 254, 395 
 
 Oil Creek, etc., R. Co. v. Pennsyl- 
 vania, etc., ( '..., 83 Pa.8t. mo, 220 
 Oldhimi v. .Mt. Sterling, etc., Co. 
 (Ky.), 45 S. W. Hep. 779, 51 
 
 Old Town, etc., R. Co. v. Veazie, 
 
 39 Maine 571, 528 
 
 Olds v. Phillipsburg, etc., Co. 
 
 (Tenn.), 48 S. W. Rep. 285, 578 
 O'Leary v. Board of Com'rs, 79 
 Mich. 281, 19 Am. St. Rep. 
 169, 26 
 
 Oler v. Baltimore, etc., R. Co., 41 
 
 Md. 583, 380 
 
 Olery v. Brown, 51 How. Pr. 
 
 (N. Y.) 92, 306 
 
 Oliphant v. Woodburn, etc., Co., 
 
 63 Iowa 332, 337 
 
 01iverv.Gilmore,52Fed. Rep.562, 166 
 Oliver's Est., 136 Pa. St. 43, 20 
 
 Am. St. Rep. 894, 443 
 
 Olmstead v. Farmer, etc., Co., 50 
 
 Mich. 200, 305 
 
 Olney v. Chadsey, 7 R. I. 224, 577 
 
 v. Conanicut Land Co., 16 R. I. 
 
 597, 5 L. R. A. 361, 183 
 
 Olsen v. Cook, 57 Minn. 522, 637 
 
 Olson v. State Bank, 57 Minn. 552, 
 
 59 N. W. Rep. 635, 629 
 
 Omaha Bridge Cases, 51 Fed. Rep. 
 
 309, 2 C. C. A. 174, 133 
 
 Omaha, etc., Co. v. Burns, 49 Neb. 
 
 229, 578 
 
 Omaha, etc., R. Co. v. Cable, etc., 
 
 Co., 30 Fed. Rep. 324, 100 
 
 Oneida Bank v. Ontario Bank, 21 
 
 N. Y. 490, 229 
 
 Ooregum, etc., Co. v. Roper (H. 
 L), 61 Law J. (N. S.) 337, 
 Law Rep. App. Cases (1892) 
 125, 337 
 
 Opinion of Judges (N. C), 28 S. 
 
 E. Rep. 18, 91 
 
 Oregon, etc., Co. v. Roper, 1892 
 
 App. Cas. 125, 219 
 
 Oregon R. Co. v. Oregonian R. 
 Co., 130 U. S. 1, 
 
 36, 124, 134, 179, 184 
 O'Reilly v. Bard, 105 Pa. St. 569, 661 
 Ormsby v. Vermont, etc., Co., 56 
 
 N. Y. 623, 250, 252, 253, 500, 501 
 
 Orr v. Bracken Co., 81 Ky. 593, 88,91 
 
 v. IT. S. Bank, 1 Ohio 36, 13 
 
 Am. Dec. 588, 235 
 
 Orrick v. Boehm, 49 Md. 72, 156 
 
 Osborn v. Crosby, 63 N. H. 583, 362 
 
 v. McMasters, 40 Minn. 103, 573 
 
 Osborne v. Shawmut, etc., Co., 51 
 
 Vt. 278, 288 
 
 v. United States Bank, 9 Wheat. 
 738, 24, 25 
 
 Oacaloosa, etc., Works v. Park- 
 hurst, 54 Iowa 357, 6 N. W. 
 Rep. 547, 382
 
 TABLE OF CASES. 
 
 Ixxi 
 
 [References are to Pages."} 
 
 Oscillating Carousal Co. v. McCool 
 
 (N. J. Ch.), 35 Atl. Rep. 585, 173 
 Osgood v. King, 42 Iowa 478, 349 
 
 Ossipee Mfg. Co. v. Canney, 54 
 
 N. H. 295, 176, 177 
 
 Oswald v. Minneapolis Times Co., 
 
 65 Minn. 249, 176, 617, 636 
 
 v. St. Paul, etc., Co., 60 Minn. 
 
 82, 61 N. W. Rep. 902, 447 
 
 Otis v. Gardner, 105 111. 436, 481 
 
 Otto v. Union, 75 Cal. 308, 
 
 303, 305, 306 
 Ottumwa Screen Co. v. Stodghill, 
 
 103 Iowa 437, 471, 472 
 
 Overseers v. Gibbs, L. R. 5 H. L. 
 
 480, 544 
 
 v. Sears, 22 Pick. (Mass.) 125, 17 
 Owen v. Routh, 14 C. B. 327, 494 
 
 v. Shepherd, 59 Fed. Rep. 746, 
 
 8 C. C. A. 224, 244, 42. 65 
 
 Pacific Bank v. Stone (Cal.), 53 
 Pac. Rep. 634, 578 
 
 Pacific Nat'l Bank v. Eaton, 141 
 
 U. S. 227, 376 
 
 Pacific R. Co. v. Hughes, 22 Mo. 
 
 291 531 
 
 v. Missouri Pac. R. Co., 23 Fed. 
 
 Rep. 565, 56 
 
 v. Renshaw, 18 Mo. 210, 531, 532 
 v. Seeley, 45 Mo. 212, 100 Am. 
 
 Dec. 369, 157 
 
 v. Seibert, 142 U. S. 339, 109 
 
 Paddock v. Fletcher, 42 Vt. 389, 48 
 Paducah, etc., R. Co. v. Parks, 86 
 
 Tenn. 554, 8 S. W. Rep. 842, 380 
 Page v. Heineberg, 40 Vt. 81, 94 
 
 Am. Dec. 378, 151, 156 
 
 v. Fall River, etc., Co., 31 Fed. 
 Rep. 257, 580 
 
 Paine v. Central Vermont R. Co., 
 
 118 U. S. 152, 659 
 
 v. Lake Erie, etc., R. Co., 31 
 
 Ind. 283, 196 
 
 v. Stewart, 33 Conn. 516, 652 
 
 Painsville, etc., R. Co. v. King, 17 
 
 Ohio St. 534, 318, 427 
 
 Pairpoint, etc., Co. v. Watch Co., 
 
 161 Pa. St. 17, 265 
 
 Palace Car Co. v. Central Trans- 
 portation Co., 171 XL S. 138, 130 
 Palmer v. Van Santvoord, 153 N. 
 
 Y. 612, 38 L. R. A. 402, 182, 635 
 Palmeri v. Manhattan R. Co., 133 
 
 N. Y. 261, 16 L. R. A. 136, 237 
 Palmetto Lodge v. Hubbell. 2 
 Strob. (S. C.) 457, 144 
 
 Paris v. Paris, 10 Ves. Jr. 185, 439 
 Parish v. Stearns, 21 Pick. (Mass.) 
 148, 534 
 
 v. Wheeler, 22 N. Y. 494, 207 
 
 Park v. Grant, etc., Works, 40 N. 
 
 J. Eq. 114, 421, 426 
 
 v. Thomas, 66 N. Y. 559, 432 
 
 Parke v. Commonwealth, etc., Co., 
 
 44 Pa. St. 422, 283 
 
 Parker v. Bethel Hotel Co., 96 
 Tenn. 252, 31 L. R. A. 706, 
 
 10, 415, 466, 666, 667, 669, 672 
 v. Lamb, 99 Iowa 265, 34 L. R. 
 
 A. 704, 612 
 
 v. Nickerson, 112 Mass. 195, 
 
 545, 547 
 . v. Nickerson, 137 Mass. 487, 552 
 v. N. Cent. R. Co., 33 Mich. 
 
 23, 367, 368 
 
 v. Thomas, 19 Ind. 213, 81 Am. 
 
 Dec. 385, 393 
 
 v. Railway Co., 7 Man. & G. 
 
 288, 101, 131 
 
 v. Sun, etc., 42 La. Ann. fl72, 313 
 Parks v. Evansville, etc., R. Co., 
 
 23 Ind. 567, 377 
 
 Parrott v. Byers, 40 Cal. 614, 486 
 
 Paterson v. Arnold, 45 Pa. St. 410, 595 
 
 Patterson v. Lynde, 112 111. 196, 651 
 
 v. Minnesota, etc., Co., 41 Minn. 
 
 84, 569 
 
 v. Robinson, 116 N. Y. 193, 163 
 
 v. Stewart, 41 Minn. 84, 660 
 
 Paul v. Virginia, 8 Wall. <TJ. S.) 
 
 168, 254, 255, 256 
 
 v. Virginia, 8 Wall. (U.S.) 181, 119 
 Paulimo v. Portuguese, etc., Assn., 
 
 18 R. I. 165. 64 
 
 Pauly v. Pauly, 107 Cal. 8, 48 Am. 
 St. Rep. 98, 539, 554 
 
 v. State Loan, etc., Co., 56 Fed. 
 Rep. 430, 58 Fed. Rep. 666, 7 
 C. C. A. 422, 165 U. S. 606, 
 
 630, 631 
 Paxton v. Bacon, etc., Co., 2 Nev. 
 
 259 (new ed.) 768, 51, 55 
 
 Paxton, etc., Co. v. First National 
 Bank, 21 Neb. 621, 33 N. W. 
 Rep. 271, 52, 53 
 
 Payne v. Bullard, 23 (1 Cushman 
 
 88) 88, 405 
 
 v. Elliott, 54 Cal. 339, 309, 313 
 
 v. Elliott, 54 Cal. 504, 320 
 
 v. Goldbach, 14 Ind. App. 100, 
 
 42 N. E. Rep. 642, 119 
 
 Pay son v. Hadduck, 8 Biss. (C. 
 
 C ) 293 631 
 
 v. Withers, 5 Biss. C. C. 269, 272
 
 Ixxii 
 
 TABLE OF CASES. 
 
 [References are to Pages."] 
 
 Peabody v. Flint, 6 Allen 52, 450 
 
 v. Speyers, 56 N. Y. 230, 321 
 
 Peake v. R. Co., 18 111. 88, 43 
 
 Pearce v. Madison, etc., R. Co., 
 21 How. (U. S.) 441, 
 
 159, 175, 192, 204, 215 
 Pearsall v. Great Northern R., 161 
 
 U. S. 646, 30, 86, 89, 93, 111, 131 
 v. Western, etc., Co., 124 N. Y. 
 256, 146 
 
 Pearson v. Concord, etc., R. Co. 
 62. N. H. 537, 13 Am. St. 
 Rep. 590, 184, 185, 292, 552, 554 
 Peatman v. Centerville, etc., Co., 
 100 Iowa 245, 69 N. W. Rep. 
 541, 455 
 
 Peck v. Bank of America, 16 R. I. 
 
 710, 478, 487, 488 
 
 v. Coalfield, etc., Co., 11 111. 
 
 App. 88, 354 
 
 v. Elliott, 79 Fed. Rep. 10, 47 
 U. S. App. 605, 38 L. R. A. 
 616, 311, 658 
 
 v. Miller, 39 Mich, 594, 651 
 
 v. Providence,, etc., Co., 17 R. I. 
 275, 23 Atl. Rep. 967, 468, 488 
 Peck-Williamson, etc., Co. v. Ok- 
 lahoma Board of Ed. (Okla.), 
 50 Pac. Rep. 236, 171 
 
 Peckham v. North Parish, 16 
 
 Pick. 274, 283 
 
 v. Van Wagenen, 83 N. Y, 40, 
 
 427, 429, 430 
 Peek v. Gurney, L. R. 6 H. L. 
 
 377, 49 
 
 Pehlan v. Hazard, 5 Dill. (C.C.)45, 354 
 Pell's Case, L. R. 5 Ch. 11, 492 
 
 Pellatt's Case, 2 Ch. App. Cas. 
 
 527, 369 
 
 Pembina Mining Co. v. Pennsyl- 
 vania, 125 U. S. 181, 31 L. ed. 
 650, 2 Inters. Com. Rep. 24, 
 
 57, 248, 255, 267 
 Pender v. Lushington, L. R. 6 Ch. 
 
 Div. 70, 512 
 
 Peninsular Savings Bank v. Black, 
 etc., Co., 105 Mich. 535, 
 
 340, 348, 351 
 1'ciin, etc., Co. v. Hapgood, 141 
 
 Mass. 145, 7 N. E. Rep. 22, 52 
 Penniman's Case, 103 U. S. 714, 100 
 Pennsylvania Co. v. Franklin, 
 etc., Co., 181 Pa. St. 40, L. 
 R. A . 780, 333, 482 
 
 Pennsylvania R. Co. v. Duncan, 
 
 111 Pa. St. 352, 89 
 
 v. St. Louis, etc., R. Co., 118 
 U. S. 290, 61, 179, 213 
 
 Pennoyer v. Neff, 95 U. S. 714, 654 
 Pennypacker v. Insurance Co., 80 
 
 Iowa 56, 276 
 
 Penobscot, etc.. R. Co. v. Bartlett, 
 
 12 Gray (Mass.) 244, 71 Am. 
 
 Dec. 753, 610, 645 
 
 v. Dunn, 39 Maine 587, 384, 385 
 
 v. White, 41 Maine 512, 381 
 
 Penobscot R. Co. v. Dummer, 40 
 
 Maine 172, 375 
 
 Pensacola, etc., Co. v. Western, 
 
 etc., Co., 96 IT. S. 1, 108,255 
 
 People v. Albany, etc., R. Co., 5 
 
 Lans. 25, 588 
 
 v. Am. Bell, etc., Co., 117 N. Y. 
 
 251, 272 
 
 v. Assessors, 1 Hill (N. Y.) 
 
 620, 2 
 
 v. Bachelor, 22 N. Y. 128, 504 
 
 v. Baker, 141 N. Y. 251, 424 
 
 v. Bank, 24 Wend. (N. Y.) 431, 84 
 v. Barric, 49 Cal. 342, 44 
 
 v. Batchelor, 22 N. Y. 128, 502 
 
 v. Beach, 19 Hun (N. Y.) 259, 36 
 v. Board, 11 Mich. 222, 546 
 
 v. Board of Assessors (N. Y.), 
 
 N. Y. Law Journal (May 3, 
 
 1899), 605 
 
 v. Board of Trade, 80 111. 134, 
 
 150, 305, 306 
 v. Board of Underwriters, 54 
 
 How. Pr. 240, 142 
 
 v. Buffalo, etc., Co., 131 N. Y. 
 
 140, 15 L. R. A. 240, 570 
 
 v. Building Assn. ,35 Ohio St. 258, 82 
 v. Campbell, 144 N. Y. 166, 135 
 
 v. Chambers, 42 Cal. 201, 34 
 
 v. Cheeseman, 7 Colo. 376, 
 
 26, 33, 36 
 v. Chicago, etc., 130 111. 268, 17 
 
 Am. St. R. 319, 
 
 33, 85, 134, 167, 168, 184, 185, 202 
 v. Chicago, etc., Co., 8 L. R. A. 
 
 497, 166 
 
 v. Chicago, etc., R. Co., 118 111. 
 
 113, 117 
 
 v. Chicago Live Stock Ex., 170 
 
 111. 556, 39 L. R. A. 373, 
 
 82, 301, 666, 667 
 v. Coleman, 133 N. Y. 279, 31 
 
 N. E. Rep. 96, 19, 20, 309 
 
 v. Cook, 110 N. Y. 443, 111 N. 
 
 Y. 688, 30 
 
 v. Commissioners, 23 N.Y. 192, 308 
 v. Comrs.,94 11. S. 415, 105 
 
 v. Comrs., 4 Wall. (U. S.) 244, 105 
 v. Crockett, 9 Cal. 112, 496 
 
 v. Crossley, 69 111. 195, 
 
 140, 141, 504, 509
 
 TABLE OF CASES. 
 
 lxxiii 
 
 [References are to Pages.] 
 
 People v. Cummings, 72 N. Y. 433, 
 
 535, 539 
 v. England, 27 Hun (N. Y.) 139, 567 
 v. Fidelity, etc., Co., 153 111. 25, 
 
 26 L. R. A. 295, 263, 266, 269 
 
 v. Fire Assn. of Philadelphia, 
 
 92 N. Y. 311, 44 Am. Rep. 380 
 
 248, 260, 268 
 v. Frank, 28 Cal. 507, 44' 
 
 v. Goss, etc., Co., 99 111. 355, 496 
 v. Hawkins, 106 Mich. 479, 267 
 
 v. Higgins, 15 111. 110, 300 
 
 v. Holden, 82 111. 93, 377 
 
 v. Kipley, 171 111. 44, 241 
 
 v. La Rue, 67 Cal. 530, 71, 151 
 
 v. Londoner, 13 Colo. 303, 6 L. 
 
 R. A. 444, 536 
 
 v. Louisville, etc., R. Co., 120 
 
 111. 48, 198 
 
 v. Mauran, 5 Denio (N. Y.) 389, 
 
 156, 157 
 v. Maynard, 15 Mich. 463, 26 
 
 v. Med. Soc, 24 Barb. (N. Y.) 
 
 570, 300 
 
 v. Med. Soc, 32 N. Y. 187, 
 
 298, 300, 303 
 v. Milk Exchange, 145 N. Y. 
 
 267, 27 L. R. A. 437, 168, 674 
 
 v. Montecito, etc., Co., 97 Cal. 
 
 276, 33, 34, 35 
 
 v. Musical, etc., Union, 118 N. 
 
 Y. 101, 150 
 
 v. Musical, etc., Union, 101 N. 
 
 Y. 680, 303 
 
 v. Mutual, etc., Co., 38 Mich. 
 
 154, 117 
 
 v. Nelson, 46 N. Y. 477, 24 
 
 v. New York Com. Assn., 18 
 
 Abb. Pr. 271, 301, 303 
 
 v. New York, etc., Exchange, 8 
 
 Hun 216, 299 
 
 v. New York, etc., R. Co., 15 
 
 N. Y. Supp. 635, 30 
 
 v. NewYork Produce Exchange, 
 
 149 N. Y. 401, 301, 305 
 
 v. North River, etc.. Co., 121 
 
 N. Y. 582, 24 N. E. Rep. 834, 
 13, 32, 83, 165, 166, 167, 173, 187 
 199, 666 
 V. Northern R. Co., 42 N. Y. 
 
 217, 541 
 
 v. O'Brien, 111 N. Y. 1, 52 
 
 N. Y. Sup. Ct. 519, 2 L. R. A. 
 
 255, 7 Am. St. Rep. 684, 
 
 91, 92, 117, 133, 156, 663, 676 
 v. Overyssel, 11 Mich. 222, 550 
 
 v. Paton, 20 Abb. N. Cas. 195, 419 
 v. Peck, 11 Wend. (N. Y.) 604, 504 
 
 People v. Phoenix Bank, 24 Wend. 
 (N. Y.) 431, 666 
 
 v. Pullman, etc., Co., 175 111. 
 
 126, 82, 131, 136, 152, 181 
 
 v. Robinson, 64 Cal. 373, 294 
 
 v. San Francisco Sav. Union, 72 
 
 Cal. 199, 427 
 
 v. St. Franciscus, etc., Soc. 24 
 
 How. Pr. (N. Y.) 216, 145, 150 
 v. St. Louis, etc., R. Co., 35 L. 
 
 R. A. 656, 318 
 
 v. St. Stephen's Church, 53 
 
 N. Y. 103, 300 
 
 v. Selfridge, 52 Cal. 331, 36 
 
 v. Sheldon (N.Y.) 34 N. E. Rep. 
 
 785, 166 
 
 v. Sheldon, 139 N. Y. 251, 168 
 
 v. Silver, etc., Co., 105 N.Y. 76, 273 
 v. Stanford, 77 Cal. 360, 26 
 
 v. State Treasurer, 24 Mich. 468, 448 
 v. Stearling, etc., Co., 82 111. 
 
 457, 141 
 
 v. Stockton, etc., R. Co., 45 Cal. 
 
 306, 33, 34 
 
 v. Supervisors, 4 Hill (N. Y.) 
 
 20, 425 
 
 v. Suburban R. Co., 188111. 594, 115 
 v. Thurber, 14 111. 554, 267 
 
 v. United States, etc., Co., 20 
 
 Abb. New. Cas. 192, 416 
 
 v. Utica, etc., Co., 15 Johns. 358, 
 
 61, 62, 83 
 v. Walker, 9 Mich. 328, 417, 419 
 v. Wemple, 138 N. Y. 1, 104 
 
 People's Bank v. Gridlev, 91 111. 
 
 457, 471 
 
 v. Kurtz, 99 Pa. St. 344, 332, 479 
 v. St. Anthonv's, etc., R. C. 
 
 Church, 39 Hun (N. Y.) 498, 498 
 People's, etc., Bank v. Cupps, 91 
 
 Pa. St. 315, 148 
 
 v. Sup. Court, 104 Cal. 649, 29 
 
 L. R. A. 844, 48 Am. St. Rep. 
 
 147, 510 
 
 People's, etc., Co. v. Balch, 8 Gray 
 
 (Mass.) 330, 407 
 
 v. Wemple, 131 N. Y. 64, 
 
 255, 256, 273 
 v. Westcott, 14 Gray (Mass.), 
 
 440, 404, 503 
 
 Peoria, etc., R. Co. v. Preston, 35 
 
 Iowa 118, 373, 532 
 
 v. Thompson, 103 111. 187, 220, 358 
 Perkins v. Savage, 15 Wend. 412, 367 
 Perkins, etc., Co. v. Bradley, 24 
 
 Yt. 66, 581 
 
 Perrim v. Grand Lodge, 48 Minn. 
 
 82, 73
 
 lxxiv 
 
 TABLE OF CASES. 
 
 [Beferences are to Pages."} 
 
 Terry v. Cotton Seed Oil, etc., 
 
 Co., 93 Ala. 364, 545 
 
 v. Hale, 143 Mass. 540, 395 
 
 v. Oil Mill Co., 93 Ala. 364, 588 
 
 v. Railroad Co., 44 Ark. 383, 54 
 
 v. Tuscaloosa, etc., Co., 93 Ala. 
 
 364, 509 
 
 v. Tuscaloosa, etc., Co. (Ala), 9 
 So. Rep. 217, 560 
 
 Peter v. Union, etc., Co., 56 Ohio 
 
 St. 81, 630 
 
 Peters v. Foster, 10 N. Y. Supp. 
 
 389, 657 
 
 v. Union, etc., Co. (Ohio), 46 
 N. E. Rep. 894, 348 
 
 Petition of Brown, 14 R. I. 371, 441 
 Philadelphia, etc., R. Co., 187 
 Pa. St. 123, 667 
 
 Pew v. First Nat'l Bank, 130 
 
 Mass. 391, 584 
 
 Pfister v. Gerwig, 122 Ind. 567, 144 
 Pfohl v. Simpson, 74 N. Y. 137, 639 
 Phelps v. Farmers' Bank, 26 
 
 Conn. 279, 309 
 
 v. Farmers', etc., Bank, 26 
 Conn. 269, 435 
 
 Philadelphia v. Ridge Ave. R. Co. 
 
 143 Pa. St. 444, 196 
 
 v. Ridge Ave. R. Co., 102 Pa. 
 St. 190, 308 
 
 Philadelphia, etc., Assn. v. New 
 
 York, 119 U. S. 110, 271 
 
 Philadelphia, etc., R. Co. v. Cow- 
 ell, 28 Pa. St. 329, 70 Am. 
 Dec. 128, 430 
 
 v. Hickman, 28 Pa. St. 318, 373 
 
 v. Md. 10 How. (U. S.) 376, 111 
 v. Quiglev, 21 How. 202, 237 
 
 Philadelphia & S. S. Co. v. Penn- 
 sylvania, 122 IT. S. 326, 104 
 Philips v. Wickham, 1 Paige Ch. 
 
 (N. Y.) 590, 504 
 
 Phillips' Academy v. King, 12 
 
 Mass. 564, 151, 199 
 
 Phillips v. Bury, 2 T. R. 346, 80 
 
 . Campbell, 43 N. Y. 271, 581 
 
 v. Covington, etc., Bridge Co., 
 
 2 Mete. (Ky.) 219, 381,382 
 
 v. Eastern R. Co., 138 Mass. 
 
 122, 425 
 
 v. Library Co., 141 Pa. St. 462, 
 
 284, 285 
 
 v. Providence, etc., Co. (R. I. 
 
 1899), !:; All. Rep. 598, 526 
 
 v. Wickham, I Paige Ch. (N. 
 
 V.) .".'.id, 509, 662 
 
 V. Winslow, 18 B. Mon. (Ky.) 
 
 431, 68 Am. Dec. 729, 180 
 
 Phinizy v. Murray, 83 Ga. 747, 20 
 Am. St. Rep. 342, 428 
 
 v. R. Co., 62 Fed. Rep. 678, 74 
 
 Phoenix, etc., Bank v. Balcheller, 
 
 151 Mass. 589, 8 L. R. A. 644, 249 
 Phoenix, etc., Co. v. Burdett, 112 
 
 Ind. 204, 254, 256, 267 
 
 v. Commonwealth, 113 Pa. St. 
 
 563, 416, 417 
 
 v. Com., 5 Bush (Ky.) 68, 96 
 
 Am. Dec. 331, 267 
 
 v. Welch, 29 Kan. 672, 254, 268 
 
 Phoenix W. Co. v. Badger, 67 N. 
 
 Y. 294, 75, 369, 403, 406 
 
 v. Badger, 67 N. Y. 489, 372 
 
 Pier v. Hanmore, 86 N. Y. 95, 573, 625 
 Pierce v. Commonwealth, 104 Pa. 
 
 St. 150, 16, 521 
 
 v. Emery, 32 N. H. 484, 123, 180 
 v. Milwaukee, etc., R. Co., 24 
 Wis. 551, 123 
 
 Pike v. Railway Co., 68 Maine 
 
 445, 405 
 
 Pine v. Lake Erie, etc., R. Co., 
 
 31 Ind. 283, 195 
 
 Pinkerton v. Manchester, etc., R. 
 
 Co., 42 N. H. 424, 471, 472, 494 
 Pinkus v. Minneapolis Linen 
 
 Mills, 65 Minn. 40, 455 
 
 Pioneer, etc., Assn. v. Cannon, 
 96 Tenn. 599, 33 L. R. A. 112, 
 
 272, 273 
 
 Piscataqua, etc., Co. v. Jones, 39 
 
 N. H. 491, 372, 394 
 
 Pitcher v. Board, etc., 121 111. 
 
 412, 302 
 
 Pittsburg, etc., Co. v. Quintrell, 
 
 91 Tenn. 693, 50 
 
 v. Reese, 118 Pa. St. 355, 578 
 
 Pittsburg, etc., R. Co. v. Alle- 
 gheny Co., 63 Pa. St. 126, 318 
 v. Applegate, 21 W. Va. 172, 367 
 v. Biggaf, 34 Pa. St. 455, 369, 370 
 v. Byers, 32 Pa. St. 22, 411 
 v. Clarke-Thaw, 29 Pa. St. 146, 490 
 v. Com., 66 Pa. St. 77, 101 
 v. Commonwealth, 100 Pa. St. 
 
 192, 238 
 
 v. Keokuk, etc., Co., 131 U. S. 
 
 371, 205,209,213,215 
 
 v. Reich, 101 111. 157, 195 
 
 v. Stewart, 41 Pa. St. 54, 371 
 
 Pittsburg Min. Co. v. Spooner, 74 
 
 Wis. 307, 42 N. W. Rep. 255, 45 
 Pixlev v. West. Pac. R. Co., 33 
 
 Cal. is:;, L61, 162, 231 
 
 Plank, etc., Co. v. Burkhard, 87 
 
 Mich. 182, 49 N. W. Rep. 562. 382
 
 TABLE OF CASES. 
 
 lxxv 
 
 [References are to Pages."] 
 
 Plank Road v. Thatcher, 1 Kern 
 
 (N. Y.) 102, 529 
 
 Plant v. Macon, etc., Co., 103 Ga. 
 
 666, 30 S. E. Rep. 567, 179 
 
 Planters' Bank v. Whittle, 78 Va. 
 
 737, 183 
 
 Planters', etc., Bank v. Padgett, 
 
 69 Ga. 159, 597 
 
 Planters', etc., Ins. Co. v. Sehna, 
 
 etc., Bank, 63 Ala. 585, 459 
 
 Plaquemines, etc., Co. v. Buck, 52 
 
 N. J. Eq. 219, 27 Atl. Rep. 
 
 1094, 45, 46, 51 
 
 Plimpton v. Bigelow, 93 N. Y. 
 
 592 309 
 
 Plymouth R. Co. v. Colwell, 39 
 
 Pa. St. 337, 179 
 
 Pocock v. Lafayette, etc., Assn., 
 
 71 Ind. 357, 199, 222 
 
 Polhemus v. Fitchburg R. Co., 
 
 123 N. Y. 502, 197 
 
 Polk v. Plummer, 2 Humph. 
 
 (Tenn.) 500, 37 Am. Dec. 666, 17 
 Pollard v. First Nat'l Bank, 47 
 
 Kan. 406, 427 
 
 Polleys v. Ins. Co., 14 Maine 141, 11 
 Pond v. Framingham, etc., R. 
 
 Co., 130 Mass. 194, 589 
 
 v. Railway Co., 12 Blatchf. 280, 525 
 Poole v. Middleton, 29 Beav. 646, 
 
 458, 464 
 Poole's Case, 9 Ch. Div. 322, 339 
 
 Pope v. Brandon, 2 Stev. (Ala.) 
 
 401, 11 
 
 v. Capital Bank, 20 Kan. 440, 65 
 v. Hanke, 155 111. 617, 28 L. R. 
 
 A. 568, 261, 264 
 
 v. Terre Haute, etc., Co., 87 
 
 N Y 137 285 
 
 Port v. Russell, 36 Ind. 60, 538 
 
 Port Edward R., etc., Co. v. Ar- 
 
 pin, 80 Wis. 214, 49 N. W. Rep. 
 
 828, 374 
 
 Portland, etc., Co. v. East Port- 
 land, 18 Ore. 21, 6 L. R. A. 
 
 290, 159 
 
 v. State, 135 Ind. 54, 21 L. R. A. 
 
 639, 81 
 
 Porter v. Bank of Rutland, 19 Vt. 
 
 410, 486 
 
 v. Rockford, etc., R. Co., 76 111. 
 
 561, 101 
 
 v. Sabin, 149 U. S. 473, 449 
 
 v. State, 141 Ind. 488, 40 N. E. 
 
 ReD. 1601, 42 
 
 Porter's Case, 1 Co. Rep. 22, 154 
 
 Post v. Beacon, etc., Co. (C. C. 
 
 App.), 84 Fed. Rep. 371, 193 
 
 Post Express, etc., Co. v. Coursey 
 
 (N. Y.), 10 N. Y. Supp. 497, 82 
 Post & Co. v. Toledo, etc., R. Co., 
 
 144 Mass. 341, 59 Am. Rep. 
 
 86, 247, 624, 645, 656 
 
 Postal, etc., Co. v. Charleston, 153 
 
 IT. S. 692, 109 
 
 Pott & Co. v. Schmucker, 84 Md. 
 
 535, 57 Am. St. Rep. 415, 415 
 
 Potter v. Machine Co., 127 Mass. 
 
 592, 636 
 
 Potts v. Wallace, 146 U. S. 689, 
 
 406, 576, 577 
 Poultney v. Bachman, 31 Hun 49, 150 
 Powder River, etc., Co. v. Custer 
 
 Co., 9 Mont. 145, 22 Pac. Rep. 
 
 383, 272, 280 
 
 Prall v. Tilt, 28 N. J. Eq. 479, 481 
 
 Pratt v. Read & Co., 33 Conn. 446, 
 
 421, 543 
 
 v. Short, 79 N. Y. 437, 228 
 
 v. Trustees, 93 111. 475, 384 
 
 Pray v. Mitchell, 60 Maine 430, 321 
 
 Predyman v. Wodry, Cro. Jac. 
 
 109, 154 
 
 Presby v. Parker, 56 N. H. 409, 390 
 President, etc., Assn. v. Allen, 105 
 
 Ind. 593, 142 
 
 President, etc., Hibernia Road v. 
 
 Henderson, 8 Sergt. & Rawle 
 
 (Pa.) 219, 375 
 
 Preston v. Grand, etc., Co., 11 
 
 Sim. 237, 191 
 
 Price v. Anderson, 15 Sim. 473, 438 
 v. Coal Co. (Ky.) 32 S.W. Rep. 
 
 267, 189 
 
 v. Holcomb, 89 Iowa 123, 56 N. 
 
 W. Rep. 407, 526, 672 
 
 v. Price, 6 Dana (Ky.) 107, 320 
 
 Priest v. White, 89 Mo. 609, 356 
 
 Prince Inv. Co. v. St. Paul, etc., 
 
 Co., 68 Minn. 121, 467, 489, 505 
 Pritchitt v. Nashville, etc., Co., 
 
 96 Tenn. 472, 33 L. R. A. 856, 445 
 Procter, etc., Co. v. Finley, 98 
 
 Ky. 505, 520 
 
 Proprietors v. Ipswich, 153 Mass. 
 
 42, 26 N. E. Rep. 239, Denny, 
 
 etc., Co. v. Schram, 6 Wash. 
 
 134, 61 
 
 Proprietors' Union Locks v. 
 
 Towne, 1 N. H. 44, 406 
 
 Protection, etc., Co. v. Foote, 79 
 
 111. 361, 538 
 
 Protective, etc., Co. v. Osgood, 93 
 
 111. 69, 341 
 
 Prouty v. Lake Shore, etc., R. 
 
 Co., 52 N. Y. 363, 197
 
 lxxvi 
 
 TABLE OF CASES. 
 
 [References are to Pages.'} 
 
 Prouty v. Michigan, etc., R. Co., 
 
 1 Hun IN. Y.) 655, 319 
 
 Providence Bank v. Billings, 4 
 
 Pet. (TJ. S.) 514, 131 
 
 Prov. Inst, for Sav. v. Boston, 101 
 
 Mass. 575, 107 
 
 Prov., etc., Co. v. Brown, 9 TJ. C. 
 
 C. C. P. 286, 387, 395 
 
 Pugh v. Hurtt, 52 How. Pr. 22, 
 
 610, 657 
 Pugh and Sherman's Case, L. R. 
 
 13 Eq. 566, 396 
 
 Pulbrook v. Richmond, etc., Co., 
 
 L. R. 9 Ch. Div. 610, 542 
 
 Pullan v. Cincinnati, etc., R. Co., 
 
 4 Bissell 35, 123 
 
 Pullen v. Hillman, 84 Maine 129, 249 
 Pullman, etc., Co. v. Central, 
 
 etc., Co., 171 U. S. 138, 209 
 
 v. Missouri Pac. R. Co., 115 
 
 U. S. 587, 30, 194, 196 
 
 v. Penn., 141 U. S. 18, 103 
 
 Pulsford v. Richards, 22 L. J. Ch. 
 
 559, 392 
 
 Putnam v. City of New Albany, 4 
 
 Biss. 365, 370 
 
 Pyles v. Riverside, etc., Co., 30 
 
 W. Va. 123, 128 
 
 Q 
 
 Queen v. Arnaud, 16 L. J. N. S. 
 
 C. L. 50, 11 
 
 Quick v. Lemon, 105 111. 578, 377, 385 
 Quincy Bridge Co. v. Adams, 88 
 
 111. 615, 56 
 
 Quiner v. Marblehead, etc., Co., 
 
 10 Mass. 475, 459 
 
 Quinlin v. Houston, etc., R. Co., 
 
 89 Tex. 356, 23 
 
 R 
 
 Rabb v. Reed, 5 Rawle'sRep. 151, 
 28 Am. Dec. 650, 305 
 
 Rabe v. Dunlap, 51 N. J. Eq. 40, 
 
 25 Atl. Rep. 959, 95, 453 
 
 Ragan V. McElroy, 98 Mo. 349, 157 
 
 Railroad v. Carv, 28 Ohio St. 208, 60 
 v. Dow, r.t Fed. Rep. 388, 174 
 
 v. Dow, 120 IT. S. 287, 346 
 
 v. Echternacht, 21 Pa. St. 220, 384 
 v. Gaines, 97 U. S. 697, 131,521 
 v. Georgia, 98 U. B. 359, 111, 194 
 v. Ham, INC. S. 587, 323, 325 
 
 v. Harris, 12 Wall. 05, 283 
 
 v. Humphries (Miss.), 7 So. 
 Rep. 522, 436 
 
 Railroad v. Ketchum, 27 Conn. 
 170, 586 
 
 v. Koonz, 104 TJ. S. 5, 250 
 
 v. Maine, 96 U. S. 499, 111 
 
 v. Maryland, 10 How. (U. S.) 
 
 376, 112 
 
 v. Peniston, 18 Wall. (TJ. S.) 5, 
 
 102, 104 
 
 v. Pennsylvania, 15 Wall. (TJ. S.) 
 
 300, 102 
 
 v. Pratt, 22 Wall. (TJ. S.) 123, 164 
 v. Quigley, 21 How. 202, 235 
 
 v. Railroad Co., 06 N. H. 100, 164 
 v. Roberson, 61 Fed. Rep. 592, 56 
 v. Schuyler, 34 N.Y. 30, 235 
 
 v. State, 29 Ala. 573, 663 
 
 v.Tierman (Kan.), 15 Pac. Rep. 
 544, 587 
 
 Railroad Co. v. Belfast, 77 Maine 
 
 445, 319 
 
 v. Berks Co., 6 Pa. St. 70, 112 
 
 Railroad Commission Cases, 116 
 
 TJ. S. 307, 16 
 
 Railroad Tax Cases, 13 Fed. Rep. 
 
 722, 101 
 
 Railway Co. v. Allerton, 18 Wall. 
 
 (U. S.) 233, 2, 356, 546 
 
 v. Dewey, 14 Mich. 477, 550 
 
 v. James, 16L.U. S. 545, 57 
 
 v. Knoxville, 98 Tenn. 1, 376 
 
 v. McCarthy, 96 U. S. 276, 210, 214 
 v. Philadelphia, 101 TJ. S. 528, 100 
 v. Smith, 48 Ohio St. 219, 317 
 
 v. Weber, 96 111. 443, 104 
 
 v. Wilkerson, 83 Mo. 235, 384 
 
 Raleigh v. Fitzpatrick, 43 N. J. 
 
 Eq. 501, 549 
 
 Ramsey v. Gould, 57 Barb. (N. 
 
 Y.) 398, 461 
 
 Rand v. Hubbell, 115 Mass. 461, 
 
 15 Am. Rep. 121, 439, 440, 441 
 Randall v. Evening News, 97 
 Mich. 136, 235 
 
 v. Van Vechten, 19 John. 60, 161 
 Rathbone v. Frost, 9 Wash. 162, 279 
 v. Gas Co., 31 W. Va. 798, 448 
 
 v. Parkersburg, etc., Co., 31 W. 
 Va. 798, 8 S. E. Rep. 570, 414 
 
 Rathbun v. Snow, i23 N. Y. 343, 
 
 10 L. R. A. 355, 146, 147 
 
 Rathlmrn v. Snow, 22 N. Y. S. R. 
 
 227, 147 
 
 Ratterman v. Western, etc., Co., 
 
 I '27, U. 8.411, 109 
 
 Raub v. Balirtown, etc., Assn., 
 
 66 N. J. L. 262, 577 
 
 Re Argus, etc., Co., 1 N. Dak. 
 434, 26 Am. St. Rep. 639, 541
 
 TABLE OF CASES. 
 
 lxxvii 
 
 [References are to Pages."] 
 
 Re Bates, etc., Co., 91 Fed. Rep. 
 625, 543 
 
 Concession Trust (1896), 2 Ch. 
 
 757, 341 
 
 Fair Hope, etc., Estate, 183 Pa. 
 
 St. 96, 635 
 
 Gibbs* Estate, 157 Pa. St. 59, 22 
 
 L. R. A. 276, 66 
 
 Nassau, etc., Co., 2 Ch. D. 610, 38 
 Newcomb, 42 N. Y. St. 442, 535 
 
 Olympia, 67 L. J. Ch. N. S. 433, 45 
 Prime Estate, 136 N. Y. 347, 18 
 
 L. R. A. 713, 257 
 
 Rotherham Alum Co., L. R. 25 
 
 Ch. Div. 103, 54 
 
 Scottish, etc., Co., L. R. 23 Ch. 
 
 Div. 413, 396 
 
 South Durham, etc , Co., L. R. 
 31 Ch. Div. 261, 315 
 
 Read v. Buffuni, 79 Cal. 77, 12 
 
 Am. St. Rep. 131, 579 
 
 Read v. Cumberland, etc., Co., 93 
 Tenn. 482, 27 S. W. Rep. 660, 
 
 324, 486 
 Read v. Frankfort Bank, 23 Maine 
 
 318, 90, 663 
 
 Rece v. Newport News R. Co., 32 
 
 W. Va. 164, 3L. R. A.572, 56,255 
 Red Wing, etc., Co. v. Friedrich, 
 
 25 Minn. 112, 362, 363, 370, 378 
 Reed v. Bank of Newburgh, 6 
 
 Paige (N. Y.) 337, 509 
 
 v. Boston, etc., Co., 141 Mass. 
 
 554, 410 
 
 v. Copeland 50 Conn. 479, 467 
 
 v. Home Saw Bank, 130 Mass. 
 
 443, 39 Am. Rep. 468, 234, 236 
 v. Richmond, etc., R. Co., 50 
 
 Ind. 342, 35 
 
 v. Walker (Tex. 1893), 21 S. W. 
 Rep. 687, 280 
 
 Reese River Co. v. Smith, L. R. 4 
 
 H. L. 64, 395 
 
 Reeve v. Ladies', etc., Assn., 56 
 
 Ark. 335, 18 L. R. A. 129, 262 
 
 Reeves v. Harper, 43 La. Ann. 
 
 516, 272 
 
 Reg v. Birmingham, etc., R. Co., 
 
 9 C. & P. 469, 238 
 
 v. Charwood, etc., Co., 1 C. & 
 
 F. 419, 496 
 
 v. Great North., etc., R. Co., 2 
 
 Cox Or. Cas. 70, 238 
 
 v. Liverpool, etc., Co., 21 L. J. 
 Q. B. (N. S.) 284, 496 
 
 Regents v. Detroit, etc., Soc, 12 
 
 Mich. 138, 151 
 
 v. Williams, 9 Gill. & J. (Md.) 
 232, 16 
 
 Rehm v. German, etc., Co., 125 
 
 Ind. 135, 288 
 
 Rehoboth v. Rehoboth, 23 Pick. 
 
 (Mass.) 139, 154 
 
 Reichwald v. Commercial Hotel, 
 
 106 111. 439, 174, 183, 251, 542, 598 
 Reid v. Eatonton, etc., Co., 40 Ga. 
 
 98, 2 Am. Rep. 563, 606 
 
 Reile v. Rundle, 103 U. S. 222, 654 
 Reisner v. Strong, 24 Kan. 410, 71 
 Relfe v. Rundle, 103 TJ. S. 222, 
 
 215, 216, 658 
 Remington, etc., v. Samara Bay 
 
 Co., 140 Mass. 494, 611,637 
 
 Renick v. Bank, 13 Ohio Rep. 298, 674 
 Rensselaer, etc., Co. v. Barbon, 
 
 16 N. Y. 457, 367 
 
 Republican, etc., Mines v. Brown, 
 19 U. S. App. 203, 58 Fed. 
 Rep. 644, 24 L. R. A. 776, 7 C. 
 C. A. 412, 257, 448, 454, 672, 673 
 Rex v. Amerv, 1 T. R. 575, 23 
 
 v. Bank of "England, Doug. 524, 161 
 v. Decant, 1 Str. 536, 520 
 
 v. Fraternity of Hostmen, 2 
 
 Strange 1223, 418 
 
 v. Ginever, 6 T. R. 732, 520 
 
 v. Head, 4 Burr. 2515, 141 
 
 v. Merchant, etc., Co., 2 Barn. 
 
 & Adol. 115, 418 
 
 v. Rabb, 3 Term R. 579, 418 
 
 v. Richardson, 1 Burr. Rep. 517, 
 
 298, 587 
 v. Shelley, 3 Term R. 141, 418 
 
 v. Spencer, 3 Burr. 1827, 141 
 
 v. Varlo, 1 Cowp. 248, 522 
 
 v. Westwood, 2 Dow. & Clark 
 
 21 23 141 
 
 v. W. & B. C, etc., Co., 3 Ad.' 
 & El. 477, 419 
 
 Reyer v. Odd Fellows Assn., 157 
 
 Mass. 367, 288 
 
 Reynolds v. Bridenthal (Neb.), 
 
 77 N. W. Rep. 658, 506 
 
 v. Crawfordsville Bank, 112 U. 
 
 S. 405, 220 
 
 v. Taylor, 43 Ala. 420, 622 
 
 Rhode Island, etc., Co. v. Moulton, 
 
 82 Fed. Rep. 979, 629, 630 
 
 Rhodes v. Missouri, etc., Assn., 
 175 111. 621, 42 L. R. A. 93, 
 
 262, 263 
 
 v. U. S. Nat'l Bank, 24 TJ. S. 
 App. 607, 66 Fed. Rep. 512, 34 
 L. R. A. 742, 
 
 246, 624, 638, 643, 646 
 
 v. Webb, 24 Minn. 292, 546, 577 
 Rice v. Hoisery Co., 56 N. H. 114, 624
 
 lxxviii 
 
 TABLE OF CASES. 
 
 [References are to Pages.] 
 
 Rice v. Merrimac, etc., Co., 56 
 
 N. H. 114, 652 
 
 v. National Bank, 126 Mass. 300, 40 
 v. Railroad Co., 1 Black (U. S.) 
 
 358, 100 
 
 v. Rockefeller, 134 N. Y. 174, 
 
 461, 494 
 Richards v. Clarksburg, 30 W. 
 
 Va. 491, 298 
 
 V.Minnesota, etc., Bank (Minn.), 
 
 77 X. W. Rep. 822, 669 
 
 v. Pattinson, Barnes, Notes Cas. 
 235, 418 
 
 Richardson v. Buhl, 77 Mich. 632, 
 
 167, 425 
 v. Graham (W. Va.), 30 S. E. 
 
 Rep. 92, 47, 51 
 
 v. Green, 133 U. S. 30, 321 
 
 v. Pitts, 71 Mo. 128, 595 
 
 v. Richardson, 75 Maine 570, 46 
 
 Am. Rep. 428, 446 
 
 v. Union Cong. Society, 58 N. 
 
 H. 189, 522 
 
 v. Vermont, etc., R. Co., 44 Vt. 
 613, 423, 503 
 
 Richardson's Exrs. v. Green, 133 
 
 U. S. 30, 344, 358 
 
 Richelieu, etc., Co. v. Interna- 
 tional, etc., Co., 140 111. 248, 
 29 N. E. Rep. 1044, 
 
 159, 362, 363, 382, 383, 385, 393 
 Richie v. McMullen, 79 Fed. Rep. 
 
 522, 25 C. C. A. 50, 449 
 
 Richmond v. Irons, 121 IT. S. 27, 
 , 469, 624, 626, 633 
 
 Richmond, etc., R. Co. v. Louisa. 
 
 R. Co., 13 How. (U. BO 71, 
 Richmond Fac. Assn. v. Clarke, 
 61 Maine 351, 75 
 
 98, 100, 131 
 Richwald v. Commercial Hotel, 
 
 106 111.439, 51,180,181,335,671 
 Ricker v. Larkin, 27 111. A pp. 625, 37 
 Rickerson, etc., Co. v. Farrell, 
 
 etc., Co., 75 Fed. Rep. 554, 348 
 Ricketts v. Ches., etc., R. Co., 33 
 
 \V. Va.433, 7 L. R. A. 354, 121 
 Rider v. Fritchey, 49 Ohio St. 
 285, 634 
 
 v. Morrison, 54 Md. 429, 475 
 
 Rider, etc., Co. v. Roach, 97 N. Y. 
 
 221 
 Riddicfe v. Amelin, 1 Mo. 5, 23 
 
 Riddle v. Railway Co., 39 Fed. 
 
 Rep. 290, 60 
 
 Riggs v. Cragg, 89-N. Y. 479, 445 
 
 v. Cragg, 26 Hun 89, 445 
 
 Rikhoff v. Brown, etc., Co., 68 
 
 Ind. 388, 75 
 
 Ringo v. Biscoe, 13 Ark. 563, 181 
 
 Rio Grande, etc., Co. v. Burns, 82 
 
 • Tex. 50, 17 S. W. Rep. 1042, 494 
 Ritchie v. McMullen, 79 Fed. 
 Rep. 523 (C. C. A.) 64 Fed. 
 Rep. 253, 55, 449 
 
 Rivanna, etc., Co. v. Dawson, 3 
 Grat. (Va.) 19, 46 Am. Dec. 
 183, 151, 152 
 
 Road Co. v. Branegan, 40 Ind. 31, 586 
 Roane, etc., Co. v. Wis. Tr. Co., 
 
 74 N. W. Rep. 818 (Wis.), 32 
 
 Robbins v. Shelbv Taxing Dis- 
 trict, 120 U.-S/489, 255 
 Roberts v. Deming, etc., Co., Ill 
 
 N. Car. 432, 162, 538 
 
 v. Washington Nat'l Bank, 11 
 Wash. 550, 554, 555 
 
 Roberts, etc., Co. v. Schlick, 62 
 Minn. 332, 64 N. W. Rep. 
 826, 48 
 
 Robertson v. Bullions, 11 N. Y. 
 
 243 18 
 
 Robie v. Sedgwick, 35 Barb. 319, 26 
 Robinson v. Bank L. R., 1 Eq. 
 
 32, 460 
 
 v. Bid well, 22 Cal. 379, 617 
 
 v. Hall, 59 Fed. Rep. 648, 563 
 
 v. Hall, 63 Fed. Rep. 222, 25 
 U. S. App. 48, 12 C. C. A. 
 674, 561 
 
 v. New Berne Nat'l Bank, 95 
 N. Y. 637, 
 
 428, 430, 435, 466, 471, 508 
 v. Pittsburgh, etc., R. Co., 32 
 
 Pa. St. 334, 72 Am. Dec. 792, 390 
 v. Smith, 3 Paige (N. Y.) 222, 
 
 24 Am. Dec. 216, . r ,44, 574 
 
 v. Turrentine, 597 Fed. Rep. 
 551, 366 
 
 Rochester, etc., Co. v. Martin, 13 
 
 Minn. 59, Gil. 54, 100 
 
 v. Raymond, 158 N. Y. 576, 53 
 X. E. Rep. 507, 491,629 
 
 Rochester Ins. Co. v. Martin, 13 
 
 Minn. 59, 135 
 
 Rockford, etc., R. Co. v. Sage, 65 
 
 111. 328, 16 Am. R. 587, 54 
 
 Rockv Ml. Bank v. Bliss, 89 N. 
 
 Y. 338, 637 
 
 Rodgers v. Danby Fniversalist 
 Society, 19 Vt. 187, 33, 34 
 
 v. Gross, 67 Minn. 224, 358 
 
 Roehler v. Mech. Aid Society, 22 
 
 Mich. 86, 150 
 
 Rogers v. Hastings, etc., R., 22 
 
 Minn. 25, 584 
 
 v. Nashville, etc., R. Co., 91 
 Fed. Rep. 299, 415, 545, 548
 
 TABLE OF CASES. 
 
 lxxix 
 
 [Beferences are to Pages."] 
 
 Rogers v. Pell, 154 N. Y. 518, 245 
 
 v. Railway Co., 22 Minn. 25, 587 
 
 v. Society, 19 Vt. 187, 11 
 
 v. Stevens, 4 Halst. Ch. (N. J.) 
 
 167, 471 
 
 Rohler v. Mechanics'Aid Society, 
 
 22 Mich. 86, 300 
 
 Rollins v. Clay, 33 Maine 132, 525, 542 
 
 v. Carriage Co., 80 Iowa 380, 181 
 
 v. Shaver Co., 80 Iowa 380, 182, 191 
 
 Roman v. Woolfolk, 98 Ala. 219, 449 
 
 Rood v. Whorton, 67 Fed. Rep. 
 
 434, 74 Fed. Rep. 118, 341 
 
 Rorke v. Thomas, 56 N. Y. 559, 569 
 Rosborough v. Canal Co., 22 Cal. 
 
 555, 587 
 
 Roseboom v. Whittaker, 132 111. 
 
 81, 23 N. E. Rep. 339, 549, 551 
 Rose Hill, etc., Co. v. People, 115 
 111. 133, 3 N. E. Rep. 725, 
 
 26, 42, 44 
 
 Ross v. Union P. R. Co., 1 Woolw. 
 
 C. C. 26, 495 
 
 Ross-Meehan Co. v. Southern Iron 
 
 Co., 72 Fed. Rep. 957, 101, 310 
 Rothschild v. Hoge, 43 Fed. Rep. 
 
 97, 375 
 
 Rothwell v. Robinson, 39 Minn. 1, 
 
 447, 450, 454 
 Rough v. Breitung (Mich.), 75 N. 
 
 W. Rep. 147, 10, 77 
 
 Rouse v. Merchants' Nat'l Bank, 
 
 46 Ohio St. 493, 5 L. R. A. 
 
 378, 182 
 
 Roy, etc., Co. v. Scott, etc., Co., 
 
 11 Wash. 399, 554 
 
 Royal Bank v. Grand Junction R. 
 
 Co., 100 Mass. 445, 162 
 
 Royal Bank of India, L. R. 4 Ch. 
 
 252, 38 
 
 Rudd v. Robinson, 126 N. Y. 113, 
 
 22 Am. St. Rep. 816, 564 
 
 Rue v. Railwav Co., 74 Tex. 474, 251 
 Ruggles v. Illinois, 108 U. S. 526, 100 
 Ruhev. Buck, 124 Mo. 178, 25 L. 
 
 R. A. 178, 261 
 
 Rule v. Omega, etc., Co. (Minn), 
 
 67 N. W. Rep. 60, 611 
 
 Ruuk v. St. John, 29 Barb. 585, 657 
 Runner v. Dwiggins, 147 Ind. 238, 
 
 36 L. R. A. 645, 638, 639 
 
 Runvan v. Casters' Lessees, 14 
 
 Pet. (U. S.) 122, 254, 255, 260 
 
 Ruse v. Bromberg, 88 Ala. 619, 403 
 Russell v. Alabama, etc., R. Co., 
 
 94 Ga. 510, 393 
 
 v. Jones, 101 Ala. 261, 13 So. 
 
 Rep*. 145, 276 
 
 Russell v. McLellan, 14 Pick. 
 
 (Mass.) 63, 669 
 
 v. Pacific R. Co., 113 Cal. 258, 
 
 34 L. R. A. 747, 246, 652 
 
 v. Rock River, etc., Co., 184 Pa. 
 
 St. 102, 39 Atl. Rep. 21, 45 
 
 v. Temple (Mass.), 3 Dane's 
 
 Abr. 108, 320 
 
 v. Wakefield, etc., Co., L. R. 20 
 Eq. 474, 448 
 
 Rust v. United, etc., Co., 70 Fed. 
 
 Rep. 129, 17 C. C. A. 16, 285 
 
 Rutherford v. Hill, 22 Ore. 218, 17 
 
 L. R. A. 549, 595 
 
 Rutland, etc., Co. v. Bates, 6S Vt. 
 
 579 545 
 
 Rutland, etc., R. Co. v. Thrall, 35 
 
 Yt. 536, 316, 385, 405, 409, 531 
 Rutter v. Kilpatrick, 63 N. Y. 604, 
 
 292, 376 
 Ryan v. Leavenworth, etc., R. 
 
 Co., 21 Kan. 365, 187, 428 
 
 v. Seaboard, etc., R. Co., 89 
 Fed. Rep. 397, 510 
 
 Ryder v. Railroad Co., 13 111.516, 434 
 
 s 
 
 Sacks v. City of Minneapolis 
 
 (Minn. 1898), 77 N. W. Rep. 
 
 563, 232 
 
 Saint v. Wheeler, etc., Co., 95 
 
 Ala. 362, 10 So. Rep. 539, 583 
 
 Salem, etc., Corp. v. Ropes, 6 
 
 Pick. 23, 19 Am. Dec. 363, 
 
 373, 374 
 Salem, etc., Co. v. Danvers, 10 
 
 Mass. 514, 101 
 
 Salem Milldam Corp. v. Ropes, 9 
 
 Pick. (Mass.) 187, 19 Am. 
 
 Dec. 363, 367, 382, 393, 404 
 
 Saline Nat'l Bank v. Prescott 
 
 (Kan.), 57 Pac. Rep. 12, 672 
 
 Salmon v. Richardson, 30 Conn. 
 
 360, 79 Am. Dec. 255, 568, 572 
 Salomon v. Salomon, etc., Co., 
 
 Lim., L. R. App. Cas. (1897), 
 
 22, 75, Law Times N. S. 427, 603 
 Salt Lake City v. Hollister, 118 
 
 U. S. 256, " 110, 201, 215, 235, 236 
 Salt Lake, etc., Co. v. Jintic, etc., 
 
 Co., 13 Utah 323, 45 Pac. Rep. 
 
 200, 637 
 
 Saltmarsh v. Spaulding, 147 Mass. 
 
 224, 541, 549, 552, 675 
 
 Samuel v. Holladay, 1 Woolw. 
 
 (N. Y.) 400, 447, 453
 
 lxxx 
 
 TABLE OF CASES. 
 
 [References are to Pages."] 
 
 Samuels v. Evening Mail, 75 N.Y. 
 
 604, 237 
 
 Sanborn v. Lefierts, 58 N. Y. 179, 570 
 San Buenaventura, etc., Co. v. 
 
 Vassault, 50 Cal. 534, 503 
 
 San Diego v. Railroad Co., 44 
 
 Cal. 106, 550 
 
 San Diego, etc., Co. v. Pacific, 
 etc., Co., 112 Cal. 53, 33 L. R. 
 A. 788, 182, 225, 255, 554 
 
 v. San Diego, 118 Cal. 556, 38 
 
 L. R. A. 460, 81 
 
 v. San Diego, etc., Co., 108 Cal. 
 
 549, 29 L. R. A. 839, 168 
 
 v. San Diego (Cal.) 50 Pac. 
 Rep. 633, 38 L. R. A. 460, 115 
 
 Sanford, etc., Co. v. Howe, 157 
 
 IT. S. 312, 182 
 
 San Francisco v. Flood, 64 Cal. 
 
 504, 320 
 
 v. Spring Valley Water- Works, 
 
 63 Cal. 329, - 308 
 
 v. Spring Valley, 48 Cal. 493, 28 
 
 Sanger v. Upton, 91 U. S. 56, 
 
 296, 321, 458 
 
 San Joaquin, etc., Co. v. West, 94 
 
 Cal. 399, 50, 385 
 
 San Pedro, etc., Co. v. Reynolds, 
 
 121 Cal. 74, 564 
 
 Santa Clara County v. Southern, 
 
 etc., R. Co., 118 U. S. 394, 30 
 
 (L. ed.) 118, 57, 80, 104, 248 
 
 Santa Clara, etc., Co. v. Hayes, 
 
 76 Cal. 387, 166 
 
 v. Meredith, 49 Md. 389, 33 
 
 Am. Rep. 264, 584 
 
 Santa Clara Female Academy v. 
 
 Sullivan, 116 111. 375, 56 Am. 
 
 Rep. 776, 32, 260 
 
 Santa Cruz R. Co. v. Schwartz, 53 
 
 Cal. 106, 377 
 
 Santa Fe, etc., Co. v. Hitchcock, 
 
 ( N. Mex.), 50 Pac. Rep. 332, 194 
 Sargent v. Franklin, etc., Co., 8 
 
 Pick. (.Mass.) 90, 19 Am. Dec. 
 
 306, 143,433,458,459 
 
 v. Insurance Co., 8 Pick. 
 
 (Mass.) 90, 489 
 
 v. Railway Co., 9 Pick. (Mass.) 
 
 202, 473 
 
 v. Webster, 13 Met. (Mass.) 
 
 497. 46 Am. Dec. 743, 
 
 502, 522, 540, 541 
 
 Savage v. Bartlett, 78 Md. 501, 401 
 i v. Hoylake R. Co., L. R. r l 
 Excli. 9, 48 
 
 Savings Bank v. I'-utrhers', etc., 
 Bank, L30 Mo. 155, 659 
 
 Savings Bank v. Caperton, 87 Ky. 
 
 306, 563 
 
 Sawyer v. Hoag, 17 Wall. (U.S.) 
 
 610, 321, 338, 340, 659 
 
 v. Manchester, etc., R. Co. (N. 
 
 H.), 13 Am. St. Rep. 550, 505 
 v. Printing Co., 77 Iowa 242, 526 
 Sayles v. Bates, 15 R. I. 342, 5 
 
 Atl. Rep. 497, 473, 494, 630, 631 
 v. Brown, 40 Fed. Rep. 8, 
 
 310, 498, 504, 616, 625, 661 
 Schaefer v. Missouri, etc., Co., 46 
 
 Mo. 248, 398 
 
 Schalucky v. Field, 124 111. 617, 660 
 Schell v. Second Nat'l Bank, 14 
 
 Minn. 43 (Gill. 34), 505 
 
 Schenck v. Andrews, 57 N. Y. 
 
 133, 349 
 
 Schenectady, etc., R. Co. v. 
 
 Thatcher, 11 N. Y. 102, 37, 531 
 Schertz v. First Nat'l Bank, 47 111. 
 
 App. 124, 638 
 
 Scbeufler v. Grand Lodge, . 45 
 
 Minn. 256, 73, 304 
 
 Schley v. Dixon, 24 Ga. 273, 575 
 
 Schlieder v. Dielman (La.), 10 So. 
 
 Rep. 934, 663 
 
 Schloss v. Montgomery T. Co., 87 
 Ala. 411, 13 Am. St. R. 51, 6 
 So. Rep. 360, 37, 74, 75, 77 
 
 Schmidt v. Hennepin, etc., Co., 
 
 35 Minn. 511, 490 
 
 Schrever v. Mills Co., 29 Ore. 1, 
 
 43 Pac. Rep. 719, 52 
 
 Schuieldtv. Smith, 131 Mo. 280, 
 
 29 L. R. A. 830, 182, 183 
 
 Schultz v. Insurance Co., 77 Fed. 
 Rep. 375 (C. C. A.), 80 Fed. 
 Rep. 337, 658 
 
 Schurtz v. Schoolcraft, etc., R. 
 
 Co., 9 Mich. 269, 381 
 
 Scott v. Armstrong, 146 U. S. 499, 182 
 v. Bank, 21 Blach. 203, 15 Fed. 
 
 Rep. 494, 458, 473 
 
 v. DePeyster, 1 Ed. Ch. 513, 564 
 v. Dickson, 29 L. J. Ex. 62, 49 
 
 v. Eagle, etc., Co., 7 Paige 
 
 (N. Y.) 198, 423 
 
 v. Fire Ins. Co., 7 Paige (N. Y.) 
 
 198, 426, 432 
 
 v. Middleton, etc., R. Co., 86 
 
 N. Y. 200, 578 
 
 v. Neely, 140 U. S. 106, 590 
 
 Scottish, etc., R. Co. v. Stewart, 
 
 3 Macq. 382, 227 
 
 Scoville v. Thayer, 105 U. S. 143, 
 
 310, 326, 336; 340, 404, 411, 607, 613 
 Scripture v. Francestown, etc., 
 Co.,50N. II. 571, 471, 476
 
 TABLE OF CASES. 
 
 lxxxi 
 
 [References are to Pages.] 
 
 Seabright v. Payne, 62 Lea 
 
 (Tenn.) 283, 135 
 
 Seacord v. Pendleton, 55 Hun 
 
 579, 598 
 
 Seaman v. Insurance Co., 18 Fed. 
 
 Rep. 250, 415 
 
 Seamans v. Christian Bros., etc., 
 
 Co., 66 Minn. 205, 277 
 
 Second Nat'l Bank v. Hall, 35 
 
 Ohio St. 158, 71, 605 
 
 Security Co. v. Hartford, 61 
 
 Conn. 89, 23 Atl. Rep. 699, 308 
 Sedalia, etc., R. Co. v. Wilkerson, 
 
 83 Mo. 235, 362 
 
 Seeds, etc., Co. v. Heyn, etc. Co., 
 
 (Neb.) 77 N. W. Rep. 660, 183 
 Seeligson & Co. v. Brown, 61 Tex. 
 
 114, 471 
 
 Seely v. Bank, 78 N. Y. 608, 424 
 
 Seller v. Potter, etc., Co., 30 N. 
 
 Y. Supp. 294, 275 
 
 Sellers v. Greer, 172 111. 549, 40 
 
 L. R. A. 589, 11 
 
 v. Iron Co., 13 Fed. Rep. 20, 550 
 v. Phoenix, etc., Co. 13 Fed. 
 
 Rep. 20, 456 
 
 Sells v. Grocery Co., 72 Miss. 
 
 590, 182 
 
 Selma, etc., R. Co. v. Anderson, 
 
 51 Miss. 829, 394 
 
 v. Tipton, 5 Ala. 787, 405 
 
 Semans v. Temple Co., 105 Mich. 
 
 400, 28 L. R. A. 430, 261 
 
 Semple v. Bank of Columbia, 5 
 
 Sawyer (U. S.) 88, 279 
 
 Seneca County Bank v. Lamb, 26 
 
 Barb. 595, 142 
 
 Senour, etc., Co. v. Clarke, 96 
 
 Wis. 469, 577 
 
 Sewall v. Boston, etc., Co., 4 Al- 
 len (Mass.) 277, 313, 482 
 Seward v. Rising Sun, 79 Ind. 351, 320 
 Seymour v. Guaranty, etc., Soc, 
 
 54 Minn. 147, 220, 222 
 
 v. Spring Forest, etc., Assn., 
 
 144 N. Y. 333, 28 L. R. A. 859, 
 
 221, 224, 354 
 v. Society, 34 Minn. 147, 207 
 
 v. Sturgess, 26 N. Y. 134, 348, 403 
 Shackelford v. Mississippi, etc., R. 
 
 Co., 52 Miss. 159, 197 
 
 Shaffer v. Hahn, 111 N. C. 1, 579 
 
 Shakman v. U. S., etc., Co., 92 
 
 AVis. 366, 32 L. R. A. 383, 676 
 Shakopee, etc., Works v. Cole, 
 
 37 Minn. 91, 33 
 
 Shaler, etc., Co. v. Bliss, 27 N. Y. 
 
 297, 570 
 
 vi — Private Corp. 
 
 Sharpe v. Dawes, 46 L. J. (Q. B.) 
 
 104, 523 
 
 Shaw v. Boylan, 16 Ind. 384, 592 
 
 v. Davis, 78 Md. 308, 23 L. R. 
 
 A. 294, 454, 455 
 
 v. Quincy Min. Co., 145 U. S. 
 
 444, 55, 250, 281 
 
 v. Spencer, 100 Mass. 382, 
 
 313, 479, 483, 486 
 Shawhan v. Zinn, 79 Ky. 300, 449, 457 
 Sheafe v. Larimer, 79 Fed. Rep. 
 
 921, 611, 638 
 
 Sheffield, etc., Co. v. Woodcock, 
 
 7 M. & W. 574, 296 
 
 Shellengton v. Howland, 53 N. Y. 
 
 371, 469, 637 
 
 Shelmerdine v. Welsh, 20 Phila. 
 
 Rep. 199, 517 
 
 Shepley v. Railroad Co., 55 Maine 
 
 395, 180 
 
 Sheren v. Mendenhall, 23 Minn. 
 
 92, 599 
 
 Sheridan, etc., Co. v. Chatham, 
 
 etc., Bank, 127 N. Y. 517, 543 
 Sherma v. Fitch, 98 Mass. 59, 161, 538 
 Sherman, etc., Co. v. Morris, 43 
 
 Kan. 282, 221, 557 
 
 Sherwood v. Alvis, 83 Ala. 115, 3 
 
 Am. St. Rep. 695, 221, 279 
 
 v. American Bible Soc, 1 Keyes 
 
 (N. Y.) 561, 156 
 
 v. American, etc., Soc, 4 Abb. 
 
 (N. Y. Ct. App. Cas.) 231, 178 
 Sheufner v. Grand Lodge, 45 
 
 Minn. 256, 73 
 
 Shewalter v. Pirner, 55 Mo. 218, 
 
 157, 220 
 Shickle, etc., Co. v. Wiley, etc., 
 
 Co., 61 Mich. 226, 2>5, 287 
 
 Shickle v. Watts, 94 Mo. 410, 658 
 
 Shields v. Clifton Hill, etc, Co., 
 
 94 Tenn. 123, 26 L. R. A. 509, 48 
 
 v. Land Co., 94 Tenn. ,123, 74 
 
 v. Ohio, 95 U. S. 319, 91, 92, 194 
 
 v. State, 26 Ohio St. 86, 30, 31 
 
 Shipley v. Mechanics' Bank, 10 
 
 Johns. 484, 496 
 
 Shober v. Association, 68 Pa. St. 
 
 429, 383 
 
 Shober's Admrs. v. Lancaster Co., 
 
 etc., Assn., 68 Pa. St. 429, 363 
 Shockley v. Fisher, 75 Mo. 498, 181 
 Shoe Co. v. Hoit, 56 N. H. 548, 383 
 Shoemaker v. Mechanics' Nat'l 
 
 Bank, 2 Abb. (U. S.) 416, 199 
 v. Washburn, etc, Co., 97 Wis. 
 
 585, 73 N. W. Rep. 333, 191 
 
 Short v. Medberry, 29 Hun 39, 635
 
 lxxxii 
 
 TABLE OF CASES. 
 
 [References are to Pages."] 
 
 Shrewsbury, etc., R. Co. v. Stour 
 Valley R. Co., 2 DeGex, M. 
 & G. 866, 31 
 
 Shropshire, etc., R. Co. v. Queen, 
 
 L. R. 7 H. L. 496, 376 
 
 ShropshireUnions R.Co.v. Queen, 
 
 L. R. 7 E. & I. Apps. 496, 476 
 Shuev v. United States, 92 U. S. 
 
 73, 384 
 
 Sibley v. Carteret Club, 40 N. J. 
 
 L. 295, 303, 306 
 
 v. Quinsigamond Nat'l Bank, 
 133 Mass. 515, 471 
 
 Sickles v. Manhattan, etc., Co., 
 
 66 How. (N. Y.) 305, 81 
 
 Signa, etc., Co. v. Greene, 88 Fed. 
 
 Rep. 207, 31 C. C. A. 477, 458 
 
 Silk, etc., Co. v. Campbell, 27 N. 
 
 J. L. 539, 447 
 
 Silkman v. Yonkers Water 
 Conirs., 152 N. Y. 327, 37 L. 
 R. A. 827, 81 
 
 Sills v. Brown, 9 Carr. & P. 604, 150 
 Silver Hook Road v. Greene, 12 
 
 R. I. 164, 404 
 
 Silverman v. Lessor, 88 Maine 599, 249 
 Simeral v. Dubuque, etc., Co., 18 
 
 Iowa 319, 144 
 
 Simm v. Anglo-Amer. Tel. Co., 
 
 5 L. R. Q. B. Div. 188, 482 
 
 Simmons, etc., Co. v. Doran, 142 
 U. S. 417, 583 
 
 v. Norfolk, etc., Co., 113 N. C. 
 147, 22 L. R. A. 677, 666 
 
 Simons v. Min. Co., 61 Pa. St. 
 
 202, 45 
 
 v. Vulcan Oil Co., 61 Pa. St. 
 
 202, 45, 47 
 
 Simnson v. Moore, 30 Barb. 637, 445 
 
 Sims v. Thompkins, 84 Ala. 613, 543 
 
 Singer v. Fleming, 39 Neb. 679, 
 
 23 L. R. A. 210, 245 
 
 v. Given, 61 Iowa 93, 658 
 
 v. Talcot, etc., Co., 176 111. 48, 671 
 Sinking Fund Cases, 99 U. S. 700 
 
 88, 90 
 Si-son v. Matthews, 20 Ga. 848, 608 
 Bkelly v. Hank, 9 Ohio 606, 110 
 
 v. Private, etc., Soc, 13 Daly 
 (N. Y.)2, 145 
 
 Skillman v. Lookman, 23 Cal. 198, 20 
 Skinner v. Wallace, etc., Co. 140 
 
 N. Y. 217, 544 
 
 Bkowhegan Bank v. Cutler, 49 
 
 Maine 315, 52 Maine 509, 471 
 
 Skrainka v. Allen, 7 Mo. App. 
 
 134, 7C Mo, 384, 344 
 
 Slattery v. Rchwannecke, 118 N. 
 Y. 543, 583 
 
 Slausonv. Schwabacher, etc., Co., 
 
 4 Wash. 783, 278 
 
 Slee v. Bloom, 5 Johns. Ch. (N. 
 Y.) 366, 19 Johns. (N. Y.) 
 456, 672 
 
 v. Bloom, 20 Johns. (N. Y.) 
 669, 637 
 
 Sleeper v. Franklyn Lyceum, 7 R. 
 
 I. 523, 304 
 
 v. Goodwin, 67 Wis. 577, 31 N. 
 W. Rep. 335, 617, 635, 637 
 
 Slemmons v. Thompson, 23 Ore. 
 
 215, 31 Pac. Rep. 514, 494, 496 
 Slipher v. Earhart, 83 Ind. 173, 377 
 Slocum v. Prov., etc., Co., 10 R. 
 
 I. 112, 73, 77 
 
 Small v. Herkimer, etc., Co., 2 N. 
 
 Y. 330, 409 
 
 Smith v. America, etc., Co., 7 
 
 Lansing 317, 471 
 
 v. Association, 78 Cal. 289, 550 
 
 v. Board, etc., 38 Conn. 208, 582 
 v. Cresent, etc., Co.. 30 La. 
 
 Ann. 1378, 471 
 
 v. Cornelius, 41 W. Va. 59, 30 
 
 L. R. A. 747, 162 
 
 v. Co-op., etc., Assn., 12 Daly 
 
 304, 447 
 
 v. Dorn, 96 Cal. 73, 449 
 
 v. Ferres, etc., R. Co., 51 Pac 
 
 Rep. 710, 171 
 
 v. Huckabee, 53 Ala. 191, 651 
 
 v. Hurd, 12 Mete. (Mass.) 371, 
 
 10, 449, 546 
 
 v. Insurance Co., 14 Allen 336, 257 
 v. Lake Shore, etc., R. Co., 114 
 Mich. 460, 72 N. W. Rep. 328, 
 
 89,91 
 v. Law, 21 N. Y. 296, 503, 504 
 
 v. Los Angeles, etc., Assn., 78 
 Cal. 289, 12 Am. St. Rep. 53, 
 
 540, 548 
 
 v. Los Angeles Co., 98 Cal. 210, 197 
 v. McGroarty, 136 U. 8. 237, 182 
 v. Mayfield, 163 111.447, 64 
 
 v. Nashville, etc., R., 91 Tenn. 
 
 221, 18 S. W. Rep. 546, 468, 486 
 v. Nelson, 18 Vt. 511, 304 
 
 v. Omans, 17 Wis. 395, 634 
 
 v. Pedigo, 145 Ind. 361, 32 L. R. 
 
 A. 838, 18 
 
 v. Pilot, etc., Co., 47 Mo. App. 
 
 409 , 244 
 
 v. Plank Rd. Co., 30 Ala. 650, 40 
 v. Poor, 40 Maine 415, 429, 575 
 
 v. Prior, 58 Minn. 247, 59 N. W. 
 
 Rep. 1016, 351, 354 
 
 v. Putnam, 61 N. H. 632, 183
 
 TABLE OF CASES. 
 
 lxxxiii 
 
 [Beferences are to Pages.] 
 
 Smith v. Railroad Co., 64 Fed. 
 
 Rep. 272, 521 
 
 v. San Francisco, etc., R. Co., 
 115 Cal. 584, 35 L. R. A. 309, 
 
 507, 514 
 v. Silver, etc., Co., 64 Md. 85, 
 
 54 Am. Rep. 760, 23 
 
 v. Silver Valley, etc., Co., 64 
 
 Md. 85, 252 
 
 v. Skeary, 47 Conn. 47, 182 
 
 v. Smith, 62 111. 496, 146, 147, 579 
 v. Whitfield & Sanders, 38 Fla. 
 
 211, 241 
 
 v. White (Tex.), 25 S. W. Rep. 
 809, 199 
 
 Smyth v. Ames, 169 U. S. 466, 16, 81 
 Smythe v. Ames, 169 U. S. 522, 57 
 Snider's Sons Co. v. Troy, 91 Ala. 
 224, 24 Am. St. Rep. 887, 11 
 L. R. A. 515, 66, 74, 597, 598 
 
 Snyder v. Studebaker, 19 Ind. 462, 
 
 69, 76 
 Snyder Bros. v. Bailey (111.), 46 
 
 N. E. Rep. 452, • 579 
 
 Societe Foncierv. Millikin, 135 TJ. 
 
 S. 304, 284 
 
 Society Perun v. Cleveland, 43 
 Ohio St. 481, 3 N. E. Rep. 
 357, 66, 67, 71 
 
 Society v. Commonwealth, 52 Pa. 
 
 St. 125, 91 Am. Dec. 139, 38, 298, 306 
 Solomon v. First Nal'l Bank, 72 
 
 Miss. 854, 434 
 
 v. Penoyar, 89 Mich. 11, 559 
 
 South v. Paulk, 24 Ga. 356, 62 
 
 South Bend, etc., Co. v. Cribb Co. 
 
 (Wis.), 72 N. W. Rep. 749, 183 
 South, etc., Co. v. Fire Assn. of 
 Philadelphia, 67 Hun (N. Y.) 
 41, 288 
 
 South Nashville, etc., Co. v. Mor- 
 row, 87 Tenn. 406, 102 
 South Yorkshire R. Co. v. Great 
 
 Northern R. Co. 9 Ex. 55, 227 
 Southern, etc., Assn. v. Normon, 
 
 98 Ky. 294, 31 L. R. A. 41, 256 
 Southern, etc., Co. v. Cole, 4 Fla. 
 
 359, 321 
 
 Southern, etc., R. Co. v. Hixon, 
 
 5 Ind. 165, 150, 398 
 
 v. Orton, 6 Sawy. (C. C.) 157, 157 
 
 v. Stevens, 87 Pa. St. 190, 529 
 
 v. Denton, 146 U. S. 202, 270 
 
 Southern Pac. R. Co. v. Orton, 32 
 
 Fed. Rep. 457, 1, 2, 85 
 
 Southern R. Co. v. Bourknight, 70 ' 
 
 Fed. Rep. 442, 30 L. R. A. 823, 196 
 Southwestern, etc., R. Co. v. Mar- 
 tin, 57 Ark. 355, 429 
 
 Spangler v. Railway Co., 21 111. 
 
 275, 403 
 
 Spanish Ambassador v. Buntish, 
 
 Bulst. pt. 2, 322, 280 
 
 Sparks v. Dispatch Transfer Co., 
 
 104 Mo. 531, 24 Am. St. Rep. 
 
 351, 579 
 
 v. Masonic, etc., Assn., 100 Iowa 
 
 458, 282 
 
 v. Woodstock, 87 Ala. 294, 38 
 
 Spartanburg v. Spartanburg, etc., 
 
 R. Co., 57 S. C. 129, 666 
 
 Spaulding v. Paine, 81 Ky. 416, 309 
 Spear v. Bach, 82 Wis. 192, 321 
 
 Spering's Appeal, 71 Pa. St. 11, 10 
 
 Am. Rep. 684, 544, 561, 562, 566 
 Sperry's App., 116 Pa. St. 391, 303 
 Splawn v. Chew, 60 Tex. 532, 150 
 
 Spooner v. Phillips, 62 Conn. 62, 
 
 16 L. R. A. 461, 
 
 415, 438, 439, 441, 442 
 Sprague v. Coche Co. Mfg. Co., 
 
 10 Blatchf. 174, 477 
 
 v. Cutler, etc., Co., 106 Ind. 
 
 242, 280 
 
 v. Nat'l Bank of America, 177 
 
 111. 149, 632 
 
 v. Nat'l Bank of America, 172 
 
 111. 149, 42 L. R. A. 606, 
 
 330, 335, 339 
 Spratt v. Livingston, 32 Fed. Rep. 
 
 507, 22 L. R. A. 453, 671 
 
 Spreckles v. Nevada Bank, 113 
 
 Cal. 272, 33 L. R. A. 459, 459 
 
 Spring Co. v. Knowlton, 103 U. S. 
 
 49, 224, 229, 334 
 
 Spring Valley Water-Works v. 
 
 Schottler, 110 U. S. 347, 16, 90 
 v. Schottler, 62 Cal. 73, 113 
 
 Sproule v. Bouch, L. R. 29 Ch. 
 
 Div. 635, 438, 439 
 
 Spurgeon v. Santa Ana, etc., Co., 
 
 120 Cal. 71, 39 L. R. A. 701, 461 
 Spurlock v. Railroad Co., 61 Mo. 
 
 319, 465 
 
 St. Albans v. National, etc., Co., 
 
 57 Vt. 68, 102 
 
 St. Clair v. Cox, 106 IT. S. 350, 
 
 255, 271, 283, 284, 285, 288 
 St. Joe, etc., Co. v. Bank, 10 Colo. 
 
 App. 339, 50 Pac. Rep. 1055, 549 
 St. John v. Erie R. Co., 10 Blatch. 
 
 (U. S.) 271, 425 
 
 v. Railway Co., 22 Wall. (U. S.) 
 
 136, 318 
 
 St. John's, etc., Co. v. Munger, 
 
 106 Mich. 90, 29 L. R. A. 63, 
 
 64 N. W. Rep. 3, 191 
 
 St. Louis v. Shields, 62 Mo. 247, 77
 
 lxxxiv 
 
 TABLE OF CASES. 
 
 [References are to Pages."} 
 
 St. Louis, etc., Co. v. Goodfellow, 
 
 9 Mo. 149, 490 
 
 v.St. Louis, 84 Mo. 202, 70 
 
 St. Louis, etc., R. Co. v. Chenault, 
 
 86 Kan. 51, 550 
 
 v. Fire Assn., 55 Ark. 163, 281 
 
 v. Gill, 156 U. S. 649, 196 
 
 v. James, 161 U. S. 545, 55, 61, 281 
 v. Newsom, 56 Fed. Rep. 951, 6 
 
 C. C. A. 172, 56 
 
 v. Newcom, 2 C. C. A. 174, 60 
 
 v. N., M. R. Co., 2 Mo. App. 69, 26 
 v. Philadelphia, etc., Assn., 60 
 
 Ark. 325, 28 L. R. A. 83, 281, 272 
 v. Paul, 64 Ark. 83, 62 Am. St. 
 
 Rep. 168, 126 
 
 v. Terre Haute, etc., R. Co., 145 
 U. S. 393, 223, 224 
 
 St. Louis v. Western, etc., Co., 
 
 148 U. S. 96, 109 
 
 St. Mary's, etc., Assn. v. Lynch 
 
 (N.'H.), 9 Atl. Rep. 98, 503 
 
 St. Paul, etc., Ins. Co. v. Allis, 24 
 
 Minn. 75, 28, 29 
 
 St. Paul Div. v. Brown, 11 Minn. 
 
 356, Gill. 254, 23 
 
 St. Paul, etc., R. Co. v. Parcher, 
 
 14 Minn. 297, 123 
 
 v. Robbins, 23 Minn. 439, 376 
 
 St. Paul v. St. Paul, etc., R. Co., 
 
 23 Minn. 469, 110 
 
 Stackpole v. Seymour, 127 Mass. 
 
 104, 496 
 
 Stacy v. Little Rock, etc., R. Co., 
 
 5 Dill. (C. C.) 348, 341 
 
 Stafford Nat'l Bank v. Palmer, 47 
 
 Conn. 443, 596 
 
 Standard Oil Co. v. Scofield, 16 
 
 Abb. (N. C.) 372, 173 
 
 Standard, etc., Co. v. Derm, etc., 
 Co., 87 Wis. 127, 58 N. W. 
 Rep. 238, «50 
 
 Stapleton v.Odell,47 N.Y.Supp.13, 563 
 Starkweather v. American Bible 
 Soc, 72 111. 50, 22 Am. Rep. 
 133, 153, 155, 156 
 
 Starrett v. Rockland, etc., Co., 65 
 
 Maine 371, 362, 368 
 
 State v. Ackerman (Ohio), - 24 L. 
 
 B. \. 296, 266 
 
 v. Adams, 44 Mo. 570, 304 
 
 v. American, etc., Assn., 64 
 
 Minn. 349, 666 
 
 v. Anderson, 'M Wis. 114, 72 N. 
 
 W. Rep. 386, 120 
 
 v. Anderson, 90 Wis. 550, 120 
 
 v. Alchisr.n, etc.. R. Co., 24 
 Neb. 143, 8 Am. St. Rep. 164 
 
 31, 84. 667 
 
 State v. Atchison, etc., R. Co. 
 
 38 Kan. 744, 5 Am. St. Rep. 
 
 800, 667 
 
 v. Auditor-Gen., 46 Mich. 226 103 
 v. Bailey, 16 Ind. 46, 95 
 
 v. Baltimore, etc., R. Co., 120, 
 
 Ind. 298, 238 
 
 v. Baltimore, etc., R. Co., 6 
 
 Gill. (Md. ) 363, 431 
 
 v. Baltimore, etc., R. Co., 77 
 
 Md. 489, 196 
 
 v. Baltimore, etc., R. Co., 15 
 
 W. Va. 362, 238 
 
 v. Bank, etc., 6 Gill & J. 206, 181 
 v. Bank of New England, 7© 
 ;/< .Minn. 398, 68 Am. St. Rep. 
 "538, 630 
 
 v. Barron, 57 N. H. 498, 82 
 
 v. Beck, 81 Ind. 500, 33, 34 
 
 v. Bergenthal, 72 Wis. 314, 39 
 
 N. W. Rep. 566, 416, 419 
 
 v. Bienville, etc., Works, 28 La. 
 
 Ann. 204, 415, 416 
 
 v. Bonnell, 35 Ohio St. 10, 502 
 
 v. Brownton, etc., R. Co., 120 
 
 Ind. 337, 22 N. E. Rep. 316, 82 
 v. Bryce, 7 Ohio (Pt. 2) 82, 588 
 
 v. Bulkelev, 61 Conn. 287, 536 
 
 v. Bull, 16 Conn. 179, 23 
 
 v. Butler, 86 Tenn. 614, 672 
 
 v. Butler City, etc., Co., 18 
 
 Mont. 199, 32 L. R. A. 697, 81 
 
 v. Cannon River, etc., Assn., 
 
 67 Minn. 14, 669 
 
 v. Carey, 2 N. Dak. 36, 49 N. 
 
 W. Rep. 164, 267, 271 
 
 v. Carr, 111 Ind. 335, 16 
 
 v. Carteret Club, 40 N. J. L. 
 
 295, 150 
 
 v. Central, etc., Assn., 29 Ohio 
 
 St. 399, 33 
 
 v. Chamber, etc., 20 Wis. 68, 
 
 299, 302 
 v. Chamber of Commerce, 47 
 
 Wis. 670, 302, 306 
 
 v. Chamber of Commerce 
 
 (Minn.), 79 N. W. Rep. 1026, 459 
 v. Cheraw, etc., R. Co., 16 S. C. 
 
 524, 496 
 
 v. Chicago, etc., R. Co., 77 Iowa 
 
 442, 238 
 
 v. Chute, 34 Minn. 135,505, 523, 535 
 V.Cincinnati, etc., R. Co. ,47 Ohio 
 
 St. 130, 23 N. E. Rep. 928, 81, 165 
 v. Cincinnati, etc., Co., 24 Ohio 
 
 St. 611, 238 
 
 v. Citizens', etc., R. Co., 47 Ind. 
 
 407, 17 Am. Rep. 702, 221 
 
 v. Com. Bank, 28 Neb. 677, 321
 
 TABLE OF CASES. 
 
 lxxxv 
 
 \_Beferences are to Pages."] 
 
 State v. Commissioners, 21 Fla. 1, 471 
 v. Com'rs, 23 N. J. L. 510, 57 
 
 Am. Dec. 409, 151 
 
 v. Cookins, 123 Mo. 56, 33 
 
 v. Critchet, 37 Minn. 13, 33, 150 
 v. Cronan, 23 Nev. 437, 49 Pac. 
 
 Rep. 41, 504 
 
 v. Curtis, 35 Conn. 374, 674 
 
 v. Curtis, 9 Nev. 335, 141 
 
 v. Dawson, 16 Ind. 40. 23 
 
 v. District Co art, 26 Minn. 233, 
 
 285, 286 
 v. District Court (Mont.) 56 
 
 Pac. Rep. 219, 672 
 
 v. Doyle, 40 Wis. 175, 22 Am. 
 
 Rep. 692, 239, 271 
 
 v. East Fifth St. R. Co., 140 Mo. 
 
 539, 62 Am. St. Rep. 743, 
 
 118, 119, 120 
 v. Einstein, 46 N. J. L. 479, 416 
 
 v. Elizabeth (N. J.) 39 Atl. Rep. 
 
 683, 157 
 
 v. Felton(N.J.)19Atl.Rep.l23, 581 
 v. Ferris, 42 Conn. 560, 291, 505 
 
 v. Fidelity, etc., Co., 77 Iowa 
 
 648, 268 
 
 v. Fidelity, etc., Co., 49 Ohio St. 
 
 440, 16 L. R. A. 611, 38, 257 
 
 v. Fidelity, etc., Co., 39 Minn. 
 
 538, 41 N. W. Rep. 108, 
 
 268, 269, 271, 290 
 v. Field, 49 Mo. 270, 238 
 
 v. First Nat'l Bank, 89 Ind. 302, 
 
 471, 496 
 v. Fogarty, 105 Iowa 32, 671 
 
 v. Foulkes, 94 Ind. 493, 33, 34 
 
 v. Gaslight Co., 5 Rob. (La.) 
 
 539, 663 
 v. Georgia Med. Soc, 33 Ga. 608, 
 
 95 Am. Dec. 408, 80, 306 
 
 v. Great Works, etc., R. Co., 
 
 120 Ind. 298, 238 
 
 v. Greer, 78 Mo. 188, 88, 521 
 
 v. Goodwill, 25 Am. St. Rep. 
 
 870, 57, 99 
 
 v. Gordon, 87 Ind. 171, 33 
 
 v. Habib, 18 R. I. 558, 30 Atl. 
 
 Rep. 462, 42, 44 
 
 v. Hancock, 35 N. J. L. 537, 134 
 v. Hannibal, etc., Road Co., 138 
 
 Mo. 332, 36 L. R. A. 457, 664 
 
 v. Hannibal, etc., R. Co., 138 
 
 Mo. 332, 39 S. W. Rep. 910, 
 
 36 L. R. A. 457 2, 139 
 
 v. How, 1 Mich. 512, 77 
 
 v. Hunton, 28 Vt. 594, 506, 541 
 
 v. Insurance Co. (1892), 49 Ohio 
 
 St. 440, 16 L. R. A. 611, 31 N. 
 
 E. Rep. 658, 268, 269, 290 
 
 State v. Insurance Co., 115 Ind. 
 
 257, 268 
 
 v. Insurance Co., 47 Ohio St. 
 
 167, 290 
 
 v. International Inv. Co., 88 
 
 Wis. 512, 33 
 
 v. Janesville, etc., Co., 92 Wis. 
 
 496, 32 L. R. A. 391, 342, 666, 669 
 v. Leete, 16 Nev. 242, 541 
 
 v. Lincoln, etc., Co-. (Mo.), 46 
 
 S. W. Rep. 593, 130 
 
 v. McGrath, 92 Mo. 355, 41 
 
 v. Mclver, 2 S. C. (N. S.) 25, 496 
 v. Madison, 53 Maine 546, 239 
 
 v. Madison, etc., R. Co., 72 Wis. 
 
 612, 118 
 
 v. Maine, etc., Co., 66 Maine 488, 112 
 v. Manufactures', etc., Assn., 50 
 
 Ohio St. 145, 24 L. R. A. 252, 541 
 v. Merchant, 37 Ohio St. 251, 534 
 v. Miller, 30 N. J. L. 368, 86 Am. 
 
 Dec. 188, 521 
 
 v. Minnesota, etc., Co., 40 Minn. 
 
 213, 33, 83, 113, 242, 619, 620, 666 
 v. Minn., etc., Co., 40 Minn. 227, 189 
 v. Mississippi, 101 U. S. 814, 86 
 
 v. Mo. Pac. R. Co., 29 Neb. 550, 
 
 45 N. W. Rep. 785, 81 
 
 v. Morris, etc., R. Co., 23 N. J. 
 
 360, 235 
 
 v. Morristown, etc., Assn., 23 
 
 N. J. L. 195, 308 
 
 v. Murphy, 17 R. I. 698, 24 Atl. 
 
 Rep. 473, 42 
 
 v. National School of Osteo- 
 pathy, 76 Mo. App. 339, 668 
 v. Nebraska, etc., Co., 17 Neb. 
 
 126, 52 Am. Rep. 404, 82 
 
 v. Nebraska, etc., Co., 29 Neb. 
 
 700, 167, 202 
 
 v. Neff (Ohio), 28 L. R. A. 409, 19 
 • v. Noyes, 47 Maine 189, 90 
 
 v. Oberlin, etc., Assn., 35 Ohio 
 
 St. 258, 83, 189, 666 
 
 v. Oftedal (Minn.), 75 N. Y. 
 
 Rep. 692, 35 
 
 v. Ohio, etc., R. Co., 6 Ohio C. 
 
 C. 415, 509 
 
 v. Olesen, 48 Minn. 150, 75 
 
 v. Oberton, 24 N. J. L. 435, 148 
 
 v. Park & Nelson L. Co., 58 
 
 Minn. 330, 667 
 
 v. Parker, 26 Vt. 357, 268 
 
 v. Passaic, etc., Soc, 54 N. J. 
 
 L. 260, 24 Am. Rep. 748, 238, 240 
 v. Payne, 129, Mo. 468, 101, 131 
 v. Pennsylvania, etc., Co., 23 
 
 Ohio St. 121, 82, 83
 
 lxxxvi 
 
 TABLE OF CASES. 
 
 [Preferences are to Pages.} 
 
 State v. Phipps,50 Kan. 609, 18 L. 
 
 R. A. 657, 256 
 
 v. Phoenix, etc., Co., 92 Tenn. 
 
 420, 254, 267 
 
 v. Pettineli, 10 Nev. 141, 499 
 
 v. Pierce, 21 Kan. 241, 29 Pac. 
 
 Rep. 565, 521 
 
 v. Pullman, etc., Co., 175 111. 
 
 125, 134 
 
 v. Railway Co., 15 W. Va. 362, 238 
 v. Real Estate Bank, 5 Ark. 
 
 595, 666 
 
 v. Rice, 65 Ala., 83, 180 
 
 v. Rombauer, 46 Mo. 155, 496 
 
 v. Scougal, 3 S. Dak. 55, 15 L. 
 
 R. A. 477, 51 N. W. Rep. 858, 113 
 v. Security Bank, 2 S. Dak. 538, 238 
 v. Shelbyville, etc., Co., 41 Ind. 
 
 151, 36 
 
 v. Sherman, 22 Ohio St. 411, 
 
 122 195 
 v. Sibley, 25 Minn. 387, 23, 95^ 291 
 v. Smith, 48 Vt. 266, 
 
 189, 192, 367, 382, 539 
 v. Smith, 15 Ore. 98, 14 Pac. 
 
 Rep. 814, 15 Pac. Rep. 137, 
 
 507, 541, 542 
 v. Spartanburg, etc., R. Co. 
 
 (S. C), 28 S. E. Rep. 145, 
 
 84, 115, 667 
 v. Swift, 7 Houst. (Del.) 137, 257 
 v. Standard Oil Co., 49 Ohio St. 
 
 137, 30 N. E. Rep. 279, 2, 13, 165 
 v. Steele, 37 Minn. 428, 26 
 
 v. Stockley, 45 Ohio St. 304, 521 
 v. St. Louis, etc., R. Co., 29 Mo. 
 
 App. 301, 416 
 
 v. Sullivan, 45 Minn. 309, 11 L. 
 
 R. A. 272, 536 
 
 v. Taylor, 55 Ohio St. 61, 44 N. 
 
 E. Rep. 513, 94 
 
 v. The Morris, etc., R. Co., 23 
 
 N. J. L. 360, 237, 238, 239 
 
 v. Thompson, 23 Kan. 338, 33 
 
 Am. Rep. 165, 44 
 
 v. Travelers', etc., Co., 70 Conn. 
 
 590, 66 Am. St. Rep. 138, 365 
 
 v. Truby, 37 Minn. 97, 150 
 
 v. Trustees, 5 Ind. 77, 301 
 
 v. Tu« lor, 5 Day 329, 509 
 
 v. Turnpike, 15 N. H. 162, 85 
 
 v. Vanderbilt, 37 Ohio St. 590, 193 
 v. Vermont, etc., R. Co., 27 Vt. 
 
 103, 238 
 
 v. Vickere, 14 Am. St. Rep. 675, 588 
 v. Waram, 6 Hill (N. Y.) 33, '12 
 v. Webb, 110 Ala. 214, 356 
 
 v. Webb, 97 Ala. Ill, 342, 674 
 
 State v. Western, etc., R. Co., 89 
 
 N. C. 584. 238 
 
 v. Western, etc., R. Co., 47 Ohio 
 
 St. 167, 8 L. R. A. 129, 257 
 
 v. Weston, 4 Neb. 216, 622 
 
 v. Whitvvorth, 117 U. S. 129, 101 
 
 v. Williams, 75 N. C, 134, 150, 305 
 
 v. Wood, 84 Mo. 378, 33 
 
 v. Wright, 10 Nev. 467, 535 
 
 State Bank v. Andrews, 18 N. Y. 
 
 167, 569 
 
 v. Fox, 3 Blatch. C. C. 431, 189 
 
 State Bank, etc., Co. v. Pierce, 92 
 
 Iowa 668, 416 
 
 State Board v. Citizens', etc., R. 
 
 Co., 417 Ind. 407, 222 
 
 State Freight Tax Cases, 15 Wall. 
 
 (U. S.)232, 104, 109 
 
 State of Minnesota v. T. M. Co., 
 
 40 Minn. 213, 190 
 
 State Tax Cases, 15 Wall. (U. S.) 
 
 284, 104 
 
 State Tax Cases, 92 U. S. 575, 103 
 
 State, etc., Assn. v. Nixon-Jones, 
 
 etc., Co., 25 Mo. App. 642, 146 
 Steam, etc., Co. v. Hubbard, 101 
 
 U. S. 188, 247, 626 
 
 v. Weed, 17 Barb. 382, 199 
 
 Steam Nav. Co. v. Weed, 17 Barb. 
 
 378, 222 
 
 Steamboat Co. v. Brockett, 121 U. 
 
 S. 637, 235 
 
 S. S. Co. v.Tugman, 106 U.S. 118, 55 
 Stebbins v. Insurance Co., 3 Paige 
 
 350, 294 
 
 v. Merritt, 10 Cush. (Mass.) 27, 
 
 499, 503, 504, 523 
 v. Phoenix, etc., Co., 3 Paige 
 
 (N. Y.) 350, 471 
 
 v. Scott, 172 Mass. 356, 52 N. E. 
 Rep. 535, 610, 642 
 
 Steel Works v. Bresnahan, 60 
 
 Mich. 332, 538 
 
 Stein v. Howard, 65 Cal. 616, 340, 348 
 Steinhauerv.Colmar (Colo. App.), 
 
 55 Pac. Rep. 291, 676 
 
 Steinmetz v. Versailles, etc., R. 
 
 Co., 57 Ind. 457, 404 
 
 Stephens v. Fox, 83 N. Y. 313, 638 
 Stetson v. Northern, etc., Co., 104 
 
 Iowa 393, 541, 551 
 
 Stettauer v. New York, etc., Co., 
 
 42 N. J. Eq. 46, 419 
 
 Stevens v. Carp River, etc., Co., 
 
 57 Mich. 427, 581 
 
 v. Corbitt, 33 Mich. 458, 377 
 
 v. Davidson, 18 Gratt. (Va.)819, 141 
 
 v. Rutland, etc., R. Co., 29 Vt. 
 
 548, 528
 
 TABLE OF CASES. 
 
 lxxxvii 
 
 [References are to Pages."] 
 
 Stevens v. R. & B. R. Co., 29 Vt. 
 
 545, 95 
 
 Stewart v. Erie, etc., Co., 17 
 
 Minn. 372, Gil. 348, 164, 453 
 
 v. Firemen's, etc., Co., 53 Md. 
 
 564, 485 
 
 v. Lay, 45 Iowa 604, 625 
 
 v. Lehigh Valley R. Co., 38 N. 
 
 J. L. 505, 552 
 
 v. Mahoney, etc., Co., 54 Cal. 
 
 149, 507 
 
 v. Northampton, etc., Co., 38 N. 
 
 J. L. 436, 277 
 
 v. Railroad Co., 41 Fed. Rep. 
 
 736, 587 
 
 v. Transportation Co., 17 Minn. 
 
 372 (Gil. 348), 223 
 
 Stewart, etc., Co. v. Rau, 92 Ga. 
 
 531, 73 
 
 Stickle v. Liberty, etc., Co. (N. 
 
 J.), 32 Atl. Rep. 708, 132 
 
 Stillwell, etc., Co. v. Niles, etc., 
 Co. (Mich.), 72 N. W. Rep. 
 1107, 580 
 
 Stilphen v. Ware, 45 Cal. 110, 412 
 Stockholders', etc., v. Louisville, 
 etc., R. Co., 12 Bush (Ky.) 
 62, 503 
 
 Stockton v. American, etc., Co., 
 
 N. J. Ch., 36 Atl. Rep. 971, 127 
 Stockton Bank v. Staples, 98 Cal. 
 
 189, 151, 178 
 
 Stoddard v. Foundry Co., 34 
 
 Conn. 542, 430, 434 
 
 v. Linn, 159 N. Y. 265, 657 
 
 Stofflet v. Strome, 101 Mich. 197, 
 
 59 N. W. Rep. 411, 73 
 
 Stohr v. San Francisco, 82 Cal. 
 
 557 145 
 
 Stokes v. Stickney, 96 N. Y. 323, 625 
 Stone v. City and County Bank, 3 
 
 C. P. Div. 282, 396 
 
 v. Kellogg, 62 111. App. 444, 419 
 
 v. Mississippi, 101 U. S. 814, 99 
 
 v. Wilson, 8 Bax. (Tenn.) 108, 415 
 
 Stoney v. American, etc., Co., 11 
 
 Paige (N. Y.) 635, 177 
 
 Stoops v. Greensburg, etc., Co., 10 
 
 Ind. 47, 373 
 
 Story v. Furman, 25 N. Y. 214, 657 
 Stout v. Zulick, 48 N. J. L. 599, 7 
 Atl. Rep. 362, 64, 66 
 
 v. Railroad Co., 8 Fed. Rep. 
 794, 56 
 
 Stoutimore v. Clark, 70 Mo. 471, 73 
 Stow v. Wyse, 7 Conn. 214, 18 
 
 Am. Dec. 99, 502 
 
 Stowe v. Flagg, 72 111. 397, 33, 34, 35 
 
 Strait v. National, etc., Co., 18 
 
 N. Y. Sup. 224, 167 
 
 Straus v. Insurance Co., 5 Ohio St. 
 
 60, 130 
 
 Streeten v. Robinson, 102 Cal. 
 
 542, 579 
 
 Stribfling v. Bank, 5 Rand. (Va.) 
 
 132, 62 
 
 Stringer's Case, L. R. 4 Ch. App. 
 
 475, 432 
 
 Strong v. McCagg, 55 Wis. 624, 673 
 
 v. Railway, 93 N. Y. 426, 424 
 
 v. Smith, 15 Hun (N. Y.) 222, 505 
 
 Stuart v. Valley R. Co., 32 Gratt 
 
 146, 381 
 
 Stuffelbeam v. DeLashmutt, 83 
 
 Fed. Rep. 449, 400 
 
 Sturges v. Board of Trade, 86 111. 
 
 441, 306 
 
 v. Carter, 114 IT. S. 521, 102 
 
 v. Crowninshield, 4 Wheat. 
 
 (IT. S.) 122, 621 
 
 v. Stetson, 1 Biss. (C. C.) 246, 
 
 337 338 
 v. Vanderbilt, 73 N. Y. 384, 
 
 70, 637, 664 
 Sturtevant v. National, etc., 
 
 Works, 88 Fed. Rep. 613, 
 
 60 IT. S. App. 235, 492 
 
 Sturtevant-Larrabee Co. v. Mast, 
 
 etc., Co., 66 Minn. 437, 637, 640 
 Stutz v. Handley, 41 Fed. Rep. 
 
 531; s. c. 139 U.S. 417, 503 
 
 Sullivan v. Beck, 79 Fed. Rep. 
 
 200, 276 
 
 v. Metcalfe, 5 C. P. D. 455, 7 
 
 Eng. Rul. Cas. 497, 49 
 
 Supervisors v. M., etc., Co., 21 III. 
 
 338, 95 
 
 Supply Co. v. Elliott, 10 Colo. 327, 
 
 15 Pac. Rep. 691, 3 Am. St. 
 
 Rep. 586, 293, 471, 492 
 
 Supreme Commanderv v. Ains- 
 
 worth, 71 Ala. 436, 46 Am. 
 
 R. 332, 144, 145, 149 
 
 Supreme Council v. Perry, 140 
 
 Mass. 580, 142 
 
 Supreme Lodge v. Zuhlke, 129 111. 
 
 298, 303 
 
 Supreme Lodge K. of P. v. Knight, 
 
 117 Ind. 489, 3 L. R. A. 409, 
 
 144, 145 
 Supreme Lodge, etc., v. Improved, 
 
 etc., 113 Mich. 133, 38 L. R. 
 
 A. 658, 41 
 
 Supreme Sitting, etc., v. Baker, 
 
 134 Ind. 293, 673 
 
 Susquehanna, etc., Co. v. Elkins, 
 
 124 Pa. St. 484, 150
 
 lxxxviii 
 
 TABLE OF CASES. 
 
 \Beferences are to Pages.] 
 
 Sutherland v. Olcott, 95 N. Y. 93, 
 
 310, 311 
 Sutton Mfg. Co. v. Hutchinson, 63 
 
 Fed. Rep. 496, 24 U. S. App. 
 
 145, 11 C. C. A. 320, 184, 322, 590 
 Sutton's Hospital, 10 Rep. 306, 7 
 
 Eng. Rul. Cas. 233, 139 
 
 Swan Laud, etc., Co. v. Frank, 
 
 148 U. S. 603, 608, 637 
 
 Swartwout v. Michigan, etc., R. 
 
 Co., 24 Mich. 389, 
 
 73, 75, 76, 370, 379, 410 
 Swasey v. Emerson, 168 Mass. 118, 576 
 Sweeny v. Wheeling, etc., Co., 30 
 
 W. Ya. 443, 553 
 
 Sweney v. Talcott, 85 Iowa 103, 33 
 Swentzel v. Bank (Pa.), 23 Atl. 
 
 Rep. 405, 562 
 
 Swepson v. Bank, 9 Lea (Tenn.) 
 
 713, 182 
 
 Swift v. Richardson, 7 Houst. 
 
 (Del.) 338, 417, 419 
 
 v. Smith, etc., Co., 65 Md. 428, 
 
 523, 672 
 Sykes v. People, 132 111. 32, 23 N. 
 
 E. Rep. 391', 40 
 
 Tahor v. Goss, etc., Co., 11 Colo. 
 
 419, 271 
 
 Taft v. Hartford, etc., R. Co., 8 R. 
 
 I. 310, 315, 317, 318 
 
 v. Ward, 106 Mass. 518, 20 
 
 Tafft v. Presidio, etc., R. Co., 84 
 
 Cal. 131, 18 Am. St. Rep. 166, 
 
 478, 482, 486 
 Taggart v. Newport, etc., R. Co., 
 
 16 R. I. 668, 19 Atl. Rep. 326, 134 
 v. West Md. R. Co., 24 Md. 563, 
 
 75, 361, 370, 371,375,378, 531 
 Talbott v. Fidelity, etc., Co., 74 
 
 Md. 536, 13 L. R. A. 584, 22 
 
 Atl. Rep. 395, 268 
 
 Talbottr Co. v. Queen Anne Co., 
 
 50 Md. 245, 15 
 
 Tallmadge v. Fishkill, etc., Co., 
 
 I Barb. (N. Y.) 382, 492 
 
 Talmage v. Pell, 7 N. Y. 328, 187, 365 
 Talor v. Secor, 99 U. S. 575, 112 
 
 Tama Water Tower Co. v. Hop- 
 kins, 7<i low a 653, 317, 658 
 Tappan v. Merchants' Bank, 19 
 
 Wall. 190, 102 
 
 Tarpcv v. Deserl Salt Co., 5 Utah 
 
 494, 17 Pac. Rep. 631, 
 
 153, 196, 260 
 Taeker v. Wallace, 6 Daly (N. Y.) 
 
 364, 341 
 
 Tatem v. Wright, 23 N. J. L. 429, 256 
 Tavern Co. v. Burkhard, 87 Mich. 
 
 182, 49 N. W. Rep. 562, 384 
 
 Tayer v. Tool Co. 4 Gray (Mass.) 
 
 75, 636 
 
 Taylor v. Branham, 35 Fla. 297, 
 
 39 L. R. A. 362, 255 
 
 v. Bowker, 111 U. S. 110, 660 
 
 v. Chichester, etc., R. Co., L. 
 
 R. 2 Ex. 356, 227 
 
 v. Exporting Co., 6 Ohio 177, 
 
 189, 191 
 
 v. Grand Trunk R. Co., 48 N. 
 
 H. 304, 237 
 
 v Granite, etc., Assn., 136 N. 
 
 Y. 343, 283 
 
 v. Griswold, 14 N. J. L. 222, 27 
 
 Am. Dec. 33, 508, 509, 520 
 
 v. Holmes, 127 U. S. 489, 448 
 
 v. Miami, etc., Co., 6 Ohio St. 
 
 176, 191 
 
 v. Portsmouth, etc., R. Co. 
 
 (Maine), 39 Atl. Rep. 560, 64 
 
 v. South, etc., Co., 13 Fed. Rep. 
 152, 317 
 
 Taylors of Ipswich, 11 Coke's Rep. 
 
 53, 142 
 
 Ticonic, etc., v. Lang, 63 Maine 
 
 480, 369 
 
 Tidwell v. Chiricahua, etc., Co., 
 
 53 Pac. Rep. (Ariz.) 192, 157 
 
 Tillingast v. Boston, etc., Co., 39 
 
 S. C. 484, 22 L. R. A. 49 245 
 
 Tippling v. Pexall, 2 Bulst. 233, 2 
 
 Tisdub v. Harris, 20 Pick. (Mass.) 
 
 9, 320 
 
 Titus v. Cairo, etc., R. Co., 37 N. 
 
 J. L. 98, 576 
 
 v. Great Western, etc., Co., 61 
 N. Y. 237, 329, 330, 332 
 
 Titcomb v. Insurance Co., 79 
 
 Maine 315, 677 
 
 Titus & Scudder v. Cairo, etc., R. 
 
 Co.,37N. J. L. 98, 539 
 
 Telfair v. Howe, 3 Rich. Eq. (S.C.) 
 
 335, 55 Am. Dec. 637, 156 
 
 Telegram, etc., Co. v. Comm., 52 
 
 N. E. Rep. 445 (Mass. 1899), 241 
 Telegraph Co. v. Davenport, 97 U. 
 
 S. 369, 478, 479, 483 
 
 v. Massachusetts, 125 U. S. 530, 109 
 
 v. Purdy, 162 IT. S. 329, 612 
 
 v. Texas, 105 U. S. 460, 103, 108, 109 
 
 Temple v. Dodge, 89 Tex. 68, 543 
 
 Temple, etc., R. Co. v. Hellman, 
 
 103 Cal. 634, 159 
 
 Templin v. Chicago, etc., R. Co., 
 73 Iowa 548, 578
 
 TABLE OF CASES. 
 
 lxxxix 
 
 [Beferences are to Pages.] 
 
 Ten Broek v. Winn Boiler, etc., 
 
 Co., 20 Mo. App. 19, 147 
 
 Ten Eyck v. Pontiac, etc., R. Co., 
 74 Mich. 226, 16 Am. St. Rep. 
 633, 540, 546, 552, 585 
 
 v. Pontiac, etc., R. Co. (Mich.), 
 72 N. W. Rep. 362, 342 
 
 Tennessee v. Whiteworth, 117 U. 
 
 S. 139, 100, 111, 112 
 
 Tennessee, etc., Co. v. Ayers 
 (Tenn.),43 S. W. Rep. 744, 
 
 376 4-19 
 
 Terry v. Little, 101 U. S. 216, ' 651 
 
 v. Merchants', etc., Bank, 66 
 
 Ga. 177, 
 
 Texas, etc., R. Co. v. Cox, 145 U. 
 
 S. 593, 
 
 v. Robards, 60 Tex. 545, 
 
 Texas, etc., Co. v. Starrow, 92 
 
 Fed. Rep. 5, 
 
 v. Worsham, 76 Tex. 556, 
 
 Thatcher v. King, 156 Mass. 490, 
 
 Thaver v. Nehalem, etc., Co., 31 
 
 Ore. 437, 51 Pac. Rep. 202, 
 
 v. Tyler, 10 Gray (Mass.), 164, 289 
 
 The American, etc., Co. v. Moore, 
 
 2 Dak. 280, 
 The Binghamton Bridge, 3 Wall. 
 
 (U. S.) 51, 
 The Brooklyn, etc., Co. v. Citv of 
 
 Brooklyn, 78 N. Y. 524, 
 The Delaware Railroad Tax, 18 
 
 Wall. 206, 
 The Railroad Commission Cases, 
 
 116 U. S. 326, 
 The Shepaug Voting Trust Cases, 
 
 60 Conn. (Supp.) 553, 
 Thebas v. Smiley, 110 111. 316, 658, 659 
 Thomas v. Brownville, etc., R. 
 
 Co., 109 IT. S. 522, 555 
 
 v. Dakin, 22 Wend. 9, 2, 136, 139 
 v. Dakin, 22 Wend. (N. Y.) 110, 
 
 23 27 
 v. Frederick School, 7 Gill & J . ' 
 
 369, 40 
 
 v. Gregg, 78 Md. 551, 440 
 
 v. Gregg, 78 Md. 545, 445, 446 
 
 v. Mut., etc., Union, 17 N. Y. 
 St. Rep. 51, 49 Hun (N. Y.) 
 171, 145 
 
 v. Owens, 4 Md. 189, 622 
 
 v. Railway Co., 101 U. S. 71, 
 100, 120, 121, 134, 157, 163, 180, 
 
 187, 212 
 v. Railway Co., 101 U. S. 82, 130 
 v. Railroad Co., 109 U. S. 522, 552 
 v. Reno Sav. Bank, 19 Nev. 171 
 v. Richmond, 12 Wall. 349, 
 
 664 
 
 642 
 
 135 
 
 673 
 270 
 569 
 
 576 
 
 281 
 
 96 
 
 85 
 
 87 
 
 100 
 
 518 
 
 Thompson v. Abbott, 61 Mo. 176, 
 
 411 
 229 
 196 
 
 Thompson v. Hudgins, 116 Ala. 
 93, 458 
 
 v. Lambert, 44 Iowa 239, 171, 218 
 v. Lumber Co., 4 Wash. 600, 182 
 v. Meisser, 108 111. 359, 659 
 
 v. Pfeiffer (Kan.), 56 Pac. Rep. 
 
 763, 637 
 
 v. Reno Sav. Bank, 19 Nev. 103, 
 3 Am. St. Rep. 797, 
 
 74, 321, 410, 658 
 v. Stanley, 25 N. Y. Supp. 890, 478 
 v. Swoope, 24 Pa. St. 474, 265 
 
 v. Waters, 25 Mich. 214, 
 
 151, 153, 265 
 v. Williams, 76 Cal. 153, 9 Am. 
 St. Rep. 187, 504, 539, 540 
 
 Thorne v. Cramer, 15 Barb. (N. 
 Y.) 112, 23 
 
 v. Travelers', etc., Co., 80 Pa. 
 St. 15, 277 
 
 Thorton v. Balcom, 85 Iowa 198, 
 
 33,36 
 v. Marginal, etc., R. Co., 123 
 Mass. 32, 26, 32, 664, 675, 676 
 
 Thorpe v. Rutland & Burlington 
 
 R. Co., 27 Vt. 141 (1885), 87, 99 
 Thresher v. Pike Co. R. Co., 25 
 
 111. 340, 362, 377 
 
 Throop v. Lithographing Co., 125 
 
 N. Y. 530, 182 
 
 Thurber v. Crump, 86 Ky. 408, 
 
 466, 471 
 Tobey v. Hakes, 54 Conn. 274, 496 
 Tod v. Kentucky, etc., Co., 57 
 
 Fed. Rep. 47, 171 
 
 Toledo Bank v. Bond, 1 Ohio St. 
 
 626, 86 
 
 Toledo, etc., R. Co. v. Dunlap, 47 
 
 Mich. 456, 195 
 
 v. Johnson, 49 Mich. 148, 674 
 
 v. Thomas, 33 W. Va. 566, 276, 278 
 Tome v. Railway Co., 39 Md. 36, 
 
 17 Am. Rep. 540, 329, 330, 332, 480 
 Tomlinson v. Branch, 15 Wall. 
 
 460, 111, 112 
 
 v. Bricklayers' Union, 87 Ind. 
 
 307, 10 
 
 v. Jessup, 15 Wall. (U. S.) 454, 
 
 89, 112 
 v. Tomlinson, 9 Beav. 459, 320 
 
 Topeka, etc., Co. v. Hale, 39 Kan. 
 
 23, 372, 471 
 
 Topping v. Bickford, 4 Allen 
 
 (Mass.) 120, 162 
 
 Torbett v. Godwin, 62 Hun 407, 569 
 Toronto Gen. T. Co. v. C, B. & Q. 
 
 R. Co., 123 N. Y. 37, 657 
 
 Totten v. Tison, 54 Ga. 139, 315, 316
 
 xc 
 
 TABLE OF CASES. 
 
 [References are to Pages."] 
 
 Touchband v. Chicago, etc., R. 
 
 Co., 115 N. Y. 437, 283, 284 
 
 Towle v. Am., etc., Co., 78 Fed. 
 
 Rep. 688, 174 
 
 Town v. Bank, 2 Doug. (Mich.) 
 
 530, 665, 672 
 
 Town of East Lincoln v. Daven- 
 port, 94 U. S. 801, 195 
 Town of McGregor v. Baylies, 19 
 
 Iowa 43, 28 
 
 Townes v. Nichols, 73 Maine 515, 496 
 Tracv v. Guthrie, etc., Soc, 47 
 
 Iowa 27, 544 
 
 v. Talmage, 14 N. Y. 162, 226, 229 
 Tradesman's, etc., Co. v. Wheel 
 
 Co., 95 Tenn. 634, 182 
 
 Tradesman's Pub. Co. v. Knox- 
 
 ville, etc., Co., 95 Tenn. 634, 
 
 31 L. R. A. 593, 176, 569, 571, 592 
 Tradesmen's Nat'l Bank v. Looney, 
 
 99 Tenn. 278, 38 L. R. A. 837, 
 
 389, 392 
 Travelers', etc., Co. v. Fricke 
 
 (Wis. 1898), 41 L. R. A. 557, 271 
 Travers v. Kansas Pac. R. Co., 63 
 
 Mo. 421, 238 
 
 Treadway v. Hamilton, etc., Co., 
 
 29 Conn. 68, 144 
 
 Treadwell v. Salisbury, etc., Co., 
 
 7 Grav (Mass.) 393, 66 Am. 
 
 Dec. 490, 187, 670 
 
 Tregear v. Etiwanda, etc., Co., 76 
 
 Cal. 537, 9 Am. St. Rep. 245, 320 
 Trevor v. Whitworth, L. R. 12 
 
 App. Cas. 409, 188, 219 
 
 Trinity Church v. Vanderbilt, 98 
 
 N. Y. 170, 570 
 
 Tripp v. New, etc., Co., 137 Mass. 
 
 499, 581 
 
 v. N. W. Nat'l Bank, 41 Minn. 
 
 400, 181, 543, 633 
 
 Trisconi v. Winship, 43 La. Ann. 
 
 45, 458 
 
 Troup' v. Horhach (Neb.), 74 N. 
 
 W. Rep. 326, 341 
 
 Trowbridge v. Scudder, 11 Cush. 
 
 (Mass.) 83, 596, 605 
 
 Trov, etc., Co. v. White, 10 S. 
 
 Dak. 475, 42 L. R. A. 549, 
 
 500, 540, 541 
 Trov, etc., R. Co. v. Kerr, 17 
 
 "Barb. (N. Y.) 581, 528 
 
 v. Tibbits, is Barb. 297, 370 
 
 Trustees v. Flint,] 13 Mete. 
 
 (Mass. I 539, 592, 617 
 
 v. Roome, 93 X. Y. 313, 267 
 
 v. 8haffer, 63 III. 243, 147 
 
 Trustees, etc., v. Connolly, 157 
 
 Mass. 272, 578 
 
 Tshumi v. Hills, 6 Kan. App. 549, 
 
 51 Pac. Rep. 619, 310 
 
 Tube Works v. Ballou, 146 U. S. 
 
 517, 589 
 
 Tunis v. Hestonville, etc., R. Co., 
 
 149 Pa. St. 70, 507, 510, 536 
 
 Turnbull v. Payson, 95 U. S. 418, 
 
 292, 506 
 Turner v. Grargus, etc., Co., 65 
 
 Ga. 649, 38 Am. Rep. 80, 397, 398 
 v. North Beach, etc., R. Co., 34 
 
 Cal. 594, 237 
 
 Turner Bros. v. Alabama, etc., Co., 
 
 25 111. App. 144, 611 
 
 Turnpike Co. v. Gerhab (Pa.), 13 
 
 Atl. Rep. 90, 466 
 
 v. Illinois, 96 IT. S. 63, 100 
 
 Tussaud v. Tussaud, L. R. 44 Ch. 
 
 Div. 678, 139 
 
 Tuttle v. Michigan, etc., R. Co., 
 
 35 Mich. 247, 31, 193 
 
 v. Nat'l Bank of the Republic, 
 
 161 111. 497, 34 L. R. A. 750, 
 
 246, 623, 646, 650, 651, 655 
 Twin Creek, etc., Co. v. Lancaster, 
 
 79 Ky. 552, 362 
 
 Twin Lick, etc., Co. v. Marbury, 
 
 91 U. S. 587, 544, 548, 549, 551, 553 
 Twiss v. Guaranty, etc., Co., 87 
 
 Iowa 733, 55 N. W. Rep. 89, 221 
 v. Guaranty, etc. Assn. (Iowa), 
 
 55 N.W. Rep. 8, 204 
 
 Twycross v. Grant, 2 C.P. Div. 503, 44 
 Tyler v. Tualatin Academy, 14 
 
 Ore. 485, 221 
 
 u 
 
 Underwood v. New York, etc., R. 
 
 Co., 17 How. Pr. (N. Y.) 537, 329 
 Union Bank v. Bridgely, 1 Har. 
 
 & G. (Md.) 324, 141 
 
 v. Jacobs, 6 Humph. (Tenn.) 
 
 515, 175 
 
 v. Laird, 2 Wheat. (U. S.) 390, 
 
 467, 468, 489 
 v. United States Bank, 
 
 Humph. (Tenn.) 369, 62 
 
 Union, etc., Assn. v. Neill, 31 
 
 Iowa 95, 531 
 
 v. Seligman, 92 Mo. 635, 1 Am. 
 St. Rep. 776, 295, 593 
 
 Union Central, etc., Co. v. 
 
 Thomas, 46 Ind. 44, 277 
 
 Union Iron Co. v. Pierce, 4 Biss. 
 
 327, 89 
 
 Union Locks, etc., v.Towne, 1 N. 
 
 H. 44, 529
 
 TABLE OF CASES. 
 
 XC1 
 
 [References are to Pages."] 
 
 Union Nat'l Bank v. Matthews, 
 
 98 U. S. 621, 173, 223 
 
 v. State Nat'l Bank, 168 111.256, 
 
 48 N. E. Bep. 82, 182 
 
 Union, etc., Co. v. American, etc., 
 
 Co., 11 B. I. 569, 13 B. I. 673, 429 
 v. Hersee, 79 N. Y. 454, 373, 531 
 v. Jenkins, 1 Caines Cas. (N. 
 
 Y.) 86, 361 
 
 v. McMillen, 24 Ohio St. 67, 276 
 v. Murphy's, etc., Co., 22 Cal. 
 
 621, 199 
 
 v. Plume, etc., Co., 58 Conn. 
 
 219 208 221 
 
 v. Pollard, 94 Va. 146, 36 L."b.' 
 
 A. 271, 245 
 
 v. U. S., 99 U. S. 700, 91 
 
 v. White, 106 111. 67, 147, 579 
 
 Union, etc., B. Co. v. Chicago, 
 
 etc., B. Co., 163 U. S. 564, 
 
 220, 543 
 v. Chicago, etc., B. Co., 51 Fed. 
 
 Bep. 309, 543 
 
 Union Pac. B. Co. v. Hall, 3 Dill. 
 
 (C. C.) 515, 91 U. S. 343, 25 
 
 v. Mobilier, 135 Mass. 367, 554 
 
 v. Myers (Pacific B. Bemoval 
 
 Cases), 115 U. S. 1, 18, 25 
 
 v. Philadelphia, 101 U. S. 528, 112 
 
 v. Bailway Co., 163 U. S. 564, 121 
 
 v. United States, 99 U. S. 402, 317 
 
 United States v. Bevans, 3 Wheat. 
 
 336. 3 Dall. 370, 244 
 
 v. Freight Assn., 166 U. S. 290, 
 
 164, 290, 332 
 V. Fox, 94 U. S. 315, 153 
 
 v. Joint Traffic Assn., 171 U. S. 
 
 505, 570, 16 
 
 v. Knight, 156 U. S. 1, 169 
 
 v. Memphis, etc., B. Co., 6 Fed. 
 
 Bep. 237, 241 
 
 V. Northwestern, etc., 164 U. S. 
 
 686, 41 L. ed. 599, 248 
 
 v. Pipe Co., 85 Fed. Bep. 271, 168 
 v. Stanford, 70 Fed. Bep. 346, 
 
 44 U. S. App. 68, 17 C. C. A. 
 
 143, 161 U. S. 412, 617 
 
 v. Southern Pac. B. Co., 49 Fed. 
 
 Bep. 297, 59 
 
 v. Southern, etc., B. Co., 45 Fed. 
 
 Bep. 596, 30 
 
 v. Trans-Mo., etc., Assn., 166 U. 
 _ S. 290, 168 
 
 United States, etc., Commonwealth 
 
 v. New York, etc., B. Co., 129 
 m Pa. St. 463, 255 
 
 United States, etc., Co. v. Atlantic, 
 
 etc., B. Co., 34 Ohio St. 450, 
 
 32 Am. Bep. 380, 547, 550, 554, 555 
 
 United States, etc., Co. v. Schlegel, 
 
 143 N. Y. 537, 43, 170 
 
 United, etc., Co. v. Omaha, etc., 
 
 Co., 48 N. Y. Supp. 817, 260 
 
 Unity, etc., Co. v. Cram, 43 N. H. 
 
 636, 381 
 
 University of Des Moines v. Liv- 
 ingston, 57 Iowa 307, 368 
 University of Vermont v. Baxter, 
 
 42 Vt. 99, 43 Vt. 645, 196 
 
 Upper Miss. Tr. Co. v. Whittaker, 
 
 16 Wis. 220, 283 
 
 Upton v. Burnham, 3 Biss. 431, 631 
 v. Englehart, 3 Dill. (C. C.) 496, 
 
 389, 398, 399, 401 
 v. Hansborough, 3 Biss. (C. C.) 
 
 417, 291, 397, 593 
 
 v. Tribilcock, 91 U. S. 45, 
 
 321, 338, 340, 342, 376, 379, 
 
 384, 397, 398, 401, 607, 609 
 Usher v. West Jersey B. Co., 126 
 
 Pa. St. 206, 4 L. B. A. 261, 261 
 Utley v. Clark, etc., Co., 4 Colo. 
 369, 272, 276, 280 
 
 V 
 
 Vail v. Hamilton, 85 N. Y. 453, 
 
 189, 191, 293 
 v. Jameson, 41 N. J. Eq. 648, 182 
 Valley, etc., B. Co. v. Lake Erie, 
 
 etc., Co., 46 Ohio St. 44, 130, 184 
 Van Allen v. Assessors, 3 Wall. 
 
 (U.S.) 573, 101,105,110 
 
 Van Brocklin v. Tennessee, 117 
 
 U. S. 151, 154, 25 
 
 Vance v. Phoenix, etc., Co., 4 Lea 
 
 (Tenn.)385, 566 
 
 Van Cleve v. Berkey, 143 Mo. 109, 
 
 44 S. W. Bep. 743, 42 L. B. 
 
 A. 593, 335, 356 
 
 Van Cott v. Van Brunt, 82 N. Y. 
 
 535, 345, 348, 351, 354 
 
 Van Demark v. Barons, 52 Kan. 
 
 779, 629 
 
 Vanderbilt v. Bennett, 6 Pa. Co. 
 
 Ct. Bep. 193, 2 Smith's Corp. 
 
 Cas. 1029, 517 
 
 Vanderbilt v. Bichmond, etc., Co., 
 
 2 N. Y. 479, 51 Am. Dec. 315, 236 
 Vandermark v. Glenn, 85 Va. 9, 506 
 Vanderpool v. Gorman, 140 N. Y. 
 
 563, 24 L. B. A. 548, 
 
 245, 262, 263 
 Van Doren v. Olden, 19 N. J. Eq. 
 
 176, 97 Am. Dec. 650, 445 
 
 Van Dresser v. Oregon, etc., Co., 
 
 48 Fed. Bep. 202, 283
 
 XC11 
 
 TABLE OF CASES. 
 
 [References are to Pages.'] 
 
 Van Dyck v. McQuade, 86 N. Y. 
 
 38, 432 
 
 Van Dyke v. Stout, 8 N. J. Eq. 333, 380 
 Van Hoffman v. City of Quincy, 
 
 4 Wall. (U. S.) 535, 621 
 
 Van Houten v. McKelway, 17 N. 
 
 J. E. 126, 18 
 
 Van Kirk v. Adler, 111 Ala. 104, 447 
 Vanneman v. Young (N. J.), 20 
 
 Atl. Rep. 53, 598 
 
 Van Norman v. Central Car, etc., 
 
 Co., 41 Mich. 166, 430 
 
 Van Pelt v. Gardner, 54 Neb. 701, 
 
 75 N. W. Rep. 874, 
 
 609, 617, 639, 640 
 Van Sandan v. Moore, 1 Russ. Ch. 
 
 441, 20 
 
 Vansands v. Middlesex, etc., 
 
 Bank, 26 Conn. 144, 489 
 
 Van Steuben v. Central R. Co., 
 
 178 Pa. St. 367, 121 
 
 Varnum v. Andrews, 119 N. Y. 
 
 101, 182 
 
 Vawter v. Griffin, 40 Ind. 593, 321 
 
 Veeder v. Baker, 83 N. Y. 156, 625 
 
 v. Mudgett, 95'N. Y. 295, 310 
 
 Venerable v. Ebenezer, etc., Ch., 
 
 25 Kan. 177, 68 
 
 Vent v. Duluth, etc., Co., 64 
 
 Minn. 307, 370 
 
 Yerplank v. Mercantile, etc., Co., 
 
 1 Edw. Ch. (N. Y.) 84, 190 
 
 Vicksburg, etc., R. Co. v. Dennis, 
 
 116 U. S. 665, 111 
 
 Vidal v. Girard, 2 How. (U. S.) 
 
 187, 199 
 
 Virginia Land Co. v. Haupt, 90 
 
 Va. 533, 44 Am. St. Rep. 939, 
 
 note, 398 
 
 Visalina, etc., Co. v. Sims, 104 
 
 Cal. 326, 121, 226 
 
 Vredenbergv. Behan, 33 La. Ann. 
 
 627, 599 
 
 Vreeland v. New Jersey, etc., Co., 
 
 29 N. J. Eq. 188, 367 
 
 w 
 
 Wabash, etc., R. Co. v. Ham, 114 
 
 U. S. 587, 32. 
 
 Wachsmuth v. Merchants' Nat'l 
 
 Bank, 96 Mich. 426, 235 
 
 WachteJ v. Society, 84 N. Y. 28, 303 
 Wadesboro, etc., Co. v. Burns, 1 14 
 
 N. C. 353, 19 S. E. Rep. 238, 
 
 73, 74, 410, 667 
 Wagner v. Rock Island, 146 111. 
 
 139, 21 L. R. A. 519, 81 
 
 Wait v. Nashua, etc., Assn. 
 
 (N. H.), 23 Atl. Rep. 77, 577 
 
 Wait v. Smith, 92 111. 385, 147 
 
 AVakefield v. Fargo, 90 N. Y. 213, 635 
 Wakeman v. Dalley, 51 N. Y. 27, 565 
 Walburn v. Ingilby, 1 Myl. & K. 
 
 61, 592 
 
 Waldo v. Chicago, etc., R. Co., 14 
 
 Wis. 625, 389, 395 
 
 Walker v. Detroit, etc., R. Co., 47 
 
 Mich. 338, 481, 494 
 
 v. Lewis, 49 Tex. 123, 592 
 
 v. Mobile, etc., R. Co., 34 Miss. 
 
 245, 381 
 
 v. Whitehead, 16 Wall. (U. S.) 
 
 314, 621 
 
 v. Wilmington, etc.. R. Co., 26 
 S. C. 80, 147 
 
 Wall v. London, etc., Corp., 67 L. 
 
 J. R. (Ch. D.) 596 (1898), 30 
 
 v. Society, etc., 32 Fed. Rep. 
 273, 280 
 
 Wallace v. Bank, 89 Tenn. 630, 449 
 v. Carpenter, etc., Co., 70 Minn. 
 321, 73 N. W. Rep. 189, 68 
 Am. St. Rep. 530, 
 
 339, 341, 343, 353, 356, 357, 635 
 v. Lincoln Sav. Bank, 89 Tenn. 
 
 630, 24 Am. St. Rep. 625, 561, 574 
 v. Pierce- Wallace, etc., Co., 101 
 
 Iowa 313, 38 L. R. A. 122, 672 
 v. Townsend, 43 Ohio St. 537, 3 
 N. E. Rep. 601, 368, 382, 384 
 
 Waller v. Howell, 45 N. Y. Sup. 
 
 790, 20 Misc. (N. Y.) 236, 18 
 
 Walsh v. vEtna, etc., Co., 30 Iowa 
 
 133, 6 Am. R.. 664, 144 
 
 Walter A.Wood, etc., Co. v. Rob- 
 bins, 56 Minn. 48, 57 N. W. 
 Rep. 317, 313,361,368,376,384 
 Walters v. Whitlock, 9 Fla. 86, 264 
 Walton v. Riley, 85 Kv. 413, 
 
 33, 37, 598 
 v. Oliver, 49 Kan. 107, 30 Par. 
 Rep. 172, 48 
 
 Ward v. Farwell, 97 111. 593, 99 
 
 v. Forest Grove, 20 Ore. 355, 231 
 v. Johnson, 95 111. 215, 174 
 
 v. Min., etc. , R. Co., 119 111. 287, 
 
 10 N. E. Rep. 365, 71 
 
 v. Polk, 70 Ind. 309, 546 
 
 v. S. E. R. Co., 2 El. & El. 812, 496 
 Wardell v. Fnion Pac. R. Co., 103 
 
 U. S. 651, 544 
 
 Ward nor, etc., Co. v. Jack, 82 
 
 Iowa 435, 217 
 
 Wardrobe v. California, etc., Co., 
 
 7 Cal. L19, 237 
 
 Ware v. Razemore, 58 Ga. 316, 450 
 v. Hamilton Brown, etc., Co., 
 92 Ala. 145, 272
 
 TABLE OF CASES. 
 
 XC111 
 
 [References are to Pages. ] 
 
 Ware, etc., Co. v. Anderson, etc., 
 
 Co. (Iowa), 77 N. W. Rep. 
 
 1026, 273 
 
 Warehousing Co. v. Badger, 67 
 
 N. Y. 294 296 
 
 WarfieldV. Marshall, etc., Co., 72 
 
 Iowa 666, 2 Am. St. Rep. 263, 
 
 180, 182, 592 
 Warner v. Delbridge, etc., Co., 
 
 110 Mich. 590, 34 L. R. A. 
 
 701, 612 
 
 v. Mower, 11 Vt. 385, 502, 503, 504 
 v. Penover, 82 Fed. Rep. 181, 
 
 561, 563 
 Warren v. First Nat'l Bank, 149 
 
 111. 9, 265 
 
 v. King, 108 U. S. 389, 317, 318, 425 
 v. Mobile, etc.. R. Co., 49 Ala. 
 
 582, 197 
 
 Washburn v. Green, 133 U. S. 30, 607 
 v. National, etc., Co., 81 Fed. 
 
 Rep. 17, 358 
 
 Washburn, etc., Co. v. Bartlett, 3 
 
 N. Dak. 138, 276, 278 
 
 Washington, etc., R. Co. v. Als- 
 
 brook, 146 U. S. 279, 131 
 
 Washington, etc., Co. v. State, 19 
 
 Mo. 239, 663 
 
 Washington Sav. Bank v. Bank, 
 
 107 Mo. 133, 411 
 
 Water, etc., Co. v. Tenney, 24 
 
 Colo. 344, 51 Pac. Rep. 505, 157 
 Water-Works v. Schottler, 110 
 
 U. S. 347, 81 
 
 Watrous & Snouffer v. Blair, 32 
 
 Iowa 58, 278 
 
 Watson v. Crandall, 7 Mo. App. 
 
 233, 78 Mo. 583, 49 
 
 Watts' Appeal, 78 Pa. St. 370, 
 
 180, 551, 561, 562 
 Waukon, etc., R. Co. v. Dwyer, 
 
 49 Iowa 121, 292 
 
 Wayne, etc., Co. v. Haramons, 
 
 129 Ind. 368, 27 N. E. Rep. 
 
 487, 538, 544, 560 
 
 Weatherford, etc., R. Co. v. 
 
 Granger, 86 Tex. 350, 24 S. 
 
 W. Rep. 795, 50, 51, 52, 53, 54 
 Weaver v. Barden, 49 N. Y. 286, 313 
 Webb v. Baltimore, etc., R. Co., 
 
 77 Md. 92, 321, 367, 371, 375, 376 
 v. Ridgelv, 38 Md. 364, 536 
 
 Weber v. Fickey, 47 Md. 196, 659 
 
 Webster v. Howe, etc., Co., 54 
 
 Conn. 394. 171 
 
 v. Upton, 91 U. S. 65, 
 
 321, 341, 342, 492 
 Wechselberg v. Bank, 64 Fed. 
 
 Rep. 90, 12 C. C. A. 56, 599 
 
 Weckler v. Hagerstown Nat'l 
 
 Bank, 42 Md. 581, 20 Am. Rep. 
 
 95, 135, 558 
 
 Weeks v. Silver, etc., Co., 23 J. & 
 
 8. (N.Y.)l, 149 
 
 Weigand v. Alliaver, etc., Co., 44 
 
 W. Va. 133,. 670, 672 
 
 Weidenfeld v. Sugar, etc., R. Co., 
 
 48 Fed. Rep. 615, 543 
 
 Weinburg v. Union, etc., R. Co., 
 
 55 N. J. Eq. 640, 522 
 
 Weisiger, etc., Assn. v. Rainbolt 
 
 (Neb.), 67 N. W. Rep. 493, 398 
 Welch v. Importers' Bank, 122 N. 
 
 Y. 177, 549, 598 
 
 Welfly v. Shenandoah, etc., Co., 
 
 83 Va. 768, 40 
 
 Welles v. Larrabee, 36 Fed. Rep. 
 
 866, 630, 631 
 
 Wellington, etc., R. Co. v. Cahie, 
 
 etc., R. Co., 114 N. C. 690, 71 
 
 Wells v. Cowles, 2 Conn. 567, 320 
 
 v. Green Bav, etc., Co., 90 Wis. 
 
 442, 336 
 
 v. N. Pac. R. Co., 23 Fed. Rep. 
 
 469, 32 
 
 v. St. Paul, etc., Co., 63 Minn. 
 
 370, 578 
 
 Wells, Fargo & Co. v. Oregon R. 
 
 Co., 8 Sawy. (C. C.) 601, 29, 40 
 Welsh v. Heim Brew. Co., 47 Mo. 
 
 App. 608, 135 
 
 Wemple v. Railroad Co., 120 111. 
 
 196, 313, 376 
 
 Wenstrom, etc., Co. v. Purnell, 
 
 75 Md. 113, 392, 393 
 
 Wesiger v. Richmond, etc., Co., 
 
 90 Va. 795, 389 
 
 West v. Bullskin, etc., Co., 32 
 
 Ind. 138, 36 
 
 v. Crawford, 80 Cal. 19, 362 
 
 West Branch Broom Co. v. Lum- 
 ber Bank, 121 Pa. St. 143, 6 
 
 Am. St. Rep. 766, 16 
 
 Westchester, etc., Co. v. Cover- 
 dale, 48 Kan. 446, 289 
 v. Jackson, 77 Pa. St. 321, 
 
 316, 429 
 
 Westcot v. Minnesota, etc., Co., 
 
 23 Mich. 145, 149, 408 
 
 Westerfield v. Radde, 7 Daly 
 
 326, 147 
 
 Western Nat'l Bank V.Armstrong, 
 
 152 U. S. 346, 577 
 
 Western Nat'l Bank of New York 
 
 V.Lawrence (Mich.), 76 N. W. 
 
 Rep. 105, 610, 643 
 
 Western Nat'l Bank v. Reckless, 
 
 96 Fed. Rep. 59, 624, 640, 644
 
 XC1V 
 
 TABLE OF CASES. 
 
 [References are to Pages."] 
 
 "Western, etc., R. Co. v. Franklin 
 
 Bank, 60 Md. 36, 
 Western R. Co. v. Nolan, 48 N. Y. 
 
 513, 
 Western Union, etc., Co. v. Lieb, 
 
 76 111. 172, 
 Western U. Tel. Co. v. Davenport, 
 
 97 U. S. 369, 
 Western, etc., Assn. v. Ready, 24 
 
 .Minn. 350, 
 "Western, etc., Co. v. Alabama, 132 
 U. S. 472, 
 v. Attorney-General, 125 Mass. 
 
 530, 
 v. Citizens', etc., R. Co., 128 
 
 Ind. 525, 
 v. Cousley, 72 111. 531, 
 v. Des Moines Nat'l Bank, 103 
 Iowa 455, 72 N. W. Rep. 657, 
 191, 311, 342, 405, 
 v. Eyser, 2 Colo. 141, 
 v. Maes, 125 U. S.530, 
 v. Smith, 75 111. 496, 
 v. Taggart, 163 U. S. 1, 
 West Nashville, etc., R. Co. v. 
 Nashville, etc., Bank, 6 Am. 
 St. Rep. 835, 
 West Nashville Planing Mill v. 
 Nashville Sav. Bank, 86 Tenn. 
 252, 
 Weston v. Ives, 97 N. Y. 222, 
 West Point, etc., R. Co. v. Rose 
 (Miss., May 23, 1898), 23 So. 
 Rep. 629, 
 West River, etc., Co. v. Dix, 6 
 
 How. 507, 
 Wetherbee v. Baker, 35 N. J. Eq. 
 501, 309, 335, 
 
 Weyer v. Second Nat'l Bank, 57 
 
 'Ind. 198, 
 Wheeler v. Aiken Bank, 75 Fed. 
 Rep. 781, 
 v. Everett, etc., Co., 14 Wash. 
 
 630, 45 Pac. Hep. 316, 
 V.Millar, 90 N. Y.353, 292, 658, 
 v. Northwestern, etc., Co., 39 
 
 Fed. Rep. 347, 
 v. Pullman, etc., Co., 143 111. 
 197, 675, 
 
 v. Sleigh Co., 39 Fed. Rep. 347, 
 
 428, 
 
 Whr-eler & Wilson Mfg. Co. v. 
 Boyce, 36 Kan. 350, .",9 Am. 
 Rep. 671, 235,236,237, 
 
 Wheelock v. Kost, 77 III. 296, 
 
 v. Monitor,. 15 Vt. 510, 
 Whit.' v. Bank, 22 Pick. 181, 
 v. Brown, 2 Daly 329, 
 
 332 
 
 448 
 
 267 
 
 482 
 
 542 
 
 109 
 
 103 
 
 117 
 50 
 
 504 
 237 
 103 
 197 
 103 
 
 492 
 
 341 
 299 
 
 54 
 
 98 
 
 350 
 
 313 
 
 563 
 
 172 
 659 
 
 492 
 
 677 
 
 435 
 
 556 
 
 74 
 
 10 
 
 229 
 
 305 
 
 v. State, 69 Ind. 273, 
 v. Syracuse, etc., R. 
 
 White v. Brownell, 2 Daly's Rep. 
 (N. Y.) 329, 300 
 
 v. Green, 105 Iowa 176, 592 
 
 v. Greene (Iowa), 70 N. W. 
 
 Rep. 182, 341 
 
 v. Howard, 38 Conn. 342, 265 
 
 v. Marquardt (Iowa), 70 N. W. 
 
 Rep. 193, 74 N. W. Rep. 930, 191 
 v. Marquardt & Sons, 105 Iowa 
 
 145, 492 
 
 v. Rice, 112 Mich. 403, 70 N. W. 
 
 Rep. 1024, 151, 199 
 
 v. Salisbury, 33 Mo. 150, 458, 471 
 
 26 
 Co., 14 
 Barb. (N. Y.) 559, 529 
 
 v. Taylor, 113 Mich. 543, 576 
 
 Whitehall v. Jacobs, 75 Wis. 474, 352 
 White Mountain R. Co. v. East- 
 ern, 34 N. H. 124, 372 
 White River, etc., Co. v. Vermont 
 
 Cent. R. Co., 21 Vt. 590, 96 
 
 White Vallev, etc., Co. v. Val- 
 
 lette, 21 Howard (U. S.) 414, 135 
 Whitman v. National Bank, 51 
 TJ. S. App. 536, 83 Fed. Rep. 
 288, 28 C. C. A. 404, 76 Fed. 
 Rep. 697, 643, 646 
 
 Whitman, etc., Co. v. Strand, 8 
 
 Wash. 647, 276 
 
 Whitney v. Butler, 118 U. S. 655, 
 
 469, 632 
 v. Robinson, 53 Wis. 309, 10 N. 
 
 W. Rep. 512, 73 
 
 v. Wyman, 101 U. S. 392, 598 
 
 Whitney, etc., Co. v. Barlow, 63 
 
 N. Y. 62, 201, 207, 220, 221 , 223 
 Whittaker v. Amwell Nat'l Bank, 
 
 52 N. J. Eq. 400, 423, 432 
 
 Whittemore v. Gibbs, 24 N. H. 
 
 484, 321 
 
 Whittenton Mills v. Upton, 10 
 
 Grav (Mass.) 582, 173 
 
 Whitwe'll v. Warner, 20 Vt. 425, 
 
 593, 608, 
 Whipple v. Parker, 29 Mich. 369, 595 
 Wickersham v. Brittan, 93 Cal.34, 
 
 15 L. R. A. 106, 535 
 
 v. Zinc Co., 18 Kan. 481, 584 
 
 Wiggin v. Freewill Baptist Church, 
 
 8 Mete. (Mass.) 301, 502 
 
 Wiggins, etc., Co. v. East St. Louis, 
 
 107 U. S. 365, 104, 109 
 
 Wight v. Railway Co., 16 B. Mon. 
 
 (Kv.)4, 375,377 
 
 Wilbur v. Stoepel, 82 Mich. 344, 515 
 Wilcox v. Bickel, 11 Neb. 154, 448 
 Wilcox,etc.,Co.v.Mosher(Mich.), 
 
 72 N. W. Rep. 117, 268
 
 TABLE OF CASES. 
 
 xcv 
 
 [References are to Pages."} 
 
 Wiles v. Suydam, 64 N. Y. 173, 660 
 Wilkesbarre Bank v. City of 
 Wilkesbarre, 148 Pa. St. 601, 
 24 Atl. Eep. Ill, 309,320 
 
 Wilkins v. Thorne, 60 Md. 253, 282 
 Wilkinson v. Bauerle, 41 N. J. 
 
 Eq. 635, 182, 183, 543, 552, 575 
 
 Willamet & Co. v. Kittridge, 5 
 
 Saw. (U. S.) 44, 125 
 
 Williamette Mfg. Co. v. Bank of 
 
 Columbia, 119 U. S. 191, 180 
 
 Willard v. Denise, 50 N. J. Eq. 
 
 482, 26 Alt. Rep. 29, 583 
 
 Williams v. Creswell, 51 Mass. 
 
 817, 25 
 
 v. Hanna, 40 Ind. 535, 629 
 
 v. Hilliard, 38 N. J. Eq. 373, 574 
 
 v. Kimball, 35 Fla. 49, 26 L. R. 
 
 A. 746, 253 
 
 v. Lowe, 4 Neb. 382, 489 
 
 v. McDonald, 37 N. J. Eq. 409, 
 
 561, 566 
 v. Montgomery, 68 Hun (N. 
 
 Y.) 416, 462 
 
 v. Montgomery, 148 N. Y. 519, 514 
 v. Mfg. Co., 3 Md. Ch. 418, 189 
 
 v. Parker, 136 Mass. 204, 315 
 
 v. Planters' Ins. Co., 57 Miss. 
 
 759 °35 
 
 v. Taylor, 120 N. Y. 244, 403, 411 
 v. Tel. Co., 61 How. Pr. 216, 93 
 
 N. Y. 162, 437 
 
 v. Western Union, etc., Co., 93 
 N. Y. 162, 308, 309, 312, 313, 431 
 Williamson v. Kokomo, etc., 
 
 Assn., 89 Ind. 389, 68 
 
 Willis v. Chapman, 68 Vt. 459, 
 
 35 Atl. Rep. 459, 20 
 
 v. Fry, 13 Phila. 33, 329, 332 
 
 v. Mabon, 48 Minn. 140, 31 Am. 
 St. Rep. 626, 622, 633 
 
 Wilmington, etc., Co. v. Als- 
 brook, 146 U. S. 279, 111 
 
 v. Evans, 166 111. 548, 46 N. E. 
 Rep. 1083, 113 
 
 Wilson v. Book, 13 Wash. 676, 658 
 v. Kings, etc., R. Co., 114 N. Y. 
 487, 27 N. Y. St. Rep. 81, 
 
 216, 216, 582 
 v. Leary, 120 N. C. 90, 58 Am. 
 
 St. Rep. 778, 677 
 
 v. Little, 2 N. Y. 443, 475 
 
 v. Martin-Wilson F. A. Co., 149 
 
 Mass. 24, 288 
 
 V. Proprietors, etc., 9 R. I. 590, 662 
 
 v. St. Louis, etc., R. Co., 108 
 
 Mo. 588, 459 
 
 Salamanca, 99 U. S. 499, 195 
 
 Wilson v. Valley, etc., R. Co., 33 
 
 Ga. 466, 532 
 
 Winchester, etc., Co. v. Wickliffe, 
 100 Ky. 531, 66 Am. St. Rep. 
 356, " 429, 430 
 
 Wincock v. Turpin, 96 111. 135, 
 
 639, 661 
 Windsor, etc., Co. v. Tandy, 66 
 
 Yt. 248, 29 Atl. Rep. 248, 384, 385 
 Wing & Evans v. Slater, 19 R. I. 
 
 597, 33 L. R. A. 566, 634 
 
 Winget v. Association, 128 111. 67, 
 
 21 N. E. Rep. 12, 69, 77 
 
 Winston v. Dorsett, etc., Co., 129 
 111. 64, 4 L. R. A. 507, 
 
 337, 372, 379 
 v. Rock River P. Co., 129 111. 
 64, 4 L. R. A. 507, 372 
 
 Winter v. Baldwin, 89 Ala. 483, 416 
 v. Belmont, etc., Co., 53 Cal. 
 
 428, 313 
 
 v. Montgomery, etc., Co., 89 
 
 Ala. 544, 481, 485 
 
 v. Muscogee, etc., Co., 11 Ga. 
 438, 94 
 
 Winterfield v. Cream City, etc., 
 Co., 96 Wis. 239, 71 N. W. 
 Rep. 101, 171 
 
 Winters v. Hub, etc., Co., 57 Fed. 
 
 Rep. 287, 50 
 
 Wisconsin, etc., Co. v. Milwaukee 
 Co., 95 Wis. 153,36 L. R. A. 
 55, 16, 80 
 
 v. Oshkosh,62Wis. 32, 101 
 
 Wishard v. Hanson, 99 Iowa 307, 
 
 61 Am. St. Rep. 238, 353 
 
 Witter v. Miss., etc., R. Co., 20 
 
 Ark. 463, 531 
 
 Witters v. Sowles, 32 Fed. Rep. 
 
 130, 659 
 
 Wolf Gaines v. Davenport, etc., 
 
 Co. 93 Iowa 218, 579 
 
 Wolffe v. Underwood, 96 Ala. 329, 
 
 8 S. W. Rep. 774, 16 
 
 Wolverton v. Taylor, 132 111. 197, 247 
 Wood v. Bedford, etc., R. Co., 8 
 Phila. 94, 178 
 
 v. Church, etc., Assn., 63 Wis. 
 
 9, 536 
 
 v. Coosa, etc., R. Co., 32 Ga. 
 
 273, 367 
 
 v. Corry, etc., Wks., 44 Fed. 
 
 Rep 146, 12 L. R. A. 168, 221 
 
 v. Dummer, 3 Mason 308, 321 
 
 v. Hammond, 16 R. I. 98, 154 
 
 v. Lary, 47 Hun (N. Y.) 550, 319 
 v. Manufacturing Co., 23 Ore. 
 23, 586
 
 XCV1 
 
 TABLE OF CASES. 
 
 [References are to Pages."] 
 
 Wood v. Union, etc., Assn., 63 "Wis. 
 
 9, 22 N. W. Eep. 756, 358 
 
 v. Wilev, etc., Co., 56 Conn. 87, 64 
 Wood, etc., Co. v. King, 45 Ga. 34, 541 
 Woodbridge v. Pratt, etc., Co., 69 
 
 Conn. 304, 37 Atl. Rep. 688, 
 
 13, 499 
 Woodbury, etc., Co. v. Louden- 
 
 schlager, 55 N. J. Eq. 78, 35 
 
 Atl. Rep. 436, 44, 45 
 
 v. Mulliken & Gibson, 66 Vt. 
 
 465, 575 
 
 Woodfork v. Union Bank, 3 Cold. 
 
 (Tenn.) 488, 95 
 
 Woolfolk v. January, 131 Mo. 620, 342 
 Woodruff v. Dubuque, etc., R.Co., 
 
 30 Fed. Rep. 91, 509, 513 
 v. Howes, 88 Cal. 184, 550 
 v. Wentworth, 133 Mass. 309, 515 
 
 Woods' App., 92 Pa. St. 379, 314 
 
 Worcester, etc., Co. v. Willard, 5 
 
 31 ass. 80, 161, 385 
 Work v. Bennett, 70 Pa. St. 484, 494 
 Wright v. Bundv, 11 Ind. 398, 251 
 
 v. Central, etc., Co., 67 Cal. 532, 
 
 8 Pac. Rep. '70, 521,536 
 
 v. Hughes, 119 Ind. 324, 12 Am. 
 
 St. Rep. 412, 
 
 135, 174, 180, 201,207, 221 
 v. Lee, 2 S. Dak. 596, 51 N. W. 
 
 Rep. 706, 71, 279, 501, 524, 605 
 v. Lee, 4 S. Dak. 237, 55 N. W. 
 
 Rep. 931, 65, 77, 276, 278, 289 
 
 v. Milwaukee, etc., Co., 95 Wis. 
 
 29, 36 L. R. A. 47, 60 Am. St. 
 
 Rep. 74, 118, 125, 668 
 
 v. Nostrand, 94 X. Y. 31, 671 
 
 v. Pipe Line Co., 101 Pa. St. 204, 
 
 47 Am. Rep. 701, 221, 222 
 
 v. ShHI.y. etc., R. Co., 16 B. 
 
 Mon. i Ky.) 4, 394 
 
 v. Springfield, etc., R. Co., 117 
 
 Mass. 226, 19 Am. Rep. 412, 541 
 Wright's Case, L. II. 12 Eq. 331, 396 
 Wyeth, etc., Co. v. James Spencer 
 
 Bateman, etc., Co. (Utah), 47 
 
 Pac. Rep. 604, 130, 134 
 
 Wymanv. Katon (Iowa), 43 L. R, 
 
 A. 6 610,667 
 
 Wviunn v. Kimberly-Clark Co., 
 
 93 Wis. 564, 254 
 
 Wythe, etc., Co. v. James, etc., 
 Co., 15 Utah 110, 178 
 
 Y 
 
 Yakima Nat. Bank v. Knipe, 6 
 
 Wash. 348, 33 Pac. Rep. 834, 42 
 Yale, etc., Co., v. Wilcox, 64 Conn. 
 
 101, 25 L. R. A. 90, 44, 45, 46 
 
 Yarborough v. Bank of England, 
 
 16 East 6, 235 
 
 Yeaton v. Bank, 21 Grat. (Va.) 
 
 593, 93 
 
 Yonkers Gazette Co. v. Taylor, 30 
 
 App. Div. Rep. (N. Y.) 334, 365 
 York, etc., Co. v. Winans, 17 
 
 How. (U. S.) 39, 121 
 
 York Park Assn. v. Barnes, 39 
 Neb. 834, 56 N. W. Rep. 440, 
 
 32, 296, 367, 379 
 Young v. Board of Education, 54 
 Minn. 385, 40 Am. St. Rep. 
 340, 207 
 
 v. Erie, etc., Co., 65 Mich. Ill, 
 
 341, 593 
 v. Farwell, 139 111. 326, 
 
 611,651, 652,655 
 v. Iron Co., 65 Mich. Ill, 352 
 
 v. Lynch, 1 W. Bl. 27, 418 
 
 v. McKay, 50 Fed. Rep. 394, 632 
 v. South Tredegar I. Co., 85 
 Tenn. 189, 4 Am. St. Rep. 752, 
 
 244, 313 
 Youngblood v. Ga., etc., Co., 83 
 
 Ga. 797, 10 S. E. Rep. 124, 95 
 
 Younglove v. Lime Co., 49 Ohio 
 St. 663, 660 
 
 z 
 
 Zabriskie v. Hackensack, etc., R. 
 
 Co., 18 N.J. Eq. 179, 
 
 88, 94, 95, 528, 529 
 Zellerbach v. Allenberg, 99 Cal. 
 
 57, 421 
 
 Zimmerv. State, 30 Ark. 677, 85,195 
 
 v. Schleehauf, L15 Mass. 52, 634 
 
 Zinn v. Mendel, 9 W. Va. 580, 575 
 
 Zulaeta's ( llaim, L. R. 5 Ch. App. 
 
 Cas. 444, 188
 
 THE 
 
 LAW OF PRIVATE CORPORATIONS 
 
 CHAPTER 1. 
 
 DEFINITION AND CLASSIFICATION. 
 
 1. 
 
 Introductory. 
 
 111. 
 
 2. 
 
 Definition. 
 
 12. 
 
 3. 
 
 Origin and growth of corpora- 
 tions. 
 
 13. 
 
 4. 
 
 Organization and powers. 
 
 14. 
 
 5. 
 
 Corporations during the Middle 
 
 15. 
 
 
 Ages. 
 
 16. 
 
 6. 
 
 The great trading corporations. 
 
 17. 
 
 7. 
 
 Early incorporation in the 
 
 18. 
 
 
 United States. 
 
 19. 
 
 8. 
 
 The juristic person. 
 
 
 9. 
 
 0. 
 
 The fiction theory. 
 Illustrations. 
 
 20. 
 
 Kinds of corporations. 
 
 Public corporations. 
 
 Municipal and public quasi-cor- 
 porations. 
 
 Qwasi-public corporations. 
 
 Private corporations. 
 
 Corporations, aggregate and sole. 
 
 Ecclesiastical corporations. 
 
 Incorporated religious societies. 
 
 Charitable or eleemosynary cor- 
 porations. 
 
 Joint stock companies. 
 
 § 1. Introductory, — Every civilized state has found it nec- 
 essary to confer certain powers and privileges upon juristic 
 persons formed by the aggregation of natural persons. These 
 legal persons are invested with rights and privileges apart from 
 the rights and privileges of the natural persons which form 
 their constituent parts, and are by the law endowed with cer- 
 tain attributes not possessed by natural persons, such as con- 
 tinuous existence. These creatures of the law are called cor- 
 porations, and that branch of the law of the land which defines 
 and regulates the application of the general law to these juris- 
 tic persons is called the law of corporations. 
 
 (1)
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §2 
 
 § 2. Definition. — A corporation is defined as "an artificial 
 person, created by law, or under authority of law, from a group 
 or succession of natural persons, and having a continuous ex- 
 istence irrespective of that of its members, and powers and lia- 
 bilities different from those of its members." 1 
 
 This is a very satisfactory definition of a modern corporation, 
 but it is doubtful whether the description given by the earliest 
 writer upon the subject can be improved upon. A corporation, 
 says Kyd, is a "collection of many individuals united into one 
 body under a special denomination, having perpetual succes- 
 sion under an artificial form, and vested by the policy of the law 
 with the capacity of acting in several respects as an individual, 
 particularly of taking and granting property, of contracting 
 obligations and of suing and being sued, of enjoying privileges 
 and immunities, in common, and of exercising a variety of po- 
 litical rights more or less extensive according to the design of 
 its institution, or the powers conferred upon it either at the 
 time of its creation or any subsequent period of its existence." 2 
 
 1 The Century Dictionary. (Austin 
 Abbott.) As to meaning of "continu- 
 ous existence" and "perpetual succes- 
 sion," see State v. Hannibal, etc., R. 
 Co., 138 Mo. 332, 36 L. R. A. 457. 
 
 2 Kyd I, 13. Sec State v. Standard 
 Oil Co., 19 Ohio St. 137, 30 X. E. Rep. 
 279. The celebrated definition of Chief 
 Justice Marshall in Dartmouth Col- 
 
 .. Woodward, 4 Wheat. 518,636, 
 - follows: "A corporation is an 
 artificial being, invisible, intangible, 
 and existing only in contemplation of 
 law. Being the mere creature oi law, 
 it possesses only those properties which 
 the charter of its creation confers upon 
 it, either expressly, or as incidental to 
 its very existence. These are such as 
 are supposed besl calculated to effect 
 the objecl for which it w as created. 
 Among the most important are immor- 
 tality, I. if the expression may be al- 
 lowed, indn iduality ; properties by 
 u hich a perpetual succession of many 
 persons ai lered ae the Bame and 
 
 may act as a single individual." For 
 other definitions see Minor, Inst. 1,541 ; 
 Taylor, §§ 1-9 ; Potter I, ch. 1 ; Water- 
 man I, § 1 ; Thomas v. Dakin, 22 
 Wend. 9; Southern Pac. R. Co. v. Or- 
 ton, 32 Fed. Rep. 457 ; Baltimore R. 
 Co. v. Fifth Baptist Church, 108 U. S. 
 317; Railway Co. v. Allerton, is Wall. 
 233; Tippling v. Pexall, 2 Bulst. 233; 
 People v. Assessors, I Hill (N.Y.)620. 
 In In re (iihhs Estate, 157 Pa. St. 59, 22 
 L. R. A. 276, the court said: "A cor- 
 poration is an artificial person created 
 by law as the representative of those 
 persons, natural or artificial, who con- 
 tribute to, or become holders of shares 
 in, the property intrusted to it for a 
 common purpose. As it is the ereat- 
 ure of positive law, its rights, powers 
 and duties are prescribed by the law. 
 Beyond the legitimate purpose which 
 ii was created to serve, and the lines 
 of limitation the law has drawn around 
 it, it is without power to act or capac- 
 ity to take." See Andrews I'.ros. v. 
 
 Xoungs town Coke < !o.,86 Fed. Rep.585.
 
 § 3 DEFINITION AND CLASSIFICATION. 3 
 
 Whether an aggregation of individuals is a corporation is 
 determined rather by the faculties and powers conferred than 
 the name or description given it. 1 
 
 § 3. Origin and growth of corporations. — A recent writer 
 has said that the Romans made the world over again, but that 
 among their many achievements none was more durable in its 
 effect on the civilization of mankind than the invention of cor- 
 porations as an instrument of government and trade. 2 The 
 Roman mind was early familiar with the idea of a number of in- 
 dividuals grouped into a unit. 3 But the conception of a juristic 
 person does not seem to have been fully developed until the 
 latter portion of the time of the Republic. But corporations 
 under various names were common from very early times and 
 are expressly recognized in the Twelve Tables. 4 Prior to about 
 the end of the Republic these associations seem to have been 
 recognized not as persons, but as aggregations with some of 
 the rights of persons. Gradually, however, the idea developed 
 until the .entire body of corporations was brought within the 
 realm of private law. As said by Sohm : 5 " Roman law con- 
 trived to accomplish a veritable masterpiece of juristic ingenu- 
 ity in discovering the notion of a juristic person ; in clearly 
 grasping and distinguishing from its members the collective 
 whole as the ideal unity of the members bound together by a 
 corporate constitution ; in raising the whole to the rank of a 
 person and in securing it a place in private law as an inde- 
 pendent subject of proprietary capacity standing on the same 
 footing as other private persons." 
 
 The history of corporations in Rome shows the usual fluctua- 
 tions of opinion with reference to their value to society. At times 
 they were encouraged, and members of the patrician element, 
 under the convenient cloak afforded by their organization, were 
 enabled to engage in trade, from which its members were other- 
 
 ^dgeworth v. Wood, 58 N. J. L. 4 See generally Mommsen's Hist, of 
 
 463, Wilgus' Cases. See §31, infra. Rome, Vol. II, 68; Vol. IV, 267; Vol. 
 
 2 Baldwin, Modern Political Institu- V, 370, 373. See Table viii, 1 Kent 
 
 tions, p. 141 ; Bl. Com. 1, 468 ; 1 Minor's Com. 524, note. 
 
 Inst. 500; 1 Kent Com. 525, note; 1 5 Institutes of Roman Law, p. 106. 
 
 Kent Com. 268. See Wilgus' Cases. 
 L 3 Niebuhr, Hist, of Rome, I, p. 340.
 
 4 THE LAW OF PRIVATE CORPORATIONS. § 4 
 
 wise debarred by law or public sentiment. 1 In the time of the 
 Republic the formation of voluntary corporations seems to have 
 been unrestricted, but they increased so rapidly that they be- 
 came uupopular, and by a law of 64 B.C. they were all dissolved. 
 But a few years later the charters were revived and their scope 
 much extended. Under Julius Csesar each charter had to be 
 submitted to him for approval, and the objects of the corpora- 
 tion therein clearly defined. 2 Although corporations existed 
 and seem to have been the subject of private law, Justinian 
 makes no reference to them in the Institutes; but they are 
 mentioned in several places in his digest. 3 
 
 § 4. Organization and powers. — These juristic persons were 
 created for the various purposes of government, the control of 
 colleges and hospitals and the pursuits of commerce. They 
 were created by a law, a decree of the senate or an imperial 
 constitution. 4 They could be formed by three persons but 
 continued by one, and had continuous succession during the 
 period provided by law for their existence, without reference 
 to the changes in the management. Their powers and priv- 
 ileges varied according to their constitutions, but generally 
 they had authority to sue and be sued, choose officers to man- 
 age their business, elect new members from time to time, 
 and make by-laws consistent with their constitution and the 
 laws of the land. 5 The title to their property was vested in the 
 juristic person and not in its members, and the members were 
 not individually liable for the debts of the corporation. There 
 is a difference of opinion as to the majority required to trans- 
 act the business. 6 The corporation existed so long as the es- 
 
 'Niebuhr, Hist, of Rome, 1,447; 4 Savigny, System des Heutigen 
 
 Mommsen, Hist, of Rome, B. Ill, ch. Romischen Rechts, §§85-102. 
 
 12. Cato not only took shares in a 5 Gaius, Elements of Roman Law 
 
 trading corporation, but loaned it (Poste's Trans.), 143, 144. 
 
 rnono\ and sent his agent Quintua to 6 See Rattigan : The Roman Law of 
 
 look after hie investment. See Plu- Persons, p. 200. The rule seems to 
 
 tarch, Life Of Cato (Clough's Tr.), II, have heen that a majority of at least 
 
 pp. 344, 346. two-thirde of the voting membere 
 
 •Momno en, Hi t. of Borne, Book V, should be present and that a majority 
 
 ch. 11; Hunter's Roman haw, 314. of such should agree in order to ren- 
 
 ■See Taylor Corp., ch. 1, and note der a resolution obligatory upon all. 
 
 in Wilgus' Cases. But opinions differ.
 
 § 4 DEFINITION AND CLASSIFICATION. 5 
 
 sential conditions required for its existence continued. But if 
 the state withdrew its sanction the corporation was at an end. 
 Those organized for purely private purposes are said to have 
 ceased to exist when the last member died, although Savigny 
 says that this did not occur in the case of corporations of a 
 permanent character designed for public purposes. Some 
 writers assert that the corporations could be dissolved by a res- 
 olution of a majority of the members, although jurists like Sa- 
 vigny and Puchta claim that the consent of the state was nec- 
 essary to the dissolution as well as the creation of a corpora- 
 tion. 1 When a public corporation which was specially en- 
 dowed by the state was dissolved, its property reverted to the 
 state. And the same result followed in the case of other cor- 
 porations, when there was no heir who could take the prop- 
 erty. 2 
 
 A corporation could not be guilty of a crime, as it could not 
 entertain the necessary intent. Justinian says that "There is 
 no theft without the intention to commit theft," and it was 
 held that " penal enactments are applicable only to beings ca- 
 pable of feeling, thinking, and exercising the power of voli- 
 tion." 3 In addition to the ordinary corporation aggregate, the 
 Roman law recognized a special kind of corporate body, which 
 resembled the corporation sole of the English law. It included 
 (1) The State; (2) the Prince, in so far as he was the repre- 
 sentative of sovereign power; (3) every public officer consid- 
 ered with reference to the rights and duties attaching to the 
 office; (4) the Fisc, or public treasury; and (5) the hereditas 
 jacens, the inheritance of a deceased person so long as it is not 
 taken up by any one as heir. These were all regarded as 
 juristic persons, possessed of rights as such. 4 
 
 1 Eattigan, p. 202. sence of the facts of family life and of 
 
 2 Mackeldey, Mod. Civ. Law, I, 148. the peculiar incidents of humanity (as 
 
 3 Gouldsmit's Pandects, § 34, note. birth, death, and marriage) destroyed 
 
 4 Mackenzie, Roman Law, p. 163. the analogy between artificial and nat- 
 The general rights of corporations ural persons. With this exception, 
 
 in respect of ownership, possession, the difference between the rights and 
 
 obligations and actions were, in Jus- duties of corporations and those of 
 
 tinian's time, the same as those of natural persons were the following : 
 
 natural persons except where the ab- (1) In respect of usufruct, or the
 
 6 THE LAW OF PRIVATE CORPORATIONS. § 5 
 
 § 5. Corporations during the Middle Ages. — After the fall of 
 Rome the commercial corporations disappeared, and only those 
 survived which were connected with the church. Certain organ- 
 izations in the form of guilds of workmen, which had been 
 known from very early times, now gained great strength. In 
 1582, Henry III of France authorized the organization of work- 
 men in the several cities, and in the eighteenth century the 
 entire trade of the city of Paris was in the hands of six great, 
 and forty-four lesser, corporations. These incorporations pos- 
 sessed special privileges and were sometimes outside of the ju- 
 risdiction of the ordinary courts. Their powers increased un- 
 til they constituted in each city an imperium in imperio. 1 They 
 controlled all the offices, and obtained the sanction of the gov- 
 ernment to whatever they thought for their own benefit. The 
 guild hall was the city hall. But as the spirit of popular lib- 
 erty increased, these exclusive, restrictive organizations gradu- 
 ally lost their power, until they were practically all destroyed 
 by the French Revolution and the reform legislation which 
 followed that period. 
 
 § 6. The great trading corporations. — The tendency during 
 this period was to concentrate political power in the cities, and 
 the feudal kings sought to neutralize it by chartering great 
 business corporations for adventure and foreign trade. The 
 Hanseatic Leagues of the Middle Ages were in a certain sense 
 
 rights of using and taking the fruits of daily granted to them the right to 
 w -h:it w :is owned by another, the dura- succeed on an intestacy and in prior- 
 tion of Buch :i right was limited to one ity to the public treasury, to the prop- 
 hundred years. erty of their deceased members. 
 
 (2) in the case of a township (civ- (5) The rights of corporations to 
 
 making a contract of loan, in enter on an inheritance as heir, to 
 
 which an equal quantity of things of take a legacy, and to benefit from a 
 
 the same kind and value is to lie re- trust under a will (fldeicommisaum'), 
 
 turned to tin- lender (jmutuwri), the were all generally recognized in Jus- 
 
 township is only bound so far us the tinian's time, bul it was only by grad- 
 
 - really to its advantage. ual legislative efforts in imperial times 
 
 \ corporation could not be that this had been fully brought about. 
 
 sued for fraud, bul its individual di- Amos Prin. of Civil Law, p. L20. 
 
 rectors could, and its corporate nets 1 Bee, generally, Gross, The Gild 
 
 might be el aside on the ground of Merchant, London, 1890; Merlin, R6p- 
 
 undue pr< sure exercised by it. ertoire de Jur., VI, l H>, et seq. ; Mot 
 
 (4) Certain corporations bad Bpe- ley, The Dutch Republic, I, 36.
 
 § 6 DEFINITION AND CLASSIFICATION. 7 
 
 commercial partnerships, which sought political strength in 
 order to force commercial privileges. These trading corpora- 
 tions gradually obtained control of all the territory which was 
 then being exploited. They were of two classes, one in 
 which membership was obtained by the payment of a fee, and 
 each member traded for himself at his own risk and upon his 
 own capital. The other kind had a common stock, and the 
 trading was by the corporation, under the management and 
 for the benefit of all the stockholders. 1 In 1216 or 1248 the first 
 of these trading companies was authorized in Burgundy by the 
 Duke of Brabant, under the name of the Brotherhood of St. 
 Thomas a Becket of Canterbury. A century later it was trans- 
 ferred to England and its privileges confirmed by Edward III 
 and later by Henry VII, who changed its name to the Merchant 
 Adventurers of London. These great monopolies, without whose 
 permission no one could trade, increased until, by the close of 
 the reign of Elizabeth, they had gathered five-sixths of the for- 
 eign trade of England into the port of London and into the 
 hands of two hundred shareholders. 2 But the world gradually 
 grew larger and many companies were organized for its exploita- 
 tion. The East Indian Company was chartered under Elizabeth, 
 and the Hudson Bay Company in 1670. The Russian Company, 
 the Eastland Company and the Levant Company were organized 
 about the same time. English colonies in America were planted 
 by corporations operating under similar charters. The pro- 
 moters of the Plymouth Colony were known as the Merchant Ad- 
 venturers, and had a capital stock of seven thousand pounds. 3 
 The Dutch East India Company began the first settlement on 
 Manhattan Island, and a similar Swedish corporation estab- 
 lished a settlement in Delaware. The Richelieu chartered the 
 Company of New France and gave it title to almost the 
 whole of Canada. 4 Many similar corporations were organized 
 about this time, and their exclusive privileges made them the 
 
 1 Smith, Wealth of Nations, iii, B. V., 148; Hume's Hist, of Eng., Vol. II, 
 ch. 1, p. 108. See article on Chartered p. 284. 
 
 Companies, in 3 Enc. of the Law of 3 Palfrey, Hist, of New Eng., I, 153, 
 England, p. 148. 216, 221. 
 
 2 Gross, The Gild Merchant, I, p. 4 Baldwin, Mod. Polit. Inst., p. 168.
 
 s 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §7 
 
 subject of hatred among the people. 1 Many proved disastrous 
 failures, but a few, like the Hudson Bay Company, prospered 
 exceedingly and retained their charters until comparatively 
 recent times. 2 
 
 § 7. Early incorporation in the United States. — Corpora- 
 tions were sometimes created during the colonial period. In 
 some cases the charters were granted by the governor as the 
 representative of the crown and occasionally by the crown it- 
 self. 3 Several of the older colleges were incorporated by the 
 colonial legislatures. In 1637 Massachusetts chartered the 
 artillery company which is still in existence. In 1732 Con- 
 necticut chartered a company for trading purposes, with power 
 to "encourage the fishery, etc.," which, by virtue of the "etc." 
 grant, immediately established a bank. This, however, was 
 treated as an usurpation, and the corporation lost its charter. 4 
 About the same time numerous corporations were organized in 
 
 1 Daniel Defoe, in his Essay on Proj- ued in business until 1867, when its 
 ects, says: " Here begins the forming exclusive rights were purchased by 
 of public joint-stocks which, together the government. Winsor, Crit. and 
 with the East India, African, and Nar. Hist, of Am., VIII, p. 60. 
 Hudson Bay Companies, before es- 
 tablished, begot a new trade, which 
 we call by a new name, stockjobbing, 
 which was at first only the simple oc- 
 casional transferring of interest and 
 shares from one to another as persons 
 alienated their estates; but by the in- 
 dustry of the exchange brokers, who 
 got the business into their own hands, 
 it became a trade, and one, perhaps, 
 managed with the greatest intrigue, 
 
 The company attempted at one time 
 to do a life insurance business. See 
 Child v. Hudson Bay Co., 2 Peere 
 Williams 207 (1723). 
 
 3 Denton v. Jackson, 2 John. Ch. 
 320; Wilson's Works, Vol. II, p. 561; 
 3 Bland's Ch.416, note, Wilgus' Cases. 
 
 4 Colonial Records of Conn., VII, p. 
 390. This suggests the way ill which 
 the Manhattan Bank secured its char- 
 ter. There being no chance of ob- 
 
 ariiiice and trick that ever anything taining a charter for banking purposes, 
 
 that appeared with a face of honesty 
 could he handled with. Tims stock- 
 jobbing * * * and projecting * * * 
 indeed are now almost grown scan- 
 dalous." 
 
 For the history of the South Sea 
 Company Bee Mahon's Hist, of Eng- 
 land, I, ch. xi; Blanqui's Hist. Polit. 
 I Icon., ch. x.wi. For speculative and 
 gambling insurance companies, Smith, 
 
 Wealth of Nations, iii, 122. 
 
 1 The Hudson Baj < tompany contin- 
 
 Aaron Burr secured a charter for a 
 company to supply the city of New 
 
 York with water, with authority to 
 use its surplus capital "in any way not 
 inconsistent with the laws and consti- 
 tution of the United States ill the 
 state, if New York " This was in L799 
 and the hank is still doing business 
 under the charter, l'arlon's lafe of 
 Burr, 238. The Century Magazine. 
 .May, L899.
 
 § 8 DEFINITION AND CLASSIFICATION. 9 
 
 the colonies for the purpose of issuing paper money, but in 
 1720 an act of Parliament prohibited such incorporation. 1 In 
 1748 the Ohio Company obtained a charter directly from par- 
 liament. No charters were granted in Maryland prior to the 
 Revolution. 2 The constitutional convention refused to grant 
 the power to create corporations to the federal congress, but 
 immediately after it went into effect they were created under 
 the implied power. During this early period the practice of 
 incorporation was looked upon with disfavor 3 and charters were 
 very difficult to obtain and were therefore very valuable. But 
 a change of opinion has gradually taken place until the present 
 policy is free incorporation. 4 
 
 § 8. The juristic person. 5 — The idea of separate personality 
 is at the base of the concept corporation. A juristic person 
 can not exist without the capacity for rights and liabilities dis- 
 tinct from those of its members. The rights of a corporation 
 are not the joint rights of the sum of its individual members, 
 but the sole rights of the collective whole of its members. This 
 collective whole or invisible entity which is called into exist- 
 ence and lives by means of the corporate constitution, and 
 which operates not through the medium of other persons, but 
 immediately, is a new subject of rights and duties. It is a 
 community viewed as the subject of rights. The sharp line of 
 demarkation between the collective j^erson and the separate 
 
 1 See Sumner's History of American humanity, and according to the rules 
 
 Currency, 28. of morality, yet, conjunctively, they 
 
 2 McKim v. Odom, 3 Bland's Ch. are hard-hearted, determined vil- 
 
 418. See a History of the Law of Pri- lains." Swift's Works, Nichols' ed., 
 
 vate Corporation before 1800, by Prof. XII, 452; quoted in Baldwin Mod. 
 
 Williston, 2 Harv. Law Rev. 105, 149. Pol. Inst. 193. See also 2 Hume's 
 
 3 In 1733 Lord Bathurst wrote to Hist, of England, ch. 26, p. 256; 
 
 Swift: "All corporations of men are Smith's Wealth of Nations, iii, B. V., 
 
 perpetually doing injustice to individ- ch. 1, p. 145. 
 
 uals. I will attend it, but am as much 4 For the development of the prac- 
 prejudiced against them as possible, tice of free incorporation, see "Free- 
 though I know nothing of the man dom of Incorporation," Baldwin, Mod. 
 nor the matter in question. I have Pol. Inst.; 2 Kent Com., p. 268 and 
 often reflected (from what cause it note. 
 
 arises I know not) that though the 5 See note, Wilgus' Cases, Corpora- 
 majority of a society are honest men, tion as a person. 
 and would act separately with some
 
 10 THE LAW OF PRIVATE CORPORATIONS. § 8 
 
 members expressed the fundamental idea underlying the Roman 
 law of corporations. German mediaeval law never got beyond 
 the idea that the rights of a corporation were the joint rights 
 of its members. But the English common law fully recognized 
 the separate personality of the corporate entity. 1 It inher- 
 ited this principle from the Roman law, and adorned it with 
 such metaphysical conceptions as "invisibility," "intangi- 
 bility," "immortality," and "soullessness." Coke, who was 
 almost the embodiment of the common law, says that "A 
 body politic is a body to take in succession formed (as to that 
 capacity) by policy, and therefore it is called by Littleton a 
 body politic ; and it is called a corporation or a body incorpo- 
 rate because it is made into a body, and of a capacity to take 
 and grant." The distinction between the rights of a corpora- 
 tion and the rights of its members is well illustrated by the 
 rule of the Roman law that a slave could not be tortured for 
 the purpose of extorting information to be used against his 
 master. But the slave of a corporation could by torture be 
 compelled to give information against the members of the cor- 
 poration. He was the property of the juristic person, the 
 corpus, and not of its members. So, by the common law, the 
 title to the corporate property is in the juristic person, and can 
 be conveyed only in the corporate name, although one person 
 may be the holder of all the capital stock. 2 An action of re- 
 plevin or for the conversion 3 of the property of the corporation 
 
 1 For the history of "fictitious per- ods by which their property can be sold 
 
 Bone " in the common law, see Pollock and transferred." England v. Dear- 
 
 ;ind Maitland, History of English Law, born, 141 Mass. 590; Smith v. Hard, 12 
 
 I, pp.469, etseq.; Wilgus' Cases, note, Mete. (Mass.) 371 ; Moore, etc., Co. v. 
 
 Corporation as :i person. Towers, etc., Co., 87 Ala. 206, 13 Am. 
 
 » In Bough v.Breitung (Mich.), 75 N. St. R. 23, 6 So. Rep. 41; Parker v. 
 
 \Y. Rep. i 17, ii was said: "Stockhold- Bethel, etc., Co., 96 Tenn. 252, 31 L.R. 
 
 era do not own the corporate property L. 706; Button v. Hoffman, 61 Wis. 20, 
 
 andean aol mortgage, sell or convey it. 20N.W. llep.607,50 Am. Rep. 131 ; Bar- 
 
 Thetitleie in the artificial beingcalled rick v. Gifford, 47 Ohio St. 180,21 Am. 
 
 the corporation, nol in the stockhold- St. R. 798; Wheelock v. Moulton,15 Vt. 
 
 3uch property is not under the con- ' r)|!l ; Humphrey v. McKissock,] 10 U. S. 
 
 trol of its stockholders, whether they 304; Baldwin v. Canfield, 26 Minn. 13. 
 
 eparately or collectively. The laws B Tomlinson v. Bricklayers' Union, 
 
 under which these corporations are or- 87 [nd. 307. 
 ganized provide the agencies and meth-
 
 § 8 DEFINITION AND CLASSIFICATION. 11 
 
 can not be brought by a stockholder, nor can the stockholders 
 bind the corporation by their contract. 1 The declarations or 
 admissions of stockholders as such are not admissible in evi- 
 dence against the corporation; 2 nor are the stockholders par- 
 ties to an action against the corporation, 3 although for certain 
 purposes a judgment against a corporation is conclusive against 
 its stockholders. 4 As a corporation is a distinct personality in 
 the eye of the law, it may sue or be sued by, 5 or convey or re- 
 ceive a conveyance from, a stockholder. 6 
 
 The citizenship of a corporation may be different from that 
 of its stockholders. Thus, a vessel which belonged to a British 
 corporation was held entitled to British registry, although cer- 
 tain of the stockholders were foreigners. 7 In a suit against a 
 corporation the stockholders can not set off their individual 
 claims against the claim of the plaintiff, although the plaintiff 
 is insolvent. In a case where this was attempted, 8 Mr. Jus- 
 tice Mitchell said: " In dealing with the right of creditors, 
 and the obligations existing between a corporation and its 
 shareholders, by reason of their contract of membership, un- 
 doubtedly the courts often find it necessary to consider the 
 real parties in interest as the individual shareholders; but it 
 may be laid down as a rule, that except in such cases it has 
 been found absolutely essential for the administration of jus- 
 tice to treat a corporation as a collective entity, without refer- 
 ence to its individual shareholders." 
 
 1 Davis v. Creamery Co., 48 Neb. porators the knowledge of the cor- 
 
 471, 67 N. W. Rep. 436; Moore H. H. poration it must be the knowledge of 
 
 Co. v. T. H. Co., 87 Ala. 206, 6 So. Rep. all the corporators." 
 
 41, 13 Am. St. 23 ; Sellers v. Greer, 172 4 See Hale v. Hardon, 95 Fed. Rep. 
 
 111. 549, 40 L. R. A. 589, Wilgus' Cases. 747 (C. C. A., May 31, 1899) and cases 
 
 2 Polleys v. Ins. Co., 14 Me. 141. cited; Mutual, etc., Co. v. Phoenix, 
 
 "Merchants' Bank v. Cook, 4 Pick, etc., Co., 108 Mich. 170, 62 Am. St. 
 
 405. In Mercantile Nat. Bank v. Par- R. 693, Wilgus' Cases. 
 
 sons, 54 Minn. 56, it was contended 5 Rogers v. Society, 19 Vt. 187. 
 
 that notice to certain stockholders was 6 Foster v. Comrs., etc., 1Q. B. 516; 
 
 notice to the corporation. The court Pope v. Brandon, 2 Stew. (Ala.) 401. 
 
 said: "Generally, and for most pur- 7 Queen v. Arnaud, 16 L. J. N. S. C. 
 
 poses, a corporation is a legal entity, L. 50. 
 
 distinct from the body of its stock- 8 Gallagher v. Germania, etc., Co., 
 
 holders and, in any event, to render 53 Minn. 214. 
 
 the knowledge of the individual cor-
 
 12 THE LAW OF PRIVATE CORPORATIONS. § 9 
 
 §9. The ftetioii theory. 1 — Some modern decisions show a 
 disposition to disregard the principle that a corporation is a 
 person separate and distinct from the individuals who com- 
 pose its membership. Thus, where the corporation sought to 
 escape responsibility for certain contracts by having them 
 made with the individual stockholders instead of in the cor- 
 porate name, the court said that it would look beneath the 
 surface and recognize the fact that these individuals were in 
 fact the corporation. But this merely goes to the question 
 whether the state will permit that to be done indirectly which 
 can not be done directly. So the departure from the original 
 idea of no personal liability on the part of a stockholder 
 which has been effected by legislation is not inconsistent with 
 the principle that the corporation is a juristic person. This 
 liability is from the individual member to the creditor, and 
 the corporation is only indirectly, if at all, affected by it. 
 
 The statement is generally made by American and English 
 jurists and courts that the corporation is an artificial person, or 
 a fictitious entity. 2 This theory has been strongly assailed in 
 recent times by German jurists, who insist that the distinct- 
 iveness of the corporate personality is as real as the individu- 
 ality of a physical person. 3 Instead of being a mere figure of 
 speech, the legal person created by the law is a reality. The 
 fiction theory undoubtedly prevails in this country, and is the 
 prolific cause of much unsatisfactory reasoning. It has been 
 much criticised within recent years, but upon grounds which 
 are inconsistent with the acceptance of the organic theory. If 
 the corporation is a mere fiction, a figment of the imagination, 
 it is easy to "look beneath it" or disregard it when it is in the 
 way; but a fact can not be so easily disposed of. Few decisions, 
 however, are the results of careful reasoning upon a clearly 
 accepted and recognized theory. Modern courts are, to a 
 great extent, concerned with the rights and liabilities of mcm- 
 
 i See Wilgus' Cases, note, The cor- Juristische Person, by Prof. Gierke. 
 
 poration as a collection of individuals. See for a full and satisfactory discus- 
 
 i Holland's Jurisprudence, 8th ed., sion Freund'sThe Real Natureol Cor- 
 
 ■; Markby's Elem. of Law, §§ 161, porations, Univ. of Chicago Studies in 
 
 L38; Definitions quoted, §2, supra. Political Science, 1897. 
 
 ■ Holzendnrff 's Rechtslexikon, Art.
 
 § 10 DEFINITION AND CLASSIFICATION. 13 
 
 bers of corporations having capital stock ; and when it is nec- 
 essary to determine individual rights or to preserve state con- 
 trol over a corporation, they will not permit a theory to pre- 
 vent a decision which justice and public policy require. 
 
 § 10. Illustrations. — As stated in the preceding section, it 
 is held in certain recent cases that when an attempt is made 
 to use the theory of corporate personality for ends subversive 
 of its reason, the courts will treat the corporation as a mere 
 collection of individuals. Hence, under some circumstances, 
 the acts of all the stockholders may be treated as the acts of 
 the corporation and result in bringing upon it the penalty of 
 dissolution. In quo warranto proceedings brought against a 
 corporation by the state to deprive it of its franchise on the 
 ground that it had abused its privileges by becoming a party 
 to an illegal trust agreement, the corporation denied that it 
 entered into the contract, but it appeared that the contract was 
 signed by all the shareholders. It was contended that the 
 agreements were the agreements of the individual shareholders 
 in their individual capacities, and with reference to their indi- 
 vidual properties, and hence not corporate agreements. But 
 the court held that the acts of the stockholders under the cir- 
 cumstances, were the acts of the corporation and said: x 
 
 "The idea that a corporation may be a separate entity, in 
 the sense that it can act independently of the natural persons 
 composing it, or abstain from acting, where it is their will 
 that it shall, has no foundation in reason or authority, is con- 
 trary to the fact, and to base an argument upon it, where the 
 question is as to whether a certain act was the act of the cor- 
 poration or of its stockholders, can not be decisive of the ques- 
 tion, and is therefore illogical ; for it may as likely lead to a 
 false as to a true result. So long as a proper use is made of 
 the fiction that a corporation is an entity apart from its share- 
 holders, it is harmless, and, because convenient, should not 
 
 'State v. Standard, etc., Co., 49 Ohio 834; Woodbridge v. Pratt & Whitney 
 St. 137; see People v. North River, Co., 69 Conn. 304; Andrews Bros. v. 
 etc., Co., 121 N. Y. 582, 24 N. E. Rep. Youngstown Coke Co.,86 Fed. Rep.585.
 
 14 THE LAW OF PRIVATE CORPORATIONS. § 11 
 
 be called in question ; but where it is urged to an end sub- 
 versive of its policy, or such is the issue, the fiction must be 
 ignored, and the question determined whether the act in ques- 
 tion, though done by shareholders — that is to say, by the per- 
 sons united in one body — was done simply as individuals, 
 and with respect to their individual interests as shareholders, 
 or was done ostensibly as such, but, as a matter of fact, to 
 control the corporation, and affect the transaction of its busi- 
 ness, in the same manner as if the act had been clothed with 
 all the formalities of a corporate act. * * * Applying, 
 then, the principle that a corporation is simply an association 
 of natural persons, united in one body under a special denom- 
 ination, and vested by the policy of the law with the capacity 
 of acting in several respects as an individual, and disregard.- 
 ing the mere fiction of a separate legal entity, since to regard 
 it in an inquiry like the one before us would be subversive of 
 the purpose for which it was invented, is there, upon an analy- 
 sis of the agreement, room for doubt that the act of all the 
 stockholders, officers, and directors of the company in signing 
 it should be imputed to them as an act done in their capacity 
 as a corporation? * * * Where all, or a majority, of the 
 stockholders comprising a corporation do an act which is 
 designed to affect the property and business of the company, 
 and which, through the control their numbers give them over 
 the selection and conduct of the corporate agencies, does affect 
 the property and business of the company, in the same man- 
 ner as if it had been a formal resolution of its board of direct- 
 ors, and the act' so done is ultra vires of the corporation and 
 against public policy, and was done by them in their indi- 
 vidual capacity for the purpose of concealing their real pur- 
 pose and object, the act should be regarded as the act of the 
 corporation ; and to prevent the abuse of corporate power, may 
 lie challenged as such by the state in a proceeding in quo war- 
 ranto. " 
 
 §11. Kinds of corporations. 1 — Corporations are classified 
 
 according to their form, nature and the purpose of their crea- 
 'Scr Wilgus' Cases Corps.
 
 § 12 DEFINITION AND CLASSIFICATION. 15 
 
 tion. The principal kinds are designated as public, private, 
 aggregate, sole, ecclesiastical, lay, civil and charitable. 1 
 
 § 12. Public corporations. — To this class belong such cor- 
 porations as are created for purposes of government and the 
 management of public affairs. They are involuntary, and 
 there is no contractual relation existing between the members 
 or between the corporation and the state. They are simply 
 political agencies created by the state for governmental pur- 
 poses, but they are sometimes granted corporate or private 
 powers to be exercised for the benefit of the persons who con- 
 stitute their members. 2 
 
 § 13. Municipal and public quasi-corporations. — Excluding 
 from consideration the class of corporations sometimes called 
 quasi-public corporations, that is, corporations which partake 
 both of the nature of public and private, we divide public cor- 
 porations proper into municipal corporations and public quasi- 
 corporations. The former are complete corporations, with all 
 the powers, duties and liabilities incident to the status, such as 
 cities, towns and villages. The latter possess but a portion 
 of the powers, duties and liabilities of corporations and include 
 counties, townships, town supervisors, road districts and 
 school districts. 3 
 
 § 14. Quasi-public corporations. — The term quasi-public 
 corporation is often used to designate a corporation properly 
 classed as private, but which is engaged in a business of such 
 a nature that the public has an interest therein, as grain ele- 
 vators, railway, telegraph, telephone, gas and water com- 
 panies. The private property which is devoted to such pur- 
 poses becomes " affected with a public interest and ceases to 
 be juris privati only," and may be controlled by the public for 
 
 J In an article on the classification of Corp., I, § 19 ; Elliott Pub. Corp., § 2 ; 
 
 corporations, in IV Yale Law Journal McKim v. (Morn, 3 Bland's Ch. 407, 
 
 97, Judge Oliver P. Shiras suggests a Wilgus' Cases. 
 
 division into political, public and pri- 3 Talbott Co. v. Queen Anne Co., 50 
 
 vate. Md. 245 ; Hamilton County v. Mighels, 
 
 2 For authorities, see Dillon Munic. 7 Ohio St. 110, Wilgus' Cases.
 
 16 THE LAW OF PRIVATE CORPORATIONS. § 15 
 
 the public good to the extent of the interest thus created. 1 But 
 it is a misnomer to call such corporations quasi-public corpo- 
 rations; a railway may be a guas^-public highway, but the 
 corporation is private. 2 
 
 A boom company is said to be a giwm-public corporation in- 
 tended to supply facilities to the general public for the driving 
 of logs. 3 
 
 § 15. Private corporation. — A private corporation is an in- 
 corporated association formed by the voluntary agreement of 
 its members, having for its object the advancement of the 
 private interests of the members. It is sometimes difficult to 
 determine whether a corporation is public or private, but the 
 simple and sufficient test is found in the purpose of its crea- 
 tion. If it is an agency for the administration of govern- 
 ment it is public, but if its primary purpose is the private 
 emolument of its members it is private, although the state 
 may hold a part or even all of its shares of stock. 4 The true 
 criterion is whether the objects, uses and purposes for which 
 the corporation was organized are solely for the public benefit 
 and convenience, or for private emolument, and whether the 
 public can participate in them by right or only by permission. 
 The mere fact that a corporation is subject to visitation and 
 inspection by a public official does not make it a public corpo- 
 ration. 5 
 
 § 16. Corporations, aggregate and sole. — A corporation 
 which is composed of several persons is called a corporation 
 
 'Mann v. Illinois, 94 U. S. 113; duct a race-track and offer purses is a 
 
 Railroad Commission Cases, 116 U. S. private corporation, and may refuse to 
 
 307; Hockett v. State, 105 Ind. 250; allow certain persons to enter horses. 
 
 Spring Valley Water-works v. Schot- Corrigan v. Coney Island Jockey Club 
 
 tier, 110 IT. B. 347; Miners' Ditch Co. (N. Y.), 2 Misc. Rep. 512. 
 
 v. Zellerbach, 37 Cal. 543, 99 Am. Dec. 8 West Branch Boom Co. v. Lumber, 
 
 I'.oi). etc., Co., 121 Pa. St. 143, (> Am. St. R. 
 
 1 l'ierce v. Commonwealth, 104 Pa. 766. 
 
 St. l-".i); Wolfle v. Underwood, 96 Ala. 'Regents v. Williams, 9 Gill & J. 
 
 329, 8 S. Rep. 771. But see Slate v. (Md.) 232; Bank of U.S. v. Planter's 
 
 Oarr, in End. 335; United States v. Bank, 9 Wheat. 904, Wilgus' Cases. 
 
 Joinl Traffic Assn., 171 Q. 8.505, 570; 5 Wisconsin, etc., Co. v. Milwaukee 
 
 Smythv.AmeB, 169U.S.466; United Co., 95 Wis. 153, 36 L.R. A. 55; Bank 
 
 States v. Freight Assn., 166 D. 8. 290, v. Gibbs, 3 McCord (S. C.) 377, Wil- 
 
 332. A corporation organized to con- gus' Cases.
 
 § 16 DEFINITION AND CLASSIFICATION. 17 
 
 aggregate, 1 while one which consists of one person, to whom 
 and his successors belongs the legal perpetuity which is 
 denied to natural persons, is a corporation sole. To the 
 former class belong banking, manufacturing and railway cor- 
 porations, and incorporated mutual benefit and fraternal socie- 
 ties. To the latter the dignitaries of the Church of England, 
 and all public officers who are invested with the attributes of a 
 corporation by reason of their official position. The governor 
 of a state, 2 and an officer to whom bonds are required to 
 be made by statute, resemble corporations sole. 3 But sole 
 corporations as they existed at common law are practi- 
 cally unknown in the United States. In the older states, 
 where the religious establishment of the English church was 
 introduced, the minister of the parish was seized of the 
 freehold as in England. "We are not aware," said Chief 
 Justice Shaw, 4 "that there is any instance of a sole corpora- 
 tion in this commonwealth, except that of a person who 
 may be seized of parsonage lands, to hold to him and his 
 successors in the same office, in right of his parish." "As 
 for sole corporations," says Dr. Hammond, 5 "they have dis- 
 appeared almost entirely from our law, not so much by any 
 change in the law itself, as by the obsolescence of the eccle- 
 siastical dignitaries, who furnished most of Blackstone's in- 
 stances. Single persons holding some office or trust can take 
 property or obligations upon themselves, and their respective 
 successors, by properly worded instruments. Many public 
 officers, treasurers, sheriffs, etc., are specially authorized by 
 statutes to do the same. The law applicable to these cases is 
 almost precisely that which a century ago would have been 
 deemed peculiar to sole corporations, and yet the word is hardly 
 ever applied to them." 
 
 1 Fietsam v. Hay, 122 111.293, 3 Am. 4 Overseers v. Sears, 22 Pick. (Mass.) 
 St. R. 492, Wilgus' Cases. 125, Wilgus' Cases. 
 
 2 Governor v. Allen, 8 Humph. 5 Hammond's Blackstone, I, 844. See 
 (Tenn.) 176, Wilgus' Cases. also Kyd Corp., p. 20. 
 
 3 Polk v. Plummer, 2 Humph. 
 (Tenn.l 500, 37 Am. Dec. 566. 
 
 2— Private Cor.
 
 18 THE LAW OF PRIVATE CORPORATIONS. § 17 
 
 § 17. Ecclesiastical corporations. — Corporations organizes 
 for the advancement of religion are common in England 1 and 
 may exist in a few of the older states of the Union. But in 
 the strict technical sense ecclesiastical corporations are at 
 present unknown in this country. 2 
 
 § 18. Incorporated religious societies, — While the ecclesi- 
 astical corporations of the English law are unknown in this 
 country, the incorporation of societies organized for the advance- 
 ment of religion, and the more convenient transaction of bus- 
 iness "relative to the temporalities thereof" is very common. 8 
 Such bodies are classed with those organized for literary, edu- 
 cational and charitable purposes and are provided for under 
 the laws of most, if not all, the states. The property of the 
 church is held by the corporation in trust and can not be di- 
 verted to other purposes. 4 Such organizations are favored by 
 the law, and are frequently exempted from general taxation. 5 
 Civil courts will not control the internal management of incor- 
 porated religious societies, unless a civil or property right is 
 invaded. 6 Thus a court will not interfere where the rights of 
 a faction of the church to control its property depend mainly 
 upon controverted matters of religious doctrine. 7 But where 
 the doctrines of the church are thoroughly settled, those who 
 adhere to such doctrines are entitled to control the property, 
 although they constitute a minority of the membership. 8 
 
 § 19. Charitable or eleemosynary corporations. — Charitable 
 corporations are formed for the administration of charitable 
 
 M Bl. Com. 470; 2 Kyd Corp. 22-25. tion does nol exempt a religious cor- 
 8 Robertson v. Bullions, 1] N.Y.243, poration from liability for special as- 
 sessments. Sec Elliotl I'nl>. Corp., 
 
 3 The clmri-li society may exist (lis- § 119. 
 
 tinct from the corporation. Lilly v. 6 Waller v. Howell, 45 N. Y. Sup. 
 
 Tobbein, 103 Mo. '177, 23 Am. St. R. 790, 20 Misc. (N. V.) 236. 
 
 887; Hardin v. Trustees, 51 Mich. 137, 7 Moseman \. Heitshousen, 50 Neb. 
 
 ■17 Am. R. 555, WilgUS' Cases. 420, 69 N. W.957. See note, I s Am. 
 
 4 Brnndage v. Deardorf,55 Fed. 839; St. R. 302. 
 
 Dubs v. Egli, 167 III. 514, 47 N. E. 'Smith v. Pedigo, 145 End. 361, 32 
 
 Rep. 766; VanHouten v. McKelway, L. R. A. 838; Hear v. Heasley, 98 
 
 17 N. .1. !•:. 126. Mich. 279, 24 L. R. A. (J15. 
 6 An exemption from general taxa-
 
 § 20 DEFINITION AND CLASSIFICATION. 19 
 
 trusts and not for the profit of the members. They are in fact 
 but the formal expression of an equitable trust. Such a cor- 
 poration is a trustee selected by the donor of a charity for the 
 purpose of managing the fund given for charitable uses. 
 "Corporations of the eleemosynary sort," says Blackstone, 
 "are such as are constituted for the distribution of the free 
 alms or bounty of the founder, to such persons as he has di- 
 rected, of which kind are all hospitals for the maintenance of 
 the poor, sick and impotent, and all colleges." 1 Since the de- 
 cision in the Dartmouth college case, it is the settled law of 
 this country that the property of such a college is private prop- 
 erty. Hence, the property of a private eleemosynary corpora- 
 tion, although charged with the maintenance of a college "or 
 other public charity," is private property and not subject to 
 the control of the legislature of the state. 2 In Illinois, under 
 a statute it was held that the board of education was a private 
 eleemosynary corporation and not a public corporation. 3 An in- 
 surance patrol company, organized to save and protect property 
 from fire, which makes no distinction between insured and un- 
 insured property, which has no stock and pays no dividends, 
 but is supported by the voluntary contributions of insurance 
 companies, is a public charitable corporation. 4 
 
 § 20. Joint stock companies. 5 — A joint stock company has 
 some of the characteristics of a partnership and a corporation. 
 It is in fact a partnership with the outward form of a corpo- 
 ration, and endowed by statute with some of the powers and 
 privileges of a corporation. Except when expressly restricted 
 by statute, the members of such an association are liable as 
 partners. 6 The interests of the members are represented by 
 shares. It is in fact "a partnership made up of many persons 
 
 blackstone (Hammond's ed.), I, 4 Fire Ins. Patrol v. Boyd, 120 Pa. 
 
 471; Kyd Corp. 25, 29; Kent's Com. St. 624, 6 Am. St. R. 745. 
 
 (Barnes' ed.), II, 274; American Asy- 5 For distinction between corpora- 
 
 lum v. Phoenix Bank, 4 Conn. 172, 10 tions and partnerships, joint stock 
 
 Am. Dec. 112. See also Dartmouth companies, unincorporated compa- 
 
 College v. Woodward, 4 Wheat. 518, nies, cost book mining companies, see 
 
 Wilgus' Cases. Wilgus' Cases Corps. 
 
 -State v. Neff (Ohio), 28 L. R. A. 6 Hedges App., 63 Pa. St. 273; Peo- 
 
 409. pie v. Coleman, 133 N. Y. 279, 31 N. 
 
 3 Board of Education v.Greenbaume, E. Rep. 96; Frost v. Walker, 60 Me. 
 
 30 111. 610; Board of Education v. 468; Batty v. Adams Co., 16 Neb. 44. 
 Bakewell, 122 111. 339.
 
 20 THE LAW OF PRIVATE CORPORATIONS. § 20 
 
 acting under articles of association for the purpose of carry- 
 ing on a particular business, and having a capital stock di- 
 vided into shares transferable at the pleasure of the holder." 1 
 The shares are transferable without the consent of the other 
 members. 2 Such bodies are created by contract and do not 
 require authority from the state, although in many states 
 there are statutory provisions for their organization. 3 The 
 creation of a corporation "merges in the artificial body and 
 drowns in it the individual rights and liabilities of the mem- 
 bers, while the organization of a joint stock company leaves 
 the individual rights and liabilities unimpaired and in full 
 force." 4 A joint stock company is generally sued as a part- 
 nership; and in the absence of statutory exemptions, each 
 member is liable for all the debts of the company after the 
 joint property is exhausted. 5 
 
 1 Att'y-Gen. v. Mercantile, etc., Ins. Cases (Stock Exchange) ; Skillman v. 
 
 Co., 121 Mass. 524; Edwards v. War- Lockman, 23 Cal. 198, Wilgus' Cases 
 
 ren L. W. Co., 168 Mass. 564, 38 L. R. (Cost Book Mining Company). 
 
 A. 791, Wilgus' Cases. For short 2 Burnes v. Pennell, 2 H. of L. Cas. 
 
 sketch of history of joint stock com- 520; Willis v. Chapman, 68 Vt. 459, 
 
 panies see Van Sandan v. Moore, 1 35 Atl. Rep. 459. 
 
 Russ. Ch. 441. See also Gleason v. 3 People v. Coleman, 133 N. Y. 279. 
 
 McKay, 134 Mass. 419, Wilgus' Cases; 4 People v. Coleman, 133 N. Y. 279. 
 
 Lewis v. Tilton, 64 Iowa 220, 52 Am. 5 Taft v. Ward, 106 Mass. 518; Frost 
 
 R. 436, Wilgus' Cases (Unincorporated v. Walker, 60 Me. 468; Butterrield v. 
 
 Association); Belton v. Hatch, 109 Beardsley, 28 Mich. 412. 
 N. Y. 593, 4 Am. St. R. 495, Wilgus'
 
 CHAPTER 2. 
 
 THE CREATION, ORGANIZATION, AND CITIZENSHIP OP 
 CORPORATIONS. 
 
 /. The Creation and Organization. § 
 
 § 21. In general. 
 
 22. By what authority. 
 
 23. Essentials of legal incorporation. 
 
 24. Agreement between incorpora- 
 
 tors. 
 
 25. Acceptance of the grant. 
 
 26. Delegation of power to charter ? 
 
 corporations. 
 
 27. Delegation of ministerial duties. 
 
 28. Power of congress to create cor- 
 
 porations. 
 
 29. Ratification of claim of corpo- 
 
 rate franchise. 
 
 30. Corporations by prescription. 
 
 31. Creation by implication. 
 
 32. Methods of legislative action. 
 
 33. Constitutional limitations. 
 
 34. By consolidation. 
 
 //. Organization wider General Incor- 
 poration Laws. 
 \ 36. In general. 
 
 36. General requirements. 
 
 37. Purposes for which corporations 
 
 may be organized. 
 
 38. Substantial compliance with 
 
 statutory requirements. 
 
 39. Illustrations. 
 
 40. Conditions precedent to organi- 
 
 zation of corporation de jure. § 
 
 41. Articles of incorporation — Con- 
 
 tents. 
 
 42. Filing and publication of arti- 
 
 cles. 
 
 43. Subscriptions for capital stock as 
 
 a condition precedent. 
 
 44. Date of incorporation. 
 
 45. Who may be incorporators. 
 
 (21) 
 
 46. Number of incorporators. 
 
 47. The corporate name. 
 
 48. Protection of corporate name. 
 
 49. Proof of incorporation— In direct 
 
 proceedings. 
 
 50. In collateral proceedings. 
 
 III. Promoters of Corporations. 
 
 51. Who are promoters. 
 
 52. Fiduciary position of promoters. 
 
 53. Secret profits. 
 
 54. Owners of property as promoters. 
 
 55. Personal liability of promoters 
 
 on contracts. 
 
 56. Liability to subscribers whose 
 
 subscriptions are obtained by 
 fraud. 
 
 57. Fraudulent prospectus. 
 
 58. Liability of corporation on con- 
 
 tracts made by promoters. 
 
 59. Adoption of contract by corpora- 
 
 tion. 
 
 60. Acceptance of benefits under the 
 
 contract. 
 
 61. Limited to obligations of the ac- 
 
 cepted contract. 
 
 62. The expenses and services of 
 
 promoters. 
 
 IV. Corporations as Persons and 
 
 Citizens. 
 
 63. The citizenship of a corporation. 
 
 64. Incorporation in several states. 
 
 65. Citizenship within the four- 
 
 teenth amendment. 
 
 66. A corporation as an "inhabi- 
 
 tant " of a state. 
 
 67. Place of doing business — Li- 
 
 cense — Effect on citizenship. 
 
 68. A corporation as a person.
 
 22 THE LAW OF PRIVATE CORPORATIONS. § 21 
 
 /. The Creation and Organization. 
 
 § 21. In general. — Individuals can not as a matter of right 
 assume the powers and privileges of a corporation. These 
 artificial bodies are created, not by the will of natural persons, 
 but by the exercise of the sovereign power of the state, which 
 thus confers upon certain designated persons the franchise of 
 doing what they have no right to do without such special 
 authority. This privilege of conferring special powers and 
 rights upon favored individuals was formerly considered the 
 ''fairest flower of the prerogative." 
 
 § 22. By what authority. — The consent of the sovereign is 
 therefore necessary to a legal incorporation. In England it 
 was the privilege of the king to create corporations; but they 
 are now usually organized under the authority of acts of par- 
 liament. In the United States and the several states of the 
 Union the legislative department only can create or authorize 
 the creation of corporations; but this power is sometimes, un- 
 der proper constitutional authority, delegated to the courts. 
 
 § 23. Essentials of legal incorporation. — In order that there 
 may be a legal incorporation, there must be a legislative grant 
 of authority, an agreement between the incorporators, and an 
 acceptance of the grant. The necessity for legislative author- 
 ity has been already referred to. 
 
 § 24. Agreement between incorporators. — It is necessary 
 that there should be a contractual relation between the parties 
 forming the corporation. 1 This agreement may be entered into 
 in various ways, and may be implied from the acts of the par- 
 i]. -. No particular form is necessary, unless prescribed by 
 charter or statute. The acceptance of the charter or a subscrip- 
 tion for shares is ordinarily sufficient evidence of an agreement 
 to form a corporation according to the terms of the charter. 2 
 
 »Green v. Knife Falls Boom Co., 35 and Mr. Morawetz's views. .Mr. 
 
 Mi.,.,. I:-"., Wilgus' Cases. Beach, Private Corporations, § 23, and 
 
 1 Morawetz Priv. Corp., I, §§ 24, 25; the inference Erom Story's opinion in 
 
 Laurnan v. Lebanon Valley R. Co., 30 the Dartmouth College Case, would 
 
 ;• Mr. Clark, Private Cor- lead to the conclusion thai there is a 
 
 tjons, §§27 and 86, taking issue contract between the members and the 
 
 ,,,, tin point, aaj - the contracl is only corporation, and among the members 
 
 ,,•11 the subscriber and the cor- themselves, 
 poral ion, and criticises M r. Taylor's
 
 § 25 CREATION, ORGANIZATION AND CITIZENSHIP. 23 
 
 § 25. Acceptance of the grant. — The charter of a corpora- 
 tion is merely an enabling act which must be accepted by the 
 grantees before any rights can be claimed under it. If not 
 accepted within a reasonable time, its legal effect expires. 1 
 Like all offers, it may be withdrawn at anytime before accept- 
 ance. 2 The acceptance can be by those only to whom the offer 
 was made, 3 and must be as a whole, and unconditional, unless it 
 appears that it was the legislative intent that it may be accepted 
 in part and rejected in part. 4 The acceptance must be by the cor- 
 porators in their constituent capacity, and the act of acceptance 
 must be done within the borders of the state. 5 No particular 
 formalities are necessary in order to constitute an acceptance of 
 a charter, and if no conditions are attached to a grant, user 
 sufficient to show an intention to accept is "sufficient. 6 The 
 question of acceptance is one of fact for the jury. 7 
 
 § 26. Delegation of power to charter corporations. — Par- 
 liament being free from any constitutional limitations, and 
 absolute in its legislative authority, may license another to 
 grant corporate franchises. But in the United States, where 
 the legislature itself exercises delegated power, the principle 
 delegata potestas non potest delegare applies. Hence, a general 
 power to confer corporate franchises can not be delegated by 
 the legislature of the state to any other body. 8 
 
 § 27. Delegation of ministerial duties. — The principle of 
 the preceding section does not prevent the delegation of minis- 
 terial duties. Thus the legislature may properly provide that 
 
 1 State v. Dawson, 16 Ind. 40; State R. Co. v. Smith, 47 Me. 34. Accept- 
 v. Bull, 16 Conn. 179; Smith v. Silver, ance by a majority of members, see 
 etc., Co., 64 Md. 85, 54 Am. Rep. 760; St. Paul Div. v. Brown, 11 Minn. 356, 
 Qninlin v. Houston, etc., R. Co., 89 Gil. 254; Jackson v. Walsh, 75 Md. 
 Tex. 356. 304, 23 Atl. Rep. 778. 
 
 2 Lincoln Bank v. Richardson, 1 7 Hammond v. Straus, 53 Md. 1. 
 Greenl. 79, 10 Am. Dec. 34. 8 Cooley Const. Lim. 141 ; Thorne v. 
 
 3 Rex v. Amery, 1 T. R. 575. Cramer, 15 Barb. (N. Y.) 112. See 
 4 Rex v. Westwood, 2 Dow. & Clark Thomas v. Dakin, 22 Wend. (N. Y.) 
 
 21; Lvons v. Orange, etc., R. Co., 32 110, Wilgus' Cases. But see 6 Am. & 
 
 Md. 18. Eng. Enc. of Law, 2d ed., p. 1021, con- 
 
 5 Miller v. Ewer, 27 Me. 509. cerning delegation of legislative func- 
 
 6 State v. Sibley, 25 Minn. 387; tions. Also delegation to territorial 
 Miss. & R. R. B.Co. v. Prince, 34 legislatures. Riddick v. Amelin, 1 
 Minn. 79; Louisville Tr. Co. v. L., Mo. 5, Wilgus' Cases, and delegation 
 etc., R. Co., 75 Fed. Rep. 433; Bank to Regents of University of New York, 
 v. Lyman, 20 Vt. 666; Bangor, etc.,
 
 24 THE LAW OF PRIVATE CORPORATIONS. § 28 
 
 some designated officer shall issue a certificate to the effect that 
 the incorporators have complied with certain statutory require- 
 ments before the incorporation shall take effect. 1 With refer- 
 ence to such a statute the court said: 2 "The act rests upon the 
 legislative will, and in no way depends for its vitality upon the 
 action of the commissioners. * * * The commissioners perform 
 no legislative act; they enact no laws; they simply perform ad- 
 ministrative acts in carrying the law into effect and applying 
 it." 
 
 Hence, in the absence of an authorizing provision in the 
 constitution, the legislature can not delegate to a court the 
 power to create corporations. But a distinction is made be- 
 tween creating and organizing, and even in the absence of such 
 a provision the legislature may provide that the courts shall 
 supervise the organizing of incorporations under the provis- 
 ions of a general incorporation act. In such cases the court 
 determines whether the incorporators have complied with the 
 law, and when they have done so, issues its certificate or char- 
 ter to that effect. 3 
 
 § 28. Power of congress to create corporations, — The con- 
 gress of the United States may create a corporation when such 
 a body is an appropriate means for carrying into execution any 
 of the express or implied powers of the national government. 
 But it is as a means and not as an end that congress may cre- 
 ate corporations. 4 Thus the national legislature has in the ex- 
 ercise of this power created national banking corporations-, 6 
 
 1 Franklin Bridge Co. v. "Wood, ll olutions in the constitutional conven- 
 Ga. 80; People v. Nelson, 46 N. Y. tion, enumerating the power to create 
 ■177. corporations among the powers of 
 
 2 In re N«'\v York, etc., R. Co., 70 congress. They were referred to a 
 N. Y. 327. committee and never reappeared. Mad- 
 
 "Franklin Bridge <'o. v. Wood, 14 ison's Journal of Debates (Scott's ed.), 
 
 80. |>. 549. See also p. 726, where the ob- 
 
 •McCulloch v. Maryland, I Wheat, jeetions to such a grant are stated by 
 
 316; story Const. Sec. 1266 ; Hare, Am, King. 
 
 Const.Law, 5§ 98, 105, 111,249, L310. "McCulloch v. Maryland, I Wheat. 
 
 Sec- an article on "National Corpora- 816; Osborne v. CTnited states Bank, 
 
 tions" in 21 Cent. L.J. 128. Both 9 Wheat. 738; Jattliardv. Greenman, 
 
 Madison and Pinekney introduced res- L10U. S. 421, 'il">. For the act creat-
 
 §28 
 
 CKEATION, ORGANIZATION AND CITIZENSHIP. 
 
 25 
 
 savings banks; institutions of learning; religious, benevolent 
 and educational societies; manufacturing, agricultural, me- 
 chanical, insurance, transportation, railroad, market, and cem- 
 etery corporations; and boards of trade within the District of 
 Columbia, 1 and railway corporations operating lines extending 
 into two or more states. 2 Congress has also created corpora- 
 tions for building a Nicaragua Canal, 3 and also passed a gen- 
 eral law providing for the formation of national trades-union 
 organizations, with branches in the states. 4 
 
 ing the present national banking sys- 
 tem, see 12 U. S. Statutes at Large, 665. 
 
 1 Compiled Statutes of Dist. of Col- 
 umbia, ch. 15; Hadley v. Freedman's 
 Saving, etc., Co., 2Tenn. Ch. 122; 
 Williams v. Creswell, 51 Mass. 817; 
 Daily v. National, etc., Co., 64 Ind. 1. 
 
 2 California v. Central Pac. R. Co., 
 127 U. S. 1, 39; Union Pac. R. Co. v. 
 Hall, 3 Dill. (C. C.) 515, s. c. 91 U. S. 
 343. In Luxton v. North River Bridge 
 Co., 153 U. S. 525, the supreme court 
 of the United States said : "The con- 
 gress of the United States, being em- 
 powered by the constitution to regu- 
 late commerce among the several 
 states, and to pass all laws necessary 
 or proper for carrying into execution 
 any of the powers specifically confer- 
 red, may make use of any appropriate 
 means for this end. As said by Chief 
 Justice Marshal], 'The power of creat- 
 ing a corporation, though appertain- 
 ing to sovereignty, is not, like the 
 power of making war, or levying taxes, 
 or of regulating commerce, a great 
 substantive and independent power, 
 which can not be implied as incidental 
 to other powers, or used as a means 
 of executing them. It is never the 
 end for which other powers are exer- 
 cised but a means by which other ob- 
 jects are accomplished.' Congress, 
 therefore, may create corporations as 
 appropriate means of executing the 
 powers of government, as, for instance, 
 a bank for the purpose of carrying on. 
 the fiscal operations of the United 
 States, or a railroad corporation for 
 the purpose of promoting commerce 
 among the states. McCulloch v. Mary- 
 land, 4 Wheat. 316, 411, 422; Osborn 
 v. Bank of United States, 9 Wheat. 
 
 738, 861, 873; Union Pac. R. Co. v. 
 Myers ('Pacific R. Removal Cases'), 
 115 U. S. 1, 18; California v. Pac. R. 
 Co., 127 U. S. 1, 39. Congress has 
 likewise the power, exercised early 
 in this century by successive acts in 
 the case of the Cumberland or National 
 Road from the Potomac across the Al- 
 leghenies to the Ohio, to authorize the 
 construction of a public highway con- 
 necting several states. See Indiana v. 
 United States, 148 U. S. 148. And 
 whenever it becomes necessary for the 
 accomplishment of any object within 
 the authority of congress, to exercise 
 the right of eminent domain and take 
 private lands, making just compensa- 
 tion to the owners, congress may do 
 this with or without a concurrent act 
 of the state in which the lands lie. 
 Van Brocklin v. Tennessee, 117 U. S. 
 151, 154, and cases cited; Cherokee 
 Nation v. Kansas R. Co., 135 U. S. 
 641, 656. From these premises the 
 conclusion appears to be inevitable 
 that, although congress may, if it see 
 fit, and as it has often done, recognize 
 and approve bridges erected by au- 
 thority of two states across navigable 
 waters between them, it may, at its 
 discretion, use its sovereign powers, 
 directly or through a corporation cre- 
 ated for that object, to construct 
 bridges for the accommodation of in- 
 terstate commerce by land, as it un- 
 doubtedly may to improve the naviga- 
 tion of rivers for the convenience of 
 interstate commerce bv water. 1 Hare, 
 Const. Law, 248, 249.'"' 
 
 3 25 U. S. Stats. 673. 
 
 4 49 Cong., 1st Sess., ch. 567 (1886); 
 1 Supp. R. S. 498.
 
 26 THE LAW OF PRIVATE CORPORATIONS. § 29 
 
 § 29. Ratification of claim of corporate franchise. — Any 
 
 act of the legislature which indicates an intention to recognize 
 the existence of a corporation will amount to a ratification of. 
 a claim of corporate existence. The legislature may ratify 
 when it may create or authorize. Thus a statute annexing 
 other territory "to the town of A," by implication makes it 
 a town, if it was not one before, 1 but " no greater effect can be 
 attributed to a statute than appears to have been intended by 
 the legislature enacting it." 2 Such a ratification not only 
 legalizes the existence of a corporation, but cures the illegality 
 of corporate acts done before the act of ratification was passed. 3 
 
 § 30. Corporations by prescription. — A corporation is said 
 to exist by prescription if its commencement can not be shown, 
 and the grant of a charter is presumed from long continued 
 use of the corporate franchise. This is the doctrine in the 
 United States as regards public corporations, 4 and the same 
 principles have been held to apply to private corporations, 5 
 although the rule is that where there are general incorpora- 
 tion laws enacted under constitutions prohibiting the creation 
 of any corporation, except municipal by a special act, there 
 can be no private corporations by prescription (which is a 
 tacit sovereign recognition), nor even by express legislative 
 recognition. In other words, where the claim of corporate 
 existence and right to exercise a corporate franchise is called 
 in question by the proper proceedings, nothing less than proof 
 of substantial compliance with statutory provisions will sup- 
 port the claim. 6 
 
 § .'51 . Creation by implication, — No particular form of words 
 
 is essenl i.*il <<> authorize the creation of a corporation, and the leg- 
 
 islative intenl may be inferred from general and inexact terms. 7 
 
 1 Bow v. Allentown, ::i N. II. 351. 4 Jameson v. People, Hi 111. 257; 
 
 power of ratification in general, People v. RIaynard, L5 Mich. 463. 
 
 Katze ii herder v. Aberdeen, 1 li 1 5 Rose 1 1 ill, etc. j Co. V. People, 115 
 
 i - 172. 111. 183; Green v. Dennis, 6 Conn. 
 
 1 Thornton v. Marginal, etc., Co., 123 298; Robiev. Sedgwick, 35 Barb.319; 
 
 32. While v . State, 69 [nd. iiT.*>. 
 
 1 Basshor v. Dree el, B4 Md. ■•^'■'<; 'People v. Cheeseman, 7 Colo. S76; 
 
 Grand Trunk !.'. Co. v. Cook, 29 III. People v. Stanford, 77 Cal. 360. 
 
 287; 8t. Louis R. Co. v. N. W. R. Co., 7 6'Leary v. Hoard of Com'rs, 79 
 
 2 Mo. App. 69; state, v. Steele, ;;z Mich. 281, 19 Am. St. Rep. 169. 
 
 Minn
 
 § 32 CREATION, ORGANIZATION AND CITIZENSHIP. 27 
 
 "Any expression showing an intent on the part of the legisla- 
 ture to confer the right to exercise corporate power is sufficient, 
 and this intention may be deduced from the wiiole of the leg- 
 islative act." 1 The question whether an aggregation of indi- 
 viduals is a corporation is to be determined rather by faculties 
 and powers conferred upon it than by the name or description 
 given to it. 2 Thus, when powers are granted which can not be 
 exercised or enjoyed without corporate existence, the further 
 right to be a corporation will be implied, although the statute 
 granting the powers expressly declares that the grantee of the 
 power or franchise shall not be deemed a corporation. 3 So, if 
 powers and privileges are conferred upon the inhabitants of a 
 certain district, or territorial area, and if they can not be en- 
 joyed or exercised, and the purposes intended can not be 
 attained without acting in a corporate capacity, an incorpora- 
 tion to this extent is created by implication, and the intent of 
 the legislature can be shown constructively as w r ell as ex- 
 pressly. 
 
 § 32. Methods of legislative action. — Until within recent 
 years all corporations were created by special legislation, but 
 such legislation is now generally forbidden by constitutional 
 provisions. 4 By a federal statute territorial legislatures are 
 
 'McAttley v. R. Co., 83 111. 348; cases when a general law can be made 
 
 Mead v. Ry. Co., 45 Conn. 199; Andes applicable, no special law shall be 
 
 v. Ely, 158 U. S. 312; Dean v. Davis, enacted; and whether a general law 
 
 51 Cal. 406. could have been made applicable in 
 
 2 Edgeworth v. Wood, 58 N. J. S. 463. any case is hereby declared a judicial 
 
 'Liverpool, etc., Ins. Co. v. Mass., question, and as such shall be judi- 
 10 Wall. 566, s. c. 100 Mass. 531 ; cially determined without regard to 
 Thomas v. Dakin, 22 Wend. 108; any legislative assertion on that sub- 
 Dunn v. University of Oregon, 9 Ore. ject. The legislature shall pass no lo- 
 co?, Wilgus' Cases. cal or special law regulating the af- 
 
 4 Stimson Am. Stat. Law I, § 441 ; fairs of or incorporating, erecting or 
 
 Binney's Restrictions on Special Leg- changing the lines of any county, city, 
 
 islation; Elliott Pub. Corp., ch. 4. village, township, ward or school dis- 
 
 Thus the Const, of Minn., art. 10, § 2, trict, * * * granting to any cor- 
 
 provided that " no corporations shall poration, association or individual any 
 
 be formed under special acts except special or exclusive privilege, * * * 
 
 for municipal purposes." In 1892 an or franchise whatever. * * * The 
 
 amendment to the consitution was legislature may repeal any existing 
 
 adopted which provides that " in all special or local law, but shall not
 
 28 THE LAW OF PRIVATE CORPORATIONS. § 33 
 
 prohibited from granting private charters. 1 The language of 
 these provisions varies and many of them apply to certain 
 kinds or classes of corporations only, but the tendency of mod- 
 ern legislation is toward restricting the field of special legis- 
 lation. 
 
 § 33. Constitutional limitations. — It is extremely difficult 
 to determine just what power the legislature can exercise over 
 corporations by special act without violating a constitutional 
 provision forbidding the creation of corporations by special 
 acts. 2 It certainly is not deprived of the power to regulate by 
 the prohibition of the power to create, 3 as it is one thing to 
 create or bring into being a corporation, and quite another to 
 deal with it as an existing entity. 4 The provision of the con- 
 stitution of Minnesota which forbade the formation of corpora- 
 tions by special act was held not to prevent the legislature 
 from extending the duration of a corporate franchise previ- 
 ously granted to a railroad company for a limited time; 5 nor 
 from authorizing the change of a corporation originally organ- 
 ized as a mutual insurance company into a stock company. 6 
 In other states, however, it is held that when the legislature 
 "can not pass any special act for the incorporation of cities 
 and towns, it is prohibited from passing any act having for 
 its object the amendment of such act," 7 and the present con- 
 stitution of Minnesota provides that while the legislature may 
 repeal existing special or local laws, it shall not amend, ex- 
 tend or modify any of the same. 8 "A prohibition from creat- 
 
 amend, extend or modify any of the 6 Cotton v. Miss., etc., Co., 22 Minn. 
 
 same." Laws of L893, p. 3. This 372. 
 
 amendmenl is construed in Board, G St. Paul, eu-., Ins. Co. v. Allis, 24 
 
 etc., v. Cooley (Minn.), 68 N. W. Rep. Minn. 75. 
 
 150 "Townof McGregor v. Baylies, 19 
 
 T. s. Rev. Stat., § L889. Bee Carver Eowa43; Ex parte Pritz,9 towa30;San 
 
 Mercantili Co. v. Hulme,7 Mont.566. Francisco v. Spring Valley,48Cal. 193. 
 
 liottPub.Corp.,ch.4, andau- "Amend, of L892. In Minnesota, 
 
 tborities cited. prior to the constitutional amendmenl 
 
 •Attorney-General v. North Ameri- of issi, the existing constitutional 
 
 can I .Co., 82 N. V. L72, L83. provision had been practically nulli- 
 
 mtheni Pac. R. Co. v. Orton, 32 fled by judicial construction. Many 
 
 Fed, Rep. 167, Wilgu * of the great railroad corporations of
 
 §34 
 
 CREATION, ORGANIZATION AND CITIZENSHIP. 
 
 29 
 
 ing corporations by special act," says Morawetz, 1 ''undoubt- 
 edly does not, in terms, prohibit the legislature from passing 
 a special law altering the charter of an existing corporation. 
 But it is plain that a constitutional provision can not be 
 avoided and practically annulled by a subterfuge. A special 
 law altering the charter of an existing corporation and prac- 
 tically changing it must, therefore, be deemed in violation of 
 a constitutional prohibition against the creation of corpora- 
 tions by special act." 
 
 § 34. By consolidation. — The legislature may provide for 
 the creation of a corporation by the consolidation of existing 
 
 the state were organized prior to the 
 adoption of the constitution under ter- 
 ritorial charters. See Edgerton's Rail- 
 road Laws. In 1861 the present St. 
 Paul & Duluth Railway was organized 
 under one of these territorial charters 
 by striking out the directors named in 
 the act and inserting others, by chang- 
 ing the route of the road therein 
 named and various other important 
 amendments. The question of the va- 
 lidity of this legislation was submitted 
 to the attorney-general, who rendered 
 an opinion adverse to its validity. Opin- 
 ions of attorney-general (2d ed.), 190. 
 The question then came before the 
 supreme court, which decided it in the 
 same way, but the membership of the 
 court having changed, upon reargu- 
 ment, the act was upheld, largely upon 
 the ground that a practical construction 
 had been placed upon the act, which 
 had been acquiesced in by the legis- 
 lature and the people, and that private 
 and public interests of great magni- 
 tude, which had grown up on the 
 faith of that construction, would be 
 impaired by an adverse decision. 
 Ames v. Lake Superior, etc., R. Co., 
 21 Minn. 241; Cotton v. Miss., etc., 
 Co., 22 Minn. 372; Cent. R. Co. v. 
 Clark, 23 Minn. 422; St. Paul, etc., Ins. 
 Co. v. Allis, 24 Minn. 75. These were 
 all cases of amendments of terri- 
 
 torial charters, and the question 
 whether a corporation could be organ- 
 ized under the general laws of the 
 state and then receive by special grant 
 distinct corporate franchises, remained 
 open until 1886, when it came before 
 the court in the case of Green v. Knife 
 River Falls Boom Corp., 35 Minn. 155, 
 A corporation had been organized un- 
 der the general laws to build and 
 maintain booms in the St. Louis river, 
 after which a special act was passed, 
 which conferred upon it the right to 
 exercise the power of eminent domain 
 by condemning lands which were 
 flowed by its dams, or taken for its 
 use, to take tolls, and to obstruct navi- 
 gable parts of the river. The court fol- 
 lowed Ames v. Lake Superior, etc., R. 
 Co., 21 Minn. 241, and said : "This con- 
 stitutional provision was open to con- 
 struction, and during a long course of 
 legislation the practical construction 
 placed upon it by the legislature and 
 people has been a liberal one with re- 
 spect to amendments, and the court 
 would be very slow to change it at this 
 late day." 
 
 ^riv. Corp. I, § 10. An act changing 
 the name of a corporation is not the 
 grant of a private charter or a special 
 privilege. Wells, Fargo & Co. v. Ore- 
 gon R. Co., 8 Sawy. (C. C.) 601.
 
 30 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §34 
 
 corporations. 1 The word consolidation is used somewhat 
 loosely, but commonly describes the union of the stock, prop- 
 erty or franchises of two or more corporations by which their 
 affairs are permanently, or for a long period of time, placed 
 under one management. The English decisions use the word 
 amalgamation to express the idea of the fusion of two or more 
 corporations into a new one, as well as the merger of one cor- 
 poration into another. The American decisions use the word 
 consolidation to express what the English call a true amalga- 
 mation. 2 Legislative consent is necessary to a legal consolida- 
 tion ; 3 and an attempt to consolidate without authority is a 
 ground for forfeiting the corporate charter. Every consolida- 
 tion does not result in the creation of a new corporation, 4 al- 
 though the general rule is that consolidation works a dissolu- 
 tion of the previously existing corporations, and the creation 
 of a new corporation with property, liabilities and stockholders 
 derived from those which pass out of existence. 8 
 
 1 Adams v. Yazoo, etc., R. Co., 24 So. by the nature of the union and the 
 Rep. (Miss.), 317. "The fact that it is legislative intent. See Farnum v. 
 formed out of old, defunct corporations Blackstone, etc., Corps., 1 Sum. C. 
 does not make it any the less a corpo- C. 46; United States v. Southern, etc, 
 ration created by the legislature. It R. Co., 45 Fed. Rep. 596; John llan- 
 is not the material out of which it is cock, M. L. I. Co. V.Worcester, etc., R. 
 formed, but the plastic hand which Co., 149 Mass. 214; Day v. Worcester, 
 formed it, that we are to look to for its etc., R. Co., 1 
 Character and status under the ('(insti- 
 tution." Shields v. State, 26 Ohio St. 
 86. As to consolidation of parallel 
 
 and i peting railway corporations, 
 
 see Pearsall v. Great Northern R. Co., 
 161 I'. S. 646. 
 
 •Dougan's case, 28 L. Times N. S. 
 
 60. As to meaning of amalgamation, 
 
 Empire, etc., Co. v. Ex parte Bag- 
 
 .• . I.. I;. I Eq. 341; Wall v. Lon 
 
 Consol. of Corp., p. 184, et seq. The 
 mere purchase of one corporation by 
 another does not consolidate the cor- 
 porations. Gulf, etc., R. Co. v. New- 
 ell, 7:; Tex. 334, 15 Am. St. R. 788. 
 
 B Pullman, etc., Co. V. Mo., etc., K. 
 Co., 115 U. S. 587; Gray v. National 
 Steamship Co., 115 U. S. L16; McMa- 
 |,m,i v. Morrison, 111 Ind. 172, 7<> Am. 
 Dec. IIS; People v. New York, etc., 
 don,' etc., Corp" 67 L.J. R. (Oh! D.) R. Co., 15 N. Y. Bupp. 635; People v. 
 
 596 L898). 
 
 authorizing consolidation are 
 
 ol incoi point ion. ( ►hio, etc., R. 
 
 Co. v. People, 123 III. 467. As to 
 
 er of the legislature to authorize 
 
 consolidation, see Botts v. Simpkins- 
 
 rille,etc.,Co.,88 Kj .54,2 L. R. L694 
 
 Cook, 110 N. Y. 443, 111 N. Y. 688; 
 Fitzgerald v. Mo., etc., R. Co., 15 Fed. 
 Rep. 812. Sec Ewing v. Composite, 
 etc., Co., 169 Mass. 72. The m\\ cor- 
 poration may be foreign although the 
 old one was domestic. Ohio, etc., R. 
 C,,. v. People. L23 HI. 167. Iii Kan- 
 
 Mi ie a question to be determined sas, etc., R. Co. v. Smith, 40 Kan. 192,
 
 § 35 CREATION, ORGANIZATION AND CITIZENSHIP. 31 
 
 The procedure for consolidation is prescribed by the statute, 
 and, as in all proceedings to create a corporation, the provis- 
 ions which the statute makes conditions precedent must be 
 substantially complied with before a de jure corporation is 
 created. 1 The consolidation sometimes takes the form of a 
 lease 2 or the purchase by one corporation of the shares of an- 
 other. 3 But whatever its form, it must be under legislative 
 authority of such a character as to authorize the creation of a 
 new corporation. 4 
 
 II. Organization Under General Incorporation Laws. 
 
 § 35. In general. — The franchise of being a corporation was 
 originally granted by the legislature as a favor to the incorpo- 
 rators, but the policy of the state now is to encourage incorpo- 
 ration. In almost all the states there are general incorporation 
 laws under which parties may freely become incorporated by 
 complying with the requirements of the statute. 5 
 
 § 36. General requirements. 6 — These general statutes vary 
 in detail, but usually provide that the persons purporting to 
 form the corporation, not less than a designated number, shall 
 sign and acknowledge an instrument called the articles of in- 
 corporation, which shall state the name of the corporation, the 
 general nature of the business and the principal place of trans- 
 acting the same, the time of commencement and the period of 
 continuance of the corporation, the amount of capital stock and 
 
 it was held an appeal was abated by * Clearwater v. Meridith, 1 Wall. 
 consolidation. Hirschl Consol. of (U. S.) 25; Shrewsbury, etc., R. Co. 
 Corps., p. 197, et seq. v . stour Valley R. Co., 2 DeGex, M. & 
 Commonwealth v. Atl., etc., R. g. 8G6. The new corporation exists 
 Co., 53 Pa. St. 9; Tuttle v. Mich., etc., as of the date of the consolidation. 
 R. Co., 35 Mich. 247 ; Leavenworth Co. Shields v. State, 26 Ohio St. 86. 
 v. Chicago, etc., R. Co., 25 Fed. Rep. 5 For the history of the practice of 
 219. An attempted consolidation may incorporation, see chapter on "Free- 
 result in a de facto corporation only. dom of Incorporation," in Baldwin's 
 Marshall Foundry Co. v. Killian, 99 Modern Political Institutions. 
 N. C. 501, 6 Am. St. R. 539. 6 See wilgus' Cases, Schemes of In- 
 state v. Atchison, etc., R. Co., 24 corporation under Special Acts, and 
 Neb. 143. Schemes of Organization under Gen- 
 
 3 Central R. Co. v. Georgia, 92 U. S. eral Laws. 
 665; Hill v. Nisbet, 100 Ind. 341.
 
 32 THE LAW OF PRIVATE CORPORATIONS. § 37 
 
 how to be paid in, the highest amount of indebtedness or lia- 
 bility to which the corporation shall be subject, the names and 
 places of residences of the incorporators, the number and 
 amount of the shares of the capital stock, the names of the 
 first board of directors, and in what officers or persons the 
 management of the affairs of the corporation shall be vested. 
 When such articles are published for a certain period, filed ^n 
 the office of the secretary of state and in certain offices of rec- 
 ord, a certificate of incorporation is issued by the secretary of 
 state reciting that the provisions of the statute have been com- 
 plied with and that the parties are properly incorporated. In 
 many states different statutes are enacted for the organization 
 and regulation of different kinds of incorporations, such as 
 railway, insurance, banking and manufacturing companies, 
 and corporations with or without the power of eminent domain. 
 
 § 37. Purposes for which corporations may be organized. — 
 
 The purposes for which corporations may be organized under 
 the general incorporation laws of the states cover almost the 
 whole range of business and social action from "works of pub- 
 lic utility" 1 to "other lawful business." 2 The language used 
 in these statutes is very general, and is given liberal construc- 
 tion. Thus the maintenance of a wharf boat and steam ele- 
 vator is a "work of public utility." 3 A corporation organized 
 for educational purposes which charges tuition fees is not "a 
 corporation for pecuniary profit." 4 An express company is 
 engaged in "an industrial pursuit." 5 A corporation for "the 
 purchasing and holding of real estate, subdividing the same 
 into village lots and town sites " may be organized under a 
 statute which, after enumerating certain kinds of business, 
 adds "for other lawful business." 6 But when the general words 
 follow other more specific words, it has been held that corpora- 
 
 'Glenn v. Breard, 36 La. An. 875. •Glenn v. Breard, .'55 La. An. 875. 
 
 •Brown v. Corbin, 40 Minn. 508. A *Santa Clara Female Academy v. 
 
 corporation may be authorized to act Sullivan, I L6 [11. 375, 66 Am. Rep. 776. 
 
 ae .in assignee for creditors. Roane, 'Wells v. N. P. R. Co., 23 Fed. Eep. 
 
 Co. v. Wis. Tr. Co., 71 N. W. 469. 
 
 Rep. 818 ( Wis.)- 6 Brown v. Corbin, 40 Minn. 508.
 
 § 38 CREATION, ORGANIZATION AND CITIZENSHIP. 33 
 
 tions can be organized only for purposes kindred to those spe- 
 cifically enumerated. 1 Perhaps, however, the better rule does 
 not so limit such words. 2 When a statute authorizes the crea- 
 tion of corporations for certain purposes, a corporation organ- 
 ized for such purpose is legal, although it purports to have 
 been organized under another statute. 3 
 
 But where the purpose for which the corporation is stated 
 to be organized will necessarily result in creating a monopoly 
 the provision is void. 4 
 
 The purposes for which a corporation is organized must be 
 determined by the statements in its articles of incorporation. 5 
 
 § 38. Substantial compliance with statutory requirements. 
 — "A substantial compliance with all the terms of a general 
 incorporation law is prerequisite to the right of forming a cor- 
 poration under it." 6 Thus, when the articles of incorporation 
 are required to be signed by a designated number of persons, 
 that number must sign. 7 But only substantial compliance is 
 necessary, and non-compliance with provisions merely direc- 
 tory in their nature, such as a requirement that a verified cer- 
 tificate containing certain matters shall be filed by the di- 
 rectors, does not affect the legality of a corporation. 8 There 
 may be irregularities which would afford a basis for proceed- 
 ings by the state to oust the corporation of its franchises which 
 would not affect the legality of its existence with respect to 
 persons with whom it deals. 9 Even the state may be barred 
 from such proceedings by lapse of time. 10 
 
 1 State v. International Inv. Co., 88 Ind. 404 ; Thornton v. Balcom, 85 Iowa 
 
 Wis. 512. 198; Sweney v. Talcott, 85 Iowa 103. 
 
 2 Statev.Cookins, 123 Mo. 56; Brown 7 State v. Critehett, 37 Minn. 13; 
 
 v. Corbin, 40 Minn. 508; York, etc., Carey v. Morrill, 61 Vt. 598; Heinig 
 
 Assn. v. Barnes, 39 Neb. 440. v. Adams & Westlake, etc., Co., 81 
 
 3 State v.Minn., etc., Co.,40Minn.213. Ky.300; Cleggv. Hamilton, etc., Co., 
 
 4 People v. Chicago, etc., 130111.268, 61 Iowa 121; State v. Central, etc., 
 17 Am. St. R. 319. Assn., 29 Ohio St. 399; People v. Mon- 
 
 5 Detroit Driving Club v. Fitzgerald, tecito, etc., Co., 97 Cal. 276. 
 
 109 Mich. 670, 67 N. W. Rep. 899. 8 Shakopee, etc., Works v. Cole, 37 
 
 6 People v. Montecito, etc., Co., 97 Minn. 91; People v. Cheeseman, 7 
 Cal. 276; Stowe v. Flagg, 72 111. 397; Colo. 376; Walton v. Riley, 85 Ky. 
 Bigelowv. Gregory, 73 111. 197; Abbott 413; State v. Foulkes, 94 Ind. 493; 
 v. Omaha S. Co., 4 Neb. 416; State v. State v. Beck, 81 Ind. 500; Ex parte 
 Wood, 84 Mo. 378; Rogers v. Danby Spring Valley, etc., Works, 17 Cal. 132. 
 TJniversalist Society ,19 Vt. 187 ; People 9 Humphrey v. Mooney, 5 Colo. 282 
 v. Stockton, etc., R. Co., 45 Cal. 306; "State v. Gordon, 87 Ind. 171. 
 Eakright v. Logansport, etc., R. Co. ,13 
 
 3 — Private Corp.
 
 34 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 39 
 
 § 39. Illustrations. — The proper authentication and record- 
 ing of the articles of association are necessary before there can 
 be a legal incorporation ; J but a provision requiring a copy of 
 the articles to be filed with a specified officer, such as register 
 of deeds, is not necessary, 2 although the contrary is held in 
 some cases. 8 The omission to state the residence of the incor- 
 porators, 4 signing the initials instead of the full Christian 
 name, 5 the statement that " said corporate stock shall consist 
 of five hundred shares at one hundred dollars per share " when 
 the statute requires that the certificate of incorporation 
 "shall state the amount of the capital stock," 6 a statement 
 that the corporation shall exist " at least forty years," when 
 the statute required that the certificate state " the term of 
 existence not to exceed forty years " are not such defects as 
 will prevent legal incorporation. 7 The omission of the words 
 " in good faith " from a certificate which is required to state 
 " in substance that said amount of stock has been subscribed, 
 and that ten per cent, in cash thereon has been actually and 
 in good faith paid in," when it appears elsewhere in the body 
 of the certificate that the ten per cent, has been actually in good 
 faith paid in, is immaterial. 8 
 
 § 40. Conditions precedent to organization of corporation 
 
 de jure. 9 — Those provisions of the general statutes, which are 
 intended to be conditions precedent to incorporation, must be 
 
 iStowe v. Flagg, 72 111. 397; People 
 v. Montecito, etc., Co., 97 Cal. 270. 
 
 2 l!mt v. Salisbury, 55 Mo. 310; Mo- 
 kelumne Hill, etc., Co. v. Woodbury, 
 i i ( !al. 12">; Compare, [ndianapolis, 
 etc., Co. v. Herkimer, 46 In«l. 1 12; Peo- 
 ple v. Chambers, 12 Cal. 201 ; Ham- 
 mond v. Strauss, 53 Md. l. A failure to 
 comply with a provision requiring the 
 u q1 of a tee to the state before in- 
 corporation does nol prevenl Legal in- 
 corporation. I [ughesdale Mfg. * !o. v. 
 Vanner, 12 B.I. 491. Contra, Mary- 
 land, etc., Works v. Wesl End Imp. 
 i.. l:. A. 810. 
 ildsv. Hurd,32W.Va.99; Doyle 
 [izner, 42 Mich. 332; < larnett v. 
 .ii. 35 \ > is. ill; [ndianapolis, 
 
 etc., Co. v. Herkimer, 46 Ind. 142; First 
 Nat. Bank v. Davies, 43 Iowa 424; Ab- 
 bott v. Omaha, etc., Co., 4 Neb. 416; 
 Capps & Hastings Prosp. Co., 40 Neb. 
 •170, 58 N. W. Rep. 956; Martin v. 
 Deetz, 102 Cal. 55, 36 Pac. Rep. 369 
 
 •State v. Poulkes, 94 Ind. 493; Rog- 
 ers v. Danby Univ. Soc, 19 Vt. L87. 
 
 B State v. Beck, 81 End. r>00. 
 
 6 Hughes n. Antietam Mfg. ('<>., 34 
 Md. 316. 
 
 "Hughea v. Antietam Mfg. Co., 34 
 Md. 316. 
 
 K People v. Stockton, etc., R. Co., 
 46 Cal. 308. 
 
 9 See, generally, Wilgus' < !ases, Con- 
 ditions Precedent to Corporate Exist- 
 ence dejure, de facto, and bj estoppi I.
 
 § 41 CREATION, ORGANIZATION AND CITIZENSHIP. 35 
 
 strictly complied with before a de jure corporation is created. 
 There is, however, a distinction, which must be observed, be- 
 tween conditions precedent to a legal incorporation and condi- 
 tions precedent to the right to commence business. Until the 
 former are substantially complied with there is no legal cor- 
 poration. A failure to comply with the latter does not, how- 
 ever, affect the existence of the corporation. 1 Hence "the 
 legal existence of a corporation is not terminated by the fact 
 that it has violated its charter, as by carrying on business be- 
 fore conditions precedent imposed by the charter had been 
 complied with." 
 
 No general rule can be stated other than that if it appears 
 from the language of the statute that it was the intention of 
 the legislature that the requirement should be complied with 
 before the incorporation is completed, it is necessary that 
 there should be substantial compliance. 2 
 
 § 41. Articles of incorporation — Contents, — General in- 
 corporation laws always provide for the execution by the in- 
 corporators of a certificate or articles of incorporation which 
 must contain certain designated matters. Such articles have 
 the effect of a charter, 3 hence there can be no incorporation 
 when there are no articles, 4 and this is equally true where the 
 articles are fatally defective by reason of not conforming to the 
 essential requirements of the statute. 5 They may be defective 
 by reason of omitting to state the number of directors, 6 the 
 place of residence of the corporators, 7 the principal place of 
 
 'Holmes v. Gilliland, 41 Barb. (N. 'Abbott v. Omaha, etc., Co., 4 Neb. 
 
 Y.) 568; Herrodv. Hamer, 32 Wis. 416. 
 
 164 ; Charles River Bridge v. Warren S N. Y. Cable Co. v. Mayor, 104 N. Y. 
 
 Bridge, 7 Pick. (Mass.) 344. 1 ; McCallion v. Hibernia, etc., Co., 70 
 
 2 Childs v. Hurd, 32 W.A^a. 67 ; Stowe Cal. 163. 
 
 v. Flagg, 72 111. 397; People v. Mon- 6 Eeed v. Richmond, etc., R. Co., 50 
 
 tecito, etc., Co., 97 Cal. 276. Ind. 342. 
 
 3 North Point, etc., Co. v. Utah, etc., 7 See Busenback v. Attica, etc., Co., 
 
 Co. (Utah), 52 Pac. Rep. 168, 40 L. R. 43 Ind. 265. A statement in the ar- 
 
 A. 851. tides that the "office" of the corpora- 
 
 An attempted amendment of arti- tion shall be in a certain city, does not 
 
 cles by de facto trustees is ineffectual, sufficiently state the place in which 
 
 State v. Oftedal (Minn.), 75 N. W. the business shall be carried on. Ken- 
 Rep. 692.
 
 36 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §41 
 
 business of the corporation, 1 or the amount of capital stock. 2 
 The object of the corporation must be stated in substantial com- 
 pliance with the statute, 3 as the articles can not be aided, 
 varied, or contradicted by parol evidence. 1 
 
 If the time of existence is stated at a term in excess of that 
 fixed by law, the corporation will continue for the statutory 
 period. 5 A provision authorizing the board of directors to in- 
 crease the capital stock without the consent of a majority of 
 the stockholders, as required by statute, does not render the 
 articles void. 6 The articles should contain only those provis- 
 ions which are required by the statute, but the insertion of ad- 
 ditional matter will not affect their validity, as it will be 
 rejected as surplusage. 7 A provision that the articles shall 
 
 nett v. Woodworth Mason Co. (N. H.), 
 39 AtL Rep. 585. 
 
 'Harris v. McGregor, 29 Cal. 124; 
 People v. Beach, 19 Hun (N.Y.) 259; 
 Clegg v. Hamilton, etc., Co., 61 la. 
 121. 
 
 2 State v. Shelbyville, etc., Co., 41 
 Ind. 151 ; Thornton v. Balcom, 85 Iowa 
 198. 
 
 3 Peopie v. Cheeseman, 7 Colo. 376. 
 For a stricter rule, see West v. Bull- 
 skin, etc., Co.; 32 Ind. 138. 
 
 •Atty.-Gen.v. Lorman,59Mich.l57; 
 
 People v. Beach, P.) Hun (N. Y.) 259; 
 
 People v. Selfridge, 52 Cal. 331. 
 
 5 People v. Cheeseman, 7 Colo. 376. 
 
 * Eastern, etc., Co. v. Vaughan, 14 
 
 N. V. 546. 
 
 'Oregon R. Co. v. Oregonian R. 
 Co., 130 D. S. 1 ; Albright v. La Fa- 
 yette, etc., Co., 102 Pa. St. 411; Bigc- 
 low v. < rregory, ":; 111. 197. 
 
 In New York and New Jersey, and 
 under the National Banking A.ct, spe- 
 cial provisions may lie inserted in the 
 articles. 
 
 It must he remembered thai :i de 
 facto corporation may result, although 
 the provisions of the statute are not 
 complied with, in Johnson v. Schu- 
 
 lm 'Minn., 1897), 7:; N. W. Rep. I 17, 
 
 the court said : "The plaintiff claims 
 that because the articles of association 
 were not signed by several persons, 
 and were not recorded, there could be 
 no corporation de facto, and rely in 
 support of the claim upon the case of 
 Johnson v. Corser, 34 Minn. 355, 25 
 N. W. Rep. 799. The claim ignores 
 the fundamental principles applicable 
 to corporations de facto ; for if there 
 had been a compliance with the stat- 
 ute in the respects complained of, a 
 corporation de jure would have been 
 created. Johnson v. Corser is not in 
 point. That was a case where parties 
 desiring to make a certain street im- 
 provement associated themselves to- 
 gether for that purpose, and signed 
 articles of incorporation; but no at- 
 tempt was made to give any publicity 
 to them, by filing or recording or 
 Otherwise, until after the work had 
 been performed for which the action 
 was brought against (lie associate* as 
 partners. The plaintiffs also rely up- 
 on the case of Bergeron v. Hobbs, 
 tl(J Wis. (Ill, 65 Am. St. It. 85, 7V 
 N. W. Rep. 105(1. The case is 
 directly in point, but its value as 
 an authority is seriously impaired
 
 § 42 CREATION, ORGANIZATION AND CITIZENSHIP. 37 
 
 state the purposes for which the corporation is formed and that 
 it shall be unlawful for it to divert its funds to any other pur- 
 poses is for the protection of the public, and does not under 
 all circumstances affect the contracts of the corporation. 1 
 
 § 42. Filing and publication of articles. — The language of 
 the statute must be carefully examined to determine whether 
 the requirement of filing and recording of the articles is man- 
 datory or directory. Ordinarily the filing of the articles with 
 some state official, and their publication in some form, is a 
 condition precedent to legal incorporation. 2 It has been held 
 that the recording with the county recorder is a condition pre- 
 cedent. 3 The date of filing is not a part of the articles, and 
 the fact of delivery and date of filing may be shown by parol 
 evidence. 4 The incorporation is not invalidated by an errone- 
 ous recording in an improper book. 5 The surreptitious and 
 fraudulent recording of articles of incorporation contrary to 
 an agreement among the incorporators has no legal effect. 6 
 
 § 43. Subscriptions for capital stock as a condition preced- 
 ent. — Unless made so by the governing statute, the subscrip- 
 tion of the whole amount of the capital stock is not a condition 
 precedent to the legal existence of a corporation. 7 The matter 
 is, however, largely governed by statute. It has been held 
 that merely making and filing articles of incorporation do 
 not create a corporation where the stock has not been sub- 
 by an able and exhaustive dissenting 5 Walton v. Riley, 85 Ky. 413. 
 opinion. Besides, it seems to be op- 6 Ricker v. Larkin, 27 111. App. 
 posed to the weight of authority." 625. 
 
 1 Butterworth v. Kritzer Mills Co. 7 Johnson v. Kessler, 76 Iowa 411 ; 
 (Mich.,, 72 N. W. Rep. 990. Schenectady, etc., R. Co. v. Thatcher, 
 
 2 Indianapolis, etc., Co. v. Herkimer, 11 N. Y. 102. The rule of the coin- 
 46 Ind. 142; Clegg v. Hamilton, etc., mon law required that the capital 
 Co., 61 Iowa 121; Childs v. Hurd, 32 stock should all be subscribed before 
 W.Va. 66; Gent v. Mfg. Ins. Co., 107 the organization was completed. 
 111. 652, Wilgus' Cases. Schloss v. Montgomery T. Co., 87 
 
 3 Cresswell v. Oberly, 17 Bradw. Ala. 411, 13 Am. St. R. 51. See §354 
 (HI.) 281. infra. 
 
 4 Johnson v. Crawfordsville, etc., R. 
 Co., 11 Ind. 280.
 
 88 THE LAW OF PRIVATE CORPORATIONS. § 44 
 
 scribed or paid in or the directors chosen. 1 " Since a substantial 
 compliance with the conditions of the statute is all that the law 
 requires, except in the case of conditions precedent, it is gen- 
 erally held that where the governing statute requires a certain 
 percentage of the stock to be paid in, it will be sufficient that 
 the aggregate sum produced by such a percentage is paid in, 
 and it will be immaterial by whom it is paid." 2 
 
 § 44. Date of incorporatioii. — A corporation exists from 
 the time when the instrument of incorporation prescribed by 
 statute is executed, acknowledged and recorded or filed for 
 record, as required by the statute, and all conditions precedent 
 performed. When the articles are required to be approved by 
 some official, the incorporation dates from the time of such 
 approval. 3 
 
 § 45. Who may be incorporators. — A corporation is com- 
 monly composed of natural persons, but its shares may be 
 held by a state, a public or private corporation, a partnership, 
 or by persons in a political capacity. 4 Any person capable of 
 contracting may become an original shareholder of a private 
 corporation, 5 and as the interest is assignable, it may be trans- 
 ferred to or held by women and children or by persons non 
 compos mentis. But the right of membership in a particular 
 corporation may be limited to a certain class, as the members 
 of a certain profession or trade. Corporations are not "per- 
 sons" within the meaning of general incorporation laws. 6 The 
 
 1 State v. Fidelity, etc., Co., 49 Ohio L. R. A. Gil, it was said that "articles 
 
 St. 440, nil.. I; A. nil. of incorporation do not make a corpo- 
 
 'Thompson Corp., § '-'17. Notes ration; they are simply authority to 
 
 given in fraud of a statute which re- do so." 
 
 quires the stock in In- paid forin cash 4 LOOo. '2!> b. See §34<i, infra. 
 
 can not !>•■ defended against on tin' 5 The word "person" is construed 
 
 ground thai the corporation had no to mean a person of full age. [n re 
 
 authority to accept them. McLaren v. Globe, etc., Association, 63 linn (N. 
 
 Pennington, l Paige (N. Y.i 102. Y.)263. Contra in England. Be Naa- 
 
 lommonwealth, 62 Pa. Bau, etc., Co., 2 Ch. I >. 610. 
 
 St. 126. In Sparksv. Woodstock, etc., 8 See § 68, infra. But in England 
 
 14, il was held thai the "person" includes "company" in the 
 
 failure of a judge to make the ses- Companies Act of L862. So one lim- 
 
 certincate did aol prevent Hie ited company may take shares in an- 
 
 corpo ration from coming into exist- other, in re Barneds Banking Co., 
 
 ence, when the proper antecedent L. R. 3Ch.l05; Royal Bank of India, 
 
 Bteps had been taken. In State v. I-. I.'. I Ch. 262. 
 Fidelity, etc., Co . 19 Ohio St. WO, L6
 
 § 4G CREATION, ORGANIZATION AND CITIZENSHIP. 39 
 
 right of organizing a corporation is conferred upon individu- 
 als and not corporations. Unless the statute provides that 
 the incorporators shall be residents of the state, no such con- 
 ditions will be annexed, and the citizens of one state may 
 organize a corporation under the laws of another state if they 
 consider it to their advantage to do so. 1 
 
 § 46. Number of incorporators. — The statutes generally 
 prescribe the minimum number of persons who may become 
 incorporators, and this varies according to the nature and ob- 
 ject of the corporation. When not expressly determined it 
 seems that the law contemplates more than one incorporator. 
 Thus under an act providing that "any number of persons 
 may associate themselves together and become incorporated," 
 one person can not form a corporation and thus conduct his 
 business without personal liability. 2 
 
 § 47. The corporate name. — ' 'When a corporation is erected 
 a name must be given to it, and by that name alone it must 
 sue and be sued, and do all legal acts, though a very minute 
 variation therein is not material. Such name is the very be- 
 ing of its constitution, and though it is the will of the king 
 that erects the corporation yet the name is the knot of its com- 
 bination, without which it could not perform its corporate 
 functions. The name of incorporation, says Sir Edward Coke, 
 is a proper name or name of baptism, and therefore when a 
 private founder gives his college or hospital a name, he does 
 it only as a godfather, and by that same name the king bap- 
 tizes the incorporation." 3 
 
 The king or parliament in granting a patent usually desig- 
 nates or indicates by recitals the name by which the corpora- 
 
 1T Jnder a law which authorizes "any ter v. Amsterdam Imp. Co., 140 N. Y. 
 
 number of persons not less than 57G, 35 N. E. Rep. 964. 
 
 seven" to organize a corporation, citi- 2 Louisville, etc., Co. v. Eisenman, !>4 
 
 zens or residents of another state may Ky. 83, 19 L. R. A. 684, Wilgus' Cases, 
 
 organize under the law. Cent. R. Co. 3 B1. Com., I, 575. Bacon also calls 
 
 v. Pa. R. Co., 31 N. J. Eq. 475; Hum- the name the "knot of their eombi- 
 
 phreys v. Mooney, 5 Colo. 282; Dema- nation." Abr. II (Am. ed.), 440. 
 rest v. Flack, 128 N. Y. 205; Lancas-
 
 40 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §48 
 
 tion shall be known. 1 But if a name is not given by the 
 charter one may be assumed or acquired by usage and a con- 
 tract made with a corporation under an assumed name may 
 be enforced by either party. 2 
 
 When a corporation has received a name it can only change 
 the name in the manner prescribed by law. 3 A change of 
 name does not affect the liabilities, duties, or property rights 
 of a corporation. 4 
 
 § 48. Protection of corporate name. It has been held that the 
 name of a corporation is a franchise, and that when the state 
 has granted the franchise the corporation can not be restrained 
 from using it, because it nearly resembles the name of an ex- 
 isting corporation, or will be liable to cause confusion. 5 The 
 court in such a case accepts the certificate of the secretary of 
 state as conclusive evidence of the right of the corporation 
 to the name certified. 6 But the rule most consistent with 
 principle is that a corporation will be protected in the use of 
 its name upon the same equitable principles which protect 
 persons in the use of trade names and trade-marks. 7 Judge 
 
 style of the corporation and mode of 
 electing members were changed, the 
 identity of the body itself was not af- 
 fected." Doe v. Norton, 11 M. iv W. 
 913. All new suits on old obligations 
 must be brought in the new name. 
 Cotton v. Miss., etc, Co., 22 Minn. 
 372. A suit is not abated by change 
 of name of corporation. Thomas v. 
 Frederick School, 7 < lil. & .1. ;;<'>'.». 
 
 6 Boston, etc., Co. v. Boston, etc., 
 Co., L49 Mass. 436. Bui see Arming- 
 ton v. Palmer ( R. I.). 43 L. U. A. 95. 
 
 c Uico v. National Bank, 126 Mass. 
 300. The certificate of the auditor as 
 to the righl of a corporation to a cer- 
 tain name is not binding upon an- 
 other body claiming the name. ( rrand 
 Lodge v. Graham, 96 Iowa 592, 31 L. 
 I:. A. 133. 
 
 7 Holmes v. ETolmes, etc., Co., 87 
 Conn. 278, 9 Am. Rep. 324 ; Celluloid, 
 etc., Co. v. Cellonite, <•(<-., Co., 32 
 Fed. Rep. 94 ; Neb., h<\, Co. v. Nine 
 
 JBacon, Abr. II, 441; "Names of 
 Corporations," article in 23 Cent. L. 
 J. 531. 
 
 2 Clement v. City of Lathrop, 18 Fed. 
 Rep. 885. 
 
 8 Morris v. St. Paul, etc., R. Co., 19 
 Minn. 528, Gil. 459; Goodyear Rub- 
 ber Co. v. Goodyear, etc., Co., 21 
 Fed. Rep. 276; Sykes v. People, 132 
 III. 32, 23 N. E. Rep. 391. An attempt 
 to change a name by other means does 
 not avoid a charter. O'Donnell v. 
 Johns, 76 Tex. 363; Smith v. Plank 
 Rd. Co., 30 Ala. 650; Wells, Fargo & 
 i: N.Co.,8Sawy.600,608. 
 Bui in Cincinnati, etc., Co. v. Bate, 96 
 Kv. 356, 19 \m. st. R. 300, Wilgus' 
 < 'ases, it w a - held thai an unauthorized 
 change of name by the members made 
 them liable thereafter as pari tiers. 
 
 4 WYiiiy v. Bhenandoah, etc., Co., 83 
 Va. 768; Hazlel v. Butler I niv., .si 
 [nd.230; Bucksport, etc., Co. v. Buck, 
 68 Me. 81. "Though the nam.- and
 
 § 48 CREATION, ORGANIZATION AND CITIZENSHIP. 41 
 
 Thompson says : ' "The better view is that the right of an ex- 
 isting corporation to the use of its corporate name,, which is in 
 the nature of a trade name, can not be infringed by a subse- 
 quent act of incorporation by the legislature, either by the 
 direct grant of a charter to a corporation to be organized 
 under a similar name, or through a ministerial officer of the 
 state in granting a certificate of incorporation to a body of 
 adventurers having a similar name." 
 
 Where the statute provides that the secretary of state shall 
 not issue a certificate of incorporation under a name similar to 
 that already assumed by another corporation, the secretary has 
 a discretion which will not be controlled by mandamus. 2 As a 
 general rule the name selected by a new corporation must not 
 be identical with or too closely resemble that of an existing 
 corporation. 3 The right to a name attaches upon the issuance 
 of the license to incorporate, and before the incorporation is 
 completed. 4 The absence of fraudulent intent is no defense in 
 a suit for wrongfully assuming and using the name of another. 5 
 An injunction against the wrongful assumption and use of a 
 corporate name may be granted in a suit by the owner of the 
 name without the intervention of the state. 6 
 
 27 Neb. 507, 43 N. W. Rep. 348. For- 111. 423. The right to a corporate 
 
 eign and domestic corporations with name as a trade-mark is not a fran- 
 
 samename, Hazleton, etc., Co. v. Hazle- chise. Hazleton, etc., Co. v. Hazle- 
 
 ton, etc., Co., 142 111. 494.28N.E. Rep. ton, etc., Co., 142 111. 494, 28 X. E. 
 
 245. Rep. 248. 
 
 'Thompson Corps., Vol. I, § 296. 5 Armington v. Palmer (R. I.), 43 
 2 State v. McGrath, 92 Mo. 355. L. R. A. 95. As to rights of corpora- 
 international, etc., Co. v. Inter- tions in respect to names, see, gen- 
 national, etc., Co., 153 Mass. 271, 10 L. erally, American Order v. Merrill, 151 
 R. A. 758. In re U. S. Merc. Rep. Co., Mass. 558, 8 L. R. A. 320; Int., etc., 
 115 N. Y. 176. A corporation known Co. v. Int., etc., Co., 153 Mass. 271, 10 
 as the "Hygeia Water Ice Co." is not L. R. A. 758; Chas. Higgins Co. v. 
 entitled to have the "New York Higgins, etc., Co., 144 N. Y. 462, 27 
 Hygeia Ice Company, Limited," L. R. A. 42; Grand Lodge, etc., v. 
 restrained from using the word " Hy- Graham, 96 la. 592, 31 L. R. A. 133; 
 geia," it not appearing that any one Supreme Lodge, etc., v. Improved, 
 has been deceived. Hygeia Water etc., 113 Mich. 133, 38 L. R. A. 658. 
 Ice Co., 140 N. Y. 94. 6 Armington v. Palmer (R. I.), 43 L. 
 Illinois, etc., Co. v. Pearson, 140 R. A. 95, Wilgus' Cases.
 
 42 THE LAW OF PRIVATE CORPORATIONS. § 49 
 
 § 49. Proof of incorporation — In direct proceedings. — The 
 
 evidence required to prove incorporation will depend upon the 
 proceedings in which the issue is raised. In proceedings by 
 the state for the purpose of testing corporate existence, the evi- 
 dence must be sufficient to show substantial compliance with 
 the terms of the law under which the corporation claims ex- 
 istence. 1 If the corporation is organized under a public act of 
 the legislature, the court will take judicial notice of the law; 
 but if the corporation was organized under a foreign law the 
 statute must be pleaded and proved like any other fact. 2 Ac- 
 ceptance of the charter may be shown by any competent evi- 
 dence that tends to show user. 3 
 
 § 50. In collateral proceedings. — When the issue of corpo- 
 rate existence is raised collaterally, it is sufficient to prove the 
 existence of a de facto corporation. It must be shown that 
 there is a valid law under which the company could have be- 
 come a de jure corporation, a good faith attempt to incorporate 
 under the law, and a user of the franchise. 4 The existence of 
 a de facto corporation may be shown by parol evidence, 5 or a 
 
 'See § 40, supra. kima Nat. Bank v. Knipe, 6 "Wash. 348, 
 2 Jones Evidence, I, §§ 112, 120. 33Pac. Rep.834. When raised in plead- 
 3 Bank of Manchester v. Allen, 11 ing, proof of user good "prima facie," 
 Vt. 302. If the fact of acceptance is Rose Hill & E. R. Co. v. People, 115 
 recorded on the books of the corpora- 111. 133,3 N. E. Rep. 725 In Johnson v. 
 tion,the hooks are the bestevidence. Schulin (Minn.), 73 N.W. Rep. 147, it 
 Hudson v. Carman, 41 Me. 84. was held that for the purposeof show- 
 4 state v. Murphy, 17 R. LOOS, 24 Atl. ing a corporation defactoora] testimony 
 Rep. 473; Porter v. State, 141 End. 488, not purporting to give the contents of 
 -io \. E. Rep. L601 ; < 'wen v. Shepherd, corporate records or documents, tend- 
 59 Fed. Rep. 746, 8 C. C. A. 244. Cald- ing to show that after an attempl to 
 well, J., says: "The rule that the regu- organize a corporation bythe execu- 
 of the organization of a corpora- tion of articles of incorporation, the 
 tion can not be inquired into collater- supposed corporation held meetings, 
 ally has do application where Individ- adopted by-laws, elected officers, and 
 uala Bued for services deny personal did business as a corporation, is ad- 
 liability, and set up the existence of a missible without producing the corpo- 
 corporation, to which the services rate records or showing their loss. 
 were rendered." See § 72, infra. "On principle," said Chief Justice 
 
 ;|,m,- v. State, 18 Ohio St. 366, Start, "it WOUld seem that where, as 
 .. .,. Dec. I'M. Inn. ; State V. Ha- in this case, the defendants: are seek- 
 
 bib, is R. t. 658,30 Atl. hep. 162; Ya- ing to avoid their Liability as alleged
 
 § 50 CREATION, ORGANIZATION AND CITIZENSHIP. 43 
 
 prima facie case may be made by the introduction of the books 
 and records of the corporation. 1 It has been said that general 
 reputation is sufficient to make a prima facie case. 2 Many 
 states provide statutory methods for proving incorporation. 
 In Michigan the statute provides that "In any suit wherein it 
 shall become necessary or material to prove the incorporation 
 of any corporation, evidence that such a corporation was doing 
 business under a certain name shall be prima facie evidence of 
 its due incorporation, or existence pursuant to law, and of its 
 name." 8 When the statute provides that a certified copy of the 
 articles of incorporation or of the certificate of incorporation 
 shall be prima facie evidence of incorporation, 4 it does not ex- 
 clude other competent evidence. 5 
 
 For the purposes of the case it is generally sufficient to 
 prove the facts sufficient to create an estoppel against the party 
 raising the question. 6 It often becomes necessary to prove the 
 existence of a corporation in criminal proceedings. As the 
 question then arises collaterally, it is only necessary to show 
 facts sufficient to establish a de facto corporation. 
 
 " On the trial parol proof was offered, admitted and given to 
 the effect that an association of persons existed claiming to be 
 a corporation under the name of the Michigan Southern and 
 Northern Indiana Railroad Co., suing and being sued, having 
 a common seal, and operating a railroad as such, and exercis- 
 ing the franchise of a corporation. * * * \y e are f ^ e 
 opinion, however, that the proof was both competent and suffi- 
 cient." 7 
 
 partners by showing that they were a 4 See Marshall v. Bank, 108 N. C. 
 
 de facto corporation with whom the 639, 13 S. E. Rep. 182. 
 
 plaintiffs dealt, the best evidence to 5 Edelhoff v. State, 5 Wy. 19, 36 Pac. 
 
 prove the fact would be the sworn tes- Rep. 627. 
 
 timony of competent witnesses to 6 U. S. Vinegar Co. v. Schlegel, 143 
 
 what, in fact, was done." Thompson N. Y. 537, 38 N. E. Rep. 729. A con- 
 
 Corp., § 7735. tract made with the corporation in the 
 
 'Glenn v. Orr, 96 N. C. 413, 2 S. E. corporate name is prima facie evi- 
 
 Rep. 538 ; Peake v. R. Co., 18 111. 88. dence of corporate existence as against 
 
 E Fleener v. State, 58 Ark. 98, 23 S. the parties to the contract. Conti- 
 
 W. Rep. 1. nental Ins. Co. v. Richardson, 72 N. 
 
 "Canal St. Gravel Road v. Paas, 95 W. Rep. 458 (Minn.). 
 
 Mich. 372. Embezzlement, Calkins v. State, 18
 
 44 THE LAW OF PRIVATE CORPORATIONS. § 51 
 
 Where it is once shown that there is a charter, the exercise 
 of corporate acts for many years will raise a presumption of 
 incorporation. 1 
 
 III. Promoters of Corporations. 
 
 § 51. Who are promoters. — The term promoter is so well 
 understood that a judge in charging a jury is not bound to de- 
 fine it. 2 "It is not a word of art; it must be understood by 
 lawyers as it would by laymen." 3 A person who engages with 
 an owner of land in the organization of a corporation which 
 is intended to purchase the land, and who frames the prospec- 
 tus, aids in procuring subscribers for stock, and becomes one 
 of the first stockholders, is a promoter of the corporation.* 
 But the mere fact that at the time when property was pur- 
 chased the purchaser contemplated that a corporation would 
 be organized' for the purpose of acquiring the land does not 
 make the purchaser a promoter of the corporation. 5 
 
 § 52. Fiduciary position of promoters. — The promoters can 
 not be the agents of a principal not in existence, and can not 
 bind the future corporation by their contract, but by various 
 processes of reasoning, more or less unsatisfactory, they are 
 held to occupy a fiduciary relation to the corporation which is 
 to be created. From this relation it follows that they can not 
 
 Ohio St. 370; State v. Habib, L8 R. I. schlager, 55 N. J. Eq. 78, 35 Atl. Rep. 
 
 558,30Atl. Rep. 462. Burglary,Statev. 436. 
 
 Thompson, 23 Kan. 338, 33 Am. Rep. In Yale, etc., Co. v. Wilcox, 64 
 
 L66. Larceny, People v. Barric, 49 Conn. 101, 25 L. R. A. 90, the court 
 
 i il. 342; People v. Frank, 28 Cal. 607. said: "A promoter has been denned 
 
 i See noteto In re Gibbs, L57 Pa. St. to be a person who organizes a cor- 
 22 L. R. A. 276. Long acquies- poration. It is said to be not a legal 
 cence raises a presumption of legal in- but a business term, 'usefully sum- 
 corporation. Rose Hill & E. R. Co. tning up, in a single word, a Dumber 
 v. People, 115 111. L33, 3 N. E. Rep. of business operations familiar to the 
 725. See § 30, supra. commercial world, by which a com- 
 
 z Kmma, etc., Co. v. Lewis, I C. P. pany is generally brought int.. exist- 
 
 Div. 396, 1 1 Ch. Div. 918. ence.' " 
 
 ■Bramwell, J., Twycross v. Grant, 2 'Lady well, etc., Co. v. Brookes, 35 
 
 c. p, I.,. Ch. Div. 400, 17 Am. and Eng. C. C. 22. 
 
 •Woodbury, etc., Co. v. Louden-
 
 § 53 CREATION, ORGANIZATION AND CITIZENSHIP. 45 
 
 derive any personal advantage to the detriment of the corpo- 
 ration or its members, without a full and fair disclosure of 
 their transactions to those who are entitled to act for the cor- 
 poration. Hence, a promoter, when acting for the corpora- 
 tion, can not purchase property and sell it to the corporation 
 at an advance, nor can he secretly receive a bonus from the 
 vendor for negotiating the sale of his property to the corpo- 
 ration. 1 
 
 § 53. Secret profits. — Any secret profits made by the pro- 
 moters of a corporation while acting for the corporation must 
 be accounted for and may be recovered in equity by the cor- 
 poration or its representatives. 2 In some cases it is held that 
 a shareholder may maintain an action to recover his share of 
 the profits, 3 or may sue in damages for the fraud. 4 Thus, 
 where the promoter deceives the members of a corporation, as 
 to the actual price paid for the property, or by collusion with 
 the vendors is allowed a commission for making the sale, he 
 is liable to the corporation for the profits accruing to him from 
 the transaction. 5 A corporation may by means of a suit in 
 equity, by or for its benefit, or by other appropriate means, 
 rescind a sale of property to it and recover the consideration 
 paid therefor, where the promoters were the real vendors and 
 realized a profit on the property, concealing from the corpora- 
 chandler v. Bacon, 30 Fed. Rep. the corporation has been in existence 
 538; Pittsburg Min. Co. v. Spooner, 74 and engaged in business for more 
 
 Wis. 307, 42 N. W. Rep. 259; Wood- than a year, be held to a promoter's 
 
 bury, etc., Co. v. Loudenschlager, 55 fiduciary duty to the corporation. Rus- 
 N. J. Eq. 78, 35 Atl. Rep. 436; Pla- sell v. Rock River, etc., Co., 184 Pa. 
 
 quemines,etc.,Co.v. Buck, 52 N.J. Eq. St. 102, 39 Atl. Rep. 21. Article in 16 
 
 219, 27 Atl. Rep. 1094; Emery v. Par- Am. Law Rev. 671. 
 
 rott, 107 Mass. 95; Yale, etc., Co. v. 2 Chandler v. Bacon, 30 Fed. 538; 
 
 Wilcox, 64 Conn. 101, 25 L. R. A. 90; Cook v. Southern, etc., Co. (Miss.), 21 
 
 Simons v. Min. Co., 61 Pa. St. 202 ; Get- So. Rep. 795, Re Olympia, 67 L. J. Ch. 
 
 ty v. Devlin, 54 N. Y. 403 ; Burbank v. N. S. 433. 
 
 Dennis, 101 Cal. 90; Central Land Co. 3 Emery v. Parrott, 107 Mass. 95. 
 
 v. Obenchain, 92 Va. 130, 22 S. E. Rep. '-Getty v. Devlin, 54 N. Y. 403. 
 
 876; Emma, etc., Co. v. Grant, 11 Ch. 5 Emma, etc., Co. v. Grant, 11 Ch. 
 
 Div.918; Erlangerv. Phosphate Co., L. Div. 918; Simons v. Vulcan Oil Co., 61 
 
 R., 3 App. Cas. 1218. One who was Pa. St. 202. 
 
 originally a promoter can not, after
 
 46 THE LAW OF PRIVATE CORPORATIONS. § 54 
 
 tion and those associated with them in organizing it that they 
 were personally interested in the sale. 1 One who organizes a 
 corporation to purchase a patent while he already has a secret 
 agreement with the owner by which he is to receive a part of the 
 proceeds of the sale, and who obtains subscriptions to the stock 
 of the company by stating that he is putting his money into the 
 enterprise on the same basis as the others, must account to 
 the other stockholders for the profits received under the secret 
 agreement. The illegality of the contract because against 
 public policy will not defeat the right of the corporation to re- 
 cover the secret profits. z 
 
 § 54. Owners of property as promoters. — The rule stated 
 in the preceding section does not apply when the owner of 
 property becomes the promoter of a corporation which it is in- 
 tended shall become the purchaser of the property. In this case 
 in acquiring the property the promoter acted for himself, and 
 did not assume to act for the corporation. In the absence of 
 false representations, and when the subscribers have an oppor- 
 tunity to ascertain the condition of the land, it is immaterial 
 what the property may have originally cost the vendor. 3 The 
 rule is well stated by Mr. Justice Sharswood : 4 "There are 
 two principles applicable to all partnerships or associations for 
 a common purpose of trade or business, which appear to be 
 well settled on reason and authority. The first is that any 
 man or number of men who are the owners of any kind of 
 property, real or personal, may form a partnership or associa- 
 tion with others, and sell that property to the association at 
 any price which may be agreed upon between them, no matter 
 what it may have originally cost, provided there be no fraudu- 
 lent misrepresentations made by the vendors to their associates. 
 They are not bound to disclose the profits which they may 
 realize from the transaction. They were in no sense agents or 
 
 'Hebgen v. Koeffler (Wis.) , 72 X. A. 837; Plaquemines, etc., Co. v. 
 
 \V. Rep. 745. Buck, 52 N. J. Eq. 219, '-'7 Ail. Rep. 
 
 'Yale, etc., Works v. Wilcox, <;» 1094; Franey v. Warner, 96 Wis. 222. 
 Conn. 101,26 I.. I:. L 90. 'Densmore, etc., Co. v. Densmore, 
 
 •Milwaukee, etc., Co. v. Dexter, :»'.» c,i Pa. St. 18. 
 Wis. L'l t, 7 1 X. W. Rep. 976, 40 I.. R.
 
 § 54 CREATION, ORGANIZATION AND CITIZENSHIP. 47 
 
 trustees in the original purchase, and it follows that there is no 
 confidential relation between the parties, which affects them 
 with any trust. It is like any other case of vendor and vendee. 
 They deal at arm's length. Their partners are in no better 
 position than strangers. They must exercise their own judg- 
 ment as to the value of what they buy. * * * 
 
 "The second principle is that where persons form such an as- 
 sociation, or begin or start the project of one, from that time 
 they do stand in a confidential relation to each other, and to 
 all others who may subsequently become members or subscrib- 
 ers, and it is not competent for any of them to purchase prop- 
 erty for the purposes of such a company and then sell it at an 
 advance without a full disclosure of the facts. They must ac- 
 count to the company for the profits, because it legitimately is 
 theirs." 
 
 In another case, 1 where there were actual misrepresentations, 
 it was said: "If, in order to get up a company, they repre- 
 sented themselves as having acted for the association to be 
 formed, and proposed to sell at the same prices they paid, and 
 their purchases were taken on these representations, and stock- 
 holders invested in reliance upon them, it would be a fraud on 
 the company and all those interested, to allow them to retain the 
 large profits paid them by the company in ignorance of the true 
 sums actually advanced." 
 
 In this case the defendants were subscribers with others to 
 the stock of a projected company, and after the plan had been 
 formed, secured to themselves an option upon the property, 
 which they afterwards sold to the company at a greatly ad- 
 vanced price. 
 
 A promoter is not required to account for profits arising from 
 a sale of land to a corporation at an advance of the price paid 
 for it by him where a notice was attached to all the subscrip- 
 tion papers to the effect that he had an option and would sell 
 the land to the corporation for a specified amount and no rep- 
 resentations were made as to the amount he had paid for it. 2 
 
 : Sirnona v. Vulcan Oil Co., 61 Pa. St. 2 Richardson v. Graham (W. Va.), 
 202, 217. 30 S. E. Rep. 92.
 
 48 THE LAW OF PRIVATE CORPORATIONS. § OO 
 
 § 55. Personal liability of promoters on contracts. — When 
 promoters assume to contract in the name of a corporation not 
 in being they, upon well understood principles of law, be- 
 come liable individually upon such contracts. This is true in 
 all cases unless the creditor expressly waives his rights against 
 the promoters and agrees to look to the future corporation foi 
 the payment of his debt. 1 The intention of the creditor in 
 such a case is always a question of fact, and is properly sub- 
 mitted to a jury. 2 An express agreement with the promoters 
 that the creditor will look to them alone for payment inures 
 to the benefit of the corporation when organized, and it is 
 therefore not liable upon the contract, although its charter 
 contains an express provision that it shall be liable for such 
 debts when incurred in connection with its organization. 3 
 
 § 56. Liability to subscribers whose subscriptions are ob- 
 tained by fraud. — The promoters of a corporation are liable in 
 damages to subscribers for stock whose subscriptions are ob- 
 tained by fraud. 4 Under the English statute every contract re- 
 lating to the formation of a corporation or to its capital, property 
 or business, when formed ; or to the position pecuniary or 
 otherwise in regard to the company or its promoters or ven- 
 dors ; or of the directors or other officers of the company, 
 which may affect the judgment of a person invited to take 
 shares, must be disclosed, if one of the parties to the contract is, 
 at the date of the contract, or subsequently becomes, a director, 
 promoter or trustee of the company. 5 Hence, where the owner 
 of property agreed to sell it to a company for a stipulated 
 amount, but by a scries of contracts it was arranged that only 
 
 x Oarmody v. Powers, 60 Midi. 26, '-'<i 826. Bee articles in L6 Am. Law Rev. 
 
 N. W. Rep. 801. See Morion v. Hani- 281 and 671. 
 
 ilton College 'Ky.i, 36 l>. R. A. 275; "Biggins v. Bopkins, 3 Exch. (W. 
 
 Shields \. Clifton Hill, etc., <'<>., '-'i B. >^ G.) 163. 
 
 Trim. 123, 26 L. R. A. 509; Walton v. 'Savin v. Boylake R. Co., L. i:., I 
 
 Oliver, 49 Kan. 107, 30 Pac. Rep. 172; Exch. 9. 
 
 Bersey v. Tully, 8 Colo. App. L10, 44 'Miller v. Barber,66 N. Y.558; Pad- 
 
 Pac. Rep. 854; Roberts, etc., Co. v dock v. Fletcher, 42 Vt. 389. 
 
 Schlick, 62 Minn. 332, 64 X. \V. Rep. 'Statement of rule in 7 Eng. Rul. 
 
 Cms. 197.
 
 § 57 CREATION, ORGANIZATION AND CITIZENSHIP. 49 
 
 a small portion of this sum should be retained by them, and 
 the balance divided among the promoters, and the prospectus 
 did not disclose these contracts, and the plaintiffs subscribed for 
 shares without knowledge of the facts, they were allowed to re- 
 cover the value of the shares, for which they subscribed, from 
 the promoters. 1 
 
 § 57. Fraudulent prospectus. — One who is induced to sub- 
 scribe for stock in a corporation by fraudulent representations 
 contained in a prospectus issued by the promoters of a corporation 
 may recover the resulting damages from the promoters. In Eng- 
 land the original allottee of shares alone is entitled to maintain 
 the action. But a purchaser from an original allottee may re- 
 cover damages caused by misrepresentations in the prospectus, 
 if he can show that the prospectus was intended by those is- 
 suing it to be, and was in fact, communicated to him prior 
 to his purchase of the shares. The rule is founded upon the 
 theory that when the allotment was completed the office of 
 the prospectus was exhausted, and that a person who had not 
 become an allottee, but was a subsequent purchaser of shares 
 in the market, was not so connected with the prospectus as to 
 render those who had issued it liable to indemnify him against 
 the losses which he had suffered in consequence of the pur- 
 chase. 2 Under the American decisions when directors or 
 promoters of a corporation knowingly issue or sanction the 
 circulation of a false prospectus, containing untrue statements 
 of material facts, the natural tendency of which is to deceive 
 and mislead the community, and to induce the public to pur- 
 chase its stock, they are responsible to those who are injured 
 thereby. 3 Judge Thompson, after criticising the rule of Peek 
 v. Gurney, says: 4 "It is a subject of congratulation that a 
 doctrine so plainly destitute of any foundation in reason, 
 
 Sullivan v. Metcalfe, 5 C. P. D. 455, Cross v. Sackett, 2 Bosw. 617 (N. Y.). ; 
 
 7 Eng. Rul. Cas. 497. , Watson v. Crandall, 7 Mo. App. 233, 
 
 2 Peek v. Gurney, L. R.,6 H. L.377; 78 Mo. 583; Bruff v. Mali, 36 N. Y. 
 
 Scott v. Dickson, 29 L. J. Ex. 62; 200; Cazeaux v. Mali, 25 Barb. 578 
 
 Deny v. Peek, 14 App. Cas. 337. (N. Y.). 
 
 3 Morgan v. Skiddy, 62 N. Y. 319; Thompson Corp., II, § 1472. 
 4 — Private Corp.
 
 50 THE LAW OF PRIVATE CORPORATIONS. § 58 
 
 and so opposed to common opinions of justice and business 
 morality, has not obtained a foothold in this country. We 
 follow the doctrine of the overruled decisions in England, 
 and hold that it is not necessary in order to support such an 
 action, that the false representations were made directly to the 
 plaintiff. It will be sufficient if they were contained in cir- 
 culars, prospectuses, or other advertisements, with a view of 
 influencing the public at large, or any member of the public, 
 who might be influenced by them to purchase shares; and 
 that the plaintiff saw them, and on the faith of the state- 
 ments contained in them became a purchaser of shares. ' 
 It is not necessary that the representations should have been 
 communicated directly to the persons thereby induced to pur- 
 chase the shares. Nor is it necessary that they should have 
 been concocted with a view of deceiving those particular per- 
 sons; it is sufficient that they were concocted with a view of 
 deceiving any person whom the deception might catch and 
 impose upon." 
 
 § 58. Liability of corporation on contracts made by pro- 
 motors. — As a general rule a corporation is not liable on the 
 contracts of its promoters, and parties who have contracted 
 with them in the name of the corporation have no right of 
 action against it unless the engagement made on its behalf is 
 subsequently adopted by it. 1 No relation of agency can exist 
 between the promoter and a principal not in existence. The 
 rule of non-liability is not affected by the fact that the pro- 
 
 'Munson v. Syracuse R. Co., 103 Joaquin, etc, (V v. West, 94 Cal. 
 
 N. Y. 58; Gent v. Mfg., etc., Co., 399; Pittsburgh, etc., Co. v. Quintrell, 
 
 107 Hi. 662; Western, etc., Co. v. 91 Tenn. 693; Winters v. Hub, etc., 
 
 Cousley, 72 111. 531; Weatherford \. Co., 67 Fed. 287. A contract to offer 
 
 Railway Co.,86Tex. 860; Carey v.Min- stock to the corporation :it tin' lowest 
 
 ingCo.,81 [owa674, l7N.W.Rep.882; price al which the holder is willing to 
 
 idard, etc., Co. v. Dem., etc., Co., sell, before offering it to any other 
 
 87 Wis. 127,58 X. W. Rep. 238; Bat- purchaser, is uot binding in favor of 
 
 telle v. V \\\, He, Co., 37 Minn, the corporation when il wasmadeby 
 
 M.- Vrthur v. Times, etc., <'".. 48 proposed stockholders before the cor- 
 
 Minn.819; Davis v. Ravenna, etc.,Co., poration \\:is in existence as a legal 
 
 reb. 171,87 N. W. Rep. 136; Buf- entity. Ireland v. Globe, etc., Co. 
 
 flngton v. Bardon, 80 Wis. 635; San f U. [.),88 Ail. Rep.l 16,88 L. R.A.299.
 
 § 59 CREATION, ORGANIZATION AND CITIZENSHIP. 51 
 
 moters become the sole stockholders of the corporation. 1 A 
 corporation is not responsible for representations made by its 
 promoters. 2 
 
 § 59. Adoption of contract by corporation. — No rights, 
 legal or equitable, arise in favor of a corporation in respect of 
 transactions, whether complete or inchoate, merely because 
 entered into in contemplation of the creation of such corpora- 
 tion. 8 But if the corporation has the power to enter into such 
 a contract, it may adopt the contract made in its name by the 
 promoters, and thus bind itself to its performance. It then 
 becomes liable by virtue of the act of adoption, and not upon 
 the theory of the agency of the promoters. It does not, strictly 
 speaking, ratify the acts of the promoters, as ratification im- 
 plies an existing principal; it enters into a new contract, which 
 dates from the time of the act of adoption. 4 The act of adopt- 
 ing the contract must be attended by the formalities necessary 
 to the making of an original contract. Thus, if the use of a 
 seal or a resolution of the board of directors is necessary to 
 the making of such a contract, it is necessary when the cor- 
 poration adopts a contract made by a promoter for it. Under 
 ordinary circumstances the adoption of the agreement may be 
 shown by acts of acquiescence on the part of the corporation 
 or its authorized agents. 5 The president or general manager of 
 
 ^attelle v. N. W., etc., Co., 37 charged by virtue of the technical doc- 
 Minn. 89. But see Paxton v. Bacon, trine of ratification, which applies only 
 etc., Co., 2 Nev. 259 (New ed.), 768. to acts performed on behalf of an ex- 
 
 2 01dham v. Mt. Sterling, etc., Co. isting principal, see also Caledonia, 
 
 (Ky.), 45 S. W. Rep. 779. etc., Co. v. Helensburg, etc., Trustees, 
 
 'Plaquemines, etc., Co. v. Buck, 52 2 Macq. H. L. Cas. 391, 409; Oakes 
 
 N. J. Eq. 219, 24 Atl. Rep. 1094. v. Cattaraugus, etc., Co., 143 N. Y. 
 
 4 Richardson v. Graham (W. Va.), 430; dissenting opinion, Melhado v. 
 
 30 S. E. Rep. 92 ; McArthur v. Times, Porto Alegre, etc., R. Co., L. R. 9 C. P. 
 
 etc., Co., 48 Minn. 319; Huron, etc., 503. It is sometimes said that there 
 
 Co. v. Kittleson, 4 S. Dak. 520; may be a ratification. See Oakes v. 
 
 Weatherford v. R. Co., 86 Tex. 350, 24 Cattaraugus, etc., Co., 143 N. Y. 430, 
 
 S. W. Rep. 795; Reichwald v. Com- and note 26 L. R. A. 546. 
 mercial Hotel, 106 111. 439. 5 Oakes v. Cattaraugus, etc., Co., 143 
 
 That the corporation can not be N. Y. 430, 26 L. R. A. 544.
 
 52 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §60 
 
 a corporation may adopt a contract made by himself for the 
 corporation before it was legally created which he would have 
 power to make at the time of the adoption. 1 An adoption pro- 
 cured by the active co-operation of directors who have a pri- 
 vate interest in the contract does not bind the corporation. 2 
 In Massachusetts it is held that a corporation can not become 
 a party to a contract made in its name by promoters before 
 the organization of the corporation, even by adoption. 3 
 
 § GO. Acceptance of benefits under the contract. — A corpo- 
 ration may become liable on a contract made by its promoters 
 by reason of acts which create an estoppel. If it accepts the 
 benefits which accrue under the contract, it can not escape re- 
 sponsibility for the burdens. 4 Thus where the promoters 
 agreed on behalf of a railway company that if a bonus was 
 given, the road would be constructed between certain points, 
 and that coal would be carried at a stipulated rate, it was held 
 that by accepting the bonus the company was bound to com- 
 
 l Battelle v. N. W. Cement Co., 37 
 Minn. 89; Burden v. Burden, 40 N. Y. 
 Sup. 499; Sch*eyer v. Mills Co., 29 
 Ore. 1, 43 Pac. Rep. 719. 
 
 In Ireland v. Globe, etc., Co.(R. I.), 
 38 Atl. Rep. 11(5, 38 L. R. A. 299, it was 
 held that the mere issue of certificates 
 of stork by a corporation is not a ratifi- 
 cation of a contract made before it 
 came into existence, between the pro- 
 posed incorporators to the effect that 
 they would not transfer their shares 
 without giving the company an option 
 to purchase them. 
 
 8 Munsou v. Syracuse, etc., R. Co., 
 103 N. V. 58. 
 
 •Abbott v. Bapgood, 150 Mass. 248, 
 22 N. E. Rep. 907; Penn, etc., Co. v. 
 Hapgood, i II Mass. 145, 7 N. E. Rep. 
 22. 
 
 1 Chicago, etc., Co. v. Creamery Co. 
 
 i. Rep.809; Weatherford, 
 
 etc.,R.Co.v. Granger, 86 Tex. 350,248. 
 
 VV. Rep. 795 ; Pax ton, etc., < !o. v. First 
 
 National Bank, 21 Neb. 621, 33 N. W. 
 Rep. 271 ; Grape, etc., Co. v. Small, 40 
 Md.395 ; Moore, etc., Co. v. Towers, etc., 
 Co., 87 Ala. 206, 6 So. Rep. 41 ; Frank- 
 fort, etc., Co. v. Churchill, 6 T. B. Mon. 
 427, 17 Am. Dec. 159. In Morton v. 
 Hamilton College (Ky.), 38 S. W. Rep. 
 1, 35 L. R. A. 275, it was held that 
 promoters of an incorporated college 
 who advance money or assume an ob- 
 ligation to pay the interest on one of 
 the subscriptions to a fund forthe pur- 
 chase of property of the college, when 
 to do this it is necessary to obtain the 
 subscription, and it is done at the re- 
 quest of some and w itli the consent of 
 all Of those acting as trustees of the 
 
 prospective corporation, on the under- 
 standing that the college will repay 
 them or save them harmless, can re- 
 cover iroiii it the amount of such in- 
 terest Which fhev have been compelled 
 to pay and which went into the fund 
 
 used in buying the college property.
 
 § 61 CREATION, ORGANIZATION AND CITIZENSHIP. 53 
 
 ply with the terms of the contract. 1 So where a number of 
 persons not incorporated, but associated for a common object, 
 intending to procure a charter, authorize acts to be done in 
 furtherance of their object by one of their number, with the 
 understanding that he should be compensated, it was held that 
 if such acts were necessary to the organization, and were ac- 
 cepted by the corporation and the benefits thereof enjoyed, they 
 must be taken with the burden. The court said: "If the body 
 for whom the projectors assumed to act does come into exist- 
 ence, it can not take the benefits of the contract without per- 
 forming that part of it which the projectors undertook that it 
 should perform." 2 
 
 Where, after the execution of articles of incorporation and 
 the selection of officers, but before the filing and recording of 
 the articles, and before the time fixed by the articles for com- 
 mencing business, the president in the name of the corpora- 
 tion executed a promissory note in payment for certain prop- 
 erty which after the perfecting of the corporation came into 
 the possession of the corporation as its property and continued 
 to be used by it as such, the corporation is liable on the note. 
 The court said: "The conclusion is inevitable, granting the 
 entire want of power on the part of the officers, or promoters 
 of the corporation to act as such at the date of the note, that 
 the retaining possession of the consideration by the corpora- 
 tion after its organization is a ratification of the contract with 
 all its terms and obligations." 3 
 
 § 61 . Limited to obligations of the accepted contract. — The 
 
 acceptance of the contract entered into by the promoters im- 
 poses upon the corporation liability only for the obligations 
 which grow out of the contract. "When it is said that when 
 a corporation accepts the benefit of a contract made by its pro- 
 moters, it takes it cum onere, it is important to understand dis- 
 tinctly what is meant. There is, so far as this matter is con- 
 
 1 Weatherford, etc., R. Co. v. Gran- 2 Bell, etc., R. Co. v. Christy, 79 Pa. 
 
 ger, 86 Tex. 350, 2* H. V/. Rep. 795, St. 54. 
 
 Wilgus' Cases ; Burrows v. Smith, 10 3 Paxton Cattle Co. v. First Nat'l 
 
 N. Y. 550. Bank, 21 Neb. 621, 33 N. W. Rep. 271.
 
 54 THE LAW OF PRIVATE CORPORATIONS. § 62 
 
 cerned, a radical difference between a promise made on behalf 
 of the future corporation in the contract itself, the benefits of 
 which the corporation has accepted, and the promise in a pre- 
 vious contract to pay for services in procuring the latter to be 
 made. " Hence, where a proposition was made on behalf of the 
 company by its promoters that if a bonus should be subscribed 
 and paid to it, it would build its road between certain points, 
 and would carry coal at a certain stipulated rate, by accepting 
 the bonus the company became bound to fulfill the stipulations 
 of the contract. But where it appeared that one of the pro- 
 moters promised the plaintiff that if he would assist in 
 procuring subscribers to the bonus, the company would pay 
 him for his services, this was no part of the contract the 
 benefits of which were taken by the company. Hence, by ac- 
 cepting the contract, the company did not become liable for 
 such services. 1 
 
 § 62. The expenses and services of promoters. — The 
 
 great weight of authority supports the rule that corporations 
 are not liable for expenses incurred or services rendered in the 
 organization of the corporation unless made so by statute or by 
 its charter. 2 But it has been held that where the corpora- 
 tion accepts the benefit of the services legitimately rendered or 
 of expenses incurred before its organization, and which were 
 necessary for its organization, it is estopped to deny liability 
 therefor. 3 In such case the services must have been necessary 
 and reasonable, and rendered with the understanding that they 
 should accrue to the benefit of the corporation, and with the 
 expectation that they would bo paid for by it. 4 The liability 
 rests upon a promise implied by law from the fact that thecor- 
 poration, after it had capacity to contract, accepted the benefits, 
 uii' I therefore must he deemed to have taken the burdens at the 
 
 1 Weatherford, etc., It. Co. v. Gran- Div. 103; Davie, etc., Co. v. Hillaboro, 
 
 ger, 86 Tex. 861, 24 S. W. Rep. 795. etc., Co., 10 [nd. A.pp. 12. 
 
 •Rockford, <•<<-., R. Co. v. Bsge, 65 *Low v. Conn., etc., R. Co., 15 N. 
 
 III. 828, 16 \m. R.587; N. Y.& N. II. H.370. 
 
 i: Co Ketchum, 27 Conn. 170; Re * Perry v. R. Co., 44 Ark. 383; West 
 
 Elotherham Alum Co., L. R. 25 Ch. Point, etc., Co. v. Robo (Miss., May 
 
 23, 1898), 23 So. Rep. 629.
 
 § 63 CREATION, ORGANIZATION AND CITIZENSHIP. 55 
 
 same time, and is estopped to show want of capacity to make 
 the contract. This rule practically renders a corporation liable 
 in all cases for services and expenses rendered in its organiza- 
 tion, which it necessarily accepts by existing. 
 
 Where services are rendered at the request of all the corpo- 
 rators, and after incorporation no outside persons or capital are 
 taken in, it is held that the corporation may be liable in equity 
 for the value of such services. " Under such circumstances 
 the property of no one but those who contracted the debts and 
 were originally liable, would be taken or subjected to the pay- 
 ment of it. The same persons continue the same business 
 with the same property with no substantial change except in 
 name. In such a case there is no reason why in equity the 
 corporation should not be primarily liable for the debts, as it 
 has succeeded to the property of the association." But this 
 rule does not apply where third persons join the corporation. 1 
 
 IV. Corporations as Persons and Citizens. 
 
 § 63. The citizenship of a corporation. — For the purposes 
 of jurisdiction a corporation is taken to be a citizen of the 
 state by which it was created. 2 The theory that the corporate 
 person has a residence in the land of its birth without refer- 
 ence to its constituent parts controls the decision in many 
 cases. But the supreme court of the United States bases its 
 decisions upon the presumption that all of the stockholders of 
 a corporation are citizens of the state which created the cor- 
 poration. Originally this presumption was one of fact and 
 the subject of allegation and traverse, which permitted the 
 jurisdiction of the federal courts to be defeated by showing 
 the actual residence of the stockholders. But after a long 
 contest, it is settled that the presumption of citizenship is one 
 of law, which can not be overthrown by evidence. 3 " Strictly 
 
 iPaxton v. Bacon Mill Co., 2 Nev. 106 U. S. 118; Connor v. Yicksburg E. 
 
 258 ; Ritchie v. McMullen, 79 Fed. Rep. Co., 36 Fed. Rep. 273, 1 L. R, A. 331 ; 
 
 523 (C. C. A.), 64 Fed. Rep. 253. St. Louis, etc., R. Co. v. Newcom, 6 
 
 E Shaw v. Quincy Min. Co., 145 U. S. C. C. A. 172, Ann. 
 
 444; Nashua R. Co. v. Lowell R. Co., 3 St. Louis, etc., R.'Co. v. James, 161 
 
 136 U. S. 356; S. S. Co. v. Tugman, U. S. 545, Wilgus' Cases; Muller v. 
 
 Dows, 94 IT. S. 444.
 
 56 THE LAW OF PRIVATE CORPORATIONS. § 64 
 
 speaking," says Judge McCrary, 1 " corporations can not be 
 citizens; and, therefore, in order to hold them amenable to the 
 federal jurisdiction on the ground of citizenship, it has been 
 found necessary to assume, often contrary to the fact, that all 
 the stockholders are citizens of the state by which the corpora- 
 tions are created. It is only by virtue of this assumption that 
 a corporation can be said to be a citizen of any state. The 
 presumption that all the stockholders are citizens of the state 
 under whose laws they incorporate is a conclusive presump- 
 tion, and the facts will not be inquired into." 
 
 § 64. Incorporation in several states. — It is not uncommon 
 for several states to incorporate what to all intents and pur- 
 poses is the same corporation. It is impossible, however, for a 
 state to give extraterritorial force to its laws. 2 And, hence, 
 although bearing the same name, there are as many corpora- 
 tions as there are creating states. 3 For purposes of jurisdic- 
 tion the corporation is a corporation of each state, and when 
 acting in either of the states it acts under the authority of the 
 charter from that state. 4 Subject to constitutional limitations, 
 a legislature has entire control over the matter of creating cor- 
 porations, and may thus provide a method by which a foreign 
 corporation may become a domestic corporation. A corpora- 
 tion, as chartered in a foreign state, may thus be made a 
 domestic corporation. 5 " It is not true that one state may not 
 
 'Pac. R. Co. v. Mo. Pac. R. Co., 23 8 Mo. Pac. R. Co. v. Meeh, 69 Fed. 
 
 Fed. Rep. 565. Rep. 753, 30 L. R. A. 250; Bridge Co. v. 
 
 As the jurisdiction rests upon the Woolley, 78 Ky. 623; Louisville, etc., 
 
 citizenship of the parties, a pleading R. Co.v. N.A. &0. R. Co., 75 Fed. Rep. 
 
 musl allege the state by which the 433; R. Co. v. Roberson, 01 Fed. Rep. 
 
 corporation was created, ami this 592; Nashua, etc., Corp. v. Boston, 
 
 musl be a foreign state. Noaverment etc., Corp., 136 U. S. 356. 
 
 of citizenship of the stockholders is 'Quincy Bridge Co. v. Adams, 88 111. 
 
 permitted. ,; i"'- 
 
 LaFayette [ns. Co. v. French, 18 "Stout v. R. Co., 8 Fed. Rep. 7t)4; 
 
 How. (U. S.) 404; B. & 0. R. Co. v. James v. R. Co., 46 Fed. Rep. 47. A 
 
 Mil, [2 Wallace (TJ. B.) 65; St.. railroad corporation chartered by one 
 
 Louis, etc.,R. Co. v. Newcom,66 Fed. state becomes adomesti rporation 
 
 Rep, 951, <> < '. < '. A. 172. of another state by acquiring by con- 
 
 *Rece v. Newport News R. Co., 82 solidation the property and franchises 
 
 \V. Va. L64, 3 L. R. A. 672. of two domestic railway corporations
 
 § 65 CREATION, ORGANIZATION AND CITIZENSHIP. 57 
 
 incorporate a corporation of another state as such. It may be 
 done, too, without any specific provisions for the stock or inter- 
 nal government of the new corporation." 1 When a corporation 
 is created out of a corporation of another state, the indisputable 
 presumption of citizenship of the members which arises when 
 the corporators are individuals does not apply ; and the new 
 corporation for purposes of Federal jurisdiction is regarded as 
 a citizen of the same state as that of the constituent corpora- 
 tion. 2 
 
 § 65. Citizenship within the fourteenth amendment. — A cor- 
 poration is not a citizen of the United States within the mean- 
 ing of all the provisions of the constitution of the United 
 States ; but it is a person within the meaning of the clause in 
 § 1 of the fourteenth amendment to the constitution, which 
 forbids a state to deny to any persons in its jurisdiction the 
 equal protection of the laws. 3 A statute of Tennessee which 
 gave to residents of that state priority over non-residents in the 
 distribution of the assets of a foreign corporation, which, by 
 riling its articles of association in the state, became a domestic 
 corporation, was held unconstitutional, in so far as it discrim- 
 inated against citizens of other states. 4 " But it is equally well 
 settled," said Mr. Justice Harlan, "and we now hold that a 
 corporation is not a citizen within the meaning of the constitu- 
 tional provision that ' the citizens of each state shall be en- 
 titled to all privileges and immunities of citizens in the several 
 states.' * * * Since, however, a corporation is a ' per- 
 
 of the latter state. Bradley v. Ohio, R. Co. v. Beckwith, 129 U. S. 26; Cov- 
 
 etc, R. Co., 78 Fed. Rep. 387, 119 N. ington, etc., Co. v. Sanford, 164 U. S. 
 
 C. 718. 592; Smythe v. Ames, 169 IT. S. 522; 
 
 Louisville, etc., R. Co. v. Ry. Co., Hammond, etc., Co. v. Best, 91 Me. 
 
 75 Fed. Rep. 433; Clark v.Barnard, 108 431, 42 L. R. A. 528. But the four- 
 
 U. S. 436; Graham v. Ry. Co., 118 IT. S. teenth amendment does not destroy 
 
 161 ; Railway Co. v. Roberson, 61 Fed. the police power of the state. See note 
 
 Rep. 592. to State v. Goodwill, 25 Am. St. Rep. 
 
 2 Railway Co. v. James, 161 TJ. S. 545. 870-890. 
 
 3 Santa Clara County v. South. Pac. 4 Blake v. McClung, 172 TJ. S. 239, 
 
 R., 118 U. S. 394; Pembina, etc., Co. Wilgus' Cases. The chief justice and 
 
 v. Pa., 125 TJ. S. 187; Mo. Pac. R. Co. Mr. Justice Brewer dissenting, 
 v. Mackey, 127 TT. S. 205 ; M. & St. L.
 
 58 THE LAW OF PRIVATE CORPORATIONS. § 65 
 
 son ' within the meaning of the fourteenth amendment * * * 
 may not the Virginia corporation invoke for its protection the 
 clause of the amendment declaring that no state shall deprive 
 any person of property without due process, nor deny to any 
 person within its jurisdiction the equal protection of the laws? 
 We are of opinion that this question must receive a negative 
 answer. Although this court has adjudged that the prohibi- 
 tions of the fourteenth amendment refer to all the instrumen- 
 talities of the state, to its legislative, executive, and judicial 
 authorities, it does not follow that within the meaning of that 
 amendment the judgment below deprived the Virginia corpora- 
 tion of property without due process of law, simply because 
 its claim was subordinated to the claims of the Tennessee 
 creditors. That corporation was not, in any legal sense, de- 
 prived of its claim, nor was its right to reach the assets of the 
 British corporation in other states or countries disputed. It 
 was only denied the right to participate upon terms of equality 
 with Tennessee creditors in the distribution of particular assets 
 of another corporation doing business in that state. It had 
 notice of the proceedings in the state court, became a party to 
 those proceedings, and the rights asserted by it were adjudi- 
 cated. If the Virginia corporation can not invoke the pro- 
 tection of the second section of article four of the constitution of 
 the United States relating to the privileges and immunities of 
 citizens in the several states, as its co-plaintiffs in error have 
 done, it is because it is not a citizen within the meaning of 
 that section ; and if the state court erred in its decree in refer- 
 ence to that corporation, the latter can not be said to have been 
 thereby deprived of its property without due process of law 
 within the meaning of the constitution. 
 
 "It is equally clear that the Virginia corporation can not 
 rely upon (lie clause declaring that, no state shall ' deny to any 
 person within its jurisdiction the equal protection of the laws.' 
 * * * Withoui attempting i<» state whal is the full import 
 of the words, 'within its jurisdiction,' it is safe to say that a 
 corporation uol created by Tennessee, nor doing business there 
 under conditions that subjected it to process issuing from the
 
 § 66 CREATION, ORGANIZATION AND CITIZENSHIP. 59 
 
 courts of Tennessee at the instance of suitors, is not, under the 
 above clause of the fourteenth amendment, within the juris- 
 diction of that state. Certainly, when the statute in question 
 was enacted the Virginia corporation was not within the juris- 
 diction of Tennessee. * * * We adjudge that the statute, 
 so far as it subordinates the claims of private business corpora- 
 tions not within the jurisdiction of the state of Tennessee 
 (although such private corporations may be creditors of a cor- 
 poration doing business in the state under the authority of 
 that statute), to the claims against the latter corporation, of 
 creditors residing in Tennessee, is not a denial of the ' equal 
 protection of the laws' secured by the fourteenth amendment 
 to persons within the jurisdiction of the state, however unjust 
 such a regulation may be deemed." 
 
 § 66. A corporation as an "inhabitant" of a state. — The 
 
 weight of authority establishes a distinction between the citi- 
 zenship and inhabitancy of a corporation, at least if an alien 
 corporation. 1 Although a corporation is a citizen only of the 
 state by which it is created, if an alien corporation it may for 
 certain purposes be considered an inhabitant of a state where it 
 has its principal place of business. Under the statute which 
 provides that except when "the jurisdiction is founded only 
 on the fact that the action is between citizens of different states, 
 no civil suit shall be brought * * * against any person 
 by original process or proceeding in any other district than 
 that whereof it is an inhabitant," it has been held in the lower 
 United States courts that a corporation is an inhabitant of the 
 place in which it has its principal place of business, and where 
 it keeps its records and holds its corporate meetings. These 
 holdings were made under the provisions of the Revised Stat- 
 utes of 1875, when the word "inhabitant" was followed by 
 "or that in which he was found." Since the latter words are 
 not in the law as amended in 1888, it is held that a corporation 
 
 United States v. Southern Pac. R. Rep. 884; In re Hohorst, 150 U. S. 
 Co., 49 Fed. Rep. 297; East Tennessee 653. 
 R. Co. v. Insurance Co., 49 Fed. Rep. 
 608 ; Gilbert v. Insurance Co., 49 Fed.
 
 60 THE LAW OF PRIVATE CORPORATIONS. § 67 
 
 is an inhabitant only of the state and district in which it is in- 
 corporated. 1 
 
 § 67. Place of doing business— License— Effect on citizen- 
 ship. — As a corporation is a creature of local law it does not 
 change its citizenship by extending its business into other 
 states. 2 A foreign corporation does not by filing its articles of 
 incorporation in another state as required by the laws of that 
 state, lose its status as a foreign corporation. 3 This is also true 
 where a corporation goes into another state and there purchases 
 and operates a line of railways. 4 Where a corporation has the 
 right to sell its railroad to a company incorporated by another 
 state, under a law which provides that the purchasing com- 
 pany shall have "all the rights and privileges" of the vendor, 
 the purchasing company does not acquire the citizenship of 
 the vendor company. 5 The granting of a license to a corpora* 
 tion to do business in another state does not make it a citizen 
 of that state. Thus, a Maryland corporation was authorized 
 to do business in Virginia under an act which declared "that 
 the same rights and privileges shall be, and are hereby granted 
 to the aforesaid company within the territory of Virginia, and 
 the said company shall be subject to the same pains, penalties 
 and obligations as are imposed by said act, and the same rights, 
 privileges and immunities, which are reserved to the state of 
 Maryland as to the citizens thereof, are hereby reserved to the 
 state of Virginia and her citizens." The act was construed as 
 granting a license only, and therefore as not making the corpo- 
 ration a Virginia corporation. 6 In a case where it appeared 
 that an existing railroad corporation was authorized by the 
 laws of a state other than that by which it was created to ex- 
 
 iGormully, etc., Co. v. Pope Mfp. 'Chicago, etc, R. Co. v. Minn., 
 
 Co., 34 Fed. Rep. 818; Filli v. Rail- etc., R. Co., 29 Fed. Rep. 837. 
 
 way Co., 37 Fed. Rep. 65. But Bee *B. &0. R. Co. v. Koontz, 104 U.S. 
 
 Riddle v. Railway Co., 39 Fed. Rep. 5; R. Co. v. Cary, 28 Ohio St. 208. 
 
 [nreKeasbyA M . Co., 160 U. S. 6 Morgan v. E.Tenn. R. Co., 48 Fed. 
 
 221. Rep. 705; St. Louis, etc., R. Co. v. 
 
 !-..&O.R.Co.v. Koontz, 101 U-S.r,. Newcom, 2 C. C. A. 174, Ann. 
 
 6 B.&O.R.Co.v. Harris, L2 Wall. 65.
 
 § 68 CREATION, ORGANIZATION AND CITIZENSHIP. 61 
 
 tend its road into such state, Mr. Justice Miller said: 1 "It 
 may not be easy in all such cases to distinguish between the 
 purpose to create a new corporation which shall owe its ex- 
 istence to the law or statute under consideration, and the in- 
 tent to enable the corporation already in existence under laws 
 of another state to exercise its functions in the state where it is 
 so received. * * * To make such a company a corpora- 
 tion of another state, the language used must imply creation or 
 adoption in such form as to confer the power usually exercised 
 over corporations by the state, or by the legislature, and such 
 allegiance as a state corporation owes to its creator. The mere 
 grant of privileges or powers to it as an existing corporation, 
 without more, does not do this, and does not make it a citizen 
 of the state conferring such powers." And even where the 
 statute provided that upon filing a certified copy of its articles 
 of association, by a foreign railroad company, with the secre- 
 tary of state, it should become a corporation of Arkansas, it 
 was held that compliance with such statute, and leasing, pur- 
 chasing and operating a railroad in Arkansas, did not make it 
 a citizen of Arkansas within the meaning of the federal con- 
 stitution. 2 
 
 § 68. A corporation as a person. 3 — Corporations are to be 
 deemed persons within the meaning of statutes when the cir- 
 cumstances in which they are placed are identical with those of 
 natural persons who are expressly included within the operation 
 of the statutes. 4 They are within the meaning of statutes using 
 such words as person and inhabitant when they come within 
 the reason and purport of the statutes. 5 Generally, a statute 
 will be held to include corporations, unless there is something 
 in the statute tending to show that it is intended to be re- 
 
 1 Penn. Co. v. St. Louis, etc., R. Co., 10 L. R. A. 129; Beaston v. Farmers' 
 118 U. S. 290. Bank, 12 Peters (U. S.) 102. 
 
 2 St. Louis, etc., R. Co. v. James, 5 People v. TJtica, etc., Co., 15 Johns. 
 161 IT. S. 545, Wilgus' Cases. 358 ; Proprietors v. Ipswich, 153 Mass. 
 
 3 See Wilgus' Cases, Corporation as 42, 26 N. E. Rep. 239; Denny, etc., Co. 
 a Person, and note. v. Schram, 6 Wash. 134. 
 
 4 Crafford v. Supervisors, 87 Va. 110,
 
 62 THE LAW OF PRIVATE CORPORATIONS. § 68 
 
 stricted in its application to natural persons. 1 Corporations 
 are persons within the meaning of statutes relating to taxa- 
 tion, unless a contrary intent appears. 2 So a foreign corpora- 
 tion is a person within the statute relating to the limitation of 
 actions. 3 Statutes which prohibit persons from engaging in 
 banking, 4 or provide that all persons shall be liable for inju- 
 ries which result in death; 5 or that all inhabitants or residents 
 shall pay taxes; 6 that testimony shall be admitted as against 
 certain persons; 7 that all persons may do certain acts in rela- 
 tion to promissory notes, apply to corporations. 8 The term 
 "persons," when used in attachment and garnishment stat- 
 utes, includes corporations when they are placed in a position 
 identical with that of natural persons. 9 The words "debtor" 
 and "creditor," used in a statute giving a remedy by attach- 
 ment, include corporations. 10 
 
 1 Stribfling v. Bank, 5 Rand. (Va.) 7 LaFarge v. Exchange, etc., Co., 22 
 132. N. Y. 352. 
 
 2 British, etc., Co. v. Comm'rs, 31 8 State v. Waram, 6 Hill (N. Y.) 33. 
 N.Y. 32. 9 B., etc., R. Co. v. Gallahue, 12 
 
 8 Alcot v. Tioga R. Co ,20N. Y. 210. Grat. (Va.) 055, 05 Am. Dec. 254; 
 
 4 People v. Utica, etc., Co., 15 Johns. Knox v. Protection, etc., Co., 9 Conn. 
 358. 430, 25 Am. Dec. 33. 
 
 5 South v. Paulk, 24 Ga. 350. 10 Union Bank v. U. S. Bank, 4 
 
 6 Bank v. Deveaux, 5 Cranch 01. Humph. (Tenn.) 309.
 
 CHAPTER 3. 
 
 CORPORATIONS EXISTING WITHOUT LEGAL RIGHT. 
 
 § 69. General statement. 79. Fraudulent organization. 
 
 70. Manner of raising the question 80. Powers of de facto corporations. 
 
 of corporate existence. 
 
 71. Collateral attack upon de facto n - Estoppel to Deny Corporate Existence. 
 
 corporation, and the doctrine gl. General statement, 
 
 of estoppel. 82. The general rule. 
 
 /. De Facto Corporations. 83 - In actions against members as 
 
 72. Definition. partners. 
 
 73. Necessity for a valid law. 84 - Actions on stock subscriptions. 
 
 74. Good faith attempt to organize. 85 - Subscriptions in contemplation 
 
 75. User of franchise. of incorporation. 
 
 76. Organization under unconstitu- 86 - Estoppel by acquiescence. 
 
 tional statute. 8 ^ '• Estoppel limited to de facto cor- 
 
 77. Status after expiration of term of porations. 
 
 existence. 88. The contrary doctrine — Uncon- 
 
 78. Collateral attack on the right stitutional statutes. 
 
 to exercise a franchise. 
 
 § 69. General statement. — It has already been stated that 
 there can not be a legal incorporation until there has been a 
 substantial compliance with all the requirements of the statute 
 which are made conditions precedent to incorporation. When 
 such conditions have been thus complied with there results a 
 corporation de jure which is able to prove its right to exist as 
 against the direct attack of the state. 1 If, however, there is 
 not substantial compliance with the statutory requirements, 
 there may under certain conditions be a de facto corporation, 
 which, except as against the state, is as effective for all prac- 
 tical purposes as a de jure corporation. By the great weight 
 of authority, its right to exist and exercise the powers assumed 
 can not be questioned collaterally by a private individual. If 
 
 1 Capps v. Hastings, etc., Co., 40 Neb. 470, 24 L. R. A. 259, Wilgus' Cases. 
 
 (63)
 
 64 THE LAW OF PRIVATE CORPORATIONS. § 70 
 
 the state chooses to waive any of the conditions, it can do so, 
 and on grounds of public policy no one else can successfully 
 question the validity of incorporation. 
 
 § 70. Manner of raising the question of corporate exist- 
 ence, — if a pretended corporation is neither de jure nor de facto, 
 it has no standing, and its corporate existence may be ques- 
 tioned collaterally by the state or by an individual, at least 
 when there is no reason for an estoppel. 1 The right to exer- 
 cise the franchise of being a corporation can be called in 
 question only by proceedings in the nature of quo warranto in- 
 stituted by the state." This rule applies to corporations organ- 
 ized under general laws, and to those created by special 
 charter. 3 "Where the law authorizes a corporation, and there 
 is an effort in good faith to organize the corporation under the 
 law, and thereafter, as a result of such effort, corporate func- 
 tions are assumed and exercised, the organization becomes a 
 corporation de facto, and as a general rule, the legal existence 
 of such a corporation can not be inquired into collaterally, al- 
 though some of the required legal formalities may not have 
 been complied with. Ordinarily such an inquiry can only be 
 made in a direct proceeding in the name of the state, and no 
 private persons having dealings with a de facto corporation 
 can be permitted to say that it is not also a corporation 
 de jure."* This rule is held to have no application where in- 
 
 l Martin v. Deetz, 102 Cal.55; Childs way, etc., Church v. Froislie, 37 Minn. 
 
 v. rlurd, 32 W. Va. 66, 9 S. K. Rep. 447, and cases cited in the following 
 
 362 ; Att'v-Gen. v. Hanchett, 42 Mich, notes. 
 
 136, "st. ,ut v. Zulick, 48 N. J. L. 599; 
 
 Only the state can claim that the Wood v. Wiley, etc., Co., 56 Conn. 
 
 charter of a de facto corporation is 87. 
 
 void hecause unconstitutional. Taylor *Andes v. Ely,158U. S. 812; Has- 
 
 , . Portsmouth, etc., R. Co. (Me.), 39 selinan v. Mfg. Co., 97 [nd.365; North 
 
 Atl. Rep. 660; Dubs v. Egli, 167 111. v. The state, lit? [nd. 356, 8 V E. 
 
 514, i: N. E. Rep. 766; Smith v.May- Rep. 159; Hamilton v. Railroad Co., 
 
 field, 163 111. H7. Ill Pa. St. 34. See the review of 
 
 'Andrews v. Nat., etc., Works, 46 authorities by Mr. JuBtice Marshall in 
 
 U. 8. App. 281, 619, 36 L. R. A. 139; dissenting opinion in Bergeron v. 
 
 Paulino v. Portuguese,etc., Lssn.,18R. Hobbs, 96 Wis. 641, 71 N. W. Rep. 
 
 I. 165 ; John V. Farwell Co. v. Wolf L056. 
 (Wis.), 70 N. \v Rep. 289; E. Nor-
 
 § 71 CORPORATIONS EXISTING WITHOUT LEGAL RIGHT. 65 
 
 dividuals sued for services alleged to have been rendered them 
 personally, deny personal liability, and allege the existence of 
 a corporation to which the services were rendered. 1 As long as 
 irregularities in the matter of organization are overlooked by 
 the state, it is settled by the great weight of modern authority 
 that an individual can not successfully object. This principle 
 applies to a de facto foreign corporation as well as to a de facto 
 domestic corporation. 2 
 
 § 71. Collateral attack upon de facto corporation, and the 
 doctrine of estoppel. — The courts sometimes fail to distinguish 
 the principle which prevents an individual from questioning 
 the right of a corporation to exist and exercise its franchises 3 
 from the doctrine of estoppel, which prevents one who has 
 dealt with a de facto corporation from questioning its corporate 
 existence in the particular case under consideration. In dis- 
 cussing this question the supreme court of Minnesota said : 4 
 " Under the view we take of the case, it is wholly unnecessary 
 to consider any of these questions. The plaintiffs are at least 
 corporations de facto. Such a corporation, at least where there 
 is a law under which a corporation might have been legally 
 formed with such power, is capable of taking and holding 
 property as grantee, as well as a corporation de jure, and con- 
 veyances to it are valid as to all the world except the state in 
 proceedings in quo warranto, or other direct proceedings to 
 inquire into its right to exercise corporate franchises. And in 
 an action by it to recover such property, no private person will 
 be allowed to inquire collaterally into the regularity of its 
 organization. This rule is not founded upon any principle of 
 estoppel, as is sometimes assumed, but upon the broader princi- 
 ples of common justice and public policy. It would be unjust 
 and intolerable if, under such circumstances, every interloper 
 
 1 Owen v. Shepard, 8 C. C. A. 244, 3 Andrew v. National, etc., Works, 
 
 59 Fed. Rep. 746. 46 U. S. App. 281, 619, 36 L. R. A. 
 
 HVright v. Lee, 4 S. D. 237, 55 N. 139, 153. 
 
 W. Rep. 931 ; Lancaster v. Amsterdam 4 Trustees, etc., v. Froislie, 37 Minn. 
 
 Imp. Co., 140 N. Y. 576,35 N. E. Rep. 447. See language of Brewer, J., in 
 
 964. Pape v. Capital Bank, 20 Kan. 440. 
 5 — Private Corp.
 
 66 THE LAW OF PRIVATE CORPORATIONS. § 72 
 
 and intruder were allowed to take advantage of every infor- 
 mality or irregularity of organization." 
 
 In considering the same question, the supreme court of Ohio 
 said :* " The theory that a de facto corporation has no real ex- 
 istence, that it is a mere phantom, to be invoked only by that 
 rule of estoppel which forbids a party who has dealt with a 
 pretended corporation to deny its corporate existence, has no 
 foundation either in reason or authority. A de facto corpora- 
 tion is a reality. It has an actual and substantial legal exist- 
 ence. It is, as the term implies, a corporation." 
 
 I. De Facto Corporations. 
 
 § 72. Definition. — A de facto corporation is an apparent 
 corporate organization asserted to be a corporation by its 
 members and actually existing as such, but lacking the crea- 
 tive fiat of the state. 2 It is a fact, and not a mere figment of 
 the legal imagination. Its existence is the result of certain 
 conditions resulting from the acts of its incorporators. A de 
 facto corporation exists when, from defect or irregularity in 
 the organization, or from some omission to comply with the 
 conditions precedent, a corporation de jure is not created. 
 There must, however, have been a colorable compliance with 
 the requirements of some law under which an association 
 might lawfully be incorporated, for the purpose and with the 
 powers assumed, and a user of the rights claimed to be con- 
 ferred by the law. 3 While the decisions are not entirely clear, 4 
 it is evident that three things must exist before there can be a 
 corporation de facto. 1. Capacity to become a corporation de 
 jure. There must be at the time of its organization a valid 
 law under which ;i corporation with the powers assumed might 
 
 ' Society Perunv. Cleveland, 43 Ohio AH. Rep. 862; Eaton v. Walker, 76 
 
 St. 181, 3 N.E. Rep. 357, Wilgus' Cases. Mich.579, 13N.W. Rep.638; Johnson 
 
 •Re Gibbs' Estate, L57 Pa. St. 59, 22 v. Schulin (Minn.), 73 N.W. Rep. L47; 
 
 L. R. L 276, Wilgus' Cases. Eftnnegan v. Noerenberg, 52 Minn. 239. 
 
 'Snider's Sons Co. v. Troy, 91 Ala. 'See for illustration the case of Berg- 
 
 224, 11 L. R. A. 516, 24 Am. St. Rep. eron v. Hobbs, 96 Wis. 641, 71 N. W. 
 
 887; Btoul . . Zulick, is N. .1. L.599,7 Rep. 1066. Wilgus' Cases.
 
 § 73 CORPORATIONS EXISTING WITHOUT LEGAL RIGHT. 67 
 
 lawfully be created. 2. A good faith attempt to form a cor- 
 poration under such a statute; and, 3. User of the powers and 
 franchises claimed by the organization. 
 
 § 73. Necessity for a valid law. — By the weight of authority 
 there can not be a de facto corporation unless there is a valid 
 law under which the corporation might have been legally in- 
 corporated. "To be a corporation de facto, it must be possible 
 to be a corporation de jure; and acts done in the former case 
 must be legally authorized to be done in the latter, or they are 
 not protected or sanctioned by the law. Such acts must have 
 an apparent right." 1 An attempt to organize under a void 
 special law may result in a de facto corporation if there was a 
 general law under which such a corporation could be organ- 
 ized. 2 There may be a de facto corporation resulting from an 
 unsuccessful attempt to consolidate existing corporations. 
 Thus, where the laws authorize the consolidation of corpora- 
 tions of different states, the result of an attempted consolida- 
 tion may be a de facto corporation. 3 A de facto corporation can 
 never result from an attempt to organize a corporation in di- 
 rect violation of a prohibitive statute. 4 An attempt to organ- 
 ize a corporation in one state under a charter granted by an- 
 other state, does not create a de facto corporation. 5 
 
 § 74. Good faith attempt to organize. — There must also be 
 a bona fide attempt to organize a legal incorporation under the 
 statute. "To give a body of men assuming to act as a corpo- 
 ration, where there has been no attempt to comply with the 
 
 x Eveneon v. Ellingson,67Wis. 634, 2 McTighe v. Macon, etc., Co., 94 
 
 31 N. W. Rep. 342; Eaton v. Walker, Ga. 306, 32 L. R. A. 208. 
 
 76 Mich. 579,6 L. R. A. 102; Heaston 3 Continental, etc., Co. v. Toledo, 
 
 v. Cincinnati, etc., R. Co., 16Ind. 275; etc., R. Co., 82 Fed. Rep. 642. 
 
 Abbott v. Omaha, etc., Co., 4 Neb.416; * McTighe v. Macon, etc., Co., 94 
 
 Am., etc., Co. v. Minn., etc., R. Co., Ga. 306; B. & L. Ass'n v. Chamber- 
 
 157 111. 641, 42 N. E. Rep. 153; Guth- lain, 4 S. Dak. 271, 56 N. W. Rep. 897. 
 
 rie v. Oklahoma, 1 Okla. 188, 21 L. R. 5 Duke v. Taylor, 37 Fla. 64, 31 L. 
 
 A. 841 ; Duggan v. Colorado, etc., Co., R. A. 484. But see Demarest v. Flack, 
 
 11 Colo. 113; Jones v. Aspen, etc., 128 N. Y. 205, and Lancaster v. Am- 
 
 Co., 21 Colo. 263, 29 L. R. A. 143 ; So- sterdam Imp. Co., 140 N.Y. 576, hold- 
 
 ciety Perun v. Cleveland, 43 Ohio St. ing that one state may grant a charter 
 
 481; Dobson v. Simonton, 86 N. C. to non-residents enabling them to or- 
 
 493; Norton v. Shelby Co., 118 U. S. ganize a valid corporation in the state 
 
 426. of their residence.
 
 (J8 THE LAW OF PRIVATE CORPORATIONS. § 75 
 
 provisions of any law authorizing them to become sucn, the 
 statu?; of a de facto corporation, might open a door to frauds 
 upon the public. It would certainly be impolitic to permit a 
 number of men to have the status of a corporation to any ex- 
 tent merely because there is a law under which they might be- 
 come incorporated, and they have agreed among themselves to 
 act, and they have acted as a corporation. * * * " Color of 
 apparent organization under some charter or enabling act" does 
 not mean that there shall have been a full compliance with 
 what the law requires to be done, nor a substantial compli- 
 ance. A substantial compliance will make a corporation de 
 jure. But there must be an apparent attempt to perfect an 
 organization under the law. There being such apparent at- 
 tempt to perfect an organization, the failure as to some sub- 
 stantial requirement will prevent the body being a corporation 
 de jure; but if there be user pursuant to such attempted organ- 
 ization, it will not prevent it being a corporation de facto.' 
 
 § 75. User of franchise. — It is also necessary that there 
 be user of the franchise to be a corporation conferred by the 
 charter or law under which the organization was attempted. 2 
 Slight evidence of user is sufficient when the other requisites 
 exist. 8 But the acts relied upon to show user must be in their 
 nature corporate acts and not such as are perfectly consistent 
 with the conduct of an unincorporated society or partnership.* 
 
 § 70. Organization under unconstitutional statute. — As an 
 
 unconstitutional act of the legislature is not a law 5 it logically 
 
 l Finnegan v. Noerenberg, 52 Minn, whelming weighl of authority istothe 
 
 239; Bash v. Mining Co., 7 Wash. 122, contrary, as pointed out in the ex- 
 
 MPac.Rep. 464; Williamson v. Koko- haustive dissenting opinion of Mr. 
 
 mo, etc., Ass'n, 89 End. 389; Venable Justice Marshall. 
 
 v. Ebenezer,etc.,Ch.,25 Kan. L77,and 'Martin v. Deetz, L02Cal.55; Miami, 
 
 cases cited in preceding notes. In Ber- etc., Co. v. Hotchkiss, 17 III. App.622. 
 
 goron v Hobbs, 96 Wis. 641, 71 N. W. B Eaton v. Walker, 76 Mich. 579. 
 
 Bep. L066, it was held thai because *Fredenberg v. Lyon Lake M. E. 
 
 of failure to file the certiflcateof or- Ch., 87 Mich. 476. 
 
 ganization and a copy of theconstitu- 5 8eean article by the present writer 
 
 Hon ;,, the office of the register of on " The Legislature and the Courts " 
 
 deeds, the organizers 'li'l nut become in Pol Bci. Quarterly, v., p. 238. 
 a de facto corporation. The over-
 
 § 76 CORPORATIONS EXISTING WITHOUT LEGAL RIGHT. 69 
 
 follows that the legal status of a company organized under au- 
 thority assumed to be granted by such an act is the same as 
 one formed when there is no law. 1 This would seem to be 
 the prevailing doctrine, although there are authorities to the 
 contrary. 8 
 
 In a recent case it was said: 8 " We may assume that where 
 the existence of a corporation of a given kind is positively 
 forbidden by law, or where there is no valid constitutional law 
 authorizing the creation of such a corporation, it can not exist 
 even as a corporation de facto. The rule thus stated does not 
 by any means, however, negative the soundness of the propo- 
 sition that an organization assuming to be a corporation de 
 jure, but, for sufficient reasons, is not so in fact, may be a corpo- 
 ration de facto, when it is of such a character that it could un- 
 der existing laws have full and complete corporate being 
 and powers. * * * Our decision is not based upon the 
 idea that the organization of these railroad companies under 
 unconstitutional charters would make them de facto corpora- 
 tions, but upon the idea that the purpose for which they were 
 organized being lawful and proper, if they had obtained char- 
 ters under the general law and organized under them, which 
 they might have done, they would in substance have done 
 what they actually did; that is, they would have observed 
 about the same forms and requirements in the one case as in 
 the other. * * * If the laws under which they proceeded 
 were not good, they may, in our judgment, avail themselves 
 of the existence of the general law on our statute book, and 
 
 'Eaton v. Walker, 76 Mich. 579; can not enforce a mortgage made to it ; 
 Burton v. Schildbach, 45 Mich. 504, but if not organized for an unlawful 
 8 N. W. Rep. 497; Brandenstein v. purpose, a receiver for it can demand 
 Hoke, 101 Cal. 131; Heaston v. R. in equity an accounting for the debt 
 Co., 16 Ind. 275; Snyder v. Stude- purporting to be secured by it. Bur- 
 baker, 19 Ind. 462 ; McTighe v. Macon, ton v. Scheildbach, 45 Mich. 504. 
 etc., Co., 94 Ga. 306; Evenson v. El- "McTighe v. Macon, etc., Co., 94 Ga. 
 lingson, 67 Wis. 634; Thomps. Corp., 306, 32 L. R. A. 208. Citing and com- 
 § 505. menting on McCarthy v. Lavasche, 89 
 
 2 Coxe v. State, 144 N. Y. 396, 39 N. 111. 270, 31 Am. Rep. 83, Wilgus' 
 
 E. Rep. 400. See Winget v. Ass'n, Cases; Hudson v. Greenhill, etc., 
 
 128 111. 67, 21 N. E. Rep. 12. A cor- Corp., 113 111. 618, and many other 
 
 poration organized under a void law cases.
 
 70 THE LAW OF PRIVATE CORPORATIONS. § 77 
 
 of its terms, at least so far as to enable them to be regarded 
 as de facto corporations, because they had done practically 
 what that general law required, though not actually following 
 it nor professing to do so." 
 
 § 77. Status after expiration of term of existence. — 
 
 Where the term of existence of a corporation is definitely de- 
 termined by the charter or statutes, the better rule is that the 
 corporation is ipso facto dissolved by the expiration of the 
 time. 1 From this it follows that after such dissolution there is 
 not even a corporation de facto, and the fact of corporate ex- 
 istence can be successfully raised by any one not otherwise 
 estopped. 
 
 § 78. Collateral attack on the right to exercise a franchise. 
 
 The rule that the right to exercise the franchise of being a 
 
 corporation can not be collaterally questioned in the suit of an 
 individual does not extend so far as to prevent an individual 
 from questioning the right of a corporation to exercise a par- 
 ticular franchise or power. Thus, where a corporation was 
 granted the franchise of collecting tolls for a certain period or 
 under certain conditions, an individual is not prevented from 
 asserting that the time during which the franchise was to be 
 enjoyed has expired. 2 
 
 'Bradley v. Reppell, 1. ".3 Mo. 545, 32 The dissolution in such case, it has 
 S \V. Rep. 645; Dob8onv.Simonton,86 been said, 'is declared by the act of 
 b!c.494; Kurtzv. Paola, etc.,Co., 20 the legislature itself.' The limited 
 Kan. 397; Grand Rapids, etc., Co. v. time of existence has expired and no 
 Pran<r,::"> Mich. 400; Sturgess v. Van- judicial determination <>f that tact is 
 derbilt,73N. V. 384; LaGrange, etc., requisite The corporation iBdefacto 
 I; Co. v. Rainey, 7 Coldw. (Tenn.) dead." Thompson Corps., § 530. Con- 
 132, "There is much judicial author- tra: "Forthe mere exercise of its Can- 
 ity for the proposition thai where a chise beyond the period for which it 
 corporation is broughl to an end by was organized, the slate alone can 
 ti)1 . i;,,,,,. ( ,i time, thai is, by the ex- complain." Bushnellv. Machine Co., 
 pirationof the distinct limitations of 138 111. 67, 27 N. E. Rep. 596. See 
 Its life in its charter, any further exer- commenl upon Miller v. Newburgh, 
 rporate powers may be etc.,Co.,31 W. Va. 836, and 8t. Louis, 
 questioned collaterally. The govern- etc., Co. v. St. Louis, hi Mo. 202, in 
 ,,,., principle here is thai upon the Bradley v. Reppell, 133 Mo. 545, 32 S. 
 
 ration of the time limited by W. Rep. 645. 
 
 thecharter for the existence of the 'Grand Rapids, etc, Co. v. Prang, 
 
 corporation, its dissolution is complete. 35 Mich. 400.
 
 § 79 CORPORATIONS EXISTING WITHOUT LEGAL RIGHT. 71 
 
 § 79. Fraudulent organization. — It has been held that where 
 the organization is manifestly a fraud upon the statute a de 
 facto corporation is not created. Thus, where citizens of New 
 Jersey went to New York, and attempted to form an organiza- 
 tion under the laws of New York for the purpose of doing busi- 
 ness in New Jersey, it was held that not even a de facto corpo- 
 ration was created. 1 But in New York and Ohio this sort of 
 transaction, unless something more appears, is not considered 
 to be a fraud upon the law. 2 Where the whole purpose of the 
 corporation is to perpetrate a fraud, it will not be considered a 
 de facto or a de jure corporation as to those defrauded, even 
 though all the statutory forms are followed. 3 
 
 § 80. Powers of de facto corporations. — A de facto corpo- 
 ration may legally do every act and thing which the same 
 entity could do were it a de jure corporation. As to all the 
 world, except the paramount authority under which it acts and 
 from which it receives its charter, it occupies the same posi- 
 tion as though in all respects valid; and even as against the 
 state, except in direct proceedings to arrest its usurpation of 
 power, its acts will be treated as efficacious. 4 It has been held 
 that this rule applies only to the ordinary business transac- 
 tions of such a business corporation, and that it has no appli- 
 cation when the corporation attempts to exercise the power of 
 eminent domain, 5 but there appears to be no valid reason for 
 this distinction, and it is generally held that proof of a de facto 
 corporation is sufficient in a proceeding by a railway company 
 to condemn land. 6 
 
 'Hill v. Beach, 12 N. J. Eq. 31; 530; Bushnell v. Machine Co., 138 111. 
 
 Booth v. Wonderly, 36 N. J. L. 250; 67, 27 N. E. Rep. 596; Butchers' Bank 
 
 Elizabethtown, etc., Co. v. Green, 46 v. McDonald, 130 Mass. 264; Whitney 
 
 N. J. Eq.118; Empire Mills v. Alston, v. Robinson, 52 Wis. 308, 10 N. W. 
 
 etc., Co. (Tex.), 15 S. W. Rep. 200. Rep. 512; Duggan v. Col., etc., Co., 
 
 See Lancaster v. Amsterdam, etc., 11 Colo. 113. 
 
 Co., 140N. Y. 576, and §550, infra. See 5 Atkinson v. Railway Co., 15 Ohio 
 
 Demarest v. Flack, 128 N. Y. 205, 28 St. 21; Atlantic, etc., Co. v. Sullivant, 
 
 N. E. Rep. 645. 5 Ohio St. 276; Miller v. Newburgh, 
 
 2 Second Nat'l Bank v. Hall, 35 Ohio etc, Co., 31 W. Va. 836; Society 
 
 St. 158. See also Wright v. Lee (S.D.), Perun v. Cleveland, 43 Ohio St. 481. 
 51 N. W. Rep. 706. « Ward v. Min., etc., R. Co., 119 111. 
 
 s Metcalf v. Arnold, 110 Ala. 180; 287, 10 N. E. Rep. 365; McAuley v. 
 
 First Nat'l Bank v. F. C. Trebein Co., Col., etc., R. Co., 83 111. 348; Beisner 
 
 59 Ohio St. 316; Christian, etc., Co. v. Strong, 24 Kan. 410; Asheville Div. 
 
 v. Fruitdale, etc., Co. (Ala.), 25 So. No. 15 v. Astor, 92 N. C. 578; Welling- 
 
 Rep 566. ton, etc., R. Co. v. Cashie, etc., Re 
 
 4 Miller v. Newburgh, etc., Co., 31 Co., 114 N. C. 690. 
 W. Va. 836; People v. LaRue, 67 Cal.
 
 72 THE LAW OF PRIVATE CORPORATIONS. § 81 
 
 II. Estoppel to Deny Corporate Existence. 
 
 § 81. General statement. — The rule which forbids a private 
 individual to raise the question of corporate existence in a col- 
 lateral proceeding, is of the widest application and applies to all 
 cases where the organization is a de facto corporation. Where, 
 however, the objection goes to the fact of de facto corporate ex- 
 istence, as where there is no law under which the incorpora- 
 tion might have been effected, or where the law expressly for- 
 bids the creation of such a corporation, the rule has no appli- 
 cation. In many cases we find that the doctrine of estoppel 
 has been applied in such manner as to prevent one who has 
 dealt with a corporation as such from denying that it is a cor- 
 poration, in a proceeding growing out of the transaction. 
 Where there is a de facto corporation, it is unnecessary to in- 
 voke the doctrine of estoppel, as the general rule of public pol- 
 icy forbids anyone but the state raising the question. The 
 doctrine of estoppel is, hence, of more limited application than 
 the general principle discussed in the preceding sections. In 
 some cases an estoppel is applied in such manner as to prevent 
 a party from raising the question of the legal right to become 
 incorporated. But the authorities are conflicting, and no gen- 
 erally accepted rule exists. 
 
 § 82. The general rule. — The rule is established that one 
 who has contracted with a de facto corporation, as such, will 
 not be permitted, after having received the benefit of his con- 
 trail, to allege and prove any defect in the organization of such 
 corporation, which affects its capacity to enforce the contract. 
 "Where there is thus a corporation de facto, with no want of 
 legislative power to itsdueand Legal existence; where il is pro- 
 ceeding in the performance of corporate functions, and the 
 public are dealing with it on the supposition that if is what it 
 profi ■ I" ; and the questions suggested are only whether 
 
 there has been exacl regularity and strict compliance with the 
 provisions of the law relating to incorporation, it is plainly a 
 dictate alike of jus! ice and of public policy that in controver-
 
 § 83 CORPORATIONS EXISTING WITHOUT LEGAL RIGHT. 73 
 
 sies between the de facto corporation and those who have en- 
 tered into contractual relations with it as corporators or other- 
 wise, such question should not be permitted to be raised." 1 
 Those who have engaged in organizing a corporation can not, 
 when sued on a contract made in a corporate character, be 
 heard to deny the fact of corporate existence. 2 This rule ap- 
 plies when such parties seek to escape statutory liability for its 
 debts. 3 The grantor of a deed in which the grantee is named 
 as a corporation, is thereafter estopped to deny the fact of in- 
 corporation. 4 The maker of a promissory note, in which the 
 payee is named as a corporation, can not deny the fact of in- 
 corporation in an action on the note. 5 One who executes a 
 mortgage to a corporation as such, to secure a loan of money, 
 can not deny the corporate character to defeat an action 
 brought to foreclose the mortgage. 6 
 
 § 83. In actions against members as partners. 7 — The weight 
 of authority seems to support the proposition that those who 
 deal with an association as a corporation are estopped to deny 
 its existence as such, even for the purpose of holding its mem- 
 
 1 Swartwout v. Michigan, etc., R. Co., Minn. 256; Perrine v. Grand Lodge, 
 24 Mich. 389; Wadesboro, etc., Co. v. 48 Minn. 82; Stewart, etc., Co. v. 
 Burns, 114 N. C. 353, 19 S. E. Rep. 238 ; Rau, 92 Ga. 511 ; Farmers', etc., Co. 
 M. E. Church v. Pickett, 19 N. Y. 482; v. Toledo, etc., R. Co., 67 Fed. Rep. 49. 
 Stofflet v. Strome, 101 Mich. 197, 59 3 B. and L. Assn. v. Chamberlain, 4 
 N. W. Rep. 411; Com. Bank v. Pfeif- S. Dak. 271, 56 N.W. Rep. 897; Slocum 
 fer, 108 N. Y. 242, 15 N. E. Rep. 311; v. Gas-pipe Co., 10 R. I. 112; Hamil- 
 Columbia, etc., Co. v. Dixon, 46 Minn, ton v. R. Co., 144 Pa. St. 34 ; McCar- 
 463; Minn., etc., Co. v. Denslow, 46 thy v. Lavasche, 89 111. 270; Altman 
 Minn. 171; B. and L. Assn. v. Cham- v. Waddle, 40 Kan. 195. 
 
 berlain, 4 S. Dak. 271 ; Butchers' Bank 4 Whitney v. Robinson, 53 Wis. 309, 
 
 v. MacDonald, 130 Mass. 264 ; Hassin- 10 N. W. Rep. 512. 
 
 ger v. Ammon, 160 Pa. St. 245; Bank 5 Stoutimore v. Clark, 70 Mo. 471; 
 
 of Shasta v. Boyd, 99 Cal. 604; Hause Brickley v. Edwards, 131 Ind. 3, 30 
 
 v. Mannheimer, 67 Minn. 194 ; Perrine N. E. Rep. 708. 
 
 v. Grand Lodge, 48 Minn. 82. 6 Falls v. United States, etc., Co., 97 
 
 2 Fitzpatrick v. Rutter, 160 111. 282, Ala. 417, 24 L. R. A. 174. 
 
 43 N. E. Rep. 392; Bon Aqua, etc., 7 See Wilgus' ' Cases, particularly 
 Co. v. Standard, etc., Co., 34 W. Va. Martin v. Fewell, 79 Mo. 401; Fay v. 
 764; Scheufler v. Grand Lodge, 45 Noble, 7 Cush. (Mass.) 188.
 
 74 THE LAW OF PRIVATE CORPORATIONS. § 84 
 
 bers as partners. 1 There are well-considered cases, however, 
 which hold the contrary. 2 
 
 Where the plaintiff was one of the organizers and a member 
 of the first board of directors, it was held, in an action against 
 the corporation to have it declared a co-partnership, that he was 
 estopped to claim that the corporation had never been legally 
 organized. If the plaintiff had been sued by the corporation 
 on his subscription to its capital stock he "could not have 
 questioned its corporate existence on the grounds alleged in 
 his bill. * * * It is equally clear that if, during the time 
 he was a member of said corporation, it had been sued as such, 
 neither he nor any other of its members could have been heard 
 to say that no such corporation existed. The general rule is, 
 that one who deals with a corporation as existing de facto, is 
 estopped to deny, as against it, that it has been legally organ- 
 ized. It is the settled rule in this state that the legal existence 
 of a corporation de facto can not be questioned collaterally." 3 
 
 § 84. Actions on stock subscriptions. — In an action brought 
 by the corporation, its receiver, or its creditors, to enforce a 
 stock subscription, one who subscribed for the stock after the 
 organization of the pretended corporation is estopped to deny 
 the legality of the incorporation. 4 This is but an application 
 of the general principle that a subscriber can not, as against 
 creditors, set up the invalidity of a subscription to stock as to 
 which, if valid, he was in 'pari delicto. 5 One who has been 
 
 'Sniders, etc., Co. v. Troy, 91 Ala. 8 Bushnell v. Consolidated, etc., Co., 
 
 224; Cochrane v. Arnold, 58 Pa. St. 138 [11.67. 
 
 399; Bradford v. K. Co., 142 Ind. 383, *Hause v. Mannheimer, 67 Minn. 
 
 ! . Rep. Til; Black River, etc., 194; Hickling v. Wilson, lit I III. 54; 
 
 I . Holway, 85 Wis. 344,55 N. W. Wheelockv. Kost, 77 [11.296; Hamil- 
 
 Rep. lis; Phinizyv. R. Co.,62 Fed. ion v. R. Co., in I'm. St. 34; Craven 
 
 Rep. 678; Johnston v.Gumbel (Miss.), v. Mill Co., L20 [nd. 6, 21 N. I*:. Rep. 
 
 ». Rep. 100; Shields v. Land Co., 94 981; Capps v. Hastings, etc., Co., 40 
 
 Neb. 470, 24 L. R. A. 259; Thompson 
 
 Friedenberg v. Lynn, etc., Church, v. Reno, etc., Bank, L9 Nev. L03; 
 
 87 Mich. 176; and see Bchloss v. Trade Chubb v. Upton, 95 U. S. 665; W ad< s- 
 
 Co.,87Ala. 411 ; De Witt v. Hastings, boro, etc., Co. v. Burns, Ml N. C. 353. 
 
 y. 518; Clarke v. J ss, 87 Ala. B Capps v. Hastings, etc., Co., W 
 
 474,6 Bo. Rep. 362. Neb. 170,24 L. R. A. 259, 58 N. W.
 
 § 85 CORPORATIONS EXISTING WITHOUT LEGAL RIGHT. 75 
 
 induced by fraud to become a subscriber to the stock of a cor- 
 poration is estopped from asserting the fact as a defense 
 when he failed to repudiate the subscription until after the 
 corporation became insolvent. 1 
 
 § 85. Subscriptions in contemplation of incorporation. 
 
 When a subscription for stock is made before and in contem- 
 plation of the incorporation of a company, and there is no sub- 
 sequent acquiescence such as will create an estoppel, the sub- 
 scriber may insist upon a legal corporation, and defend in an 
 action upon his contract of subscription by showing that there 
 was no legal incorporation. 2 
 
 " Until the statutory requirements to organize a corporation 
 have been complied with, a subscriber to the articles of incor- 
 poration is not estopped to deny the existence of the corpora- 
 tion." 3 
 
 But if such a subscriber takes an active part in the organi- 
 zation of the corporation or its management after organization 
 he is thereafter estopped to deny that it was legally organized. 1 
 
 § 86. Estoppel by acquiescence. — A member of a corpora- 
 tion who has acquiesced in the illegal or irregular acts of the 
 corporation is estopped to deny his liability to the corporation. 
 Thus, if he has acted as a director, attended stockholders' 
 meeting, paid calls, or done any other act indicating acquies- 
 cence, he can not be heard to say that the corporation is illegal, 
 when it is sought to hold him liable for his acts as a member. 5 
 
 Rep. 956 ; Rikhoff v. Brown, etc., Co., Sweeny,60N.Y.463 ; Capps v. Hastings, 
 
 68 Ind. 388. See Martin v. South etc., Co., 40 Keb. 470, 58 N. W. Rep. 
 
 Salem, etc , Co., 94 Va. 28. In an ac- 955, 24 L. R. A. 259 ; Rikhoff v. Brown, 
 
 tion by a receiver on a stock subscrip- etc., Co., 68 Ind. 388; Indianapolis, 
 
 tion the subscriber is estopped to deny etc., Co. v. Herkimer, 46 Ind. 142; 
 
 the legality of the object of the corpo- Richmond Fac. Assn. v. Clarke, 61 Me. 
 
 ration, where the subscription is law- 351 ; Taggart v. West Md. R. Co., 24 
 
 ful on its face. Cardwell v. Kelly, 95 Md. 563, Wilgus' Cases. 
 
 Va. (1898) 570, 28 S. E. Rep. 953. 3 Ind., etc., Co. v. Herkimer, 46 Ind. 
 
 J Martin v. Land Co., 94 Va. 28, 26 143. 
 
 S. E. Rep. 591. See infra, § 389. 4 Danbury & N. R. Co. v. Wilson, 22 
 
 2 Schloss v. Montgomery, etc., Co., 87 Conn. 456 ; Phoenix W. Co. v. Badger, 
 
 Ala.411, 6 So. Rep.360; Columbia Elec. 67 N. Y. 294 ; Canfield v. Gregory, 66 
 
 Co. v. Dixon, 46 Minn. 463; Doris v. Conn. 9, Wilgus' Cases. 
 
 • 5 Swartwout v. Mich., etc., Co., 24
 
 76 THE LAW OF PRIVATE CORPORATIONS. § 87 
 
 § 87. Estoppel limited to de facto corporations. — The rule in 
 many states seems to be that the doctrine of estoppel is limited 
 to cases in which there is a de facto corporation in existence. 1 
 In a well-known case Judge Cooley said 2 : " Where there is a 
 corporation de facto, with no want of legislative power to its 
 due and legal existence, * * * it is plainly a dictate, alike oi 
 justice and public policy, that, in controversies between the de 
 facto corporporation and those who have entered into contract 
 relations with it, as corporators or otherwise, such questions 
 should not be suffered to be raised." The reasons upon which 
 this rule rests are thus stated : 3 "The statute laws of the state 
 expressly requiring certain prescribed acts to be done to con- 
 stitute a corporation, to permit parties indirectly, or upon the 
 principle of estoppel, virtually to create a corporation for any 
 purpose, would be in manifest opposition to the statute and 
 clearly against its policy, and justified upon no sound princi- 
 ple in the administration of justice." In another case it was 
 said : 4 "The estoppel arises upon matter of fact only, and not 
 upon matter of law. Hence, if there be no law which author- 
 ized the supposed corporation, or if the statute authorizing it be 
 unconstitutional and void, the contract does not estop the party 
 making it to dispute the existence of the corporation. But if. 
 on the other hand, there be a law which authorized the corpora- 
 tion, then, whether the corporators have complied with it so as 
 to become duly incorporated, is a question of fact, and the 
 party making the contract is estopped to dispute the organiza- 
 tion or the legal existence of the corporation." Where the 
 
 Mich. 389; Home, etc., Co. v. slier- Walker, 76 Mich. 579, 13 N. W. Rep. 
 
 wood, 72 Mo. 461; Meadow v. Gray, 638; Maryland, etc., Works v. West 
 
 30 Me. 547; [ntermountain, etc., Co. End, etc., Co., 87 Md. 207, 39 L. R. A. 
 
 k, •"» Mont. 568; Appleton, etc., 810. 
 
 Co. v. Jesser, 87 Mass. (5 Allen) 446; B Swartwou1 v. Mich., etc., R. Co., 24 
 
 Central, etc., Assn. v. Ala., etc., Co , Mich. 390. 
 
 7o \i;i. 130. ^Boyce v. Towsontowu, etc.. Tins.. 
 
 'Heaston v. Railroad Company, 16 46 Md. 373; Jones v. Aspen, etc.. Co., 
 
 [nd. 275; Snyder v. Studebaker, L9 21 Colo. 263, 29 L. I.'. A. L43: Snyder 
 
 [nd. 162; Jones v. Aspen, etc., Co., 21 v. Btudebaker, 19 [nd. 46?. 
 
 Colo. 263, 29 L. R. A. 143; Banden- *Snyderv Studebaker, L9Ind.462, 
 
 Htein v. Hoke, L01 Cal. LSI; Eaton v. Wilgus' Cases.
 
 § 88. CORPORATIONS EXISTING WITHOUT LEGAL RIGHT. 77 
 
 corporation bringing an action had not paid the state fees upon 
 the filing of its articles of incorporation, and the statute de- 
 clared that until this fee was paid the corporation should have 
 no corporate powers, it was held that the defendant, who had 
 dealt with the corporation as a corporation, was not estopped 
 to assert this defense. 1 
 
 § 88. The contrary doctrine — Unconstitutional statutes. — 
 
 If the doctrine of estoppel is to be limited to cases where a 
 de facto corporation exists, it seems unnecessary, as all cases 
 are covered by the rule that no one but the state can raise the 
 question of the existence of such corporation. There are 
 strong arguments against allowing an estoppel where there 
 has not been sufficient done to create a de facto corporation, or 
 where there is no law under which such a corporation can be 
 organized. But there are many cases where the language used 
 is so general that it may be understood as applying to all cases 
 where a party deals with an organization which assumes to be 
 a corporation. 2 There are also numerous cases 3 which hold 
 
 Maryland, etc., Works v. West End, 897; Wright v. Lee, 4 S. D. 237, 55 
 etc., Co., 87 Md. 207, 39 L. R. A. 810; N. W. Rep. 931; Freeland v. Ins. Co., 
 Jones v. Aspen, etc., Co., 21 Colo. 263, 94 Pa. St. 504; Dows v. Napier, 91 111. 
 29 L. R. A. 143; Slocum v. Prov., etc., 44; Irrigation Co. v. Warner, 72 Cal. 
 Co., 10 R. I. 112. A duly organized for- 379 ; St. Louis v. Shields, 62 Mo. 247 ; 
 eign corporation is a de jure corpora- McCarthy v. Lavasche, 89 111. 270; 
 tion, although it has not complied with Morawetz II, § 759. In Building, etc., 
 a statute which requires a foreign cor- Assn. v. Chamberlain, supra, the court 
 poration to pay a purchase fee and said: "The rule in Michigan appears 
 making void all contracts of one not to be different, and when a corpora- 
 paying such fee. Rough v. Breitung tion is organized under a void act of 
 (Mich. 1898), 75 N. W. Rep. 147. the legislature, the courts will not 
 
 2 Close v. Cemetery, 107 U. S. 477 ; recognize the corporation for the pur- 
 
 Winget v. Association, 128 111. 67, 21 pose of enforcing a contract made by 
 
 N. E. Rep. 12; Building, etc., Assn. it or with it. The cases which have 
 
 v. Chamberlain, 4 S. D. 271 ; Bash- been decided by the supreme court 
 
 ford, etc., Co. v. Agua, etc., Co. of that state in which the question 
 
 (Ariz.), 35 Pac. Rep. 983; Schloss v. arose, viz: State v. How, 1 Mich. 512; 
 
 Trade Co., 87 Ala. 411; 6 So. Rep. Green v. Graves, 1 Doug. (Mich.) 351 ; 
 
 360; Slocum v. Providence, etc., Co., Hurlbut v. Britain, 2 Doug. (Mich.) 
 
 10 R. I. 112. 191; Burton v. Schildbach, 45 Mich. 
 
 8 Building, etc., Assn. v. Chamber- 504; Mok v. Association, 30 Mich, 
 
 lain, 4 S. D. 271, 56 N. W. Rep. 511 — were cases where the corpora-
 
 78 THE LAW OF PRIVATE CORPORATIONS. § 88 
 
 that persons who aid in organizing a corporation, subscribe 
 for its stock and induce others to transact business with the 
 corporation on the faith of its being legally incorporated, are 
 estopped from alleging that the law under which the corpora- 
 tion is organized is unconstitutional. 
 
 tions appear to have been formed for to have receded somewhat from this 
 
 illegal purposes, namely, to violate position in the later case of Manufac- 
 
 lawa against unauthorized banking, as turing Co. v. Runnells, 55 Mich. 130, 
 
 well as without constitutional legisla- 20 N. W. Rep. 823," Wilgus' Cases, 
 tive authority. But that court seems
 
 CHAPTER 4. 
 
 THE CORPORATION AND THE STATE 1 THE CHARTER 
 
 § 89: The control of the state. 
 
 90. Visitorial power. 
 
 91. Corporations of a g«asi-public 
 
 character. 
 
 92. Reports. 
 
 93. Consequences of illegal or ultra 
 
 vires acts. 
 
 94. Forfeiture distinguished from 
 
 repeal. 
 
 95. The charter. 
 
 96. The charter as a contract. 
 
 97. The Dartmouth College case. 
 
 98. Contracts contained in charter. 
 
 99. Reservation of right to repeal 
 
 or amend charter. 
 
 100. Exercise of the reserve power 
 
 — Illustration. 
 
 101. Effect of dissolution of corpora- 
 
 tion. 
 
 102. Vested rights — Reservation of 
 
 power. 
 
 103. Acceptance of amendment. 
 
 104. Amendment must not create a 
 
 new charter. 
 
 § 105. Offer of amendment. 
 
 106. Illegal amendments — Reme- 
 
 dies. 
 
 107. Implied contracts — Grant of 
 
 exclusive franchise. 
 
 108. Eminent domain. 
 
 109. The police power. 
 
 110. Statutes affecting the remedy. 
 
 111. Construction of corporate 
 
 grants. 
 
 112. Taxation of corporations. 
 
 113. Situs of taxable property. 
 
 114. Restrictions imposed by federal 
 
 constitution. 
 
 115. Federal agencies. 
 
 116. State taxation of national 
 
 banks. 
 
 117. Meaning of "other money and 
 
 capital." 
 
 118. Telegraph companies. 
 
 119. Other agencies of commerce. 
 
 120. Exemption from taxation. 
 
 § 89. The control of the state. — Every corporation is sub- 
 ject to the control of the state, the power by which it is cre- 
 ated. This control must, however, be exercised subject to the 
 restrictive provisions contained in the state and national con- 
 stitutions. The relations between the state and a corporation 
 may be contractual, and are then governed by the same gen- 
 eral principles of law which govern contracts between indi- 
 viduals. 2 
 
 1 See Wilgus' Cases,The Corporation the meaning of the 14th amendment 
 and the State. to the constitution of the United 
 
 2 A corporation is a person within States. Hammond, etc., Co. v. Best, 
 
 (79)
 
 80 THE LAW OF PRIVATE CORPORATIONS. § 3(3 
 
 § 90. Yisitorial power. — All corporations are subject to the 
 visitorial power of the state; i. e., to the control and inspection 
 of tribunals created by the law of the land. Civil corpora- 
 tions are visited by the government itself through the medium 
 of the courts of justice; but the internal affairs of ecclesias- 
 tical and eleemosynary corporations are, in general, inspected 
 and controlled by a private visitor. 1 Civil corporations being 
 created for public use and advantage, properly fall under the 
 superintendency of the sovereign power whose duty it is to 
 take care of the public interest; but corporations whose object 
 is the distribution of a private benefaction may well find jeal- 
 ous guardians in the zeal or vanity of the founder, his heirs 
 or appointees. 2 The present power of control over corpora- 
 tions is founded more on grounds of public policy than on 
 any theory of succession to the rights of a prehistoric founder. 
 As a general rule the state has the same control, in this re- 
 spect, over corporations that it has over individuals. 3 
 
 § 91. Corporations of a quasi-public character. — The state 
 exercises extensive control over private corporations which 
 have a public character, such as railways, water, gas, telegraph 
 and telephone corporations. Certain corporations, like banks, 
 are, to a certain extent, agencies of government, while the 
 control over others is based upon the extraordinary powers 
 and franchises which have been granted to them. This is 
 particularly true of common carriers and corporations which 
 exercise the power of eminent domain. Thus the rates and 
 contracts of these corporations are subject to the control of the 
 
 91 Me. 431, 42 L. R. A. 529; see §68, v. Milwaukee Co., 95 Wis. 153, 36 L. 
 
 supra: Santa Clara Co. v. Southern, R. A. 55. 
 
 etc., R. Co., 118 U.S. Rep. 394; Mem- "Bank v. Hamilton, 21 111.53. A 
 
 phis, etc., R. Co. v. Beck with, 129 court will not exercise visitorial power 
 
 I'.S. Rep. 26. over a foreign corporation. See Clark 
 
 'Phillips v. Bury, 2 T. R. 346. See v. Mutual, etc., Co. (D. C.),48L.B A. 
 
 Wilgus' Cases, Visitation. 391. The old law of visitation does 
 
 1 Angell & Ames Priv. Corps., §684, uol apply to modern business corpo- 
 
 Kyd Corp., 17 1, I Black. Com., p. 280, rations. The so-called visitorial power 
 
 2 Knit Com., p. 300; Burner's Case, 2 over them is in the courts. See State 
 
 Bland. Ch. 141; Wisconsin, etc.. Co. v. Georgia, etc., Society, 38 Ga. 608, 
 
 95 Am. Dec 408, Wilgus' Cases.
 
 § 91 THE CORPORATION AND THE STATE THE CHARTER. 81 
 
 state, which generally acts through a board of visitors, such 
 as railway commissioners or interstate commerce commis- 
 sions. 1 The power of these bodies is very extensive, and in 
 some cases, where they have discretionary power, no appeal 
 lies from their decision, 2 unless there has been fraud, or its 
 exercise results in practical confiscation of property. 3 Water 
 and gas companies are subject to extensive control. Thus a 
 water company may be compelled to supply water to all im- 
 partially at reasonable rates, and will be enjoined from cutting 
 off the water supply from any one without good cause. 4 The 
 rates may be fixed by commissioners. The same control is 
 exercised over gas companies. 5 They must not act arbitrarily. 6 
 Thus, where there is a chance that the charges are erroneous, 
 notwithstanding the reading of the meter, the company will be 
 enjoined from cutting off the supply till the matter can be de- 
 termined in a court of law. 7 Such a corporation must furnish 
 gas to all who comply with reasonable regulations. 8 The com- 
 pany can not refuse to furnish gas to the occupant of certain 
 premises because he has not paid an account incurred for gas 
 while occupying other premises. 9 Telegraph and telephone 
 companies are subject to the same control as other common 
 
 1 State v. Cincinnati, etc., R. Co., 47 5 Water-works v. Schottler, 110 U. S. 
 Ohio St. 130, 23 N. E. Rep. 928 ; Minne- 347, Wilgus' Cases. 
 
 'apolis, etc., R. Co. v. Railroad Com- 6 See generally Ernst v. New Orleans, 
 
 missioners,44 Minn. 336, 46 N.W. Rep. etc., Co., 39 La. Ann. 550, 2 So. Rep. 
 
 559; State v. Mo. Pac. R. Co., 29 Neb. 415; McCrary v. Beaudry, 67 Cal. 120; 
 
 550, 45 N. W. Rep. 785; Central, etc., Silkman v. Yonkers Water Comrs., 152 
 
 R. Co. v. State (Ga.), 42 L. R. A. 518. N. Y. 327, 37 L. R. A. 827. Water rates 
 
 2 See Minneapolis, etc., R. Co. v. not a tax. Wagner v. Rock Island, 146 
 Railroad Commissioners, 44 Minn. 336. 111. 139, 21 L. R. A. 519. 
 
 3 San Diego, etc., Co. v. San Diego, 7 Sickles v. Manhattan, etc., Co., 66 
 118 Cal. 556, 38 L. R. A. 460, and cases How. (N. Y.) 305. 
 
 cited. But see Smyth v. Ames, 169 8 Coy v. Indianapolis, etc., Co., 146 
 
 U. S. 466. Ind. 655, 36 L. R. A. 535. 
 
 4 American, etc., Co. v. State, 46 Neb. That a person is already supplied 
 194, 30 L. R. A. 447; State v. Butte with gas by another company is no 
 City, etc., Co., 18 Mont. 199, 32 L. R. justification. Portland, etc., Co. v. 
 A. 697. See notes in 15 L. R. A. 321 State, 135 Ind. 54, 21 L. R. A. 639. 
 and 29 L. R. A. 376. 9 Lloyd v. Washington, etc., Co., 1 
 
 6 — Private Corp. 
 
 Mackey (D. C.) 331.
 
 82 THE LAW OF PRIVATE CORPORATIONS. § 92 
 
 carriers. 1 But every corporation is not necessarily obliged to 
 deal with the whole community. Thus a board of trade may 
 decide among what outside persons its telegraphic reports 
 shall be distributed. 2 But a corporation organized for the pur- 
 pose of transmitting stock quotations by telegraph is of a 
 quasi-public character, and must serve all who are willing to 
 pay for the service. 3 
 
 § 92. Reports. — All private corporations may be required 
 to make periodical reports of their capital, business and gen- 
 eral condition to a state board or official. But a failure to do 
 so does not itself work a forfeiture of the charter, 4 although it 
 may render the directors personally liable for the debts of the 
 corporation, 5 and under some circumstances ma} r be a good 
 ground of forfeiture. 6 But usually if quo warranto is brought 
 for failure to file reports, the state will accept a tender of the 
 reports. 7 
 
 § 93. Consequences of illegal or ultra vires acts. — In order 
 that the state may retain control over corporations, it is nec- 
 essary that it should have the power to restrain or punish un- 
 authorized acts. It may do this by scire-facias or quo warranto. 
 The exercise by a private corporation of franchises or privi- 
 leges not conferred by law may result in the forfeiture of the 
 charter 8 or in merely ousting the corporation from the exercise 
 of the powers illegally assumed. 9 If the corporation violates 
 its charter or fails in the performance of its corporate duties 
 in material and important particulars, there will generally 
 be a judgment of ouster. 10 But according to modern au- 
 thorities this result does not necessarily follow when the cor- 
 poration has entered into ultra vires contracts which arc not 
 
 'Central Union, etc., Co. v. Brad- 6 Post Express, etc., Co. v. Coursey 
 
 bury, 106 Ind. l; State v. Nebraska, (X. Y.), ION. V. Supp. 197. 
 
 etc., Co., 17 Neb. 126,52 Am. Rep. 404; ,; Attorney-General \. Petersburg It. 
 
 American, etc., <'<>. v. Connecticut, Co , 6 Ired. (N. C.) 156. 
 
 etc., Co., 19 Conn. 352, -II Am. Rep. 7 Statev. Barron, 57 N. H. 498. 
 
 generally notes in L' I Am. L. 8 People v. Pullman, etc., Co., 175111. 
 
 Reg. N. 8. 573, 59 Am. Rep. 172, 17.'), L26; Hartnett v. Plumbers', etc., Assn. 
 
 •II Am. Rep. 241, 243, 38 Am. Rep. 689. (Mass.), 17 N. E. Rep L002, 38 L. R. 
 
 1 Marine, etc., Exchange v. Western A. L94; State v. Pennsylvania, etc., 
 
 Union, etc., Co., 22 Fed. Rep. 23, I Co., 23 Ohio St. 121. 
 
 note to 17 Fed. Rep. 23 ; Metropolitan, 'People v. Building Assn., 35 Ohio 
 
 etc., Exchange v. Chicago Board of 8t. 258. 
 
 Trade, 15 Fed. R< p. " l People v. N. R.,etc , Co., 121 \. V. 
 
 dman v. Gold, etc., (Jo., 82 582;Peoplev. Chicago, etc., Exchange, 
 
 Hun (N. Y.i I. I7() III. 556. 39 I,. R. A. 373; Capital 
 
 ••State v. Brownton, etc.. R. Co., City, etc., Co. v. State, 105 Ala. 406, 29 
 
 120 In. I. 337, 22 N. E. Rep. JIG. L. R, A. 743.
 
 § 93 THE CORPORATION AND THE STATE THE CHARTER. 83 
 
 prohibited because contrary to morals or express statute. 
 Ultra vires acts are not necessarily a misuse of franchisee to 
 such an extent as will warrant their forfeiture. A certain 
 measure of discretion is exercised, and it is safe to assume 
 that so severe a penalty will follow only when the act is of 
 such a nature as to affect the public interests. 1 As a result a 
 corporation may do many things which are not authorized by 
 its charter, and the state will not interfere so long as the 
 stockholders or other private persons only are affected thereby. 
 Of course, where the statute provides that certain acts shall be 
 punished by forfeiture the courts have no discretion. 2 The 
 proper proceeding is by quo warranto on the motion of the 
 attorney-general or on the relation of some citizen. 3 
 
 A court of equity does not sit to administer punishment or 
 enforce forfeitures for violations of law; its jurisdiction is lim- 
 ited to the protection of civil rights, and the cases in which 
 full and adequate relief can not be had at law. An ice com- 
 pany imported two cargoes of tea, and the attorney-general 
 filed an information in equity to restrain the company from 
 longer carrying on the ice business. The court said: 4 " The 
 company is a private trading corporation. It is not in any 
 sense a trustee for public purposes. This is not a suit by a 
 stockholder or a creditor. The acts complained of are not 
 shown to have injured or endangered any rights of the public 
 or any individual or other corporation, and can not upon any 
 
 1 State v. Minnesota, etc., Co., 40 the public welfare ; for the state does 
 
 Minn. 213; Thompson Priv. Corp., § not concern itself with the quarrels of 
 
 6034; article by Jesse W. Lilienthal, in private litigants. It furnishes for 
 
 11 Harv. Law Rev. 387, on Non-Public them sufficient courts and remedies, 
 
 Corporations and Ultra Vires. In Peo- but intervenes as a party only when 
 
 pie v. N. R. Ref. Co., 121 N. Y. 582, some public interest requires its ac- 
 
 the court said that to justify forfeiture tion." 
 
 of corporate existence "the state must 2 State v. Pennsylvania, etc., Co., 23 
 
 show, on the part of the corporation Ohio St. 121 ; State v. Oberlin, etc., 
 
 accused, some sin against the law of its Assn., 35 Ohio St. 258. 
 
 being which has produced or tends to 3 Attorney-Generalv.Utica,etc, Co.„ 
 
 produce injury to the public. The 2 John. Ch. 371 ; People v. Utica, etc., 
 
 transgression must not be merely for- Co., 15 John. 358, Wilgus' Cases, 
 
 mal or incidental, but material or 4 Attorney-General v. Tudor, etc., 
 
 serious, or such as to harm or menace Co., 104 Mass. 239, Wilgus' Cases.
 
 84 THE LAW OF PRIVATE CORPORATIONS. § 94 
 
 legal construction be held to constitute a nuisance. * * * 
 No case is therefore made upon which, according to the prin- 
 ciples of equity jurisprudence and the practice of this court, 
 an injunction should be issued upon an information in chan- 
 cery." But when a quasi-public corporation is doing and 
 contemplating acts which are ultra vires and illegal, the neces- 
 sary effects of which are not only to impair the rights of the 
 public, but also to create a nuisance, an injunction will issue. 
 The principle here is that the court has jurisdiction to restrain 
 and prevent nuisances, and where the nuisance is a public 
 one, information by the attorney-general is the appropriate 
 remedy. 1 Grounds of forfeiture must be taken advantage of 
 through the law courts. The state does not waive the for- 
 feiture by recognizing the corporation as such after a cause for 
 forfeiture exists. Notwithstanding an existing ground of for- 
 feiture, the corporation may continue to exercise its franchises 
 until judgment of ouster is pronounced. 2 
 
 § 94. Forfeiture distinguished from repeal. — The repeal of 
 a charter by the legislature under a reserve power, must be dis- 
 tinguished from a forfeiture. The legislature exercises the 
 power of repeal in accordance with the conditions of the con- 
 tract, while a court declares a forfeiture for non-user or mis- 
 user of corporate franchises or powers, independent of any re- 
 served right. 3 A corporation is not dissolved by an act of 
 non-user or misuser, which is a cause of forfeiture of its fran- 
 chise. The franchise exists until the forfeiture is declared in 
 a judicial proceeding by the state against the corporation for 
 that purpose, unless a contrary legislative intent is clearly 
 manifested. 4 The statute required a turnpike company to 
 
 •Attorney-General v. Aqueduct Cor- son, etc., R. Co. v. Nave, 38 Kan. 744, 
 
 poration, L33 Maes. 361. - r > Am. Si. Rep. 803. In State v. Spar- 
 
 •People v. Bank, 24 Wend. (N. Y.) tanburg, etc., R. Co. (S. C), 28 S. E. 
 
 , 1:; i Rep. II"), ii was held that the failure 
 
 •Erie, etc., R. Co. v. Casey, 26 Pa. to complete a railroad under the pro- 
 si. L's7; Detroil v. Plank Road Co., 43 visions of the company's charter,— to 
 M;,.|,. i nt. the effed thai the powers, rights, privi- 
 
 •Statev. Atchison, etc., R. Co., 24 leges, and immunities granted there- 
 
 143,8 Am. St. Rep. 179; Atchi- by should ceasejdetermine, and be void
 
 § 95 THE CORPORATION AND THE STATE THE CHARTER. 85 
 
 make an annual report to the legislature "under forfeiture of 
 the privileges of the act in future." The court said: "The 
 meaning of this is that the forfeiture shall be proved in the 
 regular legal manner; upon the institution and prosecution of 
 proceedings in the established course, such neglect of this duty 
 shall be cause of forfeiture." 1 
 
 § 95. The charter. — The charter of a corporation is the act 
 or acts of the legislature by which the corporation is created 
 and its powers and franchises granted. Under general cor- 
 poration laws the articles of incorporation, read in connection 
 with the general laws of the state, constitute the charter. 2 
 
 § 96. The charter as a contract. — Each corporate charter 
 contains at least one contract, the franchise of being a corpo- 
 ration. This privilege "is a distinct, independent, essential 
 franchise," complete within itself, having no necessary con- 
 nection with other distinct franchises, which are the subjects 
 of legislative grant and which may or may not be given to 
 corporations once created, as well as to natural persons, as 
 to the legislature may seem advisable. 3 
 
 The franchise of acting as a private corporation is a contract 
 between the state and the incorporators, which can not be im- 
 paired by the subsequent acts of the state without violating 
 the constitutional provision which forbids the states to pass 
 laws impairing the obligation of a contract.* "It is now too 
 late to contend that any Contract which a state actually enters 
 into, when granting a charter to a private corporation, is not 
 within the protection of the clause in the constitution of the 
 United States that prohibits states from passing laws impairing 
 
 unless the company shall complete ville Water Co. v. Clark, 143 XJ. S. 1 ; 
 
 the road within three years, — is People v. Chicago, etc., Co., 130 111. 
 
 merely a cause of forfeiture, and not 268. 
 
 an express limitation of the existence 3 Southern, etc., R. Co. v. Orton, 32 
 of the corporation, and does not ipso Fed. Rep. 457, Wilgus' Cases. 
 facto dissolve the corporation. But 4 Const. U. S., Art. 1, §10. Dart- 
 see The Brooklyn, etc., Co. v. City of mouth College v. Woodward, 4 Wheat 
 Brooklyn, 78 N.Y. 524, Wilgus' Cases. 518; Carv, etc., v. Bliss, 151 Mass. 
 
 1 State v. Turnpike, 15 N. H. 162. 364, 25 N. E. Rep. 92; Downing v. 
 
 2 Lincoln, etc., Co. v. Sheldon, 44 Board, 129 Ind. 443, 28 N. E. Rep. 
 Neb. 279, 62 N. W. Rep. 480; North, 123, 614; Zimmers v. State, 30 Ark. 
 etc., Co. v. Utah, etc., Co. (Utah), 52 677. The rule applies to private cor- 
 Pac. Rep. 168, 40 L. R. A. 851 ; Louis- porations only.
 
 86 THE LAW OF PRIVATE CORPORATIONS. § 97 
 
 the obligation of contracts. The doctrines of Dartmouth Col- 
 lege v. Woodward, announced by this court more than sixty 
 years ago, have become so imbedded in the jurisprudence of the 
 United States as to make them to all intents and purposes a part 
 of the constitution, itself. In this connection, however, it is to 
 be kept in mind that it is not the charter that is protected, but 
 only any contract which the charter may contain. If there is 
 no contract there is nothing in the grant on which Ihe consti- 
 tution can act; consequently, the first inquiry in this class of 
 cases always is : whether a contract has in fact been entered 
 into, and if so, what its obligations are." 1 
 
 § 97. The Dartmouth College case. — Of this famous case 2 
 Mr. Justice Miller said: 3 "It may well be doubted whether 
 any decision ever delivered by any court has had such a per- 
 vading operation and influence in controlling legislation as 
 this. It is founded upon the clause of the constitution which 
 declares that no state shall make any law impairing the obli- 
 gation of contracts. Dartmouth College existed as a corpora- 
 tion under a charter granted by the British crown to its trus- 
 tees in New Hampshire in the year 17G9. This charter con- 
 ferred upon them the entire governing power of the college, 
 and, among other powers, that of filling up all vacancies oc- 
 curring in their own body, and of removing and appointing 
 tutors. It also declared that the number of trustees should for- 
 ever consist of twelve, and no more. 
 
 "After the revolution the legislature of New Hampshire 
 passed a law to amend the charter and to improve and enlarge 
 the corporation. It increased the number of trustees to twenty- 
 one, gave the appointment of the additional members to the 
 
 'Chief .lustier W'nile ill Stone V. ill Toledo Bank V. lioinl, 1 Ohio St. 
 
 Mi:- i ippi, LO] U. S. 814. 626, et aeq. (1858). The manifold ap- 
 
 2 1 Wheat. (U. S.) 518. plications of Ihe doctrines of I he case 
 
 • For an "inside" history of the and their limitations are best set forth 
 
 Bhirley's "Tin- Dartmouth by Mr. .lust ice Brown in Pearsall v. 
 
 College Ca e and the Supreme Courl Greal Northern R. Co., KM IT. S. 646, 
 
 ofthi tates." For criticisms, Wilgus' Cases. I have given the 
 
 !,.,. ishuelol R. <"o. v. Elliot, -"> s N. statemenl of this famous case in Hie 
 
 l . 151, mi el ;in article by Seyi r l>. authoritative language of Mr. Justice 
 
 Thompson, 26 \m. Law Rev. L69. Miller, used in his Lectures on the 
 
 • ( Ihief Justice Hartley, ( oust ituiion, page 392.
 
 § 98 THE CORPORATION AND THE STATE THE CHARTER, 87 
 
 executive of the state, and created a board of overseers, to con- 
 sist of twenty-five persons, of whom twenty-one were also to be 
 appointed by the executive of New Hampshire. These over- 
 seers had power to inspect and control the most important acts 
 of the trustees. The supreme court, reversing the decision of 
 the superior court of New Hampshire, held that the original 
 charter constituted a contract between the crown, in whom the 
 power was then vested, and the trustees of the college, which 
 was impaired by the act of the legislature above referred to. 
 The opinion, to which there was but one dissent, establishes 
 the doctrine that the act of a government, whether it be by a 
 charter of the legislature or of the crown, which creates a cor- 
 poration, is a contract between the state and the corporation and 
 that all the essential franchises, powers and benefits conferred 
 upon the corporation by the charter become, when accepted by 
 it, contracts within the meaning of the clause of the constitu- 
 tion referred to. The opinion has been of late years much 
 criticised, as including with the class of contracts whose founda- 
 tion is within the legislative action of the states, many which 
 were not properly intended to be so included by the framers of 
 the constitution, and it is undoubtedly true that the supreme 
 court itself has been compelled of late years to insist in this 
 class of cases upon the existence of an actual contract by the 
 state with the corporation when relief is sought against subse- 
 quent legislation." 
 
 § 98. Contracts contained in charter. 1 — The contracts which 
 are ordinarily found in the charter of a private corporation fall 
 into three classes: 
 
 (1.) Those between the state and the incorporators, 2 such 
 
 1 See especially, opinion of Story, and can not be taken without com- 
 in Dartmouth College v. Woodward, pensation, even for public use. * * * 
 Wilgus' Cases, All the cases agree that the indis- 
 
 2 The Delaware Railroad Tax, 18 pensable franchises of a corporation 
 Wall. 206; Bank of Pa. v. Comw., 19 can not be destroyed or essentially 
 Pa. St. 144. In Thorpe v. Rutland & modified. This is the verv point upon 
 Burlington R. Co., 27 Vt. 141 (1885), which the leading case of Dartmouth 
 Redfield, C. J., said: "It is admitted College v. Woodward was decided, 
 that the essential franchise of a pri- and which every M^ell considered case 
 vate corporation is recognized by the in this country maintains." 
 
 best authorities as private property,
 
 88 THE LAW OF PRIVATE CORPORATIONS. § 98 
 
 as the franchise of acting as a corporation, of exemption from 
 taxation, 1 or that the charter shall not be subject to amendment 
 or repeal without the consent of the corporation. 2 
 
 (2.) Contracts between the corporation and the stock- 
 holders. When one becomes a member of a corporation, it 
 is upon certain terms and conditions and for certain specified 
 purposes. He subjects his interests to the control of proper 
 authorities to accomplish the object of the organization, but 
 he does not agree that the purpose shall be changed in its char- 
 acter at the will of the directors, or a majority of the stock- 
 holders even. The contract can not be changed without the 
 consent of both parties. 3 Hence there arises a contract which 
 the legislature can neither impair, nor authorize a majority of 
 the members to impair. Thus, where the act of incorporation 
 provides for the election of directors by majority vote, it is not 
 within the power of the legislature to change the method of 
 voting so as in effect to place the control in the hands of a mi- 
 nority, 4 or provide for cumulative voting. 5 So a law authorizing 
 consolidation with another corporation and the transfer of the 
 property to the consolidated company is invalid. 6 The contract 
 between the corporation and its stockholders is violated by a 
 statute which authorizes a majority of the stockholders to en- 
 gage in a business not authorized by the charter. 7 
 
 (3.) Contracts between the corporation and persons deal- 
 ing with the corporation; such as statements in the charter or 
 law, that the capital stock shall be a certain amount, or that 
 the stockholders of an insolvent corporation shall be liable for 
 an amount in excess of the face value of their stock. 8 
 
 «New Jersey v. Wilson, 7 Crunch 8 Hawthorn v. Calef, 2 Wall. 10; 
 
 L64. McDonnell v. Alabama, etc., Co., 85 
 
 ( Louisville Gas Co. v. Citizens', etc., Ala. 401; Nome v. Wrenschall, 34 
 
 Co., 115 l . 8. 6 Md. 492 ; Sinking Fund Cases, 99 U. S. 
 
 ater v.Meredith, l Wall.25. 700; Conanl v. VanSchaick, 24 Barb. 
 
 4 Haya v. < !omw., 82 Pa. St. 518. 89. Where the liability is placed upon 
 
 bate v. Greer, 78 Mo. L88; Haysv. an officer as a penalty (or failing to 
 
 I ., 82 Pa. SI 518; Orrv. Bracken comply with the statutory require- 
 
 -i Kv. 593. Bui Bee Cross v. ment, all rights of the creditor are lost 
 
 Railroad < '<»., 35 W. Va. L72. by a repeal of the Btatute. There is no 
 
 uman v. R. Co., 30 Pa. St. 48. such thing as a vested interest in an 
 
 7 Zabriskiev. R. Co., L8N. J. ESq. 178. unenforced penally. Gregory v. Ger-
 
 § 99 THE CORPORATION AND THE STATE THE CHARTER. 89 
 
 § 99. Reservation of right to repeal or amend charter. — 
 
 Since the decision of the Dartmouth College case the states 
 generally reserve the right to repeal or amend corporate char- 
 ters without the consent of the corporation. The reservation 
 may be in the particular charter, but is now commonly con- 
 tained in a constitutional provision or a general law. 1 Such 
 general reservations apply to all charters granted or enabling 
 acts passed subsequent to their adoption unless expressly ex- 
 empted therefrom. 2 A charter accepted while a law contain- 
 ing a reservation of power to repeal or amend corporate char- 
 ters is in existence is subject to such conditions, although the 
 act creating the corporation contains no reference to the res- 
 ervation. 3 A reservation of power to amend or repeal a charter 
 contained in a general incorporation law, has been held not to 
 affect specific legislation applicable only to a single city or cor- 
 poration. 4 
 
 A corporation formed by consolidation after the adoption of 
 a constitution reserving the right to amend, alter or repeal 
 charters, is subject to that provision, although the original 
 corporation was not. 5 
 
 § 100. Exercise of the reserve power — Illustrations. — When 
 
 the power to amend or repeal the charter is thus reserved, it 
 is to be exercised by the legislature, and according to the weight 
 
 man Bank, 3 Colo. 336; Breitung v. reserved in the organic law, and there- 
 
 Lindauer, 37 Mich. 217 ; Union Iron fore necessarily inherent in every 
 
 Co. v. Pierce, 4 Biss. 327; Cooley other; but a legislative declaration 
 
 Const. Lim. (5th ed.), 444, 474; Wait that all future charters shall be sub- 
 
 Insolv. Corps., § 600. ject to modification or appeal will 
 
 Greenwood v. Freight Co., 105 U. enter into and qualify every subse- 
 S. 13; Tomlinson v. Jessup, 15 Wall, quent act of incorporation which does 
 (IT. S.) 454; Iron City Bank, Pitts- not clearly indicate a different de- 
 burg, 37 Pa. St. 341. See note on re- sign." Hare Am. Const. Law II, p. 654. 
 peal or modification of charters and s Jackson v. Walsh, 75 Md. 304, 23 
 franchises, 21 Am. St. Rep. 148; also Atl. Rep. 778. 
 
 on reservation of power to alter char- * Central, etc., Co. v. Citizens,' etc., 
 
 ters, 7 Am. St. Rep. 721. R. Co., 80 Fed. Rep. 218. 
 
 2 Close v. Greenwood, etc., Co., 107 5 Smith v. Lake Shore, etc., R. Co. 
 IT. S. 466; Miller v. New York, 15 114 Mich. 460, 72 N.W. Rep. 328; Pear- 
 Wall. 478; The Monongahela, etc., sail v. Great Northern Ry., 161 IT. S. 
 Co. v. Coon, 6 Pa. 379; Pa. R. Co. v. 646. See Lake Shore, etc., R. Co. v. 
 Duncan, 111 Pa. St. 352. "In these Smith, 173 U. S. 684, reversing the 
 instances the power of revocation was Ik, Ming Q f the state court.
 
 90 
 
 THE LAW CF PRIVATE CORPORATIONS. 
 
 100 
 
 of authority its action can not be controlled by the courts. 1 If 
 the reservation is of the right to repeal if certain conditions 
 are not complied with, there may be a repeal without a previ- 
 ous judicial determination of failure to comply. 2 In some 
 jurisdictions it is held that although the legislature may exer- 
 cise the power before a judicial investigation, its acts are subject 
 to review by the courts. 3 Alterations must be reasonable, made 
 in good faith, and consistent with the scope and object of the act 
 of incorporation. 4 Where the reservation is of power to repeal 
 
 1 Spring Valley W. W. v. Schottler, 
 110 U. S. 317 ; Greenwood v. Freight 
 Co., 105 U.S. 13. 
 
 2 Miners' Bank v. U. S., 1 Greene 
 553 (la.), s. c. 43 Am. Dec. 115; Oak- 
 land R. Co. v. Oakland R. Co., 45 Cal. 
 365; X. Y., etc., R. Co. v. Boston, 
 etc., R. Co., 36 Conn. 196; contra, 
 Flint, etc., R. Co. v. Woodhull, 25 
 Mich. 99; State v. Noyes, 47 Me. 189. 
 In Myrick v. Brawley, 33 Minn. 377, 
 the court said: " The insertion in leg- 
 islative grants, like the one in ques- 
 tion, of express provisions for for- 
 feiture in case of non-user or misuser, 
 i- not uncommon, and it can hardly 
 be questioned that it is competenl for 
 the legislature, which is the law-mak- 
 ing power, as well as one of the con- 
 tracting parties, to provide in the 
 granl a mode of enforcing the forfeit- 
 ure, either by repeal <>i the act mak- 
 ing the granl or otherwise, and there 
 can in- as litt le doubl that the forfeit- 
 ure will he effectually enforced hy re- 
 sult tip the stipulated mode, provided 
 
 the even) mii \\ hid] it is hi he resorted 
 
 t<. has arisen. When' the righl re- 
 
 i recall t lie granl depends on 
 
 t!i" happening of a contingeni event, 
 
 the existence Of 'he iaet ;il the time 
 
 of the recall must, of course, lie a mat- 
 ter for judicial investigation. Whether 
 
 the re-ent i y h\ a |.i i \ ale grantor )>er- 
 
 :i forfeiture must depend on the 
 fad "i condition broken, ami that 
 
 must be ascertained by the judiciary ; 
 but in no case, where the forfeiture 
 may be enforced by act of the grantor, 
 need he secure, before he enforces it, 
 a judicial determination, that the fact 
 upon which the right to forfeiture de- 
 pends exists. The courts will decide 
 upon the effect of his act subse- 
 quently. But neither does the legisla- 
 ture, when it exercises a reserved 
 rightto repeal, nor the private grantor, 
 when he exercises a reserved right 
 of re-entry, perform any judicial func- 
 tion. The act of neither assumes to 
 determine finally the rights of the 
 parties as effected by the act to en- 
 force the forfeiture, That is necessa- 
 rily and inherently a judicial ques- 
 tion." Erie, etc., R. Co. v. Casey, 26 
 Pa. St. 287; Crease v. Babcock, 23 
 Pick. 334; McLaren v. Pennington, 1 
 Paige 102; Read v. Frankfort Bank, 
 23 Me. 318. As to whether a judicial act 
 declaring a forfeiture is not necessary 
 tor the non-performance of a condi- 
 tion in a grant on franchise, see note 
 to Atchison, etc.. Co. v. Nave, 38 Kan. 
 717, 5 Am. St. Rep. 804. .Mere non- 
 action does not destroy a franchise, 
 although it may justify a forfeiture In- 
 judicial proceedings. I tiggins v. Down- 
 ward, 8 Houst. 227, Kt Am. St. Rep. 
 Ill, Wilgus' Ca 
 •Erie, etc., Co. v. Casey, 26 Pa. St. 
 
 2S7. 
 
 •The Sinking Fund Cases, 99 l T . S.
 
 § 101 THE CORPORATION AND THE STATE THE CHARTER. 91 
 
 or amend "at the pleasure of the legislature," the motives of 
 the legislature are immaterial. 1 A statute requiring railroads 
 to issue mileage books good for two years, and fixing the mini- 
 mum price thereof, is not within the reserve power to alter, 
 amend or repeal the charter of a railroad corporation. 2 A 
 statute making the validity of a lease by a railroad company, 
 whose charter vests the power of making such a lease in the 
 stockholders, dependent upon its acceptance by the board of 
 directors, is an amendment to the charter. 3 Under this reserve 
 power the legislature may require a railroad company to change 
 its grade and make new structures at crossings. 4 So such com- 
 panies may be compelled to unite in and extend their tracks 
 to a union passenger station, and to discontinue the use of 
 their former station. 5 A corporation may be required to estab- 
 lish a sinking fund. 6 The legislature has power, according to 
 some authorities, under the reserve power to alter or amend, 
 to authorize cumulative voting at stockholders' meeting incor- 
 porations previously formed. 7 
 
 § 101. Effect of dissolution of corporation. — The dissolution 
 of a corporation does not impair the obligation of contracts be- 
 tween the company and third persons. In a well known case, 8 
 Mr. Justice Story said: "The dissolution of the corporation 
 under the acts * * * can not in any just sense be considered 
 within the clause of the constitution of the United States on 
 this subject an impairing of the obligation of the contracts of 
 the company by those states any more than the death of a pri- 
 vate person can be said to impair the obligation of his con- 
 tracts. The obligation of those contracts survives, and the 
 
 700; Shields v. Ohio, 95 U. S. 319; Mass. 254; Albany, etc., R. Co. v„ 
 
 Flint, etc., R. Co. v. Woodhull, 25 Brownell, 24 N. Y. 345. 
 
 Mich. 99. 5 Mayor v. Norwich, etc., R. Co., 109 
 
 Greenwood v. Freight Co., 105 Mass. 103. 
 
 U. S. 13. 6 Union, etc., Co. v. U. S., 99 U. S. 
 
 2 Lake Shore, etc., R. Co. v. Smith, 700. 
 
 173 U.S. 684, overriding Smith v. Lake 7 Cross v. R. Co., 35 W. Va. 172. 
 
 Shore, etc., R. Co., 114 Mich. 460, 72 Contra, Orr v. Bracken Co., 81 Ky. 
 
 N. W. Rep. 328. 593. Supra, §98. 
 
 3 Opinion of Judges (N. C), 28 S.E. 8 Mumma v. Potomac Co., 8 Pet. 
 Rep. 18. . (U. S.) 281. See People v. O'Brien, 
 
 4 Comw. v. Eastern, etc., R. Co., 103 111 N. Y. 1, 52 N. Y. Sup. Ct. 519.
 
 92 THE LAW OF PRIVATE CORPORATIONS. § 102 
 
 creditors may enforce their claims against any property be- 
 longing to the corporation which has not passed into the hands 
 of bona fide purchasers, but is still held in trust for the com- 
 pany, or for the stockholders thereof at the time of its dissolu- 
 tion, in any mode permitted by the local laws." Upon an ab- 
 solute repeal of a corporate charter by the legislature acting 
 within its constitutional authority the corporation ceases to ex- 
 ist, and no judgment can thereafter be rendered against it. 1 If 
 the legislature has not provided some method for protecting 
 the rights of creditors and stockholders in case of a dissolution 
 of a corporation, the court will protect them by such means as 
 are within its power. 2 
 
 § 102. Tested rights — Reservation of power. — The state 
 can not, by virtue of power reserved to repeal, amend or alter 
 corporate charters, destroy rights which have become vested 
 in the corporation. The power thus reserved can be exercised 
 only for the purpose of controlling the corporation and carry- 
 ing out the purposes of the original grant. " Sheer oppres- 
 sion and wrong can not be inflicted under the guise of amend- 
 ment or alteration. Beyond the sphere of reserved powers, the 
 vested rights and property of corporations, in such cases, are 
 surrounded by the same sanctions and are as inviolable as in 
 other cases." 3 
 
 Upon the repeal of the corporate charter the life of the cor- 
 poration is ended, but the property of the corporation, includ- 
 ing street franchises, mortgages and valid contracts, survive. 4 
 
 'Thornton v. Marginal R. Co., 123 ing legislature can not undo it. The 
 
 Mass. 32; Marion, etc., Co. v. Ferry, past ran not be recalled by the must 
 
 71 Fed. Rep. 426; Nelson v. Hnbbard, absolute power. Conveyances have 
 
 96 \la. 238, 17 l>. 1{. A. :\7'>; Combes been made; these conveyances have 
 
 \. Mil., etc., R. Co., Hit Wis. 297, 27 vested legal estates, and if those es- 
 
 L. R. L 369. tates can be seized by the sovereign 
 
 •Greenwood v. Freighl Co., 105 U. authority, still thai they were origin- 
 
 B. L3 06, Infra. ally vested is a facl and can not cease 
 
 bields v. Ohio, 95 U. 8. 319; fcobeafact. When, then, a law is in 
 
 Close v. Qlenwood, etc., L07U.S.466. the nature of a contract, when abso- 
 
 'People v. O'Brien, in \'. V. 1. lute rights have vested under that 
 
 In Fletcherv. Peck, 6 Cranch (U. 8.) contract, a repeal oi the law can not 
 
 87, Chief Justice Marshall Baid: "If divest those rights." 
 an art be done under a law, a succeed-
 
 § 103 THE CORPORATION AND THE STATE THE CHARTER. 93 
 
 A corporation authorized to construct a dam across a river may 
 afterward be required to construct and maintain a fish way in 
 the dam. But after this is done and the corporation, in consid- 
 eration of a grant of enlarged powers, has paid certain damages 
 caused by the construction of the dam with a fishway which 
 the legislature knew to be insufficient, the legislature can not 
 legally require the corporation to construct a new fishway at 
 great cost. 1 
 
 Where a plank road company had power to maintain a road 
 within the city limits and to charge toll, an act which requires 
 all plank road companies "to discontinue and remove said toll 
 gates beyond the limits of the city" was held invalid. 2 A bare, 
 unexecuted power to consolidate with other corporations given 
 to a railroad company by its charter, is not, while unexecuted, 
 a vested right protected from control or revocation by the legis- 
 lature. 3 
 
 § 103. Acceptance of amendment. — Although the state re- 
 serves the right to amend the charter of a corporation, it can no 
 more compel the acceptance of such an amendment than of an 
 original charter. The corporation has the option of accepting 
 the amendment or going out of existence. 4 If the corporation 
 acts under the amendment, it will be presumed to have ac- 
 cepted the same. 5 The mere collecting of tolls in conformity 
 with reduced rates fixed by a statute does not show an assent 
 by a turnpike company to the exercise by the legislature of the 
 power to amend its charter. 6 
 
 § 104. Amendment must not create a new charter. — The 
 
 power to amend does not include the power to so far alter a 
 charter as to change the nature and purpose of the corporation. 
 Under a charter which authorized the amendment of the arti- 
 
 'Comw. v. Essex Co., 13 Gray ton v. Bank, 21 Grat.(Va.) 593; Ellisv. 
 
 (Mass.) 239. Marshall, 2 Mass. 279, Wilgus' Cases. 
 
 'Detroit V. Detroit, etc., Co., 43 5 Miller v. Insurance Co., 92 Tenn. 
 
 Mich. 140. 167 ; Demarest v. Flack, 128 N. Y. 205. 
 
 3 Pearsall v. Great Northern, etc., R. 6 Covington, etc., Co. v. Sandford, 164 
 
 Co., 161 U. S. 646. U. S. 578. 
 
 4 Com. v. Cullen, 13 Pa. St. 133 ; Yea-
 
 94 THE LAW OF PRIVATE CORPORATIONS. § 105 
 
 cles of incorporation, provided the original purpose of the cor- 
 poration should not be substantially changed, it was held 
 that a corporation organized for the business of manufacturing 
 gas and electricity, and furnishing gas for light, heat, power 
 and other purposes, could not so change its articles by amend- 
 ment as to become empowered to own and operate a street rail- 
 way, to be operated by electricity or other motive power over 
 a certain route, with power to extend its line beyond the city 
 limits. 1 The rule is that the state may repeal or supersede, 
 alter or modify a charter, but it can not take away the charter, 
 propose a new one and oblige the stockholders to accept it. 
 Power to alter or modify, does not imply power to substitute a 
 thing entirely different. 2 
 
 § 105. Offer of amendment. 8 — When an amendment to a 
 corporate charter can not lawfully be imposed by the legisla- 
 ture, because- the power is not reserved, but is offered to a cor- 
 poration for its acceptance, it may be accepted or rejected by 
 the stockholders without having any effect upon their right to 
 proceed under the existing charter. If the proposed amend- 
 ment is fundamental and changes the original plan of the 
 corporation, it can only be accepted by the unanimous vote of 
 the stockholders.* If, however, it is merely auxiliary and in- 
 
 1 State v. Taylor, 55 Ohio St. 61, 44 jects and purposes of the corporation 
 
 N. E. Rep. 513. remaining still the same. It may be 
 
 'Zabriskie v. Hackensack, etc., 1!. admitted that, under this reserve 
 
 Co.,18N. J.Eq. 179. Where it appeared power to alter and repeal, the legis- 
 
 that after the defendant subscribed for lature would have n<> right to change 
 
 stock, the name of the corporation, the the fundamental character of the cor- 
 
 amounl of the capital stock, and the poration and convert it into a different 
 
 tt of railway was increased by the legal being." Buffalo, etc., R. Co. v. 
 
 amendmenl of the charter, the « rt Dudley, ll N. Y. 336; Durfee v. Old 
 
 said: "The ilghl to alter was re- Colony, etc., R. Co., 5 lllen (Mass.) 
 ed in the charter and the subscrip- 230; Ashuelot, etc., R. Co. v. Elliot, 
 tion Hid -t be taken to have been made 52 X. II. 387, 58 N. H. 451. 
 subjecl to having such add itionaj pow- 'See Wilgus' Cases, Power of Ma- 
 cro conferred as the legislature might jority. 
 
 deem essential and expedient. The 'Winter v. Muscogee, etc., Co., M 
 
 new powers conferred are identical in Qa. 438; Ellis v. .Marshall, 2 Mass. 
 
 kind with tl inally given. They 279. See note to Comm. v. Cullen, 53 
 
 d men ly, the general ob- Am. Dec. 161.
 
 § 106 THE CORPORATION AND THE STATE THE CHARTER. 95 
 
 cidental and in aid of the original design, it may be accepted 
 by a majority of the stockholders. 1 
 
 § 106. Illegal amendment — Remedies. — When a funda- 
 mental amendment to the charter has been wrongfully accepted 
 by a corporation without the consent of all the stockholders, a 
 dissenting stockholder who acquired his interest before the 
 amendment was made 2 may obtain a perpetual injunction re- 
 straining action under the amendment 3 or may refuse to pay 
 his subscription. 4 There are a few cases which hold that a dis- 
 senting stockholder may restrain action under the amendment 
 only until the corporation offers to purchase his interest, 5 but 
 these decisions have been criticised and are not consistent with 
 the general current of authorities. 6 In all cases equity will aid 
 only such stockholders as have not acquiesced in the action of 
 the majority and have acted promptly. 7 
 
 § 107. Implied contracts — Grant of exclusive franchise. — 
 
 In the absence of a constitutional prohibition the state may 
 grant an exclusive franchise to a corporation. The charter 
 
 1 Durfee v. Old Colony R. Co., 5 Al- 
 len (Miss.) 230; Zabriskie v. Hacken- 
 sack, etc., Co., 18 N. J. Eq. 178 ; Black 
 v. Canal Co., 24 N. J. Eq. 455; Wood- 
 ford v. Union Bank, 3 Cold. (Tenn.) 
 488; 111., etc., R. Co. v. Zimmer, 20 
 111. 658; Supervisors v. M., etc., Co., 
 21 111. 338. As to the powers of a ma- 
 jority, see §486, infra. 
 
 2 McClure v. People's, etc., Co., 90 
 Pa. St. 269. 
 
 3 Mowrey v. Ind., etc., R. Co., 4 
 Biss. (C. C.) 78. 
 
 4 Clearwater v. Meredith, 1 Wall. 25 ; 
 Greenbrier v. Rodes ( ,V. Va.), 17 S. 
 E. Rep. 305; Youngblood v. Ga., etc., 
 Co., 83 Ga, 797, 10 S. E. Rep. 124; 
 Champion v. Memphis, etc., R. Co., 
 35 Miss. 692; Stevens v. R. & B. R. 
 Co., 29 Vt. 545. In Mercantile, etc., 
 Co. v. Kneale, 51 Minn. 263, it was 
 held that under Gen. St. 1878, ch. 34, 
 tit, 1, § 4, and tit. 2, §§ 110, 118, a cor- 
 
 poration organized as provided in title 
 2 is authorized by a majority vote in 
 number and amount of its sharehold- 
 ers and stock shares to amend its arti- 
 cles of association, including the arti- 
 cle which prescribes the nature of its 
 corporate business in any respect, pro- 
 vided the amendment is germane to 
 the subject-matter of the article to be 
 amended, and could have been law- 
 fully incorporated into the original 
 articles of incorporation. 
 
 5 Lauman v. L. V. R. Co., 30 Pa. St. 
 42; State v. Bailey, 16 Ind. 46. 
 
 6 Mowry v. Ind., etc., R. Co., 4 Biss. 
 (C. C.) 78. 
 
 7 Bryan v. Board, 90 Ky. 322, 13 S. 
 W. Rep. 276; Bedford R.'Co. v. Bow- 
 ser, 48 Pa. St. 29; State v. Sibley, 25 
 Minn. 387; Gifford v. N. J. R. Co., 10 
 N. J. Eq. 171; Rabe v. Dunlap, 51 
 N. J. Eq. 40, 25 Atl. Rep. 959.
 
 96 THE LAW OF PRIVATE CORPORATIONS. § 107 
 
 then constitutes a contract which can not be impaired by fut- 
 ure legislation. 1 Thus, a legislative grant of an exclusive 
 right to supply gas to a municipality and its inhabitants, 
 through pipes or mains laid in the public streets, and upon 
 condition of the performance of the service by the grantee is a 
 grant of a franchise vested in the state in consideration of 
 the performance of a service, and after the performance of 
 the service is a contract which can not be impaired by state 
 legislation. 2 So, where the charter of a company authorized 
 it to build and maintain a bridge across a river for the accom- 
 modation of the public in consideration for which it was given 
 the right to charge tolls and provided that it should be un- 
 lawful for anyone to erect a bridge or establish a ferry within 
 a distance of two miles on that river either above or below the 
 bridge, it was held to be a contract within the meaning of the 
 constitution of the United States. 3 These decisions rest upon 
 the fact that the franchise granted was exclusive, but the mere 
 grant of a charter to a private corporation does not prevent the 
 state from making a similar grant to another corporation. 4 
 Thus, when a state grants a charter to a railway or canal com- 
 pany there is no implied contract between the corporation and 
 the state that the state will not subsequently grant a similar 
 franchise to another company which may render the franchise 
 of the first corporation less valuable. In a famous case* it 
 appeared that in the year 1650 the legislature of Massa- 
 chusetts granted to the president of Harvard College "the lib- 
 erty and power" to dispose of the ferry right from Boston 
 to Charlestown for the benefit of the college. Under this act 
 the college held the right till 1775, when the legislature in- 
 corporated a company by the name of "The Proprietors of 
 the Charles River Bridge," for the purpose of erecting a 
 bridge over the river "in the place where the ferry between 
 
 'Louisville, etc., Co. v. Citizens', * White River, etc., Co. v. Vt. Cent, 
 
 etc., Co., 1 16 U. S. 683. R.Co., 21 Vt. 690. 
 
 •New Orleans, etc., Co. v. La., etc., "Charles River Bridge v. Warren 
 
 Co., L15 U. 8.660. Bridge, u Pet. (U. S.) 420, 431. 
 
 •The Binghamton Bridge, 3 Wall. 
 
 i ' 3.) 61.
 
 § 107 THE CORPORATION AND THE STATE THE CHARTER. 97 
 
 Boston and Charlestown was then kept." Under this char- 
 ter the bridge company was required to pay to Harvard Col- 
 lege the sum of two hundred pounds per year as compensa- 
 tion for what it might have received had the bridge not 
 been erected. The bridge was constructed and operated until 
 1828, when the legislature incorporated a new company by 
 the name of "The Proprietors of the Warren Bridge," for the 
 purpose of erecting another bridge over the Charles river. 
 The new bridge was erected within a few rods of the old 
 one, and was to be surrendered to the state as soon as the pro- 
 prietors were reimbursed for the expenses of building and 
 supporting it, not to exceed six years from the time the company 
 commenced to receive tolls. The bill for an injunction charged 
 that the act for the erection of the Warren bridge impaired 
 the obligation of the contract between the state and The Pro- 
 prietors of the Charles River Bridge. The state court was 
 evenly divided and therefore dismissed the bill, and the de- 
 cision was affirmed by the supreme court of the United 
 States. Before the hearing in the supreme court it was ad- 
 mitted that the Warren bridge proprietors had been reim- 
 bursed, and that the bridge was then the property of the state 
 and a free bridge. After an extensive analysis of the grants 
 and charter, Chief Justice Taney said: "The charter confers on 
 them the ordinary faculties of a corporation for the purpose 
 of building the bridge; and establishes certain rates of toll 
 which the company is authorized to take; this is the whole 
 grant. There is no exclusive privilege given to them over 
 the waters of Charles river, above or below their bridge; no 
 right to erect another bridge themselves, nor to prevent other 
 persons from erecting one; no engagement from the state 
 that another shall not be erected, and no undertaking not to 
 sanction competition, nor to make improvements that may di- 
 minish the amount of its income. Upon all these subjects, 
 the charter is silent, and nothing is said in it about a line of 
 travel, so much insisted on in the argument, in which they 
 are to have exclusive privileges. No words are used from 
 7 — Private Corp.
 
 98 THE LAW OF PRIVATE CORPORATIONS. § 108 
 
 which an intention to grant an}' of these rights can be in- 
 ferred; if the plaintiff is entitled to them, it must be im- 
 plied, simply from the nature of the grant, and can not be 
 inferred from the words by which the grant is made. * * * 
 The inquiry, then, is, does the charter contain such a contract 
 on the part of the state? Is there any such stipulation to be 
 found in that instrument? It must be admitted on all hands 
 that there is none; no words that even relate to another bridge, 
 or to the diminution of their tolls, or to the line of travel. 
 If a contract on that subject can be gathered from the char- 
 ter, it must be by implication, and can not be found in the 
 words used. Can such an agreement be implied? The rule 
 of construction before stated is an answer to the question; 
 in charters of this description no rights are taken from the 
 public, or given to the corporation, beyond those which the 
 words of the charter, by their natural and proper construc- 
 tion, purport to convey. There are no words which import 
 such a contract as the plaintiffs in error contend for, and none 
 can be implied." 
 
 § 108. Eminent domain. — The property, franchises and 
 contracts of corporations, like those of individuals, are subject 
 to the sovereign power of eminent domain, and even the fran- 
 chise of being a corporation may, under express legislative au- 
 thority, be condemned for the benefit of another corporation. 1 
 
 'Appeal of Pittsburgh Junction K. 483, L5 Pac. Rep. 74. In New Orleans, 
 Co., 122 Pa. St. 611, 9 Am. St. Rep. etc., Co. v. Louisiana, etc., Co., 115 U. 
 L28, Ann. Sec also note to 4 Am. 5.650, Mr. Justice Harlan said: "If, in 
 St. Rep. 404. Greenwood v. Freight the judgment of the state, the public in- 
 1 L05 U. S. 13,22; NewOrleansG. teresl will be besl subserved by an 
 L. Co, v. La. G. <'o., U5 r.s. 650; abandonment of the policy of granting 
 \\i-t River, etc., Co. v. Dix, 6 How. exclusive privileges to corporations, 
 607; Central, etc., <o. v. Lowell, l other than railroad companies, in con- 
 Gray 171: Richmond, etc., R. Co. v. sideration of services to be performed 
 Louisa. R. Co, L3 How. (U. S.) 71, by them tor the public, the way is 
 73; In re Minneapolis, etc., R.Co.,86 open tor the accomplishment of that 
 Minn., 181; Clarke v. Blackmar, 47 result, with resped to corporations 
 \. Y 150; lii re Providence, etc., R. whose contracts with the state are un- 
 c... I7i: [.824,21 Ail. Rep. 965; affected by that change in her organic 
 Amador, etc., Co v. Dewitt, 73 Cal. law. The rights and franchises which
 
 § 109 THE CORPORATION AND THE STATE THE CHARTER. 99 
 
 § 109. The police power. — Corporations, like individuals, 
 are subject to the police power of the state. 1 "The rights of all 
 persons, whether natural or artificial, are subject to such legisla- 
 tive control as the legislature may deem necessary for the gen- 
 eral welfare, and it is a fundamental error to suppose that 
 there is any difference in this respect between the rights of 
 natural and artificial persons. They both stand precisely upon 
 the same footing. While personal liberty is guaranteed by 
 the constitution to every citizen, yet, by disregarding the rights 
 of others, one may forfeit not only liberty, but life itself. So 
 a corporation by refusing to conform to the laws of its creation, 
 or by so conducting its business affairs as to defeat the objects 
 and purposes of its promoters and the design of the legislature 
 in creating it, may forfeit its right to further carry on its busi- 
 ness, and also its existence as an artificial being." 
 
 A charter which confers the right to manufacture and 
 sell malt liquors does not exempt the corporation from legisla- 
 tive control any more than an individual with the same powers. 
 A statute which forbids the manufacture and sale of intoxicat- 
 ing liquors does not violate the constitution. " If the public 
 safety or the public morals require the discontinuance of any 
 form of manufacture or traffic, the hand of the legislature can 
 not be stayed from providing for its discontinuance by any in- 
 cidental inconvenience which individuals or corporations may 
 suffer. All rights are held subject to the police power of the 
 state." But property already manufactured can not be taken 
 or destroyed without compensation. 3 
 
 have become vested upon the faith of Goodwill, 25 Am. St. Rep. 870-890; 
 
 such contracts can be taken by the Thorp v. Rutland, etc., R. Co., 27 Vt. 
 
 public, upon just compensation to the 141. 
 
 company, under the state's power of 2 Ward v. Farwell, 97 111.593; Stone 
 
 eminent domain." Woods Railway v. Mississippi, 101 U. S. 814; Beer 
 
 Law, I, pp. 661, 670. Lewis Eminent Co. v. Massachusetts, 97 U. S. 25; 
 
 Domain, §§ 274, 275. Northwestern, etc., Co. v. Hyde Park, 
 
 Chicago, etc., Co. v. Needles, 113 97 U. S. 659; Mugler v. Kansas, 123 
 
 U. S. 574; New York, etc., R. Co. v. U. S. 623. 
 
 Bristol, 151 U. S. 556; Eagle, etc., Co. 8 Boston, etc., Co. v. Massachusetts. 
 
 v. Ohio, 153 U. S. 446 ; note to State v. 97 U. S. 26.
 
 100 THE LAW OF PRIVATE CORPORATIONS. § 110 
 
 § 110. Statutes affecting the remedy.— The constitutional 
 prohibition against the enactment of state laws impairing the 
 obligation of contracts has no application to statutes modify- 
 ing an existing remedy and providing a new and reasonably 
 adequate one. 
 
 " The general doctrine of this court on this subject may be 
 thus stated: In modes of proceeding and forms to enforce the 
 contract the legislature has the control and may enlarge, limit, 
 or alter them, providing it does not deny a remedy or so em- 
 barrass it with conditions or restrictions as seriously to impair 
 the value of the right. 
 
 J 5 1 
 
 § 111. Construction of corporate grants. — Charters of pri- 
 vate corporations are, when accepted, executed contracts, but 
 the different provisions, when not clear and unambiguous, are 
 subject to construction. 2 A grant to a corporation must be 
 conveyed in clear and unmistakable terms. If the meaning 
 of the words is doubtful they are to be taken most strongly 
 against the corporation, 3 and especially is this true when the 
 corporation is claiming some exclusive privilege or exemp- 
 tion. 4 Thus it is held that an enumeration of burdens to 
 which a corporation is or may be subjected will not preclude 
 the state from imposing others. 5 But the charter is the meas- 
 ure of the powers of a corporation, 6 and an enumeration of 
 powers in the charter impliedly excludes all others. 7 "This 
 enumeration of the purposes for which the corporation could 
 acquire title to real estate must necessarily be held exclusive 
 of all other purposes." 8 But such grants must be given a 
 
 1 Penniman's Case, 103 U.S. 714; N. J. Eq. 427; Haggles v. Illinois, 108 
 
 Hare's Am. Const. Law. I. p. 697. U. S. 526; Tennessee v. Whiteworth, 
 
 •Turnpike Co. v. Illinois, 96 U.S. U7U. S. L39, L48; The Railroad Com- 
 
 63; Ricev. Railroad Co., I Black r. mission Cases. 1 16 I'. S. 326. 
 
 g.) 368, 380. '• Railway Co. v. Philadelphia, 101 U. 
 
 ■Holyoke Co. v. Lyman, L5 Wall. S.528: Hare's Am. Const. Law, p. 666. 
 
 511; N. W. P. Co. v. Hyde Park, 97 B Bank, etc., v. Earl, 13 Pet. 588; 
 
 i 8.669; Richmond R. Co. v. Louis- Rochester, etc., Co.v. Martin, 18 Minn, 
 
 land R Co . 13 How. 71. 59, Gil. 54. 
 
 • Omaha, etc., R. Co. v. Cable, etc., 'Thomasv. Uailway Co. L01 U.S. 71. 
 
 Co., 30 Fed. Rep 324 ; Jersey City, • Case v. Kelley, 183 U. S. 21 ; F.& 
 
 ate., Co. v. Consumers', etc., Co., 40 M. Hank v. Baldwin, 28 Minn. 198.
 
 § 112 THE CORPORATION AND THE STATE THE CHARTER. 101 
 
 reasonable construction, and powers fairly incidental to the 
 objects of the corporation are implied. 1 
 
 § 112. Taxation of corporations. — Corporations, like indi- 
 viduals, are subject to the taxing power of the state. In tax- 
 ing a corporation, the state must observe those general princi- 
 ples by which all exercise of the sovereign power of taxation is 
 to be tested. The contractual relation existing between the cor- 
 poration and the state does not, in the absence of an express ex- 
 emption from taxation, limit the taxing power. In the absence of 
 constitutional limitations, the state may impose what amounts to 
 double taxation upon corporations. 2 In order to determine 
 whether double taxation results, it is necessary to analyze the ele- 
 ments of taxable values to be found in corporations. These are, 
 ordinarily, franchises, capital stock in the hands of the corpora- 
 tion, corporate property, and shares of the capital stock in the 
 hands of individuals. Each is, under some circumstances, an 
 appropriate subject for taxation. And it is within the power of 
 the state, when not restrained by constitutional limitations, to 
 assess taxes upon them in a way to subject the corporation 
 or the stockholders to double taxation. The intent to impose 
 double taxation is, however, never to be presumed. 3 
 
 The capital stock is thus distinguished from shares which 
 represent the interest of individual shareholders. 4 "The in- 
 terest of a shareholder," says Mr. Justice Nelson, 5 "entitles 
 him to participate in the net profits earned by the bank in the 
 employment of its capital during the existence of its charter, 
 
 1 Carothers v. Philadelphia Co., 118 called to an article on the Taxation of 
 
 Pa. St. 468; Wisconsin, etc., Co. v. Corporations, hy F. W. Taussig, in 
 
 Oshkosh, 62 Wis. 32; State v. Payne, Pol. Sci. Quarterly for March, 1899. 
 
 129 Mo. 468 ; Ross-Meehan, etc., Co. v. 3 State v. Whitworth, 117 U. S. 129 ; 
 
 So. M., etc., Co., 72 Fed. Rep. 957; Salem, etc., v. Danvers, 10 Mass. 514. 
 
 Parker v. Railway Co., 7 Man. & G. See note 4, § 120, infra. See Wilgus' 
 
 288. Cases. 
 
 2 State v. Whitworth, 117 U. S. 129 ; 4 Delaware R. Tax Case,18 Wall, 206 
 
 Fall River, v. Cornes, 125 Mass. 567 ; Mfgrs., etc., Co. v. Loud, 99 Mass. 146 
 
 Railroad Tax Cases, 13 Fed. Rep. 722 ; Farrington v. Tennessee, 95 U. S. 679 
 
 Board v. Montgomery, etc., Co., 64 Com.v.Building,etc.,90 Va. 790; Porter 
 
 Ala. 269; Pittsburgh, etc., R. Co. v. v. Rockford, etc., R. Co., 76111. 561. 
 
 Com., 66 Pa. St. 77. Attention is 5 ^n Allen v. Assessors, 3 Wall. 
 
 (U. S.)573.
 
 102 THE LAW OF PRIVATE CORPORATIONS. § 113 
 
 in proportion to the number of his shares ; and upon its dissolu- 
 tion or termination, to his proportion of that which ma)' remain 
 after the payment of its debts. This is a distinct, independent 
 interest or property held by the shareholder like any other 
 property that may belong to him." A tax upon the property 
 or capital of a corporation, as distinguished from its franchises, 
 is not double taxation. 1 
 
 § 113. Situs of taxable property. — No general principle of 
 law is better settled than that the legislative power of a 
 state extends to all the property within its borders, and that 
 only so far as the comity of that state allows, can such 
 property be affected by the law of any other state. The 
 old rule that personal property was subject to the law of 
 the owner's domicile has in modern times yielded somewhat to 
 the lex situs, the law of the place where the property is kept 
 and used. For purposes of taxation personal property may be 
 separated from its owner, and he may be taxed on its account 
 at the place where it is situated, although not the place of his 
 own domicile. This is true although the owner is not a citizen 
 or a resident of the state which imposes the tax. 2 Thus, the 
 shares of stock of a corporation may be taxed at the place of 
 the domicile of the corporation, that is, the place of business 
 of the corporation, without reference to the residence of the 
 stockholder. 8 And at the same time the state in which the 
 owner of the stock resides, may also tax the shares at the place 
 of his residence.' Tax laws, however, have no extraterritorial 
 operation, and the power of taxation by the state is limited to 
 the jurisdiction of the state. 5 A state can not, therefore, tax the 
 
 l Farrington v. Tenn., , .»") U. S. 679, Morrow, 87 Tenn. 406; St. Albans v. 
 
 and cases cited above. National, etc., Co., 57 Vt. 68; N. C. 
 
 2 Lane Co. v. Oregon, 7 Wall. (TJ. K. Co. v. Comm., !)l N. 0. 464. 
 
 8.) 71; Railroad Co. v. Pa., 15 Wall. 4 Sturgee v. Carter, in V. 8.521; 
 
 (U.S. 300; Railroad Co. v. Peniston, Bradley v. Bauder, 36 Ohio St. 28. 
 
 L8 Wall (U. 80 5; Tappan \. Mer- See Ogden v. St. Joseph, 90 Mo. 522, 
 
 chants' Bank, 19 Wall. 190; Mane S 8. W. Rep. 25. 
 
 v. B. & 0. I: Co . 127 U. 8. 117. M'omm. v. Stan. lard, etc., Co., 101 
 
 "Tappan v. Merchants' Bank, 19 Pa. St. 119. 
 Wall. 490; South Nashville, etc., Co.v.
 
 § 114 THE CORPORATION AND THE STATE THE CHARTER. 103 
 
 entire track and equipment or the total capital stock of a rail- 
 road corporation whose track lies partly in another state. It 
 can tax only the property which is within the state or that 
 proportion of the capital stock which is represented by such 
 property. 1 There is nothing in the constitution or laws of the 
 United States which prevents a state from taxing personal 
 property which is within its territorial limits, although it is 
 employed in interstate or foreign commerce. 2 The state may 
 impose a tax on the capital stock of a corporation computed on 
 a percentage of the dividends made or declared. Thus, in 
 order to ascertain the proportion of the Pullman Palace Car 
 Co.'s property upon which it should pay taxes in Pennsylvania, 
 the state took as the basis of assessment such proportion of 
 the capital stock of the company as the number of miles over 
 which it ran cars in the state bore to the whole number of 
 miles in that and other states over which it ran in that and in 
 other states. "This," says the supreme court, 3 "was a just 
 and equitable method of assessment; and, if it were adopted 
 by all the states through which these cars ran, the company 
 would be assessed on the whole value of its capital stock, 
 and no more." 
 
 § 114. Restrictions imposed by the federal constitution. — 
 
 The taxing power of the United States is derived from the ex- 
 press grants contained in the constitution, while the power of 
 the states is limited only by the restrictions imposed upon it 
 by the federal or state constitutions. The federal constitution 
 provides that "No state, without the consent of congress, shall 
 lay any impost or duties on imports or exports, except what 
 shall be absolutely necessary for executing its inspection laws." 
 Other restrictions which affect the power of taxation are found in 
 
 1 Pullman, etc., Co. v. Penn., 141 ble property is, and its work done. 
 
 U. S. 18; Western, etc., Co. v. Tag- Adams Ex. Co. v. Ohio State Auditor, 
 
 gart, 163 IT. S. 1 ; State v. Auditor- 166 U. S. 185, s. c. 165 U. S. 194 and 
 
 Gen., 46 Mich. 226. But the supreme 255 ; 6 A. & E. Corp. Cas. N. S. 404. 
 
 court of the United States has held 2 Delaware R. Tax, 18 Wall. 206; 
 
 that the capital stock of a corporation Telegraph Co. v. Texas, 105 N. S. 460; 
 
 represents both its tangible and in- Western, etc., Co. v. Att'y-Gen., 125 
 
 tangible property, such as franchises, Mass. 530. 
 
 contracts, privileges and good will; 3 Pullman, etc., Co. v. Penn., 141 
 
 and when the tangible property is U. S. 18. As a basis of assessment, 
 
 scattered in many states, as in case of this was approved in Mayre v. B. & O. 
 
 express companies, the situs of this R. Co., 127 U. S. 117; Western, etc., 
 
 intangible property is not simply at Co. v. Mass., 125 U. S. 530; State R. 
 
 its home office, but wherever its tangi- Tax Cases, 92 U. S. 575.
 
 104 THE LAW OF PRIVATE CORPORATIONS. § 115 
 
 the provision of the fourteenth amendment to the constitution 
 which forbid any state to deny to any person within its jurisdic- 
 tion the equal protection of its laws. Corporations are within 
 the meaning of this provision, and hence all domestic corpora- 
 tions must be treated alike, and must be granted all privileges 
 and exemptions which are granted to natural persons within 
 the state. 1 The state may, however, discriminate between 
 domestic and foreign corporations. 2 The provision of the con- 
 stitution which reserves to congress exclusive control over 
 interstate commerce, prevents the state from imposing any tax 
 which amounts to an interference with or control over com- 
 merce between the states. Thus, a state can not tax a foreign 
 railroad corporation upon its business within the state which 
 is exclusively interstate commerce, 3 and a tax upon gross re- 
 ceipts is not valid. 4 So, the state may tax the vehicles of com- 
 merce, 5 but a tax on freight carried from state to state is in- 
 valid. 6 
 
 § 115. Federal agencies. — The agencies of the national gov- 
 ernment are beyond the reach of the taxing power of the state. 
 The power to tax involves the power to trammel and destroy. 
 This principle, established by McCulloch v. Maryland, 7 is no 
 longer controverted. Thus, the state can not tax a franchise 
 granted to a corporation by congress, 8 and it is held that this 
 extends to the capital stock of a corporation which was issue. 1 
 for a patent-right granted by the United States. 9 A distinction 
 is made between a tax upon the operations of a federal agency 
 and a tax upon the property which belongs to the agency, when 
 the tax in no way impairs its efficiency. 10 
 
 1 Santa Clara Co. v. Southern, etc., earnings per mile for the whole road, 
 
 R. Co., lis r. s. :;'.it. lias been held i<> be valid, and not to 
 
 'Ducal v. Chicago, 48 111. L72. be a tax on gross earnings. .Maine v. 
 
 ople v. Wemple, 138 N. V. l. R. Co. ,142 U. S. 217. See, however, 
 
 etc., R. Co. v. Pennsyl- dissenting opinion of Justices Brad- 
 
 vania. 145 U.S. 192. ley, Lamar and Brown. 
 
 •Philadelphia <v 8. S. Co. v. Penn- B Wiggins, etc., Co. v. East St. Louis, 
 
 Bylvania, L22 tJ. 8. •';:'<'•, questioning, L07 I'. 8. 365. 
 
 <.i overruling, State Tax Cases, L6 6 State Freight Tax, 16 Wall. (U.S.) 
 
 \\':.ll i . Railway Co. v. '-':::;. 
 
 Weber, 96 111.443. But an excise tax T i Wheat. (U. S.) 316. 
 
 on .-i foreign corporation's privilege of 'California v. Pac R. Co., L27 U.S.I, 
 
 exercising its franchises in a Btate, 'Comw. v.Phila. Co.,157Pa. SI 527. 
 
 graduated in proportion to the gross 10 Railroad C<>. v. Peniston, is Wall.
 
 § 116 THE CORPORATION AND THE STATE THE CHARTER. 105 
 
 § 116. State taxation of national banks, — The power of the 
 states to tax national banks is conferred by the act of congress 
 of July 3, 1864. ' This act subjects the shares of national 
 banks in the hands of shareholders to taxation by the state 
 under the limitation contained therein, without regard to the 
 fact that a part or the whole of the capital of the bank is in- 
 vested in national securities declared by the statute to be ex- 
 empt from taxation by or under state authority. The question 
 arose under an act of a state legislature which provided that 
 shares in any national bank held by any person should be "in- 
 cluded in the valuation of the personal property of such per- 
 son or body corporate in the assessment of taxes in the town 
 or ward where such banking association is located and not 
 elsewhere," but did not provide that the tax imposed should 
 not exceed the rate imposed upon any of the banks organized 
 under the authority of the state. The act was held invalid, it 
 appearing that no tax whatever had been laid on the shares of 
 state banks, although there was a tax on their capital. 2 This 
 decision was followed in a subsequent case, 3 where it was said 
 that if the rate of taxation on such shares is the same as or not 
 greater than upon the moneyed capital of the individual citizen, 
 which is subject or liable to taxation, the shares are taxed in 
 conformity with the provisions of the act which says that they 
 may be assessed, "but not at a greater rate than is assessed upon 
 other moneyed capital in the hands of individual citizens of the 
 state." As in the former case, in valuing these shares, no de- 
 duction was made on account of the capital of the bank in- 
 vested in United States securities. In the valuation of the per- 
 sonal estate of individuals, however, the securities held and 
 owned by them were deducted and the tax assessed on the bal- 
 ance, and like deductions were made from the capital of insur- 
 ance companies. It was argued that the assessment upon the 
 shares of the relator was at a greater rate than upon the per- 
 
 (U. S.) 5; Central, etc., Co. v. Calif., 2 VanAUen v. Assessor, 3 Wall. (IT. 
 
 162 TJ. S. 91 ; Adams, etc., Co. v. Ohio, S.) 573 ; People v. Comrs. 94 U. S. 415. 
 
 165 U. S. 194. 3 People v. Comrs., 4 Wall. (U. S.) 
 
 1 U. S. Rev. St., § 5219. See Boyer v. 244. 
 Boyer, 113 U. S. 689.
 
 106 THE LAW OF PRIVATE CORPORATIONS. § 117 
 
 sonal property of individual citizens. The answer is, said the 
 court, that upon a true construction of this clause of the act, 
 the meaning and intent of the law makers were that the rate of 
 taxation of the shares should be the same or not greater than 
 upon the moneyed capital of the individual citizen which is sub- 
 ject or liable to taxation. That is, no other or greater percent- 
 age of tax in the valuation of shares should be levied than upon 
 the moneyed taxable capital in the hands of the citizen. 
 
 The act of congress does not require perfect equality between 
 state and national banks, but only that the system of taxation 
 in a state shall not work a discrimination favorable to its own 
 citizens and corporations and unfavorable to the holders of 
 shares in national banks. If the state statute creating a sys- 
 tem of taxation does not on its face discriminate against a 
 national bank, and there is neither evidence of a legislative 
 intent to make such discrimination, nor proof that the statute 
 makes an actual and material discrimination, the act will not 
 be held invalid. 1 
 
 § 117. Meaning of "other moneyed capital/' — In a leading 
 case 2 the court said that "moneyed capital in the hands of indi- 
 vidual citizens" does not necessarily embrace shares of stock 
 held by them in all corporations whose capital is employed 
 according to their respective corporate powers and privileges 
 in business carried on for the pecuniary profit of shareholders, 
 although shares in some corporations, according to the nature 
 of their business, may be such moneyed capital. The rule and 
 test of this difference is not to be found in that quality at- 
 tached to shares of stock in corporate bodies generally whereby 
 the certificates of ownership have a certain appearance of 
 negotiability . ' ' 
 
 After a discussion of the object of the law, the court con- 
 tinues: "Applying this rule of construction, we are led in the 
 first place to consider the meaning of the words, 'other moneyed 
 
 1 Davenport Bank v. Board, etc., 128 ■Mercantile Hank v. New York, 121 
 i Hepburn v. School l>i- U. B. i:<i>.138. 
 
 rectors, '_':: Wall. I U. S.) 480; A. lams 
 v. Nashville, '•'•"> D\ B. Rep. L9.
 
 § 117 THE CORPORATION AND THE STATE THE CHARTER. 107 
 
 capital,' as used in the statute. Of course, it includes shares 
 in national banks; the use of the word 'other' requires that. 
 * * * But 'moneyed capital' does not mean all capital the value 
 of which is measured in terms of money. * * * Neither does 
 it necessarily include all forms of investment in which the in- 
 terest of the owner is expressed in money. Shares of stock in 
 railroad companies, mining companies, manufacturing com- 
 panies and other corporations are represented by certificates 
 showing that the owner is entitled to an interest, expressed in 
 money value, in the entire capital and property of a corpora- 
 tion, but the property of a corporation which constitutes its 
 invested capital may consist mainly of real and personal 
 property, which in the hands of individuals no one would 
 think of calling moneyed capital; and its business may not con- 
 sist of any kind of dealing in money or commercial representa- 
 tive of money. * * * Credits, money loaned at interest, 
 and demands against persons or corporations, are more purely 
 representative of moneyed capital than personal property, so 
 far as they can be said to differ." 
 
 Deposits in savings banks are moneyed capital in the hands 
 of individuals, but they are not within the meaning of the act 
 of congress in such a sense as to require that, because they are 
 exempt from taxation, the shares of stock in national banks 
 must also be exempt. 1 Shares in a national bank held by an- 
 other national bank are subject to taxation. 2 Money invested 
 in corporation or in individual enterprises that carry on the 
 business of railroads, manufacturing, mining investments, and 
 investments in mortgages, do not come into competition with 
 national banks, and do not come within the provisions of the 
 statute. So, insurance stocks may be taxed on income in- 
 stead of value, and deposits in savings banks and money be- 
 longing to charitable institutions may be exempted without 
 
 1 Mercantile Bank. v. New York, 121 lates the fourteenth amendment, see 
 
 U. S. 138; Davenport Bank v. B. of Prov. Inst, for Sav. v. Boston, 101 
 
 Eq. 123 U. S. 83; Hepburn v. School Mass. 575. 
 
 Directors, 23 Wall. 480; Bank of Re- 2 Mercantile Bank v. New York, 121 
 
 demption v. Boston, 125 U. S. 60. As U. S. 138. 
 to the claim that a state statute vio-
 
 108 THE LAW OF PRIVATE CORPORATIONS. § 118 
 
 infringing the statute. 1 Exemptions from taxation granted be- 
 fore the act of congress was passed do not create such inequali- 
 ties as are contemplated by the law. Congress must have acted 
 with the knowledge that the states might in certain instances 
 have contracted themselves out of the power to tax certain in- 
 stitutions; hence, the fact that the shares of national banks are 
 taxed two per cent., while under an old law the state could, 
 and did, tax the shares in a certain state bank at one per cent., 
 does not invalidate the tax on the shares of the national bank. 8 
 Exemption from taxation of interest-bearing municipal bonds 
 does not affect the validity of the national bank stock tax. 3 
 
 § 118. Telegraph companies. — In respect to foreign and 
 interstate business, a telegraph company is an instrument of 
 commerce, and subject to the regulating power of congress. 4 
 If it accepts the provisions of the statute, 5 it becomes an agent 
 of the government so far as the business of the government is 
 concerned, and a state statute which imposes a specific tax on 
 each message which is transmitted beyond the state, or which 
 an officer of the United States sends over its line, on public 
 business, is unconstitutional. 6 No tax can be imposed by the 
 state upon messages sent by such a company, or upon the re- 
 ceipts derived therefrom, where the communication is carried 
 either into the state from without or from within the state to 
 another state. A tax may, however, be levied upon all mes- 
 sages carried and delivered exclusively within the state. The 
 foundation of this principle is that messages of the former 
 class are i Lements of commerce between the states and not sub- 
 ject to legislative control of the states, while the hitter class 
 
 'Aberdeen Bank v. Chehalis Co., "Telegraph Co. v. Texas, 105 U.S. 
 
 106TJ.S. no. 460. "As i» the government messages, 
 
 'Lionberger v. Rouse, 9 Wall. (U. it is a tax by the state on the humus 
 
 s v ins employed by the goverment of the 
 
 •Adams v. Nashville, 95 U. 8. L9; United States to execute its statutory 
 
 Mercantile Bank v. New York, 121 TJ. powers, and therefore void. It was 
 
 Q t 1 ao decided in McCulloch v. Mary- 
 
 ipensacola, etc., Co. v. Western, land, I Wheat. 316, and has never 
 
 ,-te., ( '.,., 96 r. B. l, Wilgus' < lasee. been since doubted." 
 3t. U.B., (5263 5268.
 
 § 119 THE CORPORATION AND THE STATE THE CHARTER. 109 
 
 are elements of internal commerce solely within the limits and 
 jurisdiction of the state, and therefore subject to its taxing 
 power. 1 The state or a municipality may impose a license fee 
 under certain conditions, as this is an ordinary exercise of the 
 police power. 2 A city ordinance imposing a license fee upon a 
 telegraph company, which had accepted the provisions of the 
 act of congress, upon business done exclusively in the city, and 
 not including any business done to or from any points with- 
 out the state, and not including business done for the govern- 
 ment of the United States, its officers or agents, is an exercise 
 of the police power, and not an interference with interstate 
 commerce. 3 A municipal charge for the use of the streets by 
 a telegraph company erecting its poles therein is not a privi- 
 lege or license tax. "The amount to be paid is not graduated 
 by the amount of the business, nor is it a sum fixed for the 
 privilege of doing business. It is more in the nature of a 
 charge for the use of property belonging to the city, that which 
 may properly be called rental. 'A tax is a demand of sover- 
 eignty ; a toll is a demand of proprietorship.' " 4 
 
 § 119. Other agencies of commerce. — A railroad company 
 which is a link in a through line of road by which passengers 
 and freight are carried into a state from another state, and 
 from the state into other states, is engaged in the business of 
 interstate commerce, and a tax imposed by such state upon 
 the corporation owning the road, for the privilege of keeping 
 an office in the state, it being a corporation created in another 
 state, is a tax upon commerce, and invalid. The office was 
 maintained because of the necessities of the interstate busi- 
 ness of the company, and for no other purpose. A tax upon 
 
 1 Western, etc., Co. v. Alabama, 132 'Postal, etc., Co. v. Charleston, 153 
 U. S. 472; Telegraph Co. v. Texas, 105 U. S. 692. 
 
 U. S. 460; Telegraph Co. v. Massa- 4 St. Louis v. Western, etc., Co., 148 
 
 chusetts, 125 U.S. 530; Ratterman v. U.S. 96. This same distinction is made 
 
 Western, etc., Co., 127 U. S. 411 ; Le- in taxing rentals received by one rail- 
 
 loup v. Mobile, 127 U. S. 640; Fargo road company from another engaged 
 
 v. Michigan, 121 U.S. 230; Pacific, etc., in interstate commerce. See N. Y., 
 
 Co. v. Seibert, 142 U. S. 339 ; Postal, L. E. & W. R. Co. v. Pennsylvania, 158 
 
 etc., Co. v. Charleston, 153 U. S. 692. U. S. 431 ; State Freight Tax Case, 15 
 
 2 Wiggins, etc., Co. v. E. St. Louis, Wall. (U. S.) 232. 
 107 U. S. 365.
 
 110 THE LAW OF PRIVATE CORPORATIONS. § 119a 
 
 it was therefore a tax upon one of the means or instrumentali- 
 ties of the company's interstate commerce, and as such was in 
 violation of the commercial clause of the constitution. 1 An 
 act requiring a license from the agent of an express company 
 is invalid as a regulation of interstate commerce, in so far as 
 it applies to a corporation of another state engaged in that 
 business. 2 
 
 § 119a. Exemption from taxation. — The state may exempt 
 certain property of a corporation or an individual from the 
 burden of taxation, and if the grant of the privilege is sup- 
 ported by a consideration it can not be withdrawn without im- 
 pairing the obligation of the contract between the state and the 
 beneficiary. 3 The property used by railway corporations in 
 their business is often exempted from general taxation, and in 
 lieu thereof, or as a consideration therefor, the corporation pays 
 a tax upon its .gross receipts. 1 Exemption of all the property 
 of a railroad corporation includes its rolling stock and fran- 
 chises. The exemption of the capital stock of a corporation 
 does not exempt the shares in the hands of the stockholders. 5 
 When a corporation is exempt from taxation, a statute which 
 purports to tax the shares in the hands of the stockholders, but 
 requires the corporations to pay the tax and collect it out of 
 money which may become due the stockholders, without refer- 
 ence to there being any profits out of which to pay it, is in- 
 valid. 6 Exemption from taxation is never presumed, as the 
 
 'Norfolk, etc., R. Co. v. Pennsyl- It has been held that the state could 
 
 v:ini:i, L36 U. 8. 114, citing Gloucester, not grant an irrevocable exemption 
 
 <-t<-., Co. v. Pennsylvania, 114 U. S. from taxation. Skelly v. Hunk, 9 
 
 196; McCall V.California, 136 U.S. 104. Ohio 606 (overruled, however, by Jef- 
 
 •Crutcherv. Kentucky, 141 IT. S. 47. ferson Br. Bank v. Skelly, 1 Black 
 
 •Jefferson Branch Bank v. Skelly, (U.S.)436); Mott v. Railroad Co., 30 
 
 l Black (U. 8.) 436; Farrington v. Pa. St. 9. 
 
 Tenm • U.S. 679; No. Mo. R. • St. Paul v. St. Paul, etc., R. Co., 
 
 Co. v. Maguire, 20 Wall. (U. B.) W; 23 Minn. 469. 
 
 Memphis, etc., Co. v. Shelby Co., 109 8 Van All.-n v. Assessors, 3 Wall. 
 
 r S. 398; Asylum v. New Orleans, (U. S.) 573; Nat. Bank v. Com., 9 
 
 LOfi r 8. 862; Nichols v. Northamp- Wall. (U. s.i 363. 
 
 ton Co,, 12 Conn. 103; Neustadt v. "Salt Lake City v. Hollister, L18 
 
 Railroad Co., 31 111. 484. U. S. 266.
 
 § 119a THE CORPORATION AND THE STATE THE CHARTER 111 
 
 rule is imperative that the relinquishment of the taxing power 
 is never to be presumed. 1 Such grants are strictly construed 
 against the grantee. Thus, a general exemption from taxation 
 will not be so construed as to exempt from a local assessment. 2 
 So it is held that when capital stock is exempt the property 
 into which it was converted is not exempt. 3 Where one cor- 
 poration succeeds to the rights and powers of another, an ex- 
 emption from taxation enjoyed by the first corporation will not 
 pass to the second unless such was clearly the intention as evi- 
 denced by the acts of the state. 4 But where two corporations 
 unite or become consolidated under the authority of law, the 
 presumption is, until the contrary appears, that the consolidated 
 company has all the powers and privileges and is subject to all 
 the restrictions and liabilities of those out of which it was cre- 
 ated. 5 Hence, where two railroad companies whose shares are 
 by a state statute exempt from taxation within the state, and a 
 third company, created under the laws of another state, and 
 whose road is in the latter state, become merged into a new 
 company, and issue shares of the new company in exchange 
 for shares of the old company, the right of exemption from 
 taxation in the first state passes into the new shares, and each 
 of them, unless a law of the first state makes provision to the 
 contrary. 6 In order that the consolidated corporation ma}' suc- 
 ceed to the privilege of exemption from taxation it must be 
 
 1 Vicksburg, etc., R. Co. v. Dennis, Green Co. v. Conness, 109 U. S. 104; 
 116 U. S. 665; Delaware R. Tax, 18 Phila., etc., R. Co. v. Md., 10 How. 
 Wall. (U. S.) 206. (TJ. S.) 376. But compare Pearsall v. 
 
 2 Elliott Pub. Co., § 119, and cases Great Northern R. Co., 161 TJ. S. 646. 
 there cited. 6 Tennessee v. Whitworth, 117 U. S. 
 
 3 Memphis, etc., Co. v. Gaines, 97 139. See, however, Keokuk & W. R. 
 TJ. S. 697. Co. v. Missouri, 152 TJ. S. 301, where 
 
 4 Wilmington, etc., Co. v. Alsbrook, the true rule is said to depend upon the 
 146 U. S. 279; Annapolis,- etc., R. Co. effect of the consolidation— if a really 
 v. Comis, 103 U.S. 1. Contra, Nichols new company (and not a mere merger 
 v. Railroad Co., 42 Conn. 193. of the old) comes into existence, and 
 
 5 Tenn. v. Whitworth, 117 TJ. S. 139, the old companies are dissolved, then 
 
 per C. J. White, citing Tomlinson v. the exemptions of the old companies 
 
 Branch, 15 Wall. 460; Branch v. do not pass to the new. The leading 
 
 Charleston, 92 TJ. S. 677; County of case on this point is Railroad Co. v. 
 
 Scotland v. Thomas, 94 TJ. S. 682; Georgia, 98 TJ. S. 359. 
 Railroad Co. v. Maine-, 96 TJ. S. 499;
 
 112 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 119a 
 
 clearly made to appear that such was the legislative intent. 1 
 The new company holds the immunities of the old companies 
 distributively; that is, whatever privileges and immunities the 
 former companies possessed inure to the benefit of the new cor- 
 poration to the extent of the property owned by each of the 
 former companies at the time of the consolidation. 2 A general 
 exemption clause applies only to property which is reasonably 
 necessary to carry out the purposes of the corporation. 2 The 
 legislature may reserve the power to revoke a grant of exemp- 
 tion from taxation. 4 Under such a reserve power the rate of 
 taxation may be increased. 5 
 
 1 Railroad Co. v. Maryland, 10 How. 
 (U. S.) 376; The Delaware R. Tax, 18 
 Wall. (U. S.) 200; Railroad Co. v. 
 Missouri, 152 U. S. 301. 
 
 "Where corporations are consoli- 
 dated, exemption from taxation does 
 not pass to the new corporation, un- 
 less such is clearly the legislative in- 
 tention. See Adams v. Yazoo, etc., 
 Co. (Miss.), 24 So. Rep. 317. 
 
 2 Tomlinson v. Branch, 15 Wall. 
 (U. S.) 460; Tenn. v. Whitworth, 117 
 U. S. 139. See, particularly, State v. 
 Maine, etc., R. Co., 66 Me. 488, 514. 
 
 3 Railroad Co. v. Berks Co., 6 Pa. 
 St. 70; Lehigh, etc., Co. v. Northamp- 
 ton Co., 8 Watts & S. (Pa.) 334. 
 
 'Tomlinson v. Jessup, 15 Wall. 
 (U. 8.) i : 't- 
 
 Minion Pac. R. Co. v. I'liila., 101 XL 
 B. 528. For purposes of taxation the 
 franchises of a corporation may he 
 distinguished from its other property. 
 
 'I'll'' practical difficulty in the way 
 
 of th'- taxation of franchises lias 
 been to find an equitable method of 
 determining the value of tin' fran- 
 chise. A proper method of valual inn 
 is to take the market or actual value 
 
 of all the indebtedness, exclusive of 
 del its for current expenses, and the 
 market or actual value of all the stock 
 of every kind issued, and the total 
 will be the value of all the assets of 
 the corporation. From this deduct the 
 actual or market value of all the tan- 
 gible property in its possession, and 
 there remains the value of the intangi- 
 ble property, or the franchise. This 
 method is recognized by the laws of 
 Connecticut, New Jersey, Indiana, 
 Illinois and other states. In Talor v. 
 Secor, 99 TJ. S. 575, Mr. Justice Miller 
 says: "It is therefore obvious that 
 when you have ascertained the cur- 
 rent cash value of the whole funded 
 debt, and the current cash value of 
 the entire number of shares, you have, 
 by the action of those who above all 
 others can best estimate it, ascertained 
 the true value of the road, all its prop- 
 erty, its capital stock and its fran- 
 chises. For these are all represented 
 by the value of its bonded debt, and 
 nf the shares of its capital stork." 
 See aTLarticle on "Taxation of Public 
 Franchises," by John Ford, in North 
 American Review, for June, 1899.
 
 CHAPTER 5. 
 
 FRANCHISES AND PRIVILEGES. 
 
 § 120. The nature of a franchise. § 125. The sale and transfer of frar> 
 
 121. Illustrations of franchises — chises. 
 
 Conditions — Grant of right to 126. Corporations charged with pub- 
 use street for railway pur- lie duties, 
 
 poses. 127. Transfer under legislative au- 
 
 122. Illustrations — Nature of rights thority — Construction. 
 
 acquired. 128. Franchises pertaining to use of 
 
 123. The franchise of being a cor- particular property. 
 
 poration. 129. Forfeiture of franchises. 
 
 124. In whom franchises vests. 130. Constitutional protection of 
 
 franchises. 
 
 § 120. The nature of a franchise. — Some confusion exists in 
 the decisions as to the meaning of the word franchise. It is 
 sometimes given a broad significance and made to cover all 
 the rights, powers and privileges of corporations. Properly, 
 however, a distinction must be made between a franchise, a 
 power and a mere personal privilege. A franchise is a special 
 privilege conferred by the sovereign power upon a natural or 
 artificial person, which does not belong to a person as of com- 
 mon right. 1 As defined by Chief Justice Taney: 2 "Fran- 
 chises are special privileges conferred by government upon in- 
 dividuals, and which do not belong to the citizens of the country, 
 generally, of common right. It is essential to the character of 
 a franchise that it should be a grant from the sovereign author- 
 ity, and in this country no franchise can be held which is not 
 derived from the law of the state." Another learned judge 
 said : 3 "To be a franchise, the right possessed must be such 
 
 1 Green v. Knife, etc., Co., 35 Minn., 2 Bank, etc., v. Earl, 13 Peters (U. S.) 
 155. A franchise is a special privilege 595. See, also, Spring Valley W. W. 
 emanating from the sovereign power v. Schottler, 62 Cal. 73; State v. Scotl- 
 and owing its existence to a grant or gal, 3 S. D. 55, 15 L. R. A. 477, 51 N, 
 to a prescription pre-supposing a grant. W. Rep. 858. 
 
 Wilmington, etc., Co. v. Evans, 166 3 Mitchell, J., in State v. Minn., etc., 
 
 111. 548, 46 N. E. Rep. 1083. See state- Co., 40 Minn. 213. See, also, Memphis 
 
 meat of Mr Justice Field in Morgan R. Co. v. Comrs., 112 U. S. 619. 
 v. Louisiana, 93 U. S. 223. 
 
 8 — Private Corp. (H^)
 
 114 THE LAW OF PRIVATE CORPORATIONS. § 121 
 
 as can not be exercised without the express permission of the 
 sovereign power — a privilege or immunity of a public nature 
 which can not be legally exercised without a legislative grant. 
 It follows that the right, whether existing in a natural or arti- 
 ficial person, to carry on any particular business is not neces- 
 sarily or usually a franchise." In an important case in the 
 supreme court, Mr. Justice Bradley said: 1 "What is a fran- 
 chise? Under the English law Blackstone defines it as 'a royal 
 privilege or branch of the king's prerogative subsisting in the 
 hands of a subject.' Generalized and divested of the special 
 form which it assumed under a monarchical government, 
 based on feudal traditions, a franchise is a right, privilege or 
 power of public concern, which ought not to be exercised by 
 private individuals at their mere will and pleasure, but should 
 be reserved for public control and administration, either by the 
 government directly, or by public agents, acting under such 
 conditions and regulations as the government may impose in 
 the public interest, and for the public security. Such 
 rights and powers must exist under every form of society. 
 They are always educed by the laws and customs of the com- 
 munity. Under our system their existence and disposal are 
 under the control of the legislative department of the govern- 
 ment, and they can not be assumed or exercised without legis- 
 lative authority No private person can establish a public 
 highway, or a public ferry, or railroad, or charge tolls for the 
 use of the same without authority from the legislature direct 
 or derived. These are franchises. No private person can 
 take .-mother's property, even for public use, without such 
 authority ; which is the same as to say, that the right of emi- 
 nent domain can only be exercised by virtue of a legislative 
 grant. This is a franchise. No persons can make themselves 
 a body corporate and politic without legislative authority. 
 Corporate capacity is a franchise." 
 
 § 121. Illustrations of franchises — Conditions — Grant of 
 
 ritfht to use sheet for railway purposes. — r l ne illustrations of 
 
 'California v. Central, etc., Co., L27 franchise :m<l a mere monopoly, see 
 r. B. i". For distinction between a note, i l>. R. A. 616.
 
 § 121 FRANCHISES AND PRIVILEGES. 115 
 
 franchises which are granted to corporations and individuals 
 in modern times might be extended indefinitely. The com- 
 mon franchises, the right to be a corporation, to exercise the 
 power of eminent domain, to establish a ferry or bridge and 
 charge tolls, are referred to in the preceding section. The 
 authorities are conflicting on the question whether an ordi- 
 nance granting the consent of a municipality to a street rail- 
 way company to the use of a street for the purpose of laying 
 tracks is a franchise or merely a license. In one line of cases 
 it is held that where a street railway company is incorporated 
 under an act of the legislature, with power to construct, main- 
 tain and operate a railroad in a city, upon obtaining the con- 
 sent of the city in such manner and under such conditions as 
 the city may impose, and the city by ordinance grants the 
 privilege of constructing and operating the same upon a cer- 
 tain street, the grant is a mere license, and not a franchise. 1 
 Thus an ordinance granted to a railway company the right 
 and privilege of laying its tracks and operating its road along 
 certain streets upon certain conditions, 2 and provided that 
 "upon the failure of the company to comply with any condi- 
 tion herein named, the said council shall have the power, 
 which it hereby expressly reserves, to repeal the ordinance 
 and revoke the consent hereby given." The company failed 
 to perform one of the conditions, and the council passed a re- 
 pealing ordinance. It was held that the company had a 
 license, and not a franchise, and that the repealing ordinance 
 was valid. 3 
 
 Upon the general principle that the council can not deprive 
 its successor of legislative power by the enactment of an irre- 
 pealable ordinance, it was held that an ordinance giving a street 
 
 1 Chicago, etc., R. Co. v. People, 73 633, 38 L. R. A. 460; Grannan v. West- 
 Ill. "541; Chicago Board of Trade v. Chester, etc., Assn., 153 N. Y. 449. 
 People, 91 111.80; Belleville v. Citi- 3 Belleville v. Citizens', etc., Co., 152 
 zens\ etc., Co., 152 111. 171, 26 L. R. 111. 171, 26 L. R. A. 681. But a later 
 A. 681. Illinois case holds that authority to so 
 
 2 That the legislature may impose use the streets is not a mere license, 
 conditions when granting a franchise, or private contract, but is something 
 see State v. Spartanburg, etc., Co. (S. more, a franchise that carries with it 
 C), 28 S. E. Rep. 145; San Diego, etc., a public duty enforceable by manda- 
 Co. v. San Diego (Cal.), 50 Pac. Rep. mus. The People v. Suburban R. Co., 
 
 178 111. 594.
 
 116 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §121 
 
 railway company the right to lay a double track in a street 
 might be repealed and the right limited to a single track. The 
 com pan v in such case has no claim against the city for the 
 value of improvements made after notice of the intention of 
 the city to repeal the ordinance. 1 
 
 The privilege to use the streets for railway purposes, when 
 granted by an ordinance, if granted on an adequate considera- 
 tion and accepted by the grantee, may be a valid and binding 
 contract. Although the ordinance has been accepted and 
 acted on, the resulting contract may be subject to rescis- 
 sion, because of the failure of the corporation to observe con- 
 ditions which were attached to the grant. This failure does 
 not, however, avoid the contract. It merely puts it in the 
 power of the city to rescind it. 2 
 
 1 Lake Roland, etc., R. Co. v. Balti- 
 more, 77 Md. 352, 20 L. R. A. 126; 
 Baltimore v. Baltimore, etc., Co., 166 
 I'. S. 67!). The change from a doable 
 to a single track was a reasonable regu- 
 
 a contract, and that by breach. When 
 the parties have agreed that one of 
 them shall have an option to dissolve 
 the contract, if certain of its terms are 
 not observed, upon the non-fulfillment 
 
 lation concerning the use of the street, of the specified terms, the party may 
 The legislative action of a munici- exercise his option; and if he elects 
 pal corporation can not be enjoined, to treat the contract as at an end it 
 Hence, a city council will not be will be discharged. But when a term 
 enjoined from passing an ordinance of a contract is broken, ami there is 
 allowing another gas company to noagreemenl that the breach of that 
 lay pipe- in th<- streets, because the term shall operate as a discharge, it is 
 city has already granted an exclusive always a question for the courts to de- 
 franchise to lay and maintain gas pipes t ermine whether or not the default is 
 t., the complainant. Montgomery, in a matter which is vital to the con- 
 eta, Co. v. City Council (Ala.), 1 I- tract; for if it is not, the contract will 
 I; A. 616. not be discharged. 3 Am.&Eng.Enc. 
 2 In Belleville v. Citizens', etc., R. of Law, p. 893, note 5 ; Head v. Tatter- 
 Co., 152 111. 171. 26 L. R. A.. 681 685, sail, 1.. R. 7 Exch. 7. 
 the courl Baid : "These failures on Hie "The contracl at bar was of the kind 
 part of the appellee did not of them- first mentioned above, [t contained 
 
 selve- avoid the contract, l.nt they put pr< .visions wh'ieh made it (let ern li liable 
 
 it in the power of the city to rescind under certain circumstances at the 
 
 it. ii ,- entirely competenl for par- election of the city, and how was the 
 
 ontract to introduce into it a city to indicate its election to avoid 
 
 i,,,, thai if one of them fail- to the contract? Manifestly, by passing 
 
 fnllill certain specified terms, theother an ordinance repealing tie' ordinance 
 
 B hall be entitled to treal the agree- that constituted the contract, and re- 
 
 ment as at an end. There is a differ- voking all the rights ami privil 
 
 me,- between this n charging granted thereby, and by notifying ap
 
 § 122 FRANCHISES AND PRIVILEGES. 117 
 
 § 122. Illustrations — Nature of rights acquired. — There is 
 high authority for the position that a grant to a railway com- 
 pany by a city of the right to use the streets for its tracks con- 
 stitutes an easement, and that the right granted thereby is an 
 interest in realty, being an incorporeal hereditament. 1 In New 
 York corporate franchises are taxed as real property. A recent 
 writer of authority says : " The right granted by a municipality 
 to use its streets is frequently called a franchise, but it is a fran- 
 chise in the secondary rather than the primary sense of the 
 term. Indeed, it seems to us that it is more in the nature of a 
 license, which may be revoked at any time prior to its accept- 
 ance, and which vests no right in the licensee until it is 'accept- 
 ed and used.' 2 A valid grant of such right by ordinance, how- 
 ever, upon an adequate consideration, when accepted and acted 
 upon by the grantee, becomes an irrevocable and binding con- 
 tract. 3 Unless the right to repeal or amend is reserved, the city 
 can not revoke the ordinance nor, by a subsequent ordinance, 
 without the consent of the company, impose upon it further and 
 additional burdens. 4 But the right to do so may be reserved." 5 
 
 In Wisconsin it is held that a franchise given by a city to a 
 street railway company is something more than a mere ease- 
 ment or license to use the streets for the time and in the man- 
 ner specified in the ordinance, and more than a contract between 
 the public and the railway company when the ordinance has 
 
 pellee to remove its tracks, switches Galveston, etc., R. Co. v. Gulf City, 
 
 and turnouts from the streets of the etc., R. Co., 63 Texas 529; Detroit v. 
 
 city." Detroit, etc., R. Co., 37 Mich. 558; 
 
 Detroit, etc., R. Co. v. City of De- Booth Street Railways, § 10. 
 
 troit, 64 Fed. Rep. 628, 26 L. R. A. s City of St. Louis v. Western Union, 
 
 667; People v. O'Brien, 111 N. Y. 1, 2 etc., Co., 63 Fed. Rep. 68. 
 
 L. R. A. 255, 7 Am. St. Rep. 684. See 4 People v. Chicago, etc., R. Co., 118 
 
 New Orleans, etc., R. Co. v. Delamore, 111. 113; Electric R. Co. v. Common 
 
 114 U. S. 501, where it was held that Council, S4 Mich. 257; Western, etc., 
 
 a right of way for railway tracks in a Co. v. Citizens', etc., R. Co., 128 Ind. 
 
 street is a franchise which can be 525. 
 
 mortgaged and transferred. 5 Elliott Railroads, § 1079. Medford, 
 
 2 Atchison, etc., R. Co. v. Nave, 38 etc., R. Co. v. Somerville, 111 Mass. 
 
 Kan. 744,5 Am. St. Rep. 804, Ann.; 232. See Lake Roland R. Co. v. 
 
 People v. Mutual, etc., Co., 38 Mich. Mayor, 77 Md. 352, 7 Lewis Am. R. 
 
 154; City of Belleville v. Cit., etc., & Corp. Cas. 619, Ann. 
 R. Co., 152 111. 171, 26 L. R. A. 681;
 
 118 THE LAW OF PRIVATE CORPORATIONS. § 123 
 
 been accepted and acted upon. It is also a grant from the 
 state, which, when accepted by the grantee, imposes upon it 
 the duty of serving the public which it can not lay down at 
 will, or escape from, by merely ceasing to operate the road. 
 It was claimed that the franchise had been abandoned, and 
 the court said: "A mere privilege or right may, perhaps, be 
 properly said to be abandoned in a proper case, although even 
 in that case there must be something more than mere non- 
 user to constitute such abandonment. * * * While a mere 
 easement or right may be abandoned, the word is plainly in- 
 applicable to a duty owing to the state." 
 
 In a recent Missouri case, the court, after referring to the 
 Illinois and Michigan cases, which hold that the right to use 
 the streets for railway tracks and gas pipes is not a state 
 franchise, but a local easement resting on a contract, or a li- 
 cense, said: "But these cases we think not in line with 
 the great weight of authority. * * * This court has rec- 
 ognized the rights of street railways in the streets of a munici- 
 pality as franchises, and as vested rights which might be 
 mortgaged by the company to whom the franchise belonged." 1 
 It was held that the privilege was a franchise and not a mere 
 license, although granted by the municipality under legisla- 
 tive authority, and that quo wa rr<tnt<> % in the name of the state, 
 was the proper remedy to obtain a forfeiture for non-perform- 
 ance of conditions. 3 
 
 § 123. The franchise of being a corporation. — The right 
 to be a corporation is a franchise which is necessarily granted 
 by every charter of incorporation. When the state grants to 
 certain persons ami their successors in interest the privilege of 
 forming a corporation and acting in a corporate capacity within 
 certain defined limit-, the privilege so granted is called the cor- 
 
 1 Wright v. Milwaukee, etc., R. Co., *Hovelmanv. Kansas City, etc., R 
 96 w is 29, 80 \m. St. Rep. 74. See Co., 79 Mo. 643. 
 
 v. Madison, etc., R. Co.,72 Wia. •State \. East Fifth si. R. Co., 140 
 
 Mo. 689, 62 A in. st. Rep. 748.
 
 § 124 FRANCHISES AND PRIVILEGES. 119 
 
 porate franchise.' Under modern conditions this grant is lit- 
 tle more than the removal of the common law prohibition, and 
 is properly called a franchise onLy in the most general sense 
 of the word. 
 
 § 124. In whom franchises vest, — Some confusion exists on 
 the question whether franchises vest in the individuals form- 
 ing the corporation or in the corporation. The true rule is 
 that the primary franchise of being a corporation vests in the 
 individuals who compose the corporation and not in the corpo- 
 ration itself, while the secondary franchises, such as the right 
 of a railway corporation to construct and operate a railway, are 
 vested in the corporation. 2 This distinction will be clearly rec- 
 ognized when we come to consider the vendibility of fran- 
 chises. A franchise granted by a city to an electric light com- 
 pany is the property of the corporation and not of the stock- 
 holders. 3 The general rule is that the primary franchise can 
 not be sold or transferred ; but the owners of a primary franchise 
 may in effect transfer it at will, by virtue of the power they 
 possess of naming their successors in interest. The continuity 
 of corporate life is thus maintained, but the result is identical 
 with that of a formal transfer of the franchise. In one in- 
 stance, however, the rule is still of importance, and that is when 
 the property and franchises of a corporation are sold under 
 mortgage foreclosure. The purchaser at such sale may acquire 
 the property and secondary franchises of the corporation, but 
 not the primary franchise of being a corporation. Unless 
 there is legislative authority for the transfer of the primary 
 franchise, the purchasers must create a new corporation under 
 the existing laws. 
 
 § 125. The sale and transfer of franchises, — The rule 
 stated in general terms is that a corporation can not, without 
 legislative authority, mortgage, sell or transfer its franchises, 
 
 1 Paul v. Virginia, 8 Wall. (U. S.) 8 Fietsam v. Hay, 122 111. 293, 3 Am. 
 
 181. See State v. East, etc., R. Co., St. Rep. 492. 
 
 140 Mo. 53!), 02 Am. St. Rep. 743, 747; * s Payne v. Goldbach, 14 Ind. App. 
 
 N. O., etc., Co. v. Delamore, 114 U. S. 100, 42 N. E. Rep. 642. 
 501.
 
 120 THE LAW OF PRIVATE CORPORATIONS. § 126 
 
 and that any attempt to do so is invalid. 1 This doctrine for- 
 bids any corporation from transferring its primary franchise 
 of being a corporation, but under modern liberal incorporation 
 laws it has little if any practical value. There no longer exists 
 a reason for transferring this privilege, as it can be easily ac- 
 quired by complying with the simple requirements of the stat- 
 utes regulating incorporation. Franchises at common law are 
 property rights, and subject to sale and transfer like any other 
 property, and this restrictive rule is a limitation upon the 
 power of the corporation and not due to the nature of the fran- 
 chise. TsnTess the corporation is charged with some public 
 duty, which is generally the case, no good reason exists why 
 it should not be permitted to sell its secondary franchises. 2 
 The rule that the primary franchises can not be transferred is 
 reduced to an absurdity by the simple statement that the entire 
 personnel of the corporation may be changed in an hour by a 
 permissible and legal transfer of all the shares of stock. 
 
 § 126. Corporations charged with public duties. — The most 
 important modern private corporations receive their fran- 
 chises in consideration of the performance of some public duty. 
 In such cases the state is supposed to impose a certain degree 
 of confidence in the grantee, and hence insists that the duties 
 shall be performed by the particular grantee. But here, as in all 
 cases, a transfer may, as far as the personnel is concerned, be 
 
 1 Thomas v. Railway Co., 101 T T . s. and transfer <>f all franchisee created 
 
 73; State v. Anderson, 90 Wis. 550; by or under its authority, state v. 
 
 Middlesex, etc., R. Oo. v. Boston,etc., Anderson, 97 Wis. 114, 72 N. W. Rep. 
 
 R. Co., 116 Mass. 851; Fietsam v. Hay, 386. A. corporation which permits an- 
 
 122 HI. 293, 8 Am. St. Rep. 124; Chi- other company which acquires all its 
 
 . etc., Co.v. People's, etc., Co., 121 business to carry on the business in 
 
 111. 530, 2 Am. St. Rep, 124; Atkinson Its uame is liable forthe arts of the 
 
 7 . Marietta, etc., R. Co., 15 Ohio St. 21; latter. Davis, etc., Co. v. Fowler 
 
 •rthern R.Co.v. Eastern, etc., Bros., 47 N. Y. Supp. 
 
 i: ' o.,21 L.J. Chan. 837. Noimplied »8tate v. EaBt, etc., R. Co. v , l W Mo. 
 
 power to mortgage franchises. Coev. 589. [n N". O. R. Co. v. Delamore,114 
 
 Col., etc., Co., 10 Ohio SI 872; Car- D. S. 501, it was held the right of way 
 
 penter v. B. H., etc., Co., 66 N. Y. 48, of a railway company through the 
 
 Kennebec, etc., R. Co. v. streets of a city is a franchise which 
 
 Portland, etc., R.Oo.,69 Me. 28. The may be mortgaged and transferred, 
 latore may provide for the sale
 
 § 126 FRANCHISES AND PRIVILEGES. 121 
 
 made by a transfer of the stock. But the rule is settled that 
 the corporation can sell neither the primary nor secondary 
 franchises, which are necessary to the due and proper per- 
 formance of the public duties imposed upon it by its 
 charter. As stated by Mr. Justice Miller : ' "Where a cor- 
 poration like a railroad company has granted to it, by charter, 
 a franchise intended in large measure to be exercised for the 
 public good, the due performance of those duties being the 
 consideration of the public grant,, any contract which disables 
 the corporation from performing those functions, which under- 
 takes without the consent of the state to transfer to others the 
 rights and powers conferred by the charter, and to relieve the 
 grantees of the burdens which it imposes, is a violation of the 
 contract with the state and is void as against public policy." 2 
 Hence, a railway or canal company can not lease its fran- 
 chises to another company or person without express legisla- 
 tive authority, 3 nor can a railway company by means of leases 
 transfer its road and the use of its franchises to another com- 
 pany and thus exempt itself from responsibility for the man- 
 agement of the road. 4 In a ease where this was sought to be 
 done, the court said: 5 "Important franchises were conferred 
 upon the corporation to enable it to provide the facilities for 
 communication and intercourse required by the public con- 
 venience. Corporate management and control over these were 
 prescribed, and corporate responsibility for the insufficiency 
 provided as a remuneration to the community for their grant. 
 The corporation can not absolve itself from the performance of 
 its obligations, without the consent of the legislature." 
 
 Thomas v. Railway Co., 101 U. S. Mass. 347; Brunswick, etc., Co. v. 
 
 71, Wilgus' Cases. United, etc., Co., 85 Me. 532; Daniels 
 
 8 Gulf, etc., R. Co.v. Morris, 67 Tex. v. Hart, 118 Mass. 542. 
 
 692; Union Pac. R. Co. v. Railway 4 Fisher v. W. V. & P. R.Co., 39 W. 
 
 Co., 163 U. S. 564; Chicago, etc., Co. Va. 366, 23 L. R. A. 758; Ricketts v. 
 
 v. People's, etc., Co., 121 111. 531; Ches., etc., R. Co., 33 W. Va. 433,7 
 
 Visalia, etc., Co. v. Sims, 104 Cal. 326. L. R. A. 354; Naglee v. Alexandria, 
 
 3 Oregon R. Co. v. Railway Co., etc., R. Co., 83 Va. 707. 
 
 130 U. S. 1 ; Van Steuben v. Centr. R. 5 York, etc., Co. v. Winans, 17 How. 
 
 Co., 178 Pa. St. 367; Middlesex, etc., (U. S.) 39. 
 R. Co. v. Boston, etc., R. Co., 115
 
 122 THE LAW OF PRIVATE CORPORATIONS. § 127 
 
 The same principle forbids such a corporation to sell or dis- 
 pose of the property which is necessary to enable it to perform 
 its duties. It will not, however, prevent a railway company 
 from alienating its personal property, such as its locomotive 
 
 engines. 1 
 
 §127. Transfer under legislative authority — Construc- 
 tion. — The legislature may authorize a corporation to transfer 
 either its primary or its secondary franchises. 2 A law authoriz- 
 ing a corporation to transfer its franchises does not necessarily 
 deprive it of its own franchises. The transferee may merely 
 acquire a new franchise by appointment of the legislature. 
 It is for the legislature to say whether or not the franchise of 
 the old company is extinct. 3 Authority to transfer a "char- 
 ter" or "the franchise to be a corporation, " authorizes the 
 grantee to confer the right to form a corporation upon such 
 persons as he shall indicate by deed, or as shall become the 
 purchasers at foreclosure sale. As said by Chief Justice Welch,* 
 "The real transaction in all such cases of transfer, sale, or con- 
 veyance, in legal effect is nothing more or less, and nothing 
 other, than a surrender or abandonment of the old charter by 
 the corporators, and a grant de novo of a similar charter to the 
 so-called transferees or purchasers. To look upon it in any 
 other light, and to regard the transaction as a literal transfer 
 or sale of the charter, is to be deceived, we think, by a mere 
 figure of speech. The vital part of the transaction, and that 
 without which it would be a nullity, is the law under which 
 the transfer is made. The Btatute authorizing the transfer and 
 declaring its effect , is the grant of a new charter, couched in Eew 
 word-, and I Efecl upon condition of the surrender or aban- 
 
 donment of the old charter; and t lie (Iced, if the transfer is to be 
 arded as mere evidence of the surrender or abandonment." 
 
 'c r. Col., etc., R. Co., 10 Ohio ■ See Morawete Priv. Corp., §986. 
 
 si 872,76 \m. Dec.618, * State v. sin-mum, 22 Ohio si.ii! 
 
 'Chapman, etc., Co. y. Oconto, etc., Quoted In Memphis, etc., R. Co. v. 
 • IV • i. W Am. St. Rep 880. Railroad Com'ra, 112 U. S 809. 
 
 Bee monographic oote i" Brunswick, 
 etc . ( '". v. United, etc., Co., 86 Am. 
 st. Rep.
 
 § 128 FRANCHISES AND PRIVILEGES. 123 
 
 Power to sell or mortgage the franchise of being a corpora- 
 tion is never implied from authority to sell or mortgage "the 
 property and franchises " of a corporation. 1 It is not essential 
 in such case that the purchaser should be a corporation, in 
 order to acquire the property and secondary franchises. Where 
 the question was under discussion, Mr. Justice Matthews said: 2 
 "The franchise of being a corporation need not be implied as 
 necessary to secure the mortgage bondholders, or the purchasers 
 at a foreclosure sale, the substantial rights intended to be 
 secured. They acquire the ownership of the railroad and the 
 property incident to it, and the franchise of maintaining and 
 operating it as such, and the corporate existence is not essen- 
 tial to its use and enjoyment. All the franchises necessary or 
 important to the beneficial use of the railroad could as well be 
 exercised by natural persons." 
 
 A provision in the charter to the effect that the purchasers at 
 a foreclosure sale may organize as a corporation will be con- 
 strued as conferring only the right to organize according to 
 such laws as are in force at the time when the organization 
 takes place. 3 Authority to a railroad corporation to mortgage 
 its "road, income and property," does not authorize a mort- 
 gage of its franchises. 4 
 
 § 128. Franchises pertaining to use of particular prop- 
 erty. — Authority to sell and transfer certain particular prop- 
 erty authorizes the transfer to the purchaser of all franchises 
 which pertain to the use of that property. 6 But only such 
 
 *Coev. Col., etc., R. Co., lOOhio St. 5 New Orleans, etc., Co. v. Dela- 
 
 372; Eldridge v. Smith, 34 Vt. 484. more, 114 U. S. 501 ; Branch v. Jessup, 
 
 Compare Pierce v. Emery, 32 N. H. 106 U. S. 468; Pierce v. Milwaukee, 
 
 484, St. P., etc., R. Co. v. Parcher, 14 etc., R. Co., 24 Wis. 551. "It is immate- 
 
 Minn. 297; Cook v. Detroit, etc., R. rial whether the right of using and 
 
 Co., 43 Mich. 349. operating the railroad be regarded as 
 
 2 Memphis, etc., R. Co. v. Railroad a statutory right called a franchise, or 
 Co., 112 U. S. 609. as a license conferred by a municipal- 
 
 3 Memphis, etc., R. Co. v. Railroad ity, or as a mere easement or property 
 Co., 112 U. S. 609. right conferred under the common 
 
 i Pullan v. Cincinnati, etc., R. Co., 4 law ; a transfer of the property pursu- 
 Bissell 35. ant to authority conferred by law
 
 124 THE LAW OF PRIVATE CORPORATIONS. § 12S 
 
 franchises as are necessary to the enjoyment of the property 
 transferred pass with it to the grantee. Hence, a lease of a 
 railroad company's property does not confer upon the lessee 
 the right to exercise the power of eminent domain, although it 
 is necessary in order to complete the line and the power was 
 possessed by the lessor. 1 But express authority to transfer the 
 "property and franchises" authorizes the company to sell the 
 franchises which are incidental as well as those which are neces- 
 sary to the enjoyment of the property. Under such authority 
 the transferee would acquire the right of eminent domain when 
 necessary to complete the construction of the railway line pur- 
 chased. 2 The distinction between franchises which are neces- 
 sary to the use of particular property and those which are not 
 is well illustrated by the case of an exemption from taxation. 
 Such unusual privileges are not necessary to enable the 
 transferee to use and maintain the property, and hence do 
 not pass to the purchaser. The immunity from taxation in 
 such cases is not strictly a franchise but a personal privilege of 
 the company, and is not transferable. Hence upon a sale of 
 the property and franchises of a railway corporation under a 
 decree founded upon a mortgage which in terms covers the 
 franchises, or under a process upon a money judgment against 
 tli»' company, immunity from taxation upon the property of 
 the company provided in the act of incorporation does not ac- 
 company the property in its transfer to the purchaser.' So 
 where the law provides that the purchasers under a foreclosure 
 
 of a railroad shall "succeed to all such franchises, rights 
 and privilej ' as would have been had * ; by the first 
 
 company hut for such Bale and conveyance" the purchaser does 
 noi acquire exemption from taxation. Such exemption is per- 
 
 1 to the company and does not inhere in the property. 1 
 
 would include a transfer of every righl 'Morgan v. Louisiana, 93 (J. S. 217j 
 
 For ita continued operation." Memphis, etc. ,R.Co.v. Railway Comrs., 
 
 Morawetz Priv. Corp., 982, L12TJ.S.609. Bee g L19o, supra. 
 
 1 Mayor, etc . v. Norwich, etc., Co., 4 Chesapeake, etc., B. Co. v. Miller, 
 
 L09 Mass. 103. 1 1 4 U, B. 170. 
 
 * North < larolina, etc , Co • . ( 'arc- 
 Una, etc., I: I I-''
 
 § 129 FRANCHISES AND PRIVILEGES. 125 
 
 Where a ferry is practically an extension of a railroad, the ferry 
 franchise passes with the sale of the railroad without special 
 mention. 1 
 
 § 129. Forfeiture of franchises. — From the nature of a 
 franchise it logically follows that only the state can question 
 the right to its enjoyment, and begin proceedings to forfeit 
 such a right for non-user or misuser. 2 A total non-user of a 
 franchise may exist for so long a time and under such cir- 
 cumstances that a surrender of the franchise by the corporation, 
 and acceptance of such surrender on the part of the state, will 
 be presumed. 3 There appears to be but one exception to the 
 rule that the forfeiture of a franchise must be declared in a 
 direct proceeding by the state. When the franchise is granted 
 upon an express condition which is to be performed within a 
 certain time, as the construction of a line of railway to a cer- 
 tain place within a certain specified time, the forfeiture takes 
 place ipso facto upon failure to perform the condition; and the 
 failure may be ascertained in any proper collateral proceed- 
 ing. 4 
 
 § 130. Constitutional protection of franchises. — It is the 
 
 settled rule of American constitutional law that "whenever 
 the sovereign power for the time being within its legitimate 
 sphere of action — whether it be the king in his council, as in 
 colonial times, or the congress of the United States, or the 
 legislature of a state, or the council of a municipal corporation 
 acting under the authority derived from the constitution or 
 statute law of the state within which it exists — grants to a body 
 of co-adventurers the franchise of being a corporation, or any 
 
 1 Brownell v. Old Colony R. Co., 164 Wright v. Milwaukee, etc., R. Co., 95 
 Mass. 29, 29 L. R. A. 169. Wis. 29. That a corporation may for- 
 
 2 Elizabeth, etc., Co. v. Green, 46 N. feit its franchise by non-user or mis- 
 J.Eq. 118, 18 Atl. Rep. 844; Combes v. user, see note to Atchison, etc., R. Co. 
 Keyes, 89 Wis. 297, 46 Am. St. Rep. v. Nave, 5 Am. St. Rep. 804. 
 
 839; Attorney-General v.Superior, etc., 4 Oakland R. Co. v. Oakland, etc., 
 
 R. Co., 93 Wis. 604. ■ R. Co., 45 Cal. 365, 13 Am. Rep. 181 ; 
 
 3 Combes v. Keyes, 89 Wis. 297, 46 Belleville v. Cit., etc., R. Co. 152 111., 
 Am. St. Rep. 839, and cases cited; 171, 26 L. R. A. 681. Compare Willa- 
 
 met & Co. v. Kittridge, 5 Saw. ( U.S. ) 44.
 
 126 THE LAW OF PRIVATE CORPORATIONS. § 130 
 
 other species of franchise, privilege, or license in the nature of 
 property, and the grantees accept the grant — such franchise, 
 privilege or license, is within the constitutional protection in 
 such a sense that it can not thereafter be revoked or repealed 
 by any form of state action against the consent of the corpora- 
 tion, although it may be seized by the state for misuser or non- 
 user." 1 This general rule is subject to the qualifications that 
 the state may reserve to itself at the time of making the grant 
 the right to repeal or alter the grant, to a reasonable exercise 
 of the police power, and the power of eminent domain. No 
 rights, however, attach until after acceptance of the grant. 8 
 
 i Thompson Pri v. Corps., §§ 5381-2. 83, 62 Am. St. Rep. 168, and cases 
 
 This doctrine rests on the famous case cited in note. 
 
 of Dartmouth College v. Woodward, z In Illinois, etc., R. Co. v. Illinois, 
 
 4 Wheat, r. S.» 518, and the long 146 U. S. 387, it was held that there 
 
 line of authorities with which that can be no irrepealable contract in a 
 
 case has been followed. That cor- conveyance of property by a grantor 
 
 porations are entitled to protection in in disregard of a public trust under 
 
 their rights as owners of property, see which he was bound to hold and man- 
 
 St. Louis, etc., R. Co. v. Paul, 64 Ark. age it.
 
 CHAPTER 6.S 
 
 POWERS. 
 
 § 131. General statement. § 137. Grant of power— Not limited 
 
 t m rm s r, . -n b y term of corporate exist- 
 
 /. The Theory of Corporate Power. r 
 
 132. The theory of general capacity. 
 
 133. The theory of special capaci- 77. Classification of Powers. 
 
 t ies - 138. Express powers. 
 
 134. Principles of construction. 139< p owera implied from express 
 
 135. Presumption of power and reg- powers. 
 
 ularity. • 140. Incidental powers. 
 
 136. Place where powers maybe ex- 
 
 ercised. 
 
 § 131. General statement. — Power in a legal sense signifies 
 legal competence, capacity or right. 1 A corporation created by 
 the sovereign power for particular purposes has such powers 
 only as the state grants to it. Unlike a natural person, it does 
 not possess those general powers which are common to all. 
 The general scope of corporate power is ordinarily determined 
 by a consideration of the purpose for which the corporation 
 was organized. The mere fact of creation implies a grant of 
 those powers which are essential to corporate existence. The 
 state may, in the charter, enumerate specific powers granted, or 
 it may grant authority to do a certain thing, in general terms. 
 In the latter case the power to do all things proper and neces- 
 sary in order to carry out the purpose of the corporate creation 
 is implied. Thus a trading or manufacturing corporation has 
 the same authority as an individual trader or manufacturer 
 as to the manner of selling goods, selecting selling agents, and 
 imposing conditions as to terms of sales. 2 The legislatures, 
 and courts have proceeded upon two theories in determining 
 
 1 See Bissellv. Michigan, etc., R. Co., 2 Stockton v. American, etc., Co., 
 22 N. Y. 258, 264. N. J. Ch., 36 Atl. Rep. 971. 
 
 (127)
 
 128 THE LAW OF PRIVATE 0OBPORA.TIONS. § 132 
 
 corporate powers; viz., the theory of general corporate capacity, 
 and the theory of special capacities. 
 
 I. The Theory of Corporate Power. 
 
 § 132. The theory of general capacity. — The theory of the 
 general capacity of corporations is recognized by the English 
 authorities. It is probable that this is the theory of the com- 
 mon law, and that the theory of special corporate capacities 
 which is now the established rule of the American courts is a 
 departure. Accoirding to this doctrine, as stated by Sir Fred- 
 erick Pollock, 1 "a corporation once duly constituted has all 
 such powers and capacities of a natural person as in the nature 
 of things can be exercised by an artificial person. Transac- 
 tions entered into with apparent authority in the name of the 
 corporation are presumably valid and binding, and are invalid 
 only if it can be shown that the legislature has expressly or by 
 necessary implication deprived the corporation of the power it 
 naturally would have had of entering into them. The ques- 
 tion is, therefore, was the corporation forbidden to bind itself 
 by this transaction." This rule, however, is subject to the 
 important qualification established by the leading case of Ash- 
 bury Railway Company v. Riche, 8 that "where there is an act of 
 parliament creating a corporation for a particular purpose, and 
 <_ r ivinu r it powers for that particular purpose, what it does not 
 expi or impliedly authorize ta to be taken as prohibited." 
 
 1 Pollock -mi Contracts, page 1 19, and vidually ; and, third, thai it can exer- 
 
 ^ppendix, note D, "Iimitsof Cor- cise '-very power no! prohibited by its 
 
 Power." charter. Coke had laid tli" founda- 
 
 ie English have been unwilling tions of this doctrine in discussing the 
 
 mi iii terms the privilege of < i- attributes of an incorporated hospital, 
 
 plete incorporations, as of right, to all and it 1ms been Bilently extended in 
 
 vsli,, desire it, because in their low it course of time to corporations of every 
 
 . • led a an essential at- class." Baldwin Modern Pol. [nit., 
 
 tribute of a full corporation ; first, thai page 206. 
 
 its personality is wholly distinct from 'L. R, 7 II. L. 668. 
 
 thai of it u tnembei econd, thai ■ Attorney-General v. Great Eastern 
 
 therefore they can not, in fairness, be Et. Co., ■> A.pp. Cms. 481. 
 made liable for its obli indi-
 
 § 133 powers. 129 
 
 The effect of this exception is to very materially modify the 
 general rule. "The rule of law is," says Mr. Justice Black- 
 burn, "that a corporation at common law has, as an incident 
 given by law, the same power to contract and is subject to the 
 same restrictions as a natural person. And this is important 
 when we come to construe the statutes creating a corporation, 
 for, if it were true that a corporation at common law has a 
 capacity to contract to the extent given it by the instrument 
 creating it, and no further, the question would be, does the 
 statute creating the corporation, by express provision or neces- 
 sary implication, show an intention in the legislature to confer 
 upon the corporation capacity to make the contract? But if a 
 body corporate has, as incident to it, a general capacity to con- 
 tract, the question is, does the statute creating the corporation, 
 by express provision or necessary implication, show an inten- 
 tion in the legislature to prohibit and so avoid the making of 
 the contract of this particular kind?" 
 
 § 133. The theory of special capacities. — The American 
 courts have adopted what is known as the " Doctrine of Special 
 Capacities" in dealing with questions of corporate power. This 
 was also the doctrine of the earlier English cases which adopted 
 it from the equity decisions where for particular reasons it was 
 long maintained. It is also apparent that the draughtsmen of 
 the English statutes proceeded upon this theory, as they at- 
 tempted to enumerate the specific powers granted instead of 
 enumerating restrictions. Taken, however, in connection with 
 the limitations imposed upon the general rule as stated in the pre- 
 ceding section, there is very little practical difference between the 
 two doctrines. It matters little which we adopt for the pur- 
 pose of determining whether a given act of a particular corpo- 
 ration is ultra vires. It is very important, however, when we 
 are to determine the effect to be given an unauthorized con- 
 tract of a corporation. Under one theory the act rests upon 
 a want of capacity, and under the other it is an act expressly 
 forbidden. The rule of general capacity was strenuously con- 
 9 — Private Corp.
 
 130 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §134 
 
 tended for in the well-known case of Thomas v. Railroad, 1 but 
 the court gave its adherence to the doctrine of special capacity 
 and stated the rule in the following language: "We take the 
 general doctrine to be, in this country, although there may be 
 exceptional cases and some authorities to the contrary, that the 
 powers of corporations organized under legislative statutes are 
 such, and such only, as those statutes confer. Conceding the 
 rule applicable to all statutes, that what is fairly implied is as 
 much granted as what is expressed, it remains that the char- 
 ter of a corporation is the measure of its powers, and tha. 
 the enumeration of these powers implies the exclusion 01 all 
 others." 
 
 § 134. Principles of construction. — The controlling rule 
 for the construction of corporate charters is stated by Mr. Jus- 
 tice Miller, in the language quoted in the preceding section. 
 The charter of the corporation, read in connection with the 
 
 1 Thomas v. Railway Co., 101 U. S. 
 82; State v. Lincoln, etc., Co. (Mo.), 
 46 S. W. Rep. 593. The rule is thus 
 stated in a recent case: A corporation 
 is a mere creation of law, and has 
 only such powers as are expressly 
 granted by the state as are necessary to 
 cany into effect the powers expressly 
 granted. Wyeth, etc., Co. v. James- 
 Spencer Bateman,etc., Co. (Utah), 47 
 Pac, Rep. 804. The cases supporting 
 this statement are bo numerous as to 
 make citation almost unnecessary. 
 gee Valley !;. Co. v. Lake Erie, etc., 
 Co., 46 Ohio st. . r ,<> ; Humbolt, etc., 
 
 .. American, etc., Co., 62 Fed. 
 
 Rep. 381 : Straus v. Ensun «• Co., 
 
 Ohio st. (io. This doctrine is 
 criticised in a recent magazine arti- 
 cle, in which the position of the 
 supreme court of the United Stati 
 
 mined. It is said: "it is obviously 
 logical to refuse to enforce an e 
 ni. ait if one or both of the parties 
 . ontractual ca- 
 
 i v, t .ut does no1 the Inconvenience 
 
 of the conclusion call for a re-examin- 
 ation of the premise? It is submitted 
 that we shall never see our commer- 
 cial law in a satisfactory state until 
 the courts re-establish the common 
 law doctrine of general capacities, 
 treating contracts made beyond the 
 limits of chartered activity as con- 
 tracts prohibited but not void, and 
 leaving the state to punish the disre- 
 gard of the prohibition while enforc- 
 ing the contract between the parties. 
 The enforcement of corporate eon- 
 tracts, in Bpite of objections to the cor- 
 porate power, represents the over- 
 whelming tendency Of American oV- 
 cisions. The supreme court has given 
 the contrary doctrine a fair trial and 
 the result is, from a practical point of 
 
 view, a failure." Unauthorized Corpo- 
 rate Contracts, a commenl on I'ull- 
 uian Palace Car Co, v. Central Trans- 
 portation Co., 171 rj. s. 188, by 
 George Wharton Pepper, Yale Law 
 Journal, vol. 8, 1898.
 
 § 134 powers. 131 
 
 general laws applicable to it, is the measure of the powers of 
 the corporation, and any contract in excess of such powers 
 will not be sustained. But it is equally true that whatever, 
 under this charter and general laws, reasonably construed, 
 may be regarded as incidental to the objects for which the cor- 
 poration was created, is not to be taken as prohibited. It is 
 often said that corporate charters should be strictly construed 
 against the corporation, but this should be treated as an ex- 
 ception to the general rule. 1 While nothing is to be taken as 
 granted which is not fairly expressed or implied in the char- 
 ter, the language of the charter should be given a fair con- 
 struction. From the language of some of the decisions it 
 might be thought that it is the duty of courts to make every 
 effort to find a means to defeat the apparent language of the 
 charter. The intent of the legislature must govern, and if it 
 appears by a fair and reasonable construction of the language 
 of the charter that that intent was to grant the power, it must 
 be given effect. Certain general principles of construction are 
 applicable to grants to corporations as well as to natural per- 
 sons. Thus, grants of exclusive privileges, 2 or of powers in 
 derogation of public right, 3 or whereby the state restricts its 
 own action, 4 are to be construed strictly against the grantee 
 and in favor of the public. Nothing passes by implication. 
 But, as said by Chief Justice Bigelow: 5 "We know of no 
 rule or principle by which an act creating a corporation for 
 certain specific objects, or to carry on a particular trade or 
 business, is to be strictly construed as prohibitory of all 
 
 l Pearsall v. Great Northern R. Co., Co. v. Citizens', etc., Co., 127 Ind. 369. 
 
 161 U. S. 646; Parker v. Railway Co., 3 Downing v. Mt. Wash. R. Co., 40 
 
 7 Man. & G. 288; State v. Payne, 129 N. H. 230; Fertilizing Co. v. Hyde 
 
 Mo. 468; Black v. Canal Co., 24 N. J. Park, 97 U. S. 659; Providence Bank 
 
 Eq. 474; Fertilizer Co. v. Hyde Park, v. Billings, 4 Pet. (U. S.) 514. 
 
 97 U. S. 659; First M. E. Church v. 4 As an exemption from taxation, 
 
 Dixon (111.), 52 N. E. Rep. 891 ; Peo- Wilmington, etc., R. Co. v. Alsbrook, 
 
 pie v. Pullman, etc., Co., 175 111. 125. 146 U. S. 279; Railroad Co. v. Gaines^ 
 
 2 Richmond, etc., R. Co., v. Rail- 97 U. S. 697. 
 
 road Co., 13 How. (U. S.) 71; Charles 5 Brown v. Winnisimmet Co., 11 
 
 River, etc., Co. v. Warren Bridge, 11 Allen (Mass.) 326. 
 Pet. (V. S.) 420; Indianapolis, etc.,
 
 132 THE LAW OF PRIVATE CORPORATIONS. § 135 
 
 other dealings or transactions not coming within the exact 
 scope of those designated. Undoubtedly the main business of 
 a corporation is to be confined to that class of operations 
 which properly appertain to the general purposes for which 
 its charter was granted. But it may also enter into contracts 
 and engage in transactions which are incidental or auxiliary 
 to its main business, or which may become necessary, expe- 
 dient, or profitable in the care and management of the prop- 
 erty which it is authorized to hold under the act by which it 
 was created." An enumeration of powers as granted by im- 
 plication excludes all others not necessary or proper to carry 
 those enumerations into effect. 1 
 
 § 135. Presumption of power and regularity. — Persons deal- 
 ing with a corporation are entitled to assume that it is acting 
 within the scope of its powers and is observing all the require- 
 ments with reference to the manner of exercising its power. 
 If the act appears to be within the charter powers, the public, 
 in the absence of notice to the contrary, has the conclusive 
 right to presume that the act is valid. 2 Thus, a mortgagee 
 dealing in good faith with a corporation may assume that pro- 
 visions or regulations contained in the by-laws have been 
 complied with. 3 
 
 § 130. Place where powers may be exercised. — A corpora- 
 tion has implied authority to exercise its powers beyond the 
 jurisdiction of the state by which it is created, subject, how- 
 ever, to limitations Imposed by the foreign state. In order to 
 comply with conditions so imposed, a corporation may deposit 
 irity with an officer of the foreign state, as required by its 
 statute. 1 If the charter requires the business to be carried on 
 in ;, certain place, the corporation can not locate at a different 
 place, bui when no place is designated it may be at any place 
 in the 
 
 'Case .. Kdly, 188 (J. - 21; Far- "Ashley, etc., <'<>■ v. Illinois, etc., 
 men', etc . Bank v. Baldwin, 23 Minn. Co., 164 HI I W, ••' x E Rep. 410. 
 198; Life, etc., Co . tfech., etc., Co., 'Lewis \. American, etc., Assn. 
 \. y i 81. (Wis . 78 N. w. Rep. 798,89 l.. R. 
 
 'Louisville, etc., Co. v. Louisville, A. 669. 
 etc., i: Co., 76 Fed. Hep. 488, 48 U.8. 'Stickle v Liberty, etc., Co. (N. J.) , 
 
 82 \H. Rep. 708.
 
 § 137 powers. 133 
 
 137. Grant of power — Not limited by term of corporate ex- 
 istence. — A limitation on the term of the corporate existence 
 common under modern statutes does not prevent the corpora- 
 tion from taking a grant of power or a franchise to itself and 
 assigns, absolute in terms and without limitation as to time of 
 enjoyment. Thus a street railway company, having a corpor- 
 ate existence of thirty years, may take a grant of the privilege 
 of operating its road for a longer period. 1 On the same prin- 
 ciple, a corporation may take a fee-simple estate in real estate 
 and may transfer the same absolutely, and its title is not af- 
 fected by the subsequent dissolution of the corporation . 2 ' ' The 
 fact that it can not personally enjoy the interest thus granted 
 after the expiration of its substantial and corporate franchises, 
 would not cut down the estate granted. Its power of alienation 
 was unaffected, and its assignee, if otherwise endowed with the 
 franchises essential to the operation of street railways, might 
 enjoy the rights and privileges derived by assignment." 3 
 
 A right of way obtained by condemnation is not limited to 
 the period of the charter of the original corporation ; it passes 
 to its successor under a consolidation act, and, having been 
 taken for railroad uses, remains for such during the extended 
 period. 4 
 
 II. Classification of Poivers. 
 
 § 138. Express powers. — Where corporations are organized 
 under special charters, there can be but little difficulty in de- 
 termining what powers are expressly granted. Under general 
 incorporation laws, the articles of incorporation are in effect 
 special charters which must be read and construed in connec- 
 tion with the general laws of the state. When the statute or 
 charter specifically enumerates the powers which corporations 
 
 1 Detroit, etc., Ry. Co. v. Detroit, 64 3 Detroit, etc., R. Co. v. Detroit, 64 
 Fed. Rep. 628, 26 L. R. A. 667 ; Omaha Fed. Rep. 628, 26 L. R. A. 667. 
 Bridge Cases, 51 Fed. Rep. 309, 2d C. 4 Davis v. Memphis, etc., R. Co., 87 
 C. A. 174; People v. O'Brien, 111 N. Ala. 633. Same principle, see Bass v. 
 Y. 1, 2 L. R. A. 255. R. N., etc., Co., Ill N. C. 439, 16 S. E. 
 
 2 2 Kent's Com. 281. See cases cited Rep. 402. 
 in § 167, infra.
 
 134 THE LAW OF PRIVATE CORPORATIONS. § 139 
 
 organized thereunder shall possess, it impliedly limits the 
 powers to such as are thus enumerated. A general statute 
 of this character authorizing the organization of corporations 
 with certain powers only, the mere claim of other powers 
 made in the articles of incorporation is of no effect. 1 
 
 § 139. Powers implied from express powers. — A power 
 specifically granted carries with it by implication such other 
 powers as are reasonably necessary to carry the powers ex- 
 pressly granted into execution. " An incidental power is one 
 that is directly and immediately appropriate to the execution 
 of the specific power granted, and not one which has a 
 slight or remote relation to it." 2 In order to derive a power 
 by implication, it must appear that such power is necessary to 
 the enjoyment of the specially granted right, without which the 
 latter would fail. 3 Necessary, in this sense, does not mean in- 
 dispensable; it means suitable and proper to accomplish the 
 end which the legislature had in view at the time of the grant 
 of the charter. 4 A very liberal construction will be given to 
 charters of corporations formed for the purpose of promoting 
 public improvements. 6 The courts will not investigate the ex- 
 pedience of their action or inquire whether or not other and 
 better means might have been adopted for the purpose of ac- 
 complishing the desired objects. 6 Within the scope of their 
 
 'Oregon, etc., B. Co. v. Oregonian "Oglesby v. Attrill. in.") r. s. 605. 
 ]: Co., L30 U.S. L; Thomas v. Kail- [n Curtis v. Leavitt, 15 N. Y. 9, Corn- 
 way Co., 101 U. S. 71; Wyeth, etc., stock, J., said: "It is plain that cor- 
 Co. v. James-8pencer Bateman ('". porations executing their expressed 
 (( tab), 47 Pac. Rep. 607 powers are no1 confined to means of 
 
 ■People v. Chicago, etc., Co., 130 Buch indispensable necessity that 
 
 Dl. 268; Franklin County v. Lewis- without them there could l>e noexe- 
 
 ton, etc., 68 Me. 18. CUtion at all. The <-<mti iry doctrine 
 
 » Downing v. Mt. Washington R. Co., would lead at once to a very great ab- 
 
 40 \, ii surdity; tor, if there are Beveral 
 
 ■ State '• Hancock, 86 N. J. L. 587. i les ol accomplishing the end, 
 
 3tate v. Pullman, etc., Co., L75 neither one is indispensable, and each 
 
 111. 125, and authorities cited In dis- would exclude all the others. An. I 
 
 tenting opinion, p 167. thus, by inevitable logic, an expressed 
 
 • Xa Newport, etc., B. Co., 16 grant of power would be foreverdor- 
 
 K. [.1368, L9 \ 1 1 Rep 826. mant, because there are more modej
 
 § 139 powers. 135 
 
 authority corporations have all the powers of natural persons, 
 and having the power to engage in a certain business, they may 
 adopt such means and carry on the business in the manner in 
 which that kind of business is usually carried on. 1 The 
 charter of a corporation need not be consulted for authority to 
 make contracts and to sell and mortgage its property. It may 
 exercise its common law right in these matters like an indi- 
 vidual. 2 
 
 But a small proportion of the powers actually exercised by 
 private corporations are granted to them in express terms by 
 the general law or by their charter. When so granted, the 
 question of authority can not arise, and as a consequence 
 questions of corporate power ordinarily arise when it is sought 
 to exercise a power as implied from an express power. 
 
 A corporation can not engage in a business different from 
 that authorized by its charter, 3 but this rule does not prevent 
 it from carrying on a business which is incidental to the 
 principal business. Thus a manufacturing corporation may, 
 under certain conditions, run a supply store; 4 a railway com- 
 pany a restaurant, 5 or a mining company a transportation 
 company, when necessary for carrying its products to market. 6 
 But a manufacturing corporation has no implied power, un- 
 der a charter provision giving it authority to acquire and 
 
 than one of carrying it into execu- 4 Seabright v. Payne, 6 Lea (Tenn.) 
 
 tion." See Ellerman v. Chicago, etc., 283; Dauchy v. Brown, 24 Vt. 197. A 
 
 R.Co.,49N T . J. Eq. 217,23 Atl. Rep. 287. brewing company may run a saloon. 
 
 1 Deringer v. Deringer, 5 Houston Welsh v. Heiin Brew. Co., 47 Mo. 
 
 (Del.) 416, 1 Am. St. Rep 150. App. 608. A gas company may deal 
 
 2 White Valley, etc., Co. v. Vallette, in patent appliances and conven- 
 21 Howard (U. S.) 414; Wright v. iences which have a tendency to in- 
 Hughes, 119 Ind. 324; Commissioners crease sales of gas. Malone v. Lancas- 
 v. Atlantic, etc., R. Co., 77 N. C. 289; ter Gas Co., 182 Pa. St. 309. 
 
 Lehigh Valley, etc., Co. v. West, 63 5 Jacksonville, etc., R. Co. v. Hooper, 
 
 Wis. 45. 160 U. S. 514 ; Flanagan v. Great Wesfc- 
 
 3 People v. Campbell, 144 N. Y. 166; em R. Co., L. R. 7 Eq. 116; Texas, 
 Chewacla Lime Works v. Dismukes, etc., R. Co. v. Robards, 60 Tex. 545 
 87 Ala. 344; Weckler v. Hagerstown (hotel). 
 
 Nat'l Bank, 42 Md. 581, 20 Am. Rep. 6 Moss v. Averell, 10 N. Y. 449; Cal- 
 95; Rochester Ins. Co. v. Martin, 13 laway, etc., Co. v. Clark, 32 Mo. 305. 
 Minn. 59; Miller v. Insurance Co., 92 
 Tenn. 167.
 
 136 THE LAW OF PRIVATE CORPORATIONS. § 140 
 
 hold such real estate as may be deemed necessary for the success- 
 ful prosecution of its business, to purchase near a populous 
 city several hundred acres of open prairie as a site for its 
 plant and subdivide the land not occupied by the plant into 
 lots and blocks, with streets, alleys and parks, erect houses, 
 churches, school buildings, stores, and rent them to em- 
 ployes, religious denominations, school boards and busi- 
 ness men; nor can such action be sustained on the ground of 
 expediency, or of necessity in providing its employes with 
 shelter, educational advantages, markets, and places of wor- 
 ship and amusement. These enterprises were not necessary 
 to the successful carrying out of the purposes of the corpora- 
 tion, and should have been left to private capital and enter- 
 prise. 1 
 
 § 140. Incidental powers. — The old books enumerate five 
 powers which are said to be necessarily and inseparably inci- 
 dent to every corporation. As soon as a corporation is duly 
 created, it has as incidental to its existence the right: 
 
 ( 1 ) To have perpetual succession. 
 
 (2) To sue or be sued, to implead or be impleaded, grant or 
 receive by its corporate name, and do all other acts that nat- 
 ural persons may. 
 
 (3) To purchase lands and hold them for the benefit of 
 themselves and their successors. 
 
 (1 ) To have a common seal. 
 
 (.") To make by-laws or private statutes for the better gov- 
 ernment of the corporation.' 
 
 "These indicia," said Chief Justice Nelson, 8 " were given by 
 judges and elementary writers at a very early day; since which 
 time the institutions have greatly multiplied, their practical 
 operation and use have been very thoroughly tested, and their pe- 
 culiar and essentia] properties much Wetter understood. Any 
 comprehending the scope and purpose of them al this day, 
 
 ■People v. Pullman, etc., Co., 178 z i Black. Com., p. H6 ; Case of Sat- 
 
 III. 125, three judges dissenting. The ten's Hospital, 10 Rep. 80. 
 
 enting opinion contains an elabo- 'Thomas v. Dakin, 22 Wend. V 
 
 discussion ol the authorities on Y.) 9,Wilgus' Cases, 
 the doctrine ol implied pow< i
 
 § 140 powers. 137 
 
 will not fail to perceive that some of the powers above speci- 
 fied are of trifling importance while others are wholly unessen- 
 tial. For instance, the power to purchase and hold real estate 
 is not otherwise essential than to afford a place of business, 
 and the right to use a common seal or to make by-laws may 
 be dispensed with altogether. For, as to the one, it is now 
 well settled that corporations may contract by resolution or 
 through agents without seal; and as to the other, the power is 
 unnecessary in all cases where the charter sufficiently provides 
 for the government of the body. The distinguishing feature 
 far above all others is in the capacity conferred, by which a per- 
 petual succession of different persons shall be regarded in the 
 law as one and the same body, and may at all times act in ful- 
 fillment of the objects of the association as a single individual. 
 In this way a legal existence, a body corporate, an artificial be- 
 ing is constituted, the creation of which enables any number 
 of persons to be concerned in accomplishing a particular ob- 
 ject as one man. While the aggregate means and influence of 
 all are wielded in effecting it, the operation is conducted with 
 the simplicity and individuality of a natural person. In this 
 consists the essence and great value of these institutions. 
 Hence it is apparent that the only properties that can be re- 
 garded strictly as essential are those which are indispensable to 
 mould the different persons into this artificial being and thereby 
 enable it to act in the way above stated. When once consti- 
 tuted, this legal being created, the powers and faculties that 
 may be conferred are various — limited or enlarged at the dis- 
 cretion of the legislature, and will depend upon the nature and 
 object of the institution, which is as competent as a natural 
 person to receive and enjoy them. We may, in short, con- 
 clude by saying with the most approved authorities at this day, 
 that the essence of corporation consists in a capacity: 
 
 "(1) To have a perpetual succession under a special name 
 and in an artificial form. 
 
 "(2) To take and grant property, contract obligations, sue 
 and be sued by its corporate name as an individual, and 
 
 "(3) To receive and enjoy in common grants of privileges 
 and immunities."
 
 CHAPTER 7. 
 
 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 
 
 154 
 15o 
 
 § 15(5. Rules and regulations pub- 
 lished by corporations. 
 
 157. By-laws imposing forfeiture. 
 
 158. Expulsion of members. 
 
 159. Amendment, repeal and waiver. 
 
 II. Power to Take and Hold Land. 
 
 160. The common law rule. 
 
 161. Statutory restrictions. 
 1*12. Distinction between power to 
 
 take and to hold. 
 
 163. Manner of acquiring title. 
 
 164. Power to take by devise. 
 
 165. Devise to corporation — Statu- 
 tory limit. 
 
 166. The doctrine of equitable con- 
 version. 
 
 1 (>7. The estate which may be taken. 
 168. Who can question the right of 
 the corporation. 
 
 141. In general. 
 
 142. Perpetual succession. 
 
 143. To have a seal. 
 
 I. By-Laws. 
 
 144. Definition. 
 
 145. Power to make by-laws. 
 
 146. In whom vested. 
 
 147. Manner of adoption. 
 
 148. General requirements — Must 
 
 conform to charter. 
 
 149. Must not be repugnant to law 
 
 of the laud. 
 
 150. Public policy. 
 
 151. Must be reasonable. 
 162. Must be general. 
 153. Effect of by-laws— As to mem- 
 bers and officers. 
 
 Effect upon third persons. 
 By-laws limiting powers of 
 agents. 
 
 § 141. In general, — As stated in the preceding section, cer- 
 tain powers are possessed by every corporation as incidental to 
 it- existence as a corporation. They are implied from the fact 
 of the existence of the corporation. In many cases the same 
 powers are specifically granted in the charter or general incor- 
 poration Btatute. 
 
 5 L42. Perpetual succession, — It is said to be of the very 
 Q ce of a common law corporation thai it have perpetual 
 [on, and, therefore, us Blackstone says, "all corpora- 
 tions have a power necessarily implied of electing members in 
 the m of BUCh as go off." 1 In modem times, however, 
 
 1 i Black. Oom., i>. 474. 
 (138)
 
 § 143 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 139 
 
 perpetual succession means nothing more than the continuity 
 of the corporate life during the period prescribed for the cor- 
 porate existence. Although the personnel may change, the 
 corporation retains its identity. The words "perpetual suc- 
 cession " in the charter of a corporation formed by purchasers 
 under a deed of trust of the property of a prior corporation 
 whose term of life was thirty years, mean nothing more than 
 a continuous succession during the existence of the corporation 
 for the limited period. 1 After the decision in the Dartmouth 
 College case, it became the practice to limit the life of a cor- 
 poration to a certain period in order that the state might retain 
 proper control over it. 2 
 
 § 143. To have a seal, — Whether corporation seals originated 
 like private seals, in general ignorance, or in the peculiar na- 
 ture of corporations aggregate, 3 it became in the course of time 
 a power incidental to every corporation aggregate to have a 
 common seal. The common law rule was that a corporation 
 spoke through its seal. 4 The modern rule is that in the ab- 
 sence of a statute requiring a seal, a corporation may make a 
 binding contract without a seal when an individual may do so. 5 
 
 I. By-Laws. 
 
 § 144. Definition. — A by-law is a rule of permanent char- 
 acter adopted by a corporation for the regulation of its internal 
 
 1 State v. Hannibal, etc., R. Co., 138 4 Case of Sutton's Hospital, 10 Rep. 
 
 Mo. 332; 39 S. W. Rep. 910. But 30 b, 7 Eng. Rul. Cas. 233, note, 
 
 the existence of a corporation is not The corporate seal is prima facie evi- 
 
 limited to the unexpired term of its dence of the fact that it was fixed by 
 
 predecessor, which was organized un- proper authority. Morris v. Keil, 20 
 
 der a law limiting its existence to thirty Minn. 531; Indianapolis R. Co. v. 
 
 years, when the new charter confers Morganstern, 103 111. 149. 
 
 all the rights and privileges that would 5 Crawford v. Longstreet, 43 N. J. L. 
 
 have been had if the company had 325; Muscatine, etc., Co. v. Musca- 
 
 been organized under such statute. tine, etc., Co., 85 Iowa 112; Thomas v. 
 
 8 See note to Tussaud v. Tuasaud, L. Dakin, 22 Wend. (N. Y.) 9. A seal is 
 
 R. 44 Ch. Div. 678, in 32 Am. and not necessary on a stock certificate. 
 
 Eng. C. C. 11. Halstead v. Dodge, 19 J. & S. (N. Y.) 
 
 8 1 Black. Com., p. 475. 169.
 
 140 THE LAW OF PRIVATE CORPORATIONS. § 145 
 
 government. The office of a by-law is to regulate the conduct 
 and define the duties of the members toward the corporation 
 
 and between themselves. 1 
 
 § 145. Power to make by-laws. — This is one of the powers 
 implied in the grant of the franchise of being a corporation. 
 "It is implied in the charter of every private corporation 
 formed for the pecuniary profit of its members, that the ma- 
 jority shall have power to make reasonable rules and regula- 
 tions, or by-laws, for the better government of the company." 2 
 But the right is now generally granted in express terms. Thus, 
 the statute of Minnesota provides that all corporations shall 
 have power "to make by-laws and regulations consistent with 
 the laws of the state, for their own government, and for the 
 due and orderly conduct of their affairs, and the management 
 of their property.'" In certain kinds of corporations, such as 
 
 1 Flint v. Pierce, 99 Mass. 68. I Ms- Lodge v. Weller (Ya.), 25 S. E. Rep. 
 
 tihction between a resolution anil a 891. 
 
 by-law, see Drake v. Hudson, etc., R. 8 Gen. Stat. Minn., 1878, vol. 2, p. 
 
 7 Barb. 508. A court will not take 392. A corporation may usually, by 
 
 judicial notice of a by-law. Haven v. its by-laws, where no other provision 
 
 Asylum, 13 X. H. 532. is specially made, providefor: 1. The 
 
 1 Engelhardt v. Fifth Ward, etc., time, place and manner of calling and 
 Assn., l is N. Y. 281, :;■"> F. R. A. 289; conducting itsmeetings. 2. The num- 
 Case of Sutton's Hospital, 10 Rep. 23a ; ber of stockholders or members con- 
 Martin v. Nashville, etc., Assn., 2 stituting a quorum. .'!. The mode of 
 Coldw. (Tenn.) 118; People v. Cross- voting by proxy. I. The time of the 
 ley, 69 111. 195; Kearney v. Andrews, annual election for directors and the 
 10 N. J. Eq. 70; Juker v. Com w., 20 mode and manner of giving notice 
 '. !-!. "Thai every by-law by thereof. 5. The compensation ami 
 which the he in lit of | he c. ,i ] h >ra1 ii »i is duties of olli < •(•!>'. <>. The manner of 
 
 need i- a g I by-law, for thai election and the tenure of office of all 
 
 •i. thai being the true touch- officers other than the directors; ami 
 
 stone of all by-laws." Carth. I sl', /<< /• 7. Suitable penalties for violation of 
 
 Lord Holt. A provisi f the charter by-laws, fixed at any reasonable 
 
 of a new benevolent association hind- amount, in no case to exceed the stat- 
 
 ition to pay all the utory minimum, in an early 
 
 liabilities of the old association, which Norris v. stops, Hobart, 211a (1614 
 
 the expiration 1625), it was said: "Now. I am of 
 
 of the period of limitation fixed by its opinion that, though power to make 
 
 chattel tself revive the laws is given by special clause in all 
 
 old corporation, or give any life to incorporations, yel it ii needless; for I 
 
 by-laws attempted to he adopted by it hold it to be included, by law, in the 
 
 olution. Supreme very act of incorporating, as is also the
 
 § 14G POWERS INCIDENTAL TO CORPORATE EXISTENCE. 141 
 
 clubs, and chambers of commerce, and boards of trade, exten- 
 sive power is given to make rules to govern the conduct of the 
 members. Such a corporation, if authorized by statute or 
 charter, may by by-law provide for the expulsion of a member 
 for a dishonorable act, and may provide that his membership 
 can not be sold or transferred so long as he is indebted to any 
 other member. 1 
 
 § 14G. In whom vested. — In the absence of a charter pro- 
 vision to the contrary the power to make by-laws is vested 
 in the members at large, 8 but it may be granted to the board 
 of directors by the charter or general law, or delegated to it by 
 the stockholders, 3 in which case the right is impliedly taken 
 away from the body at large. 4 But under general authority to 
 pass by-laws the board of directors can not alter a by-law which 
 was adopted by the stockholders as a limitation upon the 
 power of the directors. 5 
 
 § 147. Manner of adoption. — By-laws may be adopted with- 
 out the use of the corporate seal, and no writing is necessary. 
 Their existence may be established by custom or by the ac- ; 
 quiescence of those authorized to make them. 6 But statutory 
 formalities, modes and limitations with reference to the adop- 
 tion of by-laws must be strictly observed. 7 
 
 § 148. General requirements — Must conform to charter. — 
 
 There are certain general principles which must govern in the 
 
 power to sue, to purchase, and the ance Co., 2 Doug. (Mich.) 123; Rex v. 
 
 like." Spencer, 3 Burr 1827. 
 
 1 Green v. Board of Trade, 174 111. 4 King v. Westwood, 4 Barn. & C. 
 585, 51 N. E. Rep. 599; In re Haebler 798. See People v. Sterling, etc., Co., 
 (N. Y.), 44 N. E. Rep. 87; Comw. v. 82 111.457; Calder, etc., Co. v. Pilling, 
 Union League, 135 Pa. St. 301 ; Hyde 14 M. & W. 81. 
 
 v. Woods, 94 U. S. 523. See § 158. 5 Stevens v. Davidson, 18 Gratt.(Va.) 
 
 2 Morton, etc., Co. v. Wysong, 51 819. . 
 
 Ind. 4; People v. Crossley, 69 111. 6 State v. Curtis, 9 Nev. 335; Henry v. 
 
 195; Carroll v. Mullanphy,etc.,8 Mo. Jackson, 37 Vt. 431 ; Morrison v. Dor- 
 
 App. 249; Rexv. Westwood, 2 Dow sey, 48 Md. 462; Union Bank v. Ridge- 
 
 & C. 21. ly, 1 Har. & G. (Md.) 324; Rex v. 
 
 s Heintzelman v. Druids, etc., Assn., Head, 4 Burr. 2515 (1770). 
 
 38 Minn. 138; Stevens v. Davidson, 7 Lockwood v. Mechanics' Nat'l 
 
 18 Gratt. (Va.) 819; Cahill v. Insur- Bank, 9 R. I. 308; Dunston v. Impe- 
 rial, etc., Co., 3 B. & Ad 125.
 
 142 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 149 
 
 making of all by-laws. Thus, a by-law must not be repugnant 
 to the charter, 1 nor should it be a mere repetition or restate- 
 ment of the provisions of the charter. 
 
 § 149. Must not be repugnant to law of the land. — By-laws 
 which are contrary to the law of the land are void. "Not 
 only does a general and express legislative authority to make 
 by-laws not authorize the passage of such as are in contraven- 
 tion of the law of the land, 2 but the legislature can not in any 
 instance so far delegate its powers as to confer upon a corpora- 
 tion authority to enact by-laws which within the sphere of 
 their operation would be practically a repeal of the statutes of 
 the state or an abrogation of the common law." 3 
 
 § 150. Public policy. — A by-law which is against public 
 policy, as one in general restraint of trade, is void. 4 But re- 
 straints particular as to time and place, if founded upon suf- 
 ficient consideration, are valid. 5 
 
 § 151. Must be reasonable. — A valid by-law must be reason- 
 able, and the question of reasonableness is one of law and not 
 of fact. 6 The unreasonableness of a by-law should be demon- 
 
 1 Bergman v. St. Paul, etc., Assn., 29 
 Minn. l'7-"> ; Diligent, etc., Co. V. Com., 
 ,.. I a. Bt. 293 ; Brewster v. Hartley, 37 
 Oal. 15, 99 Am. Dec. 237; Kolfl v. St. 
 Paul, etc., Exchange, 48 Minn. 215; 
 President, etc., Assn. v. Mien, 106 
 Iii.l. 593 ; Supreme Council v. Perry, 
 
 1 10 Mass. 680; Kin- v. Int., etc., Assn., 
 17m III. 136. A by-law may lie valid in 
 pari ami Invalid in part. Amesbury 
 v. Bowditch, etc., <'<>., 8 < rray I Mass.) 
 
 2 Kennebec v. Kendall, :;i Me. 170. 
 
 ■Beach, l Priv. Corp., 5312; Kent v. 
 Quicksilver, etc., I 
 
 Seneca County Bans v. Lamb, 26 
 B .ri, 66 ■. in re Lighthall Mfg I to., 17 
 Hun 268. A bj la^ ag a 
 
 rule in regard to sale different from 
 
 the common law rale was held valid. 
 Goddard v. Merchants' Exchange, t> 
 Mo. App. 290. 
 
 4 Matthews v Associated Press, L36 
 N. Y. 333, and cases cited in note 
 1, p. hi'.); Mitchell v. Reynolds, l 
 
 P. Wm. 181. A by-law may limit 
 the time within which a su it may he 
 
 brought, but can not absolutely for- 
 bid the bringing of an action. Nute 
 v. Hamilton, etc . ( !o., 6 Gray 171. 
 ■Gunmakers, etc.,Co.v. Fell.Willes, 
 
 884 ; People v. Board of Underwriters, 
 ..i How. Pr. '-'lit. Must not he in re- 
 train*, "f personal liberty. Taylors 
 of [pswich, 1 1 < Soke's Rep. 53. 
 
 'i '..in. v. Worcester, 3 i ick. !<','.'; 
 ( tartan \ , lather Mather , etc., Soci- 
 ety, :; Daly 20; Hibernia, etc., Co. v.
 
 §152 
 
 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 
 
 143 
 
 strably shown. Courts in construing by-laws will hold them 
 to be reasonable, if possible, not scrutinizing their terms 
 for the purpose of making them void, nor holding them invalid 
 if every particular reason for them does not appear. 
 
 § 152. Must be general. — By-laws must be general — "di- 
 rected to all within the sphere of their operation, and must 
 operate equally." 1 
 
 § 153. Effect of by-laws — As to members and officers, — A 
 
 member of a corporation is presumed to know of, and is bound 
 by, all valid by-laws, rules or regulations to which he has as- 
 sented, and his assent is presumed from his becoming a mem- 
 ber of the corporation. 2 A stockholder is bound by all the 
 
 Harrison, 93 Pa. St. 26-4. In Kent v. 
 Quicksilver, etc., Co., 78 N. Y. 159, 
 Folger, J., said: "All by-laws must be 
 reasonable, and consistent with the 
 general principles of the law of the 
 land, which are to be determined by 
 the courts where a case is properly be- 
 fore them. A by-law may regulate or 
 modify the constitution of a corpora- 
 tion, but can not alter it. The alter- 
 ation of a by-law is but the making 
 of another upon the same matter. If 
 the first must be reasonable and in ac- 
 cord with the principles of law, so 
 must that which alters it. If, then, the 
 power is reserved to alter, amend, or 
 repeal, and that reservation enters 
 into a contract, the power reserved is 
 to pass reasonable by-laws agreeable 
 to law. But a by-law that will disturb 
 a vested right is not such ; and it dif- 
 fers not when the power to make and 
 alter by-laws is expressly given to a 
 majority of the stockholders, and that 
 the obnoxious ordinance is passed in 
 due form." A by-law to the effect 
 that one who is an attorney in an ac- 
 tion against the corporation is not eli- 
 gible to the office of director is reason- 
 able. Cross v. West Va., etc., R. Co., 
 
 37 W. Va. 342, 16 S. E. Rep. 587. In 
 Bergman v. St. Paul, etc., Assn., 29 
 Minn. 275, the court said: "The au- 
 thority to pass by-laws is, as a matter 
 of course, authority to pass such as are 
 consistent with the articles of incorpo- 
 ration, and not a power to subvert the 
 law of corporate existence. The by- 
 laws of a corporation are only rules 
 and regulations as to the manner in 
 which the corporate powers shall be 
 exercised Any attempt on the part 
 of defendant, by by-laws or otherwise, 
 to deprive an unconsenting stock- 
 holder of a right secured to him by 
 the corporate articles, is in excess of 
 defendant's authority, or, in legal par- 
 lance, ultra vires " Sargent v. Frank- 
 lin, etc., Co., 8 Pick. 90; Hibernia, 
 etc., Co. v. Harrison, 93 Pa. St. 2(54. 
 In Lynn v. Freemansburg, etc., Assn., 
 117 Pa. St. 1, a by-law providing for 
 cumulative fines was held void as "op- 
 pressive, extortionate and unreason- 
 able." 
 
 1 Goddard v. Mer. Exch., 9 Mo. 
 App. 290; Budd v. Multnomah, etc., 
 R. Co., 15 Ore. 413. 
 
 2 Frank v. Morrison, 58 Md. 423; 
 Douglass v. Merchants', etc., Co., 118
 
 144 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 153 
 
 by-laws in force when he became a member, although he had 
 no actual knowledge of their existence. 1 A by-law which re- 
 serves a lien on the stock in favor of the corporation is bind- 
 ing on the stockholders if authorized by statute, or consented 
 to by the stockholders. 2 Mere failure to object to the pas- 
 sage of an illegal by-law does not estop a stockholder from 
 objecting when it is sought to enforce it against him. 3 The 
 Lsideration of such assent is found in the privilege of 
 becoming a member of the corporation. 4 Thus, a person who 
 becomes insured in a mutual insurance company is a member 
 of the company and bound by the by-laws, and chargeable 
 with notice of them. 5 The general rule undoubtedly is, that 
 where a policy is issued by a mutual insurance or benefit so- 
 ciety, the assured, by virtue of his insurance, becomes a mem- 
 ber of the society, and must take notice of and is bound by 
 its articles of association and by-laws, although not recited in 
 the policy, or expressly made a part of it. All the provisions 
 of the by-laws not inconsistent with the provisions of the pol- 
 icy itself will be binding as a part of the contract. But when 
 a by-law and the policy issued are in conflict, the company 
 must be deemed to have waived the provisions of the by- 
 law in favor of the insured, and the provisions of the policy 
 
 N. Y. i-l, 7 L. R. A. 822; McFadden 
 tgelee ('"., 7 1 Cal. - r >7i ; Aus- 
 tin v. Bearing, L6 N. V. L12, 69 km. 
 Dec. 866. Members oJ mutual in- 
 surance and benefit societies are 
 Im.mh. I !•• take notice ol tli«' by-laws. 
 Pfister v. Gerwig, 122 tnd. ■>>'•'; Su- 
 preme Lodge K. ol I'. v. Knight, 1 17 
 [ml. 189, :; L. I:. \. K»; Supreme 
 I etc., v. Una worth, 71 \ la. 136, 
 
 16 \m. l:. 832; Walsh v. ffitna, etc., 
 6 \m. R.664 ; 'I'm ad- 
 I [amilton, etc.,< !o.,29< !onn. 68 ; 
 . Dubuque, etc., < '".. 18 Iowa 
 Bui it has been held thai only 
 guch by la n referred to in the 
 
 cy are binding on the policy-holder. 
 Kingsley v. New England, etc., 
 
 Miller v. Hills- 
 bon ' 1 1 V •' 
 
 i v . Bank ol W a h. ( 10 Pet. 
 
 1 Matthews v. Associated Press, L36 
 N.Y.333; Treadway v. Hamilton, etc., 
 Co., 29 Conn. 68; Green v. Board oi 
 Trade, 174 111. ">s">. 51 V E. Rep. 599; 
 Board of Trade v. Nelson (HI.), 44 N. 
 E. Rep. 7ii ; In re Haebler (N. Y. , n 
 N. E. Rep. 87. 
 
 2 Airliisi.ii Co. Bank v. Durfee, I L8 
 Mo 431. Bui see Brinkerhoff-Farris 
 Trust & B. Co. v. Home L. Co., L18 
 Mo. 1 17, Wilgua' Oases. 
 
 i Kolflv.St. Paul Fuel Ex., 18 Minn. 
 
 215. 
 « Palmetto Lodge v.Hubbell, 2 Strob. 
 
 I - c 
 
 Pflater v. Gerwig, L22 [nd. 567; 
 Mitchell v. Lycoming, i tc., Co., 51 
 r 3< io2; Treadway \ , Hamilton, 
 
 e tc #i i ,,.. 29 C i. 68; Coles v. [owa, 
 
 is towa 425.
 
 § 153 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 1 1 ■"> 
 
 will govern the rights of the parties. 1 There is a conflict in 
 the authorities as to the power of a mutual insurance com- 
 pany to change its by-laws in such a manner as to affect an exist- 
 ing contract of insurance. 2 " Where by-laws are for any reason 
 illegal, it will not be presumed that the stockholders have 
 assented to them, and even if they expressly assent they are 
 not bound by such by-laws." 3 Thus, a stockholder can not be 
 deprived of his membership by reason of an illegal by-law, 
 although he assented to it. 4 A stockholder who signed a by- 
 law which pledged the members to be liable " in their indi- 
 vidual as well as their collective capacities," for money lent 
 to the corporation, was held not personally liable for money 
 subsequently loaned to the corporation where there was no 
 evidence that the money was advanced on the credit of the 
 by-law, other than the fact that the preamble of the by-law 
 stated that the object of the corporation was to afford persons 
 desirous of saving their money means of employing it to ad- 
 vantage. 5 By-laws which are adopted by stockholders are 
 binding upon the directors with a force equal to that of the 
 charter of the corporation and the statutes of the state. They 
 have no power to modify or waive them; but a by-law made 
 by the directors under proper authority may be waived or 
 modified by them. 6 By-laws are binding upon the officers of 
 a corporation, although they may not be stockholders in the 
 corporation. They are presumed, by reason of their relation 
 to the corporation, to have knowledge of the by-laws, and to 
 
 1 Davidson v. Old People's, etc., Soc, 3 In re Klaus, 67 Wis. 401 ; Thomas 
 
 39 Minn. 303, 1 L. R. A. 482, anno- v. Mat., etc., Union, 17 N. Y. St. Rep. 
 
 tated; Clark v. Mutual, etc., Assn. 51, 49 Hun (N. Y.) 171. But see, con- 
 
 (D. C), 43 L. R. A. 390. tra, Skelly v. Private, etc., Soc, 13 
 
 2 That the contract is subject to Daly (N. Y.) 2; Great Falls, etc., Co. 
 
 change, see Dwenger v. Geary, 113 Ind. v. Harvey, 45 N. H. 292; Hibernia, 
 
 106; Supreme Lodge v. Knight, 117 etc., Co. v. Harrison, 93 Pa. St. 269. 
 Ind. 489; Stohr v. San Francisco, 82 4 People v. St. Franciscus, etc., Soc., 
 
 Cal. 557; Supreme Commandery v. 24 Howard's Pr. (X. Y.) 216. 
 Ainsworth, 71 Ala. 436. Contra: Mut. 5 Flint v. Pierce, 99 Mass. 68. 
 Ben. Assn. v. Warner, 24 111. App. 357 ; 6 Campbell v. Merchants', etc., Co., 
 
 Mut. Endow. Soc. v. Essenden, 59 37 N. H. 41. 
 Md. 463. 
 
 10 — Private Cor.
 
 146 THE LAW OF PRIVATE CORPORATIONS. § 154 
 
 accept their offices with relation thereto. 1 A shareholder is not 
 chargeable with constructive notice of resolutions adopted by 
 the board of directors, "or by provisions in the by-laws reg- 
 ulating the mode in which its business shall be transacted 
 with its customers." 8 
 
 § 154. Effect upou third persons. — A person who is not a 
 member or an officer of a corporation is not bound by its by- 
 laws, of which he has no notice, nor can he claim rights based 
 upon such as are mere rules for the government of the officers 
 and members in the management of the affairs of the corpora- 
 tion. 3 "Strangers to the compan} T can not be bound by the 
 rules adopted for the government of the company." 1 A by-law 
 can not impose obligations upon persons who contract with a 
 corporation without reference to or knowledge of it. Thus, one 
 who purchases in good faith the stock of a corporation is not 
 affected by a lien on the stock in favor of the corporation 
 which was created by a by-law of which he had no notice. 5 So 
 one dealing with the agent of a corporation is not bound by a 
 by-law creating a limitation upon the apparent authority of the 
 agent, of which he had no notice. 6 But one who has knowl- 
 edge of a by-law deals with reference to it; 7 and, unless such 
 a by-law is expressly excluded, it enters into a contract. 8 Thus, 
 one who contracts to serve a corporation at a yearly salary, with 
 
 1 Bank of Wilmington v. Wollaston, factoring ( '<>., 59 N. Y. 96 : \ nglo, He, 
 
 BHarr(DeL) 90; Hunter v. New Or- v. Grangers, etc., 68 Cal. 359. A per- 
 
 leane, etc., Co., 26 La. Ann. 18; Doug- son holding stock is bound by notice 
 
 lass v. Merchants', ete», Co., 118 N.Y. of such a by-law, printed on the cer- 
 
 l^i. tificate. State, etc, Assn. v. Nixon- 
 
 reall v. Western, etc., (V, 124 Jones, etc., <'"., 25 Mo. App. 642. 
 :-'•".<;. 6 Rathbun v. Snow, 123 N. V., 348; 
 
 1 McFadden v. Los Imgeles <'"., Hallenbeck v. Powers, etc., Co. 
 
 71 Cal. 571; Cummings v. Webster, (Mich.), 76 N. W. Rep. 119; Moyer 
 
 13 Maine 192; Austin v. 8earing, 16 N. v. EastShore, etc., Co., n s. c. 300, 
 
 V. Hi', 69 Am. Dec. 665, annotated; 25 I.. R. A. is. an. I n«>te ..n effect of 
 
 Rathbun v. Snow, 123 N. Y. 343, 10 bj laws as notice. 
 I. R note; lay v. Noble, 12 'Hallenbeck v. Powers, etc, Co. 
 
 I. (Mich. >. 76 \. W. Rep. 1 19. 
 1 Smith ▼. Smith, 62 111. 496. 'Barbol \. Mutual, etc., Assn. 
 
 1 Bank, etc., v. Pinson, 58 Miss. 121, LOO Ga. 681, 28 8. E. Rep. 498. 
 
 '.:u. Rep. ■ Oil v. Maim-
 
 § 155 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 147 
 
 knowledge of a by-law which provides that his office should be 
 held at the pleasure of the board of directors, is bound thereby. 1 
 If the effect of such by-law is to be excluded, it must be by 
 special contract, made with competent authority. 2 "The office 
 of a by-law is to regulate the conduct and define the duties of 
 the members towards a corporation and between themselves; 
 so far as its provisions are in the nature of contract, the parties 
 thereto are the members of the association between themselves; 
 or the corporation on the one side and its individual members 
 on the other. The right of any third party, stranger to the 
 association, to establish a legal claim through such a by-law, 
 must depend upon the general principles applicable to express 
 contracts." 
 
 § 155. By-laws limiting powers of agents. — The authorities 
 are conflicting upon the question of the effect of a by-law 
 which limits the apparent powers of an officer of a corporation. 
 The rule most consistent with reason and supported by the 
 weight of authority seems to be that the powers of officers of 
 manufacturing and trading corporations can not be limited to 
 those enumerated in the by-laws as against persons dealing with 
 them without notice of the limitations. Such persons are justi- 
 fied in assuming that the officers have the authority implied in 
 their designations. 3 The contrary rule was adopted in a line 
 of New York cases, 4 but these were in effect reversed by the 
 court of appeals, which in a recent case 5 held that the by-laws 
 
 1 Douglas v. Insurance Co., 118 N. Y. 4 Adriance v. Roome, 52 Barb. (N. 
 484. Y.) 399; De Bost v. Albert Palmer 
 
 2 Flint v. Pierce, 99 Mass. 68; Trus- Co., 35 Hun (N. Y.) 386; Dabney v. 
 tees v. Shaffer, 63 111. 243. Stevens, 10 Abb. Pr. N. S. 39; Smith 
 
 8 Fay v. Noble, 12 Cush. 1; Smith v. v. Co-Op., etc., Assn., 12 Daly 304; 
 
 Smith, 62 111. 496; Moyer v. East Westerfield v. Radde, 7 Daly 326; 
 
 Shore, etc., Co., 41 S. C. 300, 25 L. R. A. Bohm v. Loewer's, etc., Co., 30 N. Y. 
 
 48; Wait v. Smith, 92 111. 385; Union, S. R. 424; Rathbun v. Snow, 22 N. Y. 
 
 etc., Co.v. White, 106 111. 67; Walker S. R. 227. See, also, Bocock v. Alle- 
 
 v.Wilmington, etc., R. Co., 26 S. C. 80; gheny, etc., Co., 82 Va. 913 ; Haden v. 
 
 Arapahoe, etc., Co.v. Stevens, 13 Colo. Farmers', etc., Co., 80 Va. 691. 
 
 534; Ten Broek v. Winn Boiler, etc., 5 Rathbun v. Snow, 123 N. Y. 343, 
 
 Co., 20 Mo. App. 19 ; Donovan v. Hal- 10 L. R. A. 355. 
 sey, etc., Co., 58 Mich. 38.
 
 148 THE LAW OF PRIVATE CORPORATIONS. § 156 
 
 of a business corporation are binding only upon such persons 
 as <leal with the corporation with knowledge of their existence. 
 Third persons may act upon the apparent authority conferred 
 by the principal upon the agent, and are not bound by secret 
 limitations or instructions qualifying the terms of the written 
 or verbal appointment. Hence, said the court: "The defense 
 based upon the limitation in the by-laws of the company, of 
 which the plaintiff had no knowledge, can not be sustained. 
 By-laws of business corporations are, as to third persons, pri- 
 vate regulations, binding as between the corporation and its 
 members, or third persons having knowledge of them, but of 
 no force as limitations per se as to third persons, of an author- 
 ity, which, except for the by-law, would be construed as within 
 the apparent scope of the agency." 
 
 § 156. Rules and regulations published by corporations. — 
 The by-lawa of a private corporation "bind the members only 
 by virtue of their assent, and do not affect third persons. All 
 regulations of a company affecting its business, which do not 
 operate upon third persons, are properly denominated by-laws 
 of the company, and may come within the operation of the 
 principle. Within this limit it is the peculiar and exclusive 
 office of the court to decide upon the validity of the regula- 
 tion. But there is another class of regulations, made by cor- 
 porationa as well as individuals who are common carriers of 
 is, which operate on and affect the rights of others, 
 which are not, properly Bpeaking, by-laws of the corporation, 
 and which do not full within the operation of this principle. 
 Of this character are .-'II regulations touching the comfort and 
 convenience of travelers, or prescribing rules for their conduct 
 ecure the just rights of the company." ' To this class be- 
 adopti '1 by savings hanks prescribing the rights 
 of depositors and the methods of withdrawing funds. Depos- 
 tned to assenl to these rules, and are bound by 
 them. The fad that the depositor is unable to read the rules 
 printed in the pass-book does not defeal its effect as uotice. 
 
 »S1 »verton, 24 N. J. L. 136, »Burrill v. Dollar, etc., Bank, 92Pa. 
 
 St. 134, 87 Am. Rep. 669 ; People's,
 
 § 157 TOWERS INCIDENTAL TO CORPORATE EXISTENCE. 149 
 
 § 157. By-laws imposing forfeiture. — A forfeiture of stock 
 for non-payment of calls and assessments was unknown to the 
 common law * and can only be exercised by virtue of statutory 
 authority. In the absence of a grant in the charter of power 
 of forfeiture, a by-law authorizing a forfeiture is invalid, 2 but 
 a stockholder may consent that his stock may be forfeited for 
 non-payment of calls or assessment, and when the contract is 
 indorsed upon his certificate of stock it is binding. 3 When the 
 power of forfeiture is conferred by the charter and the manner 
 of exercising such power is prescribed by a by-law, a sale madt 
 in any other manner than as so provided is unlawful. "A 
 by-law of defendant's association, also made one of the terms 
 and conditions of the stock certificates, as the same were 
 printed and issued, requiring and providing for a sale at pub- 
 lic auction, in case of a failure to meet the prescribed monthly 
 payments for a period of six months, was ignored and disre- 
 garded, to the extent that the sale was in the directors' room 
 in the offices of the corporation, and no open, public, or general 
 notice of the same was ever given. By the same by-law it was 
 also provided that, whenever any stock w r as to be sold for ar- 
 rearages in the monthly payments, a notice should be mailed 
 to the owner of the stock ten days, at least, before the day of 
 sale, stating the time and place of such sale. This express 
 and important provision was also ignored and disregarded, 
 and the sales made without any attempt to notify stockholders 
 in default, by mail or in any other manner. Hence the sales 
 were irregular and unlawful." 4 
 
 § 158. Expulsion of members. — A corporation may adopt 
 reasonable rules for the regulation of the conduct of its mem- 
 bers in carrying out their agreements, and may provide for 
 
 etc., Bank v. Cupps, 91 Pa. St. 315; 2 In re Long Island R. Co., 19 Wend. '( 
 
 Supreme Comrnandery v. Ainsworth, 37. But see Elizabeth City Cotton | 
 
 71 Ala. 436. Mills v. Dunstan, 121 N. C. 12, 61 
 
 1 § 387, infra. Minnehaha, etc., Assn. Am. St. R. 654. 
 
 v. Legg, 50 Minn. 333; Westcott v. s Weeks v. Silver, etc., Co., 23 J. & 
 
 Minn., etc., Co., 23 Mich. 145; Buddv. S. (N. Y.) 1. 
 
 Multnomah, etc., R. Co., 15 Ore. 404, 4 Allen v. Am., etc., Assn., 49 Minn. 
 
 15 Pac. Rep. 659. 544.
 
 150 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 159 
 
 the expulsion of a member for non-compliance with a con- 
 tract entered into with another member, although the contract 
 was void under the statute of frauds. 1 
 
 Such organizations as clubs, benevolent societies, stock and 
 commercial associations, may make by-laws providing for the 
 expulsion of members who have violated obligations imposed 
 upon them by virtue of their membership. 2 But in corpora- 
 tions owning property there is no power to expel a member 
 unless expressly conferred by the charter. Such authority 
 can not be conferred by a by-law. 1 The remedy for unlawful 
 expulsion is by mandamus to compel restoration to member- 
 ship. 6 
 
 § 159. Amendment, repeal and waiver. — The same author- 
 ity which makes a by-law may amend or repeal it, 6 and mem- 
 bers are bound by amendments made in accordance with ex- 
 isting rules to the same extent as by the original by-law. 7 
 Where articles of incorporation are void they can not be made 
 good by amendment, although the amended articles are prop- 
 erly filed. 8 An amendment can not be affected by a usage 
 contrary to a by-law. 9 A corporation may by a course of deal- 
 ing waive a by-law, and be unable to assert it against those 
 with whom it deals. 10 But the officers can not waive by-laws 
 
 Ch.XII. Dickenson v. Cham- 
 ber of Com., 29 Wis. 45; State v. Cham- 
 bei "i ' '"in . 17 Wis. 670; < toddard v. 
 9 Mo. \|>|>. '-'!»<>, 
 7s Mo. 809; I In gg v. Mass. Med. 
 Society, ill Mass. 185; Southern, etc., 
 I Hi -.mii. :. Iml. Hi"). 
 
 ■People v. Board ol Trade, 80 III. 
 
 i:;i ; Hassey v. Gallagher, 61 Ga. 86; 
 
 Dawkins v. Antrobus, L. R. 17 Ch. 
 
 Div. 815. Compare State v. Williams, 
 
 c 184. 
 
 1 Brans v. Phila. Clab, 50 Pa. St. 
 n>7 ; State v. < Ihamber <>f Com . 17 
 Wii 870; Dickenson v. Chamber ol 
 Com , 29 Wia. i i 
 
 ■Peo] l'. Ben. Society, 24 
 
 Bow. IV. 216 (N. Y.) ; Roehler v. 
 Mech. Aid Society, 22 Mich. 8(5. 
 
 5 People v. Musical, etc., Union, l is 
 N. V. mi ; State v. Carterel Club, 40 
 N. J. L. 295. 
 
 6 Heintzelman v. Druid, <'tr , Assn., 
 
 88 Minn. L88. 
 
 7 Poultney v. Bachman,81 Hun 19; 
 McDowell \. Ackley, 98 Pa, Bt. 277. 
 
 •State v. Critchett, 87 Minn. 18; 
 State v. Truby, 87 Minn. 97. 
 
 '•sMis v. Brown, 9 Carrd P. 604. 
 
 in ( Hark v. Insurance < '<>.,<> < !ush. S 12 ; 
 Susquehanna, <•<<•., < !o. v. ESlkins, 124 
 Pa. Si 184 ; Cumberland, etc., Co. v. 
 Bchell, 29 Pa. St. 81 ; Splawn v. Obew, 
 60 Tex. 582; Manning v. Ancient, etc., 
 86 Kj 186, 6 s. \v. Rep. 885.
 
 § 160 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 151 
 
 which were adopted by the stockholders for the protection of 
 the corporation. 1 
 
 II. Power to Take and Hold Land. 
 
 § 160. The common law rule. — Blackstone names as one of 
 the incidental powers of every private corporation the power 
 to acquire and hold real estate. At common law every private 
 corporation had implied power to take and hold such lands only 
 as were reasonably necessary for the purposes of its creation. 2 
 This limitation, it has been said, was imposed by the common 
 law independent of statute, 8 but probably was not so, if the 
 king's license in mortmain was obtained. 4 
 
 § 161. Statutory restrictions. — By the English statutes of 
 mortmain, beginning with Magna Charta and ending with 
 9 George II, all corporations were forbidden to take and hold 
 
 1 Mulrey v. Insurance Co., 4 Allen 
 (Mass.) 116. 
 
 2 1 Blk. Com., p. 478 ; 2 Kent Com., 
 pp.227, 281 ; Nicoll v. Railway Co.,12 N. 
 Y. 121 ; Thompson v. Waters, 25 Mich. 
 214; Blanchard v. Warner, 1 Blatchf. 
 U. S. 258; Page v. Heineberg, 40 Vt. 
 8i, 94 Am. Dec. 378; McCartee v. Or- 
 pnans' Asylum Soc, 9 Cow. (N.Y.) 437, 
 18 Am. Dec. 516; Rivanna, etc., Co. 
 v. Dawson, 3 Grat. (Va.) 19, 46 Am. 
 Dec. 183 ; Mallett v. Simpson, 94 N. 
 C. 37, 55 Am. Rep. 594. 1 Kyd'. Corp., 
 79, citing 19 Henry VI, 44, says that at 
 common law corporations had the 
 same capacity to take and hold lands 
 as a private person prior to Magna 
 Charta (1215). A corporation has no 
 power to purchase or take either real 
 or personal property by gift, devise 
 or bequest for an unauthorized pur- 
 pose. Hence, under authority, to take 
 lands for a right of way and certain 
 enumerated purposes, a railway cor- 
 poration can not take lands by dona- 
 tion for purposes in no way connected 
 with the road. Case v. Kelly, 133 U. 
 S. 21. The presumption is in favor of 
 
 the right of the corporation to hold 
 real estate. People v. Larue, 67 Cal. 
 526; Stockton Bank v. Staples, 98 Cal. 
 189. A corporation with legal capa- 
 city to take and hold property may 
 take and hold it in trust, when au- 
 thorized by law, to the same extent 
 as a private person. White v. Rice 
 (Mich.), 70 N. W. Rep. 1024. 
 
 8 State v. Com'rs, 23 X. J. L. 510, 57 
 Am. Dec. 409. The real estate must 
 be held for a purpose which tends to 
 carry out the object for which the cor- 
 poration was created. Thus, in the 
 absence of a prohibitory law, a corpo- 
 ration formed for religious purposes 
 may hold land as a trustee for such 
 uses. Phillips Academy v. King, 12 
 Mass. 564. A corporation formed 
 for educational purposes may hold 
 lands in aid thereof. Phillips Acade- 
 my v. King, 12 Mass. 564. See Re- 
 gents v. Detroit, etc., Soc, 12 Mich. 
 138; Leggett v. Ladd, 23 Ore. 26. As 
 to power of alienation at common law, 
 see note, 7 Eng. Rul. Cas. 377, and 
 cases cited. 
 
 * Angell & Ames Corp., 8th ed., § 145
 
 152 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 161 
 
 land without a license from the crown. 1 These statutes were 
 never re-enacted in the United States, 2 and were not in force 
 in any state, except under certain restrictions, in Pennsylvania. 3 
 The various states have, however, generally adopted constitu- 
 tional or statutory restrictions which limit the power of corpo- 
 rations in this respect. 4 These statutes ordinarily grant to cor- 
 porations power to "acquire, hold and transfer all such real 
 and personal estate as is necessary or convenient for the pur- 
 pose of conducting, carrying on or disposing of the business of 
 such corporation . " 5 The acquisition of real estate for purposes 
 
 1 2 Kent Com., p. 282; 1 Washburn subsequently enacted, all for the pur- 
 
 Eeal Property, 4th ed., p. 76. pose of preventing the great accumu- 
 
 2 Moore v. .Moure, 4 Dana (Ky.) 354, lation of real property in the hands of 
 
 29 Am. Dee. 417; Rivanna Nav. Co. corporations, and they all provided 
 
 v. Dawson, 3 Grat. (Va.) 19,46 Am. substantially for a re-entry on the part 
 
 Dec. 183; Mallett v. Simpson, 94 N. of the next superior lord whenever 
 
 C. 37, 55 Am. Rep. 594. lands had been aliened in mortmain; 
 
 "Leazurev.Hillegas,7Serg.&R.(PaO and, nntil such entoy enforcing the for- 
 
 313. In In re McGraw's Estate, 111 feiture, the corporation held the lands. 
 
 N. Y. 67, the cases are reviewed. The There was one law, directed against 
 
 court said: "As at common law a cor- superstitious uses (23 Henry VIII, c. 
 
 poration could take real propertyinthe 10), which provided that the grant to 
 
 way as ail individual; thecon8e- such uses for more than twenty years 
 
 quence was that, in England, laiv was absolutely void, and the estates 
 
 landed possessions \\<iv held by re- thus aliened would have gone to the 
 
 ligious corporations, and, byreason of grantor or his heirs, excepting for a 
 
 alienations of real estate to them, the provision subsequently made, giving 
 
 services due by the vassal to the lord such estates to the king. Wilm., notes, 
 
 partially if not totally paralyzed, 9, K). in Attorney-General v. Downing, 
 
 a,,.l the chief lords losl their escheats, variously reported : Amb. 550, 571 ; l 
 
 Thie constantly growing and Dick.414;3Ves. 714;5Ves.300;8Ves. 
 
 alarming evil. To remedy the evil, 256. The mortmain statute 9Geo.IL, 
 
 the flrsl Mortmain act was placed in c. 86) renders all devise- to charita- 
 
 \\, { - i which declared all such ble uses void. Shelf. Mortm. 118 L20." 
 
 alienation rporations entirely ' Gilbert v. Hole, 2 S. Dak. 164 ; Leg- 
 
 void, and i hat the lands should revert 
 to the lord of the fee. it was held, bow- 
 ' ion must be ac- 
 companied b<, an entry, and then, and 
 from that time, there was a foi feiture, 
 ition having taken the tiil< 
 
 getl v. N. J., etc., Co., I N. J. Eq. 541, 
 23 Am. Dec. 720. It is against public 
 policy for a coi poration to om n more 
 
 real estate than is necessary for the 
 
 transaction of ite corporate business or 
 is required in the collection of debts. 
 
 and held the property until such for- People v. Pullman, etc., Co., 175 111. 
 
 feiture byte-entry. Shelf. Mortm. 8, 125. 
 
 ;;| ,i G ml Corp. 106. •Gen. Stat. Minn., chap. 84, , I 18. 
 
 •me- upon the subject wi t First M. B.Ohurcb v. Dixon (111.),
 
 § 162 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 153 
 
 foreign to the general objects of the corporation is, under such 
 statutes, an ultra vires act. Thus, a corporation organized for 
 manufacturing purposes may acquire real estate upon which to 
 locate its buildings or plant, but it can not purchase lots for 
 speculative purposes. 1 A corporation authorized by its charter 
 to hold real property, may lease it to be used for a business 
 which the corporation itself could not lawfully carry on. 2 The 
 quantity of real estate which a foreign corporation may hold is 
 generally restricted by statute. 3 Under such a statute it can 
 not indirectly own the land by holding the majority of the 
 stock of a domestic corporation.* 
 
 § 162. Distinction between the power to take and to hold. — 
 
 Although the authorities are not uniform, the preponderance 
 is in favor of the proposition that a prohibition on the power 
 to hold real estate does not exclude the power to take the title 
 to real estate subject to the risk of being ousted by the state. 5 
 This appears to have been the English rule, 6 and under it the 
 corporation may at any time previous to a judgment of ouster, 
 convey a good and valid title. There are many cases, how- 
 ever, which hold that a corporation which is forbidden to hold 
 real estate can not take the title, and that a conveyance or a 
 
 52 N. E. Rep. 887. For construction of which a corporation may hold is lim- 
 
 such statutes, see Crawford v. Long- ited, the title is not divested by an in- 
 
 street, 43 N. J. L. 325; Belcher v. St. crease in the value beyond the pre- 
 
 Louis, etc., Co., 101 Mo. 192, 13 S. W. scribed amount. Bogardus v. Trinity 
 
 Rep. 822. Church, 4 Sandf. Ch. 633; Harvard 
 
 1 Case v. Kelly, 133 U. S. 21 ; Com- College v. Boston, 104 Mass. 470; 
 monwealth v. Railway Co., 132 Pa. St. Comw. v. N. Y., etc., Co., 114 Pa. St. 
 591 ; Matthews v. Skinker, 62 Mo. 329 ; 340. See generally : Tarpey v. Desert, 
 Commonwealth v. Railway Co., 139 etc., Co., 5 Utah 494, 17 Pac. Rep. 631; 
 Pa. St. 457; Freeman v. Sea View, Boyce v. St. Louis, 29 Barb. 650; Stark- 
 etc, Co., N. J. Eq. 40 Atl. Rep. 218. weather v. Am., etc., Soc, 72 111. 50; 
 
 2 Nye v. Storer, 168 Mass. 53, 46 N. Am., etc., Soc. v. Marshall, 15 Ohio 
 E. Rep. 402. St. 537. 
 
 3 American, etc., Co. v. Tennille, 87 A devise of land to the government 
 Ga. 2S; Koenigv. Chicago, etc., R. Co., of the United States is void. United 
 27 Neb. 699. States v. Fox, 94 U. S. 315. 
 
 4 The reasons for such restriction are 5 Thompson Priv. Corp., §5775. 
 well stated by Christiancy, J., in 6 See Leazure v. Hillegas, 7 Serg. & 
 Thompson v. Waters, 25 Mich. 214. Raw. (Pa.) 313, Wilgus' Cases. 
 
 Where the value of the real estate
 
 154 THE LAW OF PRIVATE CORPORATIONS. § 163 
 
 devise to it is of no effect. 1 In accordance with this rule, it 
 was held that a devise of real estate to a corporation which, by 
 reason of this limitation upon its power, was unable to hold it, 
 was of no effect, and that the title vested in the heirs. 2 
 
 § 163. Manner of acquiring title. — By the common law a 
 corporation could acquire title to real estate the same as an in- 
 dividual. 3 So under the modern law it may acquire title in 
 any way that a natural person can, as by adverse possession, 4 
 devise, 5 prescription, or by the exercise of the power of emi- 
 nent domain. 6 When a corporation has power to become a 
 creditor, it may, unless expressly prohibited, take a mortgage 
 upon real estate as security, and in case of default acquire title 
 by foreclosure. 7 Thus, a railway corporation may take a mort- 
 gage upon real estate to secure the payment of subscriptions to 
 its stock. 
 
 § 164. Power to take by devise. — It is probable that the 
 power to devise land was frequently exercised in Anglo-Saxon 
 times, but after the Norman conquest, or at least after the 
 feudal system was fully established, this method of alienating 
 lands was not allowed to any one (except in a few places by 
 local custom) until the Statute of Wills in the time of Henry 
 VIII. But long before this time the devise of uses or trusts in 
 land was recognized, so corporations could take an use in real 
 estate by devise at common law; 8 but they were forbidden to 
 hold the land itself, and after 15 Richard II, to hold the use 
 (except by special license of the king), by a series of statutes 
 extending from Maijna Charta to 32 Henry VI II. The latter 
 act, known as the statute of wills, provided that the sole owner 
 i't a Eee Bimple could devise it to any one "except to bodies 
 politic and corporate." 9 In the absence of such a statute of 
 wills, or a restrictive statute of some kind, and subject t<» the 
 rule that it musl be reasonably necessary. and convenient for 
 carrying out the objects of the corporation, the old common 
 law rule, thai tleic is no inherent incapacity in a corpora- 
 tion to take by devise, prevails in the United States at the 
 
 'Wood v. Hammond, 16 R. I. 98; •Porter's C:i*>\ I Co. Rep. 22, 24. 
 
 [n re McGraw'a Estate, 111 N. Y. 66, Bee 1 Thomas's 4 '<>. Liu., p. L88, ei .-<-/., 
 
 2 I. R \ note fir; McCartee v. Orphan Asy. Soc, 
 
 Mi, re McGraw, ill N.Y 66. 9 Cow. 184,18 ^m. D.616; Downing v. 
 
 •See Predyman v. Wodry, Orok. Marshall, 23 N. Y. 866, 80 Am. D. 290. 
 
 109. 'This incapacity was removed by the 
 
 •Rehoboth v. Rehoboth, 28 Pick. Btatute of charitabl I Eliz. C. 4 
 
 (Ma A.. D. 1601), as regards gifts for various 
 
 lie McG tate, 111 N.Y.66. pu erein denominated chari- 
 
 ' i iomp on I'm-. Corp table. 
 
 7 Blunt v. Walker, li Wi 884, 78 
 Am. !>• • 709.
 
 § 165 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 155 
 
 present time. 1 A conveyance by a citizen of a state of property 
 located in the state to a foreign corporation for benevolent pur- 
 poses, when the state permits its own corporations to take real 
 estate for like purposes, is valid. "In harmony with the gen- 
 eral law of comity among the states composing the Union, the 
 presumption should be indulged, that a corporation of one 
 state not forbidden by the law of its being may exercise within 
 any other state the powers therein granted, including the power 
 of acquiring lands, unless prohibited therefrom, either in the 
 indirect enactments, or by public policy deduced from the gen- 
 eral course of legislation, or the settled adjudication of their 
 highest courts." 2 When a statute of wills forbids a devise to 
 a corporation, a devise of land in the state to a foreign corpora- 
 tion is void. 3 Judge Thompson says that the better rule is that 
 the disability created by a statute of wills does not follow the 
 corporation into another state, while a disability created by the 
 charter or general corporation law follows the corporation 
 everywhere. 4 
 
 § 165. Devise to corporation — Statutory limit. — The better 
 rule is that the state only can raise the question that the cor- 
 poration is holding more real estate than it is permitted to hold 
 under the law. 5 We have already seen that the authorities 
 are not uniform on the question of the power of a corporation 
 which is forbidden to hold real estate to take title to the same. 6 
 It was recently held by the supreme court of Maine that a be- 
 quest to an incorporated charitable institution of property in 
 excess of the amount which such corporations are allowed by 
 general statutes to take and hold, there being no prohibition 
 by the statute of wills, or the charter of the corporation, and 
 no penalty for taking in excess of the limitation, is not void 
 but merely voidable at the instance of the state. 7 But the New 
 York Court of Appeals, in recent important cases, has held that 
 a devise of an amount of land which, together with the amount 
 already held, exceeding the statutory limit, is void as to the ex- 
 cess only. The title to the excess was held to vest in the heirs 
 of the devisor, and they were permitted to raise the question of 
 
 "In re McGraw, 111 N. Y. 66; weather v. Am. Bible Soc, 72 111. 50, 
 
 Downing v. Marshall, 23 N. Y. 366, 22 Am. Rep. 133. 
 
 80 Am. Dec. 290. 5 American, etc., Foe. v. Marshall, 
 
 2 Christian Union v. Yount, 101 15 Ohio St. 537; Christian, etc., v. 
 U. S. 352. Yount, 101 IT. S. 352. 
 
 3 Draper v. Harvard College, 57 6 §§ 162, supra, 168, infra. De Camp 
 Howard Pr. N. Y. 269. v. Dobbins, 25) N. J. Eq. 36. 
 
 4 Corps., §5785. But see Stark- 7 Farrington v. Putnam, 90 Me. 40o, 
 
 37 Ail. Rep. 652.
 
 156 THE LAW OF PRIVATE CORPORATIONS. § 1GG 
 
 the right of the corporation to take the title. 1 A devise to a 
 trustee to collect the rents and profits for the benefit of a cor- 
 poration, which is forbidden to hold real estate, is a mere eva- 
 sion of the statute and void. 2 
 
 § 166. The doctrine of equitable conversion. — When a cor- 
 poration is incapable of taking a devise of real estate, the 
 will may direct the executors to convert the real estate into 
 money, and pay the proceeds over to the corporation. On 
 well established principles, this is considered a bequest of 
 money. 3 
 
 § 167. The estate which may be taken. — A corporation 
 may take a title in fee-simple, although the period of the cor- 
 porate existence is limited. Chancellor Kent said that a cor- 
 poration has a fee-simple for the purpose of alienation, but 
 only a determinable fee for the purpose of enjoyment, and 
 that on the dissolution of the corporation, the reversion is to 
 the original grantor or his heirs; that the grantor will be ex- 
 cluded by the alienation of the fee, and in that way the cor- 
 poration may defeat the possibility of a reversion. 4 In modern 
 times, upon the dissolution of a joint stock corporation, the 
 title to its real estate passes into administration for the benefit 
 of its creditors first and its stockholders afterwards. 6 
 
 'In re McGraw's Estate, 111 N. Y. ' Kent's Ctom., 283 ;Nicoll v. Railway 
 ' l. ::. L 887. A.nd see Cor- Co., 12 N. Y. 121 ; People v. Mauran, 
 nell, etc., v. Fiske, 136 U. S. L52; 5 Denio (N. Y.)S89; Page v. Heine- 
 Wood v. Hammond, 16 R. 1.98. berg, 10 N't. 81; People v. O'Brien, 
 ■McCarteev. Society, 9 Cow. N.Y.J 111 N. Y. 1,7 Am. St. Rep. 684; De- 
 437. Bee Downing v. Marshall, 23 N. troil Bt.R.Co.v. Detroit, L10 Mich.384. 
 Y. 866; Coleman v. San., etc, Co., 49 A. corporation may hold title t<> real 
 Cal. 517 estate as tenanl in common \\ ith an- 
 •Sherwood v. American Bible Soc., other corporation or natural person. 
 •Y. 661 ; Orrick v. Boehm, New York, ejc., Co. v. Pulton Bank, 
 49Md.72. ka to the doctrine of equita- ~ Wend. (N. \> U2; I Washburn 
 ble conversion generally, see Given v. Real Property, Ith ed.,643. Bui not 
 Hilton, 95 U. 8. 591 If the real i (oinl tenant. Telfair v. Howe, 
 tate I i" the corporation, a 8 Rich, Eq. (8. ('.) 236,55 im, Dec. 
 n.iirt of equity can not convert it into 687, 
 
 money and direct the money paid 'Heath v. Barmore, SON. Y. 802. 
 
 ther 
 • 72 III. 50.
 
 § 1G8 POWERS INCIDENTAL TO CORPORATE EXISTENCE. 157 
 
 § 168. Who can question the right of the corporation,— On 
 
 grounds of public policy it is generally held that the state 
 only can raise the question that a corporation which has power 
 to hold land for any purpose, or under any circumstances, is 
 holding real estate which it has no authority to hold. 1 The 
 general rule is that the title of the corporation to real property 
 can not be questioned by a private person, upon the ground 
 that the law gives the corporation no right to take or hold 
 such a title. Hence, a corporation which has received a grant 
 of land may convey a good title to a grantee, 2 or maintain an 
 action against trespassers, 3 although it has no legal right to 
 hold real estate. This rule does not apply, however, when the 
 corporation is seeking to acquire lands contrary to its charter. 4 
 The right of a corporation to take or hold land in violation of 
 its charter will not be inquired into collaterally. 5 
 
 1 Congregational, etc., Soc. v. Ever- etc., Co. v. Tennile, 87 Ga. 28; Tid- 
 
 itt, 85 Md. 79, 36 Atl. Rep. 654, 35 L. well v. Chiricahua, etc., Co., 53 Pac. 
 
 R. A. 693; Water, etc., Co. v. Tenney, Rep. (Ariz,) 192. The property is held 
 
 24 Colo. 344, 51 Pac. Rep. 505; State subject to the state right of escheat, 
 
 v. Elizabeth (N. J.), 39 Atl. Rep. 683, Hickory, etc., Co. v. Buffalo, etc., R. 
 
 903; Lauder v. Peoria, etc., Soc, 71 Co., 32 Fed. Rep. 22. 
 
 111. App. 475; Cooney v. A. Booth, 2 Blunt v. Walker, 11 Wis. 334, 78 
 
 etc., Co., 169 111. 370, 48 N.E. Rep. 406; Am. Dec. 709; Farmers', etc., Co. v. 
 
 National Bank v. Whitney, 103 U. S. Curtis, 7 N. Y. 466. 
 
 99; Fritts v. Palmer, 132 U. S. 282; Southern, etc., R. Co. v. Orton, 6 
 
 Hough v. Cook Co., etc., Co., 73 111. Sawy. (C. C.) 157. 
 
 23, 24 Am. Rep. 230 ; Hamsher v. Ham- 4 Case v. Kelly, 133 TJ. S. 21 ; Pacific 
 
 sher, 132 111. 273, 8 L. R. A. 556; Al- R. Co. v. Seeley, 45 Mo. 212, 100 Am. 
 
 exander v. Tolleston Club, 110 111. 65; Dec. 369. 
 
 Gilbert v. Hole, 2 S. Dak. 164, 49 N. 5 She\valter v. Pirner, 55 Mo. 218; 
 
 W. Rep. 1 ; Mallett v. Simpson, 94 N. People v. Mauran, 5 Denio (N.Y.)389; 
 
 C. 37, 55 Am. Rep. 594; Ragan v. Mc- Ehrman v. Union, etc., Co., 35 Ohio 
 
 Elroy, 98 Mo. 349 ; Blunt v. Walker, 1 1 St. 324 ; Cooney v. A. Booth, etc., Co. 
 
 Wis. 334, 78 Am. Dec. 709; Hayward 169 111. 370. 
 v. Davidson, 41 Ind. 212; American,
 
 CHAPTER 8. 
 
 PARTICULAR POWERS. 
 
 §169. Power to contract. 
 
 170. Manner of acting — Necessity 
 
 for a seal. 
 
 171. Formalities to be observed in 
 
 contracting. 
 
 172. Contracts which are against 
 
 public policy. 
 
 173. Traffic agreements. 
 
 174. Pooling arrangements — Con- 
 
 tracts to prevent competition. 
 
 175. Contracts granting special priv- 
 
 ileges. 
 17*".. Trust agreements. 
 
 177. Illustrations of trust agree- 
 
 ments. 
 
 178. Statutes forbidding trust agree- 
 
 ments. 
 
 17'.t. Contracts by trusts. 
 
 1SI). Power to indorse and guaran- 
 tee paper. 
 
 181. To enter into a partnership. 
 
 182. To borrow money and make 
 
 negotiable paper. 
 
 183. Limitations upon amount of in- 
 
 debtedness. 
 
 § 184. Liability to holder of overissued 
 negotiable paper. 
 
 185. Power to acquire personal prop- 
 
 erty. 
 
 186. Power of alienation. 
 
 187. Limitations on right of aliena- 
 
 tion — Corporations charged 
 with public duties. 
 
 188. Power to give a mortgage. 
 
 189. Assignment for benefit of cred- 
 
 itors — Preferences. 
 
 190. Power to hold stock in another 
 
 corporation. 
 
 191. Exceptions to general rule. 
 
 192. Purchase of its own shares. 
 
 193. When a corporation may hold 
 
 its own shares. 
 
 194. Powers of national banks. 
 L95. Consolidation. 
 
 196. The effect of consolidation. 
 
 197. Powers of the new corporation. 
 
 198. Liabilities of die new corpora- 
 
 tion . 
 
 199. The loaning <>f money. 
 199«. Power to act as a trustee. 
 
 § 1 »;'.». Power 1o Contract. — For the purpose of advancing 
 the objects of its creation ;i corporation maw subjeel to the lim- 
 itations imposed by its charter, <1<> whatever a natural person 
 could do. 1 The power to make Buch contracts as are reason- 
 ably ueci ssa ry in order to carry out, its Legitimate purposes in- 
 heres in every corporation, and is co-extensive with its corpo- 
 
 1 Kelly v Board, etc., 7:, Va.263; anycontract which the lain authorizes 
 Blnnt v.Walker, 11 Wis. 849; New En- a corporation to make. McTighe v. 
 gland, etc., Co. v. Robinson, '_'■"> Ind. Macon, etc., Co., id Ga. 806, 82 P. K. 
 
 .\ corporation ,(, facto may make k. 208. 
 
 (158)
 
 § 170 PARTICULAR POWERS. 159 
 
 rate powers. 1 But a corporation has no implied power to enter 
 into contracts in aid of purposes other than those for which it 
 was chartered, 2 and the general proposition is that it can enter 
 into such contracts only as are expressly or impliedly author- 
 ized. 3 The fact that a particular contract may be advantageous 
 to the corporation is immaterial. Where a railway company 
 agreed to give a sum of money to aid in defraying the expenses 
 of a musical festival, the agreement was held ultra vires and 
 non-enforcible. The court said: 4 "Such a contract can not be 
 held to bind the corporation by reason of any supposed benefit 
 which it may derive from an increase of passengers over its 
 road upon any grounds that would not hold it equally bound 
 by a contract to partake in or to guarantee the success of any 
 enterprise that might attract population or travel to any city 
 or town upon its line." But a subscription by a hotel com- 
 pany to aid in bringing a military encampment to a town has 
 been held valid. 5 A business corporation may make a valid 
 contract to pay money to secure the location of a postofnce 
 near its place of business. 6 A street railway company may 
 bind itself by a note to aid in establishing a base-ball park 
 where it will increase the traffic on the road. 7 These and many 
 other cases which might be cited illustrate the general propo- 
 sition that a corporate contract to be valid must be within the 
 express or implied charter powers of the corporation. 
 
 § 170. Maimer of acting, — Necessity for a seal. — A corpora- 
 tion necessarily acts through its agents. The powers of the va- 
 rious corporate agents are discussed in another chapter, and it 
 
 Portland, etc., Co. v. East Portland, v. Railway Co., 10 Beav. 1 ; East Ang- 
 
 18 Ore. 21, 6 L. R. A. 290; McKiernan lian R. Co. v. Eastern, etc., R. Co., 11 
 
 v. Lenzer, 56 Cal. 61. C. B. 775; Downing v. Mt. Washing- 
 
 2 Chewacla, etc., Works v. Dis- ton, etc., Co., 40 N. H. 230. 
 
 mukes, 87 Ala. 344, 5 L. R. A. 100; i Davis v. Old Colony R. Co., 131 
 
 Germantown, etc., Co. v. Dhein, 43 Mass. 258; Colman v. Railroad Co., 
 
 Wis. 420. 10 Beav. 1. 
 
 3 Thomas v. Railroad Co., 101 U. S. 5 Richelieu, etc., Co.v. Int., etc., Co., 
 
 71 ; Davis v. Old Colony R. Co., 131 140 111. 249. 
 
 Mass. 258; Pearce v. Railroad Co., 21 6 Green Co. v. Blodgett, 159 111. 169. 
 
 How. (U. S.) 441; Franklin Co. v. "Temple, etc., R. Co. v. Hellnian, 
 
 Lewiston Inst., 68 Me. 43; Cohnan 103 Cal. 634.
 
 160 THE LAW OF PRIVATE CORPORATIONS. § 170 
 
 is only necessary at this time to state that the corporation may, 
 by rules or regulations in the form of by-laws, provide 
 the manner in which its agents shall transact its business. 
 These limitations are binding upon all who deal with the 
 agents, with knowledge of the limitation, but in the absence 
 of such knowledge the agent is conclusively presumed to have 
 the power ordinarily appertaining to agents with such appar- 
 ent authority. It may be taken as the rule that all persons 
 are bound by knowledge of limitations which are contained in 
 the charter or articles of incorporation, although it is difficult 
 to see why an ordinary person is bound to know what is in a 
 charter, granted by a special law, of which even a court will 
 not take judicial notice. 1 
 
 At common law a corporation could only enter into a con- 
 tract by the use of its seal, 2 except in cases of comparatively 
 little importance, such as the hiring of a servant, cook or 
 butler. 3 But this rule was gradually relaxed. Trading com- 
 panies were allowed to accept bills of exchange or execute a 
 promissory note without affixing the corporate seal. 4 It was 
 finally held that although the corporation could only contract 
 under seal, it could, by a resolution not under seal, appoint an 
 agent who could bind the corporation by his acts. 
 
 The question arose in Bank of Columbia v. Patterson, 6 and 
 Mr. Justice Story, after stating the common law rule, said: 
 "The technical doctrine that a corporation could not contract, 
 except under its seal, or in other words, could not make a 
 promise, if it had ever been fully settled, must have been pro- 
 ductive of great mischiefs. Indeed, as soon as the doctrine was 
 blished that its regularly appointed agent could contract in 
 
 their name, without seal, it was impossible to support it, for 
 
 otherwise the party who trusted such contract would be with- 
 out remedy against (lie corporation. Accordingly, it would 
 a to be a sound rule of Law that wherever a corporation is 
 
 1 Ti ed on the maxim of pub- Taniere, 12 <^. B. (Ad. and El. N. S.) 
 
 lie policy thai > of the lata < ■- 998, in 7 Eng. Rul. Caa. 866. 
 
 the charter of a corpora- 'Black. Com., Bk. [, ch. 18,475. 
 
 tion whether under :i general or u *Hornv. I\y, l Modern 18, Plow, 
 
 special act being red a tow. 91 b; Church v. Coke Co., 6 Ad. and 
 
 : 8( . • cited in note to 1 >oe v. El. - s 16. 
 
 »7Cranch (XT. s.) 298.
 
 § 170 PARTICULAR POWERS. 101 
 
 acting within the scope of the legitimate purposes of its in- 
 stitution, all parol contracts made by its authorized agents are 
 express promises of the corporation ; and all duties imposed 
 on them by law, and all benefits conferred at their request, 
 raise implied promises, for the enforcement of which an action 
 will lie." 1 
 
 In modern times a corporation is required to use a seal only 
 when an individual must use one. 2 It is not necessary to the 
 valid appointment of an agent. 3 A power of attorney to confess 
 judgment 4 need not be under seal, nor it seems even for the 
 purpose of conveying or mortgaging real estate of the corpora- 
 tion. 5 A corporation may be bound by the contracts of an agent 
 which are neither authorized nor executed under the corporate 
 seal. 6 As stated by Mr. Justice Story above: A corporation may 
 be bound by an implied contract arising out of the acts of its 
 agent, or from the acceptance of benefits, or from duties imposed 
 by law. 7 The corporation may become liable by acquiescence. 
 "Authority in the agent of a corporation may be inferred from 
 the conduct of its officers, or from their knowledge and neglect 
 to make objections, as well as in the case of individuals." 8 A 
 provision in a statute that every contract of every corporation, 
 by which a liability may be incurred by the company exceed- 
 ing one hundred dollars, shall be in writing and under the seal 
 of the corporation, or signed by some officer of the corporation 
 authorized thereto, applies only to executory contracts. It has 
 
 1 Bank of England v. Moffat, 3 Bro. s Dispatch Line v. Bellamy Mfg. Co., 
 Ch. 262; Rex v. Bank of England, 12 N. H. 205; Fitch v. Steam Mill Co., 
 Dong. 524 and note; Gray v. Portland 80 Maine 34; Cook v. Kuhn, 1 Neb. 
 Bank, 3 Mass. 364; Worcester, etc., 472. But see Garrett v. Belmont Land 
 Co. v. Willard, 5 Mass. 80. Co., 94 Tenn. 459, Wilgus' Cases. 
 
 2 Crawford v. Longstreet, 43 N. J. 6 Fletcher v. U. S. Bank, 8 Wheat. 
 L. 325. 358; Hoag v. Lamont, 60 N. Y. 96. 
 
 3 Bank v. Patterson, supra; Leekins 7 Bank of Columbia v. Patterson, 
 v. Nordyke, etc., Co., 66 Iowa 471 ; supra; Pixley v. West Pac. R. Co., 33 
 Randall v. Van Vechten, 19 John. 60; Cal.183; Tyler v. Trustees, 14 Ore. 485; 
 Goodwin v. Screw Co., 34 N. H. 378; Hayden v. Middlesex T. Co., 10 Mass. 
 Hand v. Coal Co., 143 Pa. St. 408. 397; Gowen, etc., Co. v. Tarrant, 73 
 
 4 Ford v. Hill, 92 Wis. 188, 66 N. W. 111. 608 ; Jones v. Nat., etc., Assn., 94 
 Rep. 115. Pa. St. 215. 
 
 11— Private Corp. 8 Sherman v. Fitch, 98 Mass. 59.
 
 162 THE LAW OF PRIVATE CORPORATIONS. § 171 
 
 no application when the company has received and retains 
 the property. 1 
 
 When a seal is attached it will be presumed to have been at- 
 tached by competent authority. It has been said that a seal 
 conclusively imports a consideration, 2 but the correct rule, as 
 stated by Lord Campbell, is that "although the agreement be 
 under seal we may examine to see whether there was any, and 
 what consideration for the contract to pay money, when we 
 are to determine whether the contract was or was not ultra 
 vires." 3 
 
 A bond, although for the payment of money, may be a nego- 
 tiable instrument although under seal. 4 
 
 §171. Formalities to be observed in contracting. Provis- 
 ions prescribing the manner in which corporations shall do 
 ein act may be either directory or mandatory, depending 
 apon the language of the statute and nature of the require- 
 ment. Mandatory directions as to the mode or form of enter- 
 ing into contracts must be followed. 5 But after a contract 
 made in a different way is executed, and the corporation has 
 received benefits under it, it may be compelled to pay for what 
 it received. 6 
 
 If a person dealing with a corporation has knowledge or 
 is charged with notice that certain formalities are necessary 
 on tin' part of the corporation, and are not being complied 
 with, he may be unable to hold the corporation to the con- 
 tract, 7 but if In- lias no such knowledge, and is not charged 
 
 i Roberta v. Doming, etc., <'<>., Ill Bhip, L10U.S. L62; Topping v. Bick- 
 
 N. c. 132; Pixley v. Wesl Pac. R. ('<>., ford, I Allen | Maes.) 120. 
 
 i. L83; t uitis v. Mining Co., L09 "Pixley v. Weal Pac. R. Co.,38Cal. 
 
 N. c. m i. is:;. 
 
 ■Royal Bank v. Grand Junction R. "Dana v. St. Paul Bank, 4 Minn. 885, 
 
 i is, ( ;ii. 29] ; Leonard v. American ins. 
 
 •Mayor of Norwich v. Norwich R. Co., 97 [nd .299; Head v. Providence 
 
 c, i ii & r.ii; ii ::. [ns.Co.,2 Cranch. (U. B.) 127. Notice 
 
 4 \iu. Nat, Bank v. Am., etc., Co., of restriction annexed to the grant of 
 
 19 i; i L49; Mercer Co. v. Racket, I powers to a corporation ischarged to 
 
 \v : ,n r persons dealing with the corporation. 
 
 ■Head v. Insurance Co., 2 Cranch. Smith v. Cornelius, 41 W. Va. 69, 80 
 
 127; Bissell v. Spring Valley Town- L. R. A. 747.
 
 § 172 PARTICULAR POWERS. 163 
 
 with notice under the circumstances, his rights are not affected 
 thereby. 1 One dealing with a corporate agent apparently hav- 
 ing authority may properly assume, on the principle of right 
 acting, 2 that the agent is acting within the scope of his real 
 authority, that the corporation is acting regularly, and that all 
 formalities and regulations with reference to the internal man- 
 agement and affairs of the corporation have been observed. 3 
 
 § 172. Contracts which are against public policy. — Corpo- 
 rations, like individuals-, are forbidden to enter into contracts 
 or agreements which the policy of the law considers detri- 
 mental to the public interest. Corporations charged with pub- 
 lic duties are subject to restrictions of this nature which are 
 peculiar and which grow out of the nature of the franchises 
 granted them by the state. Their acts may be ultra vires be- 
 cause contrary to established principles of common law, or in 
 violation of express statutes, such as have been enacted in 
 most of the states. 
 
 § 173. Traffic agreements. — It is settled law that agreements 
 or arrangements between railway companies and other common 
 carriers, which have for their object the prevention of competi- 
 tion, are void as against public policy; but this principle does 
 not forbid all traffic arrangements. The «rule is that "a busi- 
 ness or traffic arrangement or contract entered into by a rail- 
 road or other corporation charged with the performance of 
 public duties, which is fairly necessary, incidental, or ancillary 
 to the carrying out of its purposes of incorporation, will be valid 
 (assuming the contract to be entered into in the proper manner) 
 provided the contract is not injurious to the public, (1) by 
 necessarily or potentially rendering the corporation incapable 
 of performing its public duties or enabling it to shirk its pub- 
 lic obligations, or (2) by creating a monopoly in the contract- 
 ing parties through the stifling of competition or in other ways, 
 
 insurance Co. v. McCain, 96 U. S. N. Y. 193; Thomas v. Railroad Co., 
 
 84. 101 IT. S. 71. 
 
 2 Downing v. Mt. Wash. R. Co., 40 s Hackensack Water Co. v. DeKay, 
 
 N. H. 230; Patterson v. Robinson, 116 36 N. J. Eq. 548.
 
 164 THE LAW OF PRIVATE CORPORATIONS. § 174 
 
 or (3) by giving exclusive or unfair advantages to certain in- 
 dividuals over the general public." 1 Subject to these restric- 
 tions, a railroad company may enter into a contract with ship- 
 pers to carry beyond its own lines 8 and provide for dividing 
 rates and freight under such circumstances. 3 The contract 
 must not, however, be of such a nature as to amount to a prac- 
 tical transfer of the franchises of the corporation. 4 
 
 § 174. Pooling arrangements — Contracts to prevent com- 
 petition. — Pooling arrangements between railway companies 
 which have for their object the suspension of competition are, 
 in the absence of express authority, ultra vires and void. 5 It is 
 now settled that contracts of this character are invalid, without 
 reference to the reasonableness of the rates established there- 
 under, 6 although it was held in New Hampshire 7 that a con- 
 tract to prevent competition between railroad companies, but 
 not for the purpose of raising the cost of transportation above 
 reasonable rates, was valid. The court said: "It is equally free 
 from doubt that when such contracts prevent an unhealthy 
 competition and yet furnish the public with adequate facilities 
 at fixed and reasonable rates, they are beneficial and in accord 
 with sound principles of public policy." 
 
 •Taylor Private Corp., § 307. such arrangements, whatever their 
 
 •Railroad Co. v. Pratt, 22 Wallace form, however disguised, are ultra 
 
 i 123. wire* and void." (iivi'ii's Brice I It m 
 
 1 Elkins v. Camden, etc., R. Co., 36 Vires, 339. For construction of a con- 
 
 N. .1. Eq. 241; Btewarl v. Brie, etc., Btitutional prohibition (Tex. Const., 
 
 7 .Minn. 372. Ait. L0, § 5), see G. C, etc., R. Co. v. 
 
 • Ohio, etc., R. Co. v. Indianapolis, State, 72Tex. mi. 
 
 etc., R. Co., 6 \m. Law Reg. N. S. 5 Stewart v. Erie, etc., Co., 17 Minn. 
 
 783. "Corporations may make all 372, Gil. 348; Gulf, etc., R. ('<>. v. 
 
 accessary arrangements for cheaply stair, 7i.' l»x . 104; Hartford, etc., R. 
 
 and expeditiously developing and car- Co. v. New York, etc., R. Co., 3d K<>l>- 
 
 rying on their particular business, but ertson (N. Y.) HI. 
 
 It is another thing logo beyond this, 8 United States v. Freighl Assn., L68 
 
 to enter in to (tracts for instance, by tJ. S. 290. As to the federal statute, 
 
 whirh the exclusive control of their see § 178, infra. 
 
 exclusive righl of working the tine is 7 Railroad ('<>. v. Railroad Co., 66 
 
 handed over to other parties. All N. II. loo.
 
 § 175 PARTICULAR POWERS. 165 
 
 § 175. Contracts granting special privileges. — Public pol- 
 icy forbids common carriers to make contracts by which spe- 
 cial or exclusive privileges are given to one person or class of 
 persons over others. 1 So there must be no undue or unreason- 
 able discrimination between shippers in charges or facilities. 2 
 
 § 176. Trust agreements. — It may now be taken as settled 
 that corporations can not without express authority enter into 
 what have become known as trust agreements. Such contracts, 
 whether made by formal corporate action or by the sharehold- 
 ers assuming to act in their individual capacities, but for the 
 purpose of bringing the control of many corporations under 
 one management, tend to stifle legitimate competition and cre- 
 ate unlawful monopolies. Such contracts are ultra vires, and 
 are also void on grounds of public policy. When a corpora- 
 tion enters into a trust, it is open to attack by the state on the 
 ground (1) that it has attempted to grant away franchises 
 conferred upon it in trust, the transfer being a breach of 
 the implied condition that the particular grantee shall re- 
 tain and execute the trust, and (2) that in making the con- 
 tract, the result of which is the creation of a monopoly, it 
 is guilty of an abuse of its franchises by employing them 
 in the doing of an illegal act. 3 Corporations can be organ- 
 ized only for carrying on a lawful business, and as these 
 combinations are unlawful and tend to create monopolies, the 
 entering into them is sufficient ground for forfeiting the cor- 
 porate charter in proceedings brought by the state for that 
 purpose. 4 Whatever tends to create a monopoly or prevent 
 competition amongst those engaged in business of a public 
 character is illegal. It has been said a private manufacturing 
 corporation stands on the same footing as an individual with 
 
 1 Messenger v. Pennsylvania R. Co., s People v. N. R. Ref. Co., 121 N. Y. 
 37 N. J. Law 531; Chicago, etc., R. 582. 
 
 Co. v. Suffern, 129 111. 274. 4 State v. Standard Oil Co., 49 Ohio 
 
 2 Atchison, etc., R. Co. v. Denver, St. 137; People v. N. R. Ref. Co., 121 
 etc., R. Co., 110 U. S. 667; State v. C. N. Y. 582. See note on monopolies 
 N., etc., R. Co., 47 Ohio St. 130. to People v. Chicago, etc., Co., 8 L. 
 
 R. A. 497.
 
 1GQ 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 177 
 
 respect to its power to enter into contracts to limit production, 1 
 but the better rule would seem to be that the corporation can 
 have its charter taken away for so doing, if the state sees fit to 
 do so. The contract is therefore something more than void, — 
 a violation of the corporate franchise also. 2 In order to forfeit 
 a charter in quo warranto proceedings against the corporation 
 for entering into a trust or illegal combination, it is not neces- 
 sary to show actual public injury, as that will be presumed 
 from the nature of the agreement. 3 
 
 § 177. Illustrations of trust agreements. — A manufacturing 
 corporation formed for the purpose of buying up the plants of 
 practically all other manufactories engaged in the same line 
 for the purpose of pooling them and practically, if not wholly, 
 preventing competition, enhancing prices, and producing a 
 monopoly in a necessary article of food, is an illegal body, and 
 has no standing in a court of equity. 4 Thus, the American 
 Biscuit & Manufacturers Co. was organized as a corporation 
 and issued a few shares to certain persons to qualify them as 
 directors. It then began buying up plants and making pay- 
 ment therefor in its own stock. The defendant sold his bak- 
 ery to the company and gave it possession, but took back a 
 lease and entered into a contract by which he was to act as the 
 agent of the company in conducting the business. He subse- 
 quently dispossessed the company, declared the scheme illegal, 
 and in the litigation resulting it was held that the company 
 had no rights which would be recognized by a court of equity, 
 
 1 Oliver v.Gilmore, 52 Fed. Rep.562. 
 
 'See People v.N. R. Sugar lief. Co., 
 121 N.Y. 682, Wilgus' Cases,— a private 
 sugar manufacturing company, and 
 State v. Standard < >il Co., 49 Ohio St. 
 137, — a private manufacturing com- 
 pany. Tli'- complain! in bol b of these 
 • es way that they had violated their 
 irate franchise in entering into 
 Bach contracts and carrying them out. 
 See al o nexl ection, 177. 
 
 ' in Hilton v. i 6 El. & Bl. 
 
 47, 86, Campbell, C. J., Baid: "I do 
 not think i hat any averment is n< 
 ■ary a i to whal hai been done under 
 It, oi as to an) mi chief which it lias 
 llv produced. We are to con- 
 lider w bal may be done under it , and 
 whal mi ichief may thua arise." 
 
 4 I ii Nat ional, etc., ' k>. v I iuicV . 87 
 
 Fed Rep. L80, the court said ol the 
 
 combination under consideration : "it 
 
 uch a combination 
 
 is illegal and that its purposes are vio- 
 lations of Bound public policy. The 
 common law forbids the organisation 
 
 of such combinations, formed of nu- 
 merous corporations and tinns. They 
 are dangerous to the peace and good 
 
 order of society, and tlicv arroiratc to 
 themselves the exercise of powers de- 
 structive of the rights of free compe- 
 fn ion in the markets of the count r.v, 
 and by their aggregate power and in- 
 fluence imperil the free and pure ad- 
 ministration of justice." Emery v. 
 Candle Co., 47 Ohio St. 820; Santa 
 Clara, etc., Co. v. Haves, 76 Cal. 387, 
 
 and cases cited in the following notes. 
 
 ( 'oinl'inat ion to fix t lie price of coal, 
 
 Bee People v. Sheldon (N. Y.), 34 N. 
 E, Rep. 785. For a general discussion 
 and review of the authorities, 
 Atty. Gen. v. Central R. Co., 50 N. .1. 
 Eq. 62 189, 24 AH. Rep. 984, 25 Ail 
 Rep. '.MU.
 
 § 177 PARTICULAR POWERS. 167 
 
 as, under the guise of a manufacturing company, its real pur- 
 pose was to combine the leading bakeries into a pool or trust. 1 
 Upon the same principle it was held that the Match Trust was 
 invalid. The court refused to enforce the contract made in 
 furtherance of a monopoly in corporate guise, although both 
 sides to the controversy desired that the contract should be 
 deemed valid. The court said : 2 " Large sums of money were 
 used in buying up the various plants, greatly in excess of 
 what they are worth; this was done to stop competition. 
 These sums were called expenses, and were recouped by keep- 
 ing up the prices of matches." So, a contract between a firm 
 and a corporation and others, combining all the harrow-tooth 
 manufactories, for the purpose of monopolizing the trade, was 
 held illegal. 3 The Preserve Trust was held invalid on very 
 broad grounds, the court holding that the corporation had no 
 power to become a member of the trust or to place its property 
 in the hands of trustees with power to purchase and control 
 other plants. 4 In the Whisky Trust cases it was held that a 
 corporation could not sell its entire property in furtherance of 
 a monopoly. 5 A manufacturing corporation, formed for the 
 purpose of providing commodities useful for the sustenance 
 and maintenance of the people, can not without legislative 
 authority delegate to a central body, whether incorporated or 
 not, full control and management of the corporate affairs. 6 A 
 contract between gas companies, fixing prices and pooling 
 profits, and requiring one company not to extend its pipes in 
 certain territory, is contrary to public policy, and void. 7 A 
 
 American, etc., Co. v. Klotz,44 Fed. not only limiting the product, but 
 
 Eep. 721. also by dismantling as many distil- 
 
 2 Richardson v. Buhl, 77 Mich. 632. leries as the trust saw fit, absolutely 
 
 'Strait v. National, etc., Co., 18 N. preventing the manufacture, except 
 
 Y. Sup. 224. in a few controlled by the trust." 
 
 4 American, etc., v. Taylor, etc., Co., Herschl, Consolidation, etc., p. 120. 
 46 Fed. Rep. 152. e p eop le v. N. R. Ref. Co., 121 N. Y. 
 
 5 State v. Nebraska, etc., Co., 29 582. 
 
 Neb. 700; Distilling, etc., Co. v. Peo- 7 Gibbs v. Consolidated, etc., Co., 
 
 pie, 156 111. 448. "The object of the 130 U. S. 396; Chicago, etc., Co. v. 
 
 trust is clearly shown to have been People's, etc., Co., 121 111. 530; Peo- 
 
 illegal, as destroying competition and pie v. Chicago, etc., Co., 130 111. 268. 
 creating a most offensive monopoly,
 
 168 THE LAW OF PRIVATE CORPORATIONS. § 178 
 
 corporation can not legally be organized for the purpose of 
 controlling all other corporations engaged in a certain kind of 
 business in a city. 1 A corporation formed to control the price 
 of milk, or coal, is formed for an illegal purpose, and void. 2 
 But a contract between two water companies for co-operation 
 in supplying water by which one officer of each company is ap- 
 pointed a trustee, the two to have general charge of the opera- 
 tion of the works, keeping account of receipts and expendi- 
 tures, with a limited power of determining what should be 
 charged to account of operating expenses with other powers 
 simply directory, such as could not be discharged by a board 
 of directors, except through an agent, is valid. 3 A combination 
 for the control and prevention of competition in the sale of 
 beer is not void at common law, although in restraint of trade, 
 as beer is not an article of prime necessity, and its sale is 
 closely restricted by public policy. 4 
 
 § 178. Statutes forbidding trust agreements. — Many states 
 have passed statutes forbidding combinations which tend to 
 prevent competition and create monopolies. The act of con- 
 gress of July 2, 1890, 5 makes "every contract, combination 
 in tin- form of trust or otherwise, or conspiracy in restraint of 
 trade or commerce among the several states, or with foreign 
 nations," illegal. The scope of this law was elaborately 
 considered in the Trans-Missouri Freight Association case, 6 and 
 it was held by a divided court that the agreement by which 
 the association was created, although legal when made, was 
 rendered invalid by the statute. " The language of the act, " 
 said the court, " includes every contract, combination in the 
 form of trusl or otherwise, or conspiracy in restraint of trade 
 or commerce among the several states, or with Foreign ua- 
 
 iPeople v. Chicago, etc., Co., L80 » 26 Stat. 209, 0. 647. 
 
 Ill 268 ' I nited States v. Trans-Mo., etc., 
 
 ■People v. Milk, etc., 146 N.Y. 267; Assn., L66 U. 8. 290, Justices White, 
 
 P pie v. 8held 139 N. Y, Field. Gray and Shiras dissenting. 
 
 etc., Co. v. Ban Diego, Bee the elaborate discussions in the 
 
 I ■ i i; \ 339. Circuil < burl of Appeals ( L9 I . E \pp. 
 
 • Anheuser-Bu ch,etc.,Co.v.Houck 86) and in the District Court (63 Feci. 
 
 I, w . Rep. 692. Bui pee Rep. 140), both holding contrary to 
 
 Brewing < 3up.), 29 the supreme court. See, also, United 
 
 Atl. Rep. 102. States v. Pipe Co., 85 Fed. Rep. 271.
 
 § 179 PARTICULAR POWERS. 169 
 
 tions. So far as the very terms of the statute go, they apply 
 to any contract of the nature described. A contract, there- 
 fore, that is in restraint of trade or commerce is, by the strict 
 language of the act, prohibited, even though such contract is 
 entered into between competing common carriers by railroad, 
 and only for the purpose of thereby affecting traffic rates for 
 the transportation of persons and property." All such agree- 
 ments, although their terms may be reasonable, and the rates 
 established reasonable, are thus rendered invalid. It is suffi- 
 cient if the necessary result of the agreement be the restraint 
 of trade. 1 A monopoly in the manufacture of an article is not 
 prohibited by this act. 2 
 
 § 179. Contracts by trusts, — As a general rule a contract 
 made in violation of a statute is void, and when a party can 
 not establish his cause of action without relying upon an ille- 
 gal contract he can not recover. This doctrine has been in- 
 voked to prevent corporations which have entered into trust 
 combinations from recovering on contracts made in aid of 
 the object of the combination. In many states the anti-trust 
 statutes provide that a purchaser of any article from any in- 
 dividual or corporation transacting business contrary to the 
 provisions of the act shall not be liable for the price of the 
 article, and may plead the act as a defense to an action for the 
 purchase price. Where a corporation which was organized 
 for the purpose of regulating the price of milk sold by its 
 members to the dealers in a certain city, brought an action to 
 recover for the value of milk sold to the defendant, it was held 
 that the action was in furtherance of the illegal combination, 
 and the plaintiff could not recover. 4 In another Illinois case 
 
 'For the present law relating to same case in House of Lords; 11 The 
 
 contracts in restraint of trade, see Reports 1 (1S94). The entire subject 
 
 Diamond Match Co. v. Roeber, 106 N. is discussed with great learning by 
 
 Y. 473 ; Matthews v. Associated Press, Lord Justices Bowen, Lindley and 
 
 136 N. Y. 333; National Ben. Co. v. others. 
 
 Union Hospital Co., 45 Minn. 272; ' United States v. Knight, 156 U. S. 1 . 
 Maxim-Nordenfelt, etc., Co. v. Nor- s Ford ^. Chicago, etc., Assn., 155 
 
 denfelt, 2 The Reports 298 (1893), and 111. 166, reversing Chicago, etc., Assn. 
 
 v. Ford, 46 111. App. 576.
 
 170 THE LAW OF PRIVATE CORPORATIONS. § 179 
 
 it appeared that the defendant sold his property to a trust and 
 transferred it by a bill of sale, but remained in possession as 
 an employe for several years. He then repudiated the agree- 
 ment, and took possession of his former property. The trust 
 brought an action of replevin, and obtained judgment in its 
 favor in the lower court, on the theory that the purchase of 
 property by a foreign corporation in pursuance of a plan of 
 monopoly does not prevent the title from passing. 1 This was 
 reversed by the supreme court, 2 which said: "The bill of sale 
 rests under the ban of the law, as well when executed to carry 
 out the illegal agreement as if it had been made for the pur- 
 pose of defrauding creditors. The law will not aid the appel- 
 lee to recover the property, but will leave both it and the ap- 
 pellant where they were when the suit was begun." A some- 
 what different case is presented when it is sought to recover 
 the value of property sold to the trust. Where the plaintiff (a 
 brewing association) sold beer to a firm which was a member 
 of a combination that was prohibited by statute, although not 
 void at common law, the association was allowed to recover. 
 The court said: 3 "The general rule, sustained by the great 
 weight of authority, is to the effect that the buyer is not in a 
 position to resist payment for goods bought by him for an un- 
 lawful purpose, known to the seller at the time of sale, unless 
 it is made to appear that the seller has done something in 
 furtherance of the unlawful act, besides the mere act of selling 
 tin' goods with such knowledge." A corporation which appears 
 to have been chartered in Illinois tor an illegal purpose can en- 
 force a stock subscription in New York, and the defendanl will 
 not be permitted to plead the illegal purpose of its organization. 1 
 
 1 Bishop v. American, etc., Co., 63 payment Bee Hanauer v. Doane, 12 
 
 III. v,.,.. 117. Wall. (U. s > 842. 
 
 * Bishop v. American, etc., Co., i">7 ' Dnited sintcs, etc., <'<>. v. Bchlegel, 
 
 HI I i:: N. Y. .v:7. In National, He, <'-». 
 
 5 Anheoser-Busch, etc., Co. v. Houck v. Quick, 67 Fed. Rep. 130, it was held 
 
 w\ Rep 692. There are thai :i corporation organized tor the 
 
 cases, however, which Ik. hi thai the purpose of securing assignments of all 
 
 mere knowledge of the seller thai the patents relating to spring i".»ili har- 
 
 buyer will make illegal use of the rows, f" '_'':"ii licenses t" tli«' assign- 
 
 i- a, 1 1 deprive him "i the righl to orsto use the patents <>n the payment
 
 180 
 
 PARTICULAR POWERS. 
 
 171 
 
 § 180. Power to indorse and guarantee paper. — Banking 
 and manufacturing corporations have implied power to make 
 negotiable paper for use within the scope of their corporate busi- 
 ness, but not to become indorsers or guarantors for the accom- 
 modation of others. 1 No authority to lend its credit is implied 
 from the mere fact that it may be beneficial to the corporation 
 to do so. But if such paper passes into the hands of a bona 
 fide holder without notice, it may be enforced. 2 So, if all the 
 stockholders consent, an accommodation indorsement may be 
 enforced. 3 
 
 of royalties, to fix and regulate the 
 prices at which the harrows shall be 
 sold, and to take charge of all litiga- 
 tion and prosecute all infringements 
 of such patents, is an illegal combina- 
 tion, and can not maintain a suit 
 against a person who is infringing a 
 patent. 
 
 1 Blake v. Domestic Mfg. Co. (N. J. 
 Ch.),38 Atl. Rep. 241 ; Memphis, etc., 
 Co. v. Memphis, etc., R. Co., 85 Tenn. 
 703, 5 S. W. Rep. 52; Tod v. Ken- 
 tucky, etc., Co., 57 Fed. Rep. 47 ; Nat'l 
 Bank of Republic v. Young, 41 N. J. 
 Eq. 531 ; Nat'l Park Bank v. Ger- 
 man, etc., Co., 116 N. Y. 281; Nat'l 
 Bank v. Wells, 79 N. Y. 498; ^Etna 
 Nat'l Bank v. Charter Oak, etc., Co., 
 50 Conn. 167; Monument Nat'l Bank 
 v. Globe Works, 101 Mass. 57; Davis 
 v. Old Col. R. Co., 131 Mass. 258; 
 Culver v. Reno R. Co., 91 Pa. St. 367; 
 Webster v. Howe, etc., Co., 54 Conn. 
 394; Lucas v. White Line, etc., Co., 
 70 Iowa 541 ; Merchants' Nat'l Bank v. 
 Detroit, etc., Works, 68 Mich. 620; 
 Nat'l Bank v. Atkinson, 55 Fed. Rep. 
 465. A manufacturing corporation 
 has no power to become a negotiator 
 of bonds upon commission. Peck-Wil- 
 liamson, etc., Co. v. Oklahoma Board 
 of Ed. (Okla.), 50 Pac. Rep. 236. In 
 California a corporation may for a val- 
 uable consideration guarantee or as- 
 sume the deot of another corporation. 
 
 Smith v. Ferres, etc., R. Co., 51 Pac. 
 Rep. 710. A guarantee by a brewing 
 company of the payment of rent for a 
 hotel in which its beer is sold is valid. 
 Winterfield v. Cream City, etc., Co., 
 96 Wis. 239, 71 N. W. Rep. 101. 
 
 2 In re Jacoby-Mickolas Co. (Minn.), 
 70 N. W. Rep. 1085; Jacobs Pharmacy 
 Co. v. Southern, etc., Co., 97 Ga. 573, 
 25 S. E. Rep. 171; Farmers' Nat'l 
 Bank v. Suton, etc., Co., 52 Fed. Rep. 
 191 ; Bank of Genesee v. Patohin 
 Bank, 19 N. Y. 312; Nat'l Bank v. 
 Young, 41 N. J. Eq. 531, 7 Atl. Rep. 
 488; Credit Co. v. Howe, etc., Co., 54 
 Conn. 357, 8 Atl. Rep. 472. See 
 Holmes v. Willard, 125 N. Y. 75. Notes 
 given for the obligations of the corpo ■ 
 rate officers are presumptively accom- 
 modation paper and ultra vires. Ger- 
 mania, etc., Co. v. Boynton, 71 Fed. 
 Rep. 797, 19 C. C. A. 118; McLellan 
 v. File Works, 56 Mich. 579. 
 
 3 Martin v. Niagara, etc., Co., 122 N. 
 Y. 165; Barr v. N. Y., etc., R. Co., 
 125 N. Y. 263; Thompson v. Lambert, 
 44 Iowa 239. In Mercantile Trust Co. 
 v. Kiser, 91 Ga. 636, it was held that a 
 sawmill corporation might, with the 
 express consent of all the stockholders, 
 guarantee the interest on the bonds of 
 a railway, the construction of which 
 was necessary to the successful prose- 
 cution of the business of the corpora- 
 tion.
 
 172 THE LAW OF PRIVATE CORPORATIONS. § 1 SO 
 
 Railway corporations are sometimes given express authority 
 to guarantee bonds of other corporations. Power to guarantee 
 such bonds upon such conditions and terms as may be agreed 
 upon includes the power to receive as consideration for such 
 guarantee stock of the company whose bonds are thus guaran- 
 teed. Where a corporation organized under the laws of Ohio 
 for the purpose of making iron work for a, mining plant at- 
 tempted to guarantee the performance of another contract for 
 the erection of a mining plant, it was claimed that the power 
 existed on the ground that the guarantee would secure a sale 
 of the iron work to be used in the plant. The court said that 
 the general rule in this country and in England is that one cor- 
 poration is impliedly prohibited from guaranteeing the con- 
 tract or debt of another, on the ground that such a guarantee 
 exposed the. funds of the company to the risk of a different en- 
 terprise and business under the control of different persons 
 than those which its stockholders, creditors and the state had 
 a right from its charter to expect. 1 But it was hold that 
 under articles of incorporation which provide that the corpora- 
 tion may do all things proper and necessary to carry on the 
 lumber business, the corporation may become a surety on the 
 bonds of building contractors when it appeared that such was 
 the custom among lumber companies. 2 A guarantee may thus 
 sometimes be lawfully made for Hie purpose of carrying out 
 tlje purposes of the corporation. When a railroad corpo- 
 ration has received the bonds of a municipal corporation in 
 paymenl for its stock, it may, in order to sell them, guarantee 
 their payment. 1 A provision thai the articles of incorporation 
 shall stat< the purposes for which it is formed and that it shall 
 not be lawful for it to direct its operations or appropriate its 
 funds i" any other purpose, is for the protection of the public, 
 and does uol operate on the contracts of the corporation sons to 
 prevent it from recovering on a mortgage given to indemnify it 
 
 ■ Humboldt, etc., Co. v. American, •Chicag >, etc., R. Co. v. Howard, 7 
 etc Fed Rep. 867, 10 0. C. Wall. 1 1 B.) 892; Low v. Railway 
 
 ; !., Co., 52 Cal. 58. 
 
 •Wheeler v I etc . Co., 1 1 
 
 Wash P Rep. 316.
 
 § 181 PARTICULAR POWERS. 173 
 
 for guaranteeing the payment of the notes of another corporation, 
 after it has paid such notes. 1 A corporation may indorse paper 
 which it holds for the purpose of negotiating it. 2 The guaranty 
 by a railroad company of the bonds of a connecting road, made 
 under power given by its charter for the purpose of securing 
 valuable business connections, is not a fundamental business 
 change and may therefore be exercised by the board of direct- 
 ors. 3 
 
 § 181. To enter into a partnership. — Corporations gener- 
 ally have no power to enter into a partnership with individu- 
 als or other corporations, or into agreements which may create 
 partnerships. 4 This rule applies with particular force when 
 the business to be conducted by the partnership is ultra vires 
 the corporation. 5 A combination or syndicate formed by five 
 corporations engaged in manufacturing cotton-seed oil, under 
 an agreement by which all the plants were placed in the 
 hands and under the management and control of a committee 
 composed of representatives from each corporation, each cor- 
 poration to share in the profit or loss, was held to be a part- 
 nership, and the agreement invalid. 6 
 
 § 182. To borrow money and make negotiable paper. — A 
 
 corporation has implied power to raise money for purposes 
 properly within the scope of its business. It may, of course, 
 for this purpose issue and sell its stock within the limit allowed 
 by law and may even issue preferred stock in order to more 
 readily find purchasers. It also has implied power to borrow 
 
 1 Butterworth v. Kritzer Mill Co. Mallory v. Oil Works, 86 Tenn. 598; 
 (Mich.), 72 N. W. Rep. 990; Union Marine Bank v. Ogden, 29 111. 248. 
 Nat'l Bank v. Matthews, 98 U. S. 621 ; See French v. Donahue, 29 Minn. Ill; 
 Mclndoe v. St. Louis, 10 Mo. 575. Allen v. Woonsocket Co., 11 R. I. 288. 
 
 2 Bank v. Patchin Bank, 13 N. Y. 5 WMttenton Mills v. Upton, 10 Gray 
 309. (Mass.) 582; Central, etc., Co. v. 
 
 3 Louisville Trust Co. v. Louisville, Smith, 76 Ala. 572; Standard Oil Co. 
 etc., Co., 75 Fed. Rep. 433. v. Scofield, 16 Abb. (N. C.) 372. See 
 
 4 Oscillating Carousal Co. v. McCool Bates v. Coronado Beach Co., 109 Cal. 
 (N. J. Ch.),35 Atl.Rep.585; People v. 160. 
 
 North River, etc., Co., 121 N. Y. 582; 6 Gunn v. Central R.Co.,74 Ga.509.
 
 174 THE LAW OF PRIVATE CORPORATIONS. § 1S2 
 
 money to enable it to carry out its legitimate objects and to exe- 
 cute the ordinary commercial paper involved in such transac- 
 tion. The weight of modern authority supports the conclu- 
 sion that private corporations organized for pecuniary profit 
 may, like individuals, borrow money whenever the nature of 
 their business renders it proper or expedient that they should 
 do so, subject only to such express limitations as are imposed 
 by their charters. The power to borrow carries with it by im- 
 plication, unless restrained by the charter, the power to se- 
 cure the loan by mortgage. It may, therefore, be regarded 
 as settled that, when general authority is given to engage 
 in business and there are no special restraints in its charter, 
 it takes the power as a natural person enjoys it, with all its in- 
 cidents and accessories. It may borrow money to attain its 
 legitimate objects, precisely as an individual, and bind itself 
 by any form of obligation not forbidden. 1 
 
 The power to borrow money is implied from an expressed 
 power to do an act which requires the use of money. Thus a 
 corporation which under a statute may "hold real and per- 
 sonal estate, and may hire, purchase or erect suitable buildings 
 for its accommodations to an amount not exceeding five hundred 
 thousand dollars," may take a lease of land and erect a build- 
 ing thereon and borrow the money necessary for such purpose. 2 
 
 1 Wright v. Boghes, L19 [nd.324; the Dame of the corporation. City, 
 
 ... Kiaranty Co., L01 U. B. 622; etc., R. Co. v. Bank, 62 Ark. 33,3] L. 
 
 Reichwald v. Hotel Co., L06 [11.439; R. A.. 535. 
 
 Booth v. Robinson, 55 Md. 419 ; Hayes ■Bradbury v. Boston Canoe Club, 
 
 . Coal Co., 29 Ohio St. 330; Railroad L63MaBS.77; Davis v. Old Colony R. 
 
 ... Lg Fed. Rep.388; Curtiss Co., 131 Mass. 258. The right of a 
 
 ivitt, L5 N. Y. '.i; Kent v.Quick- building and loan Bociety to execute 
 
 rilver, etc., Co.,78N.Y. 169-, Ward v. negotiable paper is implied from 
 
 Johnson, 95 111. 215; Commissioners v. power to incur debts tor various pur- 
 
 9; Fifth Ward Sav. poses, and to sell and mortgage prop- 
 
 ,.li,-t Nat'l Bank, 48 N.J. La* erty. Gt aee v. Bullivan, 53 U.S. 
 
 In ra Durham County, etc., Soc., App. 359, 81 Fed. Rep. 15, reversing 
 
 l2Eq.616;Kneelandv. Towle v. Am., etc., Co., 78 Fed. Rep. 
 
 Braintree,etc.,R.Oo. 1 167Mass.l61,45 688. Bee note to 43 L. R a. 119, on 
 
 •. | dentandsecre- powerof building iiHHociutioiiH to isi-n« 
 
 .,i : , corporation have no inherent negotiable paper, 
 powi ible notei in
 
 §183 
 
 PARTICULAR POWERS. 
 
 175 
 
 Such power is plainly inferable from a charter limitation upon 
 the amount of the indebtedness. 1 
 
 If the execution of negotiable paper is obviously foreign to 
 the purposes of the corporation all persons are chargeable with 
 notice of the ultra vires character of such paper. But if the 
 business of the corporation is such that it may under some 
 conditions have occasion to execute such paper, and it in fact 
 executes it for a purpose foreign to its purposes, as in payment 
 for property which it had no authority to purchase, the paper is 
 binding in the hands of a bona fide holder for value without 
 notice. The distinction is between a total want of power and 
 an irregular exercise of an unauthorized power. 2 
 
 § 183. Limitations upon the amount of indebtedness. — A 
 
 person dealing with a corporation is charged with notice of its 
 powers as disclosed by the charter or articles of incorporation. 3 
 
 1 Auerbach v. LeSueur, etc., Co., 28 
 Minn. 291. Some earlier decisions show 
 an inclination to restrict this power. 
 Thus, in Bateman v. Mid-Wales Ey. 
 Co., Lower Courts, 1 C. P. 499 (1866), 
 it was held that a railway company, 
 with a limited capital and a limited 
 power of borrowing money, had no 
 power to accept bills. But in Union 
 Bank v. Jacobs, 6 Humph. (Tenn.) 
 515 (1845*, where it was contended 
 that the money paid for capital stock 
 was the only means provided by which 
 to raise money to pay a debt, the court 
 said": "The restriction contended for 
 is too refined and technical. It might 
 have suited the days of the year books, 
 when it was held that a corporation 
 could contract for nothing except un- 
 der its corporate seal ; but it is strange 
 that it should be urged at this day of 
 enlightened jurisprudence, when the 
 substance of things is looked to rather 
 than forms. A corporation is, in the 
 estimation of the law, a body created 
 for special purposes, and there is no 
 good reason why it should not, in the 
 
 execution of these purposes, resort to 
 any means that would be necessary 
 and proper for an individual in exe- 
 cuting the same, unless it be prohibited 
 by the terms of its charter or some 
 published law from so doing. 
 
 "There is no principle which pre- 
 vents a corporation from contracting 
 debts within the scope of its action ; 
 and, as has been observed, if it may 
 contract a debt, .it necessarily may 
 make provision for its payment by 
 drawing, or indorsing, or accepting 
 notes or bills. It is not pretended 
 that this power extends to the draw 
 ing, indorsing or accepting bills or 
 notes generally, and disconnected with 
 the purposes for which the corporation 
 was created." 
 
 2 Monument Nat'l Bank v. Globe 
 Works, 101 Mass. 57; Nat'l Park Bank 
 v.German, etc., Co., 116 N. Y. 281 ; 
 Nat'l Bank v. Young, 41 N. J. Eq.531 ; 
 Jacob's, etc., Co. v. Southern, etc., 
 Co.,97 Ga. 573, 25 S.E. Pep. 171 ; Brad- 
 ley v. Ballard, 55 111. 413. 
 
 3 Pearee v. Madison, etc., R. Co., 21
 
 176 THE LAW OF PRIVATE CORPORATIONS. § 183 
 
 Hence, when the amount of indebtedness which may be in- 
 curred is limited by the charter, one who loans it an amount 
 in excess of the limit, can not recover the excess. If, however, 
 there is no bad faith and the contract is not against public pol- 
 icy, the contract is valid to the limit of indebtedness. With 
 reference to the apparently conflicting authorities, Mr. Justice 
 Mitchell said: 1 "They all fall within one or the other of three 
 classes: (1) Where the act was not in violation of the corn- 
 pan v's charter, but was merely claimed to be in excess of the 
 powers delegated to some inferior agent; or ( "2 ) where the corpo- 
 ration had received and retained the benefits of the transaction; 
 or (3) where the fact that the power of the corporation in that 
 regard had been exhausted depended on the existence of cer- 
 tain extrinsic facts not known to the other contracting party. 2 
 Dicta may be found in a few cases to the effect that limitations 
 like this upon the amount of indebtedness which the corpora- 
 tion can contract are merely directory. But there can be no 
 distinction in principle between a case where the charter or 
 articles of association prohibit a thing altogether, and where it 
 is prohibited beyond a certain limit. In the one case, there is 
 a total absence of authority to do the thing at all, and in the 
 other a total absence of authority to do it beyond a certain 
 limit; and after that limit is reached there is as much an ab- 
 
 <■ of authority in the latter case as there is in the former. 
 
 other rub' would keep corporations in subordination to the 
 state «»r properly protect shareholders, for whose special benefit 
 
 How. 0*. 8 Hi; Davis v. Old ('"1- lias been reached, he ••an recover, 
 ony R. Co., 131 M Fltzhugh Humphrey v. Patrons', etc., Assn., 
 I Co., 81 Tex. 806. 60 towa 607; < tesipee Mfg. Co. v. Can- 
 1 Kranigerv. People's Building Soc., ney,64 N. H.295; Conn. River Sav. 
 • an. 94; Oswald v. Times Print- Bank v. Fiske, 60 N. H. 868. The por- 
 ing Co., 86 Minn. L')i». As to whai son who loans money to the corpora- 
 debts, see Lockharl v. Van A.ls- Hon is affected by notice when bis 
 31 Mich. 76 ; Chase v. Curtis, 113 loan exceeds the charter limitation. 
 i « 152; Leighton v. Campbell, 17 Firs! Nat'l Bank v. Kiefer, 95 Ky. 97. 
 j; | 5i; Childfl v. Boston, etc., Istowhal is included in "indebted- 
 Works, 137 Ma--. 516. " Bee Tradesman's Pub. ('<>. v. 
 * I, loans money to the cor- Knoxville, etc., I !o., 96 Tenn. 684, 81 
 ■ .,m, in Ignorance thai tin- limit I.. R. A.. 693.
 
 § 184 PARTICULAR POWERS. 177 
 
 the limitations, whether self-imposed or imposed by statute, are 
 usually intended." 
 
 § 184. Liability to holder of over-issued negotiable paper. 
 
 Where the charter of a trading corporation provided that " the 
 highest amount of indebtedness or liability to which said cor- 
 poration shall be subject shall not exceed five thousand dol- 
 lars," and the corporation, nevertheless, contracted indebted- 
 ness and gave its promissory notes for a greater amount, it 
 was held that a bona fide purchaser of the paper before ma- 
 turity could recover thereon from the corporation. The court 
 said: 1 " Where a private corporation has authority to issue ne- 
 gotiable securities, such instruments when issued possessed 
 the legal character ordinarily attaching to negotiable paper, 
 and the holder in good faith before maturity and for value 
 may recover, even though in a particular case the power of 
 the corporation was irregularly exercised or was exceeded; or, 
 to state the legal proposition in its application to this case, this 
 defendant having power to incur debts to a limited extent 
 and to issue its negotiable notes therefor, the plaintiff, as a 
 bona fide holder of the note in suit, may recover upon it, al- 
 though in this particular case the indebtedness of the corpo- 
 ration at the time of giving this note already exceeded the 
 limits prescribed by its articles of association. Although, in 
 such a case, the corporation or its officers exceeded the corpo- 
 rate authority, and its contract would be, hence, in a sense ultra 
 vires, yet other legal principles besides those merely relating to 
 the powers of a corporation come in to affect the result." 
 
 A limitation of the indebtedness to an amount equal to one- 
 half of the capital stock of the corporation means one-half of 
 the paid-up capital stock. 2 
 
 1 Auerbach v. LeSueur, etc., Co., 28 ton v. Butler, 14 Wallace (U. S.) 282; 
 
 Minn. 291-296; Stoney v. American, Ossipee Mfg. Co. v. Canney, 54 N. H. 
 
 etc., Co., 11 Paige (N. Y.) 635; Monu- 295; Garrett v. Burlington, etc., Co., 
 
 ment Nat'l Bank v. Globe Works, 101 70 Iowa 697. 
 
 Mass. 57 ; Bissell v. Michigan, etc., R. 2 Appeal of Lehigh, etc., R. Co., 129 
 
 Co., 22 N. Y. 258-289; City of Lexing- Pa. St. 405. 
 
 12 — Private Corp.
 
 ITS THE LAW OF PRIVATE CORPORATIONS. § 1S5 
 
 § 1S5. Power to acquire personal property. — The power to ac- 
 quire real property by purchase or devise has already been 
 considered. 1 The common law placed no limit on the quantity 
 or value of personal property which a corporation might acquire, 
 although, from the nature of the business of the corporation, 
 it might be inferentially prohibited from investing its funds in 
 certain kinds of personal property. The limitation in such 
 cases is upon the power to acquire the particular kind of prop- 
 erty and not upon the power to acquire property. The statutes 
 of mortmain had no application to personal property, and a 
 corporation always had the power to take personal property by 
 bequest. 2 
 
 § 186. Power of alienation. — Independent of positive law, 
 all corporations have the absolute jus disponendi, neither limited 
 as to objects nor circumscribed as to quantity. 3 One of the 
 earliest writers on the law of corporations stated the common 
 law rule to be that all civil corporations, unless expressly re- 
 strained by the act which established them, or by some subse- 
 quent act, have and always have had an unlimited control 
 over their respective properties, and may alienate in fee or 
 make what estates they please, for years, for life, or in tail, as 
 fully as any individual may do with respect to his own prop- 
 erty. 4 When thought desirable, a corporation having no public 
 duties t<> perform may dispose of all its property ami wind up 
 its business. Hence, the directors of a corporation which has 
 been unsuccessfully carrying on the business tor which it was 
 organized may, with the consent of the majority of the stock- 
 holders, validly lease the plant of the corporation to another 
 Corporation carrying on the same business, even though a mi- 
 nority of the Stockholders Object thereto. 5 
 
 '§ 160, et $eq., supra. Stockton, etc., erton, 11 Alien (Mass.) 881; Dupee 
 
 taples, 98 Cal. 189; Nicoll v. New v. Water, etc., <'<>.. mi Mass. :;7; 
 
 !_' N. V 121. Benbo* v. Cook, 115 N.C. 824; Wythe, 
 
 'Sherwood v. American, etc., Soc, etc., Co. v. James, etc., Co., L5 Utah 
 
 > Abb. (N. V.Ct. App.Cas.)231. 110. 
 
 at Com., Vol. II, p !80 7 Eng. • Kyd Corp. (lfll ed , 1793), 107, 
 
 Rul I note; W I v. Bedford, 108; Aurora Society v. Paddock, 80 
 
 - Phila. 94; tagell & 111. 264. 
 
 Ames Corps.,{ 191; Hendee v. rink- 'Bartholomew v. Derby, etc., Co.,
 
 § 187 PARTICULAR POWERS. 179 
 
 § 187. Limitations upon the right of alienation — Corpora- 
 tions charged with public duties. — The general rule that a cor- 
 poration may alienate its property with the same freedom as 
 an individual is subject to the limitation that a corporation 
 charged with duties to the public, and which has received its 
 franchises and privileges from the state in consideration of 
 the assumption and performance of such duties, can not sell 
 or dispose of its franchises or of the property which is essential 
 to the performance of such duties without authority from the 
 state. 1 This rule also restricts the power to mortgage such 
 property, as the execution of a valid mortgage necessarily con- 
 templates a possible if not a present change of title. Upon 
 the same rule of public policy rests the principle that "land 
 which has been appropriated to corporate objects, and is neces- 
 sary for the full enjoyment and exercise of any franchise of 
 the company, whether acquired by a purchase or by exercise 
 of the delegated power of eminent domain," is held exempt 
 from levy or sale. This "on no ground of prerogative or cor- 
 porate immunity, for the company can no more alien or trans- 
 fer such lands by their own act than can a creditor by legal 
 process ; but the exemption rests on the public interests in- 
 volved in the corporation." But the reason for the rule fails 
 when a corporation owns land for other than corporate pur- 
 poses. Hence, lands held for other purposes, and not actually 
 dedicated to corporate uses, may be levied on and sold in the 
 same manner as the lands of any other debtor. 2 A manufact- 
 uring corporation has the right to lease or rent its plant tem- 
 porarily when the purpose is not the abandonment of its fran- 
 chise, but the raising of a fund to enable it thereafter to trans- 
 act its business more profitably. 3 
 
 § 188. Power to give a mortgage. — As a general rule a cor- 
 poration may mortgage the property it holds for corporate 
 
 69 Conn. 521. As to powers of the ma- 130 U. S. 1 ; Pennsylvania R. Co. v. 
 
 jority, see further, § 485. St. Louis, etc., R. Co., 118 U. S. 290. 
 
 1 City, etc., Co. v. State, 88 Tex. 600, 2 Plymouth R. Co. v. Colwell, 39 Pa. 
 
 32 S. W. Rep. 1033; Central, etc., Co. St. 337. 
 
 v. Pullman, etc., Co., 139 U. S. 24; * Plant v. Macon, etc., Co., 103 Ga. 
 
 Oregon R. Co. v. Oregonian R. Co., 666, 30 S. E. Rep. 567.
 
 180 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 18& 
 
 purposes, unless expressly prohibited from doing so. 1 The 
 power may be implied from the power to borrow money 2 or 
 from the power to take and hold real estate and make contracts 8 
 or from power "to acquire, alien, transfer and dispose of prop- 
 erty of every kind." 4 The limitation upon the general rule 
 which forbids corporations charged with public duties to sell 
 or mortgage their franchises or the property which is essential 
 to the performance of such duties has already been stated. 5 
 Under such circumstances, the corporation has no power to 
 mortgage such property or franchises without express author- 
 ity; but a corporation which is authorized to sell its franchises 
 is authorized to mortgage them, as a mortgage is in effect a sale 
 with a power of defeasance which may ultimately end in an 
 absolute transfer of title. 6 It has been held that under the 
 New York statute a manufacturing corporation can mortgage 
 property for the purpose of securing a debt but not to raise 
 money, 7 although this ruling has been considerably limited. 8 
 
 A corporation can not make a valid mortgage upon its future 
 income without express legislative authority under a statute 
 
 1 England v. Dearborn ; 141 Mass.590 ; 
 State v. Rice, c..-) Ala. s:: : Watts Ap- 
 peal, 78 Pa. st. 370; Phillips v. Win- 
 Blow, L8 B. Mon. Ky. 431, 68 Am. 
 1). c. 729; Warfield \. Marshall Co., 72 
 Iowa 666, 2 Am. St. Rep. 263; Lovev. 
 Biera, etc., Co., 32 Cal. 639, 91 Am. 
 Dec. 602; In re Pat. File Co., L. R. 6 
 Ch. App. 83, 7 Eng. Rul. Cas. 668. 
 
 •Wrighl v. Hughes, 119 End. 324, 12 
 Am. St. Rep. H2; Fitch v. Steam Mill 
 30 Me. 34; Lehigh Valley, etc., 
 Co. v. Agricultural Works, 63 Wis. 45; 
 hange Co., I Band! Ch. 
 (N. Y .) 280; < iurtia v. Leavitt, 15 N. 
 Y. 9; Eureka, etc., Works v. Bresna- 
 han, 80 Mich. 832; Reichwald v. Ho- 
 tel Co., 108 ill. 139 i ine ■ Heating 
 Co., rndemni- 
 
 0o., I'" I'. B. 622. 
 ' J Watt* Appeal, .'- Pa Bl 370; in- 
 r.. r a c, v. Paddock, 80 HI 263. 
 
 »Mc Uli ter v. Plant, 54 Miss. 108. 
 
 5 § 18G. Thomas v. Railroad Co., 101 
 I'. S. 71 ; Commonwealth v. Smith, 
 in Allen (Mass.) 448, 87 Am. Dec. 
 672; Lord v. Gas Co., 99 N. Y. 
 547; Carpenter v. Mining Co., (>5 N. 
 Y. 43; Daniels v. Hart, lis Mass. 543; 
 City Water Co. v. state 88 Tex. 600; 
 Bank v. Delaware, etc., Co., 22 N. J. 
 Eq. 130; Pierce v. Emery, 32 N. II. 
 484. Contra: Bhepley v. Railroad Co., 
 55 Maine 395; Bardstown R. Co. v. 
 Metcalf,4 Mete. Ky.) 199,81 Am. Dec. 
 541 ; Bank v. Edgerton, 30 Vt. L82; 
 Kennebec, etc . R. Co. v. Portland, 
 
 etc., I.' CO., 59 Maine 9. 
 
 • Williamette Mfg. Co. v. Bank ol 
 Columbia, 119 D. 8. 191 : Common- 
 wealth v.Smith, 10 Allen I Mass.) 448. 
 
 'Carpenter v. Black Hawk Mfg. 
 Co., 65 N Y. 18. 
 
 ■ Lord v. Yonkers, etc., Co., 99 N. 
 
 ■ 17.
 
 § 189 PARTICULAR POWERS. 181 
 
 which forbids a mortgage of property which may be acquired 
 after the execution of the mortgage. 1 A mortgage given to se- 
 cure money borrowed in excess of the amount allowed by the 
 statute is valid as against subsequent creditors who became 
 such with knowledge of all the facts. 2 A corporation can not 
 contest the validity of an agreement by which another corpo- 
 ration undertook to subject its property to a mortgage executed 
 by the former corporation for the purpose of securing bonds, 
 on the ground that the agreement is ultra vires? 
 
 § 189 Assignment for benefit of creditors. — Preferences. — 
 
 A corporation, when not forbidden by statute, may make an 
 assignment for the benefit of its creditors. 4 As said by one 
 court, 5 " the weight of authority seems to be in favor of the 
 proposition that the board of directors of a corporation, to 
 which the general management of its affairs is committed 
 without particular restriction, may authorize a general assign- 
 ment of the corporate property for the benefit of creditors, 
 when the condition of affairs is such as to reasonably justify 
 such a course, as in the case of insolvency." 
 
 So, by the weight of authority, in the absence of a prohibitive 
 statute, an insolvent corporation may deal with its property 
 in the same manner as an individual, and may, therefore, make 
 an assignment with preferences in favor of certain creditors. 8 
 
 'Lubroline Oil Co. v. Athens Sav. Co., 80 Iowa 380; Bank, etc., v. Potts, 
 
 Bank (Ga.), 30 S. E. Rep. 409. etc., Co., 90 Mich. 345; Boynton v. 
 
 8 Central Trust Co. v. Columbus, etc., Roe (Mich.), 72 N. W. Rep. 257. 
 
 R. Co., 87 Fed. Rep. 815. 5 Tripp v. N.W. Nat'l Bank, 41 Minn. 
 
 3 The Illinois, etc., Bank v. Pacific 400. The directors may make the as- 
 
 R. Co., 115 Cal. 287, 49 Pac. 196. signment without the assent of the 
 
 *ArdeseoCo.v. North American, etc., stockholders. Boynton v. Roe (Mich.), 
 
 Co., 66 Pa. St. 375 ; State v. Bank, etc., 72 N. W. Rep. *257 ; Hutchinson v. 
 
 6 Gil. & J. 206; Shockley v. Fisher, 75 Green, 91 Mo. 367; DeCamp v. Al- 
 
 Mo. 498 ; Fouche v. Brower, 74 Ga. 251 ; ward, 52 Ind. 473. 
 
 Reichwald v. Hotel Co., 106 111. 439; 6 Brown v. Grand Rapids, etc., Co. 
 
 Glover v. Lee, 140 111. 102; Tripp v. (U. S. C. C. App.), 58 Fed. Rep. 286, 
 
 N.W. Nat'l Bank, 41 Minn. 400; Chase 22 L. R. A. 817; Catlin v. Eagle Bank, 
 
 v. Tuttle, 55 Conn. 455 ; Coats v. Don- 6 Conn. 233 ; Gould v. Little Rock, etc., 
 
 nell, 94 N. Y. 168; Lamb v. Cecil, 25 R. Co., 52 Fed. Rep. 680; Ringo v. Bis- 
 
 W. Va. 288; Chamberlain v. Brom- coe, 13 Ark. 563; Bank v. Whittle, 78 
 
 berg, 83 Ala. 576; Rollins v. Carriage Va. 737; Buell v. Buckingham, 16 Iowa
 
 182 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 189 
 
 This rule is generally criticised by text writers, 1 but 
 without much apparent result. Some decisions hold that 
 as the property of an insolvent corporation is a trust fund, 
 held by the corporation for the benefit of all its creditors, it can 
 not be disposed of by way of a preference. 2 The rule has every 
 reason in its favor and has been embodied in the statutes of 
 some states. 3 But, as said by Judge Caldwell, 4 although "a 
 
 284, 85 Am. Dec. 516 ; Warfield v. Mar- 
 shall, etc., Co., 72 Eowa666; Rollins v. 
 Shaver, etc., Co., 80 Iowa 380; Allis v. 
 Jones (Neb.), 45 Fed. Rep. 148; Hen- 
 derson v. Indiana, etc., Co., 143 End. 
 5G1 ; Vail v. Jameson, 41 N. J. Eq.648; 
 Wilkinson v. Bauerle, 41 N. J. Eq. 635 ; 
 Pyles v. Riverside, etc., Co., 30 W.Va. 
 123; San Diego, etc., Co. v. Pacific, 
 etc., Co., 112 Cal. 53, 33 L. R. A. 788; 
 Bank, etc., v. Potts, etc . Co., 90 Mich. 
 846; Haywood v. Lincoln, etc., Co., 64 
 Wis. 639; Glover v. Lee, 140 111. 102; 
 Illinois, etc., Co. v. O'Donnell, 156 111. 
 624, 31 L. R. A. 265; Butler v. Rob- 
 bins Co. ,151 111.588; Union Nat'l Bank 
 v. State Nat'l Bank, 168 111. 256,48 N. 
 E. Rep. 82; Belle v. Grocery Co., 72 
 MisH.o'iD; Alhrrgerv. Hank, 123 Mo. 
 313; Bchofeldl v. Smith, 131 Mo. 280; 
 Sanford, etc., Co. v. Howe, 157 U. S. 
 312; Smith v. Skeaiy, 17 Conn. 17; 
 
 Coats v. Donnell, 94 N. Y. 168. Bee 
 the dissenting opinion by Kellam, J., 
 in Adams A: Westlake Co. v. Deyette 
 (B. Dak.), 65 N. W. Rep. 171. 
 
 'Thompson Corp., g 6493, et seq. 
 Taylor Corp., 668; Morawetz Corp., 
 § 803; Wait Insolvent Corp., § 162. 
 
 'Rouse v. Merchants' Nat'l Bank, 16 
 Ohio St. 193, •"> L. R \. 878; Brown v. 
 Morristown, etc., Co. (Tenn. Ch. 
 App.), 12 S. W. Rep. 161 : Lyon- 
 Thomai II I to. v. Perry, etc., Co., 86 
 i. I ! L l: \. 802, \nn ; 
 
 Thompson v. Lumber Co., I Wash. 
 i [aywood v, Lincoln, etc . Co., 
 m Wis. 889. in Wisconsin a statute 
 
 makes all preferences except for wages 
 void. Ford v. Bank, 87 Wis. 363; 
 Adams, etc., Co. v. Deyette, 8 S. Dak. 
 119; Biddle, etc., Co. v. Steel Co., 16 
 Wash. 681 ; Tradesman's, etc., Co. v. 
 Wheel Co., 95 Tenn. 634; Swepson v. 
 Bank, 9 Lea. (Tenn.) 713. The presi- 
 dent and general manager of a corpo- 
 ration, although having entire charge 
 of its affairs, can not in the absence of 
 special authority transfer its assets 
 after insolvency to one of its creditors 
 so as to give him a preference. Had- 
 den v. Linville (Md.), 38 Atl. Rep. 37; 
 Kankakee, etc., Co. v. Kanipe, 38 Mo. 
 App. 229, (to a director) 5. In a case 
 arising in Ohio, the Supreme court of 
 the I' nit ed States followed the decision 
 in Rouse v. Merchants' Nat'l Hank, 
 supra; Smith, etc., Co. v. McGroarty, 
 136 I'. S. 237. 
 
 'See Throop v. Lithographing Co., 
 125 N. Y.530; Bcotl v. Armstrong. I 16 
 
 V. s. 199; Varnum v. Hart. 119 N. V. 
 101. See French v. AndrewB, 146 N. 
 
 V. III. 1\ S. Rev. St., §5242; Irons v. 
 Ml-. I'.ank, f. I'.iss. (('. V.) 301. Cer- 
 tain statutory preferences are also 
 commonly authorized to clerks, ser- 
 vants, employes, etr. See Lewis \. 
 
 fisher, 80 Md. 189, 26 L. R. A. 278; 
 Palmer v. Van Santvoord, L58 N, Y. 
 612, 88 L. R. A. 402; Boston, etc., Co. 
 v. Mercantile, etc., Co., 82 Md. 586, 
 88 L. R. A. 97, tor construction of 
 such Btatute. 
 
 4 < ioidd v. i.'aiiw ay ( to., 52 Fed. Rep. 
 680, 684.
 
 § 189 PARTICULAR POWERS. 183 
 
 good many courts have, from time to time, inveighed against 
 the rule of the common law which allows a debtor to make 
 preferences among his creditors, the rule is too firmly imbedded 
 in our system of jurisprudence to be overthrown by judicial 
 decision, and it can no more be overthrown by the courts in 
 its application to corporations than to individuals." After 
 quoting the statement: " Both reason and authority establish 
 the proposition that a corporation may sell and transfer its 
 property, and may prefer its creditors, although it is insolvent, 
 unless such conduct is prohibited by law," 1 the court contin- 
 ued: 2 "We think this is a correct statement of the rule, 
 and that it can only be abrogated by legislation." When 
 preferences are allowed, a stockholder who is a bona fide creditor 
 maybe preferred. 3 But a director stands in a trust relation 
 to the stockholders and, after insolvency, to the creditors of 
 the corporation. The better rule would seem to be that an 
 insolvent corporation can not prefer a director or managing 
 agent, 4 although there are decisions to the effect that a director 
 who is a bona fide creditor may be preferred. 5 
 
 1 Wilkinson v. Bauerle, 41 N. J. Eq. has befallen or threatens the enter- 
 
 635. prise, shall be permitted to convert 
 
 'Gould v. Little Rock, etc., R. Co., their powers of management and their 
 
 52 Fed. Rep. 680. intimate and may be exclusive knowl- 
 
 8 Reichwald v. Com., etc., Co., 106 edge of the corporate affairs into means 
 
 111. 439; Lexington, etc., Co. v. Page, of self-protection, to the harm of other 
 
 17 B. Mon. (Ky.) 416, 66 Am. Dec. creditors." Seeds, etc., Co. v. Heyn, 
 
 165. etc., Co. (Neb.), 77 N. W. Rep. 660; 
 
 4 01ney v. Conanicut Land Co., 16 Hill v. Pioneer, etc., Co., 113 N. C. 
 R. I. 597, 5 L. R. A. 361 ; Consol.Tank 173, 21 L. R. A. 560. 
 Line v. Kansas City, etc., Co., 45 Fed. 5 Planters' Bank v. "Whittle, 78 Va. 
 Rep. 7; Hays v. Citizens' Bank, 51 737; Schufeldt v. Smith, 131 Mo. 280, 
 Kan. 535; Smith v. Putnam, 61 N. H. 29 L. R.A.830; Buell v. Buckingham, 16 
 632 ; Corey v. Wadsworth, 99 Ala. 68, Iowa 284, 85 Am. Dec.516 ; South Bend, 
 23 L. R. A. 618; Lyon, etc., Co. v. etc., Co. v. Cribb Co. (Wis.), 72 N.W. 
 Perry, etc., Co. (Tex.), 22 L. R. A. Rep. 749; Bank of Montreal v. Potte, 
 802, Ann. In Howe, etc., Co. v. San- etc., Co., 90 Mich. 345. In Brown 
 ford, etc., Co., 44 Fed. Rep. 231, the v. Grand Rapids, etc., Co. (C. C. 
 court said: "It seems to me enough to App.), 22 L. R. A. 817, 58 Fed. 
 say that a sound public policy and a Rep. 286, Judge Taft said: "All 
 sense of common fairness forbids that the decisions of the supreme court of 
 the directors or managing agents of a the United States relied on and re- 
 business corporation, when disaster ferred to as sustaining the view that
 
 184 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 190 
 
 An assignment by a corporation for the benefit of its credit- 
 ors is not invalidated by the preference of the claim of a bank- 
 ing corporation, of which one of the directors of the insolvent 
 corporation is president, director, and a large stockholder, 
 when it was approved by the unanimous vote of the stockhold- 
 ers and directors of the corporation. The assignment was made 
 in good faith, without fraud, in fact. 1 So, a preference may be 
 given to a creditor whose notes are guaranteed by its directors. 2 
 
 § 190. Power to hold stock in another corporation, — As a 
 
 general rule it may be stated that a corporation can not pur- 
 chase, hold, or deal in the stock of other corporations without ex- 
 press or implied authority so to do. 8 The power may, however, 
 arise by implication, and may, therefore, be exercised when 
 
 the bona fide debt of a director of a 
 corporation may not lie paid in pref- 
 erence to the debt of some other cred- 
 itor an- cases « here the directors were 
 guilty of fraud in procuring the pay- 
 ment of their own debts by fraudulent 
 wasting of the assets to accomplish the 
 preference. Such were the cases of 
 Drury v. Milwaukee, etc., R. Co., 7 
 Wall. 299; Koehler v. Black River, 
 Co., 2 Black. 715; Jackson v. 
 Ludeling, 21 Wall. 616." The fact 
 that the creditor is related to one or 
 more of the directors or officers will 
 not prevent the giving of a valid se- 
 curity as a preference to such creditor. 
 Blair v. 111., etc., Co., 159 III. 350, 31 
 L. i:. \. 
 1 Colorado Fuel, etc., Co.\ .Western, 
 Co. ^1 tah . 50 Pac. i 
 distinguishing Button Mfg. Co. v. 
 Hutchinson, 63 Fed. Rep. 196, 24 (J. 
 \ pp. 1 l"» ; Haywood v. Lincoln, 
 
 etc., Co . 64 Wis. 639. 
 
 ■ Blair v. Ill , etc., Co., 159 01. 8 K), 
 81 l. i: \ 
 
 * People v. ( Ihicago, etc., Co., 180 
 III. 268, 17 Am Bt. Rep. 819; Frank- 
 tin Co. v. Lewiston Bav. Inst., 68 
 Maine i:;; Franklin Bank v. Com- 
 
 mercial Bank, 36 Ohio St. 350; Peo- 
 ple v. Pullman, etc., Co., 175 111. 126; 
 Milbank v. Railway Co., 64 How. Pr. 
 (N. Y.) 320; Nassau Bank v. Jones, 
 95 N. Y. 115; Pearson v. Concord, 
 etc., Co., 62 N. H. 537; Oregon, etc., 
 R. Co. v. Oregonian, etc., Co., 130 U. 
 S. 1 ; Valley, etc., R. Co. v. Lake Erie, 
 etc., Co., 46 Ohio St. 14; Central, etc., 
 R. Co. v Penn., etc., R. Co., 31 N. J. 
 Eq. 475; Byrnes v.Mfg Co. ,65 Conn. 
 365, 28 L. R. A. 304; Denny, etc., Co. 
 v. Bchram, 6 Wash. 134, 36 Am. St. 
 Rep. L30j Marble Co. v. Harvey, 92 
 Tenn. 115; Knowles v. Sandersock, 
 107 Cal. 629; Easun v. Buckeye Co., 
 51 Fed. Rep. 156. In Farmers' Loan 
 and Trust v. New York, etc., R. Co., 
 150 N. V. II". 34 L. !;. A. 76, it was 
 held that the statutory right of a cor- 
 poration to purchase the stock of an- 
 other company does not give the right, 
 as the ow ncr of a majority of the stock 
 and bonds of the company, h> so man- 
 its affairs as to cause b default on 
 a mortgage, and thus obtain control of 
 the property by a foreclosure at less 
 than its value, to the del riment of min- 
 oi itj stockholders. Bee De La Vergne, 
 etc., Co. v. I .'i man, <-\r., i oat . (TJ. S. 
 B. Ct.i, 19 Nat. Corp. I.. Rep. 542.
 
 § 190 PARTICULAR TOWERS. 185 
 
 necessary to the exercise of its granted powers, or when rea- 
 sonably necessary in order to carry out the objects of the cor- 
 poration. If one corporation could purchase and hold the 
 stock of another it could thus control the business of the latter 
 corporation, and indirectly engage in a business, and thus 
 exercise powers not granted or contemplated by its own 
 charter. A contract by a railroad corporation to purchase 
 shares in another such corporation for the purpose of obtaining 
 control and thus preventing competition between the two is 
 ultra vires and illegal. 1 Where one gas company purchased 
 stock of another, the court said : 2 "Where a charter in ex- 
 press terms confers upon a corporation the power to maintain 
 and operate works for the manufacture and sale of gas, it is 
 not a necessary implication therefrom that the power to pur- 
 chase stock in other gas companies should also exist. There 
 is no necessary connection between manufacturing gas and 
 buying stocks. * * * It is true that a gas company might 
 take the stock of another company in payment of a debt, or 
 perhaps as security for a debt, but the actual purchase of such 
 stock is not directly and immediately appropriate to the exe- 
 cution of a specifically granted power to operate gas-works and 
 manufacture gas. Some corporations, like insurance com- 
 panies, may find it necessary to keep funds on hand for the' 
 payment of losses by death or fire, or to meet other neces- 
 sary demands ; but it is questionable whether they can invest 
 their surplus funds in the stocks of other corporations without 
 special legislative authority. * * * If, then, the power to 
 purchase outside stocks can not be implied from the power to 
 operate gas-works and make and sell gas, a company to which 
 the latter power has been expressly granted can not exercise 
 the former without legislative authority to do so. This is the 
 law as settled by the great weight of authority." Corporations 
 whose business it is to loan money may take stock in other 
 corporations as collateral, and in the process of realizing on 
 
 1 Central, etc., Co. v. Cullen, 40 Ga. 2 People v. Chicago, etc., Co., 130 
 582; Pearson v. Concord, etc., R. Co., 111. 2G8. 
 62 N. H. 537.
 
 lSt", THE LAW OF PRIVATE CORPORATIONS. §191 
 
 the security, become the owner of the stock. 1 The general 
 rule above stated, is subject to the exception that one corpora- 
 tion may acquire the shares of another when necessary to 
 secure the payment of a debt, 2 although it may be expressly 
 forbidden to purchase such stock. 8 So, the application of the 
 rule is sometimes limited by the doctrine of estoppel. It is 
 thus held that the objection that the purchase by a corporation 
 of the stock of another corporation is ultra vires, can not be 
 raised by the stockholders of the corporation whose stock is thus 
 purchased. 4 But, in the United States courts, a corporation 
 which unlawfully purchases stock in another corporation may, 
 under all circumstances, assert the ultra vires character of 
 the transaction. 5 
 
 § 191. Exceptions to the general rule. — In some states 6 
 and in England, 7 it is held that a corporation has implied 
 power to purchase and hold the stock of another corporation. 
 So, in man}'' cases, the authority is expressly conferred, 8 while 
 in others it is implied, from the express grant of power. 
 Tli us, the power to acquire stock in another corporation may 
 be implied from authority to consolidate with such corpora- 
 tion. 9 A banking corporation with authority to "discount 
 bills, notes and other securities," may purchase stock in 
 another corporation. 10 A corporation may be formed for the 
 purpose of dealing in bonds and stocks. 11 In some states it is 
 
 1 Firal Nat'l Bank v. Nat'l Exchange 782; Booth v. Robinson, . r >:> Md. 419; 
 
 Bank, 92 U. 8. 122. Bee In re Asiatic Hill v. Nisbet, LOOInd. 341; Evansv. 
 
 Banking Corp., L. I:. Ml.. App.252. Bailey, 66 Cal. 112. 
 
 'Howe v. Boston, etc., Co., L6 Gray 7 In're Asiatic Banking Corp., L. R. 
 
 (Mass. 193. lCh.App.252; hi re Barned's Bank- 
 
 • Holmes, etc., Co. v. Holmes, 127 ingCo., I.. R. 3 Ch. A.pp. 106. 
 
 I". - 262. h Minn. Gen. St. L894, § 2834, con- 
 
 'Kennedy v. Cal. Bav. Bank, i"l Btrued in Cowling v. Zenith Iron Co., 
 
 Cal. 196 Revei ed in 167 d. 8. 162, 65 Minn. 263, 83 L. R. A. 508. 
 
 grounds do! affectng this proposi- 'Louisville, etc., Co v. Louisville, 
 
 etc., R. Co., 75 Fed. Rep. 433. 
 
 ■ ilifornia Bank v. Kennedy, 167 l0 Latimer v. Citizens' State Bank, 
 
 i 102 towa 161, 71 N. W. Rep. 225. 
 
 tows Lumber Co. v. Foster, 19 "MarketSt. R. Co. v. Hellman, 109 
 
 25 : ' !alumet Paper < fc>. \ . Statts' Cal. 57 1 , 
 In- l iwa i 17, 64 V W. Rep.
 
 §191 
 
 PARTICULAR POWERS. 
 
 18? 
 
 held that a purely private corporation, owing no duties to the 
 public may, when necessary to make an advantageous sale of 
 its property, sell the same to another corporation and take its 
 stock in payment therefor. 1 In all cases a corporation may 
 take the stock of another corporation for the purpose of secur- 
 ing payment of an existing indebtedness. 2 And it may acquire 
 title to stock in another corporation by levying on the same 
 and selling it under execution to satisfy a judgment against 
 the corporation. 3 For the purpose of retiring from business, 
 a corporation may sell the entire property of the corporation 
 and take payment in the shares of a new corporation and dis- 
 tribute them among the stockholders of the old corporation. 4 
 The implied power to wind up the business and make a sale of 
 the property will probably authorize a sale for stock in another 
 corporation. 5 As to an agreement whereby a corporation is to 
 abandon its manufacturing business and restrict itself to the 
 holding of the stock of another corporation by which it was to 
 be carried on, the court said: 6 " The avowed object was to 
 
 1 Holmes & Co. v. Holmes, etc., Co., 
 127 N. Y. 252. 
 
 * Talmage v. Pell, 7 N. Y. 328 ; First 
 Nat'l Bank v. Exchange Nat'l Bank, 
 92 U. S. 122; McCutcheon v. Merz, 
 etc., Co., 71 Fed. Rep. 787; Howe v. 
 Carpet Co., 16 Gray 493; Hodges v. 
 Screw Co., 1 R. I. 312, 53 Am. Dec. 
 624; Kennedy v. Bank, 101 Cal. 495; 
 Knowles v. Sandercock, 107 Cal. 629. 
 
 8 Memphis, etc., R. Co. v. Wood, 88 
 Ala. 630; National Bank v. Case, 99 
 XJ. S. 628; Holmes & Co. v. Holmes, 
 etc., Co., 127 N. Y. 252. "A corpora- 
 tion having power to dispose of its 
 property may also, as an incident to 
 the exercise of this power, in some 
 instances at least, determine what 
 shall be accepted in payment, and 
 may be justified in accepting the stock 
 of another corporation for distribution 
 among the stockholders of the first 
 
 corporation according to their respec- 
 tive interests." Note to Denny, etc., 
 Co. v. Schram, 36 Am. St. Rep. 140, 
 citing Treadwell v. Salsbury, etc., Co., 
 7 Gray 393, 405, 66 Am. Dec. 490; 
 Hodges v. New England, etc., Co., 1 
 R. I. 312, 347, 53 Am. Dec. 624. See 
 Evans v. Bailey, 66 Cal. 112 ; Ryan v. 
 Leavenworth, 21 Kan. 365. 
 
 4 Treadwell v. Mfg. Co., 7 Gray 
 (Mass.") 393. 
 
 5 Holmes & Co. v. Holmes, etc., Co., 
 127 N. Y. 252; McCutcheon v. Merz, 
 etc., Co., 71 Fed. Rep. 793. 
 
 6 McCutcheon v. Merz, etc., Co., 
 supra; Central Trans. Co. v. Pullman, 
 etc., Co., 139 U. S. 24, 11 Sup. Ct. 478; 
 Thomas v. Railway Co., 101 U. S. 71 ; 
 People v. North River, etc., Co., li'l 
 N. Y. 582, 24 N. E. Rep. 834; Mallory 
 v. Oil Works, 86 Tenn. 598, 8 S. W 
 Rep. 396.
 
 1S8 THE LAW OF PRIVATE CORPORATIONS. § 192 
 
 continue corporate life and activity through the instrumentality 
 of another corporation. There was to be a corporation within 
 a corporation. Individual activity was to cease, but corporate 
 energy was to be exercised through a living corporation, whose 
 life and functions were to be controlled through the shares 
 held by its corporate creator and master. Forbidden to exer- 
 cise the very functions for which the breath of corporate life 
 had been breathed into it, by the state, there would remain 
 standing only the shell of the corporation, retaining corporate 
 existence only for the purpose of controlling and directing the 
 new corporation, in which was invested its corporate capital, 
 and to receive and distribute its aliquot proportion of those 
 dividends as earnings among its own shareholders. The 
 effect of this action of the appellee was to divest itself of the 
 power to exercise the essential and vital elements of its fran- 
 chise, by a renunciation of the right to engage directly and 
 individually in the very business which it was organized to 
 carry on, and is a disregard of the conditions upon which its 
 corporate existence was conferred. The state is presumed to 
 grant corporate franchises in the public interest, and to intend 
 that they shall be exercised through the proper officers and 
 ucies of the corporation and does not contemplate that cor- 
 porate powers will be delegated to others. Any conduct which 
 destroys their functions, or maims or cripples their separate 
 activity, by taking away the right to freely and independently 
 exercise the functions of their franchise, is contrary to a sound 
 public policy." 
 
 § 192. Purchase of its own shares. — There is a conflict 
 o\ authority as to whether a corporation. has implied authority 
 
 t,, purchase and hold its own BtOck. The law is settled in 
 
 England that a corporation can not, purchase shares of its own 
 L, 1 and the rule in the United States is that such a pur- 
 chase is ultra vires at least when the effect is to reduce the capi- 
 
 'Trevor v. Whitworth, !-. B. 12 5 Oh. App. Cas. 444 ; Hope v. Interna- 
 App I >; Znlueta's Claim, L. R. tional, etc., Soc, L. R. 4 Ch. Div. 827.
 
 § 192 
 
 PARTICULAR POWERS. 
 
 189 
 
 tal stock, and thus diminish the security of creditors. 1 The 
 funds of an insolvent corporation certainly can not be used to 
 purchase a portion of its capital stock, as it would be inequi- 
 table to the other stockholders and a fraud upon the creditors. 2 
 The fact that creditors did not know of the transaction when 
 their debts were incurred is immaterial. 3 The general rule 
 and its exceptions are thus stated by the supreme court of 
 Ohio: 4 "The doctrine that corporations, when not prohibited 
 by their charter, may buy and sell their own stock, is sup- 
 ported by a line of authorities; but nevertheless we think 
 the decided weight of authority, both in England and in the 
 United States, is against the existence of the power, unless 
 conferred by express grant or clear implication. * 
 
 It is true, however, that in most jurisdictions, where the right 
 of a corporation to traffic in its own stock has been denied, 
 an exception to the rule has been admitted to exist, whereby 
 a corporation has been allowed to take its own stock in satis- 
 faction of a debt due to it. 5 This exception is supposed to 
 
 1 Augsburg, etc., Co. v. Pepper, 95 
 Va. 92, 27 S. E. Rep. 807. Such a pur- 
 chase does not necessarily reduce the 
 capital stock. _ It may be held by the 
 corporation and reissued. State v. 
 Smith, 48 Vt. 266; State Bank v. Fox, 
 3 Blatch. C. C.431 ; Vail v. Hamilton, 
 85 N. Y. 4~>3 ; American, etc., Co. v. 
 Haven, 101 Mass. 398; Dupee v. Bos- 
 ton, etc., Co., 114 Mass. 37. In Lowe 
 v. Pioneer, etc., Co., 70 Fed. Rep. 646, 
 Nelson, J., said: "It is a mooted 
 question in this country as to whether 
 a corporation may purchase shares of 
 its own stock; many states forbid it. 
 In the absence of a charter prohibi- 
 tion, or a statute forbidding it, there 
 is no reason why the stock should not 
 be purchased, at least with the profits 
 derived from the business of the cor- 
 poration, where all the stockholders 
 assent thereto. The tendency of the 
 decisions in the state of Minnesota is 
 on this line. See State v. Minn., etc., 
 Co., 40 Minn. 227." 
 
 2 Currier v. Lebanon, etc., Co., 56 
 N. H. 262 ; Alexander v. Rolfe, 74 Mo. 
 495; Adams, etc., Co. v. Dyette, 5 S. 
 Dak. 418; Crandall v. Lincoln, 52 
 Conn. 73; In re Columbian Bank, 147 
 Pa. 422, 23 Atl. Rep. 626 ; Commercial, 
 Nat'l Bank v. Burch, 141 111. 519, 31 N. 
 E. Rep. 420. The receiver of an in- 
 solvent coi-poration may recover from 
 a stockholder whose stock has been 
 purchased by the corporation. Farns- 
 worth v. Robbins, 36 Minn. 369; State 
 v. Oberlin, etc., Assn., 35 Ohio St. 258 ; 
 Price v. Coal Co. (Ky.), 32 S. W. Rep. 
 267. 
 
 3 Commercial Nat'l Bank v. Burch, 
 141 111. 519. 
 
 4 Coppin v. Greenless, 38 Ohio St. 
 275. 
 
 5 Taylor v. Exporting Co., 6 Ohio 
 177; Coppin v. Greenless, 38 Ohio St. 
 273; Ex parte Holmes, 5 Cow. (N.Y.) 
 426; State v. Smith, 48 Vt. 266; Will- 
 iams v. Mfg. Co., 3 Wd. Ch. 418 ; First 
 Nat'l Bank v. Exchange Nat'l Bank.
 
 190 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §193 
 
 rest upon a necessity which arises in order to avoid loss." 
 So, in a case where a corporation in failing circumstances 
 borrowed money with which to purchase its own shares, the 
 court said: 1 "If a corporation, to the injury of creditors, can 
 borrow money for the purchase of one share of its stock, or 
 the stock held by one member, it can borrow money with 
 which to purchase the shares of all its members, and thus de- 
 stroy its very existence, as no corporation like the defendant 
 can have an existence in this jurisdiction without stock and 
 without stockholders. The doctrine is well established that a 
 purchase of shares in itself by a corporation is against public 
 policy and ultra vires, whenever such purchase diminishes its 
 ability to pay its debts, or lessens the security of its cred- 
 itors." 2 
 
 § 193. When a corporation may hold its own shares. — The 
 
 weight of American authority seems to be in favor of the view 
 that the act of purchasing its own shares of stock is not in it- 
 
 92 T. S. 122; City Bank v. Bruce, 17 
 N. V. 507; Verplanck v. Mercantile, 
 etc., Co., 1 Edw. Cli. (N.Y.) 84. May 
 accept its own stock as a gift, Lake 
 Superior, etc., Co. v. Drexel, 90 N. Y. 
 ST. 
 
 1 Adams, etc, ('". v. Dyette, 6 6. 
 I> :1 1<. lis, 59 N. W. He].. 21 1, 65 X. W. 
 Rep. 171. 
 
 2 < rermau Sav. Bani v. Wulfekuhler, 
 
 \'.i Kan. 'in; dill v. Balis, 72 Mo. 42 1 ; 
 
 Barton v. Plank, etc., ('<>., 17 Barb. 
 
 Clapp \. Peterson, h'l 111. 26; 
 
 Btate v. < tberlin, etc., Assn., •':•"> < >hio 
 
 Ibeles v. Cochran, 22 Kan. 
 
 105 ■linn. v. T. M. Co., 40 
 
 Minn. 21 rohnson v. Bush, S 
 
 . (!,. 207; Morawetz I, $112, el 
 
 ling 1 16S ; Beach 1 1. 
 
 Brice Ultra Vires (26 im. 
 
 !,. 19. Mr. Taylor 
 
 (§ 1, regard to the power 
 
 ,,i :i ,-,,i poration to purchase it- own 
 
 !-!■ .■■•- , there is a difference "i opinion. 
 
 The English decisions seem unani- 
 mously to negative the possession of 
 this power by the corporation ; and 
 Mr. Brice's proposition — 'Corpora- 
 tions can not, whatever the nature of 
 their business, without an express and 
 vnv clear power in that behalf, deal 
 
 in theirown shares'— may be regarded 
 as expressing somewhat vaguely, and 
 from bis use of the word 'deal,' the 
 
 English law on the Subject. In Amer- 
 ica, on the other hand, the weighl of 
 
 authority clearly indicates that there 
 is nothing in itself illegal or ultra vires 
 in the purchase of its own shares by 
 
 a corporation; and that whether the 
 
 purchase is valid depends on the con- 
 dition of the corporate affairs, the 
 
 purpose for which the purchase was 
 
 made Cor the Bhares received l>\ the 
 corporation ) and on 1 he relations to 
 the corporation of the persons ques- 
 tioning the validity of the transao- 
 1 ions."
 
 §193 
 
 PARTICULAR TOWERS. 
 
 191 
 
 self illegal, but that the validity of the particular transaction 
 depends upon the condition of the corporate affairs, and the 
 purpose for which the purchase was made. 1 It is held in some 
 states that a corporation may purchase its own shares on con- 
 dition that it is solvent and that the effect of the transaction 
 is not to reduce its actual assets below its capital stock. 2 The 
 purchase must not be made "at such time and in such manner 
 as to take away the security upon which the creditors of the cor- 
 poration have the right to rely for the payment of their claim, 
 or, in other words, so as not to diminish the fund created for 
 their benefit. Each case must therefore depend upon and be 
 determined by its own facts and circumstances." 3 As said by 
 Mr. Cook, 4 "If there is no statutory liability on the stock, and 
 if stockholders do not object, there is no reason why the net 
 profits of the corporation should not be applied to the pur- 
 chase of stock instead of being used for dividends." 
 
 A corporation organized to deal in jewelry without any lim- 
 itations as to what it may take in payment for its goods, may 
 take payment in its own stock. 5 When shares are legally pur- 
 
 1 Dupee v. Boston, etc., Co., 114 
 Mass. 37 
 
 2 Leland v. Hayden, 102 Mass. 542, 
 551; American, etc., Co. v. Haven, 
 101 Mass. 398; Dupee v. Boston, etc., 
 Co., 114 Mass. 37; Chicago, etc., Co. 
 v. Marsailles, 84 111. 145, 643; Iowa, 
 etc., Co. v. Foster, 49 Iowa 25. Sub- 
 sequent creditors can not complain. 
 Rollins v. Shaver Co., 80 Iowa 380; 
 Taylor v. Miami, etc., Co., 6 Ohio 176 ; 
 Bank v. Champlain, etc., Co., 18 Vt. 
 131 ; Pierce Railroads, 505. See Hol- 
 liday v. Elliott, 8 Ore. 84; Preston v. 
 Grand, etc., Co., 11 Sim. 327. In a 
 late case, First Nat'l Bank v. Salem, 
 etc., Co., 39 Fed. Rep. 89, Deady, J., 
 said: "The rule appears to be well 
 settled that a corporation may, unless 
 prohibited by statute, purchase its 
 own stock or take it in pledge or mort- 
 gage." Citing City Bank v. Bruce, 17 
 N. Y. 507 ; Taylor v. Exporting Co., 6 
 Ohio 177; In re Ins. Co., 3 Biss. 452; 
 
 Bank v. Transportation Co., 18 Vt. 138 ; 
 Dupee v. Boston, etc., Co., 114 Mass. 
 37. In Clapp v. Peterson, 104 111. 26, 
 the rule was so laid down, with the 
 qualification "that such act is had in 
 entire good faith, is an exchange of 
 equal value and is free from all fraud." 
 The purchase of shares of its own stock 
 by a corporation having power to do 
 so does not operate as a reduction of 
 its capital stock where the power to 
 reduce its stock was not reserved. 
 Western, etc., Co. v. Des Moines Natl 
 Bank, 103 Iowa 455, 72 N.W. Rep. 657 ; 
 Shoemaker v. Washburn, etc., Co., 97 
 Wis. 585, 73 N. W. Rep. 333. 
 
 3 Fraser v. Ritchie, 8 Brad. (111.) 
 554; Vail v. Hamilton, 8-5 N. Y. 4V 1 .; 
 Iowa, etc., Co. v. Foster, 49 Iowa 25; 
 Dock v. Cordage Co., 167 Pa. St. 370. 
 
 4 Corps., §311. 
 
 5 White v. Marquardt (Iowa), 70 N. 
 W. Rep. 193, 74 N. W. Rep. 930.
 
 192 THE LAW OF PRIVATE CORPORATIONS. § 194 
 
 chased by the corporation, they may be reissued. 1 Unissued 
 stock may, by agreement of all the stockholders, where there 
 are no debts, be paid for with the money of the corporation, 
 and issued to one of the stockholders as a trustee for all. 2 
 
 § 194. Powers of national banks. — The Revised Statutes of 
 the United States 3 provide that "no association shall make any 
 loan or discount on the security of the shares of its own capi- 
 tal stock, nor be the purchaser or holder of any such shares, 
 unless such security or purchase shall be necessary to prevent 
 loss upon a debt previously contracted in good faith; and stock 
 so purchased or acquired shall, within six months from the 
 time of its purchase, be sold or disposed of at public or private 
 sale; or, in default thereof, a receiver may be appointed to 
 close up the business of the association." While this section 
 in terms prohibits a banking association from making a loan 
 on security of shares of its own stock, it imposes no penalty 
 either upon the bank or borrower if a loan upon such security 
 is made. If the prohibition can be urged against the validity 
 of the transaction by any one except the government, it can 
 only be done before the contract is executed, while the security 
 is still subsisting in the hands of the bank. It can then, if at 
 all. be invoked to restrain or defeat the enforcement of the 
 security. When the contract has been executed, the security 
 sold and tin- proceeds applied to the payment of the debt, the 
 .(Hiit will not interfere with the matter. Both bank and bor- 
 rower are in such case equally the subjects of legal censure, 
 and they will be left by the court where they have placed 
 themsel ' 
 
 § 195. Consolidation. — Tie' consolidation of corporations 
 can take place only under proper legislative authority, 8 and 
 
 'State \. smith, 18 Vt '-'»'•''.: Com- Millerton, etc , Co., LS8 N. V. L64. A 
 
 ,,,,,,,., Boston, etc., Et. Co., L8 Mass. domestic corporation may be author- 
 
 142. ized to consolidate with a foreign cor- 
 
 » Jones v. Morrison, 31 Minn. 140. poration. Continental, <■!<•., Co. v. 
 
 I | [01, Toledo, etc., R. < '<>.. 82 Fed. Rep.642. 
 
 . etc., v. Stewart, l * >T As to consolidation of Illinois and In- 
 dians corporations, see an article in 
 
 earwatei v. Meredith, I Wall. L2 Har. La* Rev. 486. Whether or 
 
 ii - ,e. ,,, v. Madison, <•!<•., nol the legislature can authorize the 
 l;. ( ... 21 II- > 441; Col.' v.
 
 § 195 PARTICULAR POWERS. 193 
 
 statutory requirements as to the proceedings are conditions pre- 
 cedent and must be complied with before there is a legal con- 
 solidation. 1 Thus, when a certificate of incorporation is re- 
 quired to be filed, it must, in order to be effectual, contain all 
 the recitals required by the statute. 2 When all the other es- 
 sential provisions of an act authorizing consolidation are com- 
 plied with the consolidation is not invalidated by the mere ab- 
 sence of evidence that each company filed with the secretary 
 of state a resolution accepting the provisions of the act, passed 
 by a majority of the stockholders at a meeting called for that 
 purpose, or that the stockholders held separate meetings for 
 the purpose. The absence of such evidence is supplied by the 
 implication arising from the certified copy of the articles of 
 agreement for consolidation duly filed with the secretary of 
 state. 3 
 
 The authority to consolidate may be contained in the corpo- 
 rate charter, 4 a statute, 5 or it may be contained in the charter 
 of the corporation with which the corporation in question is 
 authorized to consolidate. 6 So, an unauthorized consolidation 
 may be cured by acquiescence and legislative recognition. 7 
 
 The majority of the stockholders of a corporation have no 
 power to involve the minority in a reorganization without it? 
 consent, in such manner as to compel the minority to elect be 
 tween a new contractual relation with a new company, or com- 
 pensation for them on an arbitrary basis. 8 
 
 consolidation of corporations under s Leavenworth Co. v. Chicago, etc., 
 
 the general power reserved to alter R. Co., 25 Fed. Rep. 219. 
 
 or annul the charter, it certainly can 4 Nugent v. Supervisors, 19 Wall. 
 
 not do so when the rights of stock- (U. S.) 241. 
 
 holders will thereby be affected by 5 Black v. Delaware, etc., Co., 24 N. 
 
 increasing their liability as such or J. Eq. 455. 
 
 diminishing the value of their stock; 6 In re Prospect Park, etc., Co., 67 
 
 unless the consolidation is made N. Y. 371. But see Morrill v. Smith 
 
 with the unanimous consent of all the Co., 89 Tex. 529. 
 
 stockholders. Botts v. Simpkinsville, 7 Mead v. New York, etc., R. Co., 
 
 etc., Co., 88 Ky. 54, 2 L. R. A. 594. 45 Conn. 199. 
 
 1 Commonwealth v. Atlantic, etc., R. 8 Postv. Beacon, etc., Co. (C.C.App.), 
 Co., 53 Pa. St. 9; Tuttle v. Michigan, 84 Fed. Rep. 371. As to relations re- 
 etc, R. Co., 35 Mich. 247. suiting from succession and reorgan- 
 
 2 State v. Vanderbilt, 37 Ohio St. 590. ization instead of consolidation, see 
 
 13— Private Corp. Kittel v. Augusta, etc., R. Co., 78 Fed.
 
 194 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §196 
 
 § 196. The effect of consolidation. — The result of consoli- 
 dation is ordinarily, although not necessarily, the creation of a 
 new corporation. The old corporations may or may not be dis- 
 solved, depending upon the legislative will, 1 or one corporation 
 may be merely merged in another by the process of purchasing 
 its shares and franchises under legislative authority. As a 
 general rule, however, consolidation works a dissolution of the 
 corporations previously existing and the creation of a new cor- 
 poration with property, liabilities and stockholders different 
 from those passing out of existence. 2 But a new corporation 
 does not necessarily result, as there can be a union of interests 
 and of stock without the surrender of personal identity or cor- 
 porate existence. 3 This is always a question of legislative in- 
 tent. The test, " in all cases is to be found from the facts and 
 circumstances, terms of contracts, texts of statutes, intent of 
 parties; from these it must be determined whether the original 
 corporation passed out of existence, or remains under a new 
 name and management with enlarged powers." 4 
 
 § 197. Powers and privileges of the new corporation. — The 
 
 powers of the consolidated corporation are generally regulated 
 by the statute authorizing consolidation. 6 Ordinarily, all the 
 
 Rep. 855; Ferguson v. Ann Arbor, 
 etc., I:. Co., 15 N. V. Bupp. 172; Santa 
 I e , etc., Co. v. Hitchcock (N. Mex.), 
 60 Pac. Rep. 332; Benesh v. Mill- 
 Owners' ,etc.,Co.,103 [owa 165,72N.W. 
 Rep. 674. To render a new corpora- 
 tion Liable at common law tor the 
 debts ol an established corporation "i- 
 firm, to whose business and property 
 it has succeeded, it must, in the ab- 
 sence ol a special agreement, appear 
 thai the transaction was fraudulent as 
 to creditor! ol the old corporation, or 
 thai the circum rtanc< - attending the 
 tion ol the Dew corporation and 
 n to the bnsine a and 
 property ol the old coi poration are ol 
 §uch a cl •'< :i find 
 
 mi/ thai it Is a mere continuation ol 
 
 the former. Austin v.Tecumseh Nat'l 
 Bank, 49 Neb. ■Ill', 68 N. W. Rep. 628, 
 35 L. R. A. III. 
 
 1 Keokuk, etc., R. Co. v. Missouri, 
 152 r. B. 301 ; Adams v. Yazoo, etc., 
 R. Co. (Miss.), 24 So. Rep. 317. 
 
 1 McMahon v. Morrison, L6 Lnd. 
 17:;, 79 Am. Dec. 418; Pullman, etc., 
 Co. v. Mo. Pac. R. Co., L16 U. S. 587; 
 Railroad Co. v. Georgia, 98 U, 8. 359; 
 Shields v. Ohio, 96 U. s. 319; Kansas, 
 etc., R. Co. \. Smith, 40 Kan. 192. 
 
 •Central R. Co. v. Georgia, 92 U. S. 
 665; Chicago, etc., R. Co. v. Ashling, 
 L60 [11. 373. 
 
 4 Hirschl, Cum. & Consol. ol Corp., 
 p. 184. 
 
 »See Shields v. Ohio, 95 U. S. 819
 
 § 197 PARTICULAR POWERS. 195 
 
 franchises of the old companies pass to the new, and this in- 
 cludes all the rights which before consolidation have ac- 
 crued or vested in the old corporations. 1 Thus, a consolidated 
 company is entitled to the benefit of a tax voted to one of the 
 old companies by a county or township. At the time of 
 the vote of the tax the railroad corporation had under the law 
 authority to consolidate with the other corporations. After 
 consolidation it was contended that the county was under no 
 obligation to vote the tax for the benefit of the new corpora- 
 tion. The court said: 2 "The provisions for consolidation be- 
 came part of the contract between the township and the rail- 
 road company, and the vote to issue the bonds to the company 
 was an assent to the exercise by it of all the corporate powers, 
 including that of consolidation, with which it was invested at 
 the time of the vote. " Hence, the new corporation is entitled to 
 bonds voted to one of its constituents, 3 to the benefit of exemp- 
 tions for its employes which were enjoyed by the former com- 
 pany, 4 to the constituent's exclusive right to supply gas, 5 to 
 the power to hold lands, 6 to condemn lands under the power of 
 eminent domain, 7 to the use of a street, 8 when these powers 
 were possessed by one or all of the constituent companies. By 
 
 1 Paine v. Lake Erie, etc., R. Co., 31 97 U. S. 83, that a county court in Mis- 
 Ind. 283; Cooper v. Corbin, 105 111. souri could not.on a vote by a township 
 224; Louisville Trust Co. v. Louis- to issue bonds toa corporation named, 
 ville, etc., R. Co. (C. C. App.), 75 Fed. issue bonds to a county formed by the 
 Rep. 433. consolidation of that corporation with 
 
 2 Livingston Co. v. First Nat'l another corporation, would not be, if 
 Bank, 128 U. S. 102. The court said: applied here, a sound doctrine." 
 "We think that in the present case s Green Co. v. Conners, 109 U. S. 
 the rule applied in the cases before 104; Ni antic, etc., Bank v. Town of 
 cited of County of Scotland v. Thomas, Douglass, 5 111. App. (Brad.) 579. 
 
 94 U. S. 682 ; Town of East Lincoln v. 4 Zimrner v. State, 30 Ark. 677. 
 
 Davenport, 94 U. S. 801 ; Wilson v. 5 New Orleans Gas Co. v. Louisiana, 
 
 Salamanca, 99 U. S. 499; Menasha v. etc., Co., 115 U. S. 650. 
 
 Hazard, 102 U. S 81; Harter v. Ker- 6 Georgia, etc., R. Co. v. Wilks, 86 
 
 nochan, 103 U. S. 562; New Buffalo v. Ala. 478. 
 
 Iron Co., 105 U. S. 73, and Bates 7 Toledo, etc., R. Co. v. Dunlap, 47 
 
 County v. Winter, 112 U. S.325, is the Mich. 456; Abbott v. N. Y., etc., R. 
 
 more proper and salutary one, and Co., 145 Mass. 450; State v. Sherman, 
 
 that the doctrine laid down in Harsh- 22 Ohio St. 411 . 
 
 man v. Bates County, 92 U. S. 569, 8 Pittsburgh, etc., R. Co. v. Reich, 
 
 and in the County of Bates v. Winter, 101 111. 157.
 
 196 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §198 
 
 the weight of authority a consolidation which results in the 
 creation of a new corporation, destroys an exemption from 
 taxation which was possessed by one of the corporations. 1 A 
 special statutory exemption or privilege does not pass in the 
 absence of express statutory direction. 2 The consolidation 
 effects an assignment of the choses in action of the old com- 
 panies to the new, 3 and the title of the constituent companies 
 to real property vests ipso facto in the new corporation. 4 The 
 articles of consolidation may transfer the real estate of the old 
 companies to a consolidated foreign corporation. 5 
 
 § 198. Liabilities of the new corporation, — The general rule 
 is that the new corporation resulting from consolidation be- 
 comes liable for the debts, obligations, liabilities and torts of 
 the old companies. 6 It has been held, however, that in the 
 
 'For an exhaustive discussion of consolidation involves an implied as- 
 
 this question see Adams v. Yazoo, etc., 
 E. Co. (Miss. 1898), 24 S. Rep. 371. 
 
 2 As the right of a railroad company 
 to determine its rate of fare. St. Louis, 
 etc., R. ("'>. v. Gill, L56 U. S. 649. 
 
 3 Univ. of Vt. v. Baxter, 42 Vt. 99, 
 43 Vt. 645. 
 
 4 Cashman v. Brownlee, 128 Ind. 
 266. 
 
 sumption by the new company of all 
 the valid debts and liabilities of the 
 consolidated companies. Indianapo- 
 lis, etc., R. Co. v. Jones, i".» Ind. 465; 
 Columbus, etc., R. Co. v. Powell, 40 
 Ind. 37; Jeffersonville, etc., R. Co. v. 
 Hendricks, 41 Ind. 48; Cleveland, etc., 
 R. Co. v. Prewitt. 134 Ind. 557, 33 N. 
 E. Rep. 367. The rule which the 
 
 5 Tarpey v. Deseret Salt Co., 5 Utah authorities support seems to be that 
 
 where one eorporation goes entirely 
 out of existence by being incorporated 
 into another, if no arrangements are 
 made respecting the property and lia- 
 bilities of the corporation that ceases 
 t.. exist, the corporation into which 
 
 I'M 
 
 " Paine v. Lake Erie, etc, I:. ( k>., 
 ::i [nd.283; Indianapolis, etc.,R.Co.v. 
 
 • Ind. 165 ; State v. Balti re, 
 
 I:. Co., 77 Md. 189; Philadelphia 
 
 v. Kid-- Ave. R. (',,., L43 Pa. St. IH; 
 
 9hore R. Co. v. Hutchins, :;7 it is merged will succeed to all its 
 
 Ohio st. 282; Chicago, etc., R. Co. v. 
 Moff.itt, 7". III. 624. In Louisville, etc., 
 II Co. v. Boney, M7 Ind 501, S L. R. 
 \ (35, the courl says : "While ii is 
 an open question in some jurisdictions 
 whet her or not .in the absence of a 
 statute, the debts of the original corn- 
 
 property, and be answerable for all 
 its liabilities. Thompson v. Abbott, 
 61 Mo. 176; Mt. Pleasant v. Beckwith, 
 loo r. s. :.i i ; Pullman, etc., Co. v. 
 Mo, Pac i: Co., 115 D. S. 587. A 
 consolidated railway company may be 
 held responsible for the acts and neg- 
 
 panies follow as an incident of conBol- lects of its constituent members to 
 
 m and become by implication the same extent as though d >byit 
 
 (he obligations of the new corporation, as a whole. Southern R. Co. v. 
 
 ft is settled in this state that the act of Bourknight, 70 Fed. Hep. 142, SOL
 
 § 198 PARTICULAR POWERS. 197 
 
 absence of a statutory imposition, the new corporation is liable 
 to the creditors of the old only in respect to the property re- 
 ceived from it. 1 Under this theory, as to the property received 
 from the other corporations, it is a new and independent cor- 
 poration, liable for the claims of creditors only by virtue of 
 the assumption of the obligation, or a statutory imposition. 
 The new company may, of course, be required to assume all 
 the obligations of the old company, and this imposition may 
 be imposed by the statute or by contract. 2 The sound rule is 
 that a successor corporation, which succeeds to the property, 
 must take the obligations with the benefits. 3 This rule is par- 
 ticularly applicable in jurisdictions where it is held that a 
 creditor can not prevent a corporation which owes him money 
 from consolidating. Where the statute authorizes consolida- 
 tion and makes no provision to the contrary, the creditor may 
 follow the property into the hands of the consolidated company.* 
 Under an express contract of assumption of the debts of the old 
 companies, a corporation is liable for damages to land caused 
 by one of the old companies, 5 for labor performed for one of 
 the old companies, 6 and is bound by an agreement allowing 
 other railroads to use its right of way. Where the statute pre- 
 serves all the rights of the creditors of the original company, 
 bondholders of the new company are bound by an unrecorded 
 contract of one of the original companies under which it bound 
 
 R. A. 823. The right of a creditor to 2 Warren v. Mobile, etc., R. Co., 49 
 
 recover hia claim against a consoli- Ala. 582; Western, etc., R. Co. v. Smith, 
 
 dated company under N. Y. Laws, 75 111.496; New Bedford, etc., R. Co. 
 
 1892, ch. 691, is not defeated by the v. Old Colony R. Co., 120 Mass. 397; 
 
 recovery of a judgment upon the claim John Hancock, etc., Co. v. Railway 
 
 against the constituent corporation. Co., 149 Mass. 214; Day v. Worcester, 
 
 In re Utica, etc., Co., 154 N. Y. 268. etc., R. Co., 151 Mass. 302; Polhemus 
 
 1 Prouty v. Lake Shore, etc., R. Co., v. Fitchburg R. Co., 123 N. Y. 502. 
 52 N. Y. 363. A corporation which 3 Montgomery, etc., R. Co. v. Bar- 
 purchases all the property of another ing, 51 Ga. 582. 
 
 corporation, and gives its stock in 4 Shackelford v. Mississippi, etc., R. 
 
 payment therefor to the stockholders Co., 52 Miss. 159. 
 
 of the vendor corporation, takes the 5 Smith v. Los Angelea Co., 98 Cal. 
 
 property subject to the rights of the 210. 
 
 creditors Grenell v. Detroit, etc, 6 Western, etc., Co. v. Smith, 75 111. 
 
 Co., 112 Mich. 70, 70 N. W. Rep. 413. 497.
 
 198 THE LAW OF PRIVATE CORPORATIONS. § 199 
 
 itself to have a flag station and to allow the use of land to the 
 grantor of a right of way. 1 But a consolidated company can 
 not be rendered liable for the debts of the old company by an 
 act passed after the consolidation when property of the original 
 company creating the debt had been sold under a deed of trust 
 prior to the consolidation. 2 
 
 The purchaser of a railroad at a decretal sale takes the prop- 
 erty free from a condition imposed by a county in granting aid 
 to the effect that trains should stop at a certain station. The 
 new company, however, is subject to the common law require- 
 ment that it must stop sufficient trains at the station for the 
 purpose of transacting the business. 8 
 
 A railroad company formed by consolidation of others, one 
 of which was organized by the purchasers of a railroad at fore- 
 closure, is hound by the obligation of the original company to 
 pay for land that it appropriated under a parol license and 
 agreement to pay for it. The court said* that the " action was 
 brought on the theory, not of a breach of agreement made by 
 the old company and the plaintiff, but for a breach of equita- 
 ble duty laid on the defendant by force of the facts that it had 
 taken the plaintiff's land, and is taking and using it in the 
 same plight that its predecessor held it, and that the plaintiff 
 is entitled to and is without compensation. The new company 
 is enjoying the easement under the conditions of the old com- 
 pany and the benefits and burdens incident to it are insepa- 
 rable." The specific performance of a contract made by a con- 
 Btitutent company may be enforced against the new consoli- 
 dated company. 1 
 
 § 199. Loaning of money. — A corporation can not engage 
 in the Loaning <»)' money unless authorized to do so by its char- 
 ter, <>r unless its business is of a nature wliieli usually in- 
 volves the making of Loans.' Bui money so illegally loaned 
 
 1 Mui.il.', etc., R. < '". v.Gilmer, 85 *Chicago, etc., R. C<>. v. Hall, 186 
 
 Ah, : In. I. 81, 28 I.. I.'. A. 281. 
 
 ■Hatchery. Toledo, etc., R. <'"., 62 ■ Cumberland Valley R. Co. v. Get- 
 
 III. i77 tyaburg, etc., R. Co., L77 Pa. St. M'.i. 
 
 ' People v. Louisville, etc., R. Co., ' Daniel Neg. tnat. I, §884; Cook II, 
 
 120 III. 48. 1690.
 
 § 199a PARTICULAR POWERS. 199 
 
 can be recovered, and the borrower can not interpose the de- 
 fense of the want of power in the corporation to make the 
 loan. 1 The franchise of the corporation may be forfeited at 
 the instance of the state, but the money loaned may be recov- 
 ered. 2 
 
 § 199a. Power to act as trustee. — Whether a corporation 
 may undertake the performance of a trust depends upon the 
 provisions of its charter and the circumstances of the particu- 
 lar case. "Although it was in early times held that a corpo- 
 ration could not take and hold real and personal estate in 
 trust, upon the ground that there was a defect of one of the 
 requisites of a good trustee, namely, the want of confidence in 
 the person ; yet that doctrine has long since been exploded as 
 unsound and too artificial ; and it is now held that where a 
 corporation has a legal capacity to take real and personal 
 estate, there it may take and hold it upon trust in the same 
 manner and to the same extent as a private individual may 
 do." 3 
 
 ^oock v. Lafayette, etc., Assn., 71 3 Judge Story, in Vidal v. Girard, 2 
 Ind. 357 ; Bond v. Terrell, etc., Co., 82 How. (U. S.) 187 ; White v. Rice, 112 
 Tex. 309; 18 S. W. Eep. 691; Steam, Mich.403,70N.W.Rep.l024. "Theabil- 
 etc, Co.v.Weed, 17 Barb. 382; Union, ity and competency to execute the trust 
 etc., Co. v. Murphy's, etc., Co., 22 Cal. is the real test in determining whether 
 621; Gold, etc., Co. v. National a corporation may take." Spelling I, 
 Bank, 96 U. S. 640; Smith v. White § 212. See Chapin v. School Dist., 35 
 (Tex.), 25 S. W. Rep. 809; Kadish v. N. H. 445; Philip Academy v. King, 
 Garden City, etc., Assn., 47 111. App. 12 Mass. 546; In re Howe, 1 Paige 214. 
 602. Contra: Grand Lodge v. Wadded, Without express authority a corpora- 
 36 Ala. 313 ; Chambers v. Falkner, 65 tion can not act as executor or admin- 
 Ala. 448; Life Ins. Co. v. Mech., etc., istrator. Georgetown, etc., v. Brown, 
 Co., 7 Wend. 31 ; New York, etc., Co. 34 Md. 450. A corporation can not be 
 v. Ely, 5 Conn. 560. a partner. People v. N. R. S. R. Co., 
 
 2 Shoemaker v. Mech. Nat'l Bank, 2 121 N. Y. 582. 
 Abb. (U. S.) 416; Elder v. Bank, etc., 
 12 Kan. 238.
 
 CHAPTER 9. 
 
 THE DOCTRINE OF ULTRA VIRES AND ITS APPLICATION. 
 
 § 200. 
 201. 
 202. 
 203. 
 204. 
 
 205. 
 
 206. 
 
 207. 
 
 208. 
 209. 
 
 General statement. 
 
 Proper use of phrase ultra vires. 
 
 The strict rule. 
 
 The reason for the rule. 
 
 Conflicting theories and decis- 
 ions. 
 
 Actions in furtherance of ultra 
 vires contracts. 
 
 Buckeye Marble Co. v. Harvey. 
 
 Central Transportation Co. v. 
 Pullman Palace Car Co. 
 
 Disaffirmance after part per- 
 formance. 
 
 Recovery of consideration 
 paid. 
 
 §216. 
 217. 
 
 I. Certain Bulea Affecting Doctrine of 
 Ultra Vires. 
 i. in general. 
 
 211. Presumption of validity. 
 
 212. Notice of corporate powers. 
 
 213. Limitations upon the authority 
 
 of corporate officers. 
 
 214. Restrictions contained in by- 
 
 laws. 
 216. I. imitations upon general rale. 
 
 II. Estoppel to Assert Defense of Ultra 
 
 Vires. 
 General statement. 
 Estoppel— Rule of the supreme 
 court. 
 
 218. Partially executed ultra vires 
 
 contracts. 
 
 219. Estoppel— Retention of bene- 
 
 fits. 
 
 220. Acquiescence in ultra vires acts. 
 
 221. Ratification of ultra vires acts. 
 
 III. Contracts Illegal Because Malum 
 Prohibitum or Malum In Se. 
 
 § 222. General statement. 
 
 223. Contracts malum in se. 
 
 224. Contracts against put. lie policy. 
 
 225. Statutory prohibitions. 
 
 226. Illustrations. 
 
 227. Liability for benefits received 
 
 under illegal contracts. 
 
 IV. Irregular Exercise of Power. 
 § 228. Effecl of irregularities. 
 
 229. Waul of power and neglect of 
 
 formalities. 
 
 230. Reasons tor the distinction- 
 
 Statement of Chief Justice 
 
 Saw vcr. 
 
 § 200. General statement. — The phrase ultra vires hasheen 
 in general use to describe the acts of corporations and their of- 
 ficers which are in excess of the corporate power. 1 Much con- 
 
 i Power here signifies authority, le- authorized acts is to put forth a very 
 
 gal competence, capacity or right. In plain truism; but to say that Buch 
 
 ii v . Mich., etc., R. Co . 22 V Y. bodies bave do power or capacity to 
 
 rosaythat err, is to Imputetothem an e ccellence 
 
 rporation has ao right to doun- which does not belong to any created 
 
 (200)
 
 $ 201 THE DOCTRINE OF ULTRA VIRES. 201 
 
 fusion has resulted from its use to express acts in excess of the 
 authority conferred upon the corporation, and acts which are 
 illegal in the sense of being prohibited by law. An act which 
 is in excess of the authority of an agent or officer of a corpora- 
 tion is not, upon well established principles of the law of 
 agency, binding upon the corporation. There is nothing pe- 
 culiar to the law of corporations in this; and the use of the 
 phrase ultra vires in this connection is confusing and mislead- 
 ing. There is also a division of authorities upon the question 
 of the use of the phrase to describe acts which are illegal in the 
 sense of being malum per se and malum prohibitum. It seems 
 that it would be better to use the words to describe only such 
 contracts of corporations as are in excess of .their corporate 
 powers. In considering the defense of ultra vires, however, it 
 must be noted that a distinction is made between contracts 
 which are (1) unauthorized because not granted expressly or 
 by implication, (2) contracts which are merely an irregular 
 exercise of a granted power, (3) contracts which are intrinsic- 
 ally immoral or against public policy, malum in se, and (4) 
 contracts which are prohibited by the charter or general law, 
 malum prohibitum. 
 
 § 201 . Proper use of the phrase ultra vires, — With reference 
 to the proper use of this phrase, it was said by Justice Allen: 1 
 "When acts of corporations are spoken of as ultra vires, it is not 
 intended that they are unlawful, or even such as the corporation 
 can not perform, but merely those which are not within the 
 powers conferred upon a corporation by the act of its creation." 
 
 existences with which we are ac- tions, like natural persons, have power 
 
 quainted. The distinction between and capacity to do wrong. They may, 
 
 power and right is no more to be lost in their contracts and dealings, break 
 
 sight of in respect to artificial than in over the restraints imposed by their 
 
 respect to natural persons." A cor- charters; and when they do their ex- 
 
 poration, like a natural person, can do eruption from liability can. not be 
 
 wrong, although not authorized to claimed on the mere ground that they 
 
 do so. See Salt Lake City v. Hollis- have no attributes or faculties which 
 
 ter, 118 TJ. S. 256, 2 C. C. 107; Life, render it possible for them thus to 
 
 etc., Co. v. Mechanic, etc., Co., 7 act." 
 
 Wend. (N. Y.) 31. As said in Wright l Whitney, etc., Co. v. Barlow, 63 N 
 
 v. Hughes, 119 Ind. 324: "Corpora- Y. 62.
 
 •202 THE LAW OF PRIVATE CORPORATIONS. § 201 
 
 Iii a recent case in New Jersey, 1 Justice Depue said: "The in- 
 discriminate use of this expression with respect to cases different 
 in their nature and principles, has led to considerable confu- 
 sion if not misapprehension. Where an act done by directors 
 or officers is simply beyond the powers of the executive de- 
 partment of the corporation, the agency by which the corpora- 
 tion exercises its functions, and not of the corporation itself, it 
 may be made valid and binding by the action of the board of 
 directors or by the approval of the stockholders. Where the 
 act done by the directors is not in excess of the powers of the 
 corporation itself, but is simply an infringement upon the rights 
 of other stockholders, it may be made binding upon the latter 
 by ratification, or by consent implied by acquiescence. Where 
 the infirmity of the act does not consist in a want of corporate 
 power to do it, but in the disregard of formalities prescribed, 
 it may or may not be valid as to third persons dealing bona 
 fide with the corporation, according to the nature of the form- 
 alities not observed or the consequences the legislature has im- 
 posed upon non-observance. These are all cases depending 
 upon legal principles not peculiarly applicable to corporations, 
 and the use of the phrase ultra vires tends to confusion and 
 misapprehension. In its legitimate use, the expression ultra 
 vires should be applied only to such acts as are beyond the 
 powers of the corporation itself." The proper scope of the 
 doctrine is thus Btated by Mr. Justice Brewer: 2 "Two prop- 
 ositions are Bettled. One is that a contract by which a 
 corporation disables itself from performing the functions and 
 duties undertaken and imposed by its charter is, unless the 
 state which created it consents, ultra vires. A charter not 
 only grants rights, it also imposes duties. An acceptance 
 of those rights is an assumption of those duties. As it is 
 
 linden, etc., R. Co. v. May's v. Chicago, etc., Co., ISO 111. 286; State v. 
 
 Land 18 N. J. L. 530, in Nebraska, etc., Co., 29 Neb. 700; Frank- 
 
 ;i dissenting opinion. But in many lyn v. Lewiston Inst., 68 Maine 43'. 
 
 tracts which are merely be- 'Chicago, etc., R. Co. v. Union l':i<-. 
 
 yond ili" power of the corporation are l>' Co., 47 Fed. Rep L6 Bee statement 
 
 called illegal. Bee Central, etc., Co. v. by Mr. .lust ice Mitchell, in Minnesota, 
 
 Pullman, etc., Co., IS People etc., Co. v. Langdon, 44 Minn. 48.
 
 § 202 THE DOCTRINE OF ULTRA VIRES. 203 
 
 a contract which binds the state not to interfere with those 
 rights, so, likewise it is one which binds the corporation not to 
 abandon the discharge of those duties. It is not like a deed 
 or patent which vests in the grantee or patentee not only title, 
 but the full power of alienation. But it is more — it is a con- 
 tract whose obligations neither party, state nor corporation can, 
 without the consent of the other, abandon. The other is that 
 the powers of corporation are such, and such only, as the char- 
 ter confers, and an act beyond the measure of those powers, as 
 either expressly stated or fairly implied, is ultra vires. A cor- 
 poration has no natural or inherent rights or capacities. Cre- 
 ated by the state, it has such powers as the state has seen fit to 
 give it, 'only this and nothing more. ' And so, when it assumes to 
 do that which it has not been empowered by the state to do, its 
 assumption of power is vain; the act is a nullity, the contract 
 is ultra vires. These two propositions embrace the whole doc- 
 trine of ultra vires. They are its alpha and omega. Were the 
 two foregoing propositions steadily kept in view by the courts 
 in applying this doctrine, the diversity of judicial opinion on 
 this subject would be much less." 
 
 § 202. The strict rule. — It follows from the doctrine of lim- 
 ited capacities that a corporation has only such powers as are 
 expressly or by necessary implication granted to it. The 
 theory is that the state is granting a favor, and the grantee 
 takes only what is granted. As the corporation is able to exer- 
 cise its powers by virtue of the grant alone, it follows that all 
 attempts to exercise powers not granted are ineffectual as 
 against the grantor. If the granted privileges are abused the 
 state may withdraw them. And it would be extremely illogi- 
 cal for the state through its courts to aid those who enter into 
 unauthorized relations with its creatures to carry out such un- 
 authorized acts. As against the corporation in such cases the 
 duty of the state is clear. But when innocent third per- 
 sons become involved there is often a conflict between logi- 
 cal consistency and justice to the individual, and as a result 
 the American law seems to be in a state of hopelessly in-
 
 204 THE LAW OF PRIVATE CORPORATIONS. § 202 
 
 extricable confusion. The English decisions apply the doc- 
 trine that ultra vires acts are illegal with much more strict- 
 ness than the American decisions. But practically the same 
 rule is enforced by the federal courts. According to this 
 rule, "A contract of a corporation which is either unauthor- 
 ized by or in violation of its charter or governing statutes, or 
 which is entirely outside the scope of the powers of its crea- 
 tion, is void in the sense of being no contract at all, 1 because of 
 the want of power in the corporation to enter into it; that such 
 a contract will not be enforced by any species of action in a 
 court of justice, 2 that being void ab initio, it can not be made 
 good by ratification, 3 or by any succession of renewals, and 
 that no performance on either side can give validity to it so as 
 to give a party to the contract any right of action upon it." 4 
 Under this rule, "The contracts of corporations which are not 
 authorized by their charter are illegal, because they are made 
 in contravention of public policy." Although the "unauthor- 
 ized contract may be neither malum in se nor malum prohibitum, 
 but on the contrary may be for some benevolent or worthy ob- 
 ject, * * yet if it is a violation of public policy for corpora- 
 tions to exercise powers which have not been granted to them, 
 such contracts, notwithstanding their praiseworthy nature, are 
 illegal and void." 5 No action can be maintained on such a con- 
 tract, although there has been part performance or expenses in- 
 
 > Davie 7. Old Colony R. Co., 131 R. Co. v. Eastern, etc., R. Co., 11 
 
 . 258; Chicago, etc., Co. v. The ('. I'.. 77"-, 7 Eng. Law and Eq. Rep. 
 
 People's, etc., Co., 121 [11. 630 ; Franco, 505. Jervis, C. J., Baid of a contract 
 
 Co. v. McCormick, 85 Tex. 416 ; nol within the authority of the corpo- 
 
 Long v. Georgia, etc., R. Co., 91 Ala. ration, "the assent oi all the share- 
 
 519; Twiss \. Guaranty, etc., Assn. holders to sucha contract, thougb it 
 
 V W. Rep. 8. may make them all personally Liable 
 
 'Greenville, etc., Co. v. Planters', to perform such contract, would not 
 
 etc., Co., 70 Miss. 669; Pearce v. The bind them in their corporate ca- 
 
 Mad I' Co., 21 How. (U. 8.) parity, or render liable their corporate 
 
 441; Brunswick, etc., Co. v. United funds." Germania, etc., Co. v. Boyn- 
 
 Elevator i 71 Fed. Rep. 797, L9 C.C. A. us. 
 
 ' I Denn. 'Thompson Priv. Corp., § 6856, 13 
 \m. I.. Rev. 682, 5 Am. L, Rev. 272, 
 
 lifornifl Bank v. Kennedy, 167 282, 12 Cent. L. J. 386. 
 
 I ■ Nor by the I ee Bissell v. Michigan, etc., R. 
 
 the stockholders, [n I ian Co., 22 N. Y.
 
 § 203 THE DOCTRINE OF ULTRA VIRES. 205 
 
 cur red on the faith of the ultra vires promise. 1 An action, how- 
 ever, in disaffirmance, may be maintained. An exception is 
 sometimes made in favor of those who deal with a corporation 
 without notice, actual or constructive, of the ultra vires charac- 
 ter of the contract. 2 And a distinction is made between con- 
 tracts for which there is no authority and contracts within the 
 general scope of the authority, but in excess thereof in some 
 particular. 
 
 § 203. The reasons for the rule. — The reasons upon which 
 the doctrine of ultra vires rests are thus stated by Mr. Justice 
 Gray: 3 "The reason why a corporation is not liable upon a 
 contract ultra vires, that is to say, beyond the powers conferred 
 upon it by the legislature, and varying from the objects of its 
 creation, as declared in the law of its organization, are: 
 
 "(1) The interest of the public that the corporation shall 
 not transcend the powers granted. 
 
 "(2) The interest of the stockholders that the capital shall 
 not be subjected to the risk of enterprises not contemplated by 
 the charter, and therefore not authorized by the stockholders 
 in subscribing for stock. 
 
 "(3) The obligation of every one entering into a contract 
 with a corporation to take notice of the legal limits of its 
 powers." 
 
 In an Iowa case, the court said: 4 "Corporations and offi- 
 
 1 Davis v. Old Colony, etc., R. Co., 4 Lucas v. White Line, etc., Co., 70 
 
 131 Mass. 258; Downing v. Mt. Wash- Iowa 541,59 Am. Rep. 449,453. In 
 
 ington Road Co., 40 N. H. 230; Cen- McCormick v. Market Nat. Bank, 165 
 
 tral, etc., Co. v. Pullman, etc., Co., U. S. 538, the court said: "The 
 
 139 U. S. 24. doctrine of ultra vires, by which a con- 
 
 a Miners', etc., Co. v. Zellerbach, 37 tract made by a corporation beyond 
 
 Cal. 543; Lucas v. Transfer Co., 70 the scope of its corporate powers is 
 
 Iowa 541 ; Humphrey v. Association, unlawful and void and will not sup- 
 
 50 Iowa 607; Boyce v. Coal Co., 37 port an action, rests, as this court has 
 
 W. Va. 73. often recognized and affirmed, upon 
 
 3 Pittsburg, etc., R. Co. v. Keokuk, three distinct grounds: The obliga- 
 
 etc, Co., 131 U. S. Rep. 371. See state- tion of any one contracting with a cor- 
 
 ment of Cooley, J., in Day v. Spiral, poration to take notice of the legal 
 
 etc., Co., 57 Mich. 146, 58 Am. Rep. limits of its powers; the interest of 
 
 352. the stockholders not to be subjected to 
 
 risks which they have never under-
 
 206 THE LAW OF PRIVATE CORPORATIONS. § 204 
 
 cers do not always keep within their powers, and the applica- 
 tion of the doctrine of ultra vires is often attended with very 
 perplexing questions. By the application of a few plain rules, 
 however, we may readily reach the proper answer to the ques- 
 tions involved in the case. (1) Every person dealing with a 
 corporation is charged with knowledge of its powers as set out 
 in its recorded articles of incorporation. (2) Where a corpora- 
 tion exercises power not given by its charter it violates the law 
 of its organization, and may be proceeded against by the state 
 through its attorney-general, as provided by the statute, and 
 the unanimous consent of all the stockholders can not make 
 illegal acts valid. The state has the right to interfere in such 
 cases. (3) Where a third party makes with the officers of a 
 corporation an illegal contract beyond the powers of a corpora- 
 tion, as shown by its charter, such third party can not recover; 
 because he acts with knowledge that the officers have exceeded 
 their powers, and between him and the corporation or its stock- 
 holders no amount of ratification by those unauthorized to 
 make the contract will make it valid. (4) Where the officers 
 of a corporation make a contract with third parties in regard to 
 matters apparently within their corporate powers, but which, 
 upon the proof of extrinsic facts of which the parties had no 
 notice, lie beyond their powers, the corporation must be held, 
 unless it may avoid liability by taking timely steps to prevent 
 loss or damage to such third parties; for in such cases the 
 third party is innocent, and the corporation or stockholders less 
 innocent for having selected officers not worthy of the trust 
 reposed in them." 
 
 § 204. Conflicting theories and decisions — More liberal doc- 
 trine — There has always been a strong current of opposition 
 to the application of the rule as slated by Mr. Justice Gray and 
 applied incases which follow the lead of the supreme court 
 of the I faited States. The doctrine originated at a time when 
 corporations were created for public purposes only, and its 
 
 i; and, above all, the Interest ol not transcend the powers conferred 
 the public that the corp< til apon it."
 
 § 204 THE DOCTRINE OF ULTRA VIRES. 207 
 
 early development was with reference to the transactions of 
 municipal corporations. It is properly applied with great 
 strictness to the transactions of public corporations, 1 but many 
 of the reasons urged for its application to the contracts of 
 purely private corporations are somewhat fanciful in these 
 times of free incorporation. Scarcely any two text writers 
 agree upon a consistent theory of ultra vires. Judge Thomp- 
 son has nothing but hard words for the strict doctrine and the 
 courts which enforce it; 2 while Mr. Reese is equally certain 
 that only through its rigid enforcement can our. legal salvation 
 be worked out. 3 The strict doctrine is most consistently ad- 
 hered to by the federal courts, but in the most of the state 
 courts the rule that ultra vires contracts of corporations are il- 
 legal and void is repudiated. Under these decisions want of 
 authority alone does not render a contract illegal and hence 
 void. 4 If it is founded upon a good consideration and is not 
 void because prohibited by law, it is voidable only, and may 
 give rise to rights of action, although the corporation did not 
 have authority to make it. The courts accepting this doctrine 
 hold that "the plea of ultra vires should not as a general rule 
 prevail, whether it is interposed for or against the corporation, 
 when it would not advance justice, but on the contrary would 
 accomplish a legal wrong." 5 Hence, if the condition of the 
 parties is such that it would be inequitable to allow the defense 
 of ultra vires, the doctrine of estoppel will be applied in such 
 manner as to preclude the defense. 6 It would seem that the 
 
 ^oung v. Board of Education, 54 N. Y. 62; Kadish v. Association, 151 
 
 Minn. 385, 40 Am. St. Rep. 340; New- 111. 531. 
 
 bery v. Fox, 37 Minn. 141, 51 Am. St. 6 Bissell v. Railroad Co., 22 N. Y. 
 
 Rep. 830; Elliott Pub. Corp., § 288, 258; Parish v. Wheeler, 22 X. Y. 494; 
 
 and cases cited. Holmes, etc., Co. v. Holmes, etc., Co., 
 
 2 Thompson Priv. Corp., § 5969. 127 N. Y. 252; Bradley v. Ballard, 55 
 
 s Reese Ultra Vires, ch. III. See 111. 413; Heims, etc., Co.. v. Flannery, 
 
 11 Harv. Law Rev. 387, article on Non- 137 111. 309; Day v. Spiral Springs, 
 
 public Corporations and Ultra Vires, etc., Co., 57 Mich. 146, 58 Am. Rep. 
 
 *See a discussion of the authorities 352; Dewey v. Railway Co., 91 Mich. 
 
 in an article in 12 Cent. L. J. 386, by 351 ; Wright v. Bughes, 1 10 Ind. 324; 
 
 J.C.Harper. Seymour v. Society, 54 Minn. 147; 
 
 5 Whitney, etc., Co. v. Barlow, 63 Magee v. Improvement Co. ; 98 Cal.
 
 208 THE LAW OF PRIVATE CORPORATIONS. § 205 
 
 following statement of the doctrine by Mr. Taylor could not be 
 improved. 1 "An act beyond the scope of its corporate powers, 
 if done on behalf of a corporation, or if done by the body corpo- 
 rate itself, affects the rights of persons in respect of the cor- 
 porate enterprise only in so far as the possessors of those rights 
 by their own acts or omissions have estopped themselves from 
 - srting their rights; provided the acts be of such a character 
 that the party dealing with the corporation or its agent could 
 from an examination of the charter or enabling statute and 
 articles of association have ascertained that the act was ultra 
 vires." 
 
 §205. Actions in furtherance of ultra vires contracts. — 
 When an ultra vires contract has been fully executed on both 
 sides, neither party thereto can be heard to assert its invalidity 
 as ground for relief against it. 2 According to the weight of 
 authority, where the contract has been fully executed by one 
 party the defense of ultra vires is not available in an action by 
 the other to recover the agreed consideration, so long as the 
 benefits which have been received are retained. When the 
 contract, the performance of which is demanded by the 
 plaintiff, consists in itself of something beyond the powers of 
 the corporation, or otherwise unlawful, so that, in order for 
 the action to proceed, something further unlawful must be 
 done, then it seems that the action can not be maintained. 3 
 Thus, a suit for specific performance of an ultra vires contract 
 to convey real estate can not be maintained. 1 The rule is ap- 
 parently without exception thai an action can not be main- 
 tained <ni mi ultra vires contract under circumstances where 
 the doctrine of estoppel can not be invoked. But according 
 
 i te line of authorities, the ]>;iriics may "be estopped in 
 
 some cases from disputing the validity of a corporate contract 
 
 678; Union, etc., Co. v. Plume, etc., etc., (V v. Holmes, etc, ('<>., 127 
 
 i i tin. 219; Manchester, etc., N. V. 252; Day v. Spiral Springs, etc., 
 
 R I ■ >ncord, etc., R. Co., 68 Co., 57 Mich. 146, 58 Am. Rep. S52. 
 
 N n 100. »Thompson Priv. Corp., § 8024. 
 
 * Bank ol Mich. v. Niles, 1 Doug. 
 
 2 Long ■. . Georgia, etc., i:. Co., 91 ( Mich.) 401. 
 A l.i 519, 24 Am.M. Rep. 931 ; Holn
 
 § 206 THE DOCTRINE OF ULTRA VIRES. 209 
 
 when it has been fully performed on one side, and when noth- 
 ing short of its performance will do justice." 1 
 
 § 206. Buckeye Marble Co. v. Harvey.— This case contains 
 an elaborate discussion of the doctrine of ultra vires. It was 
 an action brought to enforce a claim which grew out of a con- 
 tract by which one corporation agreed to purchase the shares 
 of another corporation which was engaged in a similar busi- 
 ness. It was held that the contract was ultra vires and void; 
 and that no rights resulted from it which were enforcible in 
 the courts. 2 The court said: 
 
 "The complainant sues upon the contract, and in affirm- 
 ance of it, seeks to have this defendant perform an agreement 
 which sprang from and was collateral to it. It has received the 
 shares it purchased, and holds on to them. It simply asks that 
 the defendant be further compelled to perform his contract by 
 contributing in accordance with his agreement, his proportion 
 of the liability paid off by complainant in protection of the 
 property of the McMillan Marble Company. The suit is clearly 
 in furtherance of the original, unlawful and void contract. 
 That the contract has been executed by the plaintiff does not 
 make it lawful or entitle it to an enforcement of it. 
 
 " This proposition was very plainly put in Pittsburgh, etc., 
 R. Co. v. Keokuk, etc., Co., 3 when it was stated as a result 
 of all the previous decisions of that court upon this subject, 
 'that a contract made by a corporation, which is unlawful 
 and void because beyond the scope of its corporate power, 
 does not, by being carried into effect, become lawful and valid; 
 but the proper remedy of the party aggrieved is by disaffirm- 
 ing the contract and sue to recover, on a quantum meruit, the 
 value of what the defendant has actually received.' " 
 
 § 207. Central Transportation Co. v. Pullman Palace Car 
 Co. — This well-known case 4 involved a consideration of thecir- 
 
 ^ooley, C. J., in Day v. Spiral 4 139 U. S. 24. See a review of this 
 
 Springs, etc., Co., 57 Mich. 146,58 Am. .case in Yak' Law Journal, 1898. See 
 
 Rep. 352. also the sequel to this case in Pullman, 
 
 2 !»2 Tenn. 115, 18 L. R. A. 252. etc., Co. v. Central, etc., Co., 171 U. 
 
 3 131 U. S. 371. S. 138. In Marble Co. v. Harvey, 92 
 14 — Private Corp.
 
 210 THE LAW OF PRIVATE CORPORATIONS. § 207 
 
 cumstances under which a defendant may interpose the de- 
 fense of ultra vires notwithstanding the fact that the contract 
 has been fully performed by the other party. The transporta- 
 tion company had leased and transferred all of its property of 
 every kind to the defendant company, which was engaged in 
 a similar and competitive business. The lessee company un- 
 dertook to pay all of the debts of the lessor company, and to 
 pay to it annually the sum of .$264,000 for a term of ninety- 
 nine years. Possession was taken and the installments paid 
 for a number of years. The suit was for a part of the install- 
 ment for the last year before suit. The defense of ultra vires was 
 interposed and sustained, the court holding that the sale was 
 unauthorized a,nd in excess of the power of the selling com- 
 pany. It was urged for the plaintiff, that even if the contract 
 was void, because ultra vires and against public policy, yet that, 
 having been fully executed on the part of the plaintiff, and the 
 benefits of it received by the defendant for the period covered 
 by the declaration, the defendant was estopped to set up the 
 invalidity of the contract as a defense to an action to recover 
 the compensation agreed on for that period. 
 
 After reviewing the decisions upon this branch of the case, 
 the court said: 
 
 "The view which this court has taken of the question pre- 
 sented by this branch of the case, and the only view which ap- 
 
 Tenn. 115, the court said: "The intended it to be understood that the 
 
 passage cited by counsel from Rail- defense would be a legal wrong only 
 
 way Co. v. .McCarthy, 96 I'. S. 267, when the law did doI require its con- 
 
 'that the doctrine of ultra uire*when sideration by the court. This passage 
 
 invoked for or against a corporation and one of similar character in San 
 
 should nol be allowed to prevail A.ntonio v. Mahaffy, 96 U. 8. 312, was 
 
 when it would defeal the ends of uncalled for in the case in which it 
 
 justice or work a legal wrong,' ie mis- was used and in Central, etc., Co. v. 
 
 leading and if literally construed Pullman, etc., Co. was characterized 
 
 would resull in an enormous practical as a mere passing remark. To Bustaii 
 
 , of the power of corpora- suit as now presented would be in 
 
 tions. We do nol understand thai a affirmance and furtherance of an un- 
 
 result required by adherence to the lawful and void contract, it is in no 
 
 law would be either unjust or a legal sense a suit in disaffirmance." 
 wrong. The learned judge doubtless
 
 § 208 THE DOCTRINE OF ULTRA VIRES. 211 
 
 pears to us consistent with legal principles, is as follows: A 
 contract of a corporation which is ultra vires in the proper sense, 
 that is to say, outside the object of its creation as defined in 
 the law of its organization, and therefore beyond the powers 
 conferred upon it by the legislature is not voidable only, but 
 wholly void, and of no legal effect. The objection to the con- 
 tract is not merely that the corporation ought not to have made 
 it, but that it could not make it. The contract can not be rat- 
 ified by either party because it could not have been authorized 
 by either. No performance on either side can give the unlaw- 
 ful contract any validity, or be the foundation of any right of 
 action upon it. When a corporation is acting within the gen- 
 eral scope of the powers conferred upon it by the legislature, 
 the corporation, as well as persons contracting with it, may be 
 estopped to deny that it has complied with the legal formalities 
 which are prerequisite to its existence or to its action, because 
 such requisites might in fact have been complied with. But 
 where the contract is beyond the powers conferred upon it by 
 existing law, neither the corporation nor the other party to the 
 contract can be estopped by assenting to it or by acting upon 
 it, to show that it was prohibited by law. 
 
 "A contract ultra vires being unlawful and void, not because 
 it is in itself immoral, but because the corporation, by the law 
 of its creation, is incapable of making it, the courts, while re- 
 fusing to maintain any action upon the unlawful contract, 
 have always striven to do justice between the parties, so far as 
 it could be done consistently with adherence to law, by per- 
 mitting property or money parted with on the faith of the un- 
 lawful contract to be recovered back or compensation to be 
 made for it. In such cases, however, the action is not main- 
 tained upon the unlawful contract, nor according to its terms, 
 but on an implied contract of the defendant to return, or fail- 
 ing to do that, to make compensation for property or money 
 which it has no right to retain. To maintain such an action 
 is not to affirm, but to disaffirm, the unlawful contract." 
 
 § 208. Disaffirmance after part performance. — The right 
 and duty of a party to disaffirm an ultra vires contract after it
 
 212 THE LAW OF PRIVATE CORPORATIONS. § 209 
 
 has been partially performed without being responsible in 
 damages for the value of the unexecuted portion of the con- 
 tract, is thus stated by Mr. Justice Miller: ' "What is sought 
 in the case before us is the enforcement of the unexecuted part 
 of the agreement. So far as it has been executed * * * 
 the accounts have been adjusted and each party has received 
 what he was entitled to by its terms. There remains unper- 
 formed the covenant to arbitrate with regard to the value of 
 the contract. It is the damages provided for in that clause of 
 the contract which are sued for in this action — damages for a 
 material part of the contract never performed; damages for the 
 value of a contract which was void. It is not a case of a con- 
 tract fully executed. * * It is a contract forbidden by 
 public policy and beyond the power of the defendant to make. 
 Having entered into the agreement it was the duty of the com- 
 pany to rescind or abandon it at the earliest moment. This 
 duty was independent of the clause in the contract which gave 
 them the right to do it. Though they delayed its perform- 
 ance for several years, it was, nevertheless, a rightful act when 
 it was done. Can this performance of a legal duty, a duty 
 both to stockholders of the company and to the public, give to 
 plaintiffs a right of action? Can they found such a right on 
 an agreement void tor want of corporate authority and forbid- 
 den by the policy of the law? To hold that they can, is, in 
 our opinion, to hold that any act performed in executing a 
 void contract makes all its parts valid, and that the more that 
 i- done under a contract forbidden by law, the stronger is the 
 claim to its enforcemenl by the courts." 
 
 § 209. Recovery of consideration paid. — As already stated, 
 the courts will not interfere with an executed ultra vires con- 
 tract/ Bui tie- injustice which results from permitting a cor- 
 poration to [dead ultra vires, while retaining benefits received 
 
 Under a partly executed contract, has led the courts which 
 
 enforcethe stricl rule that an ultra vires contracl is illegal and 
 
 void to hold that, while no action can he maintained upon the 
 
 1 Thomas i Railroad Co., 101 U.S. »Longv. Railway Co., 9\ Ma., mv 
 
 71 . and im sea cited in next note,.
 
 §209 
 
 THE DOCTRINE OF ULTRA VIRES. 
 
 213 
 
 contract, the other party may disaffirm the contract and re- 
 cover the value of what has been actually delivered. This 
 may be done in an action quasi ex contractu or in a proper 
 case, in a suit for an accounting of benefits received. 1 Thus, 
 a manufacturing company purchased materials for the pur- 
 pose of selling them again on speculation, and the vendor 
 after delivering a part repudiated the contract and sued 
 to recover the value of what had been delivered. Mr. Justice 
 Cooley said: 2 "It will be observed that the contract though 
 void in law involved no element of criminality and nothing 
 
 'Pittsburgh, etc., R. Co. v. Keokuk, 
 etc., Co., 131 U. S. 371; Miller v. 
 Insurance Co., 92 Tenn. 167, 21 S. "W. 
 Rep. 39; Brunswick, etc., Co. v. 
 United, etc., Co., 85 Me. 532; Penn- 
 sylvania R. Co. v. St. Louis, etc., R. 
 Co., 118 U. S. 290; Central, etc., Co. 
 v. Pullman, etc., Co., 139 U. S. 24; 
 California Bank v. Kennedy, 167 U. S. 
 362. In Greenville, etc., Co. v. Plant- 
 ers', etc., Co., 70 Miss. 669, it was held 
 that an ultra vires contract would not 
 be specifically enforced in equity, nor 
 would an action at law lie thereon. 
 The court, by Cooper, J., said: "The 
 agreement between the directors of 
 their companies was clearly beyond 
 the corporate powers of either com- 
 pany to make, and it had not been 
 fully executed when the appellant 
 withdrew from it. There are some 
 decisions which proceed on the appar- 
 ent postulate that an tdtra vires agree- 
 ment executed fully by one of the cor- 
 porations, or so far executed that the 
 status quo can not be restored, may be 
 made the basis of an action. But in 
 many of these cases it would be found 
 that the measure of recovery would be 
 the same whether the injury to the 
 plaintiff by the failure of the defend- 
 ant to perform, or the benefit received 
 by the defendant under the agreement 
 is taken as the standard. Cases of 
 this sort may therefore be well as- 
 
 signed to that other and far more nu- 
 merous class in which the right of re- 
 covery is not rested upon the invalid 
 agreement, but is recognized to exist 
 notwithstanding the agreement upon 
 the principle that the defendant may 
 not repudiate the contract and yet re- 
 tain the benefit which has been de- 
 rived under it. The decided weight 
 of authority in England and America 
 is that no action lies upon the invalid 
 contract, that no decree can be made 
 by a court of equity for its specific 
 performance, nor a recovery be had 
 at law for its breach; but that by 
 proceeding in the proper court, the 
 plaintiff may recover to the extent of 
 the benefit received by the defendant 
 from the execution of the agreement 
 by the plaintiff." Ashbury, etc., Co. 
 v. Riche, L R., 7 II. L. 653; Tn re 
 Cork, etc., R. Co. L. R., 4 Ch. 748; 
 Garrett v. Kansas City, etc., Co., 113 
 Mo. 330; Le AVarne v. Meyer, 38 Fed. 
 Rep. 191 ; Nashua, etc., R. Co. v. Bos- 
 ton, etc., R. Co. 164 Mass. 222; An- 
 thony v. Machine Co., 16 R.I. 571; 
 Morville v. Tract Soc, 123 Mass. 129; 
 Northwestern, etc., Co. v. Shaw, 37 
 Wis. 655; Logan Co., etc., Bank v. 
 Townsend, 139 U. S. 67; Moore v. 
 Tanning Co., 60 Vt. 459. 
 
 2 Day v. Spiral Spring, etc., Co. 57 
 Mich. 146.
 
 214 THE LAW OF PRIVATE CORPORATIONS. § 210 
 
 of an immoral nature. The case is not, therefore, one in 
 which the law will leave the parties without redress for the 
 consequences of criminal or immoral action. The plaintiff 
 has a right to sell her manufactures and to be paid for it; the 
 defendant has received something of value from her, and there 
 is manifest equity in its being required to make payment not- 
 withstanding it exceeded its powers in the purchase." Where 
 money is paid on such a contract it ma} r be recovered in an 
 action for money had and received. 1 A corporation which 
 seeks in equity relief against an ultra vires contract must re- 
 turn the consideration which it has received. 2 
 
 7". Certain Rules Affecting Doctrine of Ultra Vires. 
 
 § 210. In general. — Before proceeding with the discussion 
 of the application of the doctrine of estoppel to ultra vires con- 
 tracts, it is necessary to call attention to certain rules which 
 seem to lie at its very foundation. 
 
 § 211. Presumption of validity. — While a corporation must 
 be able to show a grant, express or implied, of power which it 
 seeks to exercise, it is well settled that contracts which are not 
 contrary to the express provisions of the charter are presumed 
 to bo within the power of the corporation; and the burden of 
 proof is upon the one denying their validity. 8 Thus, a mort- 
 executed by the officials of a corporation is presumed to 
 have been executed under proper authority.' 1 
 
 §212. Notice of corporate powers, — The doctrine of ultra vires 
 
 largely upon the rule thai every person who deals with a 
 
 corporation must at his peril take notice of the limitations 
 
 upon its power which are contained in its charter or articles of 
 
 Incorporation. "Every person who enters into a contract 
 
 'Northwestern, etc., Co. v. Shaw, N. 7.300; Elkina v. Railroad Co., 86 
 
 n Wis. '■ V .1. Eq. 241 ; Downing v. Mt. Wash- 
 
 1 Atlantic, etc., Co. v. Pacific R. Co., Ington Road Co., 40 N. II. 280; Kx 
 
 l Ped Rep. 746. parte Peru, etc., Co., 7 Cow. 640. 
 
 'Gorder v. Platten th, etc., Co., M'.oycc v. Monumk, etc., Co., 37 
 
 a<t Neb. 648; Railway Co. \ McCar- \v. Va. 7:;. 
 thy, 86 ' Qokey, 'is
 
 § 212 THE DOCTRINE OF ULTRA VIRES. 215 
 
 with a corporation," says Chief Justice Gray, 1 "is bound at 
 his peril to take notice of the legal limits of its capacity, es- 
 pecially where, as in this commonwealth, all acts of incorpo- 
 ration are deemed public acts, and every corporation organized 
 under general laws is required to file in the office of the secre- 
 tary of the commonwealth a certificate showing the purpose 
 for which the corporation is constituted." 
 
 As stated by Chief Justice Waite:* "Every corporation 
 necessarily carries its charter wherever it goes, for that is the 
 law of its existence. It may be restricted in the use of some 
 of its powers while doing business away from its corporate 
 home, but every person who deals with it any where is bound 
 to take notice of the provisions which have been made in its 
 charter for the management and control of its affairs, both in 
 life and dissolution." This rule applies to foreign as well as 
 domestic corporations. 
 
 It seems rather a harsh rule, however, which requires all 
 persons at their peril to take notice of the provisions of charters 
 which are private acts of which the courts will not take 
 judicial notice. 
 
 This doctrine is illustrated by the cases which hold that 
 where a bank loans a corporation more money than the latter's 
 recorded articles of incorporation authorize it to borrow, it 
 does so at its peril, and can collect only the amount which 
 the corporation is thus authorized to contract an indebtedness 
 for. 3 
 
 'Davis v. Old Colony R. Co., 131 Society, 60 Minn. 94; Wilson v. Kings, 
 
 Mass. 258,41 Am. Rep. 221. To the etc., R. Co., 114N. Y.487; Bocockv. Al- 
 
 same effect see Pearce v. Madison, leghany, etc., Co., 82 Va. 913, 3 Am. 
 
 etc., R. Co., 21 Howard (U. S.) 441; St. Rep. 128; Humphrey v. Patrons', 
 
 Relfe v. Rundle, 103 IT. S. 222; Salt etc., Assn., 50 Iowa 607; Elevator Co. 
 
 Lake City v. Hollister, 118 U. S. 256; v. Memphis, etc., Co., 85 Tenn. 703, 
 
 Pittsburgh, etc., R. Co. v. Keokuk, 4 Am. St. Rep. 798; Franklin Co. v. 
 
 etc., Co., 131 U. S. 371 ; Central, etc., Lewiston Inst, for Sav., 68 Me. 43. 
 
 Co. v. Pullman, etc., Co., 139 U. S. 24 ; 2 Relfe v. Rundle, 103 U. S. 222. 
 
 McCormick v. Market Nat. Bank, 3 First Nat. Bank v. Kiefer, etc., 
 
 165 U. S. 538; Kraniger v. Building Co., 95 Ky. 97, 23 S. W. Rep. 675.
 
 216 THE LAW OF PRIVATE CORPORATIONS. § 213 
 
 § 213. Limitations upon the authority of corporate officers. 
 
 — Persons who deal with corporations are bound to take no- 
 tice of the powers of the corporation as contained in the char- 
 ter and also of the powers of the agents of the corporation. 
 "Persons dealing with the officers of a corporation or with per- 
 sons assuming to represent it, are chargeable with notice of 
 the purpose of its creation and its powers, and with the au- 
 thority actual or apparent of its officers or agents, with whom 
 they deal; and when they seek to charge the corporation with 
 liability upon a contract made apparently in its behalf, the 
 burden is upon them to prove the authority of such person as- 
 suming to act as such officer or agent, to so make it." 1 This 
 places the requirement of notice of corporate powers and the 
 authority of agents upon the same principle, although in fact 
 they rest upon totally different principles. The former assumes 
 that every person is bound to know the law and the powers of 
 corporations created by law, while the latter rests upon the 
 rule of the law of agency that one who deals with an asserted 
 agent is bound at his peril to know the extent of his authority. 2 
 
 § 214. Restrictions contained in by-laws. — Although there 
 are decisions which say that a person dealing with a corpora- 
 tion is bound to take notice of its constitution, by-laws and ways 
 of doing business,' they are contrary to the weight of authority 
 and rest upon no sound principle. There are good reasons for 
 charging all persons with knowledge of what is contained in a 
 public Btatute orspread upon a public record, but it is difficult 
 to see why they must know the contents of a private rule made 
 corporation for the government of its officers and agents 
 in the transaction of its business. The by-laws may, of course, 
 be material as evidence of the actual authority of the agent and 
 are binding upon those who deal with knowledge of their eon- 
 
 1 Wilson v. Kin'/-, etc., R. <'"., ill bod v. Citizens' Bank, il'l' N. Y. 186, 
 
 N. V. 187; Adriance \. Roome, 52 L9 ^m. 8t. Rep. 482 ; Bockover v. life 
 
 ". Bat eeef 215, infra. Issn., 77 Va.85; Relfe v. Bundle, 103 
 
 'Thompson Corp., § 5974. U. B. 222; Haden v. Farmers', etc., 
 
 Bocock v. Alleghany, etc., Co., I OVa.683. See Nat., etc., Co 
 
 918, •■; Am. i Rep. L28; Jemi- v. Home, etc., Bank (111.), >i \. E. 
 
 Ren. 819.
 
 §215 THE DOCTRINE OF ULTRA VIRES. 217 
 
 § 215. Limitations upon the general rule. — The harsh rule 
 which requires a person dealing with corporations to take no- 
 tice of the extent of their powers is subject to certain well de- 
 fined limitations. When the want of power is apparent upon 
 an inspection of the charter or statute, the party dealing with 
 the corporation may reasonably be presumed to have knowledge 
 of the defect and the defense of want of authority is available 
 against him. But this defense will not avail against one who 
 can not be presumed to have had knowledge of the want of 
 authority to make the contract. Hence, if the act is appar- 
 ently within the scope of the corporate powers, and the al- 
 leged defect rests upon the existence of certain extrinsic facts 
 peculiarly within the knowledge of the corporate officers, the 
 corporation as against a person dealing in good faith is es- 
 topped from denying that which by assuming to make the 
 contract it has virtually affirmed. 1 Thus, a person dealing 
 with a corporation is not bound to know that a power can not 
 be rightfully exercised in a particular case, 2 as that the limit 
 of indebtedness fixed by the charter has been reached. 3 Where 
 an agent has authority to issue negotiable paper for any pur- 
 pose, a person receiving it in the ordinary course of business 
 is justified in assuming that it was properly issued. 4 So, a 
 holder of negotiable paper issued by a corporation which has 
 power to issue negotiable paper, is not affected by the fact that 
 it was issued at a place and for a purpose not authorized by 
 
 1 Monument Nat. Bank v. Globe for that of the public. The corpora- 
 Works, 101 Mass. 57; Beecherv. M. & tion would, however, be estopped 
 P. Rolling, etc., Co., 45 Mich. 103; from setting up the defense in a case 
 Boyce v. Montauk, etc., Co., 37 W. Va. "where the other party to the contract 
 73; Express Co. v. Railroad Co., 99 could not be presumed to be cognizant 
 U! S. 191 ; Wardner, etc., Co. v. Jack, of the excessof power." 
 82 Iowa 435; Luttrel v. Martin, 112 2 Germantown, etc., Co. v. Dhein, 
 N. C. 593; Kennedy v. Savings Bank, 43 Wis. 420, 28 Am. Rep. 549. 
 101 Cal. 495. InBissel v. Railroad Co., 3 Humphrey v. Patrons, etc., Assn., 
 22 N. Y. 258, the court said : "It is a 50 Iowa 007 ; Auerbach v. LeSeur, 
 good defense to a corporation when Co., 28 Minn. 291 ; Ellsworth v. St. 
 sued upon contract, that in making Louis, etc., Co., 98 X. Y. 553. 
 such contract it exceeded its corporate *Genesee Sav. Bank v. Michigan, 
 powers; this defense being allowed, etc., Co., 52 Midi. 438; Ellsworth v. 
 not forthe sake of the corporators, but St. Louis, etc., Co., 98 X. Y. 553.
 
 218 THE LAW OF PRIVATE CORPORATIONS. § 216 
 
 the charter. 1 When a corporation has power to purchase 
 property, the vendor without notice is not affected by the fact 
 that it is purchased for an unauthorized purpose. 2 The 
 distinction in such cases is between the possession and the 
 abuse of a power. 
 
 II. Estoppel to Assert Defense of Ultra Vires. 
 
 § 216. General statement. — The harshness of the strict rule 
 of ultra vires is much softened in many cases by the applica- 
 tion of other principles of law. From the mass of decisions the 
 rule may be fairly deduced that an ultra vires contract is unen- 
 forcible except against those persons and corporations who have 
 by participation, acquiescence, retention of benefits or some 
 other act which it would be contrary to justice to disavow, 
 estopped themselves from interposing the defense. It is safe 
 to say that this is the rule which will govern the courts in the 
 great majority of future cases. Thus, if all the stockholders are 
 estopped in a particular case, the contract may be enforced un- 
 less possibly when the rights of creditors of the corporation 
 will thereby be prejudiced, or the contract is against public 
 policy or in violation of law. But the reason for the exception 
 fails when the party seeking to assert the estoppel had knowl- 
 edge of the fact that the contract was ultra vires. The limita- 
 tion exists only for the benefit of those whose rights would be 
 prejudiced by enforcing the strict legal rule. Only those who 
 have !>• in misled can assert theestoppel. "In the application 
 of the doctrine of ultra vires," says Judge Folger," "it is to be 
 borne in mind thai it has two phases, one where (he question 
 is between the corporate body and the stockholders, or between 
 it and its Stockholders, and third parties dealing with it, and 
 through it, with them. When the public is concerned tore- 
 strain a corporation within the powers given to it by its charter, 
 an asseni of all the stockholders to the use of unauthorized 
 
 1 Main \ I 6" I il. 127; Le- Cowell v. Springe <'<>., kh) r. s. :,:>■ 
 
 high, etc., Co. v. Agricultural Works, Eastern, etc., u. Co. v. Hawkes, I 
 
 inder v. Rollins, 84 H. L. 0. 881. 
 
 Mo ' 3 K.nt v. Quicksilver, etc, Co., 78 
 
 'Thompson v. Lambert, 44 Iowa 289; N. Y. 169.
 
 § 217 THE DOCTRINE OF ULTRA VIRES. 219 
 
 power by the corporate body will be of no avail. When it is a 
 question of the right of a stockholder to restrain the corporate 
 body within its express or incidental powers, the stockholder 
 may in many cases be denied, on the ground of his express 
 assent or his intelligent, though tacit, consent to the corporate 
 action. * * * A corporation may do acts which affect the 
 public to its harm, inasmuch as they are perse illegal or malum 
 'prohibitum. Then no assent of stockholders can validate them. 
 It may do acts not thus illegal, though there is want of power 
 to do them, which affect only the interest of the stockholder. 
 They may be made good by the assent of the stockholders; so 
 that strangers to the stockholders, dealing in good faith with 
 the corporation, will be protected in a reliance upon those acts." 
 It will be observed that according to this rule, there can be no 
 estoppel asserted in aid of the enforcement of a contract which 
 is illegal because malum in se or malum prohibitum. 
 
 § 217. Estoppel — Rule of the supreme court. — The position 
 of the supreme court of the United States in reference to the 
 application of the doctrine of estoppel to ultra vires contracts is 
 clearly stated in a very recent case, 1 which grew out of an 
 attempt to hold a national bank liable as a stockholder in an- 
 other corporation. The bank had power under certain circum- 
 stances to become the legal holder of such stock, but in the 
 particular case the act was beyond its power. The case may 
 thus be distinguished from those cases where there is an abso- 
 lute want of power. But in deciding that the bank could plead 
 the defense of ultra vires, Mr. Justice White said: "The trans- 
 fer of the stock in question to the bank being unauthorized by 
 law, does the fact that under some circumstances the bank 
 might have legally acquired stock in the corporation, estop the 
 bank from setting up the illegality of the transaction? What- 
 ever divergence of opinion may arise on this question from 
 conflicting adjudications in some of the state courts, iirthis 
 
 California Bank v. Kennedy, 167 Attorney-General v. Great Eastern R. 
 U. S. 362. This is the doctrine of the Co., 5 App. Cas. 473; Trevor v. Whit- 
 English decisions. Ashbury, etc., R. worth. 12 App. Cas. 409; Oregon, etc. 
 Co. v. Riche, L. R., 7 H. L. 653; Co. v. Roper, 1892 App. Cas. 125.
 
 220 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §218 
 
 court it is settled in favor of the right of a corporation to plead 
 its want of power, that is to say, to assert the nullity of an act 
 which is an ultra vires act." In another case the court said: 1 
 '■A contract made by a corporation beyond the scope of its 
 powers, express or implied, on a proper construction of its 
 charter, can not be enforced or rendered enforcible by the ap- 
 plication of the doctrine of estoppel." 
 
 § 21S. Partially executed ultra vires contracts. — According 
 to the weight of authority in the state courts where there has 
 been performance of an ultra vires contract on the part of the 
 corporation, the other party is estopped to assert the claim 
 that the corporation had no authority to make the contract. 2 
 "One who has received from a corporation the full considera- 
 tion of his engagement to pay money * * * can not avail 
 himself of the objection that the contract thus fully per- 
 formed by the corporation was ultra vires and not within its 
 chartered privileges and powers." 3 The converse of this rule 
 that a private corporation can not avail itself of the defense of 
 ultra vires, where the contract has been in good faith fully 
 performed by the other party and the corporation has had the 
 benefit of the contract and the performance, is supported by 
 the overwhelming weight of authority, 4 although it has been 
 
 1 Union, etc., R. Co. v. Chicago, etc., 
 I:. Co., L63 i . S. 564. 
 
 kaufv. Lombard, L37 N. V. U7; 
 ' »ii ( Ireek, etc., R. Co. v. Pennsylvania, 
 etc., Co., 83 Pa. Bt. L60; Reynolds v. 
 tordsville Bank, 112 U. B. 405; 
 Bhewalterv. Pirner, 55 Mo. 218; Eck- 
 ni.-iri v. ( Ihicago, etc., R. < '"., 169 III. 
 812; Chester, etc., I lo \ Dewey, L6 
 
 '.' I ; < Miin.-ihtMU ii, etc., < '". v. 
 
 Dhein, 13 Wis. 120; Whitney, etc., Co. 
 
 v. I: u i N. V. n ' Bi ell v. 
 
 Mirhfiran, ft.- . I: i 
 Building Assn. v. Lampson, 80 Minn. 
 422; Bath, etc., Co. v.Claffy, 151 V v. 
 ii < it v. etc., Bank 
 
 90 Mich 550; National 
 Bank v. Whitney, L08 I 99. In 
 
 Alabama, the defense of ultra vires 
 may be interposed withoul accounting 
 for benefits received. 
 
 3 Whitney, etc., < !o. v. Barlow,8«jjra. 
 
 4 Darsi v. Gale, 83 111. L36; Bradley 
 v. Ballard, 55 III. H3,8 Am. Rep. 656; 
 Kadish v. Loan Assn.. L51 III. 581 ; 
 Bissell v. Michigan, etc., R. Co., 22 
 \ Y. 258; Peoria, etc., R. Co. v. 
 Thompson, 108 ill. 187; Manchester, 
 etc., R. Co. v. < loncord, etc., R. < '<>., 
 66 N. II. 100, 20 Ail. Rep. 883; Cam- 
 den, etc., R. ( '<». v. Mays, i tc., R. < '•>.. 
 48 V .1. L. 580; In re Pendleton, etc., 
 < '.. . "i < >re, 830; Beymour v. I hiar- 
 anty, etc., 8oc, ■'< i Minn. I 17 : 1 tolmes, 
 etc., < '". v. Holmes, etc., < !o., L27 N 
 Y. 262; Rider, etc., Co. v. Roach, 97 N.
 
 §219 
 
 THE DOCTRINE OF ULTRA VIRES. 
 
 221 
 
 subjected to some criticism. 1 There are decisions, however, 
 which hold that the defense can be interposed at any time by 
 either party. 2 But this rule should evidently apply only to 
 contracts which are contrary to public policy or positive law. 
 The part performance must be such as will render the defense 
 of ultra vires unjust and inequitable. 3 An ultra vires contract 
 wholly executory will never be enforced. 
 
 § 219. Estoppel— Retention of benefits.— The effect of part 
 performance is generally made to turn upon the fact that by 
 reason thereof the other party has received and retains benefits 
 under the contract. Hence, neither party to an ultra vires 
 contract will be heard to say that one or both of the parties 
 thereto had no power to make the contract while he retains the 
 benefits received under the contract.' The result is that the 
 
 Y. 378; State Board v. Citizens', etc., 
 R. Co., 47 Ind. 407,17 Am. Rep. 702; 
 Connecticut, etc., Bank v. Fiske, 60 
 N. H. 363 ; Wood v. Corry, etc., Wks., 
 44 Fed. Rep. 146, 12 L. R. A. 168; 
 Carson City, etc., Bank v. Carson City, 
 etc., Co., 90 Mich. 550, 30 Am. St. Rep. 
 454; Wright v. Pipe Line Co., 101 Pa. 
 St. 204, 47 Am. Rep. 701 ; Wright v. 
 Hughes, 119 Ind. 324, 12 Am. St. Rep. 
 412; Mainv. Casserly, 67 Cal. 127. 
 
 1 Taylor Priv. Corps., § 279. 
 
 2 The following cases hold that the 
 corporation may defend on the ground 
 of ultra vires although it has enjoyed 
 and retains the benefits of the con- 
 tract. Albert v. Savings Bank, 1 Md. 
 Ch. 407; Sherwood v. Alvis, 83 Ala. 
 115, 3 Am. St. Rep. 695; Chewacla, 
 etc., Wks. v. Dismukes, 87 Ala. 344. 
 See Boynton v. Lynn, etc., Co., 124 
 Mass. 197. 
 
 3 Nassau Bank v. Jones, 95 N. Y. 
 115; Bosshardt, etc., Co. v. Crescent, 
 etc., Co., 171 Pa. St. 109. 
 
 4 Seymour v . Spring Forest, etc., 
 Assn., 144 N. Y. 333, 26 L. R. A. 859; 
 Bath, etc., Co. v Claffy, 151 N. Y. 24, 
 36 L. R. A. 664; Wright v. Hughes, 
 
 119 Ind. 324, 12 Am. St. Rep. 412; 
 Wright v. Pipe Line Co., 101 Pa. St. 
 204; Hardware Co. v. Phalen, 128 Pa. 
 St. 110; Dewey v. Toledo, etc., R. Co., 
 91 Mich. 351; Carson City, etc., Bank 
 v. Carson City, etc., Co., 90 Mich. 550 ; 
 Union, etc., Co. v. Plum, etc., Co., 58 
 Conn. 219; Louisville, etc., R. Co. v. 
 Flannagan, 113 Ind. 488, 3 Am. St. 
 Rep. 074 ; Manchester, etc., R. Co. v. 
 Concord R. Co., 66 N. H. 100, 20 Atl. 
 Rep. 383; Colorado, etc., Co. v. Grand 
 Valley, etc., Co. (Colo.), 32 Pac. Rep. 
 178 ;'Tylerv.Tualatin Academy, 14 Ore. 
 485; Natchez v. Mallery, 54 Miss. 499; 
 Humphrey v. Patrons', etc., Assn., 50 
 Iowa 607; Twiss v. Guaranty, etc., 
 Assn., 87 Iowa 733, 55 N. W. Rep.89; 
 Darstv.Gale, 83 111.136 ; Wood v.Corry 
 Water Works, 44 Fed. Rep. 146; Link- 
 auf v. Lombard, 137 N. Y. 417; Whit- 
 ney, etc., Co. v. Barlow, 63 N. Y. 62; 
 Camden, etc., R. Co. v. Mays, etc., R. 
 Co., 48 N. J. L. 530; Sherman, etc., 
 Co. v. Morris, 43 Kan. 282; McGee v. 
 Pacific, etc., Co., 98 Cal. 678; Comw. 
 v. Suffolk, etc., Co., 161 Mass. 550, 37 
 N. E. Rep. 757; Hitchcock v. Galves« 
 ton, 96 U. S. 341.
 
 222 THE LAW OF PRIVATE CORPORATIONS. § 219 
 
 action is maintained on the contract, because the party who re- 
 tains the benefits under it is not permitted to say that it is 
 invalid. 1 "The contract in such case is assumed by the court 
 to be valid, the party seeking to avoid it not being permitted 
 to attack its character in this respect. 2 This rule has been 
 applied where an insurance company issued a policy against 
 loss caused by hail; 3 where a corporation, engaged in the busi- 
 oesa of innkeeper, sought to escape liability as such to a guest, 4 
 and where a street railway corporation agreed to pay a certain 
 sum if an agricultural fair was held at a certain place, and 
 attempted to avoid payment on the ground that the contract 
 was ultra vires."* "There are few rules," said Chief Justice 
 Gilfillan, 6 "better settled or more strongly supported by author- 
 ity, with fewer exceptions in this country, than that when a 
 contract by a private corporation, which is otherwise unob- 
 jectionable, has been performed on one side, the party which 
 has received and retains the benefit of such performance shall 
 not be permitted to evade performance on the ground that the 
 contracl was in excess of the purpose for which the company 
 was created. The rule may not be strictly logical, but it pre- 
 vents a great deal of injustice." Thus, a party who has bor- 
 rowed money from a corporation and given his promissory 
 note therefor can not, when sued upon the note, be heard to 
 Bay that the corporation had no power to make the loan. 7 In 
 a very recent Wisconsin case, where a receiver of a foreign 
 
 'Wright v. Pipe Lin.- (V, mi Pa. 17 Barb. 378, Parker, J., said: "It ill 
 
 St. 204; Dewey v. Railroad <'<>.. 91 becomes the defendants t" borrow 
 
 Mich. 861. from the plaintiffs $1,000 fora single 
 
 2 Denver, '•!'-., <'■•. v. McClelland, 9 day, to relieve their immediate neces- 
 
 Colo. 11. Bities, and then to turn around and 
 
 • Denver, etc., Co. v. McClelland, 9 say : 'I will not return you this money, 
 
 Colo. !i. because you had no power, by your 
 
 •Magee v. Improvement <'"., 98 charter, to lend it.' Let them first re- 
 
 C;il ■ Btore the money, and then it w ill be 
 
 I v. Citizens', etc., l>'. time enough for them to discuss with 
 
 i i ; i,pl. 107. the sovereign power of tin' state of 
 
 ■ vi rv. Guaranty, etc., Society, Connecticut the extent "i the plaint- 
 
 .-, i Minn. it7. in"- chartered privileges. We shall 
 
 7 l'i k v. Lafayette, etc., \--n., 71 lose our respect for the law, when it 
 
 [„.|. .;., in -•• im ' 7. Weed, bo far loses its character for justice as
 
 § 220 THE DOCTRINE OF ULTRA VIRES. 223 
 
 corporation asserted that the action of the officers of the cor- 
 poration in depositing securities in the state in order to qualify 
 the corporation for doing business there was ultra vires, the 
 court said: "It is well settled that a corporation can not avail 
 itself of the defense of ultra vires when the contract in question 
 has been in good faith, fully performed by the other party and 
 the corporation has had the full benefit of the performance oi 
 the contract. Much less will the claim that the transaction 
 was ultra vires be allowed as a ground for rescinding the 
 contract and restoring to the complaining party on that ground 
 the property or funds, with which he has parted, after he has 
 had the benefit of full performance of the contract by the other 
 party; and, in general, the plea of ultra vires will not be 
 allowed to prevail, whether interposed for or against a cor- 
 poration, when it will not advance justice, but, on the con- 
 trary, will accomplish a legal wrong." 1 
 
 § 220. Acquiescence in ultra vires acts. — If a stockholder 
 desires protection against an ultra vires act of the corporation 
 he must act promptly and energetically, or he will be bound 
 by acquiescence. If he assents to the transaction or for an un- 
 reasonable time acquiesces until the other party has acted on 
 the faith of the transaction so that he will suffer great injury 
 by its repudiation, a court of equity will be slow in granting 
 him relief. 2 
 
 to sanction the defense here at- 2 Stewart v. Transportation Co., 17 
 tempted." Minn. 372 (Gil. 348); Alexander v. 
 1 Lewis v. American, etc., Assn., Searcy, 81 Ga. 536; Dimpfel v. Rail- 
 98 Wis. 203, 73 N. W. Rep. 793, 39 road Co., 110 l T . S. 209; St. Louis, etc., 
 L. R. A. 559, citing Kadish v. Gar- R. Co. v.Terre Haute, etc., R. Co., 145 
 den, etc., Assn., 151 111.531 ; Whitney, U. 6. 393; Boyce v. Montauk, etc., ( V, 
 etc., Co. v. Barlow, 63 N. Y. 62; 37 W. Va. 73; Ashhurst's Appeal, 60 
 Union, etc., Bank v. Matthews, 98 Pa. St. 290; Green's Brice's Ultra Vires, 
 U. S. 621 ; Carson City, etc., Bank v. 783. In Nashua, etc., Corp. v. Boston, 
 Carson City, etc., R. Co., 90 Mich. 550, etc., Corp., 157 Mass. 268, 31 N. E. 
 30 Am. St. Rep. 454. As to the right of Rep. 1060, it was held that a contract 
 the receiver to assert the defense of for the joint operation of two railroads 
 ultra vires, see Abbott v. Baltimore, would not be declared ultra vires in an 
 etc., Co., 1 Md. Ch. 542; First, etc., action on the contract, when the de- 
 Bank v. Kiefer Co. , 95 Ky. 97. fense was not set up in the answer, or
 
 224 THE LAW OF PRIVATE CORPORATIONS. § 221 
 
 It is said to be the continuing duty of a party to an ultra 
 vires contract to rescind the same, but where a suit was brought 
 to have set aside and canceled a conveyance of the plaintiff's 
 railroad and franchises, plaintiff failed because of his laches. 
 
 It appeared that the contract had been fully executed on the 
 part of the plaintiff by the actual transfer of its railroad and 
 franchises to the defendant and that the defendant had held 
 the property, and paid the stipulated consideration from time 
 to time for a period of seventeen years, and had taken no steps 
 to rescind or repudiate the contract. The contract was held to 
 be ultra vires, but the court said: 1 "Upon this state of facts, 
 for the reasons above stated, the plaintiff considered as a party 
 t>> the unlawful contract has no right to invoke the assistance 
 of a court of equity to set it aside. And so far as the plaintiff 
 corporation can be considered as representing the stockholders, 
 and seeking to protect their interests, it and they are barred by 
 laches." 2 This case is not like those in which the defendant, 
 having abandoned or refused to perform the unlawful contract, 
 has been held liable to the plaintiff, as upon an implied con- 
 tract, for the value of what he has received from him, and had 
 no right to retain. 3 
 
 § 221. Ratification of ultra vires acts. — A corporation may 
 ratify a contract which it has power to make. Hence, if a 
 contract ie entered into by some one in its behalf without au- 
 thority, or is voidable because some formality has not been ob- 
 served, it may be ratified by the corporation acting in some 
 proper form. 1 A voidable contract may he ratified by a ma- 
 jority ot the stockholders, because a majority having the con- 
 in a previous action between the same l St. Louis, etc., R. ('>>. v. Terre 
 parties on the same contract, and Haute, etc., R. Co., 145 TJ. S. 898. 
 
 when no statute or decision oi thai 'Harw 1 \. Railway, 17 Wall. 
 
 ;/n -t;it'' i- cited in (TJ. 8. 1 78. 
 support "i tli" defense, and when • Spring Co. v. Knowlton, LOS U.S. 
 
 othing to show that the legia* 49; Bank v. Townsend, 189 TJ. S. 67 
 lature or any public officer of either 4 North Point, etc., Co. v. Utah, etc., 
 er objected to the con« Co., 16 Utah 246, 40 L. R. A. 851; Sey- 
 mour v. Spring Forest, etc., Assn., 1 1 J 
 N. v. :;:;:;, 26 L. R. \. 859.
 
 § 222 THE DOCTRINE OF ULTRA VIRES. 225 
 
 trol of the corporation within the general scope of its powers 
 might have made the original contract. But a contract which 
 is ultra vires because in excess of the power of the corporation 
 can not be ratified. 1 The question of the liability of a corpo- 
 ration for the torts of its agents in excess of their authority 
 will be considered elsewhere. The corporation may become 
 responsible for such acts by receiving the benefits accruing 
 therefrom. Thus, where the agents of a corporation organ- 
 ized for educational purposes engaged in the business of con- 
 veying passengers from the railway station to the grounds of 
 its school buildings, it was held that the corporation was 
 liable for injuries occasioned by the negligence of such agents 
 where it appeared that the managing officers knew that the 
 business was being carried on and received and retained the 
 income resulting therefrom. 2 
 
 III. Contracts Illegal Because Malum Prohibitum or Malum 
 
 In Se. 
 
 § 222. General statement. — Attention has already been 
 called to the distinction sometimes made between contracts 
 which are merely unauthorized by the corporate charter and 
 contracts which are illegal because contrary to law. The word 
 illegal is very often used to characterize both kinds of con- 
 tracts. A contract may be illegal because immoral in itself, 
 because expressly forbidden by statute, or because it is against 
 public policy. An act which is not authorized is ultra vires; 
 an act which is not only not authorized, but expressly prohib- 
 ited is not only ultra vires but also illegal. There is no reason 
 for using the phrase ultra vires to describe contracts which are 
 illegal in this sense of the word, because they are governed by 
 
 1 San Diego, etc., R. Co. v. Pacific, and agreeth to a trespass after it ia 
 
 etc., Co., 112 Cal. 53, 33 L. R. A. 788. done, is no trespasser, unless the tres- 
 
 2 Nims v. Mt. Hermon, etc., School, pass was done to his use or for his 
 
 160 Mass. 177, 22 L. R. A. 364; East- benefit, and then his subsequent agree- 
 
 ern, etc., R. Co. v. Broom, 6 Exch. ment amounteth to a commandment." 
 
 314. "He that receiveth a trespasser, 4 Inst. 317. 
 15 — Private Corp.
 
 226 THE LAW OF PRIVATE CORPORATIONS. § 223 
 
 the same principles that govern similar contracts between in- 
 dividuals. 1 
 
 § 223. Contracts malum in se. — There is nothing peculiar to 
 the law of corporations in contracts of this character. Such 
 contracts can never be enforced. The illegality, however, 
 must adhere in the contract itself, and mere knowledge on 
 the part of one party that the proceeds of the contract will be 
 used for an illegal purpose will not render the contract void 
 as against the party who did not participate in the illegal un- 
 dertaking. 2 An illustration of contracts which are illegal, 
 malum in se, is found in an agreement to pay for lobbying an 
 act through the state legislature. 3 
 
 § 224. Contracts against public policy. — Certain classes of 
 contracts, while not expressly prohibited by statute, are re- 
 garded as illegal, because against the public policy of the state. 
 Corporations which are charged with public duties are not per- 
 mitted to enter into contracts which will render them incapable 
 of performing such duties. All such contracts on grounds of 
 public policy are illegal and unenforcible. Thus, such cor- 
 porations can not, without the consent of the state, dispose of 
 their entire property, transfer or encumber their franchises, 
 or make any contracts which will deprive them of the ability 
 to perform their public duties. 4 Ultra vires contracts of this 
 character, which relate to franchises, trust monopolies, traffic 
 and pooling arrangements, have been already considered. 5 
 
 § 225. Statutory prohibitions. — If the statute expressly pro- 
 hibits tli«' making of a certain contract and uses language 
 Which shows that it was the intention of the legislature that 
 
 »01 f tupra. ( '"- v. Sims, l04Cal. 326. Bee cases 
 
 |. .. • ,. Talmage, it N. Y. 162; cited, §125, supra. A mortgage cov- 
 
 .1 Planters' Bank, 9 Heisk. ering the corporate property and 
 
 i.-,.-, franchises may !><■ valid as tit tin- 
 
 •Marshall v. Baltimore, etc., R. Co., property and invalid as to the fran- 
 
 !t; ||,, ii. chises. Gloniger v. EtailroadOo., L89 
 
 1 American, etc . Co. v. Onion Pac. Pa. St. 18. 
 
 I: Co i McCray 188; Visalia, etc., ■'' . [76, supra.
 
 § 225 THE DOCTRINE OK ULTRA VIRES. 227 
 
 such contracts should be void, they are necessarily illegal and 
 unenforcible. In many states there are statutory provisions, 
 which prohibit corporations from doing any acts not author- 
 ized by their charters. Thus, the New York statute 1 provides 
 that "In addition to the powers enumerated in thefiist section 
 of this recital, and to those expressly given in its charter, or 
 the act under which it is or shall be incorporated, no corpora- 
 tion shall possess or exercise any corporate powers, except 
 such as shall be necessary to the exercise of powers so enumer- 
 ated and given." This is merely a statement of the common 
 law rule which has already been discussed. A contract in ex- 
 cess of the corporate power is no more illegal in the proper use 
 of that word, than it would be if no such statute existed. It 
 is merely ultra vires for want of corporate power. The quality 
 of the act is in no way determined by the statute. The New 
 York courts construe the provision as merely declaratory of the 
 common law, 2 although in other states such a statute is re- 
 garded as making the act illegal and void. 3 The English 
 courts under the theory of general capacity are in exactly the 
 same position as an American court under such a statute. 
 Under the doctrine of general capacity the charter contains 
 only prohibitions, and what is not prohibited, if within the 
 scope of the object of the incorporation, is granted. 4 Under 
 general statutes like that above quoted, every act not granted 
 is prohibited with the same force as by negations contained in 
 English corporate charters. 
 
 As a general proposition it may be said that a prohibited 
 act is an illegal act, and an illegal act can not be made the 
 basis of a legal action. In this respect it is like an act malum 
 in se, which involves moral turpitude, and is governed by 
 the maxim ex turpi causa non oritur actio. But this general 
 
 '3N.Y. Rev. Stat. (8th ed.) 1723. are generally called illegal. See Tay- 
 
 2 Curtis v. Leavitt, 15 N. Y.9; Bond lor v. Chichester, etc., R. Co., L. 
 
 v. Terrell, etc., Co., 82 Tex. 309. R. 2 Ex. 35fi ; South Yorkshire R. Co. 
 
 s Morris, etc., R. Co. v. Sussex, etc., v. Great Northern R. Co., 9 Ex. 55, 
 
 R. Co., 20 N. J. Eq. 542. S4 ; Scottish, etc., R. Co. v. Stewart, 
 
 4 East, etc., Co. v. Eastern, etc., R. 3 Macq. 382, 415. See Nat., etc., Co. 
 
 Co., 11 C. B. 775. All ultra vires acta v. Home Sav. Bank (111.), 54 N. E. 
 
 Rep. 619.
 
 228 THE LAW OF PRIVATE CORPORATIONS. § 22G 
 
 rule is subject to exceptions. " If a statute expressly forbids 
 a corporation to make a certain contract, the contract is void, 
 even though not expressly declared to be so, and is incapable 
 of ratification; and that the contract is unlawful may be 
 pleaded by any one to an action founded directly and ex- 
 clusively on the contract; 1 unless (1) the statute expressly 
 states what the consequences of violating it shall be and those 
 consequences are other than that the contract is void; 2 or (2) 
 the statutory prohibition was evidently imposed for the pro- 
 tection of a certain class of persons who alone may take ad- 
 vantage of it; or (3) to adjudge the contract void and incapa- 
 ble of forming a basis of a right of action would clearly frus- 
 trate the evident purpose of the prohibition itself." 1 
 
 § 22(3. Illustrations. — The most of the cases in which the 
 courts enforce a contract, although made in the face of charter 
 or statutory prohibition, fall under the third exception to the 
 general rule stated in the preceding section. Where a na- 
 tional bank made an ultra vires loan of money upon real es- 
 tate security, the court refused to enjoin the sale of the security 
 under a deed of trust, as it was not the intention of the law 
 "that stockholders and perhaps depositors and other creditors 
 should be punished and the borrower rewarded by giving 
 success to this defense whenever the offensive facts should 
 occur. The impending danger of a judgment of ouster and 
 dissolution was, we think, the check and none other contem- 
 plated by congress. Thai has been always the punishment 
 pr< Bcrihed for the wanton violation of a charter, and it maybe 
 made to follow wheneverthe proper public authority shall see 
 fit to invoke its application."' An art which provides that 
 savings hank- -hall qo1 make loans upon personal security 
 alone will not prevent the hank from maintaining an action 
 for a note given for Buch prohibited loan. 8 
 
 'Bank y. Owens, 2 Pet. (U.S.) 527; •National Bank v. Matthews, 98 
 
 .at v. Palmer, 3 V Y. L9; Bank U.S. 621; National Bank v. Whitney, 
 
 v. Alvord, 81 V V LOS L7. S. 99. 
 
 •Pratl v. Short, 79 v Y 187. ■ Farmington Sav. Hank v. Palls, 71 
 
 .. loi Ph.. I orp . 297. Me. 49.
 
 § 227 THE DOCTRINE OF ULTRA VIRES. 229 
 
 A violation of the law which forbids national banks to loan 
 more than a certain amount to one person will not prevent the 
 enforcement of such an excessive loan. 1 So, a director who 
 borrows from the bank in violation of the statute, may be com- 
 pelled to repay the money. 2 The same rule applies when the 
 prohibition arises by implication, as where national banks are 
 impliedly forbidden to take real estate security, for loans. 8 So, 
 but for other reasons, a statutory prohibition of a debt will not 
 authorize a corporation to keep money which it was forbidden 
 to borrow. 4 
 
 § 227. Liability for benefits received under illegal contracts. 
 
 — It has already been stated that under contracts ultra vires for 
 want of power, the defense can not be asserted while benefits 
 received thereunder are retained. 5 Where the contract is 
 illegal, malum per se, the parties being particeps criminis, the 
 court will leave them where it found them. If it is merely 
 malum prohibitum, it is held in some cases that it may be 
 rescinded at any time and the money advanced thereon recov- 
 ered. 6 Where both parties to such a contract have received 
 benefits under it, the one which seeks to rescind and recover 
 what he has paid must offer to return what he has received. 7 
 So, the party who is less guilty than the other may disaffirm 
 and recover what he has parted with. The statutory prohibi- 
 tion may be intended for the benefit of the party seeking re- 
 lief. Thus, where a bank issued bills contrary to law, the 
 court said: 8 "The corporation issuing bills contrary to law and 
 against penal sanctions is deemed more guilty than the mem- 
 bers of the community who receive them, whenever the receiv- 
 ing of them is not expressly prohibited. The latter are regarded 
 
 1 National Bank v. Matthews, 98 6 Spring Co. v. Knowlton, 103 TJ. S. 
 U. S. 621. 4H ; Oneida Bank v. Ontario Bank, 21 
 
 2 Lester v. Howard Bank, 33 Md N. Y. 190. 
 
 558. 7 American, etc., Co. v. Union, etc., 
 
 'National Bank v. Matthews, 98 R. Co., 1 McCrary 188. 
 U. S. 621. s Thomas v. Richmond, 12 Wall. 349; 
 
 4 Conn., etc., Bank v. Fiske, 60 White v. Bank, 22 Tick. 181, , Tracy 
 N. H. 363. v. Talmage, 14 N. Y. 162, 
 
 5 Franco, etc., Co. v. McCormick,85 
 Tex. 416. Contra (111.), 54 N. W. Rep. 
 619.
 
 230 THE LAW OF PRIVATE CORPORATIONS. § 228 
 
 as the persons intended to be protected by the law; and, if they 
 have not themselves violated an express law in receiving the 
 bills, the principles of justice require that they should be able 
 to recover the money received by the bank for them." 
 
 IV. Irregular Exercise of Power 
 
 § 228. Effect of irregularities, — There remains for consid- 
 eration the case of an irregular exercise of an authorized power. 
 It is apparent that a contract of this character should not be 
 held void. Generally contracts which are within the general 
 scope of the corporate powers, but in excess of the powers in 
 some particulars, are valid, unless they are contrary to public 
 policy. Persons dealing with the corporation are not required 
 to take notice of the failure to observe formalities or of extrin- 
 sic facts which are within the knowledge of the corporation. 1 
 
 When a corporation has acted upon an executed contract, it 
 is to be presumed against it that everything necessary to make it 
 a binding contract on both parties was done, the corporation 
 haying had all the advantage it would have had if the contract 
 had been regularly made. 2 
 
 § 229. Want of power and neglect of formalities, — The 
 manner of executing a power may be prescribed by the statute 
 in such manner as to be a limitation upon the grant, and to 
 render an act done in any other way voidable. 3 But when the 
 general power to do an act exists persons dealing with a cor- 
 poration may assume that the accessary formalities have been 
 observed ID its exercise. 4 As said by one court: 5 "If a cor- 
 poration in the exercise of ;i franchise not granted to it by the 
 lature makes n contracl or does an act, they may plead 
 their wanl of authority on the ground thai the courts will not 
 Interfere to granl redress between two persons engaged in an 
 
 'The leading i babh Moore 'SeeGutta Percha, etc., Co. v. Oga- 
 
 ■ m.i- .-. etc., 7:; V Y. 288, 29 im. hill". K) Neb. 775. 
 
 134; in nrance Co. v. Dhein, i"> 'Miners', etc., Co. v. Zellerbacb.,87 
 
 Wia. 120; Merchant*' Bank v. State Gal. 648, 99 Am. Dec. 800, 
 
 Bank, 10 Wall I < 804. I Sty, etc., Co. v. Carrogi, 41 Ga 
 
 •Bole in 7 Eng. Bui. « 660.
 
 § 230 THE DOCTRINE OF ULTRA VIRES. 231 
 
 illegal enterprise. But if the contract is within the scope of 
 the franchise, but fails to conform to the regulations prescribed 
 by the charter for the guidance of its officers, and the protection 
 of the rights of the members as to each other, the corporation 
 may be held liable under the general rules of law, as to agency, 
 estoppel and waiver." The question often arises where serv- 
 ices have been rendered under a contract not made in accord- 
 ance with statutory requirements. Thus, one who is employed 
 to teach a district school, may recover for services actually ren- 
 dered, although the contract of employment was not authorized 
 by the trustees at a meeting of all their number called for that 
 purpose as required by law. The court said: 1 "Having 
 availed itself of the services, and received the benefits, it is 
 bound in conscience to pay, and will not be heard to say that 
 the original agreement was not made by a person legally 
 authorized to make it." Another illustration is found in the 
 rule that negotiable paper issued by a corporation for an un- 
 authorized purpose is valid in the hands of an innocent 
 holder if the corporation had power to issue such paper for 
 any purpose. 
 
 § 230. Reasons for the distinction — Statement of Chief 
 Justice Sawyer. — The distinction between acts which are be- 
 yond the power of the corporation and acts within the general 
 scope of the corporate power, but in excess thereof in some 
 particular, is thus stated by the supreme court of California: * 
 
 1 Fister v. La Rue, 15 Barb. (N. Y.) not void because made in violation of 
 323. See, also, City of Ellsworth v. express law, or good morals, or public 
 Rossiter, 46 Kan. 237; Cincinnati v. policy, and where the corporation re- 
 Cameron, 33 Ohio St. 336; Pixley v. tains such benefits, it must pay for 
 Railroad Co., 33 Cal. 183; Ward v. them." But a school teacher can not 
 Forest Grove, 20 Ore. 355; Hawk v. recover for services rendered when 
 Marion County, 48 Iowa 472; Kneeland he had not the certificate of qualifica- 
 v. Oilman, 24 Wis. 39. In Commission- tions required by Btatute. It was 
 crs v.Webb, 47 Kan. 104, the court said: treated as a prohibitory statute. 
 " Where a corporation, municipal or Goose River Bank v. Willow Lake 
 otherwise, has received benefits from School Tp., 1 N. Dak. 26, 26 Am. St. 
 others, upon contracts ultra vires or Rep. 605. 
 
 void because of some irregularity or 2 Miners', etc., Co. v. Zellerbach, 
 
 want of power in their creation, but 37 Cal. 543. For the same principle
 
 232 THE LAW OF PRIVATE CORPORATIONS. § 230 
 
 "Strangers are presumed to know the law of the land, and they 
 are bound when dealing Avith corporations to know the powers 
 conferred by the charters. These are open to their inspection 
 and it is easy to determine whether the act is within the scope 
 of the general powers conferred for that purpose. But they 
 have no access to the private papers of the corporation or to 
 the motives which govern directors or stockholders, and no 
 means of knowing the purposes for which an act that may be 
 lawful for some purposes is done. The very fact that the ap- 
 pointive officers of the corporation assume to do an act in the 
 apparent performance of their duties, which they are author- 
 ized to perform for the lawful purposes of the corporation is a 
 representation to those dealing with them that the act per- 
 formed is for a lawful purpose. And such is the presumption 
 of the law, and upon this presumption, strangers having no 
 notice in fact of the unlawful purpose are entitled to rely. * * 
 Upon any other principles there would be no safety in dealing 
 with corporations, and the business operations of these institu- 
 tions would be greatly crippled, while the interests of the 
 stockholders and the public and their general usefulness 
 would be seriously Impaired. The officers are appointed by 
 the corporation, and if any loss results to strangers dealing 
 with the corporation in matters within the general scope of 
 their duties, it should fall upon the corporation which is re- 
 sponsible for their appointment rather than upon parties who 
 have no other means of ascertaining the facts anil must rely 
 upon their assurances or not deal with the corporation at all." 
 
 as determining the liability of a public of Minneapolis (Minn., 1898), 77 N.W. 
 corporation for torts, see Sacks v. City Rep. 563.
 
 CHAPTER 10. 
 
 LIABILITY FOR TORTS AND CRIMES. 
 
 § 232. General statement. § 236. The commission of crime. 
 
 233. Growth of the law. 237. Crimes involving intent. 
 
 234. The modern rule. 238. Contempt of court. 
 
 235. Liability for punitive damages. 239. Proceedings. 
 
 § 232. General statement. — The rule by which corporations 
 are held responsible for the results of their tortious acts has 
 been established in the face of much opposition. In the earlier 
 cases the courts became entangled in the meshes of metaphys- 
 ical theories regarding the nature of corporations and wasted 
 much thought in trying to ascertain how an incorporeal entity 
 without conscience or soul could entertain the intent which 
 was an essential element of certain torts and crimes. It was 
 said that a corporation could exercise only such powers as 
 were expressly or by implication conferred upon it by its 
 charter and no charter conferred the authority to commit a 
 tort or a crime. Hence when the agents of a corporation wi re 
 guilty of a wrong they were to be considered as acting in their 
 individual capacity and as individuals be held responsible for 
 their acts. So it was said that indictment required an appear- 
 ance at the bar, and an incorporeal entity could not appear, 
 from which it was supposed to follow that a corporation could 
 not be indicted for a crime. But it gradually dawned upon 
 the courts that if "the invisible, intangible essence of air, 
 which we term a corporation, can level mountains, fill up val- 
 leys, lay down iron tracks and run railroad cars upon them, 
 it can intend to do it, and can act therein as well viciously a« 
 virtuously. 1 
 
 1 Bishop New Crim. Law, § 417. 
 (233)
 
 23-4 THE LAW OF PRIVATE CORPORATIONS. § 233 
 
 § 233. Growth of the law, — It was long thought that as a 
 corporation had no mouth with which to utter slander, or hand 
 with which to write libels or commit batteries, or mind to sug- 
 gest malicious prosecutions or other wrongs — as it was an arti- 
 ficial person, and could speak and act only through the agency 
 of others — it was not liable for any torts except such as re- 
 sulted from some act of commission or omission of its agents 
 or servants while acting within the scope of granted powers, 
 or wrongfully omitting and neglecting some duty imposed by 
 its charter or by-laws. Consequently it was necessary to allege 
 that the act committed was done while acting within the scope 
 and power of the company, or that the act omitted was required 
 to be performed. Whether it were wise to depart from this 
 rule that excepted corporations from liability for the acts of 
 its agents in cases where the character of the act depended upon 
 motives or intent seems no longer open. The old idea that, 
 because a corporation had no soul, it could not commit torts, 
 or be the subject of punishment for tortious acts, may now be 
 regarded as obsolete. The rights, the powers and the duties of 
 corporate bodies have been so enlarged in modern times, and 
 they have become so numerous, and enter so largely into the 
 every-day transactions of life, that it has become the policy 
 of the law to subject them, so far as practicable, to the same 
 civil liability for wrongful acts as attach to natural persons. 
 The liability is not restricted to acts committed within the 
 scope of granted powers, but the corporation may be liable in 
 an action for false imprisonment, malicious prosecution or 
 libel. 1 
 
 1 For a statement of the reasons for is asserted to be, a greater and more 
 
 the rule that a corporation is not liable mischievous monster can Dot be im- 
 
 i"i a malicious prosecution, see V.brath agined. According to the doctrine con- 
 
 rtheastern I;. <'•>., II Q. B. Div. tended for, if they do and act within 
 
 ii'i • \m. I-. i per the scope of their corporate powers, it 
 
 Lord Brammell. The American cases is legal and they are not amenable foi 
 
 holding this doctrine have been over- it. 1 1 the ad be doI within the scope 
 
 ruled. In Reed v. Home Bav. Bank, of their legitimate powers, they had 
 
 ii:. the modern doctrine do right to do it; it was doI one of the 
 
 tated and the court said: "If a objects for which they were incorpo- 
 
 oorporation be the intangible being it rated, and therefore il is do act of tln j
 
 § 234 LIABILITY FOR TORTS AND CRIMES. 235 
 
 §234. The modern rule. 1 — It is now the. settled law that a 
 corporation is liable civiliter for torts committed by its agents 
 or servants precisely as a natural person, and that it is liable 
 as a natural person for the acts of agents done by its authority, 
 express or implied, although there is neither a written appoint- 
 ment under seal, nor a vote of the corporation constituting 
 the agency or authorizing the act. 8 When an officer does an 
 act which is within the general scope of his powers, although 
 circumstances may exist which render the particular act a vio- 
 lation of his duty, the corporation is nevertheless bound by his 
 acts as to persons dealing in ignorance of those circumstances, 
 and is responsible to innocent third parties who have sustained 
 damages occasioned by such acts. 3 But in a late case it was said: 
 "In consequence, however, of the fact that a corporation must 
 of necessity act through its agents, courts have almost invaria- 
 bly held that to hold a corporation liable for a tortious act com- 
 mitted by its agent the act must be done by its express precedent 
 authority, or ratified and adopted by the corporation. Nor 
 is a corporation responsible for unauthorized and unlawful 
 acts, even of its officers, though done colore officii. To fix 
 the liability it must either appear that the officers were ex- 
 pressly authorized to do the act or that it was done bona fide 
 
 corporation at all. This doctrine leads U.S. 637; Bank v. Graham, 100 U. S. 
 to the absolute immunity for every 699; Fitzgerald v. Fitzgerald, etc., 
 species of wrong, and can never be Co., 41 Neb. 374, 59 N. W. Rep. 838; 
 sanctioned by any court of justice." Miller v. Railroad Co., 8 Neb. 219; 
 See Orr v. U. S Bank, 1 Ohio 36, 13 State v. Morris, etc., R. Co., 23 N. J. 
 Am. Dec. 588. 360; Wachsmuth v. Merchants' Nat, 
 1 An exception to the modern rule Bank, 96 Mich. 426; Randall v. Even- 
 still exists,— a public charitable cor- ing News, 97 Mich. 136; Railroad Co. 
 poration is not liable for the torts of v. Schuyler, 34 N. Y. 30; Kansas Citv 
 its agents. See Fire Ins. Patrol v. etc., Co. v. Phillips, 98 Ala. 159- Bank 
 Boyd, 120 Pa. St. 624, 6 Am. St. R. 745, v. Butchers', etc., Bank, 16 N. Y. 125 ; 
 Wilgus' Cases and cases there cited; Bissell v. Railroad Co., 22 N. Y. 258" 
 assault and battery, Eastern, etc., R. Bank v. Patchin Bank 13 N Y 309- 
 Co. v. Broom, 6 Ex. (VVels. H. & G.) 
 
 Williams v. Planters' Ins. Co., 57 Miss. 
 759;^ New York, etc., R. Co. v. Haring, 
 47 N. J. L. 137 ; Gunn v. Railroad Co., 
 
 314, Wilgus' Cases; false imprison- 
 ment, Wheeler & Wilson Mfg. Co. v. 
 
 Boyce, 36 Kan. 350, 59 Am. R. 571, 74 (4a. 599; Yarborough v. Bank of 
 
 Wilgus' Cases; slander and libel, England, 16 East 6; Lake Shore R. Co. 
 
 Behre v. National, etc., Co., 100 Ga. v. Prentice, 147 U.S. 101 ; Chestnut Hill] 
 
 213, Wilgus' Cases. etc., Co. v. Putter, 4 S. & li. (Pa.) (i, 8 
 
 8 Denver, etc., R. Co. v. Harris, 122 Am. Dec. 675; Hussey v. Norfolk etc 
 
 U. S. 597, per Mr. Justice Harlan; R. Co., 98 N. C. 34, 2 Am. St. Rep'. 312; 
 
 Railroad Co. v. Quigley, 21 How. 202; Goodspeed v. Bank, 22 Conn. 530. 
 Salt Lake City v. Holiister, 118 U. S. 8 Carter v. Howe, etc., Co.. 51 Mel 
 
 256; Steamboat Co. v. Brockett, 121 290, 34 Am. Rep. 311
 
 236 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §235 
 
 in pursuance of a general authority in relation to the subject of 
 it, or that the act was adopted or ratified by it." ' The liability 
 of a corporation for the consequences of acts of its officers, 
 done within the scope of their general powers, is not affected 
 by the fact that the act which the officers have assumed to do 
 is one which the corporation itself could not rightfully do. A 
 corporation, like an individual, ma} T do wrong through its 
 agent 2 and be liable for the wrongful act. 3 The liability ex- 
 tends to torts involving a specific intent, or the element of 
 malice, as fraud, 4 malicious wrongs, 5 libel, 6 malicious prosecu- 
 tion 7 or conspiracy. 8 
 
 § 235. Liability for punitive damages. — Out of the supposed 
 inability of a corporation to entertain an evil intent has grown 
 the contention over the question of its liability for exemplary 
 or punitive damages. As a general rule such damages can 
 not be allowed against a master for tin 1 mere negligence of his 
 servants, however gross, if he is personally free from fault. 
 Bui the rule is subject to qualification when the master is a 
 
 1 Central R. Co. v. Brewer, 78 Md. etc., R. Co., 148 Mass. 513, 12 Am. St. 
 
 394, 27 L. R. A. 63. Rep. 583; Aldrich v. Press Printing 
 
 ' Booth v. Bank, 60 N.Y. 396; Nims Co., 9 Minn. 133, Gil. 123, 86 Am. Dec. 
 
 v. Mt. Hermon Boys' Scl 1, 160 Mass. 84; Ilussey v. Norfolk, etc., R. Co., 
 
 177. -_' I.. K. A. 364; Wheeler, etc., 98 N. C. 34, 2 Am. St. Rep. 312. 
 
 1 . Boyce, 36 Kan. 350. As to the 8 Fogg v. Boston, etc., R. Co., supra; 
 liability of municipal corporations for Missouri, etc., R. Co. v. Richmond, 7:; 
 the tortious acts of its officers see Salt Tex. 568j l"> Am. St. Rep. 794. A cor- 
 Lake City v. Hollister, 118 l". 8.256. poration can not, probably, be held 
 
 3 V a in le rl lilt v. Richmond, etc., Co., for Blander, in the absence of a stat- 
 
 2 N V. 179,51 Am. I>' !. 315; Green ute. See Townsend Slander and L., 
 v. Omnibus Co., 7 c. B. (N. S.) 290; §265. Bui there are dicta to the con- 
 
 , p. 168. Thai an action trary. See Ilussey v. Norfolk, etc., 
 
 for dec. 'it will lie against a corporation, R. Co., 98 N. C. 34, 2 Am. St. Rep. 312. 
 
 .. D rsey,etc, Co. v. McCaffery, 139 Bui see Behre v. National, etc., Co., 
 
 In. I. i V.Minnesota, etc., Co., 100 Ga. 213, 62 Am. si. R. 320, 27 s. 
 
 ;■ ., i Bo ley v. National, etc., E. Rep. 986, Wilgus' Cases; also 
 
 50; Erie City Ironworks Reddit v. Singer Mfg. Co., 32 S. E. 
 
 v.lC' L06 Pa.St. 125; Mackay Rep. - V c, 392. 
 
 v. Bank of New Brui iP.C.894. 7 Reed v. Home Sav. Bank, ISO 
 
 •Abrath v. North Eh tern R. I 1 48, 39 Im.Rep. 168; Indiana, 
 
 l R.llApp.247. etc., Co v. Willis, 18 Ind. App. 525 18 
 
 -l jpeed \ Easl I [addam Bank, N. !•',. Rep, 846. 
 
 Green v. London, etc., 'FalBeimpri onmentbyactof agent, 
 
 I . < Boston, see ( ientral, etc., R. ( !o. v. Brewer
 
 § 236 LIABILITY FOR TORTS AND CRIMES. 237 
 
 corporation and can act only through agents. The negligence 
 of the superintending agent should be considered the negli- 
 gence of the corporation, and when exemplary damages could 
 have been recovered against such an agent, it should be al- 
 lowed against the corporation. 1 A corporation should be held 
 liable for punitive damages when an individual would be lia- 
 ble under the same circumstances. 2 The decisions, however, 
 are conflicting and may be divided into three classes. 
 
 ( 1 ) Those holding that only actual damages can be recov- 
 ered. 3 
 
 (2) Those allowing punitive damages when the wrongful 
 act of the agent or employe was willful and intentional. 4 
 
 (3) Those allowing punitive damages only when the 
 wrongful act was done under the express direction of the cor- 
 poration or afterwards ratified by the corporation. 5 
 
 § 236. The commission of crime. — There are some crimes 
 which a corporation, from its nature, can not commit, but 
 generally it is subject to indictment and punishment by fine 
 like a natural person. The capacity of a corporation to com- 
 
 78 Md. 394, 27 L. R. A. 63 ; Gillinghara etc., R. Co., 34 Cal. 594 ; Mendelsohn 
 
 v. Ohio, etc., R. Co., ,35 W. Va. 588, v. Anaheim, etc., Co., 40 Cal. 657; 
 
 14 L. R. A. 798; Palmeri v. Manhat- Hays v. Houston, etc., R. Co., 46 
 
 tan R. Co., 133 N. Y. 261, 16 L. R. A. Tex. 272; Ackerson v. Erie R. Co., 
 
 136, and note to Mulligan v. New 32 N. J. L. 254; Detroit, etc., Co. v. 
 
 York, etc., R. Co., 14 L. R. A. 791. McArthur, 16 Mich. 447. 
 
 Conspiracy, Buffalo, etc., Co. v. Stand- 4 Denver, etc., R. Co. v. Harris, 122 
 
 ard, etc., Co., 106 N, Y. 669. U. S. 597; Milwaukee, etc., R. Co. v. 
 
 'Shearman & Redfield Neg., II, Arms, 91 U. S. 489; Philadelphia, etc., 
 
 § 749; Denver, etc., R. Co. v. Harris, R. Co. v. Quigley, 21 How. 202; New 
 
 122 U.S. 597; Alabama, etc., R. Co. Orleans, etc., R. Co. v. Burke, 53 
 
 v. Sellers, 93 Ala. 9, 30 Am. St. Rep. Miss. 200; Baltimore, etc., R. Co. v. 
 
 17. Boone, 45 Md. 344; Samuels v. Even- 
 
 2 Denver, etc., R. Co. v. Harris, 122 ing Mail, 75 N. Y. 604; Jeffersonville, 
 U. S. 597; Wheeler & Wilson, etc., etc., R. Co. v. Rogers, 38 Ind. 116; 
 Co. v. Boyce, 36 Kan. 350; Western, Goddard v. Grand Trunk R. Co., 57 
 etc., Co. v. Eyser, 2 Colo. 141; New Me. 202; Taylor v. Grand Trunk R. 
 Orleans, etc., R. Co. v. Bailey, 40 Co., 48 N. H. 304; Belknap v. Boston, 
 Miss. 395; Atlantic, etc., R. Co. v. etc., R. Co., 49 N. H. 358. 
 
 Dunn, 19 Ohio St. 162. s Beers v. Hamburg- American, etc., 
 
 3 Wardrobe v. California, etc., Co., Co., 62 Fed. Rep. 469; Hagan v. Provi- 
 7 Cal. 119; Turner v. North Beach, dence, etc., R. Co., 3 R.I. 88; Nash-
 
 23S 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 « 23 G 
 
 mit a crime is thus stated by Bishop: 1 "A corporation can not, 
 in its corporate capacity, commit a crime by an act in the 
 fullest sense ultra vires and contrary to its nature. But within 
 the sphere of its corporate capacity, and to an undefined ex- 
 tent beyond, 2 whenever it assumes to act as a corporation it 
 has the same capabilities of criminal intent and of act — in 
 other words, of crime — as an individual man sustaining to the 
 thing the like relation." 
 
 A corporation was indictable at common law, 3 but the sub- 
 ject is now largely regulated by statute. 4 The better rule is 
 that a corporation is a "person" within the meaning of crim- 
 inal statutes, 5 although the cases are not uniform. 6 
 
 In the early cases a distinction was made between acts of 
 nonfeasance and acts of misfeasance, and it was held that a 
 corporation could be punished criminally for acts of nonfeas- 
 ance only. 7 But this distinction is now discarded, at least 
 where no criminal intent is involved. 8 A corporation is liable 
 for keeping a disorderly house, 9 obstructing a highway, 10 main- 
 taining a nuisance, publishing a libel, as well as for failing to 
 
 ville, etc., R. Co. v. Starnes, 9 Heisk. 
 •"••_'; Bass v. Chicago, etc., R. Co., 42 
 Wis. 654; Malecek v. Tower <irove, 
 etc., I;. Co., 57 Mo. 17; Travers v. 
 Kansas Pac R. Co., 63 Mo. 12] ; 
 Galveston, etc., R. Co. v. Donahoe, 
 56 Tex. 162; Emerson, etc., Co. v. 
 Bkidmore (Tex., 1894), 26 S. W. Rep. 
 671. 
 
 bop New * 'riminal Law, §417; 
 
 Mc( ' I .i » 1 1 < riminal l.:i\\ , § L80. 
 
 lop V'M ( '"nt ract Law, § 7 l'.t. 
 v. Birmingham, etc., i.\ I So., '- 1 
 P. 169; State v. Security Bank, 2 
 I lommonwealtb v. Le- 
 high, etc., I.'. Co., 165 Pa. St. 162; 
 I Commonwealth v. Pulaski, ate., lean., 
 .v. 197, i: B. W. Rep 1 1": State v. 
 The Morris, etc., R. Co., 28 V J. L. 
 Baltimore, etc., R. Co., 
 15 W. Va. 862, >it ing man} ca 
 1 9ee Statev.V tc., R, Co., 
 
 5 McClain Criminal Law, § 1S1 ; State 
 v. Baltimore, etc., R. Co., 15 W. Ya. 
 362. 
 
 6 State v. Cincinnati, etc., Co , 24 
 Ohio St. 611; State v. Field, 4!) Mo. 
 270. 
 
 7 State v. Greal Works, etc., Co., 
 20 Me. II ; State v. Baltimore, etc., R. 
 Co., 120 In.l. 298. 
 
 'Pittsburgh, etc., R. Co. v. Com- 
 monwealth, loi Pa. st. 192; state v. 
 Vermont, etc., R. Co., 27 Vt. 103; 
 
 State v. The Morris, it. •., R Co.,28 N. 
 .1. L 860; state v. Railway Co., L6 W. 
 Va. ■'!<i , j; Commonwealth v. Pulaski, 
 etc., Assn., 92 Ky. 197. 
 
 ' State \ . Paaaaic, etc., Soc., ; '»i N. J. 
 L.260. 
 
 -. v.creat North, etc., R. Co., 2 
 ('o\ Cr, I 'as. 7o ; Northern, etc., R 
 
 < " s . < ni on wealth, mo Pa. st 300; 
 
 state v. Chicago, etc., i;. Co., 77 towa 
 442.
 
 § 236 LIABILITY FOR TORTS AND CRIMES. 239 
 
 construct a bridge or do some other act imposed by law. 1 In a 
 prosecution of an agricultural fair association for permitting 
 gaming upon its grounds the court said : 2 
 
 " It is, therefore, now well settled in the courts of this coun- 
 try, as well as in England, that they are indictable for mis- 
 feasance as well as a nonfeasance of duty unlawful in itself and 
 injurious to the public. It has, therefore, been held that they 
 may be indicted for a nuisance, whether arising from mis- 
 feasance or nonfeasance, or for an injury otherwise to the pub- 
 lic unlawful in itself, and arising either from commission or 
 the omission to perform a legal duty. They may be indicted 
 for erecting and continuing a building, for leaving railroad 
 cars in a street; for neglecting to repair a highway; for per- 
 mitting stagnant water to remain on their premises; for libel; 
 for "Sabbath breaking," by doing work on Sunday in viola- 
 tion of the statute, and in many other instances. It is true 
 there are crimes of which, from their very nature, as perjury, 
 for example, they can not be guilty. There are crimes to 
 the punishment for which, for a like reason, they can not be 
 subjected, as in the case of a felony. But wherever the of- 
 fense consists in either a misfeasance or a nonfeasance of duty 
 to the public, and the corporation can be reached for punish- 
 ment, as by a fine and the seizure of its property, precedent 
 authorizes, and public policy requires, that it should be liable 
 to indictment. Any other rule would in many cases preclude 
 adequate remedy, and leave irresponsible servants, rather than 
 those who are really most at fault. If it be said that such a 
 rule may subject the property of innocent stockholders for 
 the acts of the directors, to which they are not actual par- 
 ties and of which they had no knowledge, the answer is 
 that they select directors, and it is their business to have 
 those who will see that the corporate business is so con- 
 commonwealth v. " Pennsylvania, Commonwealth v. Pulaski, etc., 
 R. Co., 117 Pa. St. 637; State v. Madi- Assn., 92 Ky. 197. See an extensive 
 son, 63 Me. 546, New York, etc., R. review of the early eases in State v. 
 Co. v. State, 50 N. J. L. 303, 53 N. J. The Morris, etc., R. Co., 23 N. J. L. 
 L. 244. 360.
 
 240 THE LAW CF PRIVATE CORPORATIONS. § 237 
 
 ducted as not to injure others or infringe upon public right 
 and good order in the community. If the penalty pre- 
 scribed for the act be both fine and imprisonment, then, so 
 far as the punishment can not, from the nature of the offender, 
 be carried out, the statute is, of course, inoperative." 
 
 § 2r , 7. Crimes involving intent. — The crimes referred to in 
 the preceding section, which from their nature corporations 
 can not be guilty of, are those which involve criminal intent 
 and include practically all the common law felonies, such as 
 murder, assault and battery and larceny. Such crimes are the 
 crimes of the individual officers or agents of the corporation. 1 
 Thus, acts which make it criminal to "knowingly and will- 
 fully " do an act, such as employing children in a factory who 
 are under a certain age, do not apply to corporations. 2 
 
 By the modern doctrine a corporation is liable civilly for 
 punitive damages caused by an assault and battery 3 or a mali- 
 cious prosecution and other torts involving intent, and there is 
 a tendency toward extending this rule so as to include crimi- 
 nal liability for such offenses. 4 
 
 "Corporations can not be indicted for offenses which derive 
 their criminality from evil intention, or which consist in a 
 violation of those social duties which appertain to men and 
 subjects. They can not be guilty of treason or felony, or per- 
 jury or offenses against the person. But beyond this there is 
 no good reason for their exemption from the consequences of 
 unlawful and wrongful acts committed by their agents in pur- 
 Buance of authority derived from them." 8 
 
 Contempt of court. — A corporation may be guilty of a 
 • on i cm pi of court, and may be punished therefor by a fine, as in 
 
 1 Cumberland, etc., Co. v. Portland, Harris, L22 U. s. 597; McKinley v. 
 
 77. Chicago, etc., R. Co., II fowa 81 1, 24 
 
 'Menson v. Manufacturing Co., '- 1 \.va. Rep. 748. 
 
 in, etc., 4 See State v. Passaic Co. Agr. Soc, 
 
 I Bethel, etc., < I Me. ill. 64 N. J. L 260. 
 
 tern, etc., R. Co. v. Broom, 6 'Commonwealth v. Prop. New Bed- 
 
 814; Denver, etc., R. Co. v. ford Bridge, 2 Gray (Mass.) 889.
 
 § 239 LIABILITY FOR TOUTS AND CRIMES. 241 
 
 the case of a natural person. 1 Contempt proceedings are crim- 
 inal, 2 but the defendant has no right to a jury trial. 3 
 
 § 239. Proceedings. — The difficulties arising on the appli- 
 cation of the rule that corporations may be prosecuted for the 
 commission of crimes are principally those of procedure. In 
 some states the statutes provide in detail for the proceedings. 
 The proceeding is illustrated by the Minnesota statute which 
 provides that when a corporation is indicted a summons signed 
 by one of the judges of the court into which the indictment is 
 returned shall be issued by the clerk, commanding the sheriff 
 to forthwith notify the accused and command its appearance 
 before the court within twenty-four hours from the time of 
 such service. Summons may be served in the manner pro- 
 vided for the service of process in a civil action. The corpora- 
 tion is required to appear within the time mentioned in the sum- 
 mons by one of its officers or by counsel; and the proceedings 
 thereafter are the same as in ordinary cases upon similar 
 charges. If the corporation fails to appear within the time 
 stated, a plea of not guilty is entered by the clerk, and there- 
 after the corporation is deemed continually present in court 
 till the final determination of the action. If found guilty, a 
 fine is imposed which is docketed as a judgment against the 
 corporation, and is enforced like a judgment in a civil action. 4 
 
 Golden Gate, etc., Min. Co. v. Su- Rep. 445 (Mass., 1899), Wilgus' Cases, 
 
 perior Court, 65 Cal. 187; Mayor, etc., 2 Smith v. Whitfield & Sanders, 38 
 
 of New York v. New York, etc., Co., Fla. 211. 
 
 64 N. Y. 622; United States v. Mem- 3 People v. Kipley, 171 111. 44. 
 
 phis, etc., R. Co., 6 Fed. Rep. 237; 4 Gen. Laws Minn., 1895, chap. 217. 
 Telegram, etc., Co. v. Conim., 52 N. E. 
 16 — Private Corp.
 
 CHAPTER 11 
 
 EXTRA-TERRITORIAL POWERS OF CORPORATIONS STATE CONTROL 
 
 OVER FOREIGN CORPORATIONS. 
 
 § 240. General statement. 
 
 241. The corporate domicile. 
 
 242. Laws have no extra-territorial 
 
 force. 
 
 243. Submission to state laws. 
 
 244. Conflict of laws. 
 
 245. Obligations imposed hy penal 
 
 statutes. 
 
 246. Constitutional rights of corpo- 
 
 rations — Insolvency proceed- 
 ings. 
 
 J. Sight of 'i Corporation to Exercise 
 its Powers in a Foreign State. 
 
 247. Power of corporation. 
 
 248. Corporate acts out of state. 
 
 //. Power of the State Over Foreign 
 < 'orporatiotu. 
 
 249. Righl to exclude. 
 
 250. Limitations on the power of the 
 
 state. 
 
 251. Insurance not interstate com- 
 
 merce. 
 
 252. No visitorial power over for- 
 
 eign corporations. 
 
 253. Righl to compel issue of new 
 
 Btock certificate. 
 
 ///. Tin "Rules of i 'omity. 
 L'"> I. 'I'Ih' comity of -tales. 
 
 Tin- general rule. 
 266. Contracts contrary to the law of 
 
 tie- forum. 
 257. ru I die policy, how determined. 
 i inatioii against non- 
 
 i authorized by charter. 
 260. I.'- trictions Imposed by 
 
 261 
 
 / 1 Statutory /.'■ ■// <• Hone. 
 I n general. 
 
 § 262. Conditions which may be im- 
 posed. 
 
 263. Ketaliatory statutes. 
 
 264. Waiver of constitutional rights 
 
 — Removal of causes. 
 
 265. The granting and revocation of 
 
 a license. 
 
 266. Meaning of "doing business." 
 
 267. Contracts made out of the state. 
 
 V. Effect of Failure to Comply with 
 
 Statutory Requirement. 
 
 268. Effect upon validity of con- 
 
 tracts. 
 
 269. Where the statute imposes a 
 
 penalty. 
 
 270. Where no express penalty is 
 
 provided. 
 
 271. Estoppel to allege non-compli- 
 
 ance. 
 
 272. Presumption— Burden of proof. 
 
 VI. Actions By and Against Foreign 
 
 ( 'orporations. 
 
 i'7:;. The right to sue. 
 
 274. Actions against foreign corpo- 
 
 rations. 
 
 275. Service upon foreign corpora- 
 
 tions. 
 27(i. Must lie doing business in the 
 
 state. 
 
 277. Service upon officer temporari- 
 
 ly within the state. 
 
 278. Illustrations. 
 
 279. Statutory requirements. 
 
 280. Designation of agent to accepl 
 
 sen ice. 
 
 281. Service obtained by deception. 
 
 282. Proceedings by stale against 
 
 foreign corporation. 
 
 (242)
 
 § 240 EXTRA-TERRITORIAL POWERS. 243 
 
 § 240. General statement. — The subject-matter of this chap- 
 ter falls within the domain of private international law and is 
 of great importance by reason of the intimate commercial re- 
 lations of the states of the Union. The rights and privileges 
 of corporations beyond the jurisdiction of the sovereignty by 
 which they are created are governed in part by the rules of com- 
 ity and in part by express statutes. For certain purposes 
 corporations are recognized as persons, but they are not cit- 
 izens of a state within the meaning of the provision of the 
 constitution of the United States which secures to the cit- 
 izens of each state all the privileges of citizens of the sev- 
 eral states. 1 These artificial persons are accorded recogni- 
 tion in foreign states when their organization and object 
 is not in conflict with the policy of the foreign state. "The 
 natural persons belonging to the state," says Bar, 2 "are recog- 
 nized as persons in every other state. This undoubted rule is 
 a consequence of the equality of natives and foreigners ad- 
 mitted by modern international law. But by custom it is just 
 as fully recognized that legal persons belonging to another 
 state must also be so regarded. * * * Although the authority 
 of the foreign state by which legal personalities are either di- 
 rectly created, or their creation by private persons tolerated, has 
 no weight in one state for itself, yet modern international inter- 
 course requires the same recognition to be extended even to the 
 legal personalities which may be capriciously created. * * 
 If the state in which it is proposed to establish the undertak- 
 ing will not permit it to be established, the object of the asso- 
 ciation * * * can never be attained. A foreign state 
 which should recognize as a legal person what was not so rec- 
 ognized in its own state, would be treating as valid legal facts 
 directed to ends that are either legally or actually impossible — 
 a result at variance with general logical principles." 
 
 § 241. The corporate domicile. — A corporation has its dom- 
 icile in the state by which it was created, 3 but by acquiring a 
 
 1 §65, snpra. Story's Conf. of Laws, § 38; Merrill, 
 
 2 Priv. Int. Law, §41. Comp. Jur., 80; Westlake Priv. Int. 
 
 8 Wharton's Conf. of Laws, § 489; Law, p. 259; Calcutta Jute Co.
 
 244 THE LAW OF PRIVATE CORPORATIONS. § 242 
 
 place of business in another state it may for certain purposes 
 acquire a domicile there also. 1 
 
 § 242. Laws have no extra-territorial force. — The laws of a 
 state have no force or effect, ex propria vigore, beyond the ter- 
 ritorial limits of the state. ''It is the indubitable basis of 
 universal law," says Story, that "laws have no force beyond 
 the territories of those who make them. This is one of the 
 few principles of universal jurisprudence universally acknowl- 
 edged." 2 
 
 The same learned writer says: "The power of a corporation 
 to act in a foreign country depends both upon the law 
 of the country where it was created and on the law of the 
 country where it assumes to act. It has only such powers as 
 were given it by the authority which created it. It can not 
 do any act by virtue of those powers in any country where the 
 law forbids it so to act. It follows that every country may 
 impose conditions and restrictions upon foreign corporations 
 which transact business within its limits." 3 Although laws 
 have no extra-territorial force the general rule is that things 
 done in one state in pursuance of the laws thereof are valid 
 and binding in other states. 4 
 
 § 243. Submission to state laws. — A corporation by engag- 
 ing in business in a foreign state submits itself to the jurisdic- 
 
 v. Nicholson, L. li. 1 Ex. Div. territorially is derived from interna- 
 
 428. tinnal comity, which never intervenes 
 
 1 Smith \. Pilot, etc., Co., 47 Mo. to set aside either the written law or 
 
 App. 409 ; Yoong v. South Tredegar I. 1 1 1 * » common law, it even the state 
 
 Co., 66 Tenn. 189; i Am. st. Rep. policy or state interest of another 
 
 country. Bank of Augusta v. Earle, 
 
 « Story's Conf. of l a L8 Pet. 517. 
 
 278; Wi rtlake Priv. Int. Law, § L32; 'Conflict of Laws, § 106, notea. 
 
 Rorer [nter-etate Law, p. 167; Pen- 'American, etc., Co. v. Farmers', 
 
 noyer v. Nefl, 95 U. 8. 714. it ie an etc., Co., 20 Colo. 208, 25 L. R. A. 
 
 ancient maxim that "beyond hister- 888. A statute providing that an asso- 
 
 ritorial boundaries it is not safe t<> ciation or partnership can be sued in 
 
 obey a party commanding. United its company na has uo extra-terri- 
 
 iv. Bevans, 3 Wheat. 886, 8 Dall. torial force. Edwards v. Warren, etc., 
 
 870 note; Henry's Foreign Law, | 1. Wort . L68 Mass. 564, 88 L. K. A. 
 
 The "Hi. force allowed to laws < ttra- 791 , Wilgus' Cases.
 
 § 244 EXTRA-TERRITORIAL POWERS. 245 
 
 tion and becomes subject to the laws of such state. Thus, such 
 a corporation becomes subject to the law of the foreign state 
 which prohibits garnishment or other proceedings to defeat 
 the exemption of the wages of a debtor on a contract to be per- 
 formed in that .state. 1 So, a foreign insurance corporation 
 which avails itself of the privilege of doing business under the 
 restrictions of a statute is not permitted to assert that the stat- 
 ute is unconstitutional. 2 
 
 § 244. Conflict of laws. — As already stated, a corporation 
 submits itself to the laws of a state by qualifying and engag- 
 ing in business in such state. Its contracts, however, receive 
 their sanction from the law of the place where they are exe- 
 cuted and to be performed, and their interpretation is con- 
 trolled by the lex loci} The place of making a contract is pre- 
 sumed to be the place of its performance in the absence of 
 anything indicating a contrary intention. 4 An express pro- 
 vision in a contract that it shall be construed in a certain state, 
 makes it a contract of that state. 5 Assignments of personal 
 property, valid by the law of the domicile, are generally recog- 
 nized as valid by the law of the state where the property is 
 situated, unless in violation of the law or public policy of that 
 state. 6 The legality of a bequest to a foreign corporation is 
 generally governed by the laws of the forum, although it may 
 differ from the law of the state by which the corporation was 
 
 1 Singer, etc., Co. v. Fleming, 39 Goodwin v. Providence, etc., Assn., 
 Neb. 679, 23 L. R. A. 210. 97 Iowa 226. 
 
 2 Daggs v. Orient, etc., Co., 136 Mo. 4 Tillinghast v. Boston, etc., Co., 39 
 382, 35 L. R. A. 227. S. C. 484, 22 L. R. A. 49. 
 
 8 Heaton v. Eldridge & Higgins, 56 B Union, etc., Co. v. Pollard, 94 Va. 
 
 Ohio St. 87, 36 L. R. A. 817; Crum- 146, 36 L. R. A. 271. 
 
 lish's Adm'rs v. Central, etc., Co., 6 Vanderpool v. Gorman, 140 N. Y. 
 
 38 W. Va. 390, 23 L. R. A. 120. Exe- 563, 24 L. R. A. 548. But see Barth 
 
 eating a reinstatement in one state v. Backus, 140 N. Y. 230, 23 L. R. A. 
 
 of an insurance policy made in an- 47. A foreign corporation may make 
 
 other does not destroy the character an assignment of property in New 
 
 of the policy as a contract of the York if it could have done so in the 
 
 state where it was originally issued, state of its domicile. Rogers v. Pell, 
 
 154 N. Y. 518.
 
 246 THE LAW OF PRIVATE CORPORATIONS. § 245 
 
 created. 1 The liability of stockholders in foreign corporations 
 is determined by the law of the creating state, 2 but there is 
 great difficulty in its enforcement. It is sometimes said that 
 it can only be enforced at the domicile of the corporation, 3 but 
 the weight of authority is otherwise. 4 In all cases the pro- 
 cedure of the forum must govern, and if no procedure or an 
 inconsistent procedure is provided by the law of the forum, the 
 liability can not be enforced. 5 Where the liability is penal 
 and not contractual, it can not be enforced outside the state. 6 
 The local laws governs a policy of insurance on real property 
 delivered to the owner in the state where the property is situ- 
 ated. 7 When there is a failure to show the law of another 
 state which governs the rights of a foreign corporation the 
 case will be governed by the law of the forum. 8 
 
 § 245. Obligations imposed by penal statutes. — Causes of 
 action which arise out of penal statutes can not be prosecuted 
 in a foreign state. 
 
 In a case which arose under a statute which made directors 
 personally liable to creditors for making and signing a false 
 report, the supreme court of the United States said: 9 
 
 'Congregational, etc., Boc. v. Ever- it was held that the words " heirs at 
 
 ett, 86 .M'l. 79, 35 L. R. A. 693. law" in a poliey made in Massachu- 
 
 1 Mandel v. Swan, etc., Co., 154 111. setts, must be given the meaning it 
 
 177, 27 L. R. A. 313. would have in Massachusetts. 
 
 a .Marshall v. Sherman, 1 18 N. Y. 9, 8 Bath, etc., Co. v. Claffy, 151 N. Y. 
 
 31 L. R. A. 757. 24, 36 I-. R. A. 664. 
 
 • Hale v. Hardin, 96 Fed. 947. 'Huntington v. Attrill, L46 r. S. 
 
 ■Rhodes V. U.S.Nat. Bank,24U. 057. Mr. Justice (iray said: "It is 
 
 S. App. 607, 66 Fed. Rep. 512,84 L. true that the courts of some states, in- 
 
 11. A. 7 )'_' ; Ferguson V. Sherman, 116 eluding Maryland, have declined to 
 
 Cal. L69, 87 L R. A. 622. Bee 42 L. enforce a similar liability imposed 
 
 I:. ,\. 896, and casee cited. by the statute of another state. But 
 
 ■Tuttlev. National Bank of the Re- in each of these eases it appears to 
 
 public, 161 111. 197,84 L. R. A. 760; have been assumed to be a sufficient 
 
 • II v. Pacific R. Co., 113 Cal. 258, ground for thai conclusion thai the 
 
 84 I. I.'. A. 717. See Marshall v. liability was nol founded in contract, 
 
 Bherman, I \^ N. V. 9. bul was in the nature of a penalty im- 
 
 7 Daggt \ Orient, etc., Co., 188 Mo. posed by statute, and do reasons were 
 
 882,85 I. R. in Mullen v. given for considering the statute a 
 
 Reed, ( >i Conn. 240, 24 L. R. A. 664, penal law in the strict, primary and 
 
 international sense Derrickson v
 
 §245 
 
 EXTRA-TERRITOKIAL POWERS. 
 
 247 
 
 "The provision of the statute of New York, now in ques- 
 tion, making the officers of a corporation who sign and record 
 a false certificate of the amount of its capital stock liable for all 
 its debts, is in no sense a criminal or quasi-criminal law. The 
 statute, while it enables persons complying with its provisions 
 to do business as a corporation, without being subject to the 
 liability of general partners, takes pains to secure and main- 
 tain a proper corporate fund for the payment of the corporate 
 debts. With this aim it makes the stockholders individually 
 liable for the debts of the corporation until the capital stock is 
 paid in and a certificate of the payment made by the officers, 
 and makes the officers liable for any false and material repre- 
 sentation in that certificate. The individual liability of the 
 stockholders takes the place of a corporate fund until that fund 
 has been duly created, and the individual liability of the officers 
 takes the place of the fund in case their statement that it has 
 been duly created is false. If the officers do not truly state 
 
 Smith, 3 Dutcher (27 N. J. L.) 166; 
 Halsey v. McLean, 12 Allen 438; First 
 National Bank v. Price, 33 Md. 487. 
 It is also true that in Steam, etc., Co. 
 v. Hubbard, 101 IT. S. 188, 192, Mr. 
 Justice Clifford referred to those cases 
 by way of argument. But in that 
 case, as well as in Chase v. Curtis, 
 113 U. S. 452, the only point adjudged 
 was that such statutes were so far 
 penal that they must be construed 
 strictly, and in both cases jurisdiction 
 was assumed by the circuit court of 
 the United States, and not doubted by 
 this court, which could hardly have 
 been if the statute had been deemed 
 penal within the maxim of interna- 
 tional law. In Flash v. Connecticut, 
 109 U. S. 371, the liability sought to 
 be enforced under the statute of New 
 York was the liability of a stockholder 
 arising upon contract, and no ques- 
 tion was presented as to the nature of 
 the liability of officers. But in Hor- 
 nor v. Henning, 93 U. S. 228, this 
 
 court declined to consider a similar 
 liability of officers of a corporation in 
 the District of Columbia as a penalty. 
 See also Neal v. Moultrie, 12 Ga. 104; 
 Cady v. Sanford, 53 Vt. 632, 639, 640 ; 
 Nickerson v. Wheeler, 118 Mass. 295, 
 298; Post v. Toledo, etc., R. Co., 144 
 Mass. 341, 345; Wolverton v. Taylor, 
 132 111. 197; Morawetz on Corpora- 
 tions (2d ed.), § 908. * * * In this 
 view that the question is not one of 
 local but of international law, we fully 
 concur. The test is not by what name 
 the statute is called by the legislature 
 or the courts of the states in which it 
 is passed, but whether it appears to 
 the tribunal which is called upon to 
 enforce it to be, in its essential char- 
 acter and effect, a punishment of an 
 offense against the public, or a grant 
 of a civil right to a private person." 
 As to penalty for failure to send a tel- 
 egraph message, see Carnahan v. 
 Western, etc., Co., 89 Ind. 526.
 
 24S THE LAW OF PRIVATE CORPORATIONS. § 246 
 
 and record the facts which exempt them from liability they 
 are made liable directly to every creditor of the company who 
 by reason of their wrongful acts has not the security for the 
 pavment of his debt out of the corporate property, on which he 
 had a right to rely. As the statute imposes a burdensome lia- 
 bility on the officers for their wrongful act, it may well be con- 
 sidered penal, in the sense that it should be strictly construed. 
 But as it gives a civil remedy at the private suit of the creditor 
 only, and measured by the amount of his debt it is as to him 
 clearly remedial. To maintain such a suit is not to administer 
 a punishment imposed upon an offender against the state, but 
 simply to enforce a private right secured under its laws to an 
 individual. We can see no just ground, on principle, for 
 holding such statute to be a penal law, in the sense that it can 
 not be enforced in a foreign state or country." 
 
 § 246. Constitutional rights of corporations — Insolvency 
 proceedings. — A corporation is a person within the meaning 
 of the first section of the fourteenth amendment to the consti- 
 tution of the United States, and may, therefore, invoke the 
 benefit of those provisions of the constitution which guarantee 
 to persons the enjoyment of property or afford them tin- means 
 for its protection or prohibit legislation injuriously affecting 
 it. 1 Neither the provision thai the citizens of one state shall 
 be entitled to ;ill 1 1 1 * - privileges and immunities of citizens of 
 the Beveral states, nor, that no slate shall deny to any person 
 within its jurisdiction the equal protection of its laws, requires 
 ;, state to recognize the corporation of another state." A dis- 
 charge under a Btate insolvent law docs not bar the claim of a 
 
 1 Loui8ville, etc., Co. v. Louisville. 181, 42 L. R. A. 528. See also United 
 
 etc., Co., 92 Ky. •_'::::, M I.. I;. A.. 579, States v. Northwestern, etc., <'".. L64 
 
 annotated; Santa Clara County v. U. S. 686, 41 L. ed. 599. § 68, supra. As 
 
 Bouthern, etc., I>'. <'"., L18 U. 8.894, t<> constitutional rights of corpora- 
 
 118; Pembina, etc., Co. tions, see People v. Fire Assn., etc., 
 
 v. Pennsylvania, 125 U. 8. 181, 81 I.. 92 V Y. 811. 
 
 ed. 650, 2 Inters. Com. Rep. 24; Min- 'Pembina, etc., <'<>. v. Pennsylva- 
 
 neapolis, etc., R, Co. •■ . Beckwith, ma, 125 U B. 181; Norfolk, etc., Co. 
 
 ■ i ed 58 ■. 586; v. Pennsylvania, 186 U. S. I L4. 
 I i. v. I'" t. 91 Me.
 
 § 246 EXTRA-TERRITORIAL POWERS. 249 
 
 creditor who does not voluntarily submit to the jurisdiction of 
 the insolvency court, where the creditor is a citizen of an- 
 other state, a corporation beyond the jurisdiction of the court, 
 or a resident of a foreign country and beyond the jurisdiction 
 of the court. 1 Hence, a foreign corporation is not bound by 
 the discharge of its debtor in state insolvency proceedings, 
 when it has not proved its claim or accepted a dividend thereon, 
 although it has an established place of business in the state at 
 which statutory service upon it is made in such proceedings. 2 
 The court said: "The defendant concedes that if the plaintiff 
 were a natural person instead of a corporation, and in the 
 same condition that the corporation is, his discharge in in- 
 solvency could not be successfully pleaded in discharge of the 
 debt. 3 But it is contended that the same rule that would be 
 applied to an individual creditor living in a state other than 
 our own should not apply where the creditor is a foreign cor- 
 poration occupying a store and doing business in this state. 
 We do not see that in principle there is any force in such a 
 distinction. Creditors without any corporate authority, who 
 have their residence out of the state, may hire and occupy 
 stores and sell merchandise within the state,, and their debts 
 contracted here not be affected by their debtor's insolvency, 
 and why may not a foreign corporation just as well have the 
 same immunity?" A foreign corporation which has complied 
 with the statute and is doing business in the state is not a resi- 
 dent of the state within the meaning of the statute, 4 and is not 
 precluded from recovering for goods sold to a resident, by a 
 discharge of the debtor in insolvency proceedings. 5 A foreign 
 corporation which does not do business in a state is not within 
 the jurisdiction and is not entitled to the protection of its laws. 
 
 1 Baldwin v. Hale, 1 Wall. 223; Phoenix, etc., Bank v. Batcheller, 151 
 
 Gilman v. Lockwood, 4 Wall, 409; Mass. 589, 8 L. R. A. 644. 
 Denny v. Bennett, 128 IT. S. 489; 2 Hammond, etc., Co. v. Best, 91 Me. 
 
 Felch v. Bngbee, 48 Me. 9, 77 Am. 431, 42 L. R. A. 528, Wilgns' Cases. 
 Dec. 203; Hills v. Carlton, 74 Me. "Pullen v. Hillman, 84 Me. 129. 
 156; Pullen v. Hillman, 84 Me 129; 4 Mass. Pub. Stat. L895, ch. 157, §81. 
 Silverman v. Lessor, 88 Me. 599; 5 Bergner, etc., Co. v. Dreyfus 
 
 (Mass., 1899), 51 N. E. Rep. 531.
 
 250 THE LAW OF PRIVATE CORPORATIONS. § 247 
 
 The state may, therefore, discriminate against it in the distri- 
 bution of the assets of another corporation. 1 
 
 I. Right of a Corporation to Exercise its Powers in a 
 Foreign State. 
 
 § 247. Power of corporation, — It follows from the doctrine 
 above stated that a state can not empower a corporation to 
 exercise its powers and franchises in another state without 
 the consent of the foreign state. It has been said that a cor- 
 poration must "dwell in the place of its creation and can not 
 migrate to another sovereignty." 2 This is true only in the 
 sense that it can not act as a corporation beyond the jurisdic- 
 tion of its creation, but it may transact such business and do such 
 acts in the foreign jurisdiction as a natural person might do. 
 Thus a corporation can not hold corporate meetings in a 
 foreign jurisdiction, but it may, through its agents, transact 
 business there when not forbidden to do so by the laws of the 
 foreign state. 3 Hence, a corporation may make valid contracts 
 in a foreign state subject to the restrictive laws of that state/ 
 
 1 Blake v. McClung, 172 U. S. 239. Priv. Int. Law, § 288; Franco-Texah, 
 
 See § 65. supra. Two justices dissent- etc., Co. v. Laigle, 59 Tex. 33y; 
 
 ing. In FrittS v. Palmer, 132 V. S. Ormshy v. Vermont, etc., Co., 5(5 
 
 282, a Colorado statute which pro- N. Y. 623. See the criticism on the 
 
 vided that a mortgage given by a for- dictum of Chief Justice Taney fiat a 
 
 eign corporation on property in the corporation can not migrate t.i an- 
 
 Btate for a debt created in another other sovereignty, in Bigeloy s note 
 
 state should not take effect as against to Story's Conf. of haw, p. 17», 
 
 ons in that state until the liabili- 'Merrick v. Van Santvoo/d, 34 
 
 tic- due to them at die time when the N. V. 208; Day v. Ogdensburg, etc., 
 
 mortgage was recorded was paid, was R. Co., 107 N. Y. r_".<: Newburg, etc, 
 
 held constitutional. As t<> the power Co. v. Weare, 27 Ohio St. 843; Atchi- 
 
 of the state to discriminate against son, etc.. i; < !< . \ . Fletcher, 36 Kan. 
 
 non-re idenl creditors in tbe matter 236. In Canada, etc., R, Co. v. Geb- 
 
 ttacbmentS upon the property of hard, [09 U. S. 527, Chief Justice 
 insolvents, Bee Long V. GirdwOOd, 160 Waitc said: "A corporation 'must 
 
 P 31 i' 3 23 I.. R. \. •':::. dwell in the place of its creation, and 
 
 ■ nmenl upon this language in can not migrate to another sovereign- 
 
 Shaw v. Quincy, etc., <'"., 146 U. S. ty,' tl gb it may do business In all 
 
 it I, SVilgus' t lasea. places where its charter allows and the 
 
 1 Murfree For. Corps., f 14; Wrier- local law do not fori. id." Railroad 
 
 ton Conf. of Laws, I06o; Westlake, Co. v. Koontz, 104 U. 8. 6. Bui wher-
 
 § 247 EXTRA-TERRITORIAL POWERS. 251 
 
 and governed by the laws of the state which created the cor- 
 poration. 1 A corporation is clothed everywhere with the 
 character given by its charter, and the capacity of corporations 
 to make contracts beyond the states of their creation, and the 
 exercise of that capacity, are supported by uniform, universal 
 and long-continued practice. 2 In discussing the limitations 
 upon the extra-territorial acts of a foreign corporation, Mr. 
 Murfree says: 3 "The recognition which is by comity ex- 
 tended to foreign corporations does not vest them with an un- 
 restricted faculty of extra-territorial action, even within the 
 limits of their charter powers; while the cases are not uniform 
 on this point, yet the weight of authority seems to be that the 
 company's power in the foreign jurisdiction extends only to 
 those acts which may be done through the mediation of agents. 
 Those corporate acts which must be done by the company 
 itself, through the persons of the corporators or stockholders, 
 must be performed where the company has a legal existence. 
 The most obvious of these are meetings for the acceptance of 
 the charter and organization of the corporation." Hence, a 
 legal meeting of the board of directors, who are merely agents, 
 may be held beyond the borders of the state. 4 In order to 
 comply with the requirement of a foreign state, a corporation 
 has power to deposit securities with an official of the foreign 
 state. 5 
 
 ever it goes for business it carries its 2 Land Grant R. Co. v. Coffey Co., 
 charter, as that is the law of its ex- 6 Kan. 245; O'Brien v. Wetherell, 14 
 istence, and the charter is the same Kan. 616; Cowell v. Springs Co., 100 
 abroad that it is at home. Whatever U. S. 55. 
 disabilities are placed upon the cor- 3 Murfree For. Corp., §8. 
 poration at home it retains abroad, 4 Galveston, etc., R. Co. v. Cowdrey, 
 and whatever legislative control it is 11 Wall. (U. S.) 459; Arms v. Con- 
 subjected to at home must be recog- ant, 36 Vt. 743; Wright v. Bundy, 11 
 nized and submitted to by those who Ind. 398; Reichwald v. Commercial 
 deal with it elsewhere." Hotel, 106 111. 439; Bellows v. Todd, 
 1 Manhattan, etc., Co. v. Fields 39 Iowa 209; Missouri, etc., Co. v. 
 (Tex., 1894), 26 S. W. Rep. 280; Rue Reinhard, 114 Mo. 218. 
 v. Railway Co., 74 Tex. 474. See Falls 5 Lewis v. American, etc., Assn., 98 
 v. U. S., etc., Assn., 97 Ala. 417, 24 Wis. 203, 39 L. R. A. 559. 
 L. R. A. 174, decision on rehearing.
 
 252 THE LAW OF PRIVATE CORPORATIONS. § 24S 
 
 § 248. Corporate acts out of state. — A corporation has no 
 power, in the absence of express authority, to perform strictly 
 corporate acts outside of the state of its creation. 1 No legal 
 organization of a corporation can take place at a meeting held 
 outside of the state granting the charter. 2 But where all the 
 interested parties acquiesce, corporate acts done beyond the 
 limits of the state may be binding. 3 Authority to transact 
 business at places out of the state does not authorize corporate 
 acts, such as corporate meetings. 4 In a leading case in Maine 5 
 the question was on the validity of a certain mortgage executed 
 by the officers of a corporation, elected at a meeting held out 
 of the state for the organization of the corporation. The cor- 
 poration was created by the state of Vermont. It appeared 
 from the records of the corporation that a meeting of the cor- 
 porators was called for the organization of the corporation un- 
 der its charter, in the city of New York, and that the charter 
 was there accepted, and the officers of the corporation elected. 
 Chief Justice Shepley said : "There are a variety of corpora- 
 tions . It will only be necessary on this occasion to speak of 
 one class of them — corporations aggregate composed of natural 
 prisons. It is often stated in the books that such a corpora- 
 tion is created by its charter. This is not precisely correct. 
 The charter only confers the power of life, or the right to 
 come into existence, and provides the instruments by which it 
 may become an artificial or acting entity. Such a corporation 
 has been well defined to be an artificial being, invisible, in- 
 tangible, and existing only in contemplation of law. The in- 
 struments provided to bring the artificial being into life and 
 active operation are the persons named in the charter, and 
 those who, by virtue of its provisions, may become associated 
 
 1 Bastian v. Modem Woodmen of v. Duluth, etc., El. Co., W Minn. 464, 
 
 America, 166 III. 596. under Btatute, 
 
 Machias, etc., Co., 88 'Missouri, etc., Co. v. Reinhard, 114 
 
 Me. 348; Ormsby v. Vermont, etc., Mo. 218, Wilgus' Cai 
 
 Mitchell v. Ver- ' Franco-Texan, etc., Co. v. I 
 
 monl l 67 N Y. 280; Smith 59Tea 839. Bee Hodgson v. Duluth, 
 
 v Silver Valley, etc., Co., 64 Md.86; etc., R. Co., 16 Minn. 164. 
 
 Campv. Byrne, n Mo. 626; Hodgson 'Millers Ewer, 27 Me. 609, 46 Am. 
 
 Dec. 619, Wilgi
 
 § 249 EXTRA-TERRITORIAL TOWERS. 253 
 
 with them. Those persons or corporations, as natural persons, 
 have no such power. The charter confers upon them a new 
 faculty for this purpose; a faculty which they can have only by 
 virtue of the law which confers it. That law is inoperative 
 beyond the bounds of the legislative power by which it is en- 
 acted. As the corporate faculty can not accompany the nat- 
 ural persons beyond the bounds of the sovereignty which con- 
 fers it, they can not possess or exercise it there; can have 
 no more power there to make the artificial being act, than 
 other persons not named or associated as corporators. Any 
 attempt to exercise such a faculty there is merely an usurpa- 
 tion of authority by persons destitute of it, and acting without 
 any legal capacity to act in that manner. It follows that all 
 votes and proceedings of persons professing to act in the 
 capacity of corporators, when assembled without the bounds 
 of the sovereignty granting the charter, are wholly void. 
 * * It may maintain a suit without those limits, but that 
 does not imply its existence or presence there. It may also 
 contract without those limits. Being within them, it may, 
 acting per se, by vote transmitted elsewhere, propose a contract 
 or accept one previously offered. And it may, b} r an agent or 
 agents duly constituted, act and contract beyond those limits. 
 But it can neither exist nor act per se without them, except by 
 the existence of its officers or agents, duly elected or appointed 
 within them." 1 
 
 II. Power of the State Over Foreign Corporations. 
 
 § 249. Right to exclude. — For the purposes of jurisdiction 
 the states of the Union are foreign to each other; 2 and as cor- 
 porations are the mere creatures of legislation, it follows that 
 a state may exclude a foreign corporation from doing business 
 within its limits, or may grant such corporation a license to 
 do business upon such terms and conditions as the peculiar in- 
 
 1 As to the distinction between cor- Y. (523; Jones v. Pearl, etc., Co., 20 
 
 porate and other acts, see also Free- Colo. 417. 
 
 manv.Machias, etc., Co., 38 Me. 343; 2 See Williams v. Kimball, 35 Fla. 
 
 Ormsby v. Vermont, etc., Co., 56 N. 49, 26 L. R. A. 746.
 
 254 THE LAW OF PRIVATE CORPORATIONS. § 240 
 
 terests and policy of the state may require. 1 "Every power 
 which a corporation exercises in another state depends for its 
 validity upon the laws of the sovereignty in which it is exer- 
 cised, and a corporation can make no valid contract without 
 the sanction, express or implied, of such sovereignty; unless a 
 case should be presented in which the right claimed by the 
 corporation should appear to be secured by the constitution of 
 the United States." 2 The recognition of its existence "depends 
 purely upon the comity of other states — a comity which is 
 never extended where the existence of the corporation or the 
 exercise of its powers is prejudicial to their interests or repug- 
 nant to their policy. Having no absolute right of recognition 
 in other states, but depending for such recognition or the en- 
 forcement of its contracts upon their assent, it follows as a 
 matter of course that such assent may be granted upon such 
 terms and conditions as those states may think proper to 
 impose. They may exclude the foreign corporation entirely; 
 they may restrict its business to particular localities, or they 
 may exact such security for the performance of its contracts 
 with their citizens as in their judgment will best promote the 
 public interests. The whole matter rests in their discretion." 8 
 There are many good and sufficient reasons why a state should 
 choose to modify the rule of comity, and impose restrictions 
 upon a foreign corporation. As said by Mr. Justice Field, 
 "it is not every corporal ion, lawful in the state of its creation, 
 i hut other states may be willing to admit within their jurisdic- 
 tion, or consent thai it have officers in them; such, for exam- 
 ple, as a corporation for lotteries. And even when the busi- 
 aess of a foreign corporation is not unlawful in other states, 
 the latter may wish to limit the number of such corporations, 
 
 "Wharton's Conf. of Laws, § 104a; 70 Midi. 486; State v. Phoenix, etc., 
 
 Brices Ultra Vires, p I, note Co.,92Tenn. i_i). 
 
 a; Paul v. Virginia, 8 Wall. (TJ. B.) • Runyan v. Corter's Lessees, 14 Pet. 
 
 imonwealth v. Ne* York, (XT. B.) 122-129. 
 
 i: Co.,129Pa. Bl W3; Phoenix, »Paul v. Virginia, 8 Wall. (U. S.) 
 
 .. Burdett, 112 tnd, 204; 168; Wyman v. Kimberly-Clark Co., 
 
 Phoenix, etc., Co. v. Welch, 29 Kan. 98 Wis. 664. 
 ; i mi .1-]. etc., I '". '• ■ Raymond,
 
 § 250 EXTRA-TERRITORIAL POWERS. 255 
 
 or subject their business to such control as would be in accord- 
 ance with the policy governing domestic corporations of a 
 similar character." 1 
 
 In Florida it is held that a corporation organized under the 
 laws of another state must also become incorporated under its 
 laws, and a failure to do so makes the members liable as part- 
 ners. 2 A state can not by mere legislative enactment make 
 all foreign corporations domestic corporations of that state, 
 and thus deprive them of the right to resort to the federal 
 courts. 3 
 
 § 250. Limitations on the power of the state. — The general 
 rule stated in a preceding section that a state may entirely ex- 
 clude foreign corporations from doing business within its 
 limits, or permit them to do business upon complying with 
 prescribed conditions, is, however, subject to the limitations 
 imposed by the federal constitution, which grants to congress 
 exclusive control over interstate commerce. Hence, a state can 
 not exclude or regulate the business of a foreign corporation, 
 which is engaged in interstate commerce, or which is itself an 
 agency of the national government. 4 
 
 A contract between a resident of the state and a foreign cor- 
 
 1 Pembina Mining Co. v. Pennsylva- United States, etc. Commonwealth v. 
 
 nia, 125 U. S. 181 ; Paul v. Virginia, 8 New York, etc., R. Co., 129 Pa. St. 463 ; 
 
 Wall. 168; Runyan v. Coster, 14 Pet. St. Clair v. Cox, 106 U. S. 350. 
 
 122; Canada Southern Ry. Co. v.Geb- 'Taylor v. Branham, 35 Fla. 297, 
 
 hard, 109 U.S. 527 ; Demarestv. Flack, 39 L. R. A. 362. 
 
 128 N. Y. 205; Isle, etc., Corporation 8 Rece v. Newport News, etc., R. 
 
 v. Osmun, 76 Mich. 162. A foreign Co., 32 W. Va. 164, 3 L. R. A. 572. 
 
 corporation can exercise its franchises 4 Crntcher v. Kentucky, 141 U. S. 47 ; 
 
 in Pennsylvania only so far as it may Pensacola, etc., Co., v. Western U. 
 
 be permitted by the local sovereign. Tel. Co., 96 U. S. 1; Cooper, etc., Co. 
 
 The right rests wholly in the comity v. Ferguson, 113 U. S. 727 ; Pembina, 
 
 of states. A corporation of one state etc., Co. v. Pennsylvania, 125 U. S. 
 
 can not do business in another state 181; People, etc., Co. v. Wemple, 131 
 
 without the latter's consent, express N. Y. 64; Norfolk R. Co. v. Pennsyl- 
 
 or implied, and that consent maybe vania, 136 U. S. 114; McCall v. Cali- 
 
 accompanied with such conditions as fornia, 136 U. S. 104; Gloucester, etc., 
 
 the latter may think proper to impose. Co. v. Pennsylvania, 114 V. S. 196; 
 
 These conditions will be valid and ef- Robbins v. Shelby Taxing District, 
 
 fectual, provided they are not repng- 120 U. S. 489. 
 nant to the constitution or laws of the
 
 256 THE LAW OF PRIVATE CORPORATIONS. § 251 
 
 poration, by which the former is to canvass certain territory 
 for the sale of its sewing machines which are to be sold to 
 him on credit, and a bond given the corporation to secure 
 payment, is an act of interstate commerce, and not affected by 
 a statute prohibiting business within the state by a foreign 
 corporation which has not complied with certain require- 
 ments. 1 
 
 A law requiring every foreign building and loan association 
 to pay an annual tax of two per cent, on its gross receipts is 
 not an interference with commerce among the states. 2 The for- 
 eign corporation can not complain if it is subjected to a tax 
 which is not imposed upon domestic corporations. 3 The sale 
 and setting up of machinery by a corporation in a state in 
 which it has no agency, is an act of interstate commerce.* 
 
 § 251. Insurance not interstate eoinnieree. — A large part of 
 the litigation which has arisen as a result of the foregoing rules 
 has grown out of the business of insurance, which is to such 
 a greal extent transacted by foreign corporations. It is settled 
 law that the business of insurance, when conducted between 
 citizens of a state and a foreign corporation is not interstate 
 commerce, 5 and, hence, a state may prescribe the conditions 
 upon which insurance companies, created under the laws of 
 other states, may do business within the state. 6 Thus, a for- 
 eign insurance campany may be required to make a deposit 
 with some state officer for the purpose of securing persons who 
 contracl with it. 7 Soitmay require that the agent of a foreign 
 insurance company shall retain money of the company until 
 B loss of which he has notice is paid. 8 Such corporations have 
 
 '(ninii v. White, etc., Go., 57 Ark. ■Omtcher V. Kentucky, 111 P. 8. 
 
 • -I is p. i;. \. 206. 47; Paul v. Virginia, 8 Wall. 168. 
 
 •Southern, etc., Assn. v. Normon, 'State v. Phipps, 60 Can. 609, L8 
 
 98 Kv. 294, 81 I-. I:. L 11. L. B. A.- ,i: > 7 - 
 
 ■Liverpool, etc., Co. v. Massachn- 'Paul V.Virginia, 8 Wall. T . S.) 
 
 in' Wall. h\ s.i 666; Tatem v. L68. 
 
 Wright, 23 N. J. L. 429; People v. 'Phoenix, etc., Co. v. Burdett, 112 
 
 Wemple, 181 N. Y 84. fad. 204. 
 ♦ Milan, etc., I '•• \ ' k>rten,98 Tenn. 
 26 L. B. A.
 
 § 252 EXTRA-TERRITORIAL POWERS. 257 
 
 no right to exercise franchises and privileges in a state con- 
 trary to the law of the state, and may be ousted from the exer- 
 cise of such forbidden privileges by quo warranto, 1 although 
 it may have obtained a license to do business in the state from 
 the insurance commissioner. 2 
 
 § 252. No visitorial power over foreign corporations, — The 
 
 courts of a state will not exercise visitorial power over or in- 
 terfere with the management of the internal affairs of a for- 
 eign corporation. 3 No such power exists unless expressly con- 
 ferred by statute. 4 A court will not interfere with the internal 
 management of a foreign corporation at the suit of a resident 
 stockholder by setting aside unwise contracts which depreciate 
 and destroy the value of the stock, although the visible and 
 tangible property of the corporation, consisting of conduits in 
 streets for electric lighting is within the state. 5 But a foreign 
 corporation which does business in a state may be compelled 
 by mandamus to produce its books which are kept in another 
 state, for inspection by a stockholder. 6 A statute granting 
 powers and privileges to corporations must be construed to 
 apply only to corporations over which it has the power of vis- 
 itation. 7 
 
 § 253. Right to compel issue of a new stock certificate. — A 
 
 state may compel a foreign corporation which is doing business 
 within its borders to issue to a resident shareholder a new cer- 
 tificate of stock in place of one which has been lost. In a case 
 where this was done the court said: 8 "The doctrine is well 
 
 1 State v. Fidelity, etc., Co., 49 Ohio 4 Republican, etc., Mines v. Brown, 
 St. 440, 16 L.R. A. 611; State v. West- 19 U. S. App. 203, 58 Fed. 644, 24 
 ern, etc., Co., 47 Ohio St. 167,8 L. R. L. R. A. 776. 
 
 A. 129. 5 Madden v. Penn., etc., Co., 181 
 
 2 State v. Fidelity, etc., Co., 49 Ohio Pa. St. 617, 38 L. R. A. 638. 
 
 St. 440, 16 L. R. A. 611. 6 State v. Swift, 7 Houst. (Del.) 137. 
 
 3 Clark v. Mutual, etc., Assn. (D.C.), 7 Re Prime Estate, 136 N. Y. 347, 
 43 L. R. A. 390; Guilford v. Western 18 L. R. A. 713. 
 
 Union, etc. , Co., 59 Minn. 332; Mining 8 Guilford v. Western Union, etc., 
 Co. v. Field, 64 Md. 151, 20 Atl. Rep. Co., 59 Minn. 332, 61 N. W. Rep. 324= 
 1039; Smith v. Insurance Co., 14 
 Allen 336. 
 
 17 — Private Corp.
 
 25S THE LAW OF PRIVATE CORPORATIONS. § 253 
 
 settled that courts will not exercise visitorial powers over for- 
 eign corporations, or interfere with the management of their 
 internal affairs. Such matters must be settled by the courts of 
 the state creating the corporation. This view rests upon a 
 broader and deeper foundation than the want of jurisdiction in 
 the ordinary sense of that word. It involves the extent of the 
 authority of the state (from which its courts derive all their 
 powers) over foreign corporations. The only difficulty is in 
 drawing the line of demarkation between matters which do and 
 those which do not pertain to the management of the internal 
 affairs of a corporation. To entertain an action to dissolve a 
 corporation, to determine the validity of its organization; to de- 
 termine which of two rival organizations is the legal one, or 
 who of rival claimants are its legal officers; to restrain it from 
 declaring a dividend, or to compel it to make one; to restrain it 
 from issuing its bonds, or from making an additional issue of 
 stock, — would clearly all be the exercise of visitorial powers 
 over the corporation, or an interference with the management 
 of its internal affairs. But the distinction between any of 
 these cases and the one at bar seems to us very apparent. 
 We think there are cases, and that this is one of 
 them, where, although the rights of a party grow out of his 
 membership in the corporation, yet, as the matter affects only 
 his individual rights under the contract by which the stock 
 was issued, therefore an enforcement of those rights will not 
 be an interference with the internal management of the corpo- 
 rate affairs within the meaning of the rule. 
 
 "It', upon principles of law or comity, foreign corporations 
 are allowed to do business and maintain suits in another state, 
 the genera] rule should be that they are liable to he sued in 
 the Bame jurisdiction. Their rights and liabilities in that re- 
 gard ought to he reciprocal. If we recognize their existence 
 
 for one purpose, we ought also for the other. 1 f on r courts 
 admit and vindicate their rights, justice requires that we also 
 
 enforce their liabilities, and that, before we send our own citi- 
 zen- to a foreign jurisdiction for redress, it should be very cl< ;n 
 that the BUbject of the action is heyond the limits of the power
 
 § 254 EXTRA-TERRITORIAL POWERS. 
 
 or sovereignty of the state over the foreign corporation. If a 
 citizen of this state held a certificate of stock in a foreign cor- 
 poration, which was alleged to have been illegally issued, or 
 to have for some cause become forfeited, we do not think there 
 would be any doubt but that our courts would entertain a suit 
 by the corporation to compel its surrender and cancellation." 
 
 III. The Rule of Comity. 
 
 § 254. The comity of states. — The doctrine of comity which 
 is universally recognized among independent states 1 applies 
 with peculiar force to the states of the Union. Formerly a 
 mere matter of international benevolence and courtesy it is now 
 recognized as an obligation. 2 The courts of one state will as- 
 sume the legal existence of a foreign corporation, 3 and in the 
 absence of a legislative expression of a contrary policy will 
 recognize the right of the corporation to do business in the 
 state. It is the comity of the state and not of the court which 
 is awarded, and the court can not impose conditions upon the 
 corporation. 4 If the corporation was legally created in the 
 state of its origin its corporate capacity will be recognized 
 everywhere, but if not legally created it can not cure the defect 
 by migration. 5 The law of comity is a part of our common 
 law. 6 
 
 1 Comity is the foundation of private guage of Davis, J., in Merrick v. Van 
 
 international law. Dr. Woolsey says : Santvoord, 34 N. Y.208. 
 
 "The foundation of this department, z SeeCalvo, LeDroit Int. II, § 537 ; 
 
 as of all privileges granted to Strang- Story's Conf . of Laws, § 38 ; Wheaton 
 
 ers, is not generally regarded as being Elem. (Dana), p. 134 ; (Lawrence) p. 
 
 justice in the strict sense, but the hu- 1C>2. 
 
 inanity and comity of nations, or in 3 Statutes extending the legal exist- 
 other words, the recognition of the ence of corporations a certain time af- 
 brotherhood of men, and the mutual ter dissolution for the purpose of suits 
 duties thence arising. Justice may and forbidding the defense of want of 
 close the avenues of commerce, and legal organization of the corporation, 
 insist that the most rigid notion of do not apply to corporations of other 
 sovereignty be carried out in practice, states. Marion, etc., Co. v. Perry, 
 but good will grants concessions to 74 Fed. Rep. 425, 41 TJ. S. App. 14, 33 
 aliens, and meanwhile enlightened L. R. A.252. 
 self-interest discovers that the inter- 4 Story's Conf. of Laws, § 38. 
 3Sts of all are promoted." See Ian- 5 Demarest v. Flack, 128 N. Y. 205. 
 
 Elston v. Piggott, 94 Ind. 14.
 
 260 THE LAW OF PRIVATE CORPORATIONS. § 255 
 
 § 255. The general rule, — By virtue of the law of comity- 
 it is settled that where a state does not forbid or its public 
 policy, as evidenced by its laws, is not infringed, a foreign cor- 
 poration may transact business within its boundaries and be 
 entitled to the protection of its laws. 1 As said in a New York 
 case, 2 unless the legislature forbids it, foreign corporations can 
 come here as freely as natural persons and exercise here all 
 the powers conferred upon them by their charter, subject to 
 the limitations imposed upon natural persons, that is, they 
 can do no act in violation of our laws or our public policy. 
 But, unless prohibited by law, they can do here, within the 
 limits of their chartered powers, precisely what domestic cor- 
 porations can do. The rule is thus stated by Mr. Justice Har- 
 lan: 3 " In harmony with the general law of comity obtaining 
 among the states composing the Union, the presumption should 
 be indulged that the corporation of one state not forbidden by 
 the law of its being may exercise within any other state the 
 general powers conferred by its own charter unless it is pro- 
 hibited from so doing either in the direct enactments of the 
 latter state or by its public policy to be deduced from the gen- 
 eral course of its legislation, or from the settled adjudications 
 of the highest courts." This rule is, however, subject to the 
 following exceptions: A state will not permit a foreign corpora- 
 tion to exercise within its limits any extraordinary franchise 
 
 'People v. Fire Assn. of Philadel- rial Bank, 8 Dana (Ky.) 114, 83 Am. 
 
 phia, 92 N. Y. 311, 44 Am. Rep. 380. Dec. 481; Santa Clara Female Aead- 
 
 1 Hollis v. Drew Theolog. Seminary, emy v. Sullivan, 116 111. 375; Clare- 
 
 96N.Y.166; Lancaster v. Amsterdam, mount, etc., Co. v. Royee, 42 Vt. 780. 
 
 fir., (\,., I!d N. Y. 576,24 L R. A. The power of the corporation to hold 
 
 822. real estate will be presumed, at least, 
 
 'Christian Onion v. Yount, 101 U. S. in favor of its grantee. Tarpey v. Des- 
 
 152 \ foreign corporation may hold eret, etc., Co., 6 Utah 495. May take 
 
 real estate in another state unless the a lease or mortgage on real estate, 
 
 right is denied it by its charter or the Lebanon Sav. Bank v. Hollenbeck, 
 
 ■ ] such oilier state. The rfghl i M > Minn. 322; Black v. Caldwell, 83 
 
 will be granted by the law of comity. Fed. Rep. 880. The right of a foreign 
 
 Lancaster v. Armstrong, etc., Co., 140 corporation to own water-works m 
 
 N. Y. 676, 24 L. R. 1. 822, annotated; the slate can only be questioned by 
 
 Bunyon v. ( ioster, 1 1 Pet, (U. 8.) 122; the state. United, etc., Co., v. Oma- 
 
 Lumbard v. Ildrich, 8 N. ll. 81,28 ha, etc., Co., W N. Y Supp. 817, dt- 
 
 Am 1 1 Lathrop v. ( iommer- ing ca
 
 § 256 EXTRA-TERRITORIAL POWERS. 261 
 
 or privileges to which it may be entitled under its charter such 
 as exemption from taxation, or the right of eminent domain, 
 or to do any acts contrary to the laws or public policy of the 
 state or not authorized by the charter of the corporation. 
 
 § 256. Contracts contrary to the law of the forum.— As a 
 
 general rule, a state will enforce rights not in their nature lo- 
 cal and not contrary to its public policy wherever arising. 
 without regard to whether they are of statutory or common 
 law origin. 1 But comity does not require the enforcement of 
 contracts which are against public policy, 2 injurious to public 
 rights, offensive to morals or contrary to law. 3 The powers 
 sought to be exercised must be in harmony with the general 
 policy of the state. Hence, a foreign corporation will not be 
 permitted to do acts within a state which are prohibited by the 
 law of the state to its own citizens or to corporations engaged 
 in a similar business. Comity does not require that non-resi- 
 dents shall be allowed a remedy which the policy of the state 
 denies to its own citizens. 4 The law of the forum governs in 
 all matters relating to the remedy. 5 A mercantile corporation 
 can not carry on its business in a state which prohibits the 
 organization of such corporations. 6 Special privileges which 
 a foreign corporation enjoys under its charter can not be exer- 
 cised beyond the boundaries of the state by which it is created, 
 especially when such privileges are contrary to the policy of 
 the other jurisdiction. 7 A foreign corporation can not exer- 
 
 1 Usher v. West Jersey R. Co., 126 835; Emery v. Burbank, 163 
 Pa. St. 206, 4 L. R. A. 261 ; Boston, 326, 28 L. R. A. 57. 
 
 etc., Co. v. Coffin, 152 Mass. 95, 8 L. « Ruhe v. Buck, 124 Mo. 178, 25 L. 
 
 R. A. 740; Bullard v. Chandler, 149 R. A. 178. 
 
 Mass. 532, 5 L. R. A. 104; Heiskell v. 5 Eingartner v. Illinois, etc., Assn., 
 
 Chickasaw Lodge, 87 Tenn. 668, 4 L. 94 Wis. 70, 34 L. R. A. 503. 
 
 R. A. 699. e Empire, etc., Co. v. Alston, etc, 
 
 2 Faulkner v. Hyman, 142 Mass. 53; Co., 4 Tex. App., Civ. Cas. 346, 12 L. 
 Beard v. Basye, 7B. Mon. 133; Fen- R. A. 366. 
 
 ton v. Livingston, 3 Macq. H. L. 497. 7 Falls v. United States, etc., Assn., 
 
 3 Seamans v. Temple Co., 105 Mich. 97 Ala. 417, 24 L. R. A. 174, the court 
 400, 28 L. R. A. 430; Jones v. Sur- said: "The statutes of Minnesota have 
 prise, 64 N. H. 243; Pope v. Hanke, 155 no binding force with us, and any 
 111. 617, 28 L. R. A. 568; Gooch v. provision found in them which au- 
 Faucette, 122 N. C. 270, 39 L. R. A. thorizes a corporation of their creation
 
 262 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §257 
 
 cise the right of eminent domain unless expressly granted to it 
 by the state in which it is doing business. 1 
 
 § 257. Public policy, how determined. — It is not always 
 easy to determine when an act is contrary to the public policy 
 of the state. An act which a state permits its own corpora- 
 tions to do can not be considered as contrary to the public 
 policy of the state. 2 The prohibition by the New York statute 
 of assignments by domestic corporations for the benefit of cred- 
 itors is held not to show a public policy of the state which 
 will prevent a foreign corporation having property in the state 
 from exercising its common-law right to make such an assign- 
 ment, especially when the assignment is valid in the state of 
 the creation of the corporation. 3 In order to discover the pub- 
 lic policy of a state it is necessary to examine its constitution, 
 its laws and judicial decisions. 4 
 
 § 258. Discrimination against non-residents. — A foreign 
 corporation will not be permitted by the law of comity to en- 
 force a contract which would result in giving the citizens of 
 another state an advantage over residents. But the mere fact 
 
 to contract for and recover more than see why the provision, with reference 
 
 eight ]>er cent, for the loan or for- t<> the rate of interest, was contrary to 
 
 bearanceof money is obnoxious to our the law or public policy of Alabama 
 
 statute for the prevention of usury, which authorized the creation of simi- 
 
 We hold further that the contract lar corporations with tlit' same privi- 
 
 whichgave rise to the present suit is leges. As to usury in building and 
 
 an obnoxious contract, ami can only loan association contracts, see the case 
 
 be enforced to the extent our statute of Reeve v. Ladies', etc., Assn., 56 
 
 permits. Any statute of this state Ark. 335, 18 L. R. A. 129, and cases 
 
 w bicfa may be supposed to confer on cited in an extensive note, and Rhodes 
 
 building and loan associations the v. Missouri, etc., Assn., 173111. 621,42 
 
 right to charge more than eight per L. R. A.. 93. 
 
 c.nt. interest, even it we conceded l Holbert v. St. L., etc., R. Co., 45 
 
 BUCh statutory authority, must be con- 
 fined in its operation to such corpora- 
 tions as are chartered in Alabama." 
 This decision ia manifestly a wrong 
 application of a corred rule. The con- 
 i, ., , \i tin< ota contract) and 
 should have i n governed by the Min- 
 
 [owa 23. 
 
 'American Union v. Yount, 101 U. 
 s. 362. 
 
 1 Vanderpoel v. Gorman, 140 N. Y. 
 568, 24 L. R. A. 548. 
 
 •Girard Will Case, 2 How. (U. 8.) 
 127: Lancaster v. Amsterdam, etc., 
 
 . laws, it i-, al o, very difficult to Co., l K) N. Y. 676, 24 L> U. A 
 
 822.
 
 § 258 EXTRA-TERRITORIAL POWERS. 2G3 
 
 that a foreign corporation has authority to carry on a business 
 not granted to domestic corporations will not prevent the for- 
 eign corporation from doing business in the state. Thus, mul- 
 tiform insurance may be carried on by a foreign corporation, 
 in a state whose domestic corporations are not authorized to do 
 so, if there is no express prohibition by statute. 1 A charter 
 privilege as to the rate of interest a corporation may receive 
 will not be recognized in another state when the local usury 
 laws expressly deny the right to domestic corporations. 2 In a 
 recent case, 3 a Missouri corporation loaned money upon a 
 mortgage on real estate situated in Illinois. The corpora- 
 tion was a legally organized building and loan company under 
 the laws of Missouri, and had authority to procure money for 
 loaning by selling its paid-up shares. This privilege was not 
 granted to similar corporations organized under the laws of 
 Illinois. The Illinois courts refused to grant to the corporation 
 the rights of an Illinois building and loan company, and treated 
 it as an ordinary loan company; and, as such, not exempt from 
 the usury laws of Illinois. Had the corporation not possessed 
 powers which, in the judgment of the Illinois court, deprived 
 it of the character of an Illinois building and loan corporation, 
 its claim of exemption from the usury laws would doubtless 
 have been admitted, as such exemptions were granted domestic 
 building and loan corporations by the Illinois law. The court 
 said : "The rules of comity among states are so liberal that if 
 it should appear to us that an association is engaged in 
 doing business under statutes similar in all respects to 
 our own, we should apply to it the same rules as are ap- 
 plicable to associations organized under our own statutes. 
 Under the general rule of comity existing be- 
 tween states, we will allow to foreign corporations a standing 
 in our courts to enforce the valid contracts they may have 
 made with our citizens, and all valid liens against property 
 
 'People v. Fidelity, etc., Co., 153 3 Rhodes v. Missouri, etc., Assn., 
 111. 25, 26 L. R. A. 295. See Vander- 173 111. 621, 42 L. R. A. 93; Meroney 
 poel v Gorman, 140 N. Y. 563. v. Atlantic, etc., Assn., 112 N. C. 842. 
 
 2 Falls v. United States, etc., Assn., 
 97 Ala. 417, 24 L. R. A. 174.
 
 264 THE LAW OF PRIVATE CORPORATIONS. § 259 
 
 situated in this state. But that rule of comity does not re- 
 quire that we should allow foreign corporations to enforce 
 contracts here if such enforcement would be in conflict with 
 our laws, and, being thus in conflict, the enforcement whereof 
 would work against our own citizens, and give to the citizens 
 of another state an advantage which the resident has not. 1 As 
 has been said by this court, 2 comity between different states 
 does not require a law of one state to be executed in another 
 when it would be against the public policy of the latter state. 
 No state is bound to recognize or enforce contracts which are 
 injurious to the welfare of its people, or which are in viola- 
 tion of its own laws. 3 If, therefore, it appears that the state of 
 Illinois has granted to corporations of this state certain rights 
 and privileges, and immunity from penalties provided in cer- 
 tain other sections of our statute, and a foreign corporation at- 
 tempts to invoke the aid of the courts of this state to the same 
 extent, it must affirmatively appear that such foreign corpora- 
 tion is organized and doing business under a similar statute 
 before it will be entitled to like consideration; and where it 
 clearly appears, as it does in this case, that the amount re- 
 ceived by a foreign corporation as compensation for its loan or 
 advancement is far in excess of the legal rate of seven per cent, 
 allowed by our statute, then it must affirmatively appear thai 
 the statute under which such corporation is organized is iden- 
 tical with, or at least substantially like, our own." 
 
 59. Ads not authorized by charter. — It is well settled 
 thai the doctrine of comity does not require a state to permit 
 a foreign corporation to exercise powers which it is not au- 
 thorized to exercise by its charter. "The contracl must be 
 ..ne which the foreign corporation is permitted by its charter 
 to make." 4 Charter restrictions follow a corporation and are 
 operative wherever it does business." Thus, a corporation 
 
 1 Walton v. Whitlock, 9 Fla. 86. BON. II 263,9 \m. Rep. 206; Fishei 
 
 Pope i Hani e, 166 III. 617, -mi v. Lord, 68 V II. 614. 
 
 ] I: \ 4 Can I v. Poole, 12 N. Y. I'.).'.; Mfor- 
 
 l onfl i . 827; I aulknei v. lie v. Hall, II Ua. 510. 
 
 II-. man, II- BlaM.58; Hill 9. Spear, 'American, etc., Co. v. Farmers',
 
 § 260 EXTRA-TERRITOKIAL POWERS. 26b 
 
 which is not by its charter permitted to hold real estate, will 
 not be permitted to hold real estate in a state other than that 
 by which the charter was granted. 1 
 
 § 260. Restrictions imposed by general law. — A distinction 
 is sometimes made between limitations upon corporate powers 
 which are imposed by a general law and such as are contained 
 in a charter. A limitation contained in a charter is operative 
 everywhere. But only general limitations which are intended 
 to adhere in the constitution of the corporation, and to apply 
 to all acts wherever done, are, as a rule, recognized in other 
 states. 2 It has been said that a court would recognize in a for- 
 eign jurisdiction only those powers and capacities which would 
 be recognized by the courts of the state incorporating it, if 
 they were considering the particular act in question. 3 The 
 New York statute prohibiting assignments b} T insolvent cor- 
 porations was held to have no extra-territorial force, and not to 
 affect the validity of an assignment by an insolvent corpora- 
 tion made in Ohio of property situated in Illinois, 4 In New 
 York it was held that the power of a Pennsylvania corporation 
 to take under a New YorK will was restricted by a Pennsyl- 
 vania statute which forbade gifts by a will executed under cer- 
 tain circumstances. 5 But the weight of authority seems to 
 sustain the view that such statutes are directed to the individ- 
 uals, and not to corporations. In Ohio it was held that a New 
 York statutory prohibition against a devise to a corporation 
 did not prevent a New York corporation from taking a devise 
 of real estate situated in Ohio, if the terms of its charter were 
 broad enough to authorize it to hold land. 6 In Massachusetts 
 
 etc., Co., 20 Colo. 203, 25 L.R. A. 338; 3 Christiancy, J., in Thompson v. 
 
 Blair v. Perpetual, etc., Co., 10 Mo. Waters, 25 Mich. 214. 
 
 559, 47 Am. Dec. 129; Ohio, etc., Co. * Warren v. First Nat'l Bank, 149 
 
 v. Merchants', etc., Co., 11 Humph. 111. 9. SeePairpoint,etc, Co. v. Watch 
 
 (Tenn.) 1, 53 Am. Dec. 742. Co., 161 Pa. St. 17. 
 
 diamond, etc., Co. v. Powers, 51 5 Kerr v. Dougherty, 79 N. Y. 327. 
 
 Mich. 145; Hope, etc., Co. v. Perkins, 6 American, etc., Soc. v. Marshall, 
 
 38 N. Y. 404. 15 Ohio St. 537. See also White v. 
 
 z Ohio, etc., Co. v. Merchants', etc., Howard, 38 Conn. 342; Thompson v. 
 
 Co ,11 Humph. (Tenn.) 1, 24, 53 Am. Swoope, 24 Pa. St. 474; contra, House 
 
 Dec. 742. of Mercy v. Davidson, 90 Tex. 529.
 
 266 THE LAW OF PRIVATE CORPORATIONS. § 261 
 
 it was held that the New York statute which prohibited any 
 person from devising more than one-half of his estate to a re- 
 ligious association or corporation did not apply to a devise to 
 such a New York corporation by a non-resident of property 
 situated in another state. The court said: "It seems to us 
 that the statute of New York was intended to apply only to tes- 
 tators who were inhabitants of that state. It is not an act re- 
 lating primarily to corporations, or designed primarily to limit 
 the amounts they may receive ; but it is an act relating to wills, 
 and designed for the protection or benefit of persons interested 
 in the estates of inhabitants of that state. There is nothing in 
 it to prevent a New York corporation from receiving any be- 
 quests which may be made to it by an inhabitant of another 
 state, and which may be lawful according to the laws of the 
 place of his residence." 
 
 IV. Statutory Restrictions. 
 
 § 261. In general, — Almost all of the states have modified 
 the rule of comity as to the recognition of foreign corporations, 
 and adopted statutes designating the conditions upon which 
 such corporations may transact business. These statutes con- 
 tain many features in common and have for their general 
 purpose the protection of the people of the state from the acts 
 of irresponsible foreign corporations. They generally provide 
 for tin' granting of licenses to foreign corporations upon their 
 complying with prescribed conditions; and require that the 
 corporation shall maintain an ofliee within the state, and des- 
 ignate some agenl upon whom service of process may be made. 1 
 
 'Stimeon, Am. St. Law, [I, ch. iv, copies of their articles of association 
 
 100 3499. As to such restrictions, and appointing a resident agenl for 
 
 see People v. Fidelity, etc., Co. (Ill-), Bervice of process, may carry on busi- 
 
 26 I.. R. A. 295, and note to State v. ness in the state and enjoy all the 
 
 rman (Ohio), 24 L. R. A. 296. rights and privileges and be sub j eel 
 
 The Michigan statute relating to the to all the restrictions and liabilities of 
 
 incorporation of domestic manufactur- corporations existing under said act, 
 
 ing and mercantile corporations, whicb dues not prohibit foreign corporal ions 
 
 provides thai foreign corporations or- from doing business in the state until 
 
 ganized foi any of the purposes con- they have complied with such condi* 
 
 template. i by said act, upon recording tions, 01 invalidate contracts made by
 
 § 202 EXTRA-TERRITORIAL FOWERS. 267 
 
 A statute which admits corporations of a certain kind 
 impliedly excludes those organized for other purposes. 1 
 
 § 262. Conditions which may be imposed. — From the gen- 
 eral power of the state to exclude foreign corporations, it fol- 
 lows that, subject to the restrictions imposed by the national 
 constitution, it is the. sole judge of the conditions upon which 
 foreign corporations may be permitted to do business within 
 the state. A statute imposing conditions must stand unless it 
 is clearly unconstitutional. 2 It is immaterial whether the con- 
 ditions imposed are reasonable or unreasonable. 3 It is no ob- 
 jection to such a condition that it results in a discrimination 
 in favor of domestic corporations. Thus, a foreign corporation 
 may be discriminated against in the matter of taxation, 4 and a 
 foreign corporation may be required to pay a higher license 
 than is required of domestic corporations. 5 
 
 A state may impose a franchise or a license tax on a foreign 
 corporation for the privilege of doing business. 6 An act taxing 
 foreign insurance companies for the benefit of a firemen's fund is 
 constitutional. 7 Foreign corporations selling goods in Michigan 
 by traveling salesmen are not required to pay the franchise 
 fee required of domestic corporations. The act if applied to 
 
 them. It simply prescribes the terms Western Union, etc., Co. v. Lieb, 76 
 
 upon which such corporations, if the}'- 111. 172; Phoenix, etc., Co. v. Burdett, 
 
 so desire, may become entitled to the 112 Ind. 204. The conditions must be 
 
 benefits of the act conferred upon do- imposed by the legislature and not by 
 
 mestic corporations of similar charac- the courts. Demarest v. Flack, 128 
 
 ter. People v. Hawkins, 106 Mich. 479. N. Y. 205. 
 
 J Isle Royal, etc., Corp. v. Secretary 5 Insurance Co. v. New Orleans, 1 
 
 of State, 76 Mich. 162. "Woods 85; Pembina, etc., Co. v. 
 
 2 Phomix, etc., Co. v. Burdett, 112 Pennsylvania, 125 U. S. 181. When 
 
 Ind. 204; State v. Carey, 2 N. Dak. the statutes require the corporation 
 
 36; State v. Phoenix, etc., Co., 92 to file an instrument designating its 
 
 Tenn. 420. place of business within the state, it 
 
 3 Hartford, etc., Co. v. Raymond, 70 is sufficient to name the city in which 
 Mich. 485. its office is located. McLeod v. Ainer- 
 
 4 Phoenix, etc., Co. v. Com., 5 Bush ican, etc., Co., 100 Ala. 496, 14 So. 
 (Ky.) 68, 96 Am. Dec. 331 ; Atty.-Gen'l Rep. 409. 
 
 v. Bay State, etc., Co., 99 Mass. 148; 6 Commonwealth v. Standard, etc., 
 
 Liverpool, etc., Co. v. Mass., 10 Wall Co., 101 Pa. St. 119. 
 
 566; People v. Thurber, 13 111. 554; 7 Trustees v. Roome, 93 N. Y. 313.
 
 9GS THE LAW OF PRIVATE CORPORATIONS. § 263 
 
 such corporations would impose an illegal restraint upon inter- 
 state commerce. 1 
 
 § 263. Retaliatory statutes.— The courts have generally sus- 
 tained the validity of statutes which authorize foreign corpora- 
 tions to do business within the state upon such terms and 
 conditions as are, or may be, imposed upon the corporations of 
 the enacting state in the state of the domicile of the foreign 
 corporation in question. 2 It has been contended that such 
 statutes are unconstitutional, as an abdication by the legisla- 
 ture of its functions and a delegation of its powers to a for- 
 eign legislature. But such a statute is a complete law which is 
 to go into effect upon the happening of a contingency and is 
 not an abandonment of the legislative functions. 3 Such a pro- 
 vision is " a constitutional and valid exercise of legislative will, 
 is not void for uncertainty, is susceptible of enforcement, and 
 ought to be enforced upon the happening of the contingency 
 therein mentioned." 4 Under a statute, sec. 29, chap. 73, Rev. 
 Statute of Illinois, 1874, which provides that its provisions 
 shall go into effect " when, by the laws of any other state, any 
 * * * prohibitions are imposed or would be imposed on in- 
 surance companies of this state doing or which might seek to do 
 business in such other state," the mere existence of the law in 
 another state is sufficient to put the retaliatory law in force. 5 But 
 
 1 Wilcox, etc. f Co.V. MoBher (Mich.), 4 State v. Insurance Co., 115 linl. 
 
 72 X. W. 117. 257. 
 
 ■State v. Fidelity, etc., Co., 39 Minn. 5 Germania, etc., Co. v. Swigert, 128 
 
 Home, etc., Co. v. Swigert, 104 111.237,4 L. R. A. 473. "It is not 
 
 III. 653; Germania, etc., Co. v. Bwi- important nor necessary to the exist- 
 
 gert, 128 111.237, I L. R. A. 173; State ence of the law here thai an Iowa 
 
 7. Insurance Co., 115 ind. 257; Phce- company should goto New York to 
 
 nix, etc., Co. v. Walch, 29 Kan. 672; test the sincerity of the people in the 
 
 People v. Fire Assn. of Philadelphia, enforcement of her law : nor is such 
 
 92 N. Y. 811; Goldsmith v. Home, a step necessary to the enforcement of 
 
 62 Ga. 379; State v. [nsur- the law in this state. A. spirit of com- 
 
 ance Co. 1892), 19 Ohio Bt. 140, 16 ity between the states should induce 
 
 i: \ 61l;Talbotl \. Fidelity, etc., a belief thai their laws are made in 
 
 I Md 6, 18 L. R. \ 584. good faith, and for observance." State 
 
 Home, etc., Co. v. Swigert, 104 HI. v. Fidelity, etc., Co., 77 [owa 648; 
 
 Ucora \ . Hamer, 88 Miss. 662; Talbotl v. Fidelity, etc., Co., 74 Md. 
 
 Btatev. Parker, 26 Vt. I 586, 18 L. R. A. 584, 22 Atl. Rep
 
 § 264 EXTRA-TERRITORIAL POWERS. 2G9 
 
 in Ohio it was held that to make a case for the application of 
 the retaliatory provision it must appear that an Ohio company 
 had been formed for the purpose of doing substantially the 
 same kind of business in the foreign state, and that it would 
 then be subjected to burdens not imposed by the laws of Ohio 
 upon foreign corporations. 1 Such statutes will not be enforced 
 against a foreign corporation unless it is clearly proved that 
 they would have the restrictive effect which is claimed. 2 
 
 § 204. Waiver of constitutional rights — Removal of causes. 
 
 — There has been some conflict among the courts as to the right 
 of a state to require of a foreign corporation as a condition 
 precedent to the right to do business, a stipulation not to re- 
 move to the federal courts actions which may be commenced 
 against it in the state courts. The state courts have generally 
 sustained such provisions. Under the decisions of the federal 
 courts they are unconstitutional. The question arose in Wis- 
 consin, and the court held the provision valid. Upon appeal 
 to the supreme court of the United States, the decision of the 
 supreme court of Wisconsin was reversed. 3 
 
 Subsequently the supreme court of Wisconsin held that 
 although the provision was not binding upon the corporation 
 the state might revoke the license, if the corporation chose to 
 insist upon its constitutional right to litigate in the federal 
 courts. Chief Justice Ryan said: 4 "The statute extended to 
 these foreign insurance companies the privilege of doing busi- 
 ness in this state on equal footing with domestic corporations. 
 Experience showed their power to harass the citizens of the 
 state doing business with them by removing actions on their 
 policies from courts of the vicinage to distant and expensive 
 tribunals. Hence the provisions of the statute; and con- 
 ceding to the fullest extent the right of removal of actions 
 
 1 State v. Insurance Co., 49 Ohio 3 Insurance Co. v. Morse, 20 Wall. 
 St. 440, 1G L. R. A. 611. 445. See Lafayette, etc., Co. v. French, 
 
 2 People v. Fidelity, etc., Co., 153 18 How. (U. S.) 404; Commonwealth 
 111. 25, 26 L. R. A. 295; State v. In- v. Coal Co., 97 Ky. 238. 
 
 surance Co., 49 Ohio St. 440, 16 L. R. * State v. Doyle, 40 Wis. 175. 
 A. 611 ; State v. Fidelity, etc., Co., 39 
 Minn. 538.
 
 270 THE LAW OF PRIVATE CORPORATIONS. § 2 04 
 
 commenced, we can see no pretense for questioning the power 
 of the state, in the exercise of its absolute discretion on the 
 subject, to revoke the license of the company exercising the 
 right. The state has the power to make its voluntary license 
 subject to the forbearance of a right, and revokable upon its 
 exercise. The right may survive the license, but the license 
 can not survive its exercise. So grants are sometimes made 
 upon conditions to forbear a right. It was for the authorities 
 of the state alone to judge that the exercise of the right was an 
 abuse of the privilege of the license, * * * the federal 
 courts * * * have no jurisdiction over the question 
 whether foreign corporations, exercising the right, shall be 
 permitted by the state to do business within it. That is a 
 matter of state policy, state law, state jurisdiction." 
 
 This decision was approved by the supreme court of the 
 United States, 1 but in a later case 2 it was held that where 
 the statute provided that no permit should be granted to a 
 foreign corporation until a stipulation was entered into that 
 it would not remove actions brought against it to the federal 
 courts, it was apparent that the purpose was to deprive the 
 corporation of its constitutional rights and that the statute was 
 void. In a still later case the court said: "But that statute 
 requiring the corporation, as a condition precedent to obtain- 
 ing a permit to do business within the state, to surrender a 
 right and privilege secured to it by the Constitution and laws 
 of the United States, was unconstitutional and void, and could 
 give no validity or effect to any agreement or action of the 
 corporation in obedience to its provisions.'" But the fact re- 
 mains that the state may entirely exclude the corporation if it 
 chooses to stand on its constitutional right. A person may 
 waive a constitutional provision in his favor. 4 
 
 1 Doyle v. Insurance Co., 94 U. S. which had nol obtained a licensi 
 
 required by statute ol 1< >\\ a . 
 ■ Barron v. Burnside, 121 U. S. 186. "Southern, etc., Co. v. Denton, 146 
 Thiai ration of an U. S. 202; Texas, etc., Co, v. VVor- 
 
 • oi the corporation for engaging snam, 76 Tex. 656. 
 in the bo ol the corporation 'Embury v. Conner, 8 N. V. 511; 
 
 In reOooper, 93 N. Y. .'.a?.
 
 § 265 EXTRA-TERRITORIAL POWERS. 271 
 
 § 265. The granting and revocation of a license. — Statutes 
 generally provide that the license to do business shall be 
 granted by some state officer, upon application by the corpora- 
 tion and compliance with the statutory conditions. Whether 
 the action of this officer is judicial or administrative depends 
 upon the language of the statute. 1 If it is apparent that no 
 discretion was intended to be vested in the officer, but that he 
 should grant the license when the conditions are complied with , 
 his acts are ministerial and subject to the control of the courts, 2 
 but if it is apparent that the legislature intended that the offi- 
 cer should exercise judgment and discretion, in granting or re- 
 voking a license, his acts are judicial and not subject to the 
 control of the courts. 3 The state is not estopped from insisting 
 upon compliance with a condition by the failure of its officials 
 to require compliance at the proper time. 4 If a corporation is 
 so organized that it is impossible for it to comply with the 
 conditions imposed by the restrictive statute, it can not com- 
 pel the issue of a license to it. 5 The motives which in- 
 duce a state to exclude a foreign corporation or authorize the 
 revocation of a license are immaterial, and can not be made the 
 subject of a judicial inquiry. 6 
 
 § 266. Meaning of "doing business." — These words as used 
 in the various statutes refer to the general transaction of busi- 
 ness, and not to an isolated transaction, without the intention 
 of continuing business. 7 Thus, it does not include a mere con- 
 
 1 Lafayette, etc., Co. v. French, 18 Royal, etc., Co. v. Ostium, 76 Mich. 
 
 How. 404; Ducat v. Chicago, 10 Wall. 162. 
 
 410; Insurance Co. v. Morse, 20 Wall. 4 Travelers, etc., Co. v. Fricke 
 
 445; St. Clair v. Cox, 106 U. S. 350; (Wis.), 41 L. R. A. 557. 
 
 Philadelphia, etc., Assn. v. New York, 5 Mutual, etc., Co. v. House, 89 
 
 119 U. S. 110. Tenn. 438; Mutual, etc., Co. v. Swig- 
 
 2 Statev.Fidelity,etc.,Co.,39Minn. ert, 120 111. 36, 11 N. E. Rep. 410; 
 
 538. Isle Royal, etc., Co. v. Osmun, 76 
 
 3 Travelers, etc., Co. v. Fricke Mich. 162. 
 
 (Wis.. 1898), 41 L. R. A. 557; State v. 6 Doyle v. Continental, etc., Co., 94 
 
 Doyle, 40 Wis. 175, 22 Am. Rep. 692; U. S. 535. 
 
 State v. Carey, 2 N. Dak. 36, 49 N. 'Cooper, etc., Co. v. Ferguson, 113 
 
 W. Rep. 164; Dwelling-House, etc., U. S. 727; Tabor v. Goss, etc , Co., 11 
 
 Co. v. Wilder, 40 Kan 561 ; Kansas, Colo. 419; Farmers', etc., Co. v. Lake, 
 
 etc., Co. v. Wilder, 43 Kan. 731 ; Isle etc., R. Co. (111.), 51 N. E. Rep. 55.
 
 979 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 266 
 
 signment of goods by a foreign corporation to a citizen of the 
 state, 1 nor the purchase of an article of machinery within the 
 state, 2 nor the sale of milling machinery and placing it in a 
 mill by a corporation which has no office in the state, 3 nor so- 
 liciting subscriptions to a newspaper published in a foreign 
 state. 4 nor selling goods by a traveling salesman, 5 nor the fre- 
 quent purchase of material within the state, 6 nor the investing 
 in the securities of a domestic corporation, 7 nor soliciting sub- 
 scriptions to the stock of a foreign corporation, 8 nor the ap- 
 pointment of agents who are to transact the business, 9 nor the 
 bringing of a suit. 10 The mere collection of a debt after the 
 passage of an act imposing certain conditions upon the right 
 to do business is not within the prohibition where the debt 
 was due before the passage of the act." The single act by a 
 foreign mortgage loan corporation of lending money upon 
 mortgage security, in Alabama, is held to be "doing business" 
 within the meaning of the law, 12 although the supreme court of 
 
 1 Bertha, etc., Co. v. Clute (X. Y.), & Johnson, etc., Co. v. Foster, etc., 
 
 27 N. V. Supp. 342; Cooper, etc., Co. 
 v. Ferguson, 113 U. S. 727. 
 
 2 Colo. I. Works v. Sierra Grande, 
 etc., Co., 15 Colo. 499; Graham & 
 Anderson v. Hendricks, 22 La. Ann. 
 523. 
 
 3 Milan, etc., Co. v. Gorten, 93 
 Twin. 590, 26 L. R. A. 135. 
 
 4 Beard v. Union, etc., Co., 71 Ala. 
 60. 
 
 5 Ware v. Hamilton Brown, etc., 
 Co., 92 Ala. 1 15. 
 
 ■ ( lommonwealth v. Standard, etc., 
 Co., 101 Pa St. 119. 
 
 7 Gilchrist v. Helena, etc., R. Co., 47 
 Fed. Rep. 598. 
 
 ■ Payson v. Withers, 5 Bias. C. C. 
 269 
 
 D - Morgan <S Co. v. White, L01 
 [nd. H3. 
 
 Co., 4 Dak. 329, 30 N. W. Rep. 166. 
 Upon a contract made out of the state, 
 Barse, etc., Co. v. Kong, etc., Co., J 6 
 Utah 59. 
 
 11 Pioneer, etc., Assn. v. Cannon, 96 
 Tenn. 599, 33 L. R. A. 112. 
 
 12 Ginnv. New Eng., etc.,Co.,92 Ala. 
 135 ; Farrior v. New Eng., etc., Co., 88 
 Ala. 275. See People v. Am. Hell, 
 etc., (V)., 117 N. Y. I'll. In Reeves v. 
 
 Harper, 13 La. Ann. 516, ii was held 
 that the constitution of Louisiana 
 does nut deny to a citizen <>!' Louis- 
 iana the privilege of borrowing money 
 from foreign corporations, nor does it 
 prohibit such corporations from loan- 
 ing money to our citizens, provided 
 
 only that such transactions are not 
 
 done in the course of business carried 
 
 on by the corporation in this state, 
 
 w St. Louis, etc., R. Co.v. Phila. Fire without complying with the require- 
 
 i.. I;. A. 88; merits of the constitution. The single 
 
 Utley v. Clark, etc., Co., I Colo. 869; act of loaning monej within the state 
 
 lei River, etc., Co. v. Custer Co., Is not a doing of business. 
 
 ■ Pac. Rep. 383; lull' i A lite Insurance company chartered
 
 267 
 
 EXTRA-TERRITORIAL POWERS. 
 
 273 
 
 the United States has held otherwise. 1 So in Arkansas it is 
 held that the taking of a single mortgage for a past due debt 
 for goods sold at the demand of the corporation is not doing 
 business in the state. 2 
 
 But a corporation "does business" in a state in which it 
 has an office and sells goods. 8 A corporation which lends 
 money to a resident of the state through a broker domiciled in 
 the state, 4 or in another state, 5 is not doing business in the 
 state. 
 
 § 267. Contracts made out of the state. — These restrictive 
 statutes do not affect the right of a citizen of a state to enter 
 
 in the state of Illinois carried on 
 business in the state of Missouri 
 through an agent appointed for that 
 purpose. The agent in Missouri 
 would solicit and receive from citizens 
 in that state applications for insur- 
 ance, which he would forward to the 
 home office of the company in Chi- 
 cago. When the application was ap- 
 proved the policy was rilled in, dated 
 and signed by the officers of the com- 
 pany in Chicago, and transmitted by 
 mail to the agent of the company in 
 Missouri, who, upon the payment to 
 him by the applicant of the first pre- 
 mium, called in this case an entrance 
 fee, delivered the policy to the as- 
 sured. In Berry v. Knights Templar, 
 etc., Co., 46 Fed. Rep. 439, it was held 
 that the company was doing business 
 in the state of Missouri. 
 
 The signing of a policy in Phila- 
 delphia by a company located and do- 
 ing business there and the sending it 
 to the applicant or the attorney of the 
 applicant in New York is not a viola- 
 tion of the New York statute. People 
 v. Imlay, 20 Barb. 68. A foreign cor- 
 poration organized to act as the gen- 
 eral agent of its members in the selling 
 of goods produced by them, and having 
 18 — Private Corp. 
 
 and employing no capital stock in the 
 state, is not subject to the provision 
 of the statute requiring a statement 
 showing its title, object, location of 
 its offices and names of its agents in 
 the state. Kilgore v. Smith, 122 Pa. 
 St. 48. 
 
 hooper, etc., Co. v. Ferguson, 113 
 U. S. 727; and see Caesar v. Capell, 83 
 Fed. Rep. 403; Pioneer, etc., Co. v. 
 Cannon, 96 Tenn. 599, 33 L. R. A. 112. 
 
 2 Florsheim, etc., Co. v. Lester, 60 
 Ark. 120, 27 L. R. A. 505. A foreign 
 corporation which has obtained no 
 permit authorizing it to do business in 
 the state may maintain an action in 
 the state court against a non-resident 
 to recover damages under a contract 
 executed and to be performed, exceptas 
 to the delivery of the property in ques- 
 tion, in another state. Ware, etc., Co. 
 v. Anderson, etc., Co. (Iowa, 1899), 
 77 N. W. Rep. 1026. 
 
 3 People v. Wemple, 131 N. Y. 64; 
 People v. Silver, etc., Co., 105 N. Y. 
 76. 
 
 4 American, etc., Co. v. Peirce, 49 
 La. Ann. 390. 
 
 5 American, etc., Co. v. Ogden, 49 
 La. Ann. 8.
 
 274 THE LAW OF PRIVATE CORPORATIONS. § 2G7 
 
 into a contract with a foreign corporation. 1 Tims, when the 
 statute prohibited any person or persons from "paying, receiv- 
 ing or forwarding any premium or application for insurance, 
 or in any manner aiding or helping in the securing or placing 
 of any insurance" with any foreign insurance company not 
 authorized to do business in the state, it was held that the 
 statute applied to persons who, as insurance agents or brokers, 
 do business with unauthorized foreign insurance companies, 
 or agents of other parties, but not to persons who, as owners, 
 make single contracts of insurance with such companies or 
 associations upon their own property. Mr. Justice Mitchell 
 said : "It may be readily conceded that an act which should 
 attempt to prevent a non-resident owner of property in this 
 state, or a resident owner not at the time within its territory, 
 from insuring his property in any manner lawful in the place 
 of the contract, would be void as extra-territorial. So, also, it 
 may be conceded that if a citizen of Pennsylvania has, by a 
 contract validly made outside of its boundaries, incurred a 
 liability, no law of this state can, under the constitution of the 
 United States, prevent his fulfilling that obligation, even by 
 an act done within the state. But beyond the limitations im- 
 posed by the constitution, the power of the legislature to de- 
 clare any acts done within the territory of the state unlawful 
 or criminal can not be questioned; and all considerations of 
 wisdom, of policy, or hardship, of difficulty or even impossibility 
 of general enforcement must be addressed to the law-making 
 branch of the government. We entertain, therefore, no doubt 
 of the power of the legislature to make the insurance of his 
 property in an unauthorized foreign company by an owner 
 criminal, if done in this state; but such a statute would be 
 nol only an unusual, but a very harsh and extreme interfer- 
 i with He' genera] right of a citizen to manage his private 
 affaire in bis own way. We should not attribute sueli an in- 
 tention to the ad in question unless its terms be plain or the 
 implicai ion unavoidable. " 2 
 
 »M. r. Faxon Oo. v. LovettCo., 60 »Oom. v. Biddle, 139 Pa. St. 806; 
 N..J.I.. i Columbia, etc., 'Co. v. Kinton, 37 N. J.
 
 § 268 EXTRA-TERRITORIAL POWERS. 275 
 
 A contract with a foreign corporation stipulating that it 
 shall not be valid until approved at the principal office of the 
 company, in another state, is not a contract made in the state 
 within the meaning of a statute invalidating contracts made 
 by foreign corporations which have not filed their articles of 
 association and paid the franchise tax. 1 
 
 V. Effect of Failure to Comply With Statutory Requirements. 
 
 §268. Effect upon validity of contracts.— The validity of 
 contracts entered into between citizens of a state and a foreign 
 corporation which has not complied with the conditions prece- 
 dent to the right to do business in the state is determined by 
 the language of the particular statute. Where the statute ex- 
 pressly declares that such contracts can or can not be enforced 
 there can be no question. 2 Thus, where the statute makes it 
 "unlawful" for an insurance company to do business it can 
 not collect insurance premiums. 3 Generally the statute simply 
 prohibits such corporations from doing business within the 
 state and imposes a penalty upon the corporation or some offi- 
 cer or agent thereof for a violation of this prohibition. 
 
 Where the statute provides that a foreign corporation which 
 has not complied with statutory conditions can not maintain 
 an action within the state, a motion to dismiss will not be 
 granted where there has been compliance between the time of 
 commencing the action and the hearing of the motion. 4 
 
 The fact that the corporation has not complied with the qual- 
 ifying statute is not available as a defense when the corporation 
 is sued by a citizen of the state upon a contract entered into 
 by the corporation. The statutes are intended for the protec- 
 
 L. 33; Lamb v. Bowser, 7 Biss. C. C. 2 Nenchatel, etc., Co. v. The Mayor, 
 
 372; Huntley v. Merrill, 32 Barb. 626; 30 N. Y. Sup. 252, 155 N. Y. 373; Sel- 
 
 Hyde v. Goodnow, 3 N. Y. 266. In ser v. Potter, etc., Co., 30 N. Y. Sup. 
 
 Hooper v. California, 155 U. S. 648, on 294; Hartford, etc., Co. v. Matthew s, 
 
 656, Mr. Justice White says: The state 102 Mass. 221; Conn. River, etc., Co. 
 
 of California has the right "to prohibit v. Way, 62 N. H. 622. 
 
 a citizen from contracting within her 'Insurance Co. v. Kennedy, 96 Tenn. 
 
 jurisdiction with any foreign company 711 ; Hartford, etc., Co. v. Raymond, 
 
 which has not acquired the privilege 70 Mich. 485. 
 
 of engaging in business therein, either 4 Carson-Rand Co. v. Stern, 129 Mo. 
 
 in his own behalf or through an agent 381, 32 L. R. A. 420. After compli- 
 
 empowered to that end." But com- ance the corporation may enforce 
 
 pare dissenting opinion of Harlan, J. a contract previously made. Neucha- 
 
 1 Holder v. Aultman, etc., Co., 169 tel, etc., Co. v. The'Mavor, 155 N. Y. 
 
 U. S. 81. 373.
 
 276 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 269 
 
 tion of the people and not to enable the corporation to defraud 
 them. 1 
 
 The courts will not hold contracts made by a foreign corpo- 
 ration which has not complied with an enabling statute void 
 unless the legislative intention is clearly expressed in the stat- 
 ute. It will not do so by implication from loose and indefi- 
 nite language. 2 
 
 § 269. Where the statute imposes a penalty. — The decisions 
 are not uniform, but it seems that the weight of authority sup- 
 ports the proposition that, where a state prohibits a foreign 
 corporation from doing business within its limits, without 
 having first complied with certain conditions, and imposes a 
 penalty for the violation of the statute, the penalty is the sole 
 means contemplated for compelling obedience, and the con- 
 tract is valid and enforcible. 3 But the provision for a penalty 
 has been held equivalent to an express prohibition of doiii^- 
 business in the state, and to a declaration that contracts made 
 
 'Pennypacker v. Insurance Co , 80 Lauter v. Jarvis-Conklin, etc., Co., 85 
 Iowa 56; Union, etc., Co. v. McMil- Fed. Rep. 894, 29 C. C. A. 473; Fritts 
 len, 24 Ohio St. 67. v. Palmer, 132 U. S. 282; Utley v. 
 
 'Elstonv. Piggott,94 End. 14; Ca?sar Clark-Gardner, etc., Co., 4 Colo. 309; 
 y.Capell, 83 Fed. Rep.403. The Indiana Russell v. Jones, 101 Ala. 261,13 So. 
 statute against the enforcement in the Rep. 145; Toledo, etc.. Co. v. Thomas, 
 
 33 W. Va. 5(56; Whitman, etc., Co. 
 v. Strand, 8 Wash. 647; Edison, etc., 
 Co. v. Canadian, etc., Co., 8 "Wash. 
 370; Dearborn, etc., Co. v. Augus- 
 tine, 5 Wash. t>7 ; Northwestern, etc., 
 Co. v. Overholt, 4 Dillon (C.C.) 287; 
 Am. L., etc., Co. v. East, etc., Co 
 Fed. Rep. 242; Union, etc., Co. v. Mc- 
 Millen, 24 I >hio St. 67 ; Pennypacker 
 v. Insurance Co., 80 towa66; Colum- 
 bus, etc., Co. v. Walsh, is Mo. 229; 
 < 'lay, etc., < 'o. v. Huron, etc., Co., 31 
 Mich. 346; Clark v. Middleton, 19 
 Mo. 58; Ehrmann v. Teutonia, etc., 
 Co., i McCrary'e 123; Brooklj □, etc., 
 Co. v. Bledsoe, 52 Ala. 538; King v. 
 National, etc., Co., 4 Mont. I ; Wright 
 \. Lee, i 8. Dak. 237; Washburn, etc., 
 Bartlett, S N. Dak. 138. 
 
 courts of the state of a contract made 
 by a foreign corporation which does 
 not comply with such statutes does not 
 apply to a suit brought in a federal 
 curt to foreclose a mortgage taken 
 upon real estate in Indiana by a build- 
 ing and loan corporation which has 
 ,,,,i complied with the law. Sullivan 
 v. Beck, 79 Fed. Rep. 200; Hervey v. 
 Railroad Co., 28 Fed. Rep. 169; Far- 
 ,,,,•! v. Chicago, etc., R. Co., 
 
 68 Fed. Rep. 112. The [ndiana statute 
 prohibited the enforcemenl of the con- 
 tract until compliance. The contract 
 vnli'l when made and could be 
 enforced after compliance. Maine, 
 ,.(,-., ( .1 16 Ind. 107. 
 
 • Eindel v. Beck, etc., Co., 19 C 
 
 HO, 85 Pac, Rep ' kmklin, 
 
 etc., Go. v. Willhoit,84 Fed. Rep, 514;
 
 § 209 
 
 EXTRA-TERRITORIAL TOWERS. 
 
 277 
 
 in violation thereof are void. 1 Thus it is held in Pennsylvania 
 that a bond insuring a foreign corporation against the dishon- 
 esty of its manager in Pennsylvania is void, and there can be no 
 recovery thereon where the corporation has not complied with 
 the statute requiring the filing of a statement and declaring 
 that any person transacting business for the corporation with- 
 out compliance shall be guilty of a misdemeanor. 2 If the con- 
 tract has been fulhy executed its validity is in no way affected 
 by the failure of the corporation to qualify to do business in 
 the state. 3 There are many cases holding that such con- 
 tracts are void, on the theory that all acts in violation of a pro- 
 hibition are void, notwithstanding the provisions for a penalt}'. 4 
 The failure to pay a tax imposed by a statute, not by its 
 terms prohibitory, does not affect the validity of contracts 
 made by the corporation. 5 So where the statute requires cer- 
 tain acts, such as filing a certificate, to be done within a cer- 
 tain time after commencing business, the only penalty for a 
 failure is that imposed by the statute upon the officers. 6 
 
 1 J±)tna, etc., Co. v. Harvey, 11 Wis. 
 412; Thome v. Travelers, etc., Co., 80 
 Pa. St. 15; Mutual, etc., Co. v. Bales, 
 92 Pa. St. 352. 
 
 2 McCanna, etc., Co. v. Citizens', 
 etc., 76 Fed. Rep. 420, 39 U. S. App. 
 332, 35 L. R. A. 236. In Longworthy, 
 Receiver, v. Carding (Minn.), 77 N. 
 W. Rep. 207, the court said "that 
 plaintiff can not recover in this pro- 
 ceeding unless the company he rep- 
 resents has complied with the require- 
 ments of the statute regulating foreign 
 insurance companies, is not ques- 
 tioned." Citing Seamans v. Christian 
 Bros., etc., Co., 66 Minn. 205. In the 
 latter case it is said "this decision 
 does not conflict with Ganser v. Fire- 
 men's Fund Ins., 34 Minn. 372, where 
 it was held that the insured can re- 
 cover the loss, even though the in- 
 surer has not complied with the stat- 
 utory requirements so as to do busi- 
 ness in this state. The very object of 
 
 these statutory provisions is the pro- 
 tection of the insured, and the parties 
 are not in pari delicto." 
 
 3 Gamble v. Caldwell (Ala.), 12 So. 
 Rep. 424. 
 
 4 Cary, etc., Co. v. Thomas, 92 Tenn. 
 587; Jones v.Smith, 3 Gray 500; Bux- 
 ton v. Hamblen, 32 Me. 448; Thome 
 v. Insurance Co., 80 Pa. St. 15; Bar 
 bor v. Boehm, 21 Neb. 450; Dudley 
 v. Collier, 87 Ala. 431, 13 Am. St. 
 Rep. 55; Farrior v. New Eng., etc., 
 Co., 88 Ala. 275; Christian v. Ameri- 
 can Freehold, etc., Co., 89 Ala. 198; 
 Union Central, etc., Co. v. Thomas, 
 46 Ind. 44; Cassaday v. Amer., etc., 
 Co., 72 Ind. 95; Bank v. Young, 37 
 Mo. 398; Stewart v. Northampton, 
 etc., Co., 38 N. J. L. 436. 
 
 5 Lamed v. Andrews, 106 Mass. 435. 
 
 6 Northwestern, etc., Co. v. Over- 
 holt, 4 Dill. (C. C.) 287; Kindel V 6 
 Lithograph Co., 19 Colo. 310.
 
 278 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 270 
 
 § 270. Where no express penalty is provided. — Where no 
 penalty is provided, it is generally held that such contracts 
 are not enforcible, unless the conditions are such as to give 
 rise to an estoppel. These cases hold that the contract is 
 ralid, and that the only penalty for the non-compliance is ex- 
 clusion from the state, 1 but in other jurisdictions it is held 
 that all contracts entered into in violation of such a statute are 
 unenforcible. 2 "The general rule is that a contract in viola- 
 tion of law is void. The only exception is that when the law 
 imposes a penalty for a prohibited act, and it clearly appears 
 that the legislature intended no more than to impose a penalty 
 for the violation of the law, a contract made in violation of 
 3uch a statute is not void. 3 We do not think that this statute 
 belongs to the excepted class. The legislature has prohibited 
 the contract and has provided no penalty for its violation. Un- 
 less the contract shall be held void, the statute is of no effect." 
 A. mortgage, taken before compliance with the statute, was 
 held void, at least as to all but the mortgagor. 4 In a West 
 Virginia case 5 the court said: "We are aware that the courts 
 t>f Indiana, 6 Illinois, 7 Wisconsin, ami perhaps in some other 
 
 1 Wright v. Lee, 4 S. Dak. 237, 55 held that a premium note given to a 
 
 N. W. Bep. 931 ; Washburn, etc., Co. 
 v. Bartlett, 3 N. Dak. 138; Slauson v. 
 gchwabacher, etc., Co., 4 Wash. 783. 
 1 hi re Comstock, 3 Sawyer V . S.) 
 218; Cincinnati, etc, Co. V. Rosen- 
 thal, 65 Hi. 85; Lycoming, etc., Co. v. 
 Wright, 55 Vt. 526; /Etna, etc., Co. v. 
 
 foreign insurance corporation, which 
 had nut complied with the statute, 
 could not be enforced. Such a note 
 is without consideration. Haverhill, 
 etc., Co. v. Prescott, 42 N. H. 547. If 
 the contract is void by the law of the 
 state \\ lien made it can not be en- 
 
 Harvey, 11 Wis. 412; Barborv.Boehm, forced iii the courts of another state. 
 
 .1 Neb. 450. 
 
 •Hester v. Howard Hank, 33 Md. 
 
 668; Watrous & Bnouffer v. Blair, 32 
 Iowa 68; Mowing, etc., Co. v. Cald- 
 well, 54 hid. '_'7o. 
 
 4 Watson, .1, in Hank of Columbia 
 
 v. Page, 8 ( >!'■ 131 ; Lycoming, etc., 
 ('.. v. Wright, 55 VI 526; Mowing, 
 etc., Co Caldwell, 54 Ind. 270; 
 Lj Howard Bank, 38 Md 
 
 Hstional B ink v. Matthews, 98 U. B. 
 fi'ji I n Reliance, etc., < !o. v. 8a* yei . 
 L60 Ma • 113, 86 N E Rep 59, il was 
 
 Ford v. Buckeye, etc., Co., (i Bush 
 (Ky.) L33. 
 
 "Toledo, etc., Co. v. Thomas, S3 W 
 Va. 566. 
 
 6 The note is nol void, but the rem- 
 edy i 1 - suspended. American, etc., 
 Co. v. Welhnaii, 69 Ind. 418. This is 
 true under the New York statute. 
 
 Goddard v. Crefeld Mills, 45 U. S. 
 App. B4, 
 7 ( lincinnati, etc., Co. v. Rosenthal, 
 
 55 111 - •
 
 § 271 EXTRA-TERKITORTAL POWERS. 279 
 
 states, hold a different doctrine. In Vermont and Oregon 
 it has been held that a non-compliance with the precedent 
 conditions of the statutes of those states by foreign corpora- 
 tions renders their contracts void. But it will be observed 
 that these statutes imposed no penalty for the failure to comply 
 with their provisions, and it is principally upon this ground 
 that the contracts are held void, because otherwise the statute 
 might be evaded with impunity." Construing the Oregon 
 statute the federal court held that a mortgagor could recover 
 back land taken under foreclosure of a mortgage given to a for- 
 eign corporation which had not complied with the statute. 1 
 
 § 271. Estoppel to allege non-compliance. — In some cases 
 it is held that a party who has contracted with a foreign cor- 
 poration is estopped to question its right to do business in the 
 state. 2 The corporation, if it had power under its charter to 
 enter into the contract in question, is to be regarded as a de 
 facto corporation, and a person dealing with it is estopped to 
 deny its authority. 3 But if the contract is regarded as illegal 
 and prohibited, a person dealing with the corporation should 
 be permitted to plead its illegality as a defense. 4 The weight 
 of authority in the state courts supports this rule, although 
 the supreme court of the United States has held that the fail- 
 ure to comply with a statute which declared that no foreign 
 corporation should hold real estate except as provided by stat- 
 ute did not render a conveyance void. The transaction could 
 not, therefore, be attacked by a private person. 3 
 
 In a suit against the corporation there are still stronger rea- 
 sons for holding that the corporation can not be heard to deny 
 its qualification. There are other cases holding that after en- 
 joying all the benefits of the business and receiving the money 
 of the assured, a corporation will not be heard to say that it 
 
 'Semple v. Bank of Columbia, 5 3 Sherwood v. Alvis, 83 Ala. 115; 
 
 Sawyer (IT. S.) 88. Wright v. Lee, 2 S. Dak. 596. 
 
 2 Rathbone v. Frost, 9 Wash. 162; 4 In re Comstock, 3 Sawyer (U. S.) 
 
 Le France, etc., Co. v. Mt. Vernon, 9 218. 
 
 Wash. 142 ; Dearborn, etc., Co. v. Au- 5 Fritts v. Palmer, 132 U. S. 282. 
 gustine, 5 Wash. 67.
 
 2S0 THE LAW OF PRIVATE CORPORATIONS. § 272 
 
 never submitted to the jurisdiction of the state. It can reap 
 no advantage from its own wrong. To sustain this defense 
 would be to give judicial sanction to business methods much 
 below the standard of common honesty. 1 
 
 § 272. Presumption — Burden of proof. — When the com- 
 plaint of a foreign corporation is silent on the subject it will 
 be presumed on demurrer that it has complied with the re- 
 quirements of the statute enabling it to do business in the 
 state. 2 In an action brought by such a corporation it is not 
 incumbent upon it to show that it has complied with the 
 statute and obtained a certificate of authority to do business. 
 Non-compliance with the law is a matter of defense. 3 
 
 VI. Actions By and Against Foreign Corporations. 
 
 § 273. The right to sue. — By the rule of comity a corpora- 
 tion may sue in a foreign jurisdiction upon complying with 
 such conditions as are required of non-residents generally, and 
 without complying with the conditions imposed upon foreign 
 corporations doing business within the state.* The statutes of 
 a state often grant to foreign corporations the power to sue in 
 its courts. Thus in Minnesota it is provided that a foreign 
 corporation may prosecute in the courts of the state in the 
 -.line manner as domestic corporations, subject to the limita- 
 tion that it can not maintain an action upon an obligation 
 
 'Ehrman v. [nsurance Co., 1 Fed. 3 T.untrwortliy v. Garding (Minn.), 
 
 Rep. 171 : Fletcher v. [nsurance Co., 77 X. W. Rep. 207. 
 
 13 Fed. Rep. 526; Insurance Co. v. El- *Cone, etc., Co. v. Poole, H 8.0. 
 
 liott,5Fed. Rep. 225; Wall v. Society, 70, 24 I.. R. A. 289; Benriques v. 
 
 etc., 32 Fed. Rep. 273; [nsurance Co. Dutch, etc., ('<>., i' Ld. Rayi id 
 
 v. McMillen,24 Ohio St.67; Clay,etc., L582; Spanish Ambassador v. Bun- 
 Ins. Co. v. Huron, etc., Co., 31 Mich. iisliJ5ulsi.pt. 'J, p. :vi-J: Dutch, etc., 
 346; [nsurance Co v. Walsh, 18 Mo. Co. v. Muses, i Str. 612; Christian v. 
 229; Lamb v. Bowser, 7 Biss. 815, 872; The American, etc., Co., 89 Ua 198; 
 Insurance Co. v. Matthews, 102 Mass. McCall v. American, etc., Co., 99 ai.-i. 
 •_'•_'! ; Kilgore v. Smith, L22 Pa. St. is. Il'7, [2 So. Rep. 806; CTtley v. Clark, 
 
 'Sprague v. Cutler, etc., <'■>., 106 etc., Co., 4 Colo. 369; Reedv. Walker 
 
 [nd.242; Cassaday v. American, etc., (Tex., L893), 21 S. W. Rep. 687; Pow- 
 
 i ; • Nickels v. Building der Mill, <•!<-., <'". v. Custer < 
 
 Mont. I i' ; Christian Union \ . fount,
 
 § 274 EXTRA-TERRITORIAL POWERS. 281 
 
 arising out of, or in consideration of, an act which is contrary 
 to the law or policy of the state or which is thereby forbidden 
 to domestic corporations engaged in a similar business. 1 
 
 The failure of a corporation to comply with a statute regu- 
 lating the right to do business in a state will not preclude it, 
 or an insurance company subrogated to its rights, from main- 
 taining an action to recover for negligent injuries to its prop- 
 erty within the state. 2 A foreign corporation will not be denied 
 the right to sue in the courts of a state merely because its mem- 
 bers are all its own citizens. 3 
 
 The courts of equity are not open to a foreign corporation in 
 strict right but as a matter of comity. Jurisdiction will not be 
 taken on service by publication of an action by a foreign cor- 
 poration having a place of business in the state to recover a 
 debt contracted in another state and not reduced to judgment, 
 from a non-resident whose only property in the state consists 
 of his interest as partner in a firm whose property is practi- 
 cally all in another state where the principal business is carried 
 
 § 274. Actions against foreign corporations. 5 — Every state 
 may determine for itself whether it will entertain an action 
 
 101 U. S. 352; Charter Oak, etc., Co. * * * But as regards procedure and 
 
 v. Sawyer, 44 Wis. 387 ; The American, parties to actions, the law of the coun- 
 
 etc, Co. v. Moore, 2 Dak. 280; Dia- try in which the action is brought pre- 
 
 mond, etc., Co. v. Roeber, 106 N. Y. vails." Lindley Partnership, App., p. 
 
 473; Day v. Essex Bank, 13 Vt. 97; 1483; Westlake Priv. Int. Law. §286. 
 
 Newburg, etc., Co. v. Weare, 27 Ohio See Bar's Priv. Int. Law. § 41, note D. 
 
 St. 343; Bank v. Montgomery, 3 111. 2 St. Louis, etc., R. Co. v. Philadel- 
 
 422; St. Louis, etc., R. Co. v. Fire phia, etc., Assn., 60 Ark. 325, 28 L. R. 
 
 Assn., 55 Ark. 163; Jewelers', etc., A. 83. 
 
 Agency v. Douglass, 35 111. App. 627 ; s Oakdale, etc., Co. v. Garst, 18 R. I. 
 
 British, etc., Co. v. Ames, 6 Mete. 484, 23 L. R. A. 639. 
 
 (Mass.) 391 ; Libbey v. Hodgdon, 9 * National, etc., Co. v. Du Bois, 165 
 
 N. H. 394; Story Conf. Laws, p. 175, Mass. 117, 30 L. R. A. 628. 
 
 and note; Dicey on Domicile, 198. 5 As to citizenship for purpose of 
 
 l Gen. St. 1878,ch.76, §§2, 3. "Itis suit, see St. Louis, etc., R. Co. v. 
 
 an established rule of private interna- James, 16,1 U.S. 545, Wilgus' Cases; 
 
 tional law that a corporation duly ere- Shaw v. Quincy Mining Co., L45 U. S. 
 
 ated according to the laws of one state 444, Wilgus' Cases : Barrow S. S. Co. 
 
 may sue and be sued in its corporate v. Kane, 170 U. S. 100, Wilgus' (. 
 name in the courts of other states.
 
 2S2 THE LA.W OF PRIVATE CORPORATIONS. § 275 
 
 against a foreign corporation. The conditions upon which 
 this will be done are generally determined by statute. Ordi- 
 narily such actions will be entertained if the subject of the 
 litigation is such that the court may do complete justice in the 
 matter. 1 A resident stockholder may maintain an action 
 against a foreign corporation to compel it to issue a certificate 
 of stock in lieu of one that has been lost. 2 But a court will 
 not entertain a suit which involves the internal management 
 of foreign corporations. 3 One foreign corporation may sue 
 another foreign corporation in a state where the cause of action 
 arose and both are doing business. 4 A non-resident may sue 
 a foreign corporation doing business in Massachusetts upon a 
 contract made in another state where its subject-matter is 
 located, and make service upon the insurance commissioner, 
 which the company has under the law appointed as its agent 
 to accept service. 5 The relations between a corporation and 
 its shareholders are to be determined by the law of the creating 
 state which will be recognized and applied in the court of a 
 foreign state which has jurisdiction over the action. 6 In Ala- 
 bama it is held that its courts will not take jurisdiction of an 
 action for personal injuries caused by a Georgia corporation 
 in that state, although part of railroad was operated in Ala- 
 bama. 7 
 
 § 275. Service upon foreign corporations. — Most of the 
 Mai<s have provided statutory methods for service of process 
 upon foreign corporations. 8 At common law service upon a 
 corporation was made by serving upon the principal oilim-,'' 
 but the English courts have held thai when a foreign corporation 
 
 1 Kansas, etc., R. Co. v.Topeka, etc., "Johnston v. Trade, etc., Co., 132 
 
 I: •'•.., 1 35 Ma 34; Ne« Orleans, Mass. 432; Desper v. Continental 
 
 R. Co. v. Wallace, 50 Miss. 244. Water, etc., Co., 137 Mass. 252; A.bell 
 
 'Guilford v. Western Union, dr., v. Pennsylvania, etc., Co*., is W.Va. 
 
 Co., 59 Minn. 3 i'»<». 
 
 •Wilkina v. Thome, 80 Md. 253; ■Bishop v. Globe Co.,185Ma88.1S2. 
 
 Madden v. Electric Light Co., L81 Pa. 'Central R. Co. v. Carr, 76 Ala. 388. 
 
 617. i he righl t<> do so is unquestioned. 
 
 'Emerson 'I'., etc., Co. v. McCor- Sparks v. Masonic, etc., Assn., loo 
 
 mirk, etc., Co., 51 Mich. 5, construing towa 158. 
 
 a statutei ' Did s Prac. (1st Am. ed.), p. 19.
 
 §275 
 
 EXTRA-TERRITORIAL POWERS. 
 
 283 
 
 establishes a branch office in England, service upon the agent 
 in charge of such office is good service upon the corporation. 1 
 In certain early cases it was held that a corporation could only 
 be sued in the state by which it was created by service upon 
 its principal officer within that state, and that statutes pro- 
 viding for service upon corporations have no application to 
 foreign corporations. 2 This rule rested on the theory that serv- 
 ice could only be made on the superior officers of the corpora- 
 tion and they could not carry their official capacity with them 
 out of the state. 3 But in other states they are treated as nat- 
 ural non-resident persons, and if proper service can be ob- 
 tained there is no objection to the court proceeding and deter- 
 mining their rights and liabilities. 4 Service may be made 
 upon the representative of the corporation in the state. 5 
 
 Where a foreign corporation has an office in the state, serv- 
 ice may be made upon the head officer in charge of the office 
 when the cause of action arose in the state. 6 But under many 
 of the statutes this can not be done if the cause of action arose 
 in another state. 7 
 
 1 Newby v. Colts, etc., Co., L. R. 7 
 Q. B. 293 : La Burgogne, 79 L. T. Rep. 
 331 (1898-9). 
 
 2 Peckham v. North Parish, 16 Pick. 
 274; Middlebrooksv. Springfield, etc., 
 Co., 14 Conn. 301; McQueen v. Mid- 
 dleton, etc., Co., 16 John. (N. Y.) 5. 
 "A foreign corporation can only be 
 sued in this commonwealth by means 
 of an attachment of its property ; un- 
 less, as in the case of a foreign insur- 
 ance company, by virtue of an express 
 statute." Crafts v. Belden, 99 Mass. 
 535. 
 
 3 See comment by Justice Field in 
 St. Clair v. Cox, 106 U. S. 350. 
 
 *Libbey v. Hodgdon, 9 N. H. 394; 
 Railroad Co. v. Harris, 12 Wall. 65, 
 81 ; North Mo. R. Co. v. Akers, 4 
 Kan. 453. 
 
 5 A foreign corporation which en- 
 ters a state for the transaction of busi- 
 ness may be sued by serving process 
 upon its representatives in the state. 
 Van Dresser v. Oregon, etc., Co., 
 
 48 Fed. Rep. 202; Nortin v. Berlin 
 Bridge, 51 N. J. Law 442. See note to 
 Foster v. Betcher Lumber Co. (S. 
 Dak.), 23 L. R. A. 490. Statutes often 
 name the character of agents upon 
 whom service may be made. As 
 to who are "managing agents" see 
 Foster v. Betcher Lumber Co. (S. 
 Dak.), 23 L. R. A. 490; as to "local 
 agents," Mexican Central R. Co. v. 
 Pinkney, 149 U. S. 194. 
 
 6 Touchband v. Chicago, etc., R. Co., 
 115 N. Y. 437; Newby v. Colts, etc., 
 Co., L. R.7 Q. B. 293. 
 
 7 Bawknight v. Liverpool, etc., Co., 
 55 Ga. 194; .Etna, etc., Co. v. Black, 
 80 Ind. 513; Parke v. Comw., etc., 
 Co., 44 Pa. St. 422. The relation of 
 attorney and client does not make the 
 attorney a managing agent. Taylor v. 
 Granite, etc., Assn., 136 N. Y. 343. 
 The captain of a steamboat owned by 
 a foreign corporation is not a manag- 
 ing agent. Upper Miss. Tr. Co. v.
 
 284 THE LAW OF PRIVATE CORPORATIONS. § 276 
 
 § 276. Must be doing business ill the state. — According to 
 the general rule, the service upon a foreign corporation can 
 only be made upon an agent who is representing a corporation 
 which is engaged in business in the state. The corporation 
 must be in the state for the purpose of doing business, and it 
 is not enough that the agent or representative of the corpora- 
 tion is simply within the limits of the state. "We are of the 
 (Opinion," says Mr. Justice Field, 1 " that when service is made 
 within the state upon the agent of a foreign corporation, it is 
 essential, in order to support the jurisdiction of the court, to 
 render a personal judgment that it should appear somewhere 
 upon the record, either in the application for the writ, or ac- 
 companying its service, or in the pleadings or findings of the 
 court, that the corporation was engaged in business in the 
 state. The transaction of business by the corporation in the 
 state, general or special, appearing, a certificate of service by 
 the proper officer on a person who is its agent there would, in 
 our opinion, be sufficient prima facie evidence that the agent 
 represented the company in the business. It would then be 
 open, when the record is offered in evidence in another state, 
 to show that the agent stood in no representative character to 
 the company, that his duties were limited to those of subordi- 
 nate employe or to a particular transaction, or that his agency 
 had ceased when the matter in suit arose."' The agents of a 
 
 Whittaker, 16Wis. 220; a clerfc in a Co., 37 Fed. Rep. 660. See many 
 
 store belonging t<> a Foreign mining cases digested in a »"/' to 23 I.. R. A. 
 
 corporation is nol a managing agent. I'.ic. 
 
 Blanc v. Paymaster Min. Co., 95Cal. i st. Clair v. Cox, 106 U. S. : »0. 
 
 624. Ii baa been heldtbal an agent "Freeman v. Alderson, 119 U. B. 
 
 of a railway corporation \\li" deall L85; Fitzgerald, etc., ('<>. v. Fitzger- 
 
 only with its p was aid, 137 I'. S. 98; Bociete Foncier v. 
 
 nol 'in general agent. Brewster v. Millikin, 135 U, B. 304; Firemen's, 
 
 Michigan C. R. Co., 5 How. Pr. L83. etc., Co. v. Thompson, 155 111. 204; 
 
 Bol latei extend the rule. Blancv. Paymaster, etc., Co., 95 Cal. 
 
 • lit inthep 524; Moore v. Wayne Ct. Judge, 55 
 
 department is a managing agent. Mich. 84; Phillips v. Library ('<>., 
 
 Tuchband v. Chicago, etc., R, »'•'.. in Pa. St. 462; Camden, etc., Co. v. 
 
 li". v. V. i.';:. Service may be made Bwede, etc., <'".. 32 N. J. I.. i">; Mid- 
 
 upon a division superintendent in an land, etc., R. (.'<>. v. McDermid, '.'l 
 
 action for injuries received on the di- III. 170. 
 Richmond, etc., R,
 
 § 277 EXTRA-TERRITORIAL POWERS. 285 
 
 corporation are therefore not its agents for the purpose of 
 service in a state where the corporation does not transact busi- 
 ness. 1 
 
 § 277. Service upon officer temporarily within the state. — ■ 
 
 By the rule above stated a corporation which does not enter a 
 foreign state for the purpose of doing business can not be sub- 
 jected to the jurisdiction of the foreign state. "Statutory pro- 
 visions for the service of process upon a foreign corporation 
 must rest upon the fact of the foreign corporation doing busi- 
 ness, or in some way exercising its corporate franchise, within 
 the jurisdiction. A law which went beyond this would be be- 
 yond the power of any sovereign to enact." Service can not 
 be made upon an officer of a corporation who is in the state 
 upon personal and not corporate business, and it has been held 
 that this is true when he is temporarily there for the purpose 
 of transacting a particular item of business for the corpora- 
 tion, 3 although the contrary rule prevails in New York. It is 
 there held that "any service must be deemed sufficient which 
 renders it reasonably probable that the party proceeded against 
 will be apprised of what is going on against him, and have an 
 opportunity to defend." 4 
 
 In another case, 5 where the president of a corporation which 
 
 1 State v. District Court, 26 Minn. Rep. 112, 156 U. S. 518; Latimer v. 
 
 233 ; Phillips v. Library Co., 141 Pa. St. Railway Co., 43 Mo. 105; Camden 
 
 462; Moulin v. Ins. Co., 24 N. J. L. etc., Co. v. Iron Co., 32 N. J. L. 15; 
 
 222; Newell v. Great, etc., R. Co., 19 St. Clair v. Cox, 106 U. S.350. Service 
 
 Mich. 336. To constitute a person an maybe made on the president of a 
 
 agent of a foreign corporation upon corporation who is in the state but 
 
 whom service of a summons may be not on official business if the cause of 
 
 made he must be one actually ap- action arose in the state. Shickle, 
 
 pointed by and representing the cor- etc., Co. v. Wiley, etc., Co., <>1 Mich, 
 
 poration, and not one created by 226; Carsten v. Leidigh, etc., Co., 
 
 mere construction or implication con- 18 "Wash. 450, 39 L. R. A. 548; 
 
 trary to the intention of the parties. Phillips v. Library, 141 Pa. St. 462; 
 
 Mikolas v. Hiram Walker & Sons Rust v. United, etc., Co., 70 Fed. Rep. 
 
 (Minn.), 76 N. W. Rep. 36. 129, 17 C. C. A. 16. 
 
 2 Murfree For. Corp., § 208. 4 Hiller v. Burlington, etc., R. Co., 
 
 3 Fitzgerald Const. Co. v. Fitzgerald, 70 N. Y. 223. 
 
 137 IT. S. 98; Good Hope Co. v. Rail- 5 Pope v. Terre Haute, etc., Co., 87 
 
 way, etc., Co., 22 Fed. Rep. 635. See N. Y. 137; Gibbs v. Queen, etc., Co.. 
 
 also Golden v. Morning News, 42 Fed. 63 N. Y. 114.
 
 286 THE LAW OF PRIVATE CORPORATIONS. § 27S 
 
 had transacted no business in the state was served with a 
 summons when passing through the state on his way to a sum- 
 mer resort, a judgment rendered on this service was held good 
 for every purpose within the state. The court said: "The 
 object of all service of process for the commencement of a suit, 
 or any other legal proceeding, is to give notice to the party 
 proceeded against, and any service which reasonably accom- 
 plishes that end answers the requirements of natural justice 
 and fundamental law, and what service is to be deemed suf- 
 ficient for that purpose is to be determined by the legislative 
 power of the country in which the proceeding is instituted, 
 subject only to the limitation that the service must be such as 
 may reasonably be expected to give the notice aimed at." 
 
 Such service would certainly not be recognized in the courts 
 of other states. 1 
 
 In New York service on an officer or director who is tempo- 
 rarilv in the state on his own business is good if the corporation 
 has property in the state or the cause of action arose there. 2 
 
 § 278. Illustrations. — A certain firm in business in the 
 state of Wisconsin filed their complaint in a Minnesota 
 court against a Wisconsin corporation having no agent or 
 place of business in Minnesota. The action was upon con- 
 tracts made and to be executed in Wisconsin. A summons 
 was issued and was served by the sheriff in Minnesota, by de- 
 livering a copy thereof to the president of the company, who 
 was then within the stale of Minnesota, not on any business 
 of the company, but for his own persona] business and pleas- 
 ure, and who had no authority from the company to receive 
 such service. Tie' couri Baid: 1 "The question sough! to be 
 raised in this proceeding is, can the courts of this state ac- 
 quire jurisdiction over (he person of a corporation created 
 under the laws of another state, where (he cause of action 
 arose oul of this Btate, and the corporation has no property 
 
 1 Golden v. Morning News, 156TJ.8. 8 st:ttr v. District Court, 26 Muni 
 M- 233; Latimer v. Railway ('•>., 48 Mo 
 
 Hillei Burlington, etc., R. Co., 105, 97 Am. Dec. 876 
 70 N. V. 228; Childa v. I l;irriH, etc., 
 Mil N. Y. 177.
 
 § 279 EXTRA-TERRITORIAL POWERS. 287 
 
 therein, and never transacted any business, nor had any office 
 or agency, or officer, or agent therein, and the only ground for 
 asserting such jurisdiction is that the summons was served 
 within the state upon an officer of the corporation, who was 
 in the state, not upon any business, nor by any authority of 
 the corporation, but solely in a private capacity and for his 
 own private business or pleasure? The relator first raised the 
 question in the district court, by a motion, upon affidavits 
 showing the facts, to set aside such a service of the summons, 
 which motion being denied, it procured this writ of prohibition 
 to issue. We have very little doubt that if the questions were 
 properly before us for decision, we should sustain the objection 
 to the jurisdiction. The facts in Guernsey v. American Ins. 
 Co. 1 were sufficient to sustain the jurisdiction, but the reason- 
 ing of the court goes further than we can approve. But the 
 writ of prohibition is not the proper remedy." 
 
 A statute which authorizes service upon an officer who is ac- 
 cidentally within the jurisdiction when the corporation does 
 no business in the state is said to be so contrary to all ideas of 
 justice that the courts of other states ought not to sanction it. 2 
 A provision for service on the officers of "any incorporated com- 
 pany " does not apply to a foreign corporation doing no busi- 
 ness in the state, but whose officer is served while passing 
 through the state. 3 
 
 § 279. Statutory requirements. — In all the states statutory 
 methods are now provided for service of process upon foreign 
 corporations which are doing business in the state. When a 
 corporation complies with such provisions as to service and ac- 
 cepts them as a condition upon which it may do business in 
 the state, the court acquires complete and perfect jurisdiction 
 over it and may render a judgment in personam against it; 4 
 
 'Guernsey v. American, etc., Co., language used in Hesterv. Rasin, etc., 
 
 13 Minn. 278 (Gil. 256). Co., 33 S. C. 609, would seem to author- 
 
 2 Moulin v. Trenton, etc., Co., 24 N. ize service upon an officer of the cor- 
 
 J. L. 222. poration temporarily within the state 
 
 a Midland, etc., R. Co. v. McDermid, when the cause of action arose else- 
 
 91111.170. See Shickle. etc., Co. v. where. 
 
 Wiley, etc., Co., 61 Mich. 226. The 4 Ex parte Schollenberger, 96 U. S.
 
 288 THE LAW OF PRIVATE CORPORATIONS. § 280 
 
 and such a judgment is entitled to full faith and credit in 
 other jurisdictions. 1 The statutes generally require the corpo- 
 ration to designate some one upon whom service may be made 
 in the state. 
 
 "If a state permits a foreign corporation to do business 
 within her limits, and at the same time provides that in suits 
 against it for business there done process shall be served upon 
 its agents, the provision is to be deemed a condition of the 
 permission; and corporations that subsequently do business in 
 the state are to be deemed to assent to such conditions as fully 
 as though they had specially authorized their agents to receive 
 service of the process." 2 
 
 § 280. Designation of agent to accept service. — Foreign cor- 
 porations are sometimes required or permitted to name some 
 state official as their agent to accept service of summons. 
 Service on the insurance commissioner, who has been desig- 
 nated as prescribed by statute, is sufficient. 3 Such statutes 
 apply only to companies doing business in the state. 4 The 
 fact that the plaintiffs are the agents of the corporation does not 
 deprive them of the statutory right to serve summons upon the 
 state auditor. 5 When the statute authorizes service upon the 
 secretary of state, service on the deputy of the secretary is de- 
 fective. 6 But it is held that a superintendent of insurance 
 may designate a clerk to accept service for him. 7 Service by 
 mail is sufficient when there is a written admission of the re- 
 
 369; Wilson v. Martin-Wilson F. A. poration where the cause of action did 
 
 • . 149 Mass. 24; Reyer v. Odd Fel- not accrue within the stale Grand 
 
 lows Assn., 167 Mass.367; Benwood, Trunk R. Co. v. Wayne Circuit Judge, 
 
 etc., Works v. Hutchinson & Bro., L01 106 Mich. 248. 
 
 Pa 5t 369; Firemen's, etc., Co. v. 'Osborne v. Shawmut, etc., Co., 51 
 
 Thompson, L65 III. 204 Vt. 278. 
 
 • Clair v. Cox, 106 U. 8. 350; La- •Hazeltine v. Mississippi Valley, 
 
 fayette, etc., Co. v. French, 18 How. etc., Co., 55 Fed. Rep. 748. 
 
 104. B Rehm v. German, etc., Co., L25 
 
 Clair v. Cox, 106 U. B 850; End. 185. 
 
 Gibbs v. Queen, etc., Co., 68 N. V. e Lonkey v. Keyes,etc.,Oo.,2] Nev. 
 
 in. 20 \m Rep 513. Thereisno rtat- 312, L7 I.. R. A. 851. 
 
 ate in Michigan providing for the 7 Suutii, etc., Co. v. Fire Assn. of 
 
 service of process upon a foreign cor- Philadelphia, 87 Hun ( N. Y .) 41.
 
 §281 
 
 EXTRA-TKR TUTORIAL POWERS. 
 
 289 
 
 ceipt of the summons. 1 A summons served on the insurance 
 commissioner must be directed to him, but otherwise it must 
 be in the usual form. 2 When a corporation has designated an 
 agent as required by law, service thereafter upon a mere 
 solicitor of the company is invalid. 3 
 
 The agent so appointed need not be a person authorized to 
 exercise any of the contractual powers of the corporation. 4 
 A certificate appointing the managing agent residing at a 
 designated place is valid, although not naming the agent. 5 If 
 a corporation fails to appoint an agent, as required, service 
 may be made upon the agent in the state who transacted the 
 business out of which the suit grew, 6 or upon any agent who 
 can be found in the state. 7 
 
 § 281. Service obtained by deception. — On grounds of pub- 
 lic policy it is held that service of a summons upon a defendant 
 who has been induced to come within the jurisdiction of the 
 
 1 Farmer v. National, etc., Assn., 50 
 Fed. Rep. 829. See, also, 67 Hun 
 (N. Y.) 119. 
 
 2 Westchester, etc., Co. v. Cover- 
 dale, 48 Kan. 446. 
 
 3 Liblong v. Kansas, etc., Co., 82 
 Pa. St. 413; Thayer v. Tyler, 10 Gray 
 (Mass.) 164. 
 
 4 Nehns v. Edinburg, etc., Co., 92 
 Ala. 157. 
 
 5 Goodwin v. Colo., etc., Co., 110 
 U. S. 1 ; Lafflin v. Travelers, etc., Co., 
 121 N. Y. 713. 
 
 6 Funk v. Anglo-American, etc., Co., 
 27 Fed. Rep. 336. 
 
 7 Hagerman v. Empire Slate Co., 97 
 Pa. St. 534. In Foster v. Charles Bet- 
 cher, etc., Co. (S. Dak.), 23 L. R. A. 
 490, the court said: "The failure of 
 the appellant to comply with the 
 laws of the state can not be taken 
 advantage of by itself, nor in fact by 
 
 any private person in a collateral pro- 
 ceeding. The state only in its sov- 
 ereign capacity can take advantage of 
 such a failure of a foreign corporation 
 to comply with the law. "Wright v. 
 Lee, 4 S. Dak. 237, 51 N. W. Rep. 706, 
 55 N. W. Rep. 931. If a foreign cor- 
 poration is engaged in business in 
 this state, though failing to comply 
 with the law by filing a copy of its 
 articles of incorporation and a certifi- 
 cate of the appointment of an agent, 
 it is still subject to the laws of the 
 state, and amenable to its process, 
 until its right to so continue to do 
 business within this state is declared 
 forfeited by the courts of the state. 
 The person transacting the business 
 of the corporation in this state, as 
 managing agent, must be presumed to 
 be the agent of the corporation and 
 subject to the service of process." 
 
 19 — Private Cor.
 
 290 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §282 
 
 court for that purpose by the fraud of the plaintiff confers no 
 jurisdiction. 1 
 
 § 2S2. Proceedings by state against foreign corporation. — 
 
 A foreign corporation which is exercising its powers and fran- 
 chises in a state without authority of law may be ousted there- 
 from by a proceeding in quo warranto.' Under certain circum- 
 stances the remedy may be by injunction. 3 
 
 Columbia, etc., Co. v. Bucyrus, 
 etc., Co., 60 Minn. 142. 
 
 2 In State v. Insurance Co., 49 Ohio 
 440, 31 X. E. Rep. 658, the court said : 
 "It is claimed that, as the defendant 
 is a foreign corporation, it can not 
 be affected by a proceeding in quo war- 
 ranto in the courts of the state. That 
 it can not. be ousted of the right to be 
 a corporation or of any of the fran- 
 chises conferred on it by the laws of 
 New Yurk is not doubted; but as to 
 
 such franchises and privileges as are 
 derived from the laws of the state of 
 Ohio it is as much amenable to the 
 courts of this Btate as an Ohio corpora- 
 tion, and, when found exercising such 
 franchises without authority of law, it 
 may be ousted therefrom." state v. 
 Insurance Co., 47 Ohio St. 167; State 
 v. Fidelity, etc., Co., 39 Minn. 538, 41 
 N. W. Rep. 108. 
 
 'Employers', etc., Corp. v. Em- 
 ployers', etc., Co., 16 X. Y. Supp. 397.
 
 CHAPTER 12. 
 
 THE ACQUISITION AND LOSS OK MEMBERSHIP IN A CORPORATION. 
 
 § 283. Non-stock corporations. 
 
 284. Corporations having capital 
 
 stock. 
 
 285. Who can be members. 
 
 286. Method of obtaining shares. 
 
 287. Effect of delivery of stock cer- 
 
 tificate. 
 
 288. Compliance with conditions. 
 
 289. Estoppel to deny membership. 
 
 290. The holder of illegally issued 
 
 shares. 
 
 § 291. Disfranchisement — Joint stock 
 companies. 
 
 292. Disfranchisement in non-stock 
 
 corporations. 
 
 293. Nature of membership in non- 
 
 stock corporations. 
 
 294. Grounds for expulsion . 
 
 295. The proceedings. 
 
 296. Notice. 
 
 297. Incorporate and unincorpo- 
 
 rated societies. 
 
 298. Review by the courts. 
 
 § 283. Non-stock corporations. — The method by which 
 membership in a corporation without capital stock may be 
 acquired must be determined from the charter or by-laws. If 
 no restrictions are found in the charter, the admission of mem- 
 bers is under the control of the corporation. Statutes author- 
 izing and regulating the organization of such corporations al- 
 ways provide for the original membership and subsequent 
 members are usually admitted upon an application and vote 
 of approval by the existing members. 1 
 
 § 284. Corporations having capital stock. — Membership 
 in a joint-stock corporation consists simply in the ownership 
 of one or more shares of the stock. 2 The stock need not neces- 
 
 1 State v. Sibley, 25 Minn. 387. In 
 Am., etc., Co. v. Chicago, etc., Exch., 
 143 111. 210, the court, after referring 
 to a rule or by-law regulating admis- 
 sion to membership in a non-stock 
 corporation, said: "Said association 
 had an undoubted right to adopt this ton v. Hansbrough, 3 Bias. 417 
 rule, and as it prescribes the mode, 
 
 (291) 
 
 and the only mode, in which mem- 
 bership in the exchange can be ob- 
 tained, no one can justly claim to be 
 a member who has not been admitted 
 in the mode thus prescribed." 
 
 State v. Ferris, 42 Conn. 560; Up-
 
 292 THE LAW OF PRIVATE CORPORATIONS. § 285 
 
 sarily have been paid for. 1 The possession of a stock certificate 
 is not essential to membership, as it is merely evidence of the 
 ownership of shares. 2 Nor does membership necessarily fol- 
 low from the possession of the stock certificate alone, without 
 participation in the business of the corporation. 3 But the 
 party in whose name the stock appears on the books of the 
 corporation is presumed to be the owner and a member, and 
 the burden rests on him to show the contrary when it is 
 attempted to hold him to the liabilities of membership. 4 
 
 § 285. "Who can be members. — Every person who is capa- 
 ble of contracting is capable of becoming a member of a cor- 
 poration. A corporation may be formed on terms which 
 expressly exclude certain persons or classes of persons from 
 becoming members of it, 5 but regulations to this effect do not 
 affect the legal capacity of the persons excluded. Such ca- 
 pacity depends on the general law of the country, not on the 
 regulations of any particular corporation. There is no gen- 
 eral principle of law which prevents a corporation from hold- 
 ing stock in another corporation except the principle that a 
 corporation can not lawfully employ its funds for purposes not au- 
 thorized by its charter. 6 
 
 § 280. Method of obtaining shares. — The shares of a corpo- 
 ration may be acquired either by subscription before or after 
 incorporation, or by acquiring them from one to whom they 
 have already been issued and having them transferred on the 
 books of the corporation. The mere fact of subscription does 
 not make the subscriber a stockholder, as acceptance of the 
 offer is necessary, but such acceptance will be presumed from 
 
 i "Wheeler v. Millar, 90 N.Y.353; •Holland v. Daluth, etc., Co., 65 
 
 Waukon, etc., R. Co. v. Dwyer, 49 Minn. 824; Barron v. Burrill, 86 Me. 
 
 121; Downing v. Potta, 23 N.J. 72, 29 A tl. Rep. 988; Grindlev.S ■ 
 
 I. 66 78 Me. 176; Turnbull v. Payaon, 96 I '. 
 
 1 ( iolnmbia, etc., Co. v. I tixon, W B. 1 18. 
 
 Minn. 463; Ratter v.Kilpatrick, 63 N. »Blien v. Rand (Minn.), 79 N. \\\ 
 
 i : Hawley v. Upton, 102 D. B. Rep. 606. 
 
 814 •Lindley Law of Companies, 86, 43 ; 
 
 1 Baker v. Woolston, 27 Kan. L85. Pearson v. Concord R. Co., 62 V n. 
 
 537, Wilgu ' • .i i
 
 § 286 THE ACQUISITION AND LOSS OF MEMBERSHIP. 
 
 293 
 
 very slight circumstances. 1 Hence, membership in the cor- 
 poration dates from the time the offer contained in the subscrip- 
 tion is accepted. 2 The actual taking of shares of stock is equiva- 
 lent to subscription for and an agreement to take them. 8 A 
 completed transfer of shares transfers the membership in the 
 corporation. 4 The books of the corporation are the primary evi- 
 dence of membership, 5 and until a transfer is made on the cor- 
 porate books the party there registered remains a member, al- 
 though he may have pledged the stock certificates, 6 or author- 
 ized their transfer on the books of the company. 7 
 
 1 Barron v. Burrill, 86 Maine 72, 29 
 Atl. Rep. 938. 
 
 2 McClure v. People's, etc., Co., 90 
 Pa. St. 269; Busey v. Hooper, 35 Md. 
 15. 
 
 3 Barron v. Burrill, 82 Me. 72. 
 
 4 Supply, etc., Co. v. Elliott, 10 
 Colo. 327 ; Hawkins v. Glenn, 131 U. 
 S.319. 
 
 5 In re St. Lawrence, etc., Co., 44 N. 
 J. L. 529. 
 
 6 Vail v. Hamilton, 85 N. Y. 453; 
 Merchants' Bank v. Cook, 4 Pick. 405 ; 
 Hoppin v. Buffum, 9 R. I. 513; Mc- 
 Daniels v. Flower, etc., Co., 22 Vt. 
 274. 
 
 7 McNeil v. Tenth Nat'l Bank, 46 N. 
 Y. 325, Wilgus' Cases. 
 
 In Bissell v. Heath, 98 Mich. 472, 57 
 N. W. Rep. 585, the court said: "It 
 is claimed by appellant that he was 
 not a stockholder. It appears by 
 the record that, about the time the 
 bank was organized, the defendant 
 negotiated with one Solon H. Wil- 
 helm, who became cashier of the 
 hank, for the purchase of stock. It 
 appears by the stock ledger that un- 
 der date of January 3, 1887, there was 
 issued to defendant a certificate of 
 stock, the stock ledger stating that the 
 stock was transferred from subscrip- 
 tions of S. S. W. It further appears 
 that a certificate was in fact issued to 
 the defendant, and that he received 
 
 dividends for several years. It is 
 urged that the only way in which the 
 defendant, not being an original sub- 
 scriber to the capital stock, could be- 
 come a stockholder, was by securing 
 a transfer of some of the stock sub- 
 scribed for by others, and that no 
 formal transfer appears upon the 
 bank books, and hence that he never 
 legally become a stockholder. The 
 answer to this is, that the evidence of 
 the transfer was sufficient to satisfy 
 the corporators. The stock was, in 
 fact, issued and the books of the com- 
 pany showed it sufficiently. Bank v. 
 Warren, 52 Mich. 557, 18 N. W. Rep. 
 356. The corporation was bound by 
 the issue of stock. It could waive the 
 formality of any assignment by S. S. 
 W., and, having done so, could not 
 thereafter deny defendant's rights on 
 the ground that he had failed to pro- 
 duce evidence of an assignment from 
 an original subscriber to the capital 
 stock." 
 
 A corporation may waive formali- 
 ties prescribed by its charter or by- 
 laws in making an original subscrip- 
 tion or a transfer of shares. And if 
 a person has been received as a share- 
 holder, and has acted as shareholder, 
 and enjoyed the privileges of a share- 
 holder he will be estopped from de- 
 nying that he agreed to become a 
 shareholder and to assume the inci-
 
 2!»4 *THE LAW OF PRIVATE CORPORATIONS. § 287 
 
 § 287. Effect of delivery of stock certificate. — Where the 
 stock of a corporation is by the terms of the charter or by-law 
 transferable only on its books, the purchaser who receives a 
 certificate, with power of attorney, gets the entire title, legal 
 and equitable, as between himself and his seller, with all the 
 rights the latter possessed. 1 But as between himself and the 
 corporation he acquires only an equitable title, which they are 
 bound to recognize and permit to ripen into a legal title when 
 he presents himself, before any effective transfer on the books 
 has been made and offers to do the acts required by the char- 
 ter or by-laws in order to make a transfer. Until those ads 
 be done he is not a stockholder, and has no claim to act as 
 such,* but possesses, as between himself and the corporation, 
 by virtue of the certificate and power, the right to make him- 
 self, or whomsoever he chooses, a stockholder by the prescribed 
 transfer. The stock not having passed by the delivery of the 
 certificate and power of attorney, the legal title remains in the 
 seller, so far as affects the company and subsequent bona fide 
 purchasers, who take by transfer duly made on the books. 
 And hence a buyer, in good faith, from the person in whose name 
 the stock stands on the books, who takes a transfer in the 
 manner provided in the by-laws, becomes vested with a com- 
 plete title to the stock, which cuts off all the rights and equities 
 of the holder of the certificate. What other rights and equities 
 he may possess is another question; but if the transferee has 
 taken in good faith, and for value, the stock is beyond his 
 reach, and beyond recall by the corporation. 3 
 
 § 288. Compliance with conditions. — A person can not, 
 properly Bpeaking, be said to be a member of or shareholder 
 in ;i corporation so long as he has only a right to become such; 
 nor can a person who has become a member or a shareholder 
 
 dental liabilities both to the company outside of the parties to Buch trans- 
 and it- creditors. Morawetz, II, fer." People v. Robinson, 64 Cal. 378. 
 
 "New York & V ll l.\ Co. r.Schuy- 
 
 • Ch. 16. ler, 34 N. V. 30, per DaviB, J.j *i<-\>- 
 
 '"\ transfer nol entered on the bins v. insurance Co., 3 Paige 850; 
 
 of the ( ipany has no validity Bank v. Laird, 2 Wheat 390; Bargate 
 
 v. Bhortridge, 5 II. I.. Cms. 297.
 
 § 289 THE ACQUISITION AND LOSS OF MEMBERSHIP. 295 
 
 be properly said to have ceased to be one so long as he has 
 only a right to retire. If a person who is not a shareholder 
 omits to do what is necessary to render himself a shareholder, 
 he remains a non-shareholder, although very little may be 
 wanting to render him a shareholder. On the other hand, if 
 a person, who is a shareholder already, omits to do what is 
 necessary to retire, he continues to be a shareholder whatever 
 intention he may have had of withdrawing from the company, 
 and whatever preliminary steps he may have taken for that 
 purpose. In these cases, that which is necessary to change an 
 existing state of things has not happened; the right to enter 
 or leave the company has not been exercised; and until such 
 right has been exercised, membership, in the proper sense of 
 the word, has not been created in the one case, and has not 
 ceased in the other. 1 
 
 § 289. Estoppel to deny membership. 2 — A person may some- 
 times be treated as a member, although he has not complied 
 with the necessary preliminary conditions. The performance 
 of certain conditions and the observance of formalities may 
 sometimes be waived and irregular acts may be confirmed. 
 Hence if, notwithstanding the failure to comply with condi- 
 tions, or the existence of irregularities in the issue of the 
 shares, the party has been treated as a shareholder by the 
 corporation, and has acted as a stockholder, both he and the 
 corporation will be estopped to deny the relation. So, if a 
 shareholder, who has a right to retire, has in fact retired and 
 been treated by the corporation as if he was no longer a mem- 
 ber, both he and the company will be estopped to deny that 
 he has ceased to be a member, although he may not have re- 
 tired regularly and properly. 3 The corporation will not be 
 
 1 Lindley Law of Companies, 44. these circumstances are combined, 
 
 "The type then of a member of a there is membership in the fullest 
 
 company," says this learned writer, and most accurate sense." 
 
 "is a person who has agreed to be- 2 McCarthy v. La Vasche, 89 111. 270, 
 
 come a member, and with respect to Wilgus' Cases. 
 
 whom all conditions precedent to the 3 Lindley Law of Companies, 48 ; 
 
 acquisition of the rights of a member Jewell v. Rock River, etc., Co., 101 
 
 have been duly observed. Where all 111. 57 ; Union, etc., Assn. v. Selig-
 
 296 THE LAW OF PRIVATE CORPORATIONS. § 290 
 
 permitted to take advantage of the non-observance of formali- 
 ties which it has tacitly waived, and a person who has acted 
 as and received the benefits of membership will not be heard 
 to say that he has neglected to comply with certain formali- 
 ties or conditions when called upon to assume the burdens 
 incident to membership. 1 Thus, where it did not appear 
 that the defendant had ever had a certificate of stock in his 
 possession, but did appear that he authorized a share to be is- 
 sued to him, that a certificate had actually been issued, that 
 only stockholders are eligible to office, that he was upon 
 the organization of the company elected its president and 
 served for a long time in that capacity, and that he had paid 
 a number of installments upon a share of stock, it was held 
 sufficient to charge him as a member and that he was estopped 
 to deny his subscription. 2 The right to membership in a 
 corporation was restricted to persons of a certain nationality, 
 and the defendants subscribed and paid for stock, and ac- 
 cepted certificates therefor, and appeared as stockholders on 
 the books of the corporation for a period of three years, dur- 
 ing which time debts were contracted and the corporation be- 
 came insolvent. In an action to enforce the statutory liability 
 for the benefit of creditors they were held to be estopped to as- 
 sert that they were not stockholders because they were not of 
 the required nationality. 3 
 
 I 290. The holder of illegally issued shares. — There can be 
 no membership acquired through the holding of shares of 
 
 man, 92 Mo. 636; Griswold v. Belig- Co. v. Lacey,3 V. & J. 79; Murray v. 
 
 , n;m . 72 Mo. 110; Bi8sell \. Beath Bush, L. R. 6 II. L. .".7, and cases 
 
 (Mich., 1894), 57 N.W. Rep. 586; York cited in preceding note. 
 
 Park, etc., Assn.v. Barnes (Neb., 1894), 'York Park, etc., Assn. v. Barnes 
 
 140; Sanger v.Upton, (Neb., 1894), 58 N. W. Rep. 440 ; San- 
 
 91 U. S.66; Mosgrave v. Morrison, 64 gerv. [Jpton, 91 0*. S. 66. One who 
 
 M,l. [61; Boston, etc., R. Co. v. Well- subscribes for stock in a corporation, 
 
 ington, LIS Mass. 79; Chafflnv. Cum- acts as an officer thereof, and 
 
 mings, 87 Me. 76. pari in its management can nol dis- 
 
 1 Burnea v. Pennell, 2 ll. L. 0. 196; pute the validity of the corporation. 
 
 Cheltenham, etc., R. Co. v. Daniel, 2 Warehousing Co. v. Badger, 67 N. V. 
 
 Q B vi ■•• l . 281, 12 Eng. 0. L. 294. 
 
 ii7.".; Sheffield, etc., Co. v. Woodcock, •Blien v. Rand (.Minn., June 22, 
 
 7 M. & W, 071 1 Oromford, etc., R, 1899), 79 N. W. Rep. 606.
 
 § 291 THE ACQUISITION AND LOSS OF MEMBERSHIP. 297 
 
 stock which under no circumstances could legally exist, 1 but 
 if the corporation had power to issue the shares, the corpora- 
 tion and the holder of the shares may- be estopped from deny- 
 ing their existence, although they were issued irregularly and 
 improperly. 2 
 
 § 291. Disfranchisement — Joint stock companies. — Mem- 
 bership in a joint stock corporation consists in the ownership 
 of its stock, and is therefore lost by a transfer of the stock in 
 due form. Although the title to corporate property is in the 
 corporation and not in the stockholder, the latter has what 
 may be called the ultimate ownership, and of this he can not 
 be deprived by any act of the corporation. It follows that the 
 power to disfranchise or expel a member of such a corporation 
 never exists unless expressly conferred by the charter. 3 The 
 same rule is held to apply to every corporation or 'society 
 formed primarily or exclusively for gain, 4 or which holds 
 property. 5 
 
 § 292. Disfranchisement in non-stock corporations. — A non- 
 stock corporation, not organized exclusively for the purpose of 
 gain, has implied power, unless restrained by its charter, to 
 expel a member for cause. 6 In England it is held that in the 
 absence of a grant an incorporated voluntary association has 
 no inherent power to expel a member. 7 The questions com- 
 monly arise in connection with social clubs and such organi- 
 
 'Bank of Hindustan v. Alison, L. In re Long Island R. Co., 19 Wend. 
 
 R. 6 C. P. 54. 37, 32 Am. Dec. 429, Wilgus' Cases. 
 
 2 Campbell's Case, 9 Ch. App. Cases 4 In re Long Island R. Co., 19 Wend. 
 
 1. InNenney v. Waddill (Tex., 1894), 37, 32 Am. Dec. 429; Evans v. Phila- 
 
 25 S. W. Rep. 308, it was held that delphia Club, 50 Pa. St. 107, Wilgus' 
 
 the constitutional provision forbid- Cases. 
 
 cling the issue of stock except for 5 Bagg's Case, 11 Co. 93. See note 
 
 value received, and avoiding all ficti- to Hiss v. Bartlett, 3 Gray 468, in 
 
 tious issues of stock, can not be in- 63 Am. Dec. 772. 
 voked by stockholders who have 6 As to expulsion of members of a 
 
 knowingly accepted "paid up" stock subordinate lodge of a beneficial or- 
 
 to twice the amount of their subscrip- der, see opinion of Judge Thompson, 
 
 tions. Mulroy v. Supreme Lodge, etc., 28 
 
 3 Edgerton Tobacco, etc., Co. v. Mo. App. 463. 
 Croft, 69 Wis. 256, 34 N. W. Rep. 143 ; 7 Dawkins v. Antrobus, L. R, 17 Ch.
 
 298 THE LAW OF PRIVATE CORPORATIONS. § 292 
 
 zations as boards of trade and chambers of commerce. The 
 power to expel a member is usually conferred in general lan- 
 guage by the charter, and the particular grounds of expulsion 
 and procedure is provided for in the by-laws or rules of the 
 corporation. In the leading English case, 1 decided before 
 joint-stock business corporations became common, Lord Mans- 
 field said that there were three sorts of offenses for which an 
 officer or corporator might be expelled: ( 1 ) Such as have no 
 immediate relation to his office, but are in themselves of so in- 
 famous a nature as to render the offender unfit to execute any 
 public franchise. (2) Such as are only against the oath and 
 the duty of his office as a corporator, and amount to a breach 
 of a tacit condition annexed to his franchise or office. (3) The 
 third sort of offense for which an officer or corporator may be 
 displaced is of a mixed nature, as being not only against the 
 duties of his office, but also a matter indictable at common 
 law. For the first sort of offenses there must be a previous 
 conviction upon an indictment. When the offense is merely 
 against his duty as a corporator he can only be tried for it by 
 the corporation. Generally the offense must be of an infa- 
 mous character, and have some relation to the duties which at- 
 tach to membership in the corporation. "When a corporation 
 i- duly organized it has power to make by-laws and expel 
 members, though the charter is silent upon the subject. Tf 
 the power is expressly grunted in general terms, it is conferred 
 to enable the corporation to accomplish the objects of its crea- 
 tion, and is limited to such objects or purposes. It appears to 
 be well settled thai when the charter of a corporation is Bilenl 
 upon the subject of expulsion, or grants the power in general 
 terms, there are bul three legal causes of disfranchisement: 
 1. Offenses of an infamous character, indiotable at common 
 
 l»iv. 815, 11 La* 'l'. lie,,. (N. s i (Pa.) 141, I im. Dec. 163; People v. 
 
 Medical, etc., 32 N. v. 187. Notes i<> 
 
 ' |;,. X v . Richardson, i Burr. 517. Hiss v. Bartlett, 68 Am. Dec. 772; 
 
 ,\ of English cases in Rich- Austin v. Bearing, 69 Am. Dec 865; 
 
 l | .:_.. go w. Va. 191; Bociety v. Comw.,62 Pa. Bt. 125,91 
 
 , . -t. p etc., 2 Binn. am. Dec. L89
 
 § 293 THE ACQUISITION AND LOSS OF MEMBERSHIP. 299 
 
 law. 2. Offenses against the corporator's duty to the corpora- 
 tion as a member of it. 3. Offenses compounded of the two." 1 
 
 § 293. Nature of membership in non-stock corporations. — 
 
 Membership in certain non-stock corporations, such as boards 
 of trade and chambers of commerce, is valuable property 
 which may be sold and transferred subject to the restrictions 
 imposed by the rules and by-laws of the corporation. But it 
 is property in a restricted sense only, and is always held in- 
 cumbered by the conditions, without which it could not have 
 been obtained. 2 In a recent New York case 3 it is said: "When 
 membership and the rights belonging to that status were con- 
 ferred upon him the gift was accompanied by the condition 
 that the rights of whatever nature should revert to the associa- 
 tion upon the happening of certain events; and he can not be 
 heard to complain, nor can third persons claiming to derive 
 under him. He should be held to a contract which was reason- 
 able when entered into, which prejudiced no rights of persons 
 and were in conflict with no statutory or common law right. 
 A person acquires by membership in the association only such 
 rights as the constitution and by-laws give him." Hence, the 
 corporation may provide that membership can not be trans- 
 ferred without the consent of the other members or until all 
 contracts entered into with the other members are fulfilled. 4 
 
 1 State v. Chamber, etc., 20 Wis. 68. which measures their rights, duties 
 
 2 Hyde v. Ward, 94 U. S. 23; In re and liabilities as members. Weston 
 Haebler, 149 N. Y. 414, 44 N. E. Rep. v. Ives, 97 N. Y. 222 ; Belton v. Hatch, 
 87. 109 N. Y. 593; O'Brien v. Grant, 146 
 
 3 Belton v. Hatch, 109 N.Y. 593, 17 N. N. Y. 163. A member of a corpora- 
 E. Rep. 225. The rule is that members tion may so hedge himself in by agree- 
 are bound by the by-laws of the cor- ment as to yield the protection which 
 poration. See Green v. Board of Trade one seeks in the ordinary affairs of 
 (111.), 51 N. E. Rep. 99 ; In re Haebler, life, and to enlarge the authority that 
 149 N.Y. 414, 44 N. E. Rep. 87, the court may be used against him. People v. 
 said: "The relator had a right to be- New York, etc., Exchange, 8 Hun 
 come a member of this corporation 216, 220." 
 
 and to agree to be governed by its * American, etc., Com. Co. v. Chi- 
 
 charter and by-laws; and they ex- cago, etc., Exchange, 143 111. 210; 
 
 press the contract by which he and Board of Trade, etc., v. Nelson, 162 
 
 every other member is bound, and 111. 431, 53 Am. S. R. 312.
 
 300 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 294 
 
 § 294. Grounds for expulsion. — When authority is conferred 
 to expel a member for reasonable cause or for a designated of- 
 fense, the corporation has the right, through its proper officers 
 or bodv, to determine the sufficiency of the cause and what 
 constitutes the offense, 1 subject to the power of the courts to 
 restrain arbitrary and illegal action. 2 A member of a society 
 maybe expelled for conduct calculated to bring the society 
 into disrepute. 3 Under a by-law which makes "slander against 
 the society" an offense, it was held that a member could be 
 expelled, but there must be a written charge entered upon the 
 books of the corporation. 1 One member of a corporation can 
 not be expelled for villifying another member, as such an of- 
 fense' is said not to affect the interest or good government of 
 the corporation or be indictable at common law. 5 An incor- 
 porated board of trade may suspend a member under a by-law 
 which provides that "when a member shall be guilty of any 
 act of bad faith or any attempt at extortion, or any other dis- 
 honorable or dishonest conduct, he shall be censured, sus- 
 pended or expelled by the board of directors as they may 
 determine. " 6 A mere breach of contract without moral delin- 
 quency on the part of a member is not within a by-law au- 
 thorizing the board <>f managers to expel a member for "fraudu- 
 lent breach of contract, or any proceeding inconsistent with 
 
 1 Inderwick v. Bnell, '_' Mac. & <;. of the society and its members: Peo- 
 '_']»;; I'., cv s. Smith Society v. Van- plev. Mechanics' Aid Society, 22 Mich, 
 dyke, 2 Whart. (Pa.) 809, 30 Am. Dec. 86. Publication of a libelous pamphlet 
 263, on another member : Hawkins v. An- 
 
 2 People v. Higgina, 15 111. i L0. trobus, l.. R. it Ch. Div. 615. Bui Bee 
 •Burton v. St. George Society, 28 Beesley v. Chicago, He. \ssn.. n 
 
 Mich. 261. [11. App. 278. Moral delinquency : Peo- 
 
 •Rohlerv. Mechanics Aid Society, plev. Bt. Stephen's Church, 68 N, V. 
 
 22 Mich. 86. The offense must, how- 103. The following are insufficient to 
 he analogous to the common law justify expulsion: "Unprofessional 
 
 offense of slander. 
 
 .mm. v. St. Patrick Ben. A'-sn.,:.' 
 
 Hi. in. (Pa.] in. 
 • Board of Trade v. Nelson, 162 111. 
 
 i:i. 1 1 v i: Rep. 748. Expulsion may 
 
 i„- for uon-pei fonnance of Hi«- con- 
 trad : White v. Brownell, 2 Daly's 
 
 conduct in advertising": People v. 
 Med. Boc.,82 N.Y. 187. "Doing busi- 
 ness at less than the established tat iff 
 of the society " : People v. Med. Soc, 
 24 Barb. (N. Y.i 570. A.s to whether 
 a member of a club <-in be expelled 
 for striking another member 
 
 N.Y.)829. Insolvency ; Slander Evans v. Phila. Club, 60 Pa St. 107.
 
 § 295 THE ACQUISITION AND LOSS OF MEMBERSHIP. 301 
 
 just and equitable principles of trade." 1 The charter stated 
 that the object of a corporation was "to inculcate just and 
 equitable principles of trade, to establish and maintain uni- 
 form and commercial usages * * * and to adjust mis- 
 understandings between persons engaged in business;" A 
 member of a produce exchange may be expelled for unjusti- 
 fiable breach of a contract not made on the floor of the ex- 
 change, 2 or for obtaining goods from one not a member under 
 false pretenses. 3 But a by-law made under general authority 
 must be reasonable, 4 and it has been held that there can not 
 be expulsion for violation of an unenforcible by-law when the 
 offense is in no way injurious to the corporation. 5 
 
 § 295. The proceedings. — The proceedings for the expul- 
 sion of a member of a non-stock corporation may be provided 
 for by the by-laws. 6 In such cases they must be strictly ob- 
 served or the conviction can not be sustained. 7 Generally 
 
 1 People v. N. Y. Produce Exchange, a member has no right to notice of 
 149 N. Y. 401. such preliminary investigation. 
 
 2 In re Haebler, 149 N. Y. 414, 44 N. 7 Fisher v. Keane, L. R. 11 Ch. Div. 
 E. Rep. 87. As to jurisdiction of 353; Greene v. Board, etc. (111.), 51 N. 
 stock exchange arbitration commit- E. Rep. 599; Commonwealth v. Union 
 tee, see Cochran v. Phila. Stock League, 135 Pa. St. 301, 19 Atl. Rep. 
 Exch., 180 Pa. St. 289. 1030, is an elaborate consideration of 
 
 8 People v. N. Y. Com. Assn., 18 the powers of a social club to expel 
 
 Abb. Pr. 271. members for acts which are deemed 
 
 4 Hibernia Ins. Co. v. Comw.,19Pa. prejudicial to the organization. It 
 
 St. 267. A by-law limiting the number was held that where the trial was con- 
 
 of solicitors that a member of a stock ducted in due form and in good faith 
 
 exchange may employ with penalty of by the club, the courts would not in- 
 
 expulsion is illegal, because in re- quire into the question of guilt. The 
 
 straint of trade. People v. Chicago only question in the case as stated by 
 
 Live Stock Ex., 170 111. 556, 39 L. R. the court was one of power. The 
 
 A. 373. case was distinguished from Evans v. 
 
 5 Evans v. Phil. Club, 50 Pa. St. 107. Philadelphia Club, 50 Pa.St.107, on the 
 See cases collected in note to 63 Am. ground that in that case there was no 
 Dec. 772. express power of expulsion conferred 
 
 6 State v. Trustees, 5 Ind. 77; Comw. by the charter and the case rested 
 v. German Society, 15 Pa. St. 251. A upon the ground that the offense was 
 rule that when any member commits a not such as to fall within the inherent 
 grave offense or act of dishonesty in- powers of the corporation at common 
 volving the association, a committee law. It was said that the common 
 shall be appointed to make a prelimi- law power of expulsion as declared 
 nary investigation, is reasonable and in that case may be thus stated.
 
 302 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §295 
 
 there must be a provision for a hearing with an opportunity to 
 offer testimony and examine witnesses, although it has been 
 held that on a hearing before a committee of the membership of 
 a board of trade the accused is not entitled to professional coun- 
 sel. 1 If there is no provision to the contrary the power of dis- 
 franchisement rests in the whole body of membership, 8 but it 
 may be conferred upon the board of directors by a by-law reg- 
 ularly passed by the members. 3 In corporations such as social 
 clubs and boards of trade it may be exercised by a body pro- 
 vided for by the charter or the by-laws. But as said in one 
 case: "The transfer from the body of the society where it 
 properly belongs, to a small fraction of its members of so large 
 and dangerous a power as that of expulsion, must appear, if it 
 be claimed to exist, by the plainest language. It can not be 
 established by inference, or presumption, for no such pre- 
 sumption is to be made in derogation of the right of the whole 
 body, nor is it to be supposed, unless it appears by the most 
 express and unambiguous language, that the members of the 
 society have consented to hold their rights and membership by 
 
 "First, the power of disfranchisement 
 must in general be conferred by the 
 charter. It is qo1 sustained as an in- 
 cidental power, excepting (1) when 
 the member lias been legally con- 
 victed of an infamous offense, and (2) 
 when he has committed some act 
 tending to the destruction or injury 
 of the society. Second, the power to 
 m:ik <■ by-laws is incidental to corpora- 
 tions, bat is generally conferred by 
 charter. By-laws, however, which 
 
 I in a majority the |><>\\ er of expul- 
 for minor offenses, are void, and 
 expulsion ander them will nol be sus- 
 tained. Third, in joint stork com- 
 panies or corporations owning prop- 
 no power of expulsion can be 
 
 rcised unless conferred by statute." 
 i I,.- \ Board, etc (111.), 51 N. 
 I-.. Rep. 699; Haasler v. Philadelphia, 
 etc., ii Phila. 288. 
 
 2 State v. Chamber of Commerce, 20 
 Wis. 08; Medical ami Surgical Society 
 v. Weatherly, 75 Ala. 248; Gray v. 
 Christian, etc.,Soc, 137 Mass. 329, 50 
 Am. Rep. 310; Commonwealth v. 
 Union League Club, L35 Pa. St. 301. 
 
 B State v. Chamber of Commerce, 
 17 Wis. 670. "Expulsion by the action 
 of the directors is one mode or manner 
 of expulsion ; expulsion by a majority 
 vote of all the corporators is another 
 mode or manner of expulsion. A rule 
 prescribing the former mode is as 
 much authorized and justified by the 
 language of the charter as a rule pre- 
 scribing the latter mode." The charter 
 provided thai the corporation "shall 
 have the righl to admit or as p< l such 
 members as they may see fit, in the 
 mannei to be prescribed by the rules, 
 regulations and by-laws there 
 Pitcher v. Board, etc., i-'i III. 412.
 
 § 296 
 
 THE ACQUISITION AND LOSS OF MEMBERSHIP. 
 
 303 
 
 so frail a tenure as the judgment of a small portion of their 
 own number." ' 
 
 § 29G. Notice. — It is necessary to the validity of the sus- 
 pension or expulsion of a member of an incorporated society, 
 that the accused should be notified of the charge against him 
 and of the time and place set for the hearing; that the accus- 
 ing body should proceed upon inquiry and consequently upon 
 evidence, and that the accused should have a fair opportunity 
 of being heard in his defense. 2 Notice is not rendered un- 
 necessary by an express grant of power to expel. 3 A by-law 
 which authorized expulsion without notice is void.' When 
 property rights are involved and no other method is provided 
 by the by-laws notice must be personal, 5 and merely posting a 
 notice in the club house is not sufficient. 6 Lack of notice is 
 waived by a general appearance, 7 but not by an appearance 
 and objection to proceeding without the presence of the prose- 
 cutor. 8 Service of a notice is not excused by the insanity of 
 the member. 9 The notice must contain a statement of the 
 
 1 Hassler v. Philadelphia, etc., 14 
 Phila. 233. As to power to revise a 
 membership list of a lodge and drop 
 members for non-payment of assess- 
 ments, see Knights of Honor v. 
 Mickser, 72 Texas 257 ; Medical and 
 Surgical Society v. Weatherly, 75 Ala. 
 248. 
 
 2 Thomp. Corp., § 881; People v. 
 New York Com. Assn., 18 Abb. Pr. 
 271; Bagg's Case, 11 Co. 93; Fisher 
 v. Keane, L. R. 11 Ch. Div. 353; 
 Wachtel v. Society, 84 N. Y. 28; Dili- 
 gent, etc., Co. v. Comm., 75 Pa. St. 
 291. The corporation acts in a quasi 
 judicial capacity. See Otto v. Union, 
 75 Cal. 308; Burt v. Lodge, 66 Mich. 
 85, 33 N. W. Rep. 13. 
 
 3 DeLacy v. Neuse Riv., etc., Co., 1 
 Hawks 274, 9 Am. Dec. 636. 
 
 4 Erd v. Bavarian, etc., Assn., 67 
 Mich. 233. But it has been held that, 
 when no property rights are involved 
 and the by-laws do not provide for no- 
 
 tice, no notice is necessary. Manning 
 v. San Antonio Club, 63 Tex. 166, 51 
 Am. Rep. 639. 
 
 5 Wachtel v. Society, 84 N. Y. 28; 
 People v. Med. Soc, 32 N. Y. 187: 
 Service of notice is not excused by a 
 change of residence. Wachtel v. So- 
 ciety, 84 N. Y. 28. 
 
 6 Sibley v. Carteret Club, 40 N. J. L. 
 295. 
 
 7 Comm. v. Pennsylvania, etc., Soc, 
 2 Serg. & Rawl. 141 ; Sperry's App., 116 
 Pa. St. 391; Burton v. St. George 
 Soc, 28 Mich. 261. 
 
 8 People v. Mus., etc., Union, 101 
 N. Y. 680. It has been held that no- 
 tice is not waived by appearing and 
 entering upon the defense. Downing 
 v. St. Columba's, etc., Soc, 10 Daly 
 (N. Y.) 282; Labouchere v. Earl, etc, 
 L. R. 13 Ch. Div. 346. 
 
 9 Supreme Lodge v. Zuhlke, 129 111. 
 298.
 
 304 THE LAW OF PRIVATE CORPORATIONS. § 297 
 
 charge 1 and the trial be fair and open 2 before an unprejudiced 
 body. 3 This does not, however, require the impartiality of a 
 judicial tribunal, and it has been held that it is no objection 
 that one of the trial body was related to one of the parties, and 
 that the proceedings are not affected by the fact that two mem- 
 bers thereof were prejudiced. 4 "The principle to be deduced 
 from all these cases is, that in every proceeding before a club, 
 societv or association having for its object the expulsion of a 
 member, the member is entitled to be fully and fairly informed 
 of the charge and to be fully and fairly heard." 5 This rule 
 requiring notice and a hearing does not apply to mutual bene- 
 fit corporations whose charters provide that non-payment of 
 assessments after notice shall ipso facto work a forfeiture of mem- 
 bership. 6 In such cases the right to notice has been waived 
 or parted with by contract. 7 But when there is no rule pro- 
 viding for such a forfeiture, there must be an adjudication of 
 forfeiture by the corporation after notice to the member and a 
 hearing upon the issue. 
 
 § 297. Incorporated and unincorporated societies. — In some 
 of the decisions no distinction is made between incorporated 
 and unincorporated societies. In speaking of an unincorpo- 
 rated voluntary association, the supreme court of Pennsylvania 8 
 said : "These associations have some elements in common 
 with corporations, joint-stock companies and partnerships; 
 :h us association and being governed by regulations adopted 
 by themselves Eor that purpose. * * * 1 have very little 
 doubt, therefore, that the Bame rules of Law and equity, bo Ear 
 as regards the control of them and the adjudication of their re- 
 served and inherent powers to regulate the conduct and to ex- 
 
 'Mardock'fl Case, 7 Pick. (Mass.) "Hutchinson v. Lawrence, 67 How. 
 
 103; Sleeper v. Franklyn Lyceum, 7 Pr. 38. 
 
 i; | ' Thorn. Priv.Oorp., §§ 881,898. Bee 
 
 •. v. \ .1 :in i-. ii Mm. :,7o. Bcheufler v. Grand Lodge, 45 Minn. 
 
 • Smith v. Nelson, L8 \'t. .Ml. 266. 
 
 « Loubal ■. . LeBoy, 15 Lbb. N. 0.1. ~ Blisset v. Daniel, 10 Hare 478. 
 
 H Leech v. Harris, '2 Brewst. 571.
 
 § 298 THE ACQUISITION AND LOSS OF MEMBERSHIP. 305 
 
 pel their members, apply to them as to corporations and joint- 
 stock companies." 1 
 
 Greater power with reference to making rules for the gov- 
 ernment of members is sometimes recognized as belonging to 
 unincorporated associations, and they are placed under no 
 restrictions, so long as they do not conflict with general laws. 2 
 
 § 298. Review by the courts. — The power of expulsion is 
 vested in the corporation, and when it is exercised by the 
 proper body in good faith the court will not review the pro- 
 ceedings. 3 Where there has been a trial after due notice, and 
 a conviction, the proceedings will not be inquired into collat- 
 erally. 4 In a case where the plaintiff had been expelled from 
 a benevolent society, Chief Justice Gibson said: 5 "Into the reg- 
 ularity of these proceedings it is not permitted us to look. The 
 sentence of the society, acting in a judicial capacity, and with 
 undoubted jurisdiction of the subject-matter, is not to be ques- 
 tioned collaterally while it remains unreviewed by superior 
 authority. If the plaintiff has been expelled irregularly, he 
 has his remedy by mandamus to restore him, but neither by 
 mandamus nor action can the merits of the expulsion be re- 
 examined.'" Under this rule the courts will investigate the 
 proceedings in order to determine whether they are regular, 
 
 1 Gormon v. Russell, 14 Cal. 532; party an opportunity to make defense 
 
 Babb v. Reed, 5 Rawle's Rep. 151, 28 if he has any. I remember to have 
 
 Am. Dec. 650; Otto v. Union, 75 Cal. heard it observed by a very learned 
 
 308; People v. Board of Trade, 80 111. man upon such an action that even 
 
 137; Anacosta Tribe v. Murbach, 13 God himself did not pass sentence 
 
 Md. 91. upon Adam before he was called on 
 
 2 White v. Brownell, 2 Daly 329; to make his defense. Adam, says 
 State v. Williams, 75 N. C. 134; Daw- God, where art thou? Hast thou not 
 kins v. Antrobus, L. R. 17 Ch. Div. eaten of the tree whereof I com- 
 615 ; Labouchere v. Earl of Wham- manded thee that thou shouldst not 
 cliffe, L. R. 13 Ch. Div. 346. eat? And the same question was put 
 
 3 Illinois, etc., Soc. v. Baldwin, 86 to Eve also." 
 
 111. 479; Olmstead v. Farmer, etc., 4 Otto v. Union, 75 Cal. 308. 
 
 Co., 50 Mich. 200. In the celebrated 5 Black, etc., Society v. Vandyke, 2 
 
 Bently case, 2 Lord Raymond 1334, Whart. 309. 
 
 Mr. Justice Fortescue says: "The 6 Lewis v. AVilson, 121 N. Y. 284. 24 
 
 laws of God and man both give a N. E. Rep. 474; People v. N. Y., etc., 
 
 20— Private Corp. Exch., 149 N. Y. 401.
 
 306 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 29S 
 
 and whether the cause is one for which, under the charter, 
 there can be a legal expulsion, or whether the act complained 
 of comes within the by-laws. 1 Subject to these limitations the 
 corporations are left to enforce their own rules with reference 
 to expulsion, and generally the courts will interfere only when 
 a clear case of injustice is made out. 2 The remedy for wrong- 
 ful expulsion is generally mandamus to compel reinstatement, 3 
 and not by injunction, 4 although this remedy is permitted in 
 some cases. 6 The right of a member to be reinstated may be lost 
 through his laches. 6 
 
 ' Laboueherev. Earlof Wharncliffe, 736, and Society v. Commonwealth, 
 I. R. 13 Ch. Div. 346; People v. 91 Am. Dec. 139. 
 board of Trade, 80 111. 137. *Greggv. Mass. Med. Soc, Ill Mass. 
 
 2 state v. Georgia Med. Soc, 33 Ga. 185 ; Sturges v. Board of Trade, 86 111. 
 608. 
 
 8 Evans v. Phila. Club, 50 Pa. St. 
 107; State v. Cham, of Com., 47 Wis. 
 670; Otto v. Union, 75 Cal. 308; Sib- 
 ley v. Carteret Club, 40 N. J. L. 295; 
 Notes to Dane v. Derby, 89 Am. Dec. 
 
 441. 
 
 5 01ery v. Brown, 51 How. Pr. (N. 
 Y.) 92. " 
 
 6 Meberin v. San Francisco, etc., 
 Exch., 117 Cal. 215.
 
 CHAPTER 13 
 
 CAPITAL STOCK. 
 
 ¥99. Capital. 
 
 500. Capital stock. 
 
 501. Shares of stock. 
 
 502. Amount of capital stock. 
 
 303. Dividend stock. 
 
 304. Stock certificates. 
 
 305. Not negotiable instruments. 
 
 /. Classes of Stock. 
 
 306. Different kinds of stock. 
 
 307. Preferred stock. 
 
 308. Power to issue preferred stock. 
 
 309. Power of majority. 
 
 310. Under legislative authority. 
 811. Estoppel. 
 
 312. Status of holders of preferred 
 
 stock. 
 
 313. Rights of holders of preferred 
 
 stock. 
 
 314. Accumulative dividends. 
 II. Nature of Capital Stock. 
 
 315. Personal property. 
 
 316. Statute of frauds. 
 
 317. The trust fund theory. 
 
 318. Meaning of the doctrine. 
 
 319. Criticisms. 
 
 III. Fraudulently Issued Stock. 
 
 320. Overissue of stock. 
 
 321. Bona fide holders of fraudu- 
 
 lently issued stock. 
 
 322. Estoppel by recital in stock 
 
 certificate. 
 
 323. Liability for fraudulent acts of 
 
 agents. 
 
 § 324. Fraudulent acts of agents, con- 
 tinued. 
 
 325. Liability to innocent purchas- 
 
 ers only. 
 
 326. Recovery of money paid for 
 
 void shares. 
 
 327. Payment for stock. 
 
 IV. Watered Stock. 
 
 328. Meaning of phrase. 
 
 329. Issue of shares below par — The 
 
 common law rule. 
 
 330. As between stockholder and 
 
 creditor. 
 
 331. Recital that shares shall be 
 
 deemed fully paid up. 
 
 332. Bona fide purchaser of shares. 
 
 333. Who may complain. 
 
 334. Liability is to subsequent cred- 
 
 itors only. 
 
 335. Bonus stock given to "sweet- 
 
 en" bonds. 
 
 336. Construction bonds and bonus 
 
 shares. 
 
 337. Stock issued by a going con- 
 
 cern with impaired capital. 
 
 338. Shares accepted as a gratuity. 
 
 339. Illustrations. 
 
 340. Payment in property. 
 
 341. Remedy where there is over- 
 
 valuation. 
 
 342. Constitutional and statutory 
 
 provisions as to payment of 
 shares. 
 
 § 299. Capital. — The capital of a corporation is the fund 
 with which it transacts its business, and embraces all its prop- 
 erty, real and personal. It is the property or means contributed 
 
 (307)
 
 30S 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 300 
 
 by the stockholders as the fund or basis for the business en- 
 terprise, for which the corporation was formed. 1 It signifies 
 "the actual estate, whether in money or property, which is 
 owned by an individual or a corporation. In reference to a 
 corporation, it is the aggregate of the sum subscribed and paid 
 in, or secured to be paid in, b} T the shareholders, with the addi- 
 tion of all gains or profits realized in the use and investment of 
 those sums, or, if losses have been incurred, then it is the resi- 
 due after deducting such losses." 2 
 
 § 300. Capital stock. — There is a distinction between the 
 capital and the capital stock of a corporation, although the 
 terms are often used interchangeably. 3 
 
 The word capital when properly used refers to the property 
 of the corporation while the capital stock represents the in- 
 
 1 Iron R. Co. v. Lawrence, etc., Co , 
 49 Ohio St. 102, 30 N. E. Rep. 616. 
 
 z People v. Commissioners, 23 N. Y. 
 192 on 219; Bailey v. Clark, 21 Wall. 
 284; Christensen v. Eno, 106 N. Y. 97. 
 
 3 San Francisco V. Spring Valley 
 Water Works, 63 Cal. 529; Christen- 
 Ben v. Eno, 106 N. Y.97. In Williams 
 V. Western I'nion, efe., Co., 93 N. V. 
 L62, in considering a statute which 
 provided that the directors should 
 not withdraw or in any way pay to 
 tli'- stockholders any pari of the capi- 
 tal -lock of tin- corporation, or reduce 
 tin- capital stock without theassent of 
 
 the legislature, the court said : "The 
 
 'capital stock' in this Section dors not 
 
 mean shares of stock, but it means the 
 property of tin- corporation contrib- 
 uted by it- stockholders or "otherwise 
 obtained by it to the extent required 
 by it-' charter. While tic- term 'cap- 
 ital : requenl ly used in a loose 
 and indefinite ction 
 
 an.! in legal phia-e general]} il 1 1 1 ■ • . 1 1 1 - 
 
 thai and nothing more. 1 n state- v. 
 
 Moi 1 1 t..v. M, etc., \ ii . 28 V l . 1.. 
 
 ;i, ( '. .1., said : The pin B 6 
 
 'capital stock' is generally, if not uni- 
 versally, used to designate the amount 
 of capital to be contributed for the 
 purposes of the corporation. The 
 amount thus contributed constitutes 
 the capital stock of the company." In 
 Burrall v. Railroad Co., 75 N. Y. 211, 
 Folger, .1., defined "capital stock" as 
 that money or property which is put 
 in a single corporate fund by those 
 
 who by Subscription therefor be< ic 
 
 members of a corporate body. Sec 
 to same effect Harry v. Exchange Co., 
 I Sandf. Ch. (N. Y.) 280. "The cap- 
 ital stock is to he clearly distinguished 
 from the amount of property possessed 
 by the corporation. Occasionally it 
 
 happens that under the terms of stat- 
 utes relating to slock, which have 
 
 been drawn without regard to the tech- 
 nical meaning of words, the court will 
 
 const rue the capital stock to mean all 
 the actual property of a corporation." 
 
 Cook I. § '.i, citing <>hio R. Co. v. 
 Weber, 96 III. 148; Philadelphia v. 
 
 Ridge Avenue R. Co., 102 I'a.St. UK); 
 Security <'". v. Hartford, (il Conn. 
 
 \ti. hep. 699.
 
 § 301 CAPITAL STOCK. 309 
 
 terest of the stockholders in the corporation. The amount of 
 the capital stock is determined hy the charter and remains 
 fixed except as increased or decreased in the manner provided 
 by law, while the amount of capital which a corporation may 
 acquire is limited only by its success in acquisition and ac- 
 cumulation. 1 The value of the capital stock is measured by 
 the value of the corporate property. 2 The capital stock deter- 
 mines the amount of the capital which must be kept unim- 
 paired for the benefit of creditors while the corporation exists. 
 Whatever is acquired in excess of this is surplus and may be 
 distributed as profits, but until divided such surplus belongs 
 to the corporation, and in a general sense may be regarded as 
 a portion of its capital. 3 
 
 § 301. Shares of stock, — A share of stock is an incorporeal, 
 intangible thing. 4 It is a right to a certain proportion of the 
 capital stock of the corporation — never realized except upon 
 the dissolution and winding up of the corporation — with the 
 right to receive in the meantime such profits as may be made 
 in the shape of dividends. 5 In other words, it is the " right to 
 partake according to the amount put into the fund in the sur- 
 plus profits of the corporation, and ultimately on the dissolu- 
 tion of it in the assets remaining after the payment of its 
 debts." 6 
 
 "The expression, shares of stock, when qualified by words 
 indicating number and ownership, expresses the extent of the 
 owner's interest in the corporation property. The interest is 
 
 1 Farrington v. Tennessee, 95 U.S. s Neiler v. Kelley, 69 Pa. St. 403 ; 
 686 ; Wetherbee v. Baker, 35 N. J. Eq. Wilkesbarre Bank v. City of Wilkes- 
 501; People v. Coleman, 126 N. Y. barre, 148 Pa. 601, 24 Atl. Rep. Ill; 
 433, Wilgus' Cases. Fisher v. Essex Bank, 5 Gray 373. 
 
 2 Raleigh, etc., R. Co. v. Wake, 87 6 Burrall v. Railroad Co., 75 N. Y. 
 N. C. 414. 211 ; Ohio, etc., Co. v. Merchants, etc., 
 
 3 Williams v. Western Union, etc., Co., 11 Humph. (Tenn.) 1; Fisher v. 
 Co., 93 N. Y. 162; Farrington v. Ten- Essex Bank, 5 Gray (Mass.) 373; 
 nessee, 95 U. S. 689; Phelps v. Farm- Plimpton v. Bigelow, 93 N. Y. 592; 
 ers' Bank, 26 Conn. 279. Payne v. Elliott, 54 Cal. 339; Field v. 
 
 4 Jermain v. Lake Shore, etc., R. Pierce, 102 Mass. 253; Spalding v. 
 Co., 91 N.Y. 483; Payne v. Elliott, 54 Paine, 81 Ky. 416; Jones v. Davis, 
 Cal. 339, Wilgus' Cases. 35 Ohio St. 474.
 
 310 THE LAW OF PRIVATE CORPORATIONS. § 302 
 
 equitable, and does not give him the right of ownership to 
 specific property of the corporation. But he does own the 
 specific stock held in his name, and, under the rules of law, 
 the property of the corporation is held by the corporation in 
 trust for the stockholders." 1 
 
 § 302. Amount of capital stock. — The charter of a corpora- 
 tion generally provides that the corporation shall have a cer- 
 tain amount of capital stock which is supposed to represent 
 a fund upon which it obtains credit and transacts business. 
 This fund can not be increased or decreased in amount or num- 
 ber of shares by the corporation without the authority of the 
 state. 2 Stock issued in violation of this rule is void. 3 But 
 where the power to increase exists and is irregularly exercised, 
 the corporation is estopped to deny the validity of the stock so 
 issued as against a bona fide bolder thereof.' The manner in 
 which a corporation may change the amount of its capital 
 stock is commonly provided by the general corporation laws of 
 the state. As a general rule, it must be exercised by the stock- 
 holders and not by the directors. 6 But where the directors 
 have power to determine the amount of capital stock, they 
 have power to increase the same. The rule that a corporation 
 has no implied power to increase the amount of its capital 
 k when the charter has definitely fixed it at a certain sum, 
 has no application when the charter docs not impose any lim- 
 itation bul expressly authorizes the amount to be determined 
 by by-law. ruder such ci rcumstances the increase may be 
 under the authority of a by-law, and a mere resolution of the 
 
 >Bridgman v. Keokuk, 72 Eowa 12, ■Scoville v. Thayer, 105 U.S. L4S; 
 
 .„., Beck, J. New York, etc., E. Co. v. Schuyler, 84 
 
 ..ill.- v. Thayer, 105 U. 8. I 13; N. Y. 80. 
 
 Sutherland v. Olcott, 95 N. Y. 93; »Veeder v. Mudgett, 95 N.Y.295; 
 
 Grangers, etc., CJo. v. Kamper, 73 Ala. Saj les \ , Brown, 40 Fed. Rep. 8. 
 
 Crandall v. Lincoln, 62 Conn. 74; 'Chicago, etc., Co. v. Allerton, is 
 
 Chicago, etc., R. Co. v. Ulerton, 18 Wall. I Eidman v. Bowman, 
 
 Wal] , Einstein v Roch- 58 III. ill. n Am Rep. 90; Tshumi 
 
 I . . i ft \. Y. 46; Ross- v. Hills. 8 Kan. A.pp. 549, 51 Pac. 
 
 Meehan Co. v. Southern iron Co., 72 Rep. 619. 
 Rep 967 : Jones v. < loncord, ••<<••, 
 9 234.
 
 § 302 CAPITAL STOCK. 311 
 
 members is a sufficient by-law for that purpose. 1 As in all other 
 cases where there is no lack of original power, the stock- 
 holders may by acquiescence deprive themselves of the right 
 to object to the exercise of such power by the board of direc- 
 tors.* But the reduction of the capital is a different matter. 
 "Different questions of public policy are involved by a power 
 of diminishing capital invested in said companies. The rights 
 of creditors would be affected by a decrease. Their rights 
 are not injuriously affected by an increase. To decrease the 
 capital of such a corporation would be in most cases to with- 
 draw capital pledged to the fortunes of the venture. These 
 reasons have led the courts with great unanimity to hold that 
 the power of increasing the capital does not involve or imply 
 the power to decrease it." 3 The purchase of shares of its own 
 stock by a corporation having authority to do so does not 
 operate as a reduction of the capital stock, when it did not re- 
 serve to itself the power to reduce the capital stock. 1 Where 
 the law required that the constating instrument shall state the 
 amount of capital stock and it stated the amount and added 
 that k might be increased, the latter provision was treated as 
 a nullity and the amount so named as the limit. 5 In order to 
 make this rule effective, the courts hold that stock issued in 
 excess of the lawful amount is void and the holders of such 
 stock do not become members of the corporation. 6 A corpora- 
 tion which has been directed by the court to issue a certain 
 amount of stock to different persons, the aggregate of which 
 exceeds the amount authorized by its charter, should issue a 
 proportional amount to each. 7 
 
 1 Peck v. Elliott, 79 Fed. Rep. 10, 47 tificate. Gade v. Forest, etc., Co., 165 
 
 IT. S. App. 605, 38 L. R. A. 616. 111. 367. 
 
 2 Bailey v. Champion, etc., Co., 77 4 Western, etc., Co. v. DesMoines 
 
 Wis. 453. Nat'l Bank, 103 Iowa 455. 
 
 3 Peck v. Elliott, supra; Sutherland 5 Grangers, etc., Co. v. Kamper, 73 
 
 v. Olcott, 95 N. Y. 94. A corporation Ala. 325. 
 
 which has completed its organization, 6 Cartwright v. Dickinson, 88 Tenn. 
 
 except filing the certificate that its 476, 7 L. R. A. 706. 
 
 organization is complete, may reduce 7 Clark Co. v. Winchester, etc., Co. 
 
 its capital stock before filing the cer- (Ky.), 43 S. W. Rep. 716. As to es-
 
 312 THE LAW OF PRIVATE CORPORATIONS. § 303 
 
 § 303. Dividend stock. — When a corporation has not issued 
 all its stock or has authority to increase its capital stock, and 
 there is no statutory or constitutional prohibition, 1 it may is- 
 sue new shares as dividends when an amount of money or 
 property equivalent in value to the full par value of the stock 
 so issued has been accumulated and permanently added to the 
 capital of the corporation. 2 ''There is no public policy which in 
 all cases condemns such dividends. Shares having been legally 
 brought into existence may be distributed among the stock- 
 holders of a company. By such distribution no harm is done 
 to any one person, provided the dividend is not a mere infla- 
 tion of the stock of the company, with no corresponding value 
 to answer to the stock distributed. It may be that a distribu- 
 tion of stock gratuitously to the stockholders of a company 
 based upon no values, a mere inflation, or, to use a phrase 
 much in vogue, a watering of stock, would be condemned by 
 the law. But when stock has been lawfully created, and is 
 held by a corporation, which it has a right to issue for value, 
 then a stock dividend may be made, provided that the stock 
 always represents value. * * * So long as every dollar of 
 stock issued by a corporation is represented by a dollar of prop- 
 ertv, no harm can result to individuals or the public from dis- 
 tributing the stock to the stockholders. Here there was no 
 fraud, no conspiracy, no unlawful combination * * * and 
 we know of no principle of law, no public policy, and no stat- 
 ute that condemns a stock dividend under such circum- 
 stances." 8 
 
 toppel of certain stockholders to assert business have been mad it of tli» 
 
 invalidity of an unauthorized issue of profits earned. It is also made when 
 ber v. Union, etc., Co., 56 the corporate plan! has increased in 
 (,],,,, >t |,si. value and it seems better to issue new 
 
 1 See Comw. v. Boston, etc., R. <'"•. Btock i<> represenl the excess of value 
 l ,.j Mass, 1 16. ,,i;m '" M '" ''"' increase and declare a 
 
 'William" v. Western Union, etc., cash dividend, [n this country these 
 , y [52; Leland v. Hayden, dividends an- frequently made and 
 
 102 Ma-. 642; Gibbons v. Mahon, I are constantly sustained by the 
 M ., .. iso "Corporations fre- courts." Cook I, § 586. 
 qaently make a dividend of this char- ■Williamsv. Western Union, etc., 
 ;,,(.., when impro > the rut- Co., 98 N. Y. L62, citing many cases. 
 
 porate property oi the
 
 § 304 CAPITAL STOCK. 313 
 
 It is discretionary with the directors whether they will de- 
 clare a stock or cash dividend. 1 
 
 § 304. Stock certificates. — A certificate of stock is a written 
 acknowledgment by the corporation of the interest of the 
 stockholder in the corporate property and franchises. The 
 stock must be distinguished from the certificate of stock. The 
 former is the substance, while the latter is simply the evi- 
 dence. 2 The possession of a certificate is not necessary to con- 
 stitute a person a member of the corporation. 3 A stock- 
 holder has a right to demand and receive a stock certificate, 
 but the possession of a certificate is not necessary to entitle 
 him to enjoy the rights and privileges of membership in a cor- 
 poration nor to impose upon him the duties and liabilities in- 
 cidental to such membership. 4 An action may be brought 
 against him upon a stock subscription, although no certificate 
 has been delivered or tendered, unless the contract provides 
 otherwise. 5 
 
 § 305. Not negotiable instruments. — Certificates of stock 
 are not negotiable instruments, 6 although they are sometimes 
 
 1 Howell v. Chicago, etc., E. Co., 51 5 Marson v. Deither, 49 Minn. 423; 
 
 Barb. (N.Y.) 378; Jackson v. Newark, Courtright v. Deeds, 37 Iowa 503. 
 
 etc., Co., 31 N. J. L. 277; Williams v. 6 0'Herron v. Gray, 1(38 Mass. 573, 
 
 Western Union, etc., Co., supra. 40 L. R. A. 498; Shaw v. Spencer, 100 
 
 2 Cartwright v. Dickson, 88 Tenn. Mass. 382; Sewall v. Boston, etc., Co., 
 
 476, 17 Am. St. Rep. 910; Hawley v. 4 Allen (Mass.) 277; East Birming- 
 
 Brumagin, 33 Cal.394; Payne v. El- ham, etc., Co. v. Dennis, 85 Ala. 
 
 liott, 54 Cal. 339; Hubbell v. Drexel, 565, 7 Am. St. Rep. 73; Hammond v. 
 
 11 Fed. Rep. 115. Hastings, 134 U. S. 401; Parker v. 
 
 8 Walter A. Wood, etc., Co. v. Rob- Sun, etc., 42 La. An. 1172; Weaver v. 
 bins, 56 Minn. 48; Wemple v. Rail- Barden, 49 N. Y. 286; Winter v. Bel- 
 road Co., 120 111. 196; Mitchell v. mont, etc., Co., 53 Cal. 428; Weyer v. 
 Beckman, 64 Cal. 117. Second Nal'l Bank, 57 Ind. 198; 
 
 4 National Bank v. Watsontown Young v. South, etc., Co., 85 Tenn. 
 
 Bank, 105 IT. S. 217; First Nat'l Bank 189, 4 Am. St. Rep. 752; Clark v. 
 
 v. Gifford, 47 Iowa 575; Colfax, etc., American, etc., Co., 86 Iowa 436, 17 
 
 Co., v. Lyon, 69 Iowa 683; Buffalo, L. R. A. 557. "Corporate stock is 
 
 etc., R. Co. v. Dudley, 14 N. Y. 336; not commercial paper, and it has none 
 
 Chester, etc., Co. v. Dewey, 16 Mass. of the privileges and immunities 
 
 94; Wemple v. Railroad Co., 120 111. which such paper has. A purchaser 
 
 196; Columbia, etc., Co. v. Dixon, 46 takes it subject to any debt due from 
 
 Minn. 463. the stock he purchases to the corpora-
 
 314 THE LAW OF PRIVATE CORPORATIONS. § 306 
 
 said to be quasi negotiable, 1 and the holders are often protected 
 through the application of the doctrine of estoppel. 2 To such 
 an extent has the law of estoppel been applied to protect a 
 bona fide purchaser of stock that he is protected in almost 
 every instance where he would he protected if he were the 
 purchaser of a promissory note or other negotiable instrument. 
 
 I. Classes of Stock. 
 
 § 306. Different kinds of stock. — Corporations often issue 
 different kinds or classes of stock, which are known by names 
 which illustrate their principal characteristics. Thus, we find 
 stock which is described as common, preferred, preference or 
 preferential, guaranteed and bonus. Preferred stock is so 
 called because the holders are entitled to a preference over 
 the holders of the common stoek in the matter of dividends. 
 When the payment is guaranteed without reference to earn- 
 ings, stock is known as guaranteed stock. The phrase " wat- 
 ered stock " is commonly used to describe issues which have no 
 proper basis of property back of them, while bonus stock is 
 Btock which is issued gratuitously, without consideration. Some 
 states provide for the issue of special kinds of stock. Thus, in 
 Massachusetts, certain corporations may issue what is known 
 as special stoek, the holders of which are creditors of the cor- 
 poration and not stockholders. 3 
 
 ti,, n ." Gilflllan, ('. .1., In re Peo- whal is called "special stock." In 
 
 p] e ' 8] etc., (',,.. 56 Minn. iso. See American, etc., Works v. Boston, etc., 
 
 note 'to • Am. St. Rep. 759. "Certifi- Co., 139 Mass. 5, 9, the court in discuss- 
 
 s tock an- aol securities for ing this stock says : "It is limited in 
 
 ■ v iii anysense, much less are amountto two-fifths of the actual cap- 
 
 they negotiable securities. They are ital; it is subject to redemption by 
 
 simply the muniments and evidence tin' corporation at par after a fixed 
 
 I the holder's title to a given share time, to be expressed in certificates; 
 
 in the property and franchises ol tin- the corporation is bound t<> pay a 
 
 oration of which Ik- is a mem- fixed half-yearly Bum or dividend 
 
 Mechanic's Bank v. N. Y. Cent. np.ni ii as a debt; the holders oi it 
 
 i : | |. ; \ y are in no e) enl liable for the debt of 
 
 i Daniel Neg [nst. II, f 1708. the corporation beyond their stock; 
 
 ■ Woods App., 92 Pa. St. 879. and the issue of special stock makes 
 
 •The Massachusetts Btatute (Public all tin- general stockholders liable for 
 
 c ij ( iQ6 ( .. 12-61) provides for all the debts and contracts of the cor-
 
 § 307 CAPITAL STOCK. 315 
 
 § 307. Preferred stock, — The only kind of stock other than 
 common entitled to any particular consideration at this time, 
 is that which is known as preferred. Ordinarily preferred 
 stock is entitled to a preference in the payment of dividends 
 before anything is paid on the common stock. 1 After the pre- 
 ferred dividend is paid, any additional earnings are used for 
 the purpose of paying dividends upon the common stock. The 
 right of further participation in this second dividend is, of 
 course, determined by the terms of the contract between the cor- 
 poration and the holders of the preferred stock. Guaranteed 
 stock generally means nothing more than that the corporation 
 guarantees to pay a preferred dividend upon such stock out of 
 the earnings of the corporation, if there are any earnings. 
 Ordinarily it does not make the holder a creditor who is enti- 
 tled to the dividend without reference to earnings. 
 
 § 308. Power to issue preferred stock, — As a general rule a 
 corporation has no power to issue preferred stock after its or- 
 ganization, unless expressly authorized to do so by its charter 
 or by the laws of the state. 2 But at the time of organization 
 it may, unless prohibited by statute, provide for a preference 
 of one class over another, in respect to both capital and divi- 
 dend. 3 So, unless expressly prohibited by statute, such stock 
 may be issued at any time by the consent of all parties affected 
 thereby, and such consent may be inferred from the acqui- 
 escence of the stockholders. 4 
 
 poration until the special stock is etc., R. Co., 78 Va. 501; Totten v. 
 
 fully redeemed." The dividends upon Tison, 54 Ga. 139; Taft v. Hartford, 
 
 this stock are payable without regard etc., R. Co., 8 R. I. 310; Banigan v. 
 
 to earnings. Williams v. Parker, 136 Bard, 134 U. S. 291 ; Moss v. Syers, 32 
 
 Mass. 204. L. J. Ch. Div. (N. S.) 711; Anthony 
 
 Gotten v. Tison, 54 Ga. 139; Chaf- v. Household, etc., Co., 16 R. I. 571, 
 
 fee v. Rutland, etc., R. Co., 55 Vt. 5 L. R. A. 575; Melhads v. Hamilton, 
 
 HO. 29 L. T. (N. S.) 364; Re South Dur- 
 
 2 Belfast, etc., R. Co. v. Belfast, 77 ham, etc., Co., L. R. 31 Ch. Div. 261. 
 
 Maine, 445; Kent v. Quicksilver, etc., 3 Hamlin v. Toledo, etc., R. Co., 78 
 
 Co., 78 N. Y. 159; Campbell v. Amer- Fed. Rep. 664, 47 U. S. App. 422, 36 
 
 ican, etc., Co., 122 N. Y. 455, 11 L. R. L. R. A. 826. 
 
 A. 596; Chaffee v. Rutland, etc., R. *Hazelhurst v. Savannah, etc., R. 
 
 Co., 55 Vt. 110; Gordon v. Richmond, Co., 43 Ga. 13; Higgins v. Lansingh,
 
 316 THE LAW OF PRIVATE CORPORATIONS. § 309 
 
 § 309. Power of majority. — It is generally held that after the 
 organization of the corporation the majority of the stockhold- 
 ers have no power to issue preferred shares without the unani- 
 mous consent of the holders of the stock then outstanding. This 
 rule rests on the ground that such stock impairs the contracts 
 with the original subscribers, who are entitled to share equally 
 in the earnings of the corporation. "Shares of stock," said 
 Folger, J., 1 "are in the nature of choses in action and give the 
 holder a fixed right in the division of the profits or earnings 
 of the company so long as it exists, and of its effects when 
 dissolved. The right is as inviolable as is any right in prop- 
 erty, and can no more be taken away or lessened against the 
 will of the owner than can any other right unless power is 
 reserved in the first instance when it enters into the constitu- 
 tion of the right or is properly derived afterward from a su- 
 perior law-giver." 
 
 § 310. Under legislative authority. — The principle stated in 
 the preceding section would prevent the legislature from au- 
 thorizing the issuing of preferred stock without the unani- 
 mous consent of the existing stockholders. But, upon the 
 theory that the issue of such stock is merely a method of bor- 
 rowing money, it has been held that the power to issue it with- 
 out the consent of prior stockholders may be conferred by a 
 statute passed subsequent to the organization of the corpora- 
 tion and the issue of its original stock. 2 But it is only when 
 tin' preferred stock takes the form of borrowing that it creates 
 a debt, and in such cases the holders are creditors and not 
 stockholders. 8 
 
 [64 III. 801; Campbell v. American, 'Everharl v. Westchester, etc., B. 
 
 I .... L22 N. Y. 166, 1 1 I.. B. A..698; Oo., 28 Pa. St. 889; Curry v. Scott, 64 
 
 Lockhartv.VanAlgtyne,81 Mich. 76; Pa. St. 270; Rutland, etc., El. Co. \. 
 
 Kenl v Quicksilver, etc., Co., 78 N. Thrall, 86 Vt. 686; Covington v. Cov- 
 
 Y. i v. Androscoggin, etc., ington, etc., Co., 10 Bush (Ky.) 69. 
 
 i: Co . 19 Maine 191. ■ Hazelhursl v. Bailroad Co., 18 Ga. 
 
 1 Kent v. Quicksilver, etc., Co., 78 L8; Totten ir.Tison, 64 Ga. L39; West- 
 
 N. Y. 169; Sutton v. Scarborough, Chester, etc., R. l'<>. v. JackBon, 77 
 
 2 Dre* <* Sm. 621. Pa. St. 821.
 
 § 311 CAPITAL STOCK. 317 
 
 § 311. Estoppel. — The doctrine of estoppel maybe invoked 
 against an attack on the validity of preferred stock. It may 
 be invoked against a corporation which has received a consid- 
 eration or the stockholders who have participated 1 or ac- 
 quiesced 2 in its issue. Thus one who voted for the issue of 
 the stock and afterwards voted it at the meetings of the stock- 
 holders can not assert its invalidity after the corporation has 
 become insolvent. 3 So one who accepted the stock in payment 
 for work as a contractor and received interest on it for several 
 years is estopped to deny that he is a stockholder as against 
 the creditors of the insolvent corporation. 4 
 
 § 312. Status of holders of preferred stock. — Unless other- 
 wise provided by statute or the charter or contract the holders 
 of preferred shares are stockholders with the same rights and 
 powers in the management of the corporation as the holders 
 of the common stock 5 and subject to the same general and 
 statutory liabilities. 6 
 
 § 313. Rights of holders of preferred stock. — The rights of 
 the holders of preferred shares are enforcible according to the 
 terms of their contract with the corporation. 7 The characteristic 
 feature of such stock is the provision that the holders are en- 
 titled to payment of the full stipulated dividends before any 
 dividends are paid on the common stock. Such dividends, 
 however, are not payable absolutely like interest; they are pay- 
 able and can be made payable legally only out of profits. 8 A 
 
 1 Hazelhurst v. Savannah, etc., R. Co., 162 Mass. 388; Taft v. Railroad 
 
 Co., 43 Ga. 13; McGregor v. Home, Co., 8 R. I. 310; Belfast, etc., R. Co. 
 
 etc., Co., 33 N. J. Eq. 181. v. Belfast, 77 Maine 445. 
 
 2 Taylor v. South, etc., R. Co., 13 6 Railway Co. v. Smith, 48 Ohio St. 
 Fed. Rep. 152. 219. 
 
 3 Banigan v. Bard, 134 U. S. 291. 7 Hazeltine v. Belfast, etc., R. Co., 79 
 
 4 Branch v. Jesup, 106 U. S. 468. Maine 411, 1 Am. St. Rep. 330, anno- 
 See Tama, etc., Co. v. Hopkins, 79 tated. 
 
 Iowa 653; Evansville, etc., R. Co. v. 8 Boardman v. Lake Shore, etc., R. 
 
 Evansville, 15 Ind. 395. Co., 84 N. Y. 157; Lockhart v. Van 
 
 5 Miller v. Ratterman, 47 Ohio St. Alstyne, 31 Mich. 76; Miller v. Ratter- 
 141; Warren v. King, 108 U. S. 389; man, 47 Ohio St. 141; Union Pac. 
 Mackintosh v. Flint, etc., R. Co., 34 R. Co. v. United States, 99 U. S. 402; 
 Fed. Rep. 582; Field v. Lamson, etc., Taft v. Hartford, etc., R. Co., 8 R. I.
 
 31S 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §333 
 
 guarantee of dividends upon preferred stock in accordance 
 with a statute permitting a guarantee of such dividends, pay- 
 aide cumulatively out of net profits, does not make the divi- 
 dend payable absolutely. In such a case the corporation can 
 not be compelled to declare a dividend out of net profits against 
 the judgment of the directors. 1 The directors may, in their 
 discretion, apply the earnings toward the payment of debts in- 
 curred during the year in enlarging a plant instead of to the 
 payment of dividends on preferred stock. 2 Holders of such 
 stock are not creditors of the corporation, and the stock can 
 not be treated as an indebtedness which can be considered in 
 determining whether its obligations are such as to prevent it 
 from engaging in a certain enterprise. 3 An agreement to pay 
 dividends on preferred stock out of the net earnings of the cor- 
 poration does not mean the net earnings of the corporation as 
 it was when the preferred stock was issued. The corporation 
 may, after the agreement, incur new obligations which will 
 diminish the net earnings applicable to such dividends. 4 A 
 guaranty of dividends is construed to mean a guaranty that 
 the dividends will be paid if any are earned. 5 Unless other- 
 wise provided by statute, the holders of preferred stock are not 
 
 310. Stork bearing interest without 
 reference to earnings is generally held 
 invalid. Miller v. Pittsburg, etc., R. 
 Co., id I'M. st. 237, Sit Am. Dec. ">70; 
 Pittsburg, etc., R. Co. v. Allegheny 
 Co., 63 Pa. -i. 126; Painsville, etc., R. 
 c,,. v. King, 17 Ohio st. 534; Ohio 
 Collei Ro enthal, !■"> OhioSt. L83; 
 Cunningham v. Vermont, etc, R. Co., 
 12 Gray ill. 
 
 1 Field v. Lamson, etc., Co., 162 
 -. 27 I.. R. A [36. 
 Yo,k. etc., R. Co v. Nickals, 
 119 D\ 8. 296. 
 
 » People v. Bt. Louis, etc., i>'. Co., 
 
 :. , i. i: \ 666; Warren v. King, 
 
 l baffee v. Rutland 
 
 I; , HO; 1 nt v. Hartford 
 
 i; Co., B R. [. 810, That preferred 
 
 stock may be so issued as to amount 
 to a debt, see Gordon's Kxr's v. Rail- 
 road Co., 78 Va. 501. In Miller v. 
 Ratterman, 47 Ohio St. 141, the 
 court said: "The relation of the 
 holder Of preferred stock is, in some 
 Of its aspects, similar to thai Of a 
 creditor; Imt he is not a creditor save 
 as to dividends, after the same are 
 declared. Nor does he sustain a dual 
 
 relation to the corporation. He is 
 
 either a stockholder or a creditor " 
 * Bt. John v. Railway Co., 22 Wall. 
 C.S.i 136; Warren v. King, 108 r. 8. 
 389. Bui see Pent v. Tramways Co , 
 
 in Ch. Div. 84 I. 2Cum. Cas. Pri. Corp. 
 226. 
 
 ■' T:ift v. Railroad Co., 8 R. I. 810; 
 Miller v. Ratterman, 47 Ohio Bt. 141.
 
 § 314 CAPITAL STOCK. 319 
 
 entitled to preference in the distribution of the capital when 
 a corporation is wound up. 1 
 
 § 314. Accumulative dividends, — When the dividends are 
 cumulative and accumulated earnings for any period are insuf- 
 ficient to pay dividends for that period, such arrears must be 
 paid out of subsequent profits. In other words, unless declared 
 to be non-cumulative, or there is a requirement that it shall be 
 paid out of the net profits of the year, or that the entire net 
 profits of the year shall be paid out in dividends, 2 all arrears 
 on dividends on preferred stock must be paid before a divi- 
 dend can be paid on common stock. 3 In Boardman v. Ry. 
 Co., supra, the court says: "The reasonable and fair interpre- 
 tation of the contract is that the dividends were not only to be 
 preferred, but being guaranteed, were cumulative and a specific 
 charge upon the accruing profits, to be paid as arrears, before 
 any other dividends were divided upon the common stock. The 
 doctrine that preference shares are entitled to be first paid the 
 amount of dividends guaranteed and of all arrears of dividends 
 and interest before the other shareholders are entitled to receive 
 anything, and although they can receive no profits where none 
 are earned, yet, as soon as there are any profits to divide, they 
 are entitled to the same, is fully supported by authority." 4 
 
 McGregor v. Home, etc., Co., 33 Prouty v. Michigan, etc., R. Co., 1 Hun 
 
 N. J. Eq. 181; Gordon v. Richmond, (N. Y.) 655; Wood v. Lary, 47 Hun 
 
 etc., R. Co., 78 Va. 501. (N. Y.) 550. 
 
 2 Railroad Co., v. Belfast, 77 Maine 4 Adams v. Ft. Plain Bank, 36 N. Y. 
 
 445; Hazeltine v. Belfast, etc., R. 255. Ordinarily, preferred sharehold- 
 
 Co., 79 Maine 411, 1 Am. St. Rep. ers are entitled "to have deficiencies 
 
 330; New York, etc., R. Co. v. Nichals, in their dividends made up out of the 
 
 119 U. S . 296. earnings legally applicable to the pay- 
 
 8 Boardman v. Lake Shore, etc., R. ment of dividends, whenever such 
 
 Co., 84 N. Y. 157; Elkins v. Camden, earnings are received, in preference 
 
 etc., R. Co., 36 N. J. Eq. 233; Bailey to any payment to the holders of the 
 
 v. Hannibal, etc., R. Co., 17 Wall. 96, common stock. This right is inferred 
 
 1 Dillon (C. C.) 174; Henry v. Great from the contract, and need not be 
 
 Northern R. Co., 1 DeG. & J. 606; provided for in express terms. Corry 
 
 Harrison v. Mexican R. Co., L. R. 19 v. Londonderry, etc., R. Co., 29 Beav. 
 
 Eq. 358; contra by statute, 26-27 263,7 Jur. (N. S.) 508, 30 L. J. Ch 
 
 Vict., ch. 118, § 14; Lockhart v. Van 290." 
 Alstyne, 31 Mich. 76, 18 Am. Rep. 156 ;
 
 320 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §315 
 
 II. Nature of Capital Stock. 
 
 § 315. Personal property. — By the older law shares of stock 
 were considered real or personal property, according to the 
 nature, object and manner of the investment. 1 But these de- 
 cisions are now practically obsolete, and it may be taken as 
 the settled law that shares of stock are personal property. 2 
 They are in the nature of choses in action. 3 At common law 
 such shares belonging to a wife do not vest in the husband. 4 
 Upon the death of the holder of stock in a corporation, the 
 property of which consists of real estate, the shares are dis- 
 tributed as personal property. 5 
 
 § 310. Statute of frauds. — The American decisions gener- 
 ally hold that the 17th section of the statute of frauds, which 
 requires that every contract for the sale of goods, wares and 
 merchandise of a specified value shall be in writing, applies to 
 a sale of shares of stock. 6 Modern English authorities hold 
 
 1 Greenleaf's Ed. Cruise on Real 
 Property, 39; Tomlinson v. Tomlin- 
 son, 9 Beav. 459; Price v. Price, 6 
 Dana (Ky.) 107; Copeland v. Cope- 
 laud, 7 Bush (Ky.) 349; Wells v. 
 Cowles, - Conn. 567; Johns v. Johns, 
 1 Ohio St. 250, where the cases are 
 fully reviewed by Thurman, J. 
 
 2 Lowndes v. Cooch, 87 Md. 478, 40 
 l.. i: \. 380; Wilkesbarre v. city of 
 Wilkesbarre, I 18 I'm. 601, 24 AH. Rep. 
 ill ; Paynev. Elliott, 54 Cal. 339; San 
 
 Francisco v. Fl 1. 64 Cal. 504; Tre- 
 
 gear v. Etiwanda, etc., ( '".. ~ r < Cal. 
 537,9 \ni. St. Rep. 245; Cooper v. Cor- 
 bin, i'» : - IN- 224; Seward \. Rising 
 Sun. 79 End. 351 ; Arnold v. Rag 
 
 l i; i. L65; Dyer v. Osborne, 1 1 R. I. 
 821 : Baldwin v. Canfleld, 26 Minn, 
 c; Excepl in Pennsylvania i Neiler 
 89Pa 31 to:;,, trover lies for 
 the conversion of Bharea oi stork. 
 ,,. v. Elliott, 54 Cal. 889; Avers 
 v i rench, n < !onn. 1 12; McAllister 
 v. Kuhu , 'JU I. Bi 87. 
 
 3 Fisher v. Bank, 5 Gray (Mass.) 
 o73. 
 
 4 Arnold v. Ruggles, 1 R. I. 165. 
 
 5 Russell v. Temple (Mass.), 3 Dane's 
 Abr. 108. 
 
 6 In Tisdale v. Harris. 20 Pick. 
 (Mass.) 9, Chief Justice Shaw says : 
 "There is nothing in the nature of 
 shares of stock in companies which in 
 teas r sound policy should exempt 
 
 contracts in respect to them from this 
 
 enable restriction, designed by the 
 
 statute to prevent frauds in the sale of 
 other cm n i nodi ties. On the contrary, 
 
 these companies have become so num- 
 erous, so large an amount of the prop- 
 erty of the community is invested in 
 them" ; and as the ordinary indicia oi 
 property arising from delivery and 
 possession can not take place, there 
 seems to be a peculiar reason for ex- 
 tending the provision of this statute; 
 ami thus they may properly he in- 
 
 cluded under the term 'goods,' as they 
 
 arc within the reason and policy of
 
 §317 
 
 CAPITAL STOCK. 
 
 321 
 
 that this section has no application, 1 and this rule is adopted 
 by some American cases. 2 In some states the statutes use the 
 words "personal property," and expressly include choses in 
 action. 3 An agreement for the sale of shares in a corporation 
 owning real estate is not an agreement for the sale of an in- 
 terest in land, and need not be in writing. 4 
 
 § 317. The trust fund theory. — A long line of American de- 
 cisions establishes the doctrine that after insolvency the capital 
 of a corporation as represented by its subscribed capital stock 
 is a trust fund pledged for the payment of the debts of the cor- 
 poration. 5 The doctrine has been applied in cases where the 
 the act. The court is of the opinion 498; Richardson v. Green, 133 U. S. 
 
 that contracts for the sale of shares, 
 in the absence of other requisites, 
 must be proved by some note or mem- 
 orandum in writing." Mason v. Deck- 
 er, 72 N. Y. 595; Boardman v. Cutter 
 128 Mass. 388 ; Mayer v. Child, 47 Cal 
 142; North v. Forest, 15 Conn. 400 
 Pray v. Mitchell, 00 Maine 430 
 Greenwood v. Law, 55 N. J. L. 168 
 Hudson v. Weir, 29 Ala. 294; Green 
 v. Brokins, 23 Mich. 48; Reed, Statute 
 of Frauds, § 234. 
 
 1 Humble v. Mitchell, 11 Ad. & El. 
 205 ; Colonial Bank v. Whinney, 30 
 Ch. Div. 261; Knight v. Barber, 16 
 Mee. & W. 66. 
 
 2 Webb v. Railroad Co., 77 Md. 92; 
 Whittemore v. Gibbs, 24 N. H. 484; 
 Vawter v. Griffin, 40 Ind. 593. 
 
 3 See Peabody v. Speyers, 56 N. Y. 
 230 ; Mayer v. Child, 47 Cal. 142 ; Spear 
 v. Bach, 82 Wis. 192; Southern, etc., 
 Co. v. Cole, 4 Fla. 359. 
 
 4 §315, supra. 
 
 5 Wood v. Dummer, 3 Mason 308; 
 Sawyer v. Hoag, 17 Wall. 610; Upton 
 v. Tribilcock, 91 U. S. 45; Sanger v. 
 Upton, 91 U. S. 56 ; Webster v. Upton, 
 91 U. S. 65; Chubb v. Upton, 95 U. S. 
 665; Pullman v. Upton, 96 U. S. 328; 
 Graham v. Railroad Co., 102 U. S. 
 148; Morgan Co. v. Allen, 103 U. S. 
 
 21 — Private Corp. 
 
 30; Handley v. Stutz, 139 U. S. 417; 
 Clark v. Bever, 139 U.S. 96; Fogg 
 v. Blair, 139 U. S. 118; Camden v. 
 Stuart, 144 U. S. 104; Wabash, etc., 
 R. Co. v. Ham, 114 U. S. 587 ; Ailing v. 
 Wenzel, 133 111. 264; Thompson v. 
 Reno Sav. Bank, 19 Nev. 242, 3 Am. 
 St. Rep. 797; Marshall, etc., Co. v. 
 Killian, 99 N. C. 501, 6 Am. St. Rep. 
 539; Bartlett v. Drew, 57 N. Y. 587; 
 State v. Com. Bank, 28 Neb. 677. In 
 Sanger v. Upton,91.U.S.56, the doctrine 
 is stated as follows : "The capital stock 
 of an incorporated company is a fund 
 set apart for the payment of its debts. 
 It is a substitute for the personal lia- 
 bility which subsists in private co- 
 partnerships. When debts are in- 
 curred, a contract arises with the 
 creditors that it shall not be with- 
 drawn or applied otherwise than upon 
 their demands, until their demands 
 are satisfied. The creditors have a 
 lien upon it in equity. If divested 
 they may follow it as far as it can be 
 traced, and subject it to the payment 
 of their claims, except as against 
 holders who have taken it bona fide 
 for a valuable consideration and with- 
 out notice. It is publicly pledged to 
 those who deal with the corporation, 
 for their security. Unpaid stock is as
 
 322 THE LAW OF PRIVATE CORPORATIONS. § 317 
 
 corporation had distributed its capital among the stockholders 
 without providing for the payment of creditors, where the cor- 
 poration released the subscribers from their liability to con- 
 tribute their share of the capital stock, and where it has trans- 
 ferred the corporate property to third persons in fraud of its 
 creditors. In a case of the latter character, the court said: 
 "The assets of a corporation are a trust fund for the payment 
 of its debts, upon which the creditors have an equitable lien, 
 both as against the stockholders and all transferees except 
 those purchasing in good faith for value." 1 
 
 It is the settled doctrine of the supreme court of the United 
 States that "the capital stock of an insolvent corporation is a 
 trust fund for the payment of its debts, that the law implies a 
 promise by the original subscribers of stock, who did not pay for 
 it in money or other property, to pay for the same when called 
 upon by the creditors; and that a contract between themselves 
 and the corporation, that the stock shall be treated as fully 
 paid and non-assessable, or otherwise limiting their liability, 
 therefore is void against creditors." 2 
 
 But there is no direct and express trust attached to the prop- 
 erty of a corporation. It is not "in any true and complete 
 sense a trust, and can only be called so by way of analogy or 
 metaphor." 3 The true meaning of the phrase has recently 
 
 much a part of this pledge, and as 2 Hundley v. Slut/., 139 I*. S. 417. 
 much a part of the assets of the com- Certain decisions having given ris- 
 pany, as 1 1 1 * - cash which lias been to suspicion that the courl was 
 paid in upon it. Creditors have the wavering in its adherence to this 
 Bame right to look to it as to any thing doctrine, in the recent case Cam- 
 else, and the same right to insist upon den v. Stuart, 111 I'. S. Mil, Mv. 
 its payment as upon the payment of .lustier Brown said: "Nothing 
 
 any other debl dm- to the Company, thai was said in the recent eases 
 
 A- regards creditors, there is no dis- of Clark v. Bever, 139 U.S. 96; Fogg 
 tinction between such a demand and v. Blair, 189 TJ. 8. 118, or Handley v. 
 any Other assets which may form a Stutz, l.'J!) V. S. 117, was intended to 
 
 part of the property and effects of the overrule or qualify in any way the 
 
 corporation." wholesome principle adopted bythis 
 
 l Cole v. Millerton, etc., Co., 188 courl in the earlier cases, especially 
 
 N. v 164. See, also, Satton, etc., Co. as applied to the original subscribers 
 
 v. Hutchinson, 68 Fed. Rep. 196, 11 to stork." 
 ( 0. A. 820. ■Pomeroy, Eq. Jur. II, § ion;; Gra-
 
 §318 CAPITAL STOCK. 323 
 
 been stated by the supreme court in a case in which simple 
 contract creditors came into a court of equity and asked to 
 have the corporate property subjected to a lien in their favor. 
 The court said: "While it is true language has been frequently 
 used to the effect that the assets of a corporation are a trust 
 fund held by a corporation for the benefit of creditors, this 
 has not been to convey the idea that there is a direct and ex- 
 press trust attached to the property. * * * The corpora- 
 tion is an entity distinct from its stockholders as from its cred- 
 itors. Solvent, it holds its property as any individual holds 
 his, free from the touch of a creditor who has acquired no 
 lien; free, also, from the touch of a stockholder who, though 
 equitably interested in, has no legal right to, the property. 
 Becoming insolvent, the equitable interest of the stockholders 
 in the property, together with their conditional liability to the 
 creditors, places the property in a condition of trust, first for 
 the creditors, and then for the stockholders. Whatever of 
 trust there is arises from the peculiar and diverse equitable 
 rights of the stockholders as against the corporation in its 
 property, and their conditional liability to its creditors. It is 
 rather a trust in the administration of the assets after posses- 
 sion by a court of equity, than a trust attaching to the prop- 
 erty as such, for the direct benefit of either creditor or stock- 
 holder." 1 The theory has no application until the corporation 
 becomes insolvent. 2 
 
 § 318. Meaning of the doctrine. — But this doctrine does 
 not mean all that the language used in some of the decisions 
 would seem to imply. It is only in a limited sense that the 
 capital stock is a trust fund. No direct and express trust at- 
 taches to the property of a corporation. As stated above it is 
 not "in any true and complete sense a trust and can only be 
 
 ham v. Railroad Co., 102 U. S. 148; U.S.371. The limitations upon the gen- 
 
 Hollins v. Brierfield, etc., Co., 150 eral language used in some of the cases 
 
 U. S. 371. As to what constitutes a are also stated in Graham v. Railroad 
 
 withdrawal of corporate assets, see Co., 102 U. S. 148; Fogg v. Blair, 133 
 
 Buck v. Ross, 68 Conn. 29, 57 Am. St. U. S. 534, 541 ; Railroad Co. v. Ham, 
 
 Rep. 60; In re Brockway, etc., Co., 89 114 U. S. 587. 
 
 Me. 121, 56 Am. St. Rep. 401. 2 Fear v. Bartlett, 81 Md. 435, 33 L. 
 
 Collins v. Brierfield, etc., Co., 150 R. A. 721.
 
 324 THE LAW OF PRIVATE CORPORATIONS. § 318 
 
 called so by way of analogy or metaphor." 1 Thus the rule 
 that where a creditor has a trust in his favor, or a lien upon 
 property for a debt due him, he may go into equity without ex- 
 hausting his legal remedies, does not apply, 2 because, as above 
 stated, there is no "true and complete trust." The general 
 creditors of a corporation have no lien upon the property of 
 the corporation by virtue of the doctrine that the capital stock 
 is a trust fund for the protection of creditors. Heuce a party 
 may deal with a corporation in respect to its property in the 
 same manner as with an individual owner, and with no greater 
 danger of being held to have received into his possession 
 property burdened with a trust or lien. As between a cor- 
 poration and its creditors, a corporation is simply a debtor 
 and does not hold its property in trust or subject to a lien in 
 their favor in any other sense than does an individual debtor. 8 
 
 The trust fund doctrine only means that the property of the 
 corporation must first be appropriated to the payment of the 
 debts of the company before any portion can be distributed to 
 the stockholders ; it does not mean that the property is so af- 
 fected by the indebtedness of the company that it can not be 
 sold, transferred, or mortgaged to bona fide purchasers for a 
 valuable consideration, except subject to the liability of being 
 appropriated to pay that indebtedness. 4 Such a doctrine has 
 no existence. If it was a real trust fund it would be appli- 
 cable to the payment of all the debts of the corporation, but it 
 is well settled that only those who became creditors before the 
 date of the transaction complained of, and who at least pre- 
 sumptively relied on the credit of the fund, can be heard to 
 quest ion its validity. 5 
 
 But when "a corporation becomes insolvent, it is so far 
 civilly d<ad that its property may be administered as a trust 
 fund for the benefit of its stockholders and creditors: a court of 
 
 1 Pomeroy Eq. Jar. II, § L046; 1I<>1- land, etc., Co., 03 Tenn. 482, 27 S. W. 
 
 lins v. Brierfleld, etc., <'"., L60 D. 8. Rep. 660. 
 
 871; O'Bear, etc., Co. v. Volfer & • Fogg v. Blair, 133 U. S. 684 (1890). 
 
 Co., 108 \l:i. 206, 28 L. R. A. 707. 'First Nat'l Bank v. Gustin, etc., 
 
 Beauregard, L01 D. 8. 688. Co., 42 Minn. 827; Hospes v. North- 
 
 * I loll ins v. Brierfleld, etc., Co., 160 western, etc., ( "<•.. 18 Minn. 174. 
 r. B. 871 1893 Read v. Cumber-
 
 § 319 CAPITAL STUCK. 325 
 
 equity, at the instance of the proper parties, will then make 
 these funds trust funds, which in other circumstances are as 
 much the absolute property of the corporation as any man's 
 property is his." 1 
 
 § 319. Criticisms. — While this doctrine seems to be es- 
 tablished in the jurisprudence of the United States, it has 
 never been recognized by the English courts, 2 and has been 
 characterized in recent American decisions as a confusing 
 device for accomplishing ends more readily attainable on well 
 established and easily comprehended principles. 3 It is appar- 
 ent, from what has already been said, that it is little more 
 than a formula, and signifies that the corporation must pre- 
 serve its property for the payment of its debts to creditors who 
 have become such in reliance upon the apparent means pro- 
 vided for that purpose. It is difficult to see why this does not 
 apply to one individual as well as to a corporation. In a well 
 considered Minnesota case, in which the whole doctrine is 
 virtually repudiated, Mr. Justice Michell said: 4 "The phrase 
 that the capital of a corporation constitutes a trust fund for 
 the benefit of creditors is misleading. Corporate property is 
 not held in trust, in any proper sense of the term. A trust 
 implies two estates or interests — one equitable and one legal — 
 one person as trustee, holding the legal title, while another as 
 cestui que trust, has the beneficial interest. Absolute control 
 and power of disposition are inconsistent with the idea of a 
 trust. The capital of a corporation is its property. It has the 
 whole beneficial interest in it as well as the legal title. It may 
 use the income and profits of it, and sell and dispose of it the 
 
 *Graham v. Railroad Co., 102 TJ. S. Guest v. Worcester R. Co., L. R. 4 C. 
 148, 160; Hollins v. Brierfiekl, etc., P. 9. But contracts for the sale of 
 Co., 150 U. S. 371; Railroad Co. v. stock below par are by statute re- 
 Ham, 114 TJ. S. 587. quired to be in writing and registered 
 
 2 Creditors " can obtain nothing but with the registrar of joint stock corn- 
 
 what the company can get from the panies. 
 
 shareholders." In re Dronfield, etc., s Hospes v. Northwestern, etc., Co., 
 
 Co.,17Ch. Div. 76; In re Ambrose, 48 Minn. 174; Brant v. Ehlen, 59 Md. 
 
 etc., Co., 14 Ch. Div. 390. The price 1. 
 
 to be paid for shares is a matter of 4 Hospes v. Northwestern, etc., Co., 
 
 contract irrespective of the face value. 48 Minn. 174.
 
 326 THE LAW OF PRIVATE CORPORATIONS. § 320 
 
 same as a natural person. It is a trustee for the creditors in 
 the same sense and to the same extent as a natural person, but 
 no further." In the opinion of the court, all the cases in 
 which the trust fund theory has been advanced could have 
 been equally well founded on the simple doctrine of fraud. 
 "By putting it on the ground of fraud, and applying the old 
 and familiar rules of law on that subject to the peculiar nature 
 of a corporation, and the relation which its stockholders bear 
 to it and to the public, we have at once rational and logical 
 ground on which to stand. The capital of a corporation is 
 the basis of its credit. It is a substitute for the individual 
 liability of those who own its stock. People deal with it and 
 give it credit on the faith of it. They have a right to as- 
 sume that it has paid in capital to the amount which it repre- 
 sents itself as having, and if they give it credit on the faith of 
 that representation, and if the representation is false, it is a 
 fraud upon them, and, in case the corporation becomes insolv- 
 ent, the law upon the plainest principles of common justice says 
 to the delinquent stockholder: 'Make that representation good 
 by paying for your stock.' It certainly can not require the 
 invention of any new doctrine in order to enforce so familiar 
 a rule of equity." 
 
 III. Fraudulently Issued Stock. 
 § 320. Overissue of stock. — Stock issued accidentally or 
 fraudulently in excess of the limit fixed by law is invalid, 
 even in tic hands of a bona tide purchaser for value, 1 and the 
 corporation may have it declared void and ordered canceled. 1 
 'rip- holding <»f such stock confers no rights of membership 
 
 lipOE tip- holder; he does not become a stockholder 1 and is 
 
 qoI Liable on his subscription as such :' 
 
 §321. Bona fide holders of fraudulently issued stock. — A 
 bona tide holder of fraudulently issued stock, which is repre- 
 sented by certificates signed by the corporation officers ha\ ing 
 
 igcoville ^.Thayer, 105 1 .8. L43; »New York, etc., R. Co. v. Schuyler, 
 
 Bank v. Kurtz, 99 I'm. si. 344; Mi. 84 V V. 30. 
 
 Holly, etc. Company's App., 99 I'm. * Arkansas, etc., <'". v. Farmers', 
 ,13. etc Co . i:: Colo. 587. 
 
 'Clark v. Turner, 7.'i < la. 1.
 
 § 322 CAPITAL STOCK. 327 
 
 authority to issue stock and actually issued by such officers, 
 may recover damages sustained by reason of the issue of such 
 stock from the corporation. 1 Under such circumstances the 
 corporation is estopped to deny its liability for loss arising from 
 the worthless character of the certificates issued by the acts of 
 its officers within the apparent scope of their authority. In- 
 formation given by a person in charge of the office of a corpora- 
 tion that a certain certificate of stock is genuine and in a con- 
 dition for transfer was held to estop the corporation from de- 
 nying its liability to indemnify the transferee against loss, be- 
 cause of its spurious character. 2 The corporation is liable to 
 any one injured by reason of the spurious character of the 
 certificate. Merely directing an employe to cancel surrendered 
 certificates gives him neither express nor implied authority to 
 reissue them, and the corporation, in such a case, is not liable 
 for damages caused by their wrongful use to secure a personal 
 loan. 3 The liability in such cases rests upon the principle 
 that the acts of a corporation through its officers of issuing 
 spurious certificates of stock, when accepted and acted upon 
 by another in good faith, estops the corporation from denying 
 its liability to the bona fide taker of the shares for the loss 
 that he has thereby sustained. 
 
 § 322. Estoppel by recital in stock certificate. — A stock 
 certificate issued by a corporation having power to issue it, in 
 which it is stated that a designated person is the owner of a 
 certain number of shares, transferable only on the books of 
 the corporation on the indorsement and surrender of the cer- 
 tificate, is a continuing affirmation as to the ownership of 
 stock, and that the corporation will not transfer the stock 
 upon its books unless the certificate is first surrendered. Such 
 a certificate is an assurance to the commercial world that the 
 shares of stock are the property of the person designated and 
 that he has the power and right to transfer and sell the stock 
 until this power and right have been lawfully terminated. 
 
 2 Ne\v York, etc., R. Co. v. Schny- Marvis v. Manhattan Beach Co., 
 
 ler, 34 N. Y. 30; Allen v. South Bos- 148 N. Y. 652, 31 L. R. A. 776. 
 
 ton, etc., R. Co., 150 Mass. 200, 15 3 Knox v. Eden, etc., Co., 148 N. Y. 
 
 Am. St. Rep. 185. 441, 31 L. R. A. 779.
 
 S2S THE LAW OF PRIVATE CORPORATIONS. § 323 
 
 Such a representation tends to enhance the value of the stock, 
 and must be presumed to have been made with the expectation 
 that it would be acted upon by others. 1 In an action against 
 the officers who fraudulently issued stock certificates, the court 
 said, with reference to the certificates: "They authenticated 
 them, fraudulently and falsely attested them as genuine. They 
 bore on their face such false attestation, which was equivalent 
 to an assertion on their part to all persons who should pur- 
 chase or to whom they should be offered that they were 
 genuine. In this way they invited confidence and induced 
 trade. These acts were done with intent to defraud any and 
 all purchasers, well knowing that any person to whose hands 
 tlnse false certificates should come by fair purchase might be 
 injured. Therefore, having authenticated and issued these 
 certificates for the purpose of defrauding, these defendants 
 should be held liable to anyone sustaining damage by pur- 
 chasing on the faith of their genuineness. 2 It has been held 
 that fraudulent certificates are not misrepresentations to the 
 general public but to the original grantees only, upon the prin- 
 ciple that an admission or representation is no estoppel in 
 favor of a stranger. 3 But "it is believed that the courts have 
 gone far enough to establish a rule precisely the contrary." 4 
 
 § 323. Liability for fraudulent acts of agents. — By the ap- 
 plication of the ordinary rule of respondeat superior, a corpo- 
 ration is liable in damages to one who has been defrauded by 
 the acl of an agent or officer of a corporation in issuing ficti- 
 tious stock." If the issue of the stuck is within the power of 
 the corporation, the recitals in its certificate are binding upon 
 the corporation and it is obliged to ad mil the innocent holder 
 
 the certificate to the rights of a stockholder. 6 So the corpo- 
 
 'Joslyn v. st. Paul, etc., Co., n ing Eaton, etc., Co. v. Avery, 83 N. Y, 
 
 Minn. L83; Cincinnati, etc., R. Co. v. 81, 88 \m. Rep. 889, ae establishing 
 
 Citizens' Nat'] Bank, 66 Ohio St. 861, this principle in connection with the 
 
 i.. R, \. 777. liability of commercial agencies. 
 
 •Brnflv, Mali, 86 N. Y 200. 'Jarvisv. Manhattan, etc., Co., 148 
 
 •Mechanics' Bank v. New York, etc., N. Y. 652, 31 L R. A. 776. 
 
 I;. ( !o . 18 V Y • ''< lincinnati, etc., Co. v. Citizens' 
 
 'Thompson I'riv. Corp., j L500, cit- Nat'l Bank, 66 Ohio St. 851 ; Manhat-
 
 § 323 CAPITAL STOCK. 329 
 
 ration, by failing to act promptly, may lose the right which, 
 under some circumstances, it might have, to have fraudulent 
 shares surrendered up and canceled. By acquiescence it is 
 held to have ratified the issue. 1 But, when there is an over- 
 issue of shares, the holder acquires no rights as a stockholder, 
 and any holder of genuine shares may maintain a suit in 
 equity to have the illegal shares canceled or to prevent 
 the corporation from in any way recognizing them. 2 A dis- 
 tinction has been made between a case where the fraudulent 
 issue was made by the agent for his own benefit, and where it 
 was made by him while acting for the corporation. In the 
 former case it is held that the holder of the certificate had no 
 right of action against the corporation for damages, on the 
 theory that the purchaser of a non-negotiable instrument takes 
 only the title of the seller. 3 But this position does not seem to 
 be supported by the best authorities. Where the agent issues 
 the stock fraudulently to persons who are dealing with the 
 corporation through him, there is no doubt as to the liability 
 of the corporation for damages caused to a bona fide holder. 
 In the well-known Schuyler cases it appears that Schuyler was 
 the president and director of the company, and for many 
 years acted as its transfer agent at New York city, under an 
 appointment general in terms. During this time he issued 
 great numbers of fraudulent overissued certificates, and the cor- 
 poration was held liable in damages to the holders. It was 
 held that the false certificates and fraudulent transfers did not 
 create valid stock of the corporation as "a corporation with a 
 fixed capital divided into a fixed number of shares can have 
 no power of its own volition, or by any act of its officers or 
 agents to enlarge the capital or increase the number of shares 
 into which it is divided;" that if such a result can not be ac- 
 
 tan, etc., Co. v. Harned, 27 Fed. Rep. s See Tome v. Ry. Co., 39 Md. 36, 17 
 
 484 - Am. Rep. 540; Willis v. Fry, 13 Phila. 
 
 1 American, etc., Co. v. Bayless, 91 33; Mechanics' Bank v. N. Y., etc., 
 
 K y- 94 - R. Co., 13 N. Y. 599 ; overruled by N. 
 
 8 Campbell v. Morgan, 4 111. App. Y., etc., R. Co. v. Schuyler, 34 N. Y. 
 
 100; Underwood v. N. Y., etc., R. 30, and see Titus v. Great Western, 
 
 Co., 17 Howard's Practice N. Y. 537. etc., Co., 61 N. Y. 237.
 
 330 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §324 
 
 coraplished directly, "it is absurd to suppose that it can be 
 produced by the covert or fraudulent efforts of one or more of 
 the agents of the corporation." 1 Fraudulently issued stock 
 certificates may, however, by estopped bind the corporation 
 either to indemnify, or issue valid certificates to, one who, in 
 good faith, relies upon the act of the corporation in issuing 
 them. 2 The corporation is liable in damages if a certificate of 
 stock is fraudulently issued to a purchaser by its treasurer 
 with whom blank certificates signed by the president have been 
 left. 3 Stock certificates issued by the officers of the corporation 
 with apparent authority, fraudulently or by mistake, which 
 do not amount to an overissue, are valid as against the corpora- 
 tion in the hands of bona fide purchasers. 4 
 
 § 324. Fraudulent acts of agents* continued. — The liability 
 of a corporation, on stock fraudulently issued by its officers, 
 was recently given careful consideration by the supreme court 
 of Ohio. 5 The conclusion was that one who purchases a cer- 
 
 1 X. Y., etc., R. Co. v. Schuyler, 34 the fraud. If the extent of his agency 
 
 N. Y. 30. included the legitimate doing of an 
 
 'Appeal of Kisterbock, 127 Pa. St. act of the kind done, then it will be 
 
 601, 11 Am. St. Rep. 868. liable, though the act done was a fraud 
 
 1 Allen v. South Boston, etc., R. Co., as to it ami other persons. As loan 
 
 L50 Mass. 200, 15 Am. St. Rep. 185. innocent third person, affected by the 
 
 • Fifth Avenue Bank v. Forty-second agent's wrongful act, the negligence 
 
 Street, etc., Ferry R. Co., 137 N. Y. of the company in not discovering or 
 
 231, 33 N. E. Rep 378; Farrington v. preventing the fraud may accentuate 
 
 Railroad Co., 150 Mass. 406; Tome v. his right of recovery, bul does not, as 
 
 Railroad Co., 39 M<l. 36; 17 Am. Rep. I apprehend, add to nor create thai 
 
 540. ris_'l it . 
 
 'Cincinnati, etc., Co. V. Citizens' "The plaintiff in error relies much 
 Nat'l Bank, 56 Ohio St. 351, 13 L. R. upon the case of Moores v. Citizens' 
 A. 777. Thecourt said: "Insomeof Nat'l Bank, ill U. S. 156,28 L. ed. 
 the cases importance has been at- 385. We think it Bufficienl to dis- 
 tached to the negligence of the com- tinguish thai case from this that the 
 pany, through its proper agents, in courl there found thai the plaintiff 
 nol supervising the condm-t of its made the cashier of the bank, who 
 business, and whereby the particular committed the fraud, her agent to pro- 
 has been enabled to perpetrate cure and have transferred to berthe 
 l i frauds. Bu1 I apprehend that, stock on which she proposed to loan 
 upon an accurate analysis of the com- him the money, and thai in doingso 
 pany'a liability in such a case, it will he acted for her, and nol the bank; 
 found i" real on if- liability for and, therefore, thai she, and nol the 
 kcteol theagenl who perpetrated bank, wa responsible for his wrong-
 
 §324 
 
 CATITAL STOCK. 
 
 331 
 
 tificate of stock which is in the usual form, without knowledge 
 of any fraud in its issue, is entitled to have it transferred to him 
 on the books of the company, or upon demand and refusal 
 to transfer, is entitled to recover its value at the time of the 
 demand. Where certificates of stock are required to be issued by 
 
 ful act in filling up the certificate in 
 fraud of the hank as well as of the 
 plaintiff. If the court was right in 
 its assumption as tothefactof agency, 
 then the decision can have no appli- 
 cation to this case, because there is 
 no such feature in it. * * * 
 
 "It may be further observed that the 
 case does not seem to be in harmony 
 with Allen v. South Boston R. Co., 150 
 .Mass. 200, 5 L. R. A. 710, where, on 
 a state of facts quite similar, the court 
 held the treasurer who committed the 
 frauds to be the agent of the company, 
 and not of the party purchasing the 
 stock. The case of Olaflin v. Farm- 
 ers', etc., Bank, 25 N. Y. 293, has 
 been cited as sustaining the conten- 
 tion of the railway company. But 
 this case was distinguished from a 
 case like the present one by the court 
 delivering the opinion, as well as by 
 the same court in the later case of 
 Titus v. Great Western, etc., Co., 01 
 N. Y. 237. In the former case the 
 president of a bank, having a general 
 authority to certify checks upon it as 
 good, certified one in his own favor. 
 This the court held was out of the 
 ordinary course of business, and con- 
 trary to business and legal rules, and 
 not within the scope of the agency, 
 but was particular to distinguish it 
 from the issuing or transfer of a cer- 
 tificate of stock. The recent case of 
 Knox v. Eden Musee, etc., Co., 148 
 N. Y. 441, 31 L. R. A. 779, needs to be 
 noticed. In that case it will be ob- 
 served that Jurgens, the wrongdoer, 
 was not the agent of the company to 
 issue or transfer stock. His employ- 
 
 ment was simply to cancel surren- 
 dered stock. Surrendered certificates 
 were by him abstracted from the safe 
 of the company ami pledged as secur- 
 ity for a loan. With respect to this 
 the court said: 'If it can be said 
 that the direction of the president to 
 Jurgens to cancel the certificates made 
 him the agent of the company for that 
 purpose, it was an authority to de- 
 stroy, and not use. His act in ab- 
 stracting them from the safe and utter- 
 ing them as valid certificates had no 
 relation to the authority conferred. 
 It was not an act of the same kind as 
 that which he was authorized to per- 
 form. He had no apparent authority 
 to issue them as genuine certificates, 
 because he had no authority to issue 
 certificates for any purpose.' This 
 broadly distinguishes the case from 
 the one before us. No disposition is 
 shown to modify the doctrine of the 
 same court as announced in many 
 previous cases as to the liability of a 
 corporation for the acts of its agents 
 done within the scope of their em- 
 ployment, although not only negli- 
 gently, but even fraudulently, done, 
 and contrary to the purpose and in- 
 structions of the company. This 
 clearly appears from the decision in 
 Jarvis v. Manhattan, etc., Co., 148 N. 
 Y. 652, 31 L. R. A. 776, decided at the 
 same term. The case draws the dis- 
 tinction between negotiable instru- 
 ments and certificates of stock. The 
 former, though lost or stolen, are 
 available in the hands of an innocent 
 purchaser for value, whereas the lat- 
 ter are not."
 
 332 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §324 
 
 the president and secretary under the seal of the company, 
 and no other mode is provided or can be used, and neither 
 the president nor the secretary is prohibited from holding stock, 
 and both, with its knowledge, do in fact hold stock, the fact 
 that a certificate is issued in favor of the secretary is not of 
 itself sufficient to put a party on inquiry as to whether the 
 secretary is rightfully the owner of it. By reason of what ap- 
 pears on the face of a certificate of stock, and the fact that, as 
 a matter of general knowledge in the business world, such 
 certificates of stock are extensively purchased as investments 
 with no other inquiry than as to the genuineness of the signa- 
 tures of the officers to the certificates, and that such use of 
 them adds to the value of the stock of a company, and is 
 largely to its advantage, the company is charged with the duty 
 of observing care in their issue, and of supervising their 
 agents charged with the performance of the duty. This is a 
 duty it owes to all persons dealing in its stock, and if by 
 reason of its negligence in this regard, spurious stock is issued, 
 it is liable in damages to any one purchasing it for value with- 
 out knowledge' of its fraudulent character. The failure of a 
 party under such circumstances to inquire at the office of the 
 company is not such negligence as will deprive him of the 
 right to recover, although such inquiry would have disclosed 
 the fraudulent character of the certificates. The liability of 
 the corporation under such circumstances is supported by the 
 great weight of authority. 1 A corporation is liable to bona 
 
 'Western, etc., R. Co. v. Franklin 55 X. Y. II, 11 Am. Rep. 17:; : Hoi- 
 Bank, 60 M< l . •';•• ; New York, etc., R. brook v. New Jersey, etc., Co., 57 N. 
 Co. v. Schuyler, 34 N. Y. 30; Bank oi Y. 616; Bridgeport Bank v. New 
 Kentucky v. Schuylkill Bank, I Para. York, <•!<■.. R. Co., 80 Conn. 231; 
 Eq. Cas. 180, affirmed on appeal by Tome v. Parkeraburg, etc., R. Co., 39 
 
 th^ supreme courl ; Hackensack, etc., 
 Co. v. De Kay, :;<'> N. J. Eq. 548; 
 Merchants' Bank v. sea-' Bank, i" 
 Wall. 604, l'.' I., ed. L008; People's 
 Bank v. Kurtz, 99 Pa. 3t. 344, M km. 
 112; Titus v. < treat Westei n Turn- 
 pike Road, 61 N. V. 237; Brufl -.. Mali, 
 .. V. 200; McNeil v. Tenth Nat'l 
 Bank, 16 N. V. :;•-'■">, 7 Am. Rep. 841; 
 Moore v. M< tropolitaa Na1 1 Bank, 
 
 Md. 36, 17 Am. Rep. 540; Willis v. 
 Fry, L3 Phila.33; Firsl Nat'l Bank v. 
 Lanier, n Wall. 869; Allen v. South 
 Boston R. Co., L50 Mass. 200, 5 L. K. 
 A. 716; Jarvis v. Manhattan, etc., 
 Co., i is N. V. 652, 31 i .. i: \. 776; 
 Fifth Avenne Bank v. Forty-second 
 Street, etc., R. (V. 187 N. Y. 281, L9 
 I.. R. A.
 
 § 325 CAPITAL STOCK. 333 
 
 fide holders of forged certificates regular on their face, but 
 fraudulently issued by the secretary who was also the treasurer 
 and transfer agent, and who countersigned them in his official 
 capacity after forging the signature of the president. 1 
 
 The title of the true owner of a lost or stolen stock certifi- 
 cate may be asserted even against one who subsequently ac- 
 quires it in good faith for value. 2 
 
 § 325. Liability to innocent purchasers only. — The liability 
 of the corporation to a holder of stock issued fraudulently or 
 in excess of its power is to those only who acquire the stock 
 without knowledge of its fraudulent character. There is no 
 estoppel in favor of one who had knowledge of its invalidity, 
 or of facts sufficient to put him upon inquiry. 3 A statement 
 in the certificate received that no certificate can be lawfully 
 issued without the surrender of the old certificate is sufficient 
 to deprive the person receiving it of the status of an innocent 
 purchaser. The certificate was issued by the cashier of a bank 
 as security for his personal debt. The court said that none 
 of the cases affirmed a broader doctrine than this. " A cer- 
 tificate of stock in a corporation, under the corporate seal and 
 signed by the officer authorized to issue certificates, estops the 
 corporation to deny its validity as against one who takes it for 
 value, and with no knowledge or notice of any fact tending 
 to show that it has been irregulary issued." 4 But the fact 
 that a certificate of stock is issued in favor of the secretary of 
 the corporation is not sufficient to put a purchaser upon in- 
 
 1 Fifth Avenue Bank v. Forty- 111 U. S. 156. In Farrington v. South 
 
 second Street, etc., R. Co., 137 N. Y. Boston, etc., Ry. Co., 150 Mass. 406, 
 
 231, 19 L. R. A. 331, annotated. 15 Am. St. Rep. 222, it was held that 
 
 8 Knox v. Eden, etc., Co., 148 N. Y. the corporation was not estopped to 
 
 441, 31 L. R. A. 779, § 450, infra. As deny the validity of stock certificates 
 
 to the liability of the company for fraudulently issued by one of its offi- 
 
 making a transfer of shares upon the cers to secure a private debt when the 
 
 authority of a forged power of at- creditor knew that the surrender and 
 
 torney, see § 452, and Pennsylvania transfer of the old certificate were 
 
 Co. v. Franklin, etc., Co., 181 Pa. prerequisites to the lawful issue of the 
 
 St. 40, 37 L. R. A. 780. new one and took no steps to see that 
 
 3 Byers v. Rollis, 13 Colo. 22. this was done. 
 
 *Moores v. Citizens' Nat'l Bank,
 
 334 THE LAW OF PRIVATE CORPORATIONS. § 326 
 
 quiry as to whether he is rightfully the owner, where no other 
 mode of issuing stock than by the president or the secretary 
 under the corporate seal is provided, and neither the secretary 
 nor the president is prohibited from holding stock. 1 
 
 § 320. Recovery of money paid for void shares. — The trus- 
 tees of a corporation organized under the New York manu- 
 facturing act passed a resolution increasing its capital stock 
 from $1,000,000 to $1,200,000, allowing each shareholder to 
 take one share of the new stock for each five shares of the 
 original stock which he held, and providing that on his pay- 
 ing $80 on each share of $100, a certificate for full paid stock 
 should be issued to him by the company, and on his failure to 
 pay an installment of $20 per share on or before a specified 
 date, his claim to the new stock should be forfeited, and such 
 forfeited shares divided ratably among the other stockholders 
 who had paid that installment. A subscription agreement 
 binding the subscribers thereto to take stock and pay $80 per 
 share in installments as they should be called for by the com- 
 pany, and <m failure to pay any installment to submit to the 
 forfeiture of all sums theretofore paid, was signed by one of 
 the trustees who had been active in the promotion of the 
 Bcheme for the increase of the stock. He paid one install- 
 ment of twenty per cent., and upon failure to pay another tin; 
 stock was forfeited. The capital stock was afterwards reduced 
 and bonds issued to refund the payments made on the new 
 stock which was thus withdrawn. The trustee, whose stork 
 had been forfeited, received none of the bonds and sued to re- 
 cover tin' amount he had paid, and was allowed to recover on 
 the ground that the contract remained executory, and although 
 prohibited by law was not malum ins,." The plan to increase 
 
 the BtOCk was in violation Of the law, " but the court adopted the 
 
 rule as stated by Parsons: " 'All contracts which provide that 
 anything Bhall be done which is distinctly prohibited by law, or 
 
 i Cincinnati, etc., R. Go. v. Citizens' 49, but see Clark v. Lincoln, etc., Co., 
 Nat'] Bank, 66 Ohio St. 861, 47 N. B. 69 Wis. 655; Potter v Necedah, etc., 
 
 Cm. (Wis.), mi N. W. Rep. 88. 
 
 •Spring Co. v. Knowl ton, 103 U. 8 •Knowlton \ Congress, etc., <'<-, 
 
 ., \ . Y . ns ; Parsons Cont inns. vol. 
 2, p. 7J»i.
 
 § 327 CAPITAL STOCK. 335 
 
 morality, or public policy, are void, so he who advances 
 money in consideration of a promise or undertaking to do 
 such a thing may at any time before it is done rescind the 
 contract and prevent the thing from being done and recover 
 back his money.' " 
 
 § 327. Payment for stock, — To the amount authorized by 
 its charter a corporation may issue its stock in pursuance of a 
 contract of subscription, and accept in payment therefor either 
 cash, labor or property, taken at a reasonable valuation. 
 While stock need not be paid for in cash, it must be paid for 
 in the equivalent of cash. 1 The property accepted in pay- 
 ment must be at a fair and just valuation, fairly equivalent to 
 what it is worth in money and equal to the par value of the 
 stock. 2 Whatever may have been formerly held, it is now 
 established that subscriptions to corporate stock need not, 
 in the absence of statutory provisions requiring it, be paid 
 for in cash. The principle is generally accepted, both in 
 England and America, that any property which the corpora- 
 tion is authorized to purchase, or which is necessary for the 
 purposes of its legitimate business, may be received in pay- 
 ment for its stock. Any payment, whether it be in money or 
 money's worth, so that it be in good faith, will give the shares 
 so paid for the status of paid-up stock. 3 In the language of 
 Lord Justice Gifford in Drummond's case: If a man contracts 
 
 1 Gamble v. Queens County, etc., same relation to the property that he 
 Co., 123 N. Y. 91, 25 N. E. Rep. 201; previously sustained, does not con- 
 Wetherbee v. Baker, 35 N. J. Eq. stitute a contract of bargain and sale 
 501 ; Douglass v. Ireland, 73 N. Y. of the assets, or establish that their 
 100; Camden v. Stuart, 144 U. S. 104; value is sufficient to pay for the new 
 Coit v. Amalgamating Co., 119 U. S. stock in full. As against the credi- 
 343. tors of the old company the stock will 
 
 2 Van Cleve v. Berkey, 143 Mo. 109, be considered as paid only to the ex- 
 44 S. W. Rep. 743. In Sprague v. tent of the actual value of the prop- 
 National Bank of America, 172 111. erty received from the old company. 
 149, it was held that a transfer of all 3 Hayden v. Atlanta Cotton Factory, 
 the assets of a corporation to a new 61 Ga. 233; Richwald v. Commercial 
 company in consideration of its as- Hotel Co., 106 111. 439; Liebke v. 
 suming the indebtedness of the old Knapp, 79 Mo. 22; Coffin v. Ransdell, 
 one and exchanging its stock, share 110 Ind. 417; Carr v. Le Fevre, 27 Pa. 
 for share, for that of the old company, St. 413 ; Brant v. Ehlen, 59 Md. 1. 
 thereby giving each shareholder the
 
 336 THE LAW OF PRIVATE CORPORATIONS. § 328 
 
 to take shares he must pay for them, to use a homely phrase, 
 in meal or in meat; he must either pay in money or money's 
 worth. 
 
 IV. Watered Stock. 
 
 § 32$. Meaning of the phrase. — The adjective "watered" is 
 used to describe stock which is issued as paid up but which has 
 not iu fact been paid up. The difference between the amount act- 
 ually paid and the par or face value of the shares is said to be 
 water. .Such stock is issued by taking a partial cash payment, by 
 accepting property at an overvaluation, or by the issue of an 
 invalid stock dividend. The result in all cases is an over-cap- 
 italization. - After such shares reach the hands of a bona fide 
 transferee the holder is not liable to any greater extent than 
 the holder of ordinary full-paid shares. But so long as they 
 are in the hands of the original holders "the stock is liable to 
 be canceled. The person to whom it was issued, or his trans- 
 feree with notice, or the corporate officers participating in the 
 act, may, under certain circumstances, each be held personally 
 liable for the unpaid par value of the stock. They may be 
 liable to the corporation itself, or to the corporate creditors, or 
 to bona fide transferees of the stock. '1 a 
 
 § 320. Issue of shares below par — The eonimon law rule. — 
 
 The rule supported by the weight of authority in the United 
 States is that, when not restricted by its charter or by a gen- 
 eral law, a corporation may, if all the subscribers consent, le- 
 gally issue its shares to subscribers under a contract by which 
 they are t<. pay a less sum therefor than is represented by their 
 face or par value. As between I he subscriber and the corpora- 
 tion the <|ii< istioD is purely one of contract, and if the corpora- 
 tion agrees to accept less than par for its shares M can not there- 
 after repudiate the contract and recover the difference Erom the 
 tkholders. 1 There are Borne cases, however, which slate the 
 
 k Corp., etc., Co., 42 Minn. 327; arrapahoe, 
 
 •Hebbe iath western, etc., etc., Co. v. Stevens, IS Coin. 534; 
 
 I »6 V.I. Eq. 18,86 Ml. Rep. 122; Northern Trusl Co. \ Columbia, etc., 
 
 ill v. Thayer, 106 U. 8. L48; Co., 75 Fed. Rep. 986; Wells v. Green 
 
 Kenton, etc., Co. v. McAlpin, 6 Fed. Bay, etc., Co., 90 Wis. 442; Lorillard 
 
 i rat Nat'l Bank v. Guetin, v. Clyde, 86 N. Y. 884. ButBeeMor-
 
 § 329 CAPITAL STOCK. 337 
 
 rule broadly that a corporation can not issue its shares for less 
 than par, 1 but it is submitted that the accepted rule is other- 
 wise. The English courts, under the present statute, hold, on 
 the theory that such an issue is prejudicial to the rights of prior 
 shareholders who have paid in full, that stock must be paid for 
 at its full par value. A holder of full paid ordinary shares was 
 allowed to force the purchaser of certain shares which were is- 
 sued as full paid for sums less than their face, to pay the 
 difference in order to create a fund which would be sufficient 
 to pay off certain debentures which were charges against the 
 entire property of the corporation. The result was to greatly 
 increase the value of the ordinary shares. 2 Lord Chancellor 
 Halsbury stated that the solution of the question was to be 
 found in the nature of the contract of subscription, which is 
 "an agreement to become liable to pay to the company the 
 amount for which the shares have been created. That agree- 
 ment is one which the company itself has no authority to alter 
 or qualify, and I am therefore of opinion that the company 
 were prohibited by law — from doing what is compenduously 
 described as issuing shares at a discount." Lord Herschel, 
 dissenting, said that, in his judgment, the company would not 
 be entitled to call upon such shareholders for any further 
 favors beyond that agreed upon, except in the case of the 
 winding up, and then only so far as necessary for the dis- 
 charge of the obligations of the company. In New York it 
 was held that a contract between the corporation and the stock- 
 holder was valid even as against creditors, but this is not in 
 accordance with the weight of authority. 3 
 
 Stock which has been fraudulently issued as paid up, and 
 
 row v. Tron, etc., Co., 87 Term. 262; be an ultra vires act. Fisk v. Chicago, 
 
 Winston v. Dorsett, etc., Co., 129 111. etc., R. Co., 53 Barb. (N. Y.) 513. 
 
 64. 4 L. R. A. 507. But ultra vires acts are not always void. 
 
 1 See dicta in Barnes v. Brown, 80 2 Ooregum, etc., Co. v. Roper (H. L.), 
 
 N. Y. 527 ; Coleman v. Howe, 154 111. 61 Law J. (N. S.) 337 ; Law Rep. App. 
 
 458; Sturges v. Stetson, 1 Biss. (C. Cases (1892), 125. 
 
 C.) 246; Oliphant v. Woodburn, etc., 3 Christesen v. Eno, 106 N. Y. 97. 
 Co., 63 Iowa 332. It is often said to 
 
 22 — Private Corp.
 
 ool 
 
 THE LAW OF PRIVATE CORPORATIONS. § 330 
 
 which has not reached the hands of a bona fide holder, may, 
 at the instance of a dissenting stockholder, be withdrawn and 
 the certificates canceled. 1 
 
 § 330. As between stockholder and creditor. — Whether a 
 certain issue of stock is valid or not will depend upon who 
 complains of the issue. It may be valid as to the immediate 
 parties to the issue, and invalid as to creditors of the corpora- 
 tion. After a corporation becomes insolvent its assets become 
 a trust fund for the benefit of its creditors, and among such 
 assets are included all unpaid subscriptions. The obligation 
 of the stockholders to the creditors is considered as growing 
 out of the relation and not of the contract between the corpora- 
 tion and the stockholders. The subscription agreement is 
 construed as a contract to pay the company for the benefit of 
 its creditors the amount for which the shares have been cre- 
 ated and issued. This rule is based upon the principle of 
 public policy which forbids a corporation as against its cred- 
 itors to create stock for which it has not received in property or 
 cash the full face value as represented by the shares. It may 
 be considered as settled law that as against its creditors a cor- 
 poration has no power in the first instance to issue its capital 
 stock for less than its full par value. Eence, persons who 
 purchase such shares from tin corporation at less than their par 
 value are, in the event of the insolvency of the corporation, 
 liable to pay for the benefit of its creditors at least the differ- 
 ence between that which they have actually paid and the par 
 value of the shares. 2 The issuance of the shares is treated as 
 ;i representation to the public thai the corporation has property 
 equivalent to their face value. "It is so held out to the pub- 
 lie who have no means of knowing the private contracts made 
 between Wo- corporation aid its stockholders. The creditor 
 therefore, the righl to presume that die stock subscribed 
 
 iQilman, etc., R. Co. v. Kelly, 77 yer v. Hoag, 17 Wall.TJ. S.610; Cam- 
 
 I,, 126 See Sturgea v. Stetson, l den v. Stuart, 144 U. S. 104 ; A.llingv. 
 
 . J|i; WYn/.el, L88 [11.264; First Nat'l Bank 
 
 H aw ley v. Opton, L02 0. S. 314; v. Gustin Minerva, e*c.. Co.. 42 Minn 
 
 Tribilcock,91 U.S. 16; Saw- 827.
 
 § 331 CAPITAL STOCK. 339 
 
 for has been or will be paid up, and if it is not, a court of 
 equity will, at his instance, require it to be paid." 1 The same 
 result is reached if we reject the trust fund theory and place 
 the rule upon the ground of fraud. 2 
 
 A distinction is made between the liability of subscribers to 
 the original stock and those who receive stock subsequently is- 
 sued and sold for its actual value in the market for the pur- 
 pose of raising money necessary to carry on the business of 
 the corporation and preserve it from ruin; but the subscribers 
 to an increase of capital stock which is added to the original 
 stock for the mere purpose of extending its business, and not 
 to save it from wreck, are said to be liable in the same manner 
 as the subscribers to the original stock. 3 The distinction, how- 
 ever, is somewhat difficult to perceive, and more difficult to 
 properly apply. 
 
 § 331. Recital that shares shall be deemed fully paid up. — 
 
 An agreement between the shareholder and the corporation that 
 the shares shall be deemed fully paid up is ineffectual as 
 against the creditors. 4 But a purchaser or assignee of shares 
 of stock in a corporation without notice that it has not been 
 fully paid up does not become liable to the corporate creditors 
 for the unpaid balance, where the stock was issued as fully paid 
 up. 5 "Even in England, where the questions are generally 
 considered solely with reference to the rights of the share- 
 holders inter se, 6 such agreements, as between the original 
 parties and their privies, have been declared invalid by the 
 
 'Scovill v.Thayer, 105 U. S. 143. the stock was issued, not, as in this 
 
 2 Hospes v. Northwestern, etc., Co., case, to purchase property or raise 
 
 48 Minn. 174. money to add to the plant and facili- 
 
 3 Flinn v. Bagley, 7 Fed. Rep. 785. tate the operations of the company. 
 
 In Handley v. Stutz, 139 U. S. 417, but simply to increase its original 
 
 the court said: "In the Upton cases stock in order to carry on a larger 
 
 arising out of the failure of the Great business, and the stock thus issued 
 
 Western Insurance Company, in was treated as if it formed a part of 
 
 Hatch v. Dana, 101 U. S. 205, and in the original capital." 
 
 Hawkins v. Glenn, 131 U. S. 319, 4 Wallace v. Carpenter, etc., Co., 70 
 
 the defendants were either original Minn. 321, 73 N. W. Rep. 189. 
 
 subscribers to the increased stock 5 Sprague v. National Bank of Anier- 
 
 at a price far below its par value, or ica, 172 111. 149, 42 L. R. A. 606. 
 
 transferees of said subscribers; and 6 Poole's Case, 9 Ch. Div. 322.
 
 340 THE LAW OF PRIVATE CORPORATIONS. § 332 
 
 courts. 1 And even the supreme court of the United States con- 
 cedes the principle, while refusing to apply it, that a contract 
 between the subscribers to stock and the corporation, that the 
 stock shall be considered as fully paid and non-assessable, 
 or otherwise limiting their liability therefor, is void as against 
 creditors. 2 And we may conclude with great confidence that the 
 general doctrine is, except in so far as it has been shaken in 
 California, 3 Minnesota, 4 New York, 5 and in the supreme court 
 of the United States, 6 that any agreement, secret or otherwise, 
 between the corporation and its shareholders that its shares 
 shall not be paid in full, though possibly good as between the 
 corporation and its shareholders, is void as to creditors of the 
 corporation in the event of its insolvency." The foregoing is 
 the very conservative statement of the law by Judge Thompson, 
 who is very strongly opposed to the doctrine that a corporation 
 can, under any circumstances, issue stock for less than par. The 
 word "non-assessable" upon a stock certificate is merely a 
 protection against further assessments after the par value of the 
 stock has been paid. 7 All fictitious arrangements by which 
 stock is issued as paid when not in fact paid are ineffectual. 
 Thus an arrangement by which stock was nominally paid for 
 in full and the money returned to the stockholder in the form 
 of a loan was held ineffectual to protect the stockholder as 
 against the creditors of the corporation. 8 One who receives 
 stock as full paid but in fact as a gift, for the purpose of secur- 
 ing his influence on behalf of a corporation may be called on 
 to pay for the stock after the corporation becomes insolvent. 9 
 
 § 332. Bona flde purchasers of shares. — A person who pur- 
 chases stock with notice of the fact that it has not been fully 
 paid up i- Liable thereon to the same extent as his tninslVrrer. 10 
 
 i Daniell'a Oase, i De J. J. 372. 7 Upton v. Tribilcock, 91 U. S. 45. 
 
 ■Handley v. Stutz, L39TL B. U7. B Sawyerv. Hoag, L7 Wallace U. S. 
 
 • Stein v. Howard, 65 Oal. 816. 810; Bays Oase, l>. B. 10 Oh. App. 
 
 4 Hospee v. Northwestern <';n-, etc., 598. 
 ( 18 Minn. 174. ' Peninsular Savings Bank v. Black, 
 
 •Ohristensen v. Eno, L06 N. Y. 97, etc., Co., 105 Mich. 535. 
 60 An. Rep. i;i. "Upton v. Tribilcock, 91 U. S. 45; 
 
 eovill v. Thayer, 106 U. S. L48, Coleman v. Howe, L64 [11.458; Boul- 
 an<l oth(
 
 § 332 CAPITAL STOCK. 341 
 
 Although a recital in the certificate that the shares are fully 
 paid is of no effect as between the creditors of the corporation 
 after its insolvency and the original holders, the cases are in 
 substantial accord upon the proposition that a bona fide pur- 
 chaser of shares who relies upon the recital in the certificate 
 is not liable to the corporate creditors because of the fact of 
 their non-payment by the original holders. 1 In an action by 
 a creditor against the holder of bonus or watered shares, the 
 burden is on the holder to show that he acquired his shares 
 bona fide without notice of the facts which make the issue 
 fraudulent as to the creditor or that he purchased the stock 
 from a bona fide innocent transferee. 2 Any subsequent trans- 
 feree from a bona fide holder is protected. 3 
 
 The ordinary form of stock certificate which contains nothing 
 to show that the stock is not fully paid, and is silent as to 
 whether it is fully paid or not, implies that it is fully paid, 
 and a bona fide purchaser thereof is entitled to rely upon 
 this presumption. 4 "Where shares are issued by the company 
 to the subscriber as full paid shares, and are sold by the sub- 
 scriber as such, there is no ground on which a promise can 
 be implied, on the part of the purchaser without notice, to be 
 answerable either to the company or its creditors. Should the 
 representations on the faith of which he purchased prove to 
 be false, he could not be held liable on the ground of contract, 
 because he never agreed to purchase any other shares than 
 
 ton, etc., Co. v. Mills, 78 Iowa 460; 2 Wallace v. Carpenter, etc., Co. 
 
 White v. Greene (Iowa), 70 N. W. (Minn.), 73. N. W. Rep. 189. 
 
 Rep. 182. 3 Barrow's case, L. R. 14 Ch. Div. 
 
 1 Webster v. Upton, 91 U. S. 65; 432.. 
 
 Protective, etc., Co. v. Osgood, 93 111. 4 Young v. Erie, etc., Co., 65 Mich. 
 
 69; Young v. Erie, etc., Co., 65 Mich. Ill; West Nashville Planing Mill v. 
 
 Ill; Brant v. Ehlen, 59 Md.l ; Steacy Nashville Sav. Bank, 86 Tenn. 252; 
 
 v. Little Rock, etc., R. Co., 5 Dill. Johnson v. Lullman, 15 Mo. App. 55; 
 
 (C. C.) 348. Contra, Tasker v. Wal- Albitztigui v. Guadalupe, etc., Co., 92 
 
 lace, 6 Daly (N. Y.) 364; Foreman v. Tenn. 598; Rood v. Whorton, 67 Fed. 
 
 Bigelow, 4 Cliff. (C. C.) 508; Troup v. Rep. 434, 74 Fed. Rep. 118; Coleman 
 
 Horbach (Neb.), 74 N. W. Rep. 326. v. Howe, 154 111. 458; Steacy v. Lit- 
 
 For the English rule, see Re Con- tie Rock, etc., R. Co., 5 Dill. (C. C.) 
 
 cession Trust (1896), 2 Ch. 757. 348 ; Keystone, etc., Co. v. McCluney, 
 
 8 Mo. App. 496.
 
 342 THE LAW OF PRIVATE CORPORATIONS. § 333 
 
 full paid shares; and if it be said that the shares were fraud- 
 ulently issued, he could not be held liable on the ground of 
 fraud, because he was in no sense a party to the fraud." 1 But 
 the mere fact that stock is marked "non-assessable" does not 
 protect a transferee from liability for unpaid calls, as these 
 words are not construed to refer to calls or assessments neces- 
 sary to make stock full paid. 2 So the statement that the stock 
 is full paid will not protect against assessments provided for 
 by the charter.' Statements of officers and directors that stork 
 is full paid unless shown to have been made in the perform- 
 ance of their duties can not be relied upon by a purchaser and 
 are not sufficient to make him a bona fide holder of the stock 
 without notice. 4 
 
 § 333. AVho may complain. — The issue of watered stock is 
 an ;////'/ vires act on the part of the corporation, and if it ap- 
 pears that the issue of the shares will result in defrauding the 
 public, the state may, in a proper proceeding, have the cor- 
 porate charter forfeited. 5 It has been held that quo ■warranto 
 will not lie against a corporation merely because of the issue 
 of stock below par. 6 The corporation is estopped to deny the 
 contract to accept less than par for its stock. So, stockholders 
 who participate or aid in the issue of the stock or who acqui- 
 esce therein can not afterwards be heard to complain. 7 A 
 transferee of a participating stockholder can not complain of 
 tin' transaction, as his remedy is against those who induced 
 him to purchase the stock. 8 
 
 1 Branl v. Ehlen, 59 Md. L. 8 State v. Minnesota, etc., Co., 40 
 
 •Webster v. Upton, 9] U. 8. <;">; Minn. 213. 
 
 Upton v. Tribilcock, 91 U.S. r>. "TenEyck v. Pontiac, etc., R. Co. 
 
 'Western, etc., Co. v. l>'-s Moines (Mich.), 72 ET.W. Rep. 362; Woolfolk 
 
 Nati 72 N. W. Rep. 667. V.January, 131 Mo. 620; Washburn 
 
 'Browing v. Hinkle, 48 Minn.544; v. National, etc., Co., 81 Fed. Rep. 17; 
 
 Webster v. i pton,91 U. 8. 65. dark v. American, etc., Co., 86 [owa 
 
 ite v. Webb, 97 Ah. IN ; State 186. 
 
 v. Janesville, etc., Co., 92 Wis. 496; 'Higgina v. Lansingh (111.), 40 N 
 
 tham v. McCormick, L78 Pa. si. I'.. Rep. 362; Barr v. New York, etc. 
 
 186, Co., 125 N. V. 263; Church v. Citi 
 
 sens', etc., R. Co., 78 Fed. Rep. 526.
 
 § 334 CAPITAL STOCK. 343 
 
 § 334. Liability is to subsequent creditors only. — Only 
 those who become creditors of the corporation after the issue 
 of the fictitious or part paid stock can be heard to object, as 
 they only can possibly be injured by the transaction. 1 In First 
 National Bank v. Guston,etc, Co., supra, the court says: "It is 
 only those creditors who can fairly allege that they have re- 
 lied, or whom the law presumes to have relied, upon the 
 amount of capital stock of the company who have a right to 
 make such inquiry or in whose favor equity will impress a 
 trust upon the subscription to the stock and set aside a ficti- 
 tious arrangement for its payment. For example, to distribute 
 the capital among the stockholders without provision for pay- 
 ing corporate debts would be a fraud on existing creditors as 
 well as on subsequent creditors who dealt with the corporation, in 
 reliance upon the assumption that its professed capital remains 
 intact. " The court further said that there were no cases "where 
 any such trust has been enforced in favor of creditors who 
 have dealt with the corporation with full knowledge of the 
 facts. The reason is apparent, for in such cases no fraud, 
 actual or constructive, has been committed on such creditors. 
 If a corporation issues new shares after the claim of a creditor 
 arose, it is clear that the latter could not have dealt with the 
 company on the faith of any capital represented by them. 
 Whatever was contributed as capital in respect of the new 
 shares was a clear gain to the creditor's security. So, too, if 
 a party deals with a corporation, with full knowledge of the 
 fact that its nominal paid-up capital has not, in fact, been paid 
 for in money or property to the full amount of its par value, he 
 deals solely on the faith of what has been actually paid in. and 
 
 1 Handley v. Stutz, 139 U. S. 417 ; case of the insolvency of the corpora- 
 
 Coit v. Gold, etc., Co., 119 U. S. 343, tion, be charged, in favor of the cred- 
 
 14 Fed. Rep. 12; Hospes v. Northwest- itor who become such after the stock 
 
 em, etc., Co., 48 Minn. 174, 15 L. R. was issued, with the difference be- 
 
 A. 470; First Xat'l Bank v. Gustin, tween the par value of the stock and 
 
 etc., Co., 42 Minn. 327, 6 L. R. A. the amount paid the corporation 
 
 676; Duinmer v. Smedley, 110 Mich, therefor, to the extent necessary to 
 
 466, 38 L. R. A. 490. The original pay the creditor's claims. Wallace v. 
 
 holders of bonus or watered stock of Carpenter, etc., Co. (Minn.), 73 N. W. 
 
 a corporation issued as paid-up, and Rep. 189; Hastings, etc. Co. v. Iron, 
 
 their transferees with notice, will, in etc., Co., 65 Minn. 28.
 
 344 THE LAW OF PRIVATE CORPORATIONS. § 335 
 
 has no equitable right to insist on the contribution of a greater 
 amount of capital by the shareholders than the corporation it- 
 self could claim as part of its assets." 1 
 
 § 335. Bonus stock given to "sweeten" bonds. — The issue of 
 purely gratuitous or bonus stock is universally condemned, 
 and either held void or payment therefor required from its 
 holders in favor of corporate creditors. In some cases, how- 
 ever, it is held that the issue of stock to the purchasers of bonds 
 of a corporation, to induce them to purchase the securities, is 
 valid, even as against subsequent creditors. When the issue 
 of shares for less than par is permitted as between the corpora- 
 tion and the taker, it is clear that one who was a creditor of 
 the corporation before such issue can not attack the transac- 
 tion, as even on the trust fund theory the trust does not attach 
 until insolvency, and only those creditors who have at least 
 presumptively become such on the security of the stock sub- 
 scription can complain. 2 In a well known case 3 the actual 
 value of the stock which was given to the purchasers of the 
 bonds in equal amounts, in order to induce them to purchase 
 the bonds, added to the actual value of the bonds, was not 
 more than the par value of the bonds and the transaction was 
 sustained. The cases which permit such transactions require 
 that the corporation shall receive some fair and reasonable 
 equivalent for the stock and the bonds. 4 In other jurisdictions 
 the holders of such stock are held liable to the creditors for 
 the full face value of the stock, on the ground that the trans- 
 action is a fraud on the creditors of the corporation. 5 In one 
 
 1 Fii-t N.it'l Bank v. < Justin, etc., 'See cases cited in preceding sec- 
 Co., 12 Minn. 827, 6 I.. !:. A. 676. In tion. 
 
 Richardson's Exrs. v. Green, 133 U.S. "Handley v. Stutz, L39 l\ S. 117. 
 
 SO, il appeared thai Richardson had Bee, also, Brown v. Duluth, etc., R. 
 
 advanced money on bonds and taken Co., 53 Fed, Rep. 889, under statute: 
 
 st.wk as a bonus. On a suit t<> tore- Richardson's Exrs. \. Green, L83 li 
 
 ethe mortgage the moneys a. 'in- s. 81; 
 
 ally advanced by him were allowed, 'Foggv. Blair, 189 U. B, L18. 
 
 withoul any reduction on a.-. ■ n ol B Hebbard v. S. W. Land, etc., Co., 
 
 tie- i ii. stock, though there were 56 N. .1. E. 18, 86 Ail. Rep. 122; 
 
 general creditors subsequent to tin- Bkrainka v. Allen, 7 Mo. App. 434, 76 
 
 mortgage securing his bonds. Mo. 884; $845.
 
 § 336 CAPITAL STOCK. 345 
 
 case an agreement by which a subscriber to the original organ- 
 ization stock of the corporation, on payment therefor, was to 
 have in addition to the stock an equal amount of the bonds of 
 the company, was held invalid as a mere device to escape the 
 obligation created by his subscription. 1 
 
 § 336. Construction bonds and bonus shares. — Railroad 
 companies often issue bonds and stock to contractors in pay- 
 ment for material and services in the construction of the road 
 in an amount at par much in excess of the actual value of the 
 material or services, and such contracts have received judicial 
 sanction. 2 But where a company made a construction con- 
 tract under which the contractor agreed to furnish all the ma- 
 terials and do all the work necessary to construct the railroad 
 at an expenditure not to exceed $200,000, and in considera- 
 tion to receive $300,000 of the capital stock full paid, and 
 the same amount of its first mortgage bonds, the contract was 
 held invalid. The state constitution provided that "no cor- 
 poration shall issue stocks or bonds except for money, labor 
 done, or money or property actually received; and all ficti-. 
 tious increase of stock or indebtedness shall be void." And 
 the court said: "The above quoted section of the new con- 
 stitution has strangely miscarried if such an issue of watered 
 stock and unsubstantial bonds can be emitted." 
 
 The contractor had entered upon the work and expended 
 considerable money, and although the contract was rescinded, 
 compensation upon equitable terms was allowed for what had 
 been done. 
 
 In another case it was held that a statute which prohibited 
 any railroad company from selling or disposing of its stock 
 unless such shares have been fully paid up, or issuing any 
 bonds or stocks except for money, labor or property received 
 and applied for the purpose for which the corporation was 
 created, 4 does not forbid the issue of first-mortgage bonds and 
 
 'Morrow v. Nashville, etc., Co., 87 s New Castle, etc., R. Co. v. Simp- 
 
 Tenn. 262, 3 L. R. A. 37. son, 21 Fed. Rep. 533. 
 
 2 Van Cott v. Van Brunt, 82 N. Y. «Laws Minn., 1887, ch. 12, § 1. 
 535.
 
 346 THE LAW OF PRIVATE CORPORATIONS. § 337 
 
 full paid stock by a railroad company in payment for the con- 
 struction of its road, if the amount issued does not unreason- 
 ably exceed the value received. "This statute was not in- 
 tended to prevent or interfere with the usual method of raising 
 money to build railroads, or for any legitimate corporate pur- 
 pose. It is not to be construed as obstructive to the extent of re- 
 stricting or hampering corporations in their internal manage- 
 ment, and embarrass them in procuring means to carry out the 
 legitimate purposes of the corporation; and unless it appears 
 that, under the guise of building its road, bonds and stocks of 
 the defendant company are to be issued and put upon the 
 market fraudulently, that do not and arc not intended to rep- 
 resent money or property, this corporation is not prohibited 
 from entering into a real transaction based upon a present 
 consideration and having reference to legitimate corporate 
 purposes." 1 
 
 § 337. Stock issued by a going concern with impaired cap- 
 ital. — A distinction is sometimes made between an original 
 subscription for stock and a sale of stock. The principle is 
 recognized in cases cited in the preceding section. The su- 
 preme court of the United States has established the doctrine 
 that a going corporation which requires money for the purpose 
 of carrying on its business may issue its bonds and stock and 
 sell the same together for what they are actually worth in the 
 market. In the leading case it appeared that the corporation 
 found its original capital impaired, and for t lie purpose of rais- 
 in- capital with which to preserve itself by extending its busi- 
 j into new and more promising fields, issued bonds secured by 
 mortgage upon it- property. In order to effect a sale of these 
 bonds new sto<-k was issued to the purchasers of the bondsdollar 
 dollar. Thus each purchaser of n thousand-dollar bond re- 
 . .1 in addition to the bond, a thousand dollars face value of 
 k, "full |»;iid and non-assessable." The court , by Brown, .1 . , 
 I; "The case then resolves itself into the question whet her an 
 
 'Brown v. Duluth, etc . !:. Co., 58 Dow, L20 U. B.287. 
 El lilroad ('". v.
 
 § 337 CAPITAL STOCK. 347 
 
 active corporation, or as it is called in some cases 'a going con- 
 cern,' finding the original capital impaired by loss or misfor- 
 tune, may not, for the purpose of recuperating itself and provid- 
 ing new conditions for the successful prosecution of its busi- 
 ness, issue new stock, put it upon the market and sell it for 
 the best price that can be obtained. The question has never 
 been directly raised before in this court, and we are not, conse- 
 quently, embarrassed by any previous decisions on the point. 
 * * * To say that a corporation may not, under the circum- 
 stances above indicated, put its stock upon the market and sell 
 it to the highest bidder, is practically to declare that a corpora- 
 tion can never increase its capital by a sale of shares, if the 
 original stock has fallen below par. The wholesome doctrine, 
 so many times enforced by this court, that the capital stock of 
 an insolvent corporation is a trust fund for the payment of its 
 debts, rests upon the idea that the creditors have a right 
 to rely upon the fact that the subscribers to such stock have 
 put into the treasury of the corporation, in some form, the 
 amount represented by it; but it does not follow that every 
 creditor has the right to trace each share of stock issued by 
 such corporation, and inquire whether the holder, or the per- 
 son of whom he purchased, has paid the par value for it. It 
 frequently happens that corporations, as well as individuals, 
 find it necessary to increase their capital in order to raise 
 money to prosecute their business successfully, and one of the 
 most frequent methods resorted to is that of issuing new shares 
 of stock and putting them upon the market for the best price 
 that can be obtained; and so long as the transaction is bona 
 fide, and not a mere cover for 'watering' the stock, and the 
 consideration obtained represents the actual value of such 
 stock, the courts have shown no disposition to disturb it. Of 
 course no one would take stock so issued at a greater price than 
 the original stock could be purchased for, and hence the ability 
 to negotiate the stock and to raise the money must depend upon 
 the fact whether the purchaser shall or shall not be called upon 
 to respond for its par value. While, as before observed, the 
 precise question has never been raised in this court, there
 
 34S THE LAW OF PRIVATE CORPORATIONS. § 338 
 
 are numerous decisions to the effect that the general rule that 
 holders of stock, in favor of creditors, must respond for its par 
 value, is subject to exceptions where the transaction is not a 
 mere cover for an illegal increase. 1 * * * "We think that an 
 active corporation may, for the purpose of paving its debts, and 
 obtaining money for the successful prosecution of its business, 
 issue its stock and dispose of it for the best price that can be ob- 
 tained." 1 On the same principle it has been held that a corpo- 
 ration may issue stock at its actual market value and take pay- 
 ment therefor in property or services of which it is in need. 
 Thus, a railroad company in good faith made a contract for the 
 construction of its road and agreed to pay therefor in its stock 
 at its actual instead of par valuation, and it was held that the 
 holders of the stock were not liable to the creditors of the cor- 
 poration. 8 
 
 § 338. Shares accepted as a gratuity. — It is held in New 
 York that no liability attaches to one who accepts unpaid 
 shares as a mere gratuity. The liability is made to rest en- 
 tirely on the contract of subscription, and as in such case there 
 i- no contract between the holder and the corporation the 
 creditors have no basis for a claim upon him for the nominal 
 value of the shares. 1 This rule is in conflict with the cases 
 which hold that subsequent creditors arc allowed to call upon 
 the stockholders and is not in accord with the weight of au- 
 thority. In general no distinction is made between the liabil- 
 ity of one who is a subscriber for such stock and one who 
 receives it merely as a gift. 5 
 
 Harrison v. Arkansas, etc., R. 2 Hundley v. Stutz, 139 V. S. 117. 
 
 Co., l McCrary264; VanCott v. Van 3 Y;m Ootl v. Van Brunt, 82 N. Y. 
 
 Brunt, 82 N. Y. 635; Stein v. Howard, 535; Barr v. Railroad Co.,126N.Y. 
 
 65 Cal. 616; Dummer v. Bmedley, 1 LO 263. 
 
 Mich. 166, 68 V W. Rep. 260. Bee •Christensen v. Eno, 106 N. V. '.'7, 
 
 Clark v. Bever, 139 TJ. S. 96; Morrow 60 Am. Rep. 129; Christensen v. 
 
 v. Iron Co., -7T.-HI1. 262; Rickerson, Quintard, 8 N.Y. Supp.400; Seymour 
 
 rell, etc., Co., 75 Fed. v. Bturgee i, 26 N Y. 134. 
 
 Rep. PS v. Union, etc., Co. 'Peninsular Savings Bank v. Black, 
 
 (Ohio), 46 N. E. Rep. 894, Contra, etc., Co., 105 Mich. 685. 
 
 ler, <;i [owa W9, 20 N. 
 \v. Rep. .
 
 § 339 CAPITAL STOCK. 349 
 
 § 339. Illustrations. — The books are full of cases illustrating 
 the principles stated in the preceding sections. Where a 
 railway company was indebted to a construction company in 
 the sum of $70,000, which it was unable to pay, and issued 
 therefor stock of the par value of $350,000, the holders were 
 treated as stockholders who had paid twenty per cent, on their 
 stock. 1 Where $300,000 of stock was issued for property 
 worth $68,000, the stockholders were held liable for the differ- 
 ence. 2 In this case the court said: "A deliberate and advised 
 overvaluation of property thus purchased and paid for is a 
 fraud upon the law, and a violation of the condition upon 
 which the exemption of stockholders from liability under the 
 provisions of the statute is made to depend. It is in direct 
 violation of the policy as well as the terms of the law which 
 demands payment either in money or property at its value, of 
 all the capital stock of the company as a condition of immun- 
 ity to the stockholders from liability for debts of the corpora- 
 tion. The payment of an amount for property in excess of its 
 value deprives creditors and the public of the security con- 
 templated by the statute, and thus a fraud is perpetrated as well 
 upon the law as upon the creditors. * * * All that is necessary to 
 establish legal fraud is to prove two facts: (1) That the stock 
 issued exceeded the value of the property in exchange for 
 which it was issued, and (2) That the trustees deliberately 
 and with knowledge of the real value of the property over- 
 valued it and paid in stock for it an amount which they knew 
 was in excess of its actual value." 3 
 
 Under a statute which authorized payment for corporate 
 stock to be made "either in money or in land, the land to be 
 appraised by the board of directors and taken at such value 
 on such terms as may be agreed upon," $100,000 worth of 
 stock was issued and subscribed for by five persons who 
 
 1 Jackson v. Traer, 64 Iowa 469; Os- 2 Douglas v. Ireland, 73 N. Y. 100. 
 
 good v. King, 42 Iowa 478. The su- 3 To the same effect is Boynton v. 
 
 preme court of the United States, in Andrews, 63 N. Y. 93; Schenck v. 
 
 Clark v. Bever, 139 U. S. 96, refused Andrews, 57 N. Y. 133 ; Iron Com- 
 
 to follow the decision in Jackson v. pany v. Drexel, 90 N. Y. 87. 
 Traer, supra.
 
 350 THE LAW OF PRIVATE CORPORATIONS. § 339 
 
 afterward became the directors of the corporation. Certain 
 lands worth $50,000 were purchased for that sum and the deed 
 thereof made directly to the corporation, which gave its obli- 
 gation for the whole amount. The directors then appraised 
 the land at $100,000 and credited $50,000 of it as a payment 
 of fifty per cent, on the stock subscribed for by them. The 
 allowance of the credit on the stock was as against the cred- 
 itors of the corporation held invalid, and the stockholders 
 were required to pay the whole amount of their, subscription. 
 The court said: 1 "This appraisement, it is manifest, was illu- 
 sory and made only in the interest of the directors who were 
 to profit by it." Where a statute provided that "no share 
 shall be issued for less than its par value," it was held, al- 
 though the rights of the creditors were not involved, that 
 where land was purchased for $125,000 on September 29th, 
 and on October following the corporation agreed to take it at 
 an advance of $50,000, so that a stock subscription of that 
 amount made by the vendors should be thereby fully paid, 
 the stock was not thereby paid. The transaction was regarded 
 as a fraud on - the other stockholders who had paid for their 
 stock, and as not being in compliance with statutory safe- 
 guards intended for the protection of the public. 2 A share- 
 holder in a water company, at an expense of $85,000, con- 
 structed a system of pipes suitable for the extension of the 
 company's plant, and afterward sold it to the corporation for 
 $110,000, payable in stock. The transaction was upheld on 
 the ground that the difference was not so great as to show 
 fraud.' 1 The promoters of a corporation acquired a bond for 
 a deed to certain r< al estate in the sum of $53,000. Thereafter 
 they organized a corporation and issued $200,000 of stock, 
 which was given to the promoters for a transfer of the bond 
 for title. The real estate was found to be worth only $53,000 
 and the stockholders were held liable to the creditors for the 
 difference. 1 One who received Btock as paid up as considera- 
 
 'Wetherbee v. Baker, 86 N.i. Eq. 'Gamble v. Q n'a County, etc., 
 
 Co., L23 V V. 91, 25 N. E. Rep, 201 
 1 l 59 Pa. St. 884. 'Elyton, etc., Co. v. Birmingham, 
 
 etc., Co 92 \l.i. 107, L2 L. R. \. 807.
 
 § 340 CAPITAL STOCK. 35] 
 
 tion for using his influence to sell the products of the corpo- 
 ration must pay the full par value of the stock to the corpo- 
 rate creditors. 1 
 
 § 340. Payment in property. — In many states there are stat- 
 utes which provide that stock must be paid for in money or in 
 property taken at its actual valuation. In the absence of such 
 a statute, while a corporation may accept something other than 
 cash in payment for its stock, it must be taken at a fair and 
 equivalent valuation. The valuation to be considered is the 
 value to the corporation and not the parties who sold it to the 
 corporation. 2 The presumption is that the valuation at which 
 property or services was taken by the corporation was ade- 
 quate. 3 The fact that the actual value of the property proved 
 much less than it was taken at is immaterial if the valuation 
 was fair and honest at the time. 4 If stock is paid for in prop- 
 erty or services at a gross overvaluation, and the corporation 
 thereafter becomes insolvent, its creditors may, according to 
 some authorities, require the holders of the stock to pay the 
 difference between the actual value of the property and the 
 par value of the stock; while other cases hold that, at least 
 where there was actual fraud, the entire transaction is void 
 and the holder is liable for the full value of the stock without 
 a credit of the actual value of the property. 5 Before a cred- 
 itor can require the holders of such stock to pay anything 
 further, it must be shown that there was actual fraud or such 
 gross overvaluation as to be the equivalent of fraud in law. 
 Such a transaction may " be impeached for fraud but not for 
 error of judgment or mistaken views of the value of property, 
 inasmuch as good faith and the exercise of an honest judg- 
 
 1 Peninsular Sav. Bank v. Black, 3 Davis Bros. V.Montgomery, etc., 
 
 etc., Co., 105 Mich. 535. Co., 101 Ala. 127, 8 So. Rep. 496. 
 
 2 Gamble v. Queen's County Water 4 Coit v. Gold, etc., Co., 11!) V. S. 
 
 Co., 123 N. Y. 91, 9 L. R. A. 527. 343; Carr v. Le Fevre, 27 Pa. St. 413. 
 
 Distinguishing Van Cott v. Van Brunt, 5 See § 345, infra. Smith v. Prior. 58 
 
 82 N. Y. 535. See Gogebic Invest. Minn. 247. This case turns upon a 
 
 Co. v. Iron Chief, etc., Co., 78 Wis. question of pleading. 
 426; In re Western, etc., Co., L. R. 
 1 Ch. Div. 115.
 
 352 THE LAW OF PRIVATE CORPORATIONS. § 340 
 
 merit is all that is required." 1 In one case 2 it was said that 
 "where full paid stock is issued for property received, there 
 must be actual fraud in the transaction, to enable the creditors 
 of a corporation to call the stockholders to account. A gross 
 and obvious overvaluation of property would be strong evi- 
 dence of fraud." This question was elaborately discussed in 
 two recent cases. In the Montana case 3 it was held that good 
 faith in the valuation of the property is all that the law de- 
 mands. A Missouri case, 4 on the other hand, adopts an extreme 
 position and holds that the property accepted in payment must 
 be in fact a fair equivalent for the money subscribed, and that 
 the belief of the stockholder that the property was equal in 
 value to the par value of the stock will not relieve him from 
 liability on his subscription as against those who have given 
 credit to the company on the faith of its capital stock, if in 
 fact the property is not of such value. 
 
 It is safe to say that the taking of property at a gross over- 
 valuation is invalid without reference to the question of actual 
 fraudulent intent, or, if the actual fraudulent intent is neces- 
 sary, a gross overvaluation is sufficient evidence of its exist- 
 ence. Thus, where property worth $5,000 was taken to pay a 
 stock subscription of $200,000, the court said that the transac- 
 tion did not "bear the semblance of compliance with the con- 
 tract of subscription as to one of the essential terms thereof. 
 The taking of property at a valuation forty times greater than 
 its actual worth, which was known to the parties, shows upon 
 its face the absence of a bona fide exercise of judgmenl and 
 discretioD in making the valuation and an intentional non- 
 compliance with tli'' requirement that the properly sliall be 
 
 ' Douglass v. [reland, 73 N. V. LOO. ■ Kelly v. Fourth oi July, etc, (V, 
 
 ; , v. Gold, etc., Co., 119 I'.s. (Mont.), 53 Pac. Rep. 959, 12 I.. R. 
 
 343; Bank v. Alden, L29 U. 8. :'.7'-'; k. 621. Bee also National Bank v. I. 
 
 Queen County Water a W. L. Co., i"i Wis. 247; North- 
 
 L28N.Y. 91, 25 N. E.Rep.201; western, etc., Ins. Co. v. Cotton, etc., 
 
 Y tg v. [ron Co., 65 Mich, ill; <'<>., 7<» Fed. Rep. 155; DuPontv. 
 
 Whitehill v. Jacobs, 75 Wis. 174; Col- Tilden, 42 Fed. Rep. 87. 
 lit, ^. Ransdell, 110 Tnd. H7; Bickley *Van Cleve v. Berkey (Mo.), ■•' 
 
 v. Bchlag, !■"> V -i. Eq.588; Clayton B. W. Rep. 748, 42 L. Ii. A. 593. 
 v. Ore Knob Co., L09 N. 0.
 
 § 341 CAPITAL STOCK. 353 
 
 taken at its money value. The absence of fraudulent motive 
 on the part of the trustee does not give validity to a mere sim- 
 ulated execution of the trust, and an averment of fraud in ref- 
 erence thereto is unnecessary. The parties beneficially inter- 
 ested in the trust are entitled to a substantial compliance with 
 its terms. They are not bound by an act of mere formal com- 
 pliance which really involved their practical exclusion from 
 the benefits intended to be secured to them." 1 The allegation 
 in a bill seeking to require the payment of the difference be- 
 tween the par value of shares and the actual value of property 
 conveyed to the corporation, that all of the capital stock of 
 $1,250,000 was paid for by a conveyance of real estate worth 
 $100,000 is a sufficient allegation of fraud. 2 
 
 § 341. Remedy where there is overvaluation. — Where the 
 stock is issued at a discount for cash, the stockholder, if liable 
 at all, is liable for the difference between the amount paid and 
 the par value of the shares. So it will be seen that in some 
 cases it is held that, when property is taken in payment of 
 stock at a gross overvaluation, the stockholder is liable to the 
 corporate creditors for the difference between the actual value 
 of the property at the time and the face or par value of the stock. 3 
 
 ^lyton, etc., Co. v. Birmingham, Ore Knob Co., 109 N. C. 385. In Ely- 
 
 etc, Co., 92 Ala. 407, 12 L. R. A. 307. ton, etc., Co. v. Birmingham, etc., Co., 
 
 Reviewing more cases. 92 Ala. 407, 12 L. R. A. 307, the court 
 
 2 Lea v. Iron, etc., Co. (Ala.), 24 said: "Our examination satisfies us 
 
 So. Rep. 28. that the weight of American authority 
 
 8 Gates v. Tippecanoe, etc., Co., 75 does not support the statement made 
 
 Ohio St. 60, 63 Am. St. Rep. 705 ; by Mr. Cook in section 46 of his work 
 
 Wishard v. Hansen, 99 Iowa 307, 61 on Stock and Stockholders, to the ef- 
 
 Am. St. Rep. 238; Coleman v. Howe, feet that the attempts which have been 
 
 154 111. 458, 45 Am. St. Rep. 133; made in cases where stock was issued 
 
 Cole v. Adams (Tex.), 49 S. W. Rep. for property taken at an overvaluation 
 
 1052; Roman v. Dimmick, 115 Ala. to hold the party receiving such stock 
 
 233; Hastings, etc., Co. v. Iron Range, liable for its full value less the actual 
 
 etc., Co., 65 Minn. 28; Wallace v. Car- value of the property received from 
 
 penter,etc.,Co. (Minn.), 73 N. W.Rep. him have been unsuccessful ; and that 
 
 189; Elyton, etc., Co. v. Birmingham, if there has been an overvaluation 
 
 etc., Co., 92 Ala. 407 and cases there which is shown to have been fraudu- 
 
 cited. See, aslo, Clayton, etc., Co. v. lent, then the contract is to be treated 
 23 — Private Corp.
 
 354 THE LAW OF PRIVATE CORPORATIONS. § 341 
 
 But the decisions are conflicting. It lias been held that where 
 it is alleged that a subscription is unpaid, it can not be shown 
 that, although the property given was greatly overvalued, it 
 nevertheless had some value, and that the stockholders should 
 have credit for that amount. Where there is a fraudulent 
 overvaluation of the property or services the entire transaction 
 is generally held to be void, and the stockholders are liable to 
 the creditors of the corporation for the full nominal value of 
 the stock. 1 "During the past ten years," says Mr. Cook, 2 
 "there has been a vast amount of litigation on this subject. 
 The courts still disagree in their conclusions, but a careful 
 study of the cases will show that, upon authority as well as 
 principle, the stockholders can not be held liable in such a 
 case. In England and New York they can not be held liable 
 at all, except on the basis of a rescission, and under all the 
 well-considered decisions they can not bo held liable unless 
 the property is of so trifling a character that it practically has 
 no value whatever. This class of cases has arisen under two 
 aspects — first, at common law; and second, under statutes. At 
 common law it is well settled that corporate creditors can not 
 hold stockholders liable on stock which lias been issued for 
 property, even though the property was turned over to the 
 corporation at an agreed valuation which was largely in excess 
 of the real value of the properly. There have been cases which 
 refuse to follow this rule, but it is clearly established by Hi" 
 great weight of authority. The reason of the rule is, that if 
 
 like other fraudulent contracts and is be held liable unless there was fraud- 
 
 to be adopted in toto or rescinded in ulenl overvaluation of the property 
 
 toto and set aside." ami a rescission <>n the contract, ee 
 
 1 Smith v. Prior, 58 Minn. 247,59 N. Phelari v. Hazard, 5 Dill. (C. C.) 45; 
 
 W. Rep. L016; Peck v. Coalfield, etc., Van Cot! v. Van Brunt, 82 N. V. 535; 
 
 II III. \|.p. B8; Bcovill v. Barr v. New York, etc., R. Co., 125 
 
 Thayer, 105 U. 8. 143. In Clayton v. N. V. 268 : Seymour v. Spring Foi 
 
 109 N. C. 885, it ap- etc., Issn., mi N. Y. 338; Flynn v. 
 
 peared thai there was ;i fraudulent Brooklyn, etc., R. Co., 9 V Y. App. 
 
 aluation of the property, bu1 the l>i\. 269; Coffin v. Ransdell, uo [nd. 
 
 Iiolder was L'iven credit for the 117; Burner \. Brown, 189 [nd. 800; 
 
 actual value of the property. Bickley v. Schlag, 16 N.J. Eq 
 
 ''■ ^b supporting Medler v. Albuquerque, etc., Co., 6 N, 
 lie thai the stockholder can not
 
 § 341 CAPITAL STOCK. 355 
 
 the payment by property was fraudulent, then the contract is 
 to be treated like other fraudulent contracts. It is to be 
 adopted in toto or rescinded in toto and set aside. Both parties 
 are to be restored, as nearly as possible, to their original posi- 
 tions. The property, or its value, is to be returned to the per- 
 son receiving the stock, and he must return the stock, or its 
 value. In New York and England, as stated above, at com- 
 mon law, the stockholder is not liable at all to corporate credi- 
 tors, even though the overvaluation was gross, and clearly 
 shown so to be. The remedy is by rescission, and not the 
 making of a new contract by the court. There are other cases, 
 however, which hold that when the property so turned over 
 has no substantial value, or where the valuation was 'fraudu- 
 lent,' the court w r ill hold the stockholders liable for the par 
 value of the stock less the value of the property." 
 
 If the property given in payment for the stock has no value 
 whatever there is no payment and the stockholder is liable on 
 the stock. Thus, in one case, the court said: "The experi- 
 ence and good- will of the partners, which, it is claimed, were 
 transferred to the corporation, are of too unsubstantial and 
 shadowy a nature to be capable of pecuniary estimation 
 in this connection. " J Where the owner of a railroad sold it to 
 a new organization and received in payment stock and bonds 
 of the par value of fifty times the actual value of the railroad, it 
 was held that the subscription price had never been paid. The 
 court said: "The entire organization was grossly fraudulent 
 from first to last, without a single honest incident or redeem- 
 ing feature. It having been found on convincing evidence 
 that the overvaluation of the property transferred to the rail- 
 way company by Harper, in pretended payment of the sub- 
 scriptions to the capital stock, was so gross and obvious as, 
 in connection with the other facts in the case, to clearly estab- 
 lish a case of fraud, and to entitle bona fide creditors to en- 
 force actual payment by the subscribers, it only remains to 
 consider the effect of the defenses set up." 2 
 
 The remedy of the corporate creditor is in equity and not at 
 
 1 Camden v. Stewart, 144 U. S. 104. 2 Lloyd v. Preston, 146 U. S. 630.
 
 356 THE LAW OF PRIVATE CORPORATIONS. § 342 
 
 law for fraud and deceit. 1 The bill may be for one on behalf 
 of all. 2 
 
 § 342. Constitutional and statutory provisions as to pay- 
 ment of shares. — Many states have attempted to prevent the 
 issue of watered stock by the adoption of statutory or constitu- 
 tional provisions prohibiting corporations from issuing stock 
 unless they receive a full equivalent therefor in money or 
 property. 3 Care must be taken to distinguish between cases 
 decided under these statutes and those on the common law. 4 
 The provision of the Illinois constitution, which refers, how- 
 ever, only to railroad corporations, is a fair illustration of all 
 this class of prohibitions. It provides that "no railroad shall 
 issue any stock or bonds, except for money, labor or property 
 actually received and applied to the purposes for which said 
 corporation was created, and all stock dividends and other fic- 
 titious increases of the capital stock or indebtedness of any 
 such corporation shall be void." These provisions, however, 
 are not, as a rule, given the sweeping effect which their lan- 
 guage would seem to justify. The results of attempts to apply 
 a remedy which makes the stock void after the mischief is done 
 must fall heavily and unjustly upon innocent holders of stock. 
 "The trouble with these constitutional prohibitions is that they 
 attempt to cure the evil after the harm has been done instead 
 
 1 Priest v. White, 89 Mo. 609; Cole- Pennsylvania, art. lfi, §7; South Da- 
 man v. Bowe, L64 III. 458. kota, art. 17, §8; Texas, art. 12, §6; 
 •Cleveland, etc., Co. v. Texas, etc., Washington, art. L2, §6; Ohio (R. 
 R. Co., 27 Fed. Rep. 260. B., §3313); Maine (Iibby v.Tobey,82 
 ■Astothe difficulties intheway of Maine 397); Wisconsin, Mowry v. 
 applying these provisions, see State v. Farmers', etc.., Co., 7ii Fed. Hep. 38; 
 Webb, L10 Ala. 214; Van Cleve v. Minnesota (Gen. Stat. 1894, §3415, 
 ey, L43 Mo. LOO, n B. W. Rep. Hastings, etc., Co. v. Iron, etc., Co., 
 748, 12 L. R. A.. 593. Bee the consti- 65 Minn. 28; Wallace v. Carpenter, 
 tutione ol Alabama, art. 9, § 6; \r- etc., Co., 78N.W.Rep. 189); Tennes- 
 it. 12, §8; California, art. see (Jones v. Whitworth, 94 Tenn. 
 12, § 11; Colorado, art. L5,§9; Malm, 602); New Jersey (Baker v. Guarantee, 
 • [llinoiB, art. 12, § 13 ; Ken- etc., Co. (N. J.), 81 Atl. Rep. 174), and 
 tacky, |198; Louisiana, art, 238; [owa (Jackson v. Traer, 64 Iowa 469), 
 
 ouri, art, L2, have statutes to the same effect. 
 
 §8; Montana, art. 15, §10; Nebraska, ■See Railway. Co. v. Allerton, 18 
 
 :ir i ii, . '. irth Dakota, | 188; Wallace U. B. 288.
 
 §342 
 
 CAPITAL STOCK. 
 
 357 
 
 of attempting to oversee the issue of stock and bonds before the 
 issue is made." In Massachusetts the problem has been 
 solved by a statute which prohibits the issue of stock or bonds 
 for property until approved by state commissioners. The 
 Minnesota statute prevents the issue of shares below par, with 
 an exception which provides for special and preferred shares. 1 
 
 1 Wallace v. Carpenter Elec. Heat- 
 ing, etc., Co. (Minn.), 73 N. W. Rep. 
 189; Hastings, etc., Co. v. Iron, etc., 
 Co., 65 Minn. 28; Gen. St. Minn. 
 1894, § 3415, provides: "Corporations 
 having capital stock divided into 
 shares, unless specially authorized, 
 shall not issue any shares for a less 
 amount to be actually paid in on each 
 share than the par value of the shares 
 first issued; provided, that railroad 
 and navigation and manufacturing 
 corporations, and corporations for 
 buying, holding, improving, selling 
 and dealing in lands, tenements here- 
 ditaments, real, mixed and personal 
 estate and property, created or organ- 
 ized under this chapter, or under any 
 charter or special act of incorporation 
 heretofore passed, shall have power 
 to create, issue and dispose of such 
 an amount of special, preferred or 
 full-paid stock of the capital stock of 
 such corporation as may be deemed 
 advisable by the board of directors of 
 such corporation; provided, that any 
 corporation may, by its articles of in- 
 corporation or by any amended article 
 of its articles of incorporation, pro- 
 vide for special, preferred and com- 
 mon stock, or special or preferred and 
 common stock, of the capital stock of 
 such corporation ; and any corporation 
 heretofore or hereafter organized 
 without changing its articles of in- 
 corporation may issue its capital stock 
 as a part special and a part pre- 
 ferred and a part common, or a part 
 common and a part either special or 
 preferred, by direction of its board of 
 
 directors, when so authorized by a 
 majority of its stockholders at its an- 
 nual meeting or at a meeting called 
 for that purpose; and said board of 
 directors, when so authorized by said 
 meeting of said stockholders, may 
 give such preference as it may deem 
 best to such special or preferred stock, 
 or such special and preferred stock." 
 This statute was held to apply 
 to manufacturing as well as to 
 other corporations. Wallace v. Car- 
 penter, etc., Co., supra. Chief Jus- 
 tice Start said: "A certificate for 
 paid-up shares in a corporation is 
 simply a written statement in the 
 name of the corporation that the 
 holder thereof is a stockholder, and 
 that the full par value of his shares 
 has been paid to the corporation. If 
 the shares in fact have not been so 
 paid for, the certificate that they have 
 been is a false representation that the 
 assets of the corporation have been 
 increased to the amount of the par 
 value of the stock so issued. And, 
 when a corporation represents that it 
 has a paid-up capital of a given 
 amount, it represents to the business 
 world that at the time it issued the 
 stock it received money or property 
 to the full par value of its stock. 
 The issuing of the stock of a corpora- 
 tion as paid-up when it is not so in 
 fact is a public and a private wrong — 
 a cheat and a fraud — which enables 
 the corporation to obtain credit and 
 property by false pretenses. Ethic- 
 ally, the legislature might with the 
 same propriety authorize an individ-
 
 358 THE LAW OF PRIVATE CORPORATIONS. § 34l! 
 
 It was held that the Illinois provision is intended to guard 
 against the placing of worthless securities upon the market 
 and not to interfere with the usual and customary methods of 
 raising funds by railroad corporations for legitimate corporate 
 purposes. 1 But stock issued in direct violation of a prohibi- 
 tory statute is void, 2 and the holder has no standing in a court 
 of equity. 3 It has been held that one who pays money for 
 such stock under an agreement by which he has paid but fifty 
 per cent, of the par value can not recover back the money he 
 has actually paid, as he is in pari delicto. 1 But, somewhat in- 
 consistently, it is held that a person who received bonus stock 
 which was issued contrary to a prohibitory statute was liable 
 to pay therefor in full. 5 If stock has once been fully paid and 
 comes into the hands of the corporation, it may be reissued or 
 li-tributed among the stockholders without violating the stat- 
 ate. 6 Good will is property for which stock in a corporation 
 may be issued under the New York statute, which provides 
 that no stock shall be issued for less than its par value and ex- 
 cept for money, labor done or property actually received for the 
 use and lawful purposes of the corporation. 7 
 
 An agreement between the bondholders of an embarrassed 
 railroad company provided that trustees should buy in the 
 
 ual to misrepresent his assets for the given was void. Rogers v. Gross, 67 
 
 purpose of obtaining credit as loan- Minn. 224. 
 
 thorize a corporation, other than a l Peoria, etc., R. Co. v. Thompson, 
 
 mining corporation, to issue watered 103111.187. See Brown v. Dul uth, etc., 
 
 Rt'.rk. Therefore, while the meaning R. (V (Minn.). 58 Fed. Rep. 889. 
 
 of this statute is not entirely clear, il *Wbod v Union, etc, Assn., »;:> 
 
 oughl not to be construed, unless the Wis. 9, 22 N. W. Rep. 7:>n\ 
 
 express language used leaves us no 8 Arkansas, etc., R. Co. v. Farmers', 
 
 other alternative, so as to Impute \>< etc., Co., L3 Colo. 587. 
 
 tin- legislature an intention to legalize 4 Clarke \ , Lincoln, etc., Co., 59 Wis. 
 
 H practice denounced by courts ami 655, 18 N. W. Rep. 492. Bui sec <j :v_'."i, 
 
 texl writers as immoral, contrary t" and cases cited, 
 
 j. ui, lie policy, and Illegal, independ- 'Richardson's ESzs. v. Green, L3S 
 
 .•rit of any statute prohibiting it." U. S. 30. 
 
 Under this sa Btatute il was held • Commonwealth v. Boston, etc., R. 
 
 that an agreement between the sub- Co., 142 Mass. L46 ; Doris Bros. v. 
 
 gcriben thai for each share paid for Montgomery, etc., Co., 101 Ala. il'7. 
 
 a certificate foi two shares should be '"Washburn v. National, etc., Co., 81 
 
 Fed. Rep. 17. Bee 38 km. L. Rev. 581.
 
 § 342 CAPITAL STOCK. 359 
 
 mortgaged property on foreclosure and convey it to a new com- 
 pany to be organized by the bondholders which should issue 
 new mortgage bonds to pay the expenses of the sale, and other 
 new mortgage bonds to be taken by the bondholders in lieu of 
 their old bonds, and full paid-up stock subject to the mort- 
 gage debt, to be delivered to and held by the bondholders with- 
 out any payment of money. It was held that the constitu- 
 tional provision that "no private corporation shall issue stock 
 or bonds except for money, on property actually received, or 
 labor done, and all fictitious increase of stock or indebtedness 
 shall be void" did not apply. 1 "It is not clear," said the 
 court, "from the words used, that the framers of that instru- 
 ment intended to restrict private corporations, at least when 
 acting with the approval of their stockholders, in the ex- 
 change of their stock or bonds for money, property or labor, 
 upon such terms as they deem proper; provided always, the 
 transaction is a real one, based on a present consideration, and 
 having reference to legitimate corporate purposes, and is not a 
 mere device to evade the law and accomplish that which is 
 forbidden. We can not suppose that the scheme whereby the 
 appellant acquired the property, rights and privileges in ques- 
 tion, for a given amount of its stock and bonds, falls within 
 the prohibition of the state constitution. The beneficial owners 
 of such interests had the right to fix the terms upon which 
 they would surrender those interests to the corporation of 
 which they were to be the sole stockholders." 
 
 1 Memphis, etc., Railroad v. Dow, 120 U. S. 287.
 
 CHAPTER 14. 
 
 STOCK SUBSCRIPTIONS. 
 
 343. In general. 
 
 344. Agreement to take shares in a 
 
 corporation to be organized. 
 
 345. When there are no statutory 
 
 provisions. 
 345<r. Statement of rules. 
 
 346. Who may subscribe. 
 
 347. Subscriptions through an agent. 
 
 348. The form of the contract. 
 34(>. The consideration. 
 
 350. Signing articles of incorpora- 
 
 tion. 
 
 351. Application, allotment and no- 
 
 tic.-. 
 
 352. Conditional subscriptions. 
 
 353. Secret conditions. 
 
 354. Subscription of amount named 
 
 in charter or required by law. 
 
 355. Payment of deposit. 
 366. Tender of certificate. 
 :;".7. Conditional delivery of sub- 
 scription contract. 
 
 358. Performance of condition — 
 
 Waiver. 
 369. Conditions subsequent. 
 360. Subscriptions upon special 
 
 tei Hi-. 
 
 861. Subscriptions in excess of au- 
 
 thorized capital. 
 
 862. A nut of subscription by one 
 
 person. 
 :;<;:;. Who max- receive subscrip- 
 tion 
 
 Subscriptions necessary to ob- 
 tain charter. 
 
 Withdrawal of subscriptions - 
 
 860. Implied agreement to pay for 
 him i 
 
 (360) 
 
 § 367. The New England rule. 
 
 368. Premature contract by corpo- 
 ration — Effect upon subscrip- 
 tion. 
 
 369. Effect of fraud upon the con- 
 tract of subscription. 
 
 370. The English doctrine 
 
 371. The contract voidable merely— 
 Authority of agent. 
 
 372. Fraudulent representations by 
 promoters. 
 
 373. What frauds will vitiate. 
 374. Expressions of belief or opin- 
 ion. 
 
 375. Remedies of defrauded stock- 
 holders. 
 
 376. Rescission — Necessity for 
 prompt action baches. 
 
 377. Insolvency— The rights of cred- 
 itors — English doctrine. 
 
 378. Rule in the United States. 
 
 379. Right to rescind after insolv- 
 ency continued. 
 
 380. Rights of creditors before in- 
 solvency of corporation. 
 
 381. Insolvency Rule of diligence. 
 
 382. Enforcement of subscription 
 contracts by action. 
 
 883. Calls. 
 
 384. ( 'all- - I Uniformity Demand. 
 Release of subscribe] - By con- 
 sent . 
 
 886. Release by act of corporation. 
 
 887. By forfeiture. 
 
 888. When forfeiture a cumulative 
 
 remedy. 
 
 889. Estoppel of subscriber. 
 
 889a. The statute of limitations.
 
 § 343 STOCK SUBSCRIPTIONS. 361 
 
 § 343. In general. — A subscription to the capital stock of a 
 corporation, already in being, is a contract between the cor- 
 poration and the subscriber, and to be effectual, it must con- 
 tain all the elements of an ordinary contract such as competent 
 parties, mutuality and a consideration. But a subscription or 
 agreement to subscribe to the stock of a corporation to be or- 
 ganized in the future is a mere offer to enter into a contract, 
 and is not binding until the corporation is organized and the 
 offer accepted. It is, therefore, necessary to distinguish be- 
 tween contracts of subscription for the stock of an existing 
 corporation and an agreement to take stock in a corporation 
 which it is contemplated shall be organized in the future. 
 
 § 344. Agreement to take shares in a corporation to be or- 
 ganized. — Subscriptions are often made to the stock of a cor- 
 poration which is in process of organization. When the stat- 
 ute provides for commissioners, who are authorized to take 
 subscriptions under such circumstances and the provisions of 
 the statute are complied with, the agreements are binding with- 
 out reference to the question of consideration. 1 A preliminary 
 agreement by a number of persons to form a corporation and 
 to take stock therein, if made as a step authorized by a statute 
 in the process of forming a corporation, is valid by virtue of the 
 statute, although there is no consideration or mutuality prior 
 to the organization of the corporation, and is binding and irre- 
 vocable from time of signing. 2 Such subscriptions are for the 
 benefit of the corporation, and can only be enforced by it, 
 although their validity is determined by the statute and not 
 by the common law principles which govern a subscription to 
 the stock of an existing corporation. Thus, where the sub- 
 scription was made in the books of commissioners, authorized 
 by statute, to take subscriptions, the court said: "The rules of 
 common law in regard, consideration and mutuality do not apply 
 to the case. These rules, I think, may be regarded as superseded 
 by a statute which not only expressly authorizes subscriptions to 
 
 1 Walter A. Wood, etc., Co. v. Rob- Caines Cas. (N. Y.) 86; Taggart v. 
 bins, 56 Minn. 48. Western, etc., R. Co., 24 Md. 563. 
 
 2 Union, etc., Co. v. Jenkins, 1
 
 362 THE LAW OF PRIVATE CORPORATIONS. § 344 
 
 be made in anticipation of the existence of a corporation, but im- 
 pliedly at least recognizes their validity 1 -, but even without this 
 clause it would, I think, be held that a statute which authorizes 
 subscriptions in view of subsequent incorporation, and regulates 
 the manner in which they shall be made, must necessarily 
 have the effect to give validity to such subscriptions, if made 
 in accordance with the requirements of the act. 1 It has been 
 held that the agreement to associate together under the act to 
 implish the purposes designed, would seem a sufficient con- 
 sideration. The consideration need not move from the party 
 with whom the contract is made. The consideration for one 
 promise is that others will make like promises." 2 
 
 A promise to take stock, before the articles of incorpora- 
 tion have been signed, does not constitute a subscription, 8 as 
 such preliminary subscriptions are mere offers which must 
 be accepted by the corporation before they become binding 
 contracts. 4 "A subscription by a number of persons to the 
 stock of a corporation to be thereafter formed by them has in 
 law a double character. First, it is a contract between the 
 subscribers themselves to become stockholders without fur- 
 ther act on their part immediately upon the formation of 
 the corporation. As such a contract it is binding and irre- 
 vocable from the date of the subscription (at least in the 
 absence of fraud or mistake), unless canceled by consent of all 
 the subscribers before acceptance by the corporation. Second, 
 it is also in the nature of a continuing offer to the proposed 
 corporation, which, upon acceptance by it alter its formation, 
 becomes as to each subscriber a contract between him and the 
 corporation.'" A mutual agreement to subscribe for stock 
 in a corporation has been held to contemplate the further act 
 
 > Buffalo, etc., B. Co. \. Dudley, n Co., 25 III. 840; California, etc., Co. 
 
 N r.336. Bee Sedalia, etc., R. Co. v. v. 8chafer, 67 Cal. 396. 
 
 Wilkerson,83 Mo. 286, Wilgus' Cases. »Starret1 v. Rockland, etc, Co., 05 
 
 anebec, etc., R. < k>. v. Palmer, Me. 874. 
 
 :;i Me. ■"■'''''>: Osborn v. Crosby, 63 » Minneapolis, etc., Co. v. Davis, 40 
 
 t; West v. Crawford, 80 Cal. Minn. n<>; Red Wing, «■!<■.. <'<>. v. 
 
 10; Twin Creek, etc., Co. v. Lancas- Friedrich, 26 Minn. L12; Richelieu, 
 
 ter, 79 Kj etc., Co. v. International, etc., ('<».. 
 
 Insurance, etc., I v. 87 i m m. 248, 
 Ohio St, 3 : u' i v. Pike Co. B,
 
 § 345 STOCK SUBSCRIPTIONS. 363 
 
 of executing a contract of subscription upon the stock books, 
 and until this is done there is no offer which the corporation 
 can accept. 1 
 
 § 345. "When there are no statutory provisions. — An agree- 
 ment by a number of persons to take stock in a corporation to 
 be formed, when not a step authorized by statute in the organ- 
 ization of a corporation, is not a contract of the subscribers 
 with each other, but is a mere continuing offer to the corpora- 
 tion by each subscriber, and may be revoked, or will lapse on 
 the subscriber's death or insanity at any time before the corpo- 
 ration is organized. If the organization is perfected before the 
 offer is revoked, it operates as an acceptance, and the subscrip- 
 tion becomes irrevocable, the subscriber is a stockholder, and 
 the subscription may be enforced by the corporation. 2 In ju- 
 risdictions where an action can be maintained by a third per- 
 son upon a contract made for his benefit, the corporation after 
 it is formed may maintain an action upon the contract. 3 In 
 Massachusetts it was said: "In agreements of this nature en- 
 tered into before the organization is formed or the agent con- 
 stituted to receive the amount subscribed, the difficulty is to 
 ascertain the promisee in whose name alone suit can be 
 brought. The promise of each subscriber, to and with each 
 other, is not a contract capable of being enforced, or intended 
 to operate literally as a contract to be enforced between each 
 subscriber and each other who may have signed previously, or 
 who should sign afterwards; nor between each subscriber and 
 all the others collectively as individuals. The undertaking is 
 inchoate and incomplete as a contract until the contemplated 
 organization is effected or the mutual agent is constituted to 
 
 1 Athol, etc., Co. v.Carey, 116 Mass. v. Johnson, 93 Cal. 538; Bullock v. 
 471; Lake Ontario, etc., R. Co. v. Turnpike Co., 85 Ky. 184; McClure v. 
 Curtiss, 80 N. Y. 219. Railway Co., 90 Pa. St. 269; Shober's 
 
 2 Athol, etc., Co. v. Carey, 116 Admrs. v. Lancaster Co., etc., Assn., 
 Mass. 471; Red Wing, etc., Co. v. 68 Pa. St. 429. 
 
 Friedrich, 26 Wis. 112; Buffalo, etc., 8 Marysville, etc., Co. v. Johnson, 
 
 R. Co. v. Dudley, 14 N. Y. 336; Richi- 93 Cal. 538; Int., etc., Assn. v. Wal- 
 
 lieu, etc., Co. v. International, etc., ker, 83 Mich. 386, 47 N. W. Rep. 338. 
 Co., 140 111. 248; Maysville, etc., Co.
 
 364 THE LAW OF PRIVATE CORPORATIONS. § 345a 
 
 represent the association of individual rights in accepting and 
 acting upon the propositions offered by the several subscrip- 
 tions. When thus accepted, the promise may be construed to 
 have legal effect according to its purpose and intent, and the 
 practical necessity of the case; to wit, as a contract with the 
 common representative of the several associates." 1 It was held 
 that an action might be maintained in the name of the corpo- 
 ration after it was organized against a subscriber upon the al- 
 lotment to him of the shares subscribed for. 
 
 § 345a. Statement 01 rules. — Professor Collin states the 
 law on this subject as follows: "The following propositions 
 are given as the substantially harmonious net result of much 
 confusion in cases and text-books. Rambling remarks may be 
 found contrary to.each proposition, but very few reported cases 
 have been decided contrary to any one of these propositions 
 upon the facts coming within it, and I believe every proposi- 
 tion can be sustained in any state or federal court: 
 
 "(a) A preliminary agreement to form a corporation and 
 take stock therein is not a contract by the subscribers with 
 each other, and can not be enforced by one or more against 
 any other, but only by the corporation. 
 
 "(b) Such an agreement not made as -a step authorized 
 by statute in the process of forming the corporation is a mere 
 offer to the corporation not yet in existence, and is revoca- 
 ble by any subscriber until the birth of the corporation, which 
 operates as an acceptance of the offer, and thereafter the sub- 
 scription, if not previously revoked, is irrevocable, and may 
 be enforced by the corporation. 
 
 "(r) Such an agreement made as a step authorized by 
 ute in the process of forming the corporation is made valid 
 by the statute, and is binding upon each subscriber Erom the 
 time 'ling, and is irrevocable thereafter, but can be en- 
 
 forced only by the corporation. 
 
 "(d) An agreement to pay money to trustees to be by 
 them paid to a corporation thereafter to be created, the trus- 
 to return to the subscribers stock in the corporation ac- 
 1 \tli..i. etc., ( '". v. ( larey, l L6 Mass. 471.
 
 § 346 STOCK SUBSCRIPTIONS. 365 
 
 cordingly, is a valid contract between the subscribers and the 
 trustees. 
 
 "(e) The distinction made between a present subscription 
 and an agreement to subscribe to the stock of a corporation 
 thereafter to be created is unsound in principle, and disap- 
 pears as mere dicta upon a thorough sifting of the cases. 1 
 
 "(f) The damages recoverable by the corporation upon a 
 subscription is the amount of the subscription; and all discus- 
 sion of any other measure of damages, such as the difference 
 between the par and market value of stock subscribed, arises 
 from a misconception of the situation and disappears from the 
 net result of the authorities." 2 
 
 § 346. Who may subscribe. — Any one who is competent to 
 enter into a common-law contract may make a valid subscrip- 
 tion to the stock of a corporation. But the corporation can 
 not be a subscriber to its own stock, 3 and by the weight of 
 authority a corporation can not subscribe for the shares of an- 
 other corporation without express authority. A subscriber 
 may be a non-resident or an alien; 4 or it may be a municipal 
 or public corporation when acting under proper statutory 
 authority. 5 A state may debar aliens from holding shares of 
 stock in a corporation, or it may admit them upon prescribed 
 conditions. 6 A subscription may be made by a person under 
 disability, but as in the case of other such contracts it may be 
 repudiated within a reasonable time after the disability is re- 
 moved. Whether a valid subscription may be made by a mar- 
 ried woman will depend entirely on the extent to which her 
 
 1 This distinction, however, is still tied that municipal corporations may 
 recognized in the late case of Yonkers lawfully subscribe to the stock of pri- 
 Gazette Co. v. Taylor, 30 App. Div. vate corporations, when authorized 
 Rep. (N. Y.) 334 on 337 (1898). by statute to do so. It is not equally 
 
 2 See Cook. Corp. (4th ed.), § 75. clear that one private corporation may 
 3 Talmage v.Pell, 7 N.Y. 328; Frank- subscribe for the stock in another 
 
 lin Co. v. Lewiston Inst, for Sav., 68 corporation. On the contrary such 
 
 Me. 43 ; Holladay v. Elliott, 8 Ore. 84 ; subscriptions are ultra vires and void." 
 
 Allibone v. Hager, 46 Pa. St. 48. Denny Hotel Co. v. Schram, 6 Wash. 
 
 4 Commonwealth v.Hemingway, 131 134. 
 
 Pa. St. 614, 18 Atl. Rep. 990. 6 State v. Travelers, etc., Co., 70 
 
 5 In Nassau Bank v. Jones, 95 N. Y. Conn. 590, 66 Am. St. Rep. 138. 
 115, it was said : "It is conclusively set-
 
 366 THE LAW OF PRIVATE CORPORATIONS. § 34? 
 
 common-law disabilities have been removed by statute. By 
 the common law a subscription by a married woman is in- 
 valid. 1 The statute imposing individual responsibility to the 
 amount of the par value of their shares upon all stockholders 
 in national banks makes no exceptions in favor of married 
 women; 2 and under a statute which provides that no woman, 
 during coverture, shall be capable of making any contract to 
 affect her real and personal estate without the written consent 
 of her husband, it was held that a purchase of stock by a mar- 
 ried woman is not a "contract" within the terms of the stat- 
 ute, and that the wife is liable for an assessment, although the 
 stock was purchased without the consent of her husband. "If 
 a purchase of stock in a national bank by a married woman 
 without the written consent of her husband gives her the owner- 
 ship of such stock, judgment must be given against the f< me 
 defendant. If she owned the stock at the failure of the bank, 
 she is liable to the assessment; if she did not, she is not lia- 
 ble. While the federal government exclusively controls the 
 question of the liability of stockholders in national banks, it 
 i- not doubted that a state has power to say that, for reasons 
 seeming good to its legislature, and not in conflict with organic 
 law, a particular class of persons shall not be permitted to own 
 particular classes of property. * * It certainly is no- 
 
 where enacted directly that a married woman shall not own 
 stock in national banks, or stock that upon the failure of the 
 corporation shall be liable to assessment." ' The right to take 
 stock in a certain kind of corporation may be restricted by ex- 
 press provision of the charter to persons of a certain nation- 
 ality.' 
 
 § 347. Subscriptions through an agent. — A valid contract of 
 
 JCriptiOE may be made through a duly authorized agent. 5 
 Ill Bome -tales it is held that a jierson who assumes to act as 
 
 l Nat'l Com. Bank v. McDonnell, 92 •Blien v. Rand (Minn., 1899 
 
 Ala. N. W. Rep. 606 
 
 2 Keyeer v. Hitz, 188 U. - 188. ' Burr v. Wilcox, 22 V V. 551 ; Mc- 
 
 • Robinson v. Tarrentine, 59 Fed. Olelland v. Whitel; Rep.332,
 
 § 348 STOCK SUBSCRIPTIONS. 367 
 
 an agent for another without authority binds himself as a 
 principal. Under such circumstances, the agent would be- 
 come a stockholder in the corporation. 1 In other jurisdictions 
 it is held that the agent does not become a stockholder, and is 
 merely liable to the corporation in an action for damages. 2 
 
 § 348. The form of the contract. — A contract of subscrip- 
 tion for shares in a corporation need not be in writing, 3 al- 
 though, under particular charters, it has been held otherwise. 4 
 Irregularities are generally disregarded, and if it is clear that 
 the party intended to bind himself the lack of form will not 
 defeat his intention. Thus, a party was held bound by a sub- 
 scription made in a memorandum book, 5 or upon a loose 
 sheet of paper, 6 although the charter provided for opening 
 subscription books. 7 
 
 Generally, the fact that the form of subscription prescribed 
 by the charter is not followed, will not invalidate the subscrip- 
 tion, 8 although a form provided by the charter is of course suf- 
 ficient. 9 The subscriber can not escape liability by showing 
 that he has not performed conditions precedent which are 
 prescribed by the charter, when it would result in injury to 
 others who have in good faith acted upon his agreement. 10 
 
 1 State v. Smith, 48 Vt. 266; Nat'l s Buffalo, etc., Co. v. Gifford, 87 
 Com. Bank v. McDonnell, 92 Ala. 387, N. Y. 294. 
 
 9 So. Rep. 149; Allibone v. Hagar, 64 6 Iowa, etc., R. Co. v. Perkins, 28 
 
 Pa. St. 48. Iowa 281. 
 
 2 Salem Milldam Corp. v. Ropes, 9 7 Ashtabula, etc., R. Co. v. Smith, 
 Pick. (Mass.) 187. See Perkins v. 15 Ohio St, 328. 
 
 Savage, 15 Wend. 412. 8 Rensselaer, etc., Co. v*. Barbon, 16 
 
 3 York, etc., Assn. v. Barnes (Neb), N. Y. 457, note; Home, etc., Co. v. 
 58 N. W. Rep. 440; Colfax, etc., Co. Sherwood, 72 Mo. 461 ; Webb v. Bal- 
 v. Lyon, 69 Iowa 683, 29 N. W. Rep. timore, etc., R. Co., 77 Md. 92; Pitts- 
 780; Des Moines Bank v. Colfax Ho- burgh, etc., R. Co. v. Applegate, 21 W. 
 tel Co., 88 Iowa 4; Bullock v. Fal- Ya. 172; Illinois, etc., R. Co. v. Zim- 
 mouth. etc., Co., 85 Ky. 184, 3 S. W. mer, 20 111. 654. 
 
 Rep. 129; National Bank v. Van 9 Parker v. Northern, etc., R. Co., 
 
 Drewerker, 74 N. Y. 234. See § 286. 33 Mich. 23. 
 
 4 Fanning v. Insurance Co., 37 l0 Wood v. Coosa, etc., R. Co., 32 
 Ohio St. 339; Galveston Hotel v. Bol- Ga. 273; Boyd v. Peach Bottom R. 
 ton, 46 Tex. 633; Vreeland v. New Co., 90 Pa. St. 169. If the name of 
 Jersey, etc., Co., 29 N. J. Eq. 188. a person appears on the stock book
 
 368 THE LAW OF PRIVATE CORPORATIONS. § 349 
 
 § 349. The consideration. — A subscription for shares con- 
 fers mutual rights. The advantages arising from membership 
 in the corporation, and interest in the property and franchises 
 and the right to participate in dividends is a sufficient consid- 
 eration to support the contract. 1 ''The subscription for the 
 st k constitutes a contract with the company which is sup- 
 ported by a sufficient consideration. The subscriber thereby 
 acquires an interest in the corporation and there is an implied 
 promise on the part of the company to issue the proper certifi- 
 cates, as evidence of his interest, whenever the terms of his 
 subscription shall be complied with, so as to entitle him to it. " 
 When the subscription contract is made with the corporation 
 or its agents, 3 or is subsequently accepted by. the corporation* 
 the implied counter promise of the corporation is a sufficient 
 consideration to uphold the contract. 5 The legislature may 
 make subscriptions preliminary to the organization of the cor- 
 poration binding without reference to the consideration. 6 Such 
 subscriptions are binding by virtue of the statute. When 
 subscriptions were made in the books of commissioners who 
 were provided for by the statute, it was said that the subscrip- 
 tions could not be revoked, even before the corporation was 
 organized. The court said: "The rules of the common law in 
 regard to consideration and mutuality do not apply to the case. 
 These rules may, I think, be regarded as superseded by the 
 statute, which not only expressly authorizes subscriptions to 
 
 of a corporation as a stockholder, 'Lake Ontario, etc., R. Co. v. Cnr- 
 
 thongb the book is irregularly kepi tisa, 80 N. Y. 219; Wallace v. Town- 
 
 and does not contain the entries pre- send, 48 Ohio St. 687; Parkerv. N. 
 
 scribed by Btatate, the presumption is Cent. R. Co. 88 Mich. 23. 
 
 that he is the owner of the stock, and 4 N. Cent. R. Co. v. Eslow, 40 Mich, 
 
 the burden is on bim to Bhow thai li" 222. 
 
 tockholder. Holland v. l>u- » Kennebec, etc., R. Co. v. Jarvifl, 
 
 lath, etc i tinn. 824. :;i Maine 860. See Starrattv. Rock- 
 
 >Mahanv. Wood, WCal. W2; Cot- [and, etc., Co., 65 Maine 874; Dniver- 
 
 -i . etc., Church v. Kendall, 121 aity of Dea Moines v. Livingston, 67 
 
 aiIh.I. etc., Co. v. Carey, [owa 807. 
 
 116 Mass, 171. ' See f 844. 
 
 alter a. \v I etc., Co. v. Rob- 
 
 56 Minn. K 67 v w. Rep. 817.
 
 § 350 STOCK SUBSCRIPTIONS. 369 
 
 be made in anticipation of the existence of the corporation, 
 but impliedly, at least, recognizes their validity." 1 
 
 § 350. Signing articles of incorporation. — A valid subscrip- 
 tion may be made by signing the articles of association and 
 writing after the signature the number of shares taken. Such 
 an agreement does not become enforcible until the articles 
 are acknowledged as required by statute. 2 The rule stated in 
 the preceding section applies also to subscriptions made by 
 signing the articles of incorporation, or a formal subscription 
 paper which is required to be filed by the statute. It can not 
 be revoked, as the subscription is presumed to be accepted by 
 the corporation and takes effect from the filing of the certifi- 
 cate required by statute. 
 
 §351. Application, allotment and notice. — Where the 
 method of taking stock is by application, allotment and notice, 
 the notice is of the essence of the contract, and the contract 
 dates from the mailing of the notice and is complete whether 
 it reaches the allottee or not. 3 
 
 § 352. Conditional subscriptions. — A conditional subscrip- 
 tion is one on which payment can be enforced by the corporation 
 only after the occurrence or after the performance by the cor- 
 poration of certain things specified in the subscription itself. 4 
 Such a subscription is merely an offer to become a member of 
 the corporation after the condition is performed, and until 
 the condition is performed the subscriber does not become a 
 stockholder in the corporation. 5 Thus, a subscription for 
 
 1 Buffalo, etc., R. Co. v. Dudley, 14 s Pellatt's Case, 2 Ch. App. Cas. 527 ; 
 
 N. Y. 336. In re Northern, etc., Co., Ch. Div. 8 
 
 2 Coppagev. Hutton, 124 Ind.401,7 R. Corp. L. J. 177. This method is 
 
 L. R. A. 591 ; Cravens v. Cotton Mills, peculiar to English law. 
 
 120 Ind.6; Nultonv. Clayton, 54 Iowa 4 Montpelier, etc., R. Co. v. Lang- 
 
 425; Phcenix, etc., Co. v. Badger, 67 don, 46 Vt. 284. 
 
 N. Y. 294; Dayton v. Borst, 31 N. Y. 5 Ticonic, etc., Co. v. Lang, 63 Me. 
 
 435; Joy v. Manion, 28 Mo. App. 55; 480. There can not be such a thing as 
 
 Lake Ontario, etc., R. Co. v. Mason, a "conditional membership." Pitts- 
 
 16 N. Y. 451 ; Greenbrier Ind. Expo, burgh, etc., R. Co. v. Biggar, 34 Pa. 
 
 v. Rodes, 37 W. Va. 738. St. 455. 
 24 — Private Cokp.
 
 370 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 352 
 
 shares in a railway corporation, upon condition that the road 
 shall be located upon a certain route, is a conditional subscrip- 
 tion, and the subscriber does not become a member until the 
 road has been so located. 1 In New York such a condition to 
 a subscription made before incorporation renders the subscrip- 
 tion void, 2 while in Pennsylvania it is held that "where one 
 subscribes to the stock of a private corporation prior to the 
 procurement of its charter, such subscription is to be regarded 
 as absolute and unqualified, and any condition attached thereto 
 is void." 3 Of conditional subscriptions before incorporation, 
 the supreme court of the United States said that where "the 
 law prescribes that a certain amount of stock shall be subscribed 
 before corporate powers shall be exercised, if subscriptions, 
 obtained before the organization was effected, may be subse- 
 quently rendered unavailable by conditions attached to them, 
 the substantial requirements of the law are defeated. The 
 purpose of such a requirement is that the state may be assured 
 'Swartwout v. Mich., etc., R. Co., time, is a conditional sale and enforci- 
 
 24 Mich. 389; Taggart v. Western, etc., 
 R. Co., 24 Md. 563. In McMillan v. 
 Maysville, etc., R. Co., 15 B. Mon. 
 i Ky.) 218, the court said : " When the 
 
 ble between the parties. 
 
 2 Butternuts, etc., Co. v. North, 1 
 Hill (N. Y.) 518; Troy, etc., R. Co. 
 v. Tibbits, 18 Barb. 297; In re Roch- 
 
 road was * * * located, signers be- ester, etc., R. Co., 50 Ilun 29; Ft. 
 came unconditional stockholders, and Edwards, etc., Road Co. v. Payne, 15 
 as aucb were entitled to all the corpo- N. Y. 583. See Putnam v. City of New 
 rate rights and privileges of members Albany, I Biss. 365. 
 of the company. The stock itself was 3 Caley v. Philadelphia, etc., R. Co , 
 not conditional; it was only the 80 Pa. St.363; Boyd v. Peach Bottom 
 agreement to take it thai was condi- R. Co., 90 Pa. St. 169; Burke v. 
 tional. The subscribers were not Smith, 16 Wall. 390; Pittsburgh, etc., 
 stockholders until the company had R. Co. v. Bigger, 34 Pa. St. 155. A 
 performed the condition upon which conditional subscription before incor- 
 their undertaking depended; and poration may be treated as a con- 
 when that was done they became tinuing offer to take shares upon the 
 stockholders by force of the agree- terms indicated, and if not withdrawn 
 mmit of the parties." In Vent v. may be accepted by the proper agent 
 Duluth, etc., Co., 64 Minn. 307, it was of the corporation alter its organiza- 
 lield that an agreemenl for the pur- tion. A subscription upon special 
 from the corporation of its terms, received after organization by 
 -hares, w ith a provision that ihepnr- an agent without authority, may, if no1 
 r may return the Btock and re- withdrawn, be accepted bj the board 
 ceive his money back within a certain of directors. Red Wing, etc., Co. v. 
 
 drich, 26 Minn. J 12.
 
 § 352 STOCK SUBSCRIPTIONS. 371 
 
 of the successful prosecution of the work, and that creditors 
 of the company may have, to the extent, at least, of the re- 
 quired subscription, the means of obtaining satisfaction of 
 their claims. The grant of the franchise is, therefore, made 
 dependent upon securing a specified amount of capital. If the 
 subscriptions to the stock can be clogged with such conditions 
 as to render it impossible to collect the fund which the state 
 requires to be provided before it would assent to the grant 
 of corporate powers, a charter might be obtained without 
 any available capital. Conditions attached to subscriptions, 
 which, if valid, lessen the capital of the company, thus de- 
 priving the state of the security it exacted that the railroad 
 would be built, and diminishing the means intended for the 
 protection of creditors, are, therefore, a fraud upon the grantor 
 of the franchise and upon those who may become creditors of 
 the corporation. They are also a fraud upon unconditional 
 stockholders, who subscribed for the stock in the faith that 
 capital would be obtained to complete the projected work, and 
 who may be compelled to pay their subscriptions, though the 
 enterprise has failed, and their whole investment has been 
 lost. It is for these reasons that such conditions are denied 
 any effect." 1 But, after incorporation, conditional subscrip- 
 tions are held valid in all the states, 2 and a conditional sub- 
 scription, which the corporation has no authority to accept at 
 the time, will constitute a continuing offer, and, if not with- 
 drawn before the conditions are performed, it will become ab- 
 solute and binding. 3 A stipulation in a contract of subscrip- 
 tion that the subscriber shall receive bonds of the corporation 
 as a bonus in an amount equal to the stock for which he 
 subscribes does not make the issuance of the bonds a con- 
 
 1 Burke v. Smith, 16 Wall. 390. Webb v. Railway Co., 77 Md. 92. In 
 
 2 Pittsburgh, etc., R. Co. v. Stewart, New York, however, it is held that 
 
 41 Pa. St. 54; Hanover, etc., R. Co. v. the condition that a railroad shall 
 
 Haldeman, 82 Pa. St. 36; Baltimore, be located over a particular route is 
 
 etc., R. Co. v. Pumphrey (Md.), 21 invalid as against public policy. But- 
 
 Atl. Rep. 559; Armstrong v. Karsh- ternuts, etc., R. Co. v. North, 1 Hill 
 
 ner, 47 Ohio St. 276, 24 N. E. Rep. 897 ; 518. 
 
 Carey & Co. v. Morrill, 61 Vt. 598; 3 Armstrong v. Karshner, 47 Ohio 
 
 Taggart v. Railroad Co., 24 Md. 563; St. 276, 24 N. E. Rep. 897.
 
 372 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §353 
 
 dition precedent to liability on the subscription contract. The 
 liability exists, although the corporation fails to carry out the 
 agreement. Such an agreement is void. 1 
 
 § 353. Secret conditions. — Conditions attached to subscrip- 
 tions must be included in the written agreement, as oral con- 
 ditions can not be shown. 2 A secret agreement between the 
 subscriber and the corporation which in effect changes the os- 
 tensible terms of the subscription is void. The corporation 
 may disregard the collateral agreement and hold the subscriber 
 to the ostensible contract. 3 The only exception to this rule 
 seems to be found in Pennsylvania, where it may be shown by 
 oral evidence that a written subscription, absolute on its face, 
 was in fact conditional. But an agreement to which the corpo- 
 ration and all the subscribers for stock are parties that a sub- 
 scriber shall not be required to pay for his shares is binding 
 when there are no creditors. There is no liability as between 
 such a subscriber and the other shareholders. 4 A party can 
 not defend on the ground that his subscription was feigned and 
 fraudulent, and that the corporation was a party to the fraud. 6 
 
 1 Morrow v. Nashville, etc., Co., 87 
 Tenn. 262, :; J.. B. A. 37. 
 
 * Minneapolis, etc., Co. v. Davis, 40 
 Minn. 1 10; Masonic Temple Assn. v. 
 
 Ohannell, ■*'■'> Minn. 353; Boskell v. 
 Bells, 1 1 Mo. A|.p.'.»i ; Nippenose, etc., 
 i . v. Btadon, 68 Pa. St. 256; Miller 
 v I [anover Junction, etc., B. ('".. > s 7 
 i . Baile v. Educational Boci- 
 
 i: m.i. H7; Galena, etc., B. Co. 
 
 nior, l n; 111.:..; Downiev. White, 
 
 12 \\'i- 176; Topeka, etc., ('<>. v. Hale, 
 
 Can. 28. A.8 to parol declarations 
 
 Seers of tin- corporation which 
 amounl to fraud, Bee Martin v. Pen- 
 
 i etc., B. Co., 8 Fla. :::<>. By 
 pro to t be propo ed route of 
 
 a railroad, Braddocs \ Philadelphia, 
 etc, i: Oo . i ■'• N J. I. ' 
 
 • Meyer v. Blair, 109 N. v. 600; 
 
 White Mountain R. Co. v. Eastman, 
 34 N. II. 124 ; Jewell v. Rock River P. 
 Co., 101 111. 57 ; Melvin v. Lamar, etc., 
 Co., 80 111. 146; Winston v. Dorsett, 
 etc., Co., L29 111. 64 ; Piscataqua, etc., 
 Co. v.Jones. 39 N. II. 191. 
 
 •Winston v. Bock River P. Co., 129 
 III. 64, I L. B. A. 507. 
 
 •Graft 1 v. Pittsburg, etc., B. Co., 31 
 Pa. st. 489; Phoenix w. Co. v. Badger, 
 ii7 N. V. 294. A subscription on a 
 Ma nk piece of paper on condition that 
 it u ill not be attached t«> Hie articles 
 of incorporation until they are pre- 
 Bented to the subscriber for lii* ap- 
 proval is held valid in Bucherv. Dills- 
 burg, i tc., B. Co., 76 Pa. st. 306, and 
 Bee Great, etc., Co. v. Loewenthal, 164 
 III. 261.
 
 § 354 STOCK SUBSCRIPTIONS. 373 
 
 § 354. Subscription of amount named in charter or re- 
 quired by law. — When a subscription is made upon condition 
 that a certain amount of stock shall be subscribed, the sub- 
 scriber can not be called on until the full amount is taken. 1 
 If the amount of capital stock of a corporation is named in its 
 charter, it by implication has no authority to begin business 
 until the whole amount of such capital has been subscribed, 
 and the stockholders can not be required to pay their subscrip- 
 tions until the full amount of capital is legally subscribed % 
 by solvent persons apparently able to pay for the shares. 3 
 " It is an implied part of the contract of subscription that the 
 contract is to be binding and enforcible against the subscriber 
 only after the full capital stock of the corporation has been 
 subscribed. This condition precedent to the liability of the 
 subscriber need not be expressed in the corporate charter or 
 the subscription itself. It arises by implication from the just 
 and reasonable understanding of a subscriber that he is to be 
 aided by other subscriptions. This rule is supported by pub- 
 lic policy, in that corporate creditors have a right to rely upon 
 a belief that the full capital stock of a corporation has been 
 subscribed." 4 
 
 Philadelphia, etc., R. Co. v. Hick- Walker, 88 Mich. 62; Katama, etc., 
 
 man, 28 Pa. St. 318; Union, etc., Co. Co. v. Jernegan, 126 Mass. 155; John- 
 
 v. Hersee, 79 N. Y. 454. As to neces- son v. Shar, 9 S. Dak. 536; Hendrix 
 
 sary allegation in the complaint, see v. Academy of Music, 73 Ga. 437 ; All- 
 
 Duluth, etc., Co. v. Witt, 63 Minn, man v. Havana, etc., R. Co., 88 111. 
 
 538. 521. Contra, Nelson v. Blakey, 54 Ind. 
 
 2 Anderson v. Railroad Co. , 91 Tenn. 29. 
 
 44, 17 S. W. Rep. 803; Anvil, etc., s Lewey's, etc., R. Co. v. Bolton, 48 
 
 Co. v. Sherman, 74 Wis. 226, 42 Maine 451. 
 
 N. W. Rep. 226; Masonic, etc., Assn. 4 Cook I, § 176; Stoops v. Greens- 
 v. Channell, 43 Minn. 353; Boston, burgh, etc., Co., 10 Ind. 47. The 
 etc., R. Co. v. Wellington, 113 Mass. right to levy a preliminary assess- 
 79; Denny, etc., Co. v. Schram, 6 ment to defray the expenses of in- 
 Wash. 134, 36 Am. St. Rep. 130; corporation does not imply the right 
 Salem, etc., Corp. v. Ropes, 6 Pick, to levy subsequent assessments be- 
 23, 19 Am. Dec. 363; Livesey v. Oma- fore the full required amount of cap- 
 ha Hotel, 5 Neb. 50; Peoria, etc., R. ital is subscribed. In Anvil, etc., 
 Co. v. Preston, 35 Iowa 118; Atlantic, Co. v. Sherman, 74 Wis. 226, 4 L. 
 etc., Mills v. Abbott, 9 Cush. (Mass.) R. A., 232, the court said: "The 
 423; International Fair, etc., Assn. v. first position, that before the cor-
 
 374 
 
 THE LAW OF TRIVATE CORPORATIONS. 
 
 §354 
 
 Such an implication is overcome if the terms of the sub- 
 scription contract or of the statute under which the corporation 
 is organized is inconsistent with the existence of such a con- 
 dition. 1 But the rule that "when the capital stock is fixed 
 by the charter, an action does not lie to enforce a subscription 
 until all the stock is taken, does not apply where, from the 
 face of the charter, it is obvious that the whole of the capi- 
 tal stock was not necessary to the organization of the company, 
 and the subscriber knew, or had reason to know, this at the 
 time of subscribing; nor does it apply where a subscriber 
 takes part in carrying on the business of the company, and 
 votes on his shares; at least, when the suit is brought by the 
 receiver of tie' corporation after it has become insolvent." 
 
 Tie- condition may of course be waived by the subscriber. 8 
 T!i'' amount which has been subscribed may be shown by the 
 
 poration can make an assessment 
 after the first for preliminary objects 
 has been made, the whole of tin- capi- 
 tal Btock must.have been taken orsub- 
 Bcribed,is unquestionably sustained by 
 nearly all tin- authorities in this coun- 
 try. * * * There is a principle recog- 
 nized in these decisions that, outside 
 the lanL'uaL'e of the subscription itself, 
 
 the provisions Of the charter and of 
 
 the statute an- to he considered in 
 construing and giving effect to the 
 contract of subscription. From the 
 whole, taken together, this condition 
 of mil subscription ana the limital 
 upon the liability of stockholders are 
 derived. It is by no means an end 
 of the question tint the subscrip- 
 tion itself is absolute ami uncondi- 
 tional ; and yet some cases cited by 
 the insel foi the respondent 
 
 1 entirely upon the lang 
 
 ,,i the conl i id of subscription, and 
 
 I-*. • no COndll ion i- found therein, 
 
 they hold thai there is none. The 
 distinction in all the cases is that the 
 
 -lent Which i- Sllp- 
 I to I..- paid at once, or w it Inn a 
 
 verv short time, is unconditional, and 
 must he paid in order to meet the 
 preliminary and incidental expenses 
 of organizing the corporation, and 
 getting it into a condition to transact 
 its general business and carry out its 
 general objects. The leading author- 
 ity upon this question, and which has 
 been followed by nearly all the subse- 
 quent cases in this country, is the case 
 of Salem, etc.. Cor)', v Ropes, <i Tick. 
 23, 19 \ni. 1 lee. 363." 
 
 1 Lincoln, etc.. Co. v. Sheldon, It 
 Neb. 279; Anderson v. Railroad Co., 
 91 Tenn. 1 I ; Iowa, eh'., R. Co. v. 
 Perkins, 28 Iowa 281 ; Arkadelphia, 
 etc., Mill- v. Trimble, 54 Ark. 316; 
 Port Edward R., etc., Co. v. A.rpin,80 
 Wis. 21 I. 19 N. W. Rep. 828. 
 
 •TayloT 1'riv. Corp., § 618; Mus- 
 
 grave v. Morrison, ". I Md. 161 , 
 
 '■' Ma ionic, etc.. Assn. v. Ohannell, 
 i ; Minn. 853; Cornell a Michler's 
 Appeal, HI I'a. St. 158; Hamilton v. 
 Railroad Co.. l H Pa.St.84 ; Anderson 
 v. Railroad < !o., 91 Tenn. 1 1 ; Gibbons 
 v. Elli . B3 \\ is. i::i.
 
 § 355 STOCK SUBSCRIPTIONS. 375 
 
 records of the corporation. 1 But the certificate of commission- 
 ers appointed by the legislature to take subscriptions that the 
 required amount has been subscribed is conclusive. 2 
 
 § 355. Payment of deposit. — It is not uncommon for the 
 statute or corporate charter to provide that a certain percent- 
 age of the amount of the subscription shall be paid at the time 
 the subscription is made. It is held by one line of decisions 
 that when the subscription is prior to incorporation a failure 
 to comply with this requirement renders the subscription void. 3 
 Another line of decisions holds that the provision is for the 
 benefit of the corporation, and that it may therefore be waived 
 by it, and that, as the subscriber will not be permitted to take 
 advantage of his own neglect, the contract is enforcible. 4 
 When the subscription is made after the corporation is organ- 
 ized, the requirement, being for the benefit of the corporation 
 alone, may be waived by it unless the contrary appears to have 
 been clearly the legislative intention. 5 Unless the law ex- 
 pressly requires payment to be made in cash, it may be made 
 in services or in any other equivalent of cash. 6 Thus, payment 
 may be made in a promissory note, accepted in good faith, but 
 not in a check, although indorsed, which it is agreed shall not 
 be presented for payment. 7 
 
 § 356. Tender of certificate. — It is not necessary that a cer- 
 tificate of stock should have been issued in order to make a 
 subscriber a member of the corporation and liable on his sub- 
 scription. 8 "A certificate of the shares of stock in a corpora- 
 
 1 Penobscot R. Co. v. Dumrner, 40 sett, 20 Minn. 536; Illinois, etc., R. 
 Maine 172. Co. v. Zimmer, 20 111. 654. 
 
 2 Connecticut, etc., R. Co. v. Bailey, 5 Taggart v. Railway Co., 24 Md. 
 24 Vt. 465. 563 ; Oler v. Railway Co., 41 Md. 593 ; 
 
 3 President, etc., Hibernia Road v. Webb v. Railway Co., 77 Md. 92. 
 
 Hinderson, 8 Sargt. & Rawle (Pa.) 6 Boyd v. Railway Co., 90 Pa. St. 
 
 219; Beach v. Smith, 30 N. Y. 116; 169; Rothschild v. Hoge, 43 Fed. Rep. 
 
 Taggart v. Railway Co., 24 Md. 563; 97; Beach v. Smith, 30 N. Y. 116. 
 
 New York, etc., Co. v. Van Horn, 57 7 Crocker v. Crane, 21 Wend. (N. 
 
 N. Y. 473. Y.) 211. 
 
 4 Wight v. Railway Co., 16 B. Mon. 8 Holland v. Duluth, etc., Co., 68 N. 
 
 (Ky.) 4; M. & St. L. R. Co. v. Bas- W. Rep. 50; Chaffin v. Cummings, 37
 
 37G THE LAW OF PRIVATE CORPORATIONS. § 357 
 
 tion is merely a solemn affirmation under the seal of the com- 
 pany that a certain amount of shares of stock stands in the 
 name of the individual named in the certificate." 1 The exe- 
 cution of notes to the corporation in payment of an installment 
 due on a subscription under a contract by which the shares are 
 to be issued and held by the bank as security for the payment 
 of the notes makes the subscriber a stockholder, although the 
 certificate is not issued. 2 It is no defense to an action on the 
 subscription that a certificate of stock has not been tendered to 
 the subscriber. 3 Such a subscription is not a contract for the 
 purchase of certificates, and the certificate is not necessary to 
 make the subscriber a stockholder. "When a subscriber pays 
 he is the owner of the stock; it is the payment that makes him 
 a stockholder, the certificate being merely evidence of his right; 
 that he is a full stockholder, with all the rights of one, even 
 if a certificate is never issued to him; and, therefore, it is for 
 him to demand a certificate when he wishes one, and not for 
 the corporation to tender it." 4 The tender of a certificate may 
 be made a condition by the terms of the contract. 5 
 
 § 357. Conditional delivery of subscription contract. — A 
 
 written subscription may be delivered to a third person to take 
 effect only on the performance of some condition. But if the 
 delivery is to the corporation or its agent the contract is bind- 
 
 Maine 76; Baynes v. Brown, 36 X. II. to issue t lie certificate before it can re- 
 
 Butler University v. Scoonover, cover on the subscription. Railway 
 
 ill iml. 381; Mitchell v. Beckman, Co. v. Knoxville, 98 Tenn. 1. 
 
 i,| Cal. M7; Pacific Nat'l bank v. Ea- *Marson v. Deither, 49 Minn. 123; 
 
 ton, 141 I'. S. 227; Ten etc., Columbia, etc., Co. v. Dixon, 46 Minn. 
 
 Co Tenn.), 13S.W.Rep. 163 ; Walter A. Woods Co. v. Bobbins, 
 
 7ii. 56 Minn, is, ;,7 N. w. Rep. .",17. These 
 
 1 Shropshire, etc., R. Co. v. Queen, cases overrule St. Paul, etc., R. Co. v. 
 
 L. |;. 7 II. L. 496. Robbins, 23 Minn. 439, and Minneap- 
 
 rough, H s. < '. i^l'. olis, etc., Co. v. Libby, 24 Minn. 827, 
 
 •Chester, etc., ('". v. Dewey, 16 where the court adopted the view that 
 
 Mass. 94; Wemple v. Railroad < '"., 120 the contract was for the purchase of the 
 
 III. 196; Ratter v. Cilpatrick, 63 N. V. certificates of stock as securities. See 
 
 604; Webb v. Railroad Co., 77 Md. 92; Upton v. Tribilcock, 91 U. S. 45; Ful- 
 
 Courtrighl v. Deed* ■ towa 503; gam v. Macon, etc., R. Co., 44 Ga. 597. 
 
 Mitchell v. Beckman, 64 Cal. 117. Bui s Marson v. Deither, 49 Minn. 423; 
 
 oration must be in a position Courtright v. Deeds, 87 Iowa 503.
 
 § 358 STOCK SUBSCRIPTIONS. 377 
 
 ing from the time of such delivery. 1 In a case where the sub- 
 scriber sought to escape liability by asserting that there had 
 been no delivery of the subscription to the corporation, the 
 court said that the promoter who "solicited and obtained the 
 subscriptions occupied the position of agent for the subscribers 
 as a body, to hold the subscriptions until the corporation was 
 formed in accordance with the terms and conditions expressed 
 in the agreement, and then turn it over to the company with- 
 out any further act of delivery on the part of the subscribers. 
 The corporation would then become the party to enforce the 
 rights of the whole body of subscribers. It follows then that 
 considering the subscriptions as a contract between the sub- 
 scribers, a delivery to [the promoter] by a subscriber was a 
 complete and valid delivery, so that his subscription became 
 eo instanti a binding contract. The case stands precisely 
 as a case where a contract is delivered by the obligor to the 
 obligee." 2 
 
 § 358. Performance of condition — Waiver. — A conditional 
 subscription must be accepted by the corporation, and the con- 
 dition must be performed within a reasonable time. 3 The cor- 
 poration has the burden of showing that the conditions have 
 been performed, 4 or that performance thereof has been waived 
 by the subscriber. 5 A waiver may be implied from the con- 
 duct of the subscriber, as by acting as a stockholder with full 
 knowledge of all the facts, or part payment, but it can not be 
 presumed from mere silence. 6 The subscriber may be estopped 
 
 1 Wight v. Railroad Co., 16 B. 4 Santa Cruz R. Co. v. Schwartz, 53 
 
 Mon. (Ky.) 4. Cal. 106; People v. Holden, 82 111. 93. 
 
 2 Minneapolis, etc., Co. v. Davis, 40 5 0'Donald v. Railroad Co., 14 Ind. 
 Minn. 110; Thresher v. Pike Co. R. 259; Hanover, etc., R. Co. v. Halde- 
 Co., 25 111. 340; Quick v. Lemon, 105 man, 82 Pa. St. 36; Slipher v. Ear- 
 Ill. 578. But see Cass v. Pittsburg, etc., hart, 83 Ind. 173 ; Parks v. Evansville, 
 R. Co., 80 Pa. St. 31, Wilgus' Cases. etc.. R. Co., 23 Ind. 567; Thomp. 
 
 3 Johnson v. Kessler, 76 Iowa 411 ; Corp., §1336. 
 
 Blake v. Brown, 80 Iowa 277,45 N.W. 6 Buckport, etc., R. Co. v. Brewer, 
 
 Rep. 751; Stevens v. Corbitt, 33 Mich. 67 Maine 295; Cornell & Michler's 
 
 458; Leev. Imbrie, 13 Ore. 510; Cali- Appeal, 114 Pa. St. 153, 6 Atl. Rep. 
 
 fornia, etc., Co. v. Callender, 94 Cal. 258; Mack's Appeal (Pa.), 7 Atl. Rep. 
 
 120. 481.
 
 37S THE LAW OF PRIVATE CORPORATIONS. § 359 
 
 by his actions from asserting that conditions have not been 
 performed. Thus, one who subscribes for shares and joins in 
 a certificate which sets forth the fact that all conditions prece- 
 dent have been performed will not be heard to say that they 
 have not been performed when sued on his contract of sub- 
 scription. 1 So a shareholder who has participated in the busi- 
 ness of the corporation can not assert that the entire capital 
 was not subscribed.' A substantial compliance with the con- 
 dition is sufficient* 3 
 
 § •">•">'.). Conditions subsequent. — A subscription may be made 
 with an independent condition, for the non-performance of 
 which the company is liable in damages, although the sub- 
 scription itself is absolute and unconditional and enforcible 
 regardless of the performance of the condition. 4 Whether a 
 condition be "precedent or subsequent is a question purely of 
 intention, and the intention must be determined by consider- 
 ing not only the words of the particular clause, but also the lan- 
 guage of the whole contract, as well as the nature of the act 
 required, and the subject-matter to which it relates." 5 Thus, 
 where the subscription was to the stock of a hotel company 
 upon condition that a hotel be built upon a designated lot or 
 block, it was held that the building of a hotel was not a con- 
 dition precedent to the right of the company to collect an as- 
 jmenl upon the stock, as it was obvious that it was the in- 
 tion of the parties that the hotel should be buill by the 
 company out of the proceeds of the stock subscription. 8 As said 
 in another case, where a similar defense was interposed, "it pre- 
 supposes that the company was to build their road without money, 
 
 1 Bavington .. Pittsburg, etc., I.'. Maine661; Mil Id am Foundry v. Hov- 
 
 i ey,38 Mass. 1 17. As t « . what are such 
 
 llman v. Dougherty, M Md.S80. conditions, Bee Kansas City, etc., R. 
 
 ■Taggart v. Western Md. I: Co., 24 Co. v. Alderman, 47 Mo. 349 ; Kelsey v 
 
 M'l. 583; Junction R. <'". v. Reeve, Northern, etc., Co., 15 N Y. 605. 
 I51i : lines, etc. R. Co.v. 'Buckport, etc., R. Co. v. Brewer, 
 
 D enport, etc., R. 67 Maine 295; Lane v. Brainerd, 80 
 
 ('.,. v O'Connor, i'» [owa 177; Mis- Conn. 665. 
 souriPac R.Co.v Tygard,84 Mo 263 'Red Wing, etc., Co. v. Friedrich, 
 
 ♦ Bi >, v. Moore, 60 26 Minn L12.
 
 § 360 STOCK SUBSCRIPTIONS. 379 
 
 and to deliver it, a finished work, to the subscribers, who were 
 then to pay their subscriptions." ' The courts favor conditions 
 subsequent. 2 Only the managing agents of a corporation have 
 authority to accept subscriptions upon conditions precedent. 
 Such contracts can not be made by commissioners prior to 
 incorporation. But, in general, "subscriptions to the capital 
 stock of a corporation may be conditioned as to the time, man- 
 ner, or means of payment, or in any other way not prohibited 
 by statute or the rules of public policy, and not beyond the 
 corporate powers of the corporation to comply with." If the 
 condition is ultra vires or operates as a fraud upon the other 
 stockholders or the creditors of the corporation, it is unenforci- 
 ble, and the contract of subscription is enforcible without 
 reference to the conditions. 4 
 
 § 360. Subscriptions upon special terms.— Subscriptions 
 upon conditions subsequent are sometimes called subscrip- 
 tions upon special terms. The subscription in such cases 
 is absolute and the subscriber becomes a member of the 
 corporation as soon as his subscription is accepted. An 
 illustration of a subscription upon special terms is found 
 where there is a subscription for shares in a railway company 
 upon condition that payment may be made in railway ties. 
 As said in one case: " A subscription on a condition subse- 
 quent contains a contract between the corporation and the 
 subscriber whereby the corporation agrees to do some act, 
 thereby combining two contracts, one, the contract of sub- 
 scription, the other, an ordinary contract of a corporation to 
 perform certain specified acts. The subscription is valid and 
 enforcible whether the conditions are performed or not. The 
 condition subsequent is the same as a separate collateral con- 
 
 1 Miller v. Pittsburg, etc., R. Co., Meyer v. Blair, 109 N. Y. 600; York 
 40 Pa. St. 237. Park, etc., Assn. v. Barnes, 39 Neb. 
 
 2 Swartwout v. Michigan, etc., Co., 834, 58 N.W. Rep, 440; Upton v. Trib- 
 24 Mich, 389. ilcock, 91 U. S. 45 ; Winston v. Dorsett, 
 
 3 Cook Corps., § 83. etc., Co., 129 111. 64, 21 N. E. Rep. 514. 
 
 4 Melvin v. Insurance Co., 80 111. 446 ;
 
 3S0 THE LAW OF PRIVATE CORPORATIONS. § 361 
 
 tract between the corporation and the subscriber, for breach of 
 which an action for damages is the remedy." 1 
 
 If there is any doubt as to whether a condition was intended 
 to be a condition precedent or subsequent it will be held to 
 be a condition subsequent, that is a subscription upon special 
 terms. 2 A contract of subscription provided that one fourth 
 of the amount should be paid when the road was completed 
 to the county line, and the balance " to be paid in four equal 
 installments of four months as the work progresses through 
 the county, provided the company establishes a depot on said 
 road," at a designated point. The completion of the road to 
 the county line was held to be a condition precedent to lia- 
 bility, but the provision for the construction of a depot was a 
 collateral contract, the non-performance of which did not af- 
 fect the subscriber's liability. 3 
 
 § 361. Subscriptions in excess of .authorized capital. — Such 
 subscriptions are void and no liability thereon attaches to the 
 subscriber. 4 Before a subscriber can be required to pay there 
 must be a distribution of the shares among those who are en- 
 titled to them. 5 In making the distribution the commissioners 
 act judicially. 6 But it is no defense to an action against a 
 '•riber for shares within the limit, that the corporation has 
 issued stock in excess of the limit allowed by law. 7 Where 
 the commissioners have power to apportion stock no subscrip- 
 tion will be void, as each subscriber will then receive (unless 
 the commissioners in the exercise of a lawful discretionary au- 
 thority otherwise determine) such a proportion of the whole 
 capital stock as his subscription bears to the whole amounl 
 Bui the commissioners must have statutory au- 
 thority to make Buch apportionment. 8 
 
 •Morrow v. Steel Co., 87 Tenn. 262. Buffalo, etc., Co. v. Dudley, n N. Y. 
 
 •Paducah, etc., l:. Co. v. Parks, 86 836. 
 
 Tenn. 664,88. W. Rep. 842. R ('n.<-k<>r v. Crane, 21 Wend. 211. 
 
 Paducah, etc., B. Co. v. Parka, 86 7 01erv. Haiti re, etc., R. Co., n 
 
 Tenn Md. 583. 
 
 •Lathropv. Kneeland,46Barb.4S2; ■ Buffalo, etc., Co. v. Dudley, M N. 
 
 Burrows v. Bmith, 10 N. 5 I lark Y. 836. 
 
 v. Tun i. I. »Van Dykev.Stout, 8N. J. Eq.838; 
 
 Bmith, L0 N. Y. 560; Lowell, g 1 16.
 
 § 362 STOCK SUBSCRIPTIONS. 381 
 
 § 3G2. Amount of subscription by one person. — Commis- 
 sioners to take subscriptions may, without statutory authority, 
 limit the number of shares that one person may take. 1 Al- 
 though at common law one person might subscribe for the en- 
 tire capital stock. 2 
 
 § 303. Who may receive subscriptions. — A subscription to 
 be valid and binding upon the corporation must be taken by 
 an authorized agent of the corporation or be subsequently rati- 
 fied by it. 3 The statute sometimes provides that subscriptions 
 shall be received through commissioners, but such provisions 
 are directory only and subscriptions taken in other ways are 
 valid. 4 The authority of such agents is determined by the 
 statute. Acts in excess of the authority conferred by the 
 statute are of no effect unless adopted by the corporation if 
 within its power. A promoter of a proposed corporation who 
 solicits and procures stock subscriptions is the agent of the 
 body of the subscribers to hold the subscriptions until the cor- 
 poration is formed, and then turn them over to it without 
 further act of delivery on the part of subscribers. 5 
 
 § 364. Subscriptions necessary to obtain charter. — Where 
 the law requires that a certain amount of capital stock shall 
 be subscribed before a charter is granted, subscriptions which 
 are merely colorable, or by persons having no reasonable ex- 
 pectation of being able to pay, 6 or without capacity to contract, 7 
 
 1 Brower v. Passenger R. Co., 3 powers of such commissioners, see 
 
 Phil. 161; Perkins v. Savage, 15 Beach on Railways, § 84; Penobscot, 
 
 Wend. (N. Y.) 412. etc., R. Co. v. White, 41 Me. 512; 
 
 * King v. Barnes, 109 N. Y. 267. Croker v. Crane, 21 Wend. 211. 
 
 8 Walker v. Mobile, etc., R. Co., 34 5 Minneapolis, etc., Co. v. Davis, 40 
 
 Miss. 245; Taggart v. Western, etc., Minn. 110. 
 
 R. Co., 24 Md. 563. 6 Holman v. State, 105 Ind. 569; 
 
 4 Buffalo, etc., R. Co. v. Gifford, 87 Leweys Island R. Co. v. Bolton, 48 
 
 N. Y. 294 ; Croker v. Crane,'21 Wend. Maine 451 ; Penobscot R. Co. v. White, 
 
 211 ; Stuart v. Valley R. Co., 32 Gratt. 41 Maine 512. 
 
 146. Contra, Schurtz v. Schoolcraft, 'Phillips v. Bridge Co., 2 Mete, 
 
 etc., R. Co., 9 Mich. 269; Unity, etc., (Ky.) 219; Appeal of Hahn (Pa.), 7 
 
 Co. v. Cram, 43 N. H. 636. As to Atl. Rep. 482.
 
 3S2 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 305 
 
 or upon special terms, 1 or ultra vires, 2 or conditional, can not be 
 counted. 3 They must be binding subscriptions or they can not 
 be included in the amount necessary to enable the corporation 
 to collect its subscriptions and commence business. Subscrip- 
 tions by an agent without authority may be counted in those ju- 
 risdictions in which the agent in such case binds himself, if 
 not his principal.' Before conditional subscriptions can be 
 taken into account the person seeking to enforce the subscrip- 
 tion must make it appear that the conditions have been per- 
 formed, and the subscription thus become absolute. 5 
 
 § 365. Withdrawal of subscriptions — Notice. — A subscription 
 being, by the weight of authority, a mere offer, maybe withdrawn 
 at any time before incorporation, notwithstanding the fact that 
 the subscriber has been active in inducing others to subscribe, 
 and thai his associates have incurred obligations upon the 
 strength of his subscription. 6 A subscription lapses by the death 
 of the subscriber before the corporation is organized and accepts 
 the offer. 7 The right to withdraw ceases when the offer is ac- 
 cepted. It can thereafter be withdrawn only with the consent of 
 the corporation and all the other subscribers. 8 Notice of the with- 
 drawal is usually given to the same person to whom the appli- 
 cation for shares was made. Where the articles of incorpora- 
 
 1 Boston, etc., If. Co. v. Wellington, 
 ] 13 Mass. 79; < iscaloosa, etc., Works 
 v. Parkhurst, 54 [owa " : '7. Contra, 
 Phillips v. Covington, etc., R. Co., 2 
 Mete. Ky.)219. 
 
 : I »enny Hotel < !o. v. Schram, 6 
 Wash. L34, 82 Pac. Rep. 1002. 
 
 8 Caley v. Philadelphia, etc., R. Co., 
 km Pa 3t. 863; 1 1 ualoo a, etc., Wi 
 v Parkhui t, 54 [owa '■'.:,! ; Brand v. 
 i. leville, etc., R Co., 77 < la. 
 
 California, etc., ('<>. v. Ru i 11, 
 277. 
 t 8alem, etc., Corp. v. R 
 Pick I lifornia, etc., < !o. v. Rus- 
 
 sell, B8 Oal. 277, 26 Pac. Rep. L05; 
 Btate v. Smith, 18 Vt. 268 
 
 trand v. Railroad Co., 77 Ga. 508 ; 
 i, etc., Woi l. ■ v. Pai khi 
 
 54 Lowa 357, 6 N. W. Rep. 547 ; South- 
 ern, etc., Co. v. Russell, 88 Cal. 277. 
 
 6 Hudson, etc., Co. v. Tower, 156 
 Mass. 82, 30 N. E. Rep. 165, 161 Mass. 
 10, 36 N. E. Rep. 680; Muncie, etc., 
 Co. v. Green, 143 Pa. St. 269, IS Atl. 
 Rep. 7 17; Cook v. Chittenden, 25 
 Fed. Rep. 544; Holl v. Winfield Rank, 
 25 Fed. Rep. ml"; Marysville, etc., 
 Co. v. Johnson, 93 Cal. 538 ; Lew is 
 v. Mill Co. (Texas Civ. App.), 23 
 s. W. Rep. 838; Plank, etc., Co 
 Burkhard, 87 Mich. 182, 19 N. W. 
 Rep. 
 
 7 Wallace v. Townsend, 48 Ohio St. 
 
 3 V E. Rep. 601. 
 ■ Richelieu, etc., < !o. v. Int., etc., 
 Co., i id in. 248. Bee Minneapolis, 
 etc., Co. v. Davis, 10 Minn. I id.
 
 § 305 
 
 STOCK SUBSCRIPTIONS. 
 
 
 tion are executed and officers elected, oral notice to the president 
 at any time before the completion of the incorporation is suf- 
 ficient. 1 Notice to the promoters' agent who secured the sub- 
 
 1 In Hudson, etc., Co.v.Tower(Mass.) 
 36 N. E. Rep. 680, the court, by Allen, 
 J., said: "The plaintiff's requests for 
 instructions raised no question on 
 this point, but asked the court to 
 rule that, ' in order to constitute a 
 valid withdrawal, the defendants must 
 do some act, or make some unequivo- 
 cal or unconditional statement, to the 
 proper officer or officers of the associ- 
 ates, which shall amount to a public 
 withdrawal from said contract.' The 
 instructions were given with reference 
 to this request, and, as we understand 
 them, they amounted to this: that 
 Mr. Tower, having been chosen as 
 president, and acting for the associ- 
 ates, was, on August 31st, a proper of- 
 ficer to be notified by the defendants 
 of their withdrawal. We think this 
 instruction was right. No instruction 
 was asked at the trial that, in order to 
 withdraw from the associates, notice 
 must be given to all of them individ- 
 ually, or at a meeting of the associ- 
 ates. The plaintiff only contended 
 that the notice must be given to the 
 proper officer or officers. And it 
 would plainly be impracticable to re- 
 quire a direct personal notice to them 
 all. The right to withdraw would be 
 nugatory if this were necessary. A 
 subscriber who has a right to with- 
 draw may not know, or have the 
 means of knowing, who all of his as- 
 sociates are, or where they live. If 
 he does know, they may be many in 
 number, and widely scattered, or 
 some of them may be away on a jour- 
 ney. No general meeting of them 
 may be called which he can attend 
 without leaving the state. He need 
 not wait for a meeting before giving 
 his notice of withdrawal. It was in- 
 
 deed held, in an early case in Eng- 
 land, that all of the other subscribers 
 must not only have notice, but must 
 actually consent, before one of (he 
 subscribers could withdraw. Canal Co. 
 v. Raby, 2 Price (Ex.) 93. But now, 
 in England as well as here, no such 
 consent is necessary. If every one of 
 the other subscribers should object, yet 
 it is the right of a subscriber to with- 
 draw before the corporation is formed. 
 It is merely a question of giving due 
 notice of his withdrawal. And in Eng- 
 land it is not intimated in any modern 
 case, so far as our examination has 
 gone, that notice must be given to all 
 the other subscribers, or to a meeting 
 of subscribers. The retraction has usu- 
 ally been made to the same person to 
 whom the application for shares was 
 made. See Lindl. Partn. 99-105, and 
 numerous cases cited. 
 
 "In this country, no case has been 
 cited, and we have found none, dis- 
 cussing the question what notice of 
 withdrawal will be sufficient. In some 
 cases, no attempt to withdraw was 
 made till after the corporation was 
 formed. See, for examples, Associa- 
 tion v. Walker, 83 Mich. 386, 47 X. 
 W. Rep. 338; Richelieu, etc., Co. v. 
 International, etc., Co., 140 111. 248, 
 29 N. E. Rep. 1044; Shoe Co. v. Hoit, 
 56 N. H. 548; Shober v. Association, 
 68 Pa. St. 429. It is said in Cart- 
 wright v. Dickinson, 88 Tenn. 476, 12 
 S. W. Rep. 1030: 'Before the organ- 
 ization of the corporation and accept- 
 ance of the subscription, * * * the 
 promoters might perhaps agree to re- 
 lease a subscriber by substituting 
 other names for his.' This goes on 
 the idea that the subscriber has not 
 an absolute right to withdraw, and
 
 384 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 366 
 
 scription of the intention to withdraw, and a request that the 
 subscriber's name be dropped from the subscription paper, 
 which facts are communicated to the subscribers at one of their 
 meetings before organization, is sufficient. 1 There can be no 
 withdrawal after the incorporation is completed. 
 
 § 366. Implied agreement to pay for shares. — A subscrip- 
 tion for shares in a corporation having capital stock implies 
 a promise to pay for them, which will sustain an action to col- 
 lect without proof of any particular consideration. 2 This rule 
 applies as well to subscriptions taken before as after incorpo- 
 
 that somebody's assent is necessary, made. See, in addition to the cases 
 In Tavern Co. v. Burkhard, 87 Mich. 
 182, 4t> X. W. Rep. 562, the subscriber 
 apparently made known his refusal to 
 the persons who brought a second 
 papei t" In- Bigned by him, and it was 
 held to be sufficient; hut the proper 
 mode of lmyhil' such notice is not dis- 
 I. and the court incidentally re- 
 marked that 'the corporators well 
 knew, when the company was organ- 
 
 above cited, Auburn Bolt & Nut Works 
 v. Bchultz, 143 Pa. St. 256, 22 All. 
 Rep. 904; Engine Co. v: Green, 143 
 Pa. St. 269, 111 Atl. Rep. 747; Garrett 
 v. Railroad Co., 78 Pa. St. 4G5; Rail- 
 road Co. v. Echternacht, 21 Pa. St. 
 220. An offer of reward made by 
 public proclamation may be with- 
 drawn in the same manner, and the 
 fact that a claimant of the reward 
 ized, * * that the defendants was ignorant of the withdrawal of the 
 
 expressly repudiated the whole ar- offer is immaterial. Shuey v. United 
 rangement.' It is held that the death States, 92 U. S. 73. And, if not with- 
 of a subscriber before the formation of draw n by any express notice, a with- 
 the corporation is a revocation of the drawal is implied after the lapse of a 
 subscription. Phipps v. Jones, 20 Pa. considerable time. Loring v. Boston, 
 
 St. 260; Wallace v. Townsend, 43 
 Ohio Bt.537, 3 N. E. Rep. 60/ ; Pratl 
 v. Trustees, 93 III. 475; Railway Co. 
 v. Wilkei Mo. 236. [nsanity 
 
 jv- also held to be a revocation in 
 
 Beacb v. Methodist , etc., < 'lunch, 96 
 III. 177. Death is a public fact, of 
 which all the world musl take notice. 
 
 7 Mete. (Mass.i 409." 
 
 1 Bryant's, etc., Co. v. Felt, 87 Me. 
 2.°. I, :'.:; L. i;. A. 593, annotated. 
 
 •Upton v. Tribilcock, 91 V. S. 45; 
 Busey v. Eooper, 35 Md. 15, 30; Fort 
 r.'iw aid, etc., Co. v. Payne, 17 Barb. 
 567; N. Y, etc., Co. v. Martin, 13 
 Minn. 117; Walter A. Woods, etc.. Co. 
 
 though the above decisions were not v. Bobbins, 56 Minn. 18,57 N. W. Rep. 
 
 put on that ground Marletl v. .lack- :;i7; Penobscot, etc., R. Co. v. Dunn, 
 
 man, 8 Allen 2s 7 |, hut insanity 1 not. 39 Me. 587 ; Nulton v. Clayton, ->\ low a 
 
 [n most of the cases where the rfghl 425; Mansfield, etc., R. Co. v. Brown, 
 
 of withdrawal of a subscription has 26 Ohio St. 223 ; Windsor, etc., Co. v. 
 
 been held to exist, there is nothing to Tandy, 66 V*t. 248, 29 Ail. Rep. 248; 
 
 show that all the other subscribers Bavington v. Railroad Co., 84 Pa- St. 
 
 were notified, and there has been no 858; Buffalo, etc., Co. v. Dudley 'I 
 
 question a- to the- sufficiency of the N. Y 
 mode in which the withdrawal was
 
 § 307 STOCK SUBSCRIPTIONS. 385 
 
 ration, 1 and is supported by the weight of authority, although 
 it has been held that the corporation can not maintain an ac- 
 tion unless the preliminary subscription ran to the corpora- 
 tion. 2 It may, however, recover damages for the refusal to 
 take the stock. 8 A remedy by forfeiture, if it is meant to be a 
 mere security reserved by the charter or statute to the corpora- 
 tion, is merely cumulative and does not affect the personal lia- 
 bility of the stockholder to pay for the stock. 4 But if it is 
 meant to be a true forfeiture, so that the stock is reclaimed by 
 the corporation, the shareholder is no longer liable. 5 
 
 § 367. The New England rule, — In some of the New En- 
 gland states it is held that a subscriber can not be required to 
 pay for the stock unless he has expressly promised to pay, or 
 the charter expressly obligates him to do so. 6 The rule in New 
 Hampshire is thus stated by Mr. Justice Eastman: "Where 
 a party makes an express promise to pay the assessments he is 
 answerable to the corporation upon such promise for all legal 
 assessments, and may be compelled to its performance by an 
 action at law, before resorting to a sale of the shares. It is a 
 personal undertaking beyond the terms of the charter. Where, 
 on the other hand, he only agrees to take a specified number 
 of shares, without promising expressly to pay assessments, 
 then resort must first be had to a sale of the shares to pay the 
 assessments before an action at law can be maintained. His 
 agreement merely to take the shares is an agreement upon the 
 faith of the charter, and by it alone is he to be governed so far 
 
 1 Minneapolis, etc., Co. v. Crevier, Rutland, etc., R. Co. v. Thrall, 35 Vt. 
 39 Minn. 417; Minneapolis, etc., Co. 536; Carson v. Mining Co., 5 Mich. 
 v. Davis, 40 Minn. 110; Richelieu, 288. 
 
 etc., Co. v. International, etc., Co., 6 Mechanics', etc., Co. v. Hail, 121 
 
 140 111. 248, 29 N. E. Rep. 1044. Mass. 272; Worcester, etc., Co. v.Wil- 
 
 2 Lake Ontario, etc., R. Co. v. Cur- lard, 5 Mass. 80; Atlantic Cotton Mills 
 tiss, 80 N. Y. 219. But see San Joa- v. Abbott, 9 Cush. 423; Katama, etc., 
 quin, etc., Co. v. West, 94 Cal. 399, Co. v. Holley, 129 Mass. 540; Kenne- 
 Wilgus' Cases. bee, etc., R. Co. v. Kendall, 31 Maine 
 
 3 Quick v. Lemon, 105 111. 578. 470; Belfast, etc., R. Co. v. Moore, 60 
 
 4 Hartford, etc., R. Co. v. Kennedy, Maine 561 ; Penobscot, etc., R. Co. v. 
 12 Conn. 499. Dunn, 39 Maine 587. But see Wind- 
 mills v. Stewart, 41 N. Y. 384; sor, etc., Co. v. Tandy, 66 Vt. 248. 
 
 25— Private Corp.
 
 3S6 THE LAW OF PRIVATE CORPORATIONS. § 368 
 
 as his shares are to be affected. He takes them upon the con- 
 ditions and law of the charter. They exist only by virtue of 
 the charter, and are to be governed by the provisions therein 
 contained." ' 
 
 § 368. Premature contract by corporation — Effect upon sub- 
 scription. — The liability of a subscriber for an assessment does 
 not, as a rule, arise until the corporation is sufficiently organ- 
 ized and qualified by the subscription of the required capital 
 stock to enter upon the general business. 2 But a premature 
 and void contract made by a corporation before the amount of 
 capital stock required by the statute has been paid in will not 
 release the subscriber. A corporation organized to construct 
 water-works entered into a contract for the construction of the 
 works before the amount of capital stock required by the law 
 before it could begi-n business was subscribed. In an action 
 brought by the corporation against a subscriber to collect an 
 assessment, the court said: "In the formation of a private 
 civil corporation there are two classes of contracts to be con- 
 red. One is the contract which the corporators or promo- 
 ters make each with all the others, in order to bring the cor- 
 poration into existence, of which a subscription to the capital 
 stock is an example, and which necessarily antedates its com- 
 pleted existence. These are the organizing contracts. The 
 other class is the contract which the corporation itself after it 
 comes into complete existence makes will) third prisons. Both 
 these classes of contracts depend upon the provisions of the 
 charter; and it is usual that the charter of every corporation 
 contains provisions relating to each. The organizing con- 
 tracts are made primarily by each of the subscribers with each 
 of the others. They are, also, in a sense, made with the cor- 
 poration. Bui the making of them is not an exercise of any 
 of the powers or privileges granted to the corporation, because 
 they are the Bteps nec< Bsary to be taken before the corporation 
 is qualified to i k< p< i e any of the powers or privileges granted 
 to it . It needs hardly to be said thai there must be a full com- 
 
 1 New Hampshire, etc., El. Co. v. 'Anvil, etc., Co. v. Sherman, <4 
 
 John Wi,. 226, I L. i; a. 282.
 
 § 369 STOCK SUBSCRIPTIONS. 38? 
 
 pliance with all the charter provisions relating to the organiz- 
 ing contracts before the corporation comes into such a legal 
 existence as to be able to make contracts with third persons at 
 all. Until these preliminary steps have been taken there is 
 no legal person in being capable of exercising any power or 
 privilege whatever. It is obvious enough that any omission or 
 failure to complete the organization would affect any contract 
 with a third person. How any premature contract with a 
 third person could interrupt or hinder the organization is not 
 so plain. If any organizing contract was by its terms condi- 
 tioned that no such contract should be entered into, or if it 
 was so made conditional by the terms of the charter, then it 
 would appear. The contract of subscription, signed by the 
 defendant, is not by its terms conditioned upon anything relat- 
 ing to contracts which the plaintiff might make with third 
 persons, unless the reference to it in the charter puts it in 
 such a condition. * * * The defendant claims that that pro- 
 vision of the charter above quoted is such a condition by im- 
 plication, because it forbids the plaintiff to exercise any of the 
 granted privileges and powers until the required part of the 
 capital stock should be paid in. It does not seem to us that this 
 claim can be sustained. * * * The provision of the charter clear- 
 ly forbade such a contract. Being forbidden, it was void." 1 
 
 § 369. Effect of fraud upon the contract of subscription. — 
 
 The general rule is that whenever the agent of the corporation 
 duly authorized by the corporation to procure subscriptions to 
 its capital stock induces persons to become subscribers to such 
 capital stock by fraudulent representations, or concealments, 
 the person so defrauded will be entitled to claim of the cor- 
 poration a rescission of the contract in the same manner as 
 though the question had arisen between two natural persons, 
 — whenever the question arises between the contracting par- 
 ties, and the rights of third persons are not involved. 2 Or, 
 
 ^augatuck Water v. Nichols, 58 205; Prov., etc., Co. v. Brown, 9 TJ. 
 
 Conn. 403, 8 L. R. A. 637. C. C. P. 286. A transferee of shares 
 
 2 Thomps. Corp., § 1361; French v. can not .be relieved against fraud 
 
 Ryan, 104 Mich. 625; Jewett v. Val- which induced the subscription by his 
 
 ley R. Co., 34 Ohio St. 601 ; Occidental, transferrer. Langer's Case, 37 L. J. 
 
 etc., Co. v. Ganzhorn, 2 Mo. App. Ch. N. S. 292.
 
 3SS THE LAW OF PRIVATE CORPORATIONS, § 370 
 
 as stated in the language of Lord Romilly, "contracts of this 
 description between an individual and a company, so far as 
 misrepresentation or suppression of truth is concerned, are to 
 be treated like contracts between any two individuals. If one 
 man makes a false statement which misleads another, the way 
 this is to be treated affords an example of the way in which a 
 contract is to be treated where a company makes a false state- 
 ment which misleads an individual." 1 
 
 § 370. The English doctrine.— The early English cases held 
 that a subscriber could not escape liability as a contributory 
 by showing that he was induced to subscribe for the shares by 
 the false or fraudulent representations or concealments of the 
 agent of the corporation. In order to be relieved from his con- 
 tract it was necessary for him to show that the fraud was the 
 fraud of the company itself. 2 But "whilst the results reached 
 in these cases are no doubt in conformity with the general cur- 
 rent of the authorities, English and American, there is now lit- 
 tle room to doubt that the ground taken by Lord Romilly and 
 other English equity judges that a corporation is not bound by 
 the fraud of its agent, is, where no other rights are concerned 
 than those of the company and the person defrauded, funda- 
 mentally wrong; because as corporations and joint stock com- 
 panies can only act through agents, it gives them an immu- 
 nity in the commission of fraud not extended to individuals." 1 
 But the English courts in the leading case of Oakes v. Tur- 
 quand 4 adopted the rule that where a person was induced to 
 subscribe f<>r stock in a corporation by (he fraudulent repre- 
 sentations of (he directors of the corporation the contract was 
 voidable, and although the persons who by their fraud induced 
 it might not enforce it, yet other persons may in consequence 
 of it acquire rights and interests which may be enforced 
 against the party who has been so induced to enter into it; 
 thai a person who has been by such fraudulent representations 
 induced to enter into a contracl to purchase shares in a com- 
 pany may have the same rescinded within a reasonable time, 
 
 • Direcl ■, i. i: ■ II. L.99. •Thompe. Corp., § 1862. 
 
 ■Esparto Nicol, 5 Jar. N. 8. 205; 1|! Durquand & Harding, L. 
 
 Av-. i il8. B. 2 ll. I- 826.
 
 § 371 STOCK SUBSCRIPTIONS. 389 
 
 but that he can not relieve himself from liability to contribute 
 to the payment of its debts on the ground that he has been ig- 
 norant of something which with proper diligence he might 
 have known. As between the company and the member, the 
 member may have a good legal or equitable defense, but he 
 may still be called upon to contribute to the assets of the com- 
 pany for the purpose of satisfying the corporate creditors. 1 
 
 § 371. The contract voidable merely — Authority of agent. — 
 
 A contract which a person has been induced to enter into by 
 fraud is voidable only at his election. 2 Before there can be a 
 rescission on the ground of fraudulent representations by the 
 agent of the corporation, the fact of agency must be shown, 
 but it is not necessary that the agent should have had express 
 authority to make the representation or commit the fraud. 
 " That a person professing to act as the agent of another does 
 so wholly without authority, or transcends the authority actu- 
 ally conferred upon him by the principal, is no reason for en- 
 forcing the contract against the other party when obtained 
 from him by false and fraudulent representations." 3 The cor- 
 poration is not of course responsible for representations made 
 by the person who assumes to represent it, when they are en- 
 tirely beyond the scope of his employment and the results 
 have not been accepted or ratified by the corporation. In a 
 Pennsylvania case the court said: " The principle of the cases 
 would seem to be this: that, where representations made by an 
 agent to procure subscriptions are a part of a scheme of fraud 
 participated in by the officers authorized to manage its affairs, 
 or where they are such that the agent may reasonably be pre- 
 sumed by the subscriber to have the authority of the corpora- 
 tion to make them, his representations may be given in evi- 
 dence to show the fraud by means of which the subscription 
 
 J See summary of this case Thomp. 3 Crump v. United States, etc., Co., 
 
 Corp., § 1363. 7 Grat. (Va.) 352, 56 Am. Dec. 116; 
 
 2 Bosherv. Richmond, etc., Co., 89 Waldo v. Chicago, etc., R. Co., 14 
 
 Va. 455, 37 Am. St. Rep. 879 ; Wesiger Wis. 625 ; Tradesmen's Nat'l Bank v. 
 
 v. Richmond, etc., Co., 90 Va. 795; Looney, 99 Tenn. 278, 38 L. R. A, 
 
 Upton v. Englehart, 3 Dill. (C. C.) 837. 
 496; Farrarv.Walker,3 Dill. (C.C.)506.
 
 390 THE LAW OF PRIVATE CORPORATIONS. § 372 
 
 was procured. But when there is no reasonable presumption 
 of authority and no actual authority to make them, the corpo- 
 ration should not be prejudiced by the unauthorized acts of 
 the agent. Hence, when the representation of the agent is 
 contrary to the interest and duty of the corporation, as that 
 he will release, or has authority to release, the subscription 
 he is taking, it is not a reasonable presumption that he has 
 such authority, and a subscriber on such terms would be parti- 
 ceps criminis and held to all the responsibility of a bona fide 
 subscriber." 1 A corporation is not responsible for fraudulent 
 representations made by its president in selling stock fraudu- 
 lently issued by the president, of which he was the owner at 
 the time of the representations. 2 
 
 § 372. Fraudulent representations by promoters. — Before a 
 
 subscriber can have a contract of subscription rescinded for 
 fraudulent representations, he must make it appear that the 
 representations were made by some one having authority to 
 represent the corporation. As a promoter is not the agent of the 
 corporation not yet in being, it follows that the corporation is 
 not bound by his representations or promises. 3 In order to 
 make the corporation liable in damages to subscribers, who 
 have been led to take shares by false and fraudulent represen- 
 tation- it must be shown that such representations were made 
 by agents of the corporation acting within the scope of their 
 authority. In an action for damages on the ground of fraudu- 
 lent representations, it is essential to prove knowledge by the 
 defendant or his agent of the falsity of the statement alleged 
 to have deceived the plaintiff. As a corporation can not have 
 before it exists, it follows thai it is not liable in dam- 
 - for misrepresentations made by its promoters through 
 prospi '-til-'- or otherwise before it comes into existence. 1 Not 
 having made the representations itself or by its agents, it is 
 
 tar v. Titusville, el * 88 'Joy v. Mani >n, 28 Mo. A.pp 
 
 r -i 881 Bee, also, Robinson v. 'Miller v. Wild Oat, etc., Co., - r >7 
 
 l2Pa.St.884, End. 241; Kennedy v. McKay, 18 N. 
 
 72 \m. D •'• L.288; Presby \. Parker, 66 N. H. 
 
 ■ Bank, 59 Minn.221, 409. 
 27.
 
 § 372 STOCK SUBSCRIPTIONS. 391 
 
 not responsible for them. But the promoters may, in fact, 
 after its formation, act as its agents in procuring subscriptions 
 for shares. 1 
 
 The fraud of promoters in procuring a subscription to the 
 stock of a corporation is not a defense to an assessment on the 
 stock by the corporation after the subscriber has carried out 
 his contract and united with others in forming a corporation. 
 His remedy is then restricted to an action against the person 
 making the representations. 2 The defendant united with others 
 for the purpose of forming a corporation, and a preliminary 
 subscription was obtained by a citizens' committee, which was 
 chosen at a public meeting. The subscription was followed by 
 the adoption and signing of articles of incorporation. Those 
 who subscribed the articles became the stockholders. The 
 court said: "The proposition that such stockholder could 
 charge the association with fraud because he was misled by 
 the fraud of interested persons is suggestive of troublesome 
 results. If this can be done, and the stockholder thereby 
 escape payment for this stock, other stockholders, innocent of 
 the fraud, would find their responsibilities proportionately in- 
 creased, and the burdens of the concern would be shifted to 
 those members who were unable to show that they became 
 such through the fraud of others. There would be little stabil- 
 ity to corporations and little safety to stockholders if this doc- 
 trine should be sustained. In this case there not only was not 
 a corporation in existence to be a principal, but the facts set 
 up in the notice do not show that there was an agent of the 
 corporation. The promoters were persons who represented the 
 meeting, or possibly themselves or some prospective stock- 
 holder, who, for purposes of his own, desired to see the cor- 
 poration organized. They can not be said to be agents of the 
 corporation in any sense." 3 
 
 False representations as to the value of property, made by 
 the representatives of a syndicate, and not the corporation, is 
 
 1 Alger, Promoters and the Promo- 3 St. John's, etc., Co. v. Munger, 
 tion of Corps., § 171. 106 Mich. 90, 29 L. R. A. 63. 64 N. W. 
 
 2 See Franey v. Warner, 96 Wis. 222 ; Rep. 3. 
 Getty v. Devlin, 70 N. Y. 504.
 
 392 THE LAW OF PRIVATE CORPORATIONS. § 373 
 
 no defense to a promissory note given for the stock of the syn- 
 dicate which was to purchase the property of the corporation, 
 and which was transferred to the vendor corporation in pay- 
 ment for the property. 1 
 
 § 373. What frauds will vitiate. — In order to avoid a con- 
 tract of subscription on the ground of fraud, the party must 
 show that a false representation or wilful concealment of a 
 material fact was made with an intent to deceive; and that the 
 statements were relied upon and actually deceived him to his 
 injury. 2 In a case where the nature of such misrepresenta- 
 tions was carefully considered, Lord Romilly said: 3 "The basis 
 of this as well as of most of the great principles on which the 
 system of equity is founded is the enforcement of a careful 
 adherence to truth in the dealings of mankind. This princi- 
 ple is universal in its application to cases of contract. It af- 
 fects not merely the parties to the agreement, but also those 
 who induce others to enter into it. It applies not merely to 
 cases where the statements were known to be false by those 
 who made them, but to cases where statements, false in fact, 
 were made by parties who believed them to be true, if in the 
 due discharge of their duty they ought to have known, or if 
 they had formerly known and ought to have remembered the 
 facts which negatived the representation made. * With 
 
 respect to the character or nature of the misrepresentation it- 
 self, it is clear that it may be positive or negative; that it may 
 consist as much in the suppression of what is due as in the as- 
 sertion of what is false; and it is almost needless to add, that 
 it must appear that the person deceived entered into the con- 
 tract on the faith of it." It is not necessary, at least in 
 
 equity, that the fraud should have been willful. This rule 
 
 1 Tradesmen's Nat'1 Banfc v.Looney, firmatively shown. Firsl Nat'] Bank v. 
 
 38 I.. I;. \. 837. In Harford, •-'!' [owa - r >7'.i; Wenstrom, 
 
 Hunter v. French, etc., Co., 96 l"\\;i etc., Co. v. Parnell, 76 Md. LIS. 
 
 eeme t<. have "Pulsfordv. Richards, 22 I.. .1. (Mi. 
 
 been rescinded because of the fraudu- 659. Bee, also, Balem, etc., Corp. v. 
 
 lent representations of the promoters. Ropes, 9 Pick. (Mass.) L87, 19 Am. 
 
 i mnecticut, etc., R. Co. v.Bailey, Dec. 863; Goodrich v. Reynolds, 81 
 
 •ji Vt. 165; 1 1 Irich v. Reynolds, etc., III. 490, 88 Am. Dec. 240. 
 
 .1 in. 190. The traudmust be af-
 
 § 374 STOCK SUBSCRIPTIONS. 393 
 
 applies in an action for rescission; but if the action is for de- 
 ceit against the persons who were guilty of the fraud, it is 
 necessary to show guilty knowledge. In an action brought on 
 calls, where the defense was fraud in procuring the subscrip- 
 tion, the court said: 1 "The defendant, no doubt, is bound to 
 make out a case of moral fraud, but that does not necessarily 
 involve a knowledge of falsehood. It is a fraud to state things 
 which are untrue for the purpose of gain; whether the state- 
 ment is made with a knowledge of their untruth or with a 
 reckless disregard of whether they are true or false, if it be 
 with the intention of misleading another. To state things 
 knowing them to be false, or not knowing whether they are 
 true or false, and careless whether they are true or not, is 
 equally fraudulent. Utter carelessness of truth, where the 
 interests of others is concerned, is evidence of fraud." A 
 representation as to matters of which the subscriber is bound 
 to take notice, as of a matter of law, the extent of the cor- 
 porate powers and the like is no defense to an action on the 
 contract of subscription. 2 So it is no defense to an action 
 based on fraudulent representations that the subscriber might 
 have discovered the truth had he made proper inquiry. 3 
 
 § 374. Expressions of belief or opinion. — It is well settled 
 that oral statements of matters of opinion, intention and be- 
 lief are not such representations as will authorize a court to 
 set aside a contract of subscription. 4 But ''we will not say 
 that a case might not arise where a statement on the part of 
 
 1 Glamorganshire, etc., Co. v. Irvine, Md. 113. For illustrations of fraudu- 
 4 Fost. & Fin. 947. lent statements see the cases collected 
 
 2 Parker v. Thomas, 19 Ind. 213, 81 in a note to Fear v. Bartlett, 33 L. R. 
 Am. Dec. 385; Russell v. Alabama, A. 721. 
 
 etc., R. Co., 94 Ga. 510. Matters of 3 Directors v. Kisch, L. R. 2 H. L. 
 
 law. Clem v. Newcastle, etc., R. 99. But see Mullen v. Beech Grove 
 
 Co., 9 Ind. 488, 68 Am. Dec. 653; Park, 64 Ind. 202. 
 
 Upton v. Tribilcock, 91 U. S. 45. Mis- 4 Richelieu, etc., Co. v. Interna- 
 
 statement as to amount of capital tional, etc., Co., 140 111.248,29 N. E. 
 
 that has been subscribed, and of the Rep. 1044; Armstrong v. Karshner, 47 
 
 amount paid for property. Kent v. Ohio St. 276, 24 N. E. Rep. 897 ; Jeffer- 
 
 Freeland, etc., Co., L. R. 4 Eq. 588; son v. Hewitt, 95 Cal. 535. 
 "Wanstrom, etc., Co. v. Purnell, 75
 
 394 THE LAW OF PRIVATE CORPORATIONS. § 374 
 
 the agent as to the pecuniary condition and prospects of his 
 corporation would not avoid a subscription, but it must be a 
 case where both the falsity and the fraud of such representa- 
 tion are clearly shown, and where it is manifest that the con- 
 dition of the enterprise constituted a material inducement to 
 the subscription. To hold that every subscription to an in- 
 choate undertaking like this can be avoided because some en- 
 thusiastic or reckless agent has boasted of its resources or pro- 
 phesied its speedy completion would be to nullify perhaps the 
 majority of such contracts. To escape from a subscription on 
 this ground, several things must concur. It must be shown 
 that the statement was not uttered as an opinion but as an as- 
 certained and existing fact. It must not only be false in fact, 
 but must also be either known to be so by the party uttering 
 it, or his position must be one that made it his duty to know 
 the truth. The resisting subscriber must show that he acted 
 upon such statement; that his position was such as warranted 
 him in so acting, and that the statement was as to a fact ma- 
 terial to the question of his subscription. Even with these limi- 
 tations it will not avail if the representations are as to matters 
 controlled by the charter, and as to which the "subscriber is 
 legally bound to know that the agent has no right to make 
 p presentations inconsistent therewith." 1 
 
 The representation must be as to a matter of fact and not of 
 belief of a present fact or condition or of expectation of the 
 future. 1 So rescission will not be allowed because of representa- 
 tions as to the legal rights or powers of the corporation, such 
 as the righl <>|' ;i railway company 1<> construct a certain road. 3 
 A subscription made after tin' organization of the corporation, 
 which was induced by false and fraudulent representations 
 as t.) tin- purposes and powers of the corporation will not be 
 
 rgelma, etc., B. <'<>. v. Anderson, 'Columbia, <■)<■., Co. v. Dixon, 46 
 
 :,i M Wighl v. Shelby, etc., Minn. W3. 
 
 R. Co., 16 B. Mon. (Ky.) I; Ellsonv. 'Jackson v. Stockbridge, 29 Tex. 
 
 . , !; ( .. 2; Mont- 804, 94 Am. Dec. 290; Bish v. Brad 
 
 gomery, etc., B. Co. v. Matthews, 77 ford, 17 End. 490 ; Piecataqua, etc. 
 
 A Am. Bep. 80. Co. v. Jones, 89 N. II. 491.
 
 § 375 STOCK SUBSCRIPTIONS. 395 
 
 rescinded, as the subscriber is bound by knowledge of the 
 provisions of the charter. 1 
 
 § 375. Remedies of defrauded stockholders. — A person who 
 is induced by fraudulent representations or concealments to 
 subscribe for shares in a corporation is entitled, if he acts 
 promptly, to a rescission of the contract, 2 or an injunction to re- 
 strain calls, 3 or he may assert the facts as a defense to a suit on 
 an assessment, 4 or for a specific performance of the contract, or 
 in an action for damages against the corporation. 5 The neces- 
 sary elements of the plea of fraud, as stated by Thompson, 6 are: 
 
 1. A distinct allegation of the matter in which the fraudu- 
 lent representation consisted. 
 
 2. That he used reasonable diligence to make himself ac- 
 quainted with the matters of fact in respect to which the fraud 
 is charged, and that within a reasonable time after discovering 
 the facts he repudiated his contract and offered to surrender 
 his certificate. 
 
 After rescinding the .contract the defrauded subscriber may 
 recover from the corporation the money which he has already 
 paid under the contract. 7 
 
 § 376. Rescission — Necessity for prompt action — Laches. — 
 
 A subscriber may have a contract of subscription which was 
 induced by fraud rescinded and annulled, if he acts promptly 
 and before the rights of creditors or subsequent stockholders 
 have accrued. All the cases agree, however, that he must act 
 
 1 Oil City, etc., Co. v. Porter, 99 Ky. defense to an action on a note given 
 254. for the subscription. French v. Ryan, 
 
 2 Waldo v. Chicago, etc., R. Co., 14 104 Mich. 625. 
 
 Wis. G25; Henderson v. Railway Co., 5 Bosley v. National, etc., Co., 123 
 
 17 Tex. 560, 67 Am. Dec. 675. N. Y. 550. 
 
 8 Reese River Co. v. Smith, L. R. 4 6 Thompson Corp., § 1431. 
 
 H. L. 64. 7 Lare v. Westmoreland, etc., Co., 
 
 4 Davis & Co. v. Dumont, 37 Iowa 155 Pa. St. 33. May proceed by at- 
 
 47; Crump v. United States, etc., Co., tachment against the corporation as 
 
 7 Grat. (Va.) 352, 56 Am. Dec. 116 ; Oc- for money had and received. Granger, 
 
 cidental, etc., Co. v. Ganzhorn, 2 Mo. etc., Co. v. Turner, 61 Ga. 561. But 
 
 App. 205; Provincial, etc., Co. v. the money can not be recovered when 
 
 Brown, 9 U. C. C. P. 286; Jewett v. the fraud was that of the promoter. 
 
 Valley R. Co., 34 Ohio St. 601. It is a Perry v. Hale, 143 Mass. 540.
 
 396 THE LAW OF PRIVATE CORPORATIONS. § 377 
 
 with diligence in order to obtain a rescission. 1 As the con- 
 tract is merely voidable it may be ratified, after which it can 
 not be repudiated. 2 He can not wait until he sees whether the 
 enterprise is going to be a failure or a success. "He can not 
 say, 'I will abide by the company if successful, and I will 
 leave the company if it fails,' and therefore, whenever a mis- 
 representation is made of which any one of the shareholders has 
 notice and can take advantage of to avoid his contract with the 
 company, it is his duty to determine at once whether he will de- 
 part from the company, or whether he will remain a member." 3 
 
 § 377. Insolvency — The rights of creditors — English doc- 
 trine. — As to the right of a subscriber to have the contract 
 rescinded after the corporation has become insolvent, or third 
 parties have become creditors of the corporation upon the faith 
 of his name upon the register of corporate books, the decis- 
 ions are conflicting. It is the settled law in England that the 
 insolvency of the corporation cuts off the right of the subscriber 
 to a rescission without reference to his laches. He must act 
 while the corporation is a going concern, or his remedy is lost.* 
 Thus Lord Bramwell said: " Where a company is shown by a 
 winding-up to be insolvent, and where the remedies of the 
 creditors who have trusted the company upon the strength of 
 the uncalled capital, and the names upon the register, would 
 be interfered with by the withdrawal of members, the power 
 to rescind the contract to take shares is gone." 1 
 
 "I take it to be perfectly clear," said Vice-Chancellor 
 Malins, 1 "since the case of Oakes v. Turquand, that where 
 there is a question of whether a man is a contributory or not, 
 no misconducl of the company or false representation or mis- 
 
 • Oakes v. Turqaand, l.. B. 2H. I.. Burgess's Case, L. B. L5Ch.Div.507j 
 
 noteto Fear v. Bartlett, 88 Be Scottish, etc., Co., L. B. 23 Ch. 
 
 I. B. \. 721. l>iv. ii:;. 
 
 •City Bank v. Bartlett, 71 Ga. 797. "Stone v. City and County Bank, 8 
 
 •Lord Bomilly in Ashley's Case, I.. 0. P. Div. 282. 
 
 I: ,9 i 163 ; Ogilvie v. Cnox, etc., 'Pughand Sharman's Case, L. It. 18 
 
 Co., 22 How. (U. 8. Eq. 566 Sec, also, Henderson v. 
 
 'Oakee v Turquand, L. B. 2 II. L. Boyal Brit. Bank, 7 El & Bl. 866. 
 L. B. L2 Eq. 881 ;
 
 § 378 STOCK SUBSCRIPTIONS. 397 
 
 representation, made by them as a means of inducing him to 
 take shares, will relieve him from bearing the responsibility 
 which he at all events holds to creditors, whatever effect it 
 may have between himself and other shareholders." 
 
 § 378. Rule in the United States. — There is no established 
 rule in this country which cuts off the shareholder from 
 claiming a rescission after the commencement of winding up 
 proceedings, without reference to the diligence he has exer- 
 cised in discovering his rights, and repudiating his contract 
 on account of the fraud practiced upon him. 1 In many cases 
 the relief has been denied after insolvency, but the decisions 
 ordinarily turn upon the question of estoppel or laches. It is 
 admitted that if the subscriber acts promptly, he may have the 
 contract rescinded at any time before the corporation becomes 
 insolvent, and the rights of creditors attach. 2 But, after the 
 corporation has become insolvent, and has gone into liquida- 
 tion and is making calls to satisfy the claims of creditors, it is 
 frequently held that it is too late for one whose name had ap- 
 peared as a stockholder to repudiate the contract and escape 
 liability on the ground that his subscription was obtained by 
 fraud. 3 In all these cases the evidence showed that there had 
 either been lack of diligence on the part of the stockholder in 
 discovering the fraud of which he complained, or unreasonable 
 delay in asserting his rights after the discovery of the fraud, 
 or active participation in the management of the corporation, 
 or that debts had been contracted by the corporation subsequent 
 to the subscription, which either gave to corporate creditors 
 
 'SeeThomp. Corp., § 1449. Rep. 585; Duffieldv. Barnuin,etc, Co., 
 
 8 Marten v. Burns, etc., Co., 99 Cal. 64 Mich. 293 ; Turner v. Grangers, etc., 
 
 355 ; Dunn v. State Bank (Minn.), 61 Co., 65 Ga. 649, 38 Am. Rep. 801 ; How- 
 
 N. W. Rep. 27. If the rights of inno- ard v. Turner, 155 Pa. St. 349; Hurd 
 
 cent third persons require that the sub- v. Kelley, 78 N. Y. 588, 34 Am. Rep. 
 
 scription be enforced, the subscriber 567; Mathis v. Pridham, 1 Tex. Civ. 
 
 will not be permitted to repudiate his App. 58, 20 S. W. Rep. 1015; Howard 
 
 liability. Dettra v. Kestner, 147 Pa. v. Glenn (Ga.), 11 S. E. Rep. 610; Up- 
 
 St. 566. ton v. Tribilcock, 91 U. S. 45. See 
 
 8 Upton v. Tribileock, 91 U.S. 45 ; Bis- Upton v. Hansborough, 3 Biss. (C. C.) 
 
 sell v. Heath, 98 Mich. 472, 57 N. W. 417.
 
 398 THE LAW OF PRIVATE CORPORATIONS. § 378 
 
 superior equitable rights, 1 or estopped the shareholder as 
 against the corporate creditor from asserting that he was not a 
 shareholder. Thus, an act done after the discovery of the 
 fraud which is inconsistent with disaffirmance is a waiver of 
 the right, at least in favor of creditors. 2 A subscriber who has 
 served as a director of the corporation can not thereafter as- 
 sert the invalidity of his subscription for stock. 3 One who, 
 after discovery of the fact that his subscription was induced by 
 fraud, remains silent in the hope of receiving a large dividend 
 in the near future, can not after failing to receive it withdraw 
 from the company. 4 One who, after notice of the fraud, par- 
 ticipates in negotiations looking to reorganization can not 
 thereafter rescind as against creditors. 5 Acting as a share- 
 holder, or receiving a benefit from the shares after notice of 
 fraud will estop the subscriber from rescinding the contract. 6 
 One who is a party to the fraud can not, of course, be relieved 
 from its consequences. 7 But the payment of money to save 
 money already paid on a subscription which has been repudi- 
 ated for fraud will not necessarily amount to an affirmance of 
 the subscription. 8 Mere delay may be sufficient to defeat the 
 right to rescind. The application for relief must be made at 
 the earliest possible moment after discovery of the fraud. 9 The 
 laches does not begin to run until the subscriber is chargeaM.' 
 with notice of the fraud. 10 A subscriber who allows his name 
 
 'See Tamer v. Grangers, etc, Co., Case),L. R.24Ch.Div.l49. Delayol 
 
 .. 649, 38 Am Rep. 801. two months is fatal, Ogilvie v. Currie, 
 
 ■ Weisiger v. Richmond, etc., Co., 90 37 L. J. N. S. 541; six months, Ex 
 
 V;1 ; parte Hale, 55 I.. T. N. S. 670, and see 
 
 (American, etc., A.sen. v. Rainboll Upton v. Englehart, ;: Dill I I 
 
 (Neb. i, 67 N. W. Rep. 493. 196; Farrar v. Walker. 3 Dill. (C. C.) 
 
 nlvie v. Knox, etc., Co., 22 How. 506, note; delay of three years, Upton 
 
 (C g_ goo. v. Tribilcock, 91 U.S. 46; seven years, 
 
 Howard v Turner, 156 Pa. St. 349. Dynes v. Shaffer, 19 [nd. 165; Cedar 
 
 •v Bankv. Bartlett, 71 Ga. 797; Rapids, etc., Co. v. Butler, S3 Iowa 
 
 Nicol D l "' 
 
 7 Litchfield Bank v Church, 29 Conn. l0 Virginia Land Co. v. Haupt,90Va. 
 
 137 ; Southern, etc., R. Co v.Hixon,5 533,44 Am. St. Rep. 939, note. See 
 
 I,,,l. 166; Schaeffer v. Missouri, etc., notes, 3 Am. St. Rep. 797; note, 9 
 
 M,, 248. \ |M - Dec. 96, and note, 81 A.m. Dec 
 
 I , ,i . Bartlett, 81 Md. 135. 101. 
 
 1 1„ re London, etc., Co. ( Wallace's
 
 § 379 STOCK SUBSCRIPTIONS. 399 
 
 to remain on the books of the corporation for years and receives 
 dividends, which he does not offer to return, can not have the 
 contract rescinded on the ground of fraud. 1 
 
 § 379. Right to rescind after insolvency continued. — The 
 
 question whether a stockholder should be permitted to rescind 
 his subscription, on the ground of fraud, after the insolvency 
 of the corporation, is attended with much doubt and difficulty 
 because of the peculiar relations which a shareholder sustains 
 to the creditors of the corporation. Judge Dillon, in discuss- 
 ing the question, 2 suggested that the rigid English rulewas in- 
 fluenced, in a measure, by the provision of the companies act, 3 
 which requires a "register of stockholders," to which the pub- 
 lic has access. As no similar register is kept in this country, 
 the English decisions, which hold that the commencement of 
 proceedings to wind up a corporation is a bar to a suit for re- 
 scission, are not strictly applicable in this country. "I am in- 
 clined to the opinion that if a company has fraudulently mis- 
 represented or concealed material facts, and thus drawn an in- 
 nocent person into the purchase of stock, he at the time being 
 guilty of no want of reasonable caution and judgment, and 
 afterwards guilty of no laches in discovering the fraud, and he 
 thereupon, without delay, notifies the company that he repu- 
 diates the contract, and offers to rescind the purchase, these 
 facts concurring, I am inclined to the opinion that the bank- 
 ruptcy of the company subsequently happening will not enable 
 the assignee to insist that the purchase of stock is binding 
 upon him." 
 
 In a recent case it was held that the insolvency of the cor- 
 poration will not prevent the cancellation of a stock subscrip- 
 tion for fraud if the subscriber acted with due diligence in dis- 
 covering the fraud and repudiating the subscription and no 
 considerable amount of indebtedness was contracted after the 
 subscription was made. The question of due diligence is for the 
 jury. "There are obvious reasons," said Judge Thayer, 4 "why 
 
 1 Bissell v. Heath, 98 Mich. 472. 3 2o and 26 Vict. Ch. 89. 
 
 2 Upton v. Englehart, 3 Dill. (C. C.) *Newton Nat'] Bank v. Newbegin, 
 496. 20 C. C. A. 339, 74 Fed. Rep. 135, 33
 
 400 THE LAW OF PRIVATE CORPORATIONS. § 379 
 
 a shareholder of a corporation should not be released from his 
 subscription to its capital stock after the insolvency of the 
 company, and particularly after a proceeding has been in- 
 augurated to liquidate its affairs, unless the case is one in 
 which the stockholder has exercised due diligence and in 
 which no facts exist upon which corporate creditors can reason- 
 ably predicate an estoppel. When a corporation becomes bank- 
 rupt, the temptation to lay aside the garb of a stockholder and 
 assume the role of a creditor is very strong, and all attempts 
 of that kind should be viewed with suspicion. If a consider- 
 able period of time has elapsed since the subscription was 
 made; if the subscriber has actively participated in the 
 management of the affairs of the corporation, if there has 
 been any want of diligence on the part of the stockholder, 
 either in discovering the alleged fraud or in taking steps to 
 rescind when the fraud was discovered, and above all if any 
 considerable amount of indebtedness has been created since 
 the subscription was made, which is outstanding and unpaid; 
 in all of these cases the right to rescind should be denied, 
 where the attempt is not made until the corporation becomes 
 insolvent. But if none of these conditions exist and the proof 
 of the alleged fraud is clear, we think that a stockholder 
 should be permitted to rescind his subscription as well after as 
 before the company ceases to be a going concern. There is 
 some force, doubtless, in the view which lias sometimes been 
 takeo by eminent judges, that when a person has been in- 
 veigled into making a stock subscription by representations 
 thai were clearly false and fraudulent, he should be entitled 
 to rescind his subscription, even after the insolvency of the 
 company, under the Bame circumstances that would entitle 
 him to rescind a contract of a different nature; thai is to say, 
 by proof of due diligence in discovering the fraud, and of 
 
 I.. I:. L 727, annotated. To the same do rescission after the rights of bona 
 
 Dorsey M m t <-t i Co. v. M<-- fide creditors bad intervened or the 
 
 Caffrey, L89 tnd. 645; Stuffelbeam v. corporation stopped payment and be- 
 
 De Laahmutt, 83 Fed. Rep. 149. In came actually insolvent, at least with- 
 
 • ii v. South Salem, etc., <'"., 94 out showing diligence in discovering 
 
 \':i. 28, it \v;ih held that there could be the Fraud and repudiating the contract.
 
 § 380 STOCK SUBSCRIPTIONS. 401 
 
 prompt action after its discovery. 1 The case in hand, however, 
 does not require us to go to that length even if we felt so dis- 
 posed." 
 
 § 380. Rights of rescission before insolvency of corporation. 
 
 — Where a subscription to the capital stock of a corporation 
 was procured through the false and fraudulent representation of 
 the corporation, and the subscriber, without laches or unrea- 
 sonable delay in discovering the fraud and within a reasonable 
 time after such discovery, and before the execution by the cor- 
 poration of a deed conveying its property in trust for the benefit 
 of its creditors, notified the president of the corporation that he 
 repudiated the contract and refused to make any further pay- 
 ment on account of his subscription, such facts constitute a 
 valid defense to an action by the trustee to recover from the 
 subscriber the unpaid installments due upon his subscription. 
 The court said: 2 "The defense is that the defendant was in- 
 duced to become a shareholder upon the faith of certain repre- 
 sentations set forth in a prospectus issued by the company, 
 and that these representations were false and fraudulent, and 
 that the defendant within a reasonable time after the discovery 
 of the fraud, and before the execution of the deed of trust, re- 
 pudiated the contract and refused to make any further pay- 
 ments on account of his subscription. * * * As against 
 the company itself it is well settled that a shareholder may re- 
 scind a contract of subscription procured through the fraud of 
 the company within a reasonable time after the discovery of 
 the fraud. * * * This well settled rule applies with even 
 greater strictness with regard to representations set forth in a 
 prospectus issued by a company far the purpose of inviting 
 
 1 See Upton v. Tribilcock, 91 U. S. was held defective because it did not 
 45 ; Duffield v. Wire Works, 64 Mich, "show that the defendant made use of 
 293; Florida Land, etc., Co. v. Mer- reasonable diligence to make himself 
 rill, 2 U. S. App. 434, 52 Fed. Eep. 77. acquainted with the matters in re- 
 
 2 Savage v. Bartlett, 78 Md. 561; spect to which the fraud is claimed, 
 Dufheld v. Wire Works, 64 Mich. 293, nor when or how he repudiated the 
 by a divided court. In Upton v. En- contract." 
 
 giehart, 3 Dill. C. C. 496, the defense 
 26 — Private Corp.
 
 402 THE LAW OF PRIVATE CORPORATIONS. § 381 
 
 persons to join in the undertaking; and although some allow- 
 ance must be made for the manner in which the advantages 
 which are likely to be enjoyed by the subscribers are described, 
 yet as was said by the lord chancellor in the case to which we 
 have just referred, 'no misstatement or concealment of any ma- 
 terial facts or circumstances ought to be permitted.'' After 
 reviewing many cases the court said: "We may also refer to 
 Farrar v. Walker, 1 before Mr. Justice Miller on appeal to the 
 circuit court, in which that learned judge recognizes in express 
 terms the right of the defrauded shareholder to repudiate the 
 contract and to repudiate it even after the insolvency of the 
 company, if he has not had reasonable time in which to exam- 
 ine into the affairs of the company before the appointment of 
 the assignee." 
 
 In a subsequent case upon practically the same facts, the 
 Savage case was adhered to, and it was said that there was 
 nothing in the decision in conflict with the theory that un- 
 paid subscriptions are a trust fund for the benefit of creditors, 
 when that theory was rightly understood. It could have no 
 application until after the corporation became insolvent. 2 
 
 § 381. Insolvency — Rule of diligence. — In a Minnesota case 
 the court, after stating that it was unnecessary to determine 
 whether the subscriber is bound absolutely as between him 
 and the creditors regardless of Laches, or whether lie is bound 
 only when he has not been guilty of laches, said: "To say the 
 least a very different rule of diligence is required as between 
 him and the creditors than is required between him and the 
 corporation. While there is no privity of contract between 
 him and the creditors, and as a mere stockholder lie is not an 
 agenl of the corporation, still be is to a considerable extenta 
 member of the corporate family. He has a right while it is a 
 going concern to inspect the books and investigate the affairs 
 of the corporation. He has visitorial powers and duties which 
 the creditor has not. He held himself out, as a stockholder 
 ;m ,l it [a to I"- presumed, after the lapse of time, that cFeditora 
 
 ■ Jferrarv. Walker, 3 Dill. C. C. .".or,. *Fear v. Bartlett, 81 Md. 485, 8a i 
 
 R. A. 721.
 
 § 382 STOCK SUBSCRIPTIONS. 403 
 
 became such on the faith of his liability as a stockholder. 
 Under these circumstances it is, to say the least, his duty to 
 use a high degree of care and diligence to see that creditors are 
 not misled and deceived by his conduct. What would consti- 
 tute laches as between him and the creditors would not as be- 
 tween him and the corporation itself." ' 
 
 § 382. Enforcement of subscription contracts by action. — 
 
 If a subscriber neglects or refuses to pay his subscription ac- 
 cording to its terms, the corporation may maintain an action 
 against him upon the contract. It is generally held that a sub- 
 scription raises an implied promise to pay the assessments, al- 
 though in the New England states it is held that an express 
 promise is necessary. The insolvency of the corporation is no 
 defense to an action to collect subscriptions. 2 
 
 § 383. Calls. — Before an assessment can be collected, it is 
 ordinarily necessary that there shall be a call in due form. If 
 the charter of a corporation or the contract of subscription 
 makes the amount of the subscription payable at once or 
 at a stated time, it is not necessary that the directors should 
 make a formal call on the subscriber. 3 But when a formal 
 call is made necessary by the charter, by-law or contract, 
 it is a condition precedent to liability and no action can be 
 maintained to collect an assessment until the call is made 
 by the proper person and in the prescribed manner. 4 This 
 rule applies when the charter or contract is silent, and when 
 the time of payment is left to be determined by the board of 
 directors* If there is no determination of the person or body 
 by which calls shall be made, they must be made by the di- 
 
 1 Dunn v. State Bank, 59 Minn. 221, Spangler v. Railway Co., 21 111. 275. 
 
 61 N. W. Rep. 27. See Williams v. Taylor, 120 N. Y.244. 
 
 s Dill v. "Wabash, etc., R. Co., 21 When the contract requires a call the 
 
 111. 90. corporation can not show an oral con- 
 
 3 Ruse v. Bromberg, 88 Ala. 619; tract to the effect that there should be 
 Phoenix, etc., Co. v. Badger, 67 N. Y. no call: Grosse, etc., v. I' Anson's 
 294. Ei'rs, 43 N. J. L. 442. A subscriber 
 
 4 North, etc., R. Co. v. Spouleck, 88 can not question the necessity of a 
 Ga. 283 ; Glenn v. Howard, 65 Md. 40; call. Chouteau, etc., Co. v. Floyd, 74 
 Seymour v. Sturgess, 26 N. Y. 134; Mo. 286.
 
 404 THE LAW OF PRIVATE CORPORATIONS. § 383 
 
 rectors. 1 They must act in their capacity as a legally consti- 
 tuted board, 2 and in the manner prescribed by the charter. 
 It has been held a call can not be made by a dc facto board of 
 directors, 3 but there are several cases to the contrary. 4 If the 
 charter or by-law provides that a call shall be made by a cer- 
 tain person or body, a call made in any other manner or by 
 any other person is invalid. 5 In the absence of a special re- 
 quirement, the manner of making the assessment is within 
 the control of the board of directors, and it is only necessary 
 that their acts shall be sufficient to clearly indicate their in- 
 tention to render a part or all of the unpaid subscription due 
 and payable. 6 A call may be made upon all subscribers for 
 the purpose of raising money for preliminary expenses, 7 but 
 thereafter no further calls can be made until the corporation 
 is ready to begin business. 8 This may of course be changed 
 by the terms of the contract of subscription or by the provi- 
 sions of the charter. After a subscriber repudiates his subscrip- 
 tion no call is necessary before proceeding to enforce the contract. 9 
 An unpaid subscription draws interest from the time the sub- 
 scriber is in default. If a call is necessary, interest begins to run 
 from the time fixed for the payment of the call. 10 Under a statute 
 providing for calls on " giving such notice thereof as the by- 
 laws may prescribe," a by-law prescribing such notice is a 
 condition precedent to a valid call. 11 The directors may be re- 
 quired to make calls at the instance of creditors, 18 or a call 
 may be made by the court. 13 A call for an assessment need 
 
 1 Budd v. Multnomah, etc., R. Co., 6 Budd v. Multononiah, etc., Co., 15 
 
 k. Ore. in. The directors can not Ore. 413. 
 
 delegate the power to make calls. Sil- 7 Salem Mill Dam Corp. v. Ropes, 9 
 
 v. i Hook Road v. Greene, L2 R. I. 164. Pick. (Mass.) L87, L9 Am. Dec. 363. 
 
 'People, etc., Co. v. WVscott, 14 8 Anvil, etc., Co. v. Sherman, 74 
 
 Gray (Mass.) WO; Moses v. Tompkins, Wis.226. 
 84 Ua. 618. "Cass v. Railroad Co., 80 Pa. St. 81. 
 
 ' Moses v. Tompkins, 84 Ala. 618. "Gould v. Oneonta, 71 X. Y. 298. 
 
 ■Chandler v. Sheep, etc., Co. (Utah, u Germania, etc., Co.v. King, 94 
 
 i'i Pac. Rep. 635; Steinmete v. Wis. 439, 86 L. R. LSI. 
 \ '• i >;< , etc., Co., 67 Ind. 467; Ma- u Germantown, etc., Co.v. Fitler, 60 
 
 con, etc., R. Co. v. Vason, 57 Ga. 81 I. Pa. St. 124 ; Scovill v. Thayer, LOB D 
 
 * People's, etc., Co. v. Weseott, 1 1 S. 1 13. 
 Gray | Mass.) 140. ,: ' Marston v. Deither, 49 Minn. v>3.
 
 § 384 STOCK SUBSCRIPTIONS, 405 
 
 not name the time, place or person to whom the payment is to 
 be made, where the corporation has a place of business and 
 an officer authorized .to receive money due it, as the time un- 
 der such circumstances is on demand to such officer at such 
 place of business. 1 
 
 § 384. Calls — Uniformity — Demand. — A valid call must 
 operate uniformly upon all the shareholders, and require all to 
 pay the same proportion at the same time. 2 But if some share- 
 holders have already contributed more than others, it would 
 be not only the right but the duty of the directors to make 
 calls upon other shareholders in such amounts as to equalize 
 the contributions of all. 3 No notice or demand is necessary, 
 unless provided for by the charter or contract. 4 But when re- 
 quired it is a condition precedent to liability unless waived by 
 the subscriber. 5 A general provision for notice requires actual 
 notice, and in such case publication is not sufficient. 6 But 
 actual notice, although not given in the manner provided by 
 the by-laws, is always sufficient. 7 
 
 § 385. Release of subscriber— By consent, — After a valid 
 contract for subscription to shares has been made the subscri- 
 ber can not withdraw or be released from his obligations with- 
 out the consent of the corporation and all the stockholders, 8 
 and not with such consent if there are corporate debts unpaid. 9 
 But, as already stated, an agreement to take shares in a corpo- 
 
 An assessment made under an order s Morawetz Priv. Corp., § 147. 
 
 of court in another state is conclusive 4 Heaston v. Railway Co., 16 Ind, 
 
 on the stockholders, although resi- 275. 
 
 dents in another state and not served. 5 Rutland, etc., R. Co. v. Thrall, 35 
 
 Mutual, etc., Co. v. Phcenix, etc., Co. Vt. 536. 
 
 (Mich.), 34 L. R. A. 694, annotated; 6 Lake Ontario, etc., R. Co. v. Ma- 
 Glenn v. Liggett, 135 U. S. 533. son, 16 N. Y. 451. 
 
 'Western, etc., Co. v. Des Moines 'Jones v. Sisson, 6 Gray 288. 
 
 Nat'l Bank, 103 Iowa 455; Distin- 8 Selma, etc., R. Co. v. Tipton, 5 
 
 guishing, In re Cawley & Co., L. R. 42 Ala. 787 ; Payne v. Bullard, 23 (1 Cueh- 
 
 Ch. Div. 209; North, etc., R. Co. v. man 88) Miss. 88. 
 
 Spullock, 88 Ga. 283. 9 Cartwright v. Dickinson, 88 Tenn. 
 
 2 Great Western, etc., Co. v. Burn- 476; Boutin v. Dement, 123 111. 143 14 
 ham, 79 Wis. 47, 47 N. W. Rep. 373; 
 Pike v. Railway Co., 68 Maine 445.
 
 406 THE LAW OF PRIVATE CORPORATIONS. § 38G 
 
 ration to be organized is a mere offer which may be withdrawn 
 at any time before it is accepted. 
 
 §386. Release by act of corporation. — The mere mis- 
 management of the affairs of a corporation by its officers 
 and agents will not enable a stockholder to withdraw and be 
 released from his obligation, 1 nor is he released by the fact that 
 the corporation has violated its charter, and thus subjected it- 
 self to a possible forfeiture at the suit of the state. 2 But if the 
 right to amend or alter the charter is not reserved in such a 
 way as to make it a part of the contract of subscription 3 an 
 amendment which materially changes or enlarges the purposes 
 of the corporation will release a subscriber who did not consent 
 thereto. 1 It is generally held that in order to release a sub- 
 scriber such alteration must be material, although much con- 
 flict exists as to what is a material amendment or alteration. 5 
 In some states it is held that if the alteration is of such a char- 
 acter as to facilitate the object for which the corporation was 
 originally organized, and is thus for the benefit of the sub- 
 scriber, he will not be released from his contract, although the 
 alteration is a material one. 6 A radical and material amend- 
 ment never accepted and which became inoperative will not 
 release a subscriber. 7 The mere granting of additional priv- 
 ileges will not release a subscriber, although the effect is to 
 increase the liabilities of the corporation. 8 When no lights of 
 creditors are involved, a complete and final abandonment of 
 the business of the corporation will release a subscriber from 
 further liability on his subscription. 9 In such case it is neces- 
 sary for the subscriber to allege and prove "a final abandon-* 
 
 \ l. Rep. 62; Chouteau, etc., Co. v. N. Y.336; Armstrong v. Karshner, 17 
 
 Floyd, 71 Mo. 286; Potts v. Wallace, Ohio St. 276, 24 N. E. Rep. 897. 
 
 L46 i 5 §488;Mauerv.Staples,82Minn.284. 
 
 1 American, etc., Assn. v. Rainbolt ' > 186; Illinois, etc., I.. Co. v. Zim- 
 
 (Neb.), 67 N. W. Rep. 198. mer, 20 111. 664 ; Hartford, etc., R. Co. 
 
 1 Craven v. Mills Co., 120 Ind. 8, 21 v. Crbswell, 6 Hill (N. Y. 388. 
 
 Rep 981; Taggarl v. Railroad 'Chattanooga, etc., R. Co. v. War- 
 Co., 24 M.l then, 98 Ga. 599. 
 1 Proprietors Union Locks v. Towne, 'Gray v. Navigation Co., 2 Watts. & 
 U ii •, Hartford, etc., R. Co. v. Barg. 166. 
 
 i :i. :. Hill (N. Y i ' Phoenix, etc , Co. v. Badger, 67 N. 
 
 ♦ Bnflalo, etc., R. Co. v. Dudley, u V. 294.
 
 § 387 STOCK SUBSCRIPTIONS. 407 
 
 ment of the work by the company, and also that the payment 
 was not necessary for satisfying any existing demand against 
 the corporation." 1 The mere failure by a railroad corporation 
 to complete its road or a non-user of a part of the road will not 
 release a subscriber unless some provision of the contract of 
 subscription is violated. 2 There may be a release by mere delay 
 to organize the corporation and accepting the offer to take 
 shares. A subscription for shares in a corporation to be or- 
 ganized can not be enforced by the corporation where the 
 rights of creditors have not intervened where no notice of the 
 organization of the corporation was given to the subscriber and 
 no attempt was made to compel him to take the stock until 
 more than two years after the organization was completed. 3 A 
 subscriber can not be held liable when the corporation has issued 
 its entire stock to other subscribers and received pay therefor. 4 
 
 § 3S7. By forfeiture. — A corporation has no inherent power 
 to forfeit shares of stock, and thus release the subscriber from 
 further liability on his subscription because he is in default in 
 the payment of assessments. 5 The power of forfeiture does 
 not exist unless it is conferred by the charter or general law, 
 and a by-law providing for forfeiture which does not rest upon 
 a charter provision is invalid. 6 "We must look to the charter," 
 said Mr. Justice Sharswood, 7 "for the power of the directors 
 to forfeit the stock. No . doubt the power given must be 
 strictly pursued, and if any restrictions or limitations therein 
 
 1 McMillan v. Railway Co., 15 B. (Mass.)303; Nickumv. Burckhardt, 30 
 Mon. 218. See Buffalo, etc., R. Co. v. Ore. 464, 60 Am. St. Rep. 822. 
 Gifford, 87 N. Y. 294. The sale of the l Level Land Co. v. Hay ward, 95 Wis, 
 property and franchises under a con- 109. 
 
 tract which is afterwards rescinded 5 Budd v. Multnomah, etc., R. Co., 
 
 will not release the subscriber. Chat- 15 Ore. 413, 3 Am. St. Rep. 169. 
 
 tanooga, etc., R. Co. v. Warthen, 98 6 In Lesseps v. Architects' Co., 4 La. 
 
 Ga. 599. An. 316, it was held that a forfeiture 
 
 2 Armstrong v. Karshner, 47 Ohio in pursuance of a by-law indorsed on 
 St. 276. the stock certificate was binding upon 
 
 8 Carter, etc., Co. v. Hazzard, 65 the stockholder, on the theory that it 
 Minn. 432. Such a subscriber has the had been agreed to by all the mem- 
 right to take part in the organization, bers. 
 
 People's, etc., Co. v. Balch, 8 Gray 7 Germantown, etc., R. Co. v. Fit- 
 ter, 60 Pa. St, 124, 100 Am. Dec. 546.
 
 408 THE LAW OF PRIVATE CORPORATIONS. § 388 
 
 provided have been disregarded, the alleged act of forfeiture 
 must be declared invalid. This is so for the special reason that 
 it is one of those forfeitures against which, if regular, equity- 
 does not relieve. The right to forfeit shares in any joint stock 
 undertaking must come from the law and can only be exer- 
 cised in the manner provided by the law. 1 Hence, if the 
 charter provides the method of procedure, it must be strictly 
 followed. 2 "The company in enforcing the payment of calls 
 by forfeiture must strictly pursue the mode pointed out in the 
 charter and the general laws of the state. This is a rule of 
 universal application to the subject of forfeiture, and one 
 which the courts will rigidly enforce, and more especially 
 where the forfeiture is one of the prescribed remedies given to 
 the party against which equity does not relieve when fairly 
 exercised." 3 Where the manner of giving notice is prescribed 
 by the law under which calls are made, the directors "have no 
 right to dispense with the mode and manner of notice thus 
 prescribed, and where by positive law personal notice is re- 
 quired, a written notice through the mail is not a compliance 
 with the statute." 4 In order to sustain a forfeiture, every con- 
 dition precedent must be strictly and literally complied with. 6 
 A declaration of forfeiture of shares in an incorporated joint 
 stock company or partnership is void where the articles of as- 
 sociation provide for the publication of notice in the news- 
 p;ijM-r~ of two designated cities for thirty days before declar- 
 ing b forfeiture, and the notice is published in the papers of 
 one city only. 6 
 
 § 088. When forfeiture a cumulative remedy. — Whether tlie 
 right to forfeit Bhares for non-payment of assessments is a 
 cumulative or exclusive remedy will depend upon tin' language 
 
 'Westcot v. Minnesota, etc., Co., 23 Md. 816; Macon, etc., (V \. Vason, 
 
 Mich. 1 16; in re Long [aland Co., L9 57 Ga. 31 1. 
 
 Wend. N. r.)87, 82 Am. Dec. 429. »Morris v. Metalline, etc., Co., 164 
 
 "Allen v. American, etc., A sen., Pa. St. 826, 27 L. R. A. 805 ; Mitchell 
 
 v. Ver it. «'ii-.. ('"., 8 Jonea A: Bpen. 
 
 »] Etedfleld Railways, p. 211, qnoted W6; Johnson v. Lytle, etc., Agency, 
 
 in Morris ▼. Metalline, etc., Co., 164 L. R. 5 Ch. Div. 687. 
 
 t, 826, '^7 I,. l,\ \ ' Morri \. Metalline, etc., Co., Kit 
 
 •Hoghea v. Antietam, etc., Co., 84 Pa. Bt. 326,27 L. R. A.805.
 
 § 389 STOCK SUBSCRIPTIONS. 409 
 
 by which the power is granted. The general rule in the 
 United States is that where a corporation has a statutory right 
 to declare a forfeiture for non-payment of calls, it may exer- 
 cise the option either to forfeit the shares, or bring an action 
 to collect the amount of the call, but that it can not forfeit the 
 shares and afterwards sue at law on the contract. 1 The exer- 
 cise of the option to forfeit in such a case terminates the con- 
 tractual relation between the corporation and the stockholder. 
 The corporation can not even collect the amount of a prior as- 
 sessment after a forfeiture, although a promissory note has 
 been given for the amount. 2 An unsuccessful attempt to for- 
 feit shares will not release the shareholder from personal lia- 
 bility as it has no effect upon the relation in which he stands 
 to the corporation. 3 The question of the liability of the stock- 
 holder after forfeiture will depend upon the nature of the stat- 
 utory remedy. If there is an absolute forfeiture, his liability 
 ceases, but if the remedy provides for a sale of the shares, and 
 an accounting, the amount received for the shares must be 
 credited upon the liability, and the corporation may have its 
 action to recover the unpaid balance. The sale in such case 
 is in the nature of the foreclosure of a lien held by the cor- 
 poration upon the shares. 4 In the states where it is held that an 
 action can not be maintained on a subscription contract unless 
 it contains an express promise to pay, such promise is neces- 
 sary to support an action for a deficiency after a foreclosure 
 and sale of the shares. 5 
 
 § 389. Estoppel of subscriber. — One who subscribes for 
 shares can not avail himself of the irregularities in their issue 
 if he has acquiesced or taken part in the transaction; 6 has 
 
 1 Mandel v. Swan, etc., Co., 154 111. s Instone v. Frankfort, etc., Co., 2 
 
 177, 27 L. R. A. 313 ; Macon v. Vason, Bibb (Ky.) 576. 
 
 57 Ga. 314; Lexington, etc., Co. v. 4 Small v. Herkimer, etc., Co., 2 N. 
 
 Bridges, 7 B. Mon. (Ky.) 556, 46 Am. Y. 330; Rutland, etc., R. Co. v. 
 
 Dec. 528; Carson v. Mining Co., 5 Thrall, 35 Vt. 536. 
 
 Mich. 288; Connecticut, etc., R. Co. 5 Mechanics', etc, Co. v. Hall, 121 
 
 v. Bailey, 24 Vt. 465. Mass. 272; Katama, etc.. Co. v. Jer- 
 
 * Ashton v. Burbank, 2 Dill. (C. C.) negan, 126 Mass. 155. 
 
 435. 6 Clarke v. Thomas, 34 Ohio St. 96;
 
 410 THE LAW OF PRIVATE CORPORATIONS. § 389 
 
 voluntarily paid an assessment thereon, 1 or has subscribed after 
 their issue under circumstances from which it may be pre- 
 sumed that he has waived such irregularities. 2 But a sub- 
 scriber who has done nothing upon which an estoppel may be 
 based, may decline to receive shares improperly issued, and 
 successfully defend a suit brought to recover on the subscrip- 
 tion contract. 3 One who agrees to take shares in a corporation 
 to be organized, who does not participate in the organization, 
 is entitled to receive shares in a regularly and legally organ- 
 ized corporation. The right to membership in a particular 
 corporation may be restricted by express provisions in its 
 charter, but a stockholder may, under certain circumstances, 
 be estopped to assert that he had not the necessary qualifi- 
 cations. Thus, where the defendants subscribed and paid for 
 stock and accepted certificates therefor in a corporation which 
 by its charter restricted the right to hold stock therein to per- 
 sons of a certain nationality, and it appeared that the corpora- 
 tion accepted them as stockholders, and that, without objection 
 on their part, they appeared as stockholders on the books of 
 the corporation three years, during which time debts were con- 
 tracted and the corporation became insolvent, it was held that 
 they were estopped, as against creditors, to assert that they 
 were not stockholders, because not, in fact, eligible to mem- 
 bership in the corporation. 4 
 
 In mi action to collect a subscription for the benefit of the 
 corporation or its creditors, the stockholder can not defend en 
 the ground thai the corporation has not fully complied with 
 tli'- statutes regulating incorporation. 8 An estoppel to be 
 
 Kansas City, etc., <'". v. Harris, 61 Hause v. Mannheimer, 67 Minn. 194, 
 
 Mo. 164. 69 N. W. Rep. sat; State Bank, etc., 
 
 l Delai Butler, 118 U. 8. 634. Co. v. Pierqe, 92Iowa668; Wadesboro, 
 
 ■K I Co. v. Hunt, 57 etc., <'<>. v. Burns, ill N. <'. 
 
 Mm. 126. Thompson v. Reno, etc., Bank, 19 
 
 American Tube WbrkBV. Boston, Nev. L03; Hamilton v. Clarion, etc., 
 
 etc., Co., 139 Ma 5; Reed v. Bo ton, R. Co., in Pa. St. 84; Swartwoul \ . 
 
 i.m. Michigan, etc . R. Co., 24 Mich 
 
 '!'.'.•. Rand (Minn.), 79 N. "W. Butsei City, etc., Co. v. Hunt, 
 
 ... Mo. 126. 
 ■ II;, ling ■. Wil oi . i"i l!! •'■I ;
 
 § 389a stock subscriptions. 411 
 
 availed of must be pleaded. Hence, if a corporation wishes to 
 prevent defendants from controverting its corporate existence 
 on the ground that they have dealt with it as a corporation, it 
 must plead the estoppel. 1 
 
 § 389a. The statute of limitations. — There is some conflict in 
 the authorities upon the question as to when the statute of 
 limitations begins to run upon contracts of subscriptions to 
 the capital stock of a corporation. The supreme court of the 
 United States holds that the statute begins to run against an 
 action against a stockholder in an insolvent corporation in the 
 hands of a receiver to recover unpaid assessments on his stock 
 when the court orders the assessment to be made. 2 The weight 
 of authority establishes the rule that some adverse action on 
 the part of the company or the representative of its creditors, 
 such as the making of a call, is necessary before the statute 
 begins to run. 3 An assessment is necessary, although the cor- 
 poration is insolvent and in the hands of a receiver. A stat- 
 ute is considered as running from the time the call is due and 
 payable. Another class of cases holds that an act of insolvency 
 on the part of the corporation renders the obligation of the sub- 
 scriber to pay absolute, and that the statute begins to run from 
 that time without reference to a call. 4 Still others hold that if 
 a call is not made within the time which bars actions upon 
 contracts of like character, the company is presumed to have 
 abandoned the contract. 5 The statute of the state by which 
 the corporation is created governs. 6 The liability for an un- 
 paid subscription must be distinguished from the additional 
 liability for the debts of a corporation which is sometimes im- 
 
 ^ickumv. Burckhardt, 30 Ore. 464, Bank v. Bridges (Pa.), 8 Atl. Rep. 
 
 60 Am. St. Rep. 822. 611; Garesche v. Lewis, 93 Mo. 197. 
 
 2 Glenn v. Marbury, 145 TJ. S. 499. 5 Pittsburgh, etc., R. Co. v. Byers, 
 
 "Scovill v. Thayer, 105 U. S. 143; 32 Pa. St. 22; Morrison v. Mullin, 34 
 Thomas v. Reno Sav. Bank, 19 Nev. Pa. St. 12. If a subscription is con- 
 171; Carry v. Woodward, 53 Ala. 371 ; ditional, the statute runs from the 
 Washington Sav. Bank v. Bank, 107 time of the performance of the con- 
 Mo. 133 ; Williams v. Taylor, 120 N. Y. dition. Cornell & Michler's App., 114 
 244. Pa. St. 153. 
 
 4 Glenn v. Dorsheimer, 23 Fed. Rep. 6 Glenn v. Liggett, 135 U. S. 533. 
 695, 24 Fed. Rep. 536; Franklin Sav.
 
 412 THE LAW OF PRIVATE CORPORATIONS. § 389« 
 
 posed by statute upon a stockholder for the benefit of creditors. 
 It has been held that when the statute has run against the 
 corporation it also bars an action by the creditors. 1 But the 
 better rule is that, as against the creditors of the corporation, 
 the statute begins to run from the date of their judgments 
 against the corporation. 8 
 
 1 Stilphen v. Ware, 45 Cal. 110. See * Christensen v. Quintard, 36 Hun 
 Blrat Nat'l Bank v. Greene, 64 Iowa (N. Y.) 334; Christensen v. Colby, 
 445. 43 Hun (N. Y.) 362.
 
 CHAPTER 15. 
 
 THE RIGHTS OF MEMBERSHIP. 
 
 §390. 
 
 391. 
 392. 
 
 393. 
 394. 
 
 395. 
 396. 
 
 397. 
 
 398. 
 399. 
 
 400. 
 401. 
 
 402. 
 
 403. 
 404. 
 405. 
 406. 
 407. 
 
 408. 
 
 409. 
 
 410. 
 411. 
 
 Participation in the manage- (a) 
 ment. 
 
 General rights of stockholders. 
 
 Rights in the corporate prop- 
 erty. 
 
 Right to inspect records. 
 
 Conditions upon which inspec- 
 tion is permitted. 
 
 The demand. 
 
 Remedy for wrongful refusal to 
 permit inspection. 
 
 Preference in subscription for 
 new shares. 
 
 I. Dividends. 
 
 Nature of dividends. 
 
 Control of directors over divi- 
 dends. 
 
 Discretion of directors. 
 
 Protection of corporate prop- 
 erty. 
 
 When dividends may be legally 
 declared. 
 
 What are profits. 
 
 Right to dividends declared. 
 
 To whom dividends belong. 
 
 Collection of dividends. 
 
 How payable — No discrimina- 
 tion. 
 
 Right of a pledgee of stock to 
 dividends. 
 
 Unlawful payment of divi- 
 dends — Liability of officers. 
 
 Set-off by the corporation. 
 
 Who entitled to dividends. 
 
 §412 
 413 
 414 
 
 (6) 
 
 As Bel ween Sttccessive Absolute 
 
 Owners. 
 In general. 
 
 Conditional sales and transfers. 
 Transfers made between the 
 date of declaration and pay- 
 ment. 
 
 As Between Life Tenant and Be- 
 mainder-Man. 
 
 415. General statement. 
 
 416. The English rule. 
 
 417. The Massachusetts rule. 
 
 418. The Pennsylvania rule. 
 
 419. General adoption of this rule. 
 
 Actions by Stockholders. 
 Actions against third persons — 
 
 The protection of collective 
 
 rights. 
 When a stockholder may sue. 
 Conditions precedent to right 
 
 of action. 
 Exceptions to the rule. 
 Illustrations — Foss v. Harbot- 
 
 tle. 
 
 425. Mozley v. Alston. 
 
 426. Hawes v. Oakland. 
 
 427. The rights of transferees. 
 
 428. Discretionary power. 
 
 429. Acquiescence. 
 
 430. Parties to the suit. 
 
 431. Right to restrain ultra vires 
 
 acts. 
 
 432. Control by the majority. 
 
 433. Limitations on the power of the 
 
 majority. 
 
 II 
 
 420. 
 
 421 
 422 
 
 423 
 424 
 
 (413)
 
 414 THE LAW OF PRIVATE CORPORATIONS. § 390 
 
 § 390. Participation in the management. — The members of 
 
 a corporation have not ordinarily the right of direct partic- 
 ipation in the management of the corporation. When the 
 stockholders share in the election of directors, and of officers, 
 if the election of officers is retained by the shareholders, 
 they have no further right to a part in the management of the 
 corporation. 1 Within the scope of their authority the directors 
 act for the corporation. And in the exercise of the ordinary 
 powers which are granted to the corporation their discretion 
 can not be controlled by the stockholders. 2 But powers which 
 are extraordinary, and which change the original contract of 
 membership, such as the sale of the entire corporate property, 
 or the acceptance of a material amendment to the charter, can 
 not be exercised by the directors without express authority 
 from the stockholders. 3 
 
 § 391. General risrlits of stockholders. — The rights of stock- 
 holders, as slated by a learned judge, are "to meet at stock- 
 holders' meetings, to participate in the prolits of the business; 
 and to require that the corporate property and funds shall n..' 
 be diverted from their original purpose. If the company be 
 comes insolvent, it is the right of the stockholders to have the 
 property applied to the payment of its debts. I do not know 
 of any other rights, except incidental ones subsidiary and 
 auxiliary to these. Of course, the stockholder has ordinarily 
 the right to a certificate for his stock, to transfer it on the 
 company's books, and to inspect these books. For the in- 
 vasion of these rights by the officers of the company, he may 
 sue at law or in equity, according to the facts in the case." 1 
 
 ! Wights in the corporate properly. — A shareholder in 
 a corporation has no legal title to the property or profits in the 
 
 Corporation Until a division 18 made or a dividend declared. 
 
 lb acquires no right or title to the accumulated gains from 
 
 1 \w to the righl to vote, Bee § 171. Conn. 579 Bee ch. 18, on the man- 
 
 i -. etc . I '"., agemenl of corporations. 
 
 ::i \v. Va. 798, - - I Rep 570. *^Yood8,J., in Forbes v, Memphis, 
 
 l .. v. Smith, 2 etc., R. Co., 2 W Is C. C. 823
 
 § 393 THE RIGHTS OF MEMBERSHIP. 415 
 
 the revenues of the corporation which entitles him to sue for 
 his undivided share of the dividends. Until divided by the 
 directors or trustees of the corporation, all of its property 
 is held by the corporation itself, and no several right is 
 possessed by the individual stockholder until a dividend is 
 declared. The declaration of a dividend from a surplus or a 
 division of profits is within those discretional'}'- powers of the 
 directors or trustees, which will not be controlled by the 
 courts. 1 Under proper circumstances, however, the courts 
 will recognize the fact that although the legal title to the prop- 
 erty is in the corporation, the beneficial interest is in the 
 stockholders. A court of equity will not permit the theory of 
 the separate identity of the corporation to be used for the pur- 
 pose of consummating a fraud or injuring the rights of the 
 stockholders. 
 
 § 393. Right to inspect records. — A stockholder in a corpo- 
 ration has at common law the right to inspect and copy the 
 books and records of the corporation at a convenient time and 
 place 3 for proper purposes, in person or by his attorney-in- 
 fact. 4 The right is very generally secured by statute, and in 
 
 1 Parker v. Bethel Hotel Co., 96 furtherance of the ends of justice, a 
 
 Tenn. 252, 31 L. R. A. 706; Beveridge debtor corporation and the owner of 
 
 v. New York, etc., R. Co., 112 N. all its stock and assets will be treated 
 
 Y. 1,2 L. R. A. 648; In re Kerno- as identical. Pott & Co. v. Schmucker, 
 
 chan, 104 N. Y. 618; Spooner v. Phil- 84 Md. 535, 57 Am. St. Rep. 415. A 
 
 lips, 62 Conn. 62, 16 L. R. A. 461; stockholder is not a trustee for the 
 
 Gibbons v. Mahon, 136 U. S. 549. corporation. Rogers v. Nashville, etc., 
 
 See §400. In some cases it is held R. Co., 91 Fed. Rep. 299. 
 that a stockholder has an insurable 3 In re Steinway, 159 N.Y. 250, 53 N. 
 
 interest in the property of the cor- E. Rep. 1103; Lewis v. Brainerd, 53 Yt. 
 
 poration. Seaman v. Insurance Co., 519; Huylar v. Cragin, etc., Co., 40 
 
 18 Fed. Rep. 250, although the con- N. J. Eq. 392; Commonwealth v. 
 
 trary has been held. A stockholder Phoenix, etc., Co., 105 Pa. St. Ill, 23 
 
 has such an interest in a conveyance Am. Law Reg. (N. S.) 388 and note; 
 
 to or from a corporation as will dis- Bourdette v. New Orleans, etc., Co., 
 
 qualify him to take an acknowledg- 49 La. Ann. 1556. 
 
 ment as a notary. The authorities are 4 Foster v. White, 86 Ala. 467 ; State 
 
 collected in Kothe v. Krag-Reynolds v. Bienville, etc., Works, 28 La. Ann. 
 
 Co. (Ind. App.),50 N. E. Rep. 594. 204; Stone v. Kellogg, 165 111. 192; 
 
 Contra, by statute, Minn. Gen. Laws, Deaderick v. Wilson, 8 Bax. (Tenn.) 
 
 1899, ch 62. 108. 
 
 * Thus, in an appropriate case and in
 
 416 THE LAW OF PRIVATE CORPORATIONS. § 394 
 
 some cases the persons who refuse a stockholder the right to in- 
 spect the books are liable to a penalty which may be recovered 
 without showing actual damages. 1 In Alabama it is provided 
 that "the stockholders of all private corporations have the 
 right of access to, of inspection and examination of, the books, 
 records and papers of the corporation, at reasonable and proper 
 times." Under this statute the stockholder "is not required to 
 show any reason or occasion rendering an examination oppor- 
 tune and proper, or a definite or legitimate purpose. The cus- 
 todian of the books and papers can not question or inquire 
 into his motives and purposes. If he has reason to believe that 
 they are improper or illegitimate, and refuses the inspection on 
 this ground, he assumes the burden to prove them as such." 2 
 Where the statute provided that the stock books should "be 
 open for the inspection of stockholders," it was held that man- 
 damus would not lie when the demand was made by the stock- 
 holder's attorney. 3 But generally the right of the stockholder 
 may be exercised in person, or through his agent or attorney. 4 
 The books must not be appropriated to an unreasonable extent, 
 but access to them can not be denied simply because it would 
 be inconvenient to grant it. 
 
 § 304. Conditions upon which inspection is permitted. — 
 
 Where there is no statute regulating the matter it is generally 
 necessary that there should be some particular matter in dis- 
 pute between the members or between the corporation and in- 
 dividuals in it, in which the applicant is interested, and in 
 respect of which the examination of the books is necessary. 5 
 The stockholder must Bhow a Bpecific and proper purpose. As 
 
 'Kelsey v. Fermentation Co., 51 * Foster v. White, 86 Ala. 467, 6 So. 
 
 Hun (N. Y.) 686; Lewis v. Brainerd, Rep. 88; State v. Bienville, etc., Works, 
 
 53 \t. 510. 28 La. Ann. 204 ; Phoenix, etc., Co. v. 
 
 •Foster v. White, 86 Ala. 167. See Commonwealth, LIS Pa. St. 663. 
 
 Baldwin, 89 Ma. 188; B Lyon v. American, etc., Co., 16 R. 
 
 State v. Bergenthal, 72 Wis. 814; I. 472; Commonwealth v. Iron Co., 
 
 State v. St. Louis, etc., R. Co., 29 Mo. 106 Pa. St. Ill; Phcenix, etc., Co. v. 
 
 .\|,p. 801 . Commonwealth, 1 18 Pa. St. 563 : Com- 
 
 ople v. i'. 8., etc., Co., 20 A.Vb. monwealth v. Pass. R. Co., L84 Pa. St 
 
 NewCaa. L92; State v. 8t. Loui8,etc., 287, 19 Atl. Rep. 629; State ▼. Einstein, 
 
 Mo. .\|.|.. 801. !•• N. J. L. 479.
 
 § 394 THE RIGHTS OF MEMBERSHIP. 417 
 
 said by the Pennsylvania court, the right is not to be exer- 
 cised to gratify curiosity or for speculative purposes, but in 
 good faith, and for a specific honest purpose, and where there 
 is a particular matter in dispute, involving and affecting 
 seriously the rights of the stockholder. 1 The right of inspec- 
 tion does not exist merely for the purpose of gratifying an idle 
 curiosity "at the caprice of the curious and suspicious." 2 
 The fact of general dissatisfaction with the management of the 
 enterprise, based upon a vague belief that it is being improper- 
 ly conducted, 3 or that the stockholder wishes to discover grounds 
 on which to base charges against the corporate body, 4 or to use 
 the information for speculative or fraudulent ends, 5 or to 
 prove a plea of justification in an action against the stock- 
 holders for libel in imputing insolvency to the company, is 
 not sufficient to justify a demand for inspection. 6 But an in- 
 spection may be granted to a stockholder on a prima facie 
 showing of fraud to secure information for a bill to obtain re- 
 lief against the fraud. 7 
 
 Asa general rule mere suspicion that there has been misman- 
 agement is not sufficient to entitle a stockholder to a writ of 
 mandamus, although it has been held on good grounds that a 
 stockholder is entitled to examine the records in order to learn 
 whether the affairs of the corporation are being properly con- 
 ducted by the directors. ""To say that they have the right, but 
 that it can be enforced only when they have ascertained in 
 some way without the books that their affairs have been mis- 
 managed, or that their interests are in danger, is practically 
 to deny the right in the majority of cases. Oftentimes frauds 
 
 'Phcenix, etc., Co. v. Common- 6 M.S. O. Co. v. Hawkins, 4 Hurl, 
 
 wealth, 113 Pa. St. 563. & N. 146. 
 
 'People v. Walker, 9 Mich. 328. 7 Phcenix, etc., Co. v. Common- 
 
 8 Lyon v. American, etc., Co., 16 wealth, 113 Pa. St. 563. As to right 
 
 R. I. 472. to order the corporate books brought 
 
 4 Commonwealth v. Phoenix, etc., within the state for inspection, see 
 
 Co., 105 Pa. St. 111. Mitchell v. Rubber Co. (N. J. Ch.), 
 
 5 In re Sage, 70 N. Y. 220; Com- 24 Atl. Rep. 407; Swift v. Richardson, 
 
 monwealth v. Iron Co., 105 Pa. St. 7 Houst. (Del.) 338. 
 111. 
 
 27— Private Corp.
 
 418 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 395 
 
 are discoverable only by examination uf the books by an ex- 
 pert accountant. The books are not the private property of 
 the directors or managers, but are the records of their trans- 
 actions as trustees for the stockholders. 1 
 
 § 395. The demand. — If the stockholder desires to examine 
 the records of the corporation, it is his duty to make proper 
 demand upon the officers in charge of the same, and to state 
 the reason for which he wishes to make the examination, and 
 the specific and particular books and records he desires to in- 
 spect. A demand of the privilege of inspecting all the books 
 and records of a corporation is too broad and indefinite, and 
 need not be complied with. 2 
 
 § 396. Remedy for wrongful refusal to permit inspection. — 
 
 If a stockholder is wrongfully refused the privilege of inspect- 
 ing the books and records of the corporation upon a proper 
 demand made at the proper time, he may maintain an action for 
 damages against the corporation, or petition for a writ of man- 
 damus to compel the custodian to permit the inspection. 3 The 
 
 1 Huylar v. Cragin Cattle Co., 40 N. Lord Kenyon, in rendering judgment 
 
 .1. Eq. 392, 2 Atl. Rep. 274. in Rex v. Babb, assumed "that in cer- 
 
 ■ Foster v. White, 86 Ala. 467. tain cases the membersof acorpora- 
 
 1 The right of a corporator, who has tionmaybe permitted to inspect all 
 
 an interest, in common with the other papers relating to the corporation." 
 
 corporators, to ins] I the books and In Gery v. Hopkins, the court, on 
 
 papers of the corporation, for a proper granting the order to produce, said: 
 
 purpose and under reasonable circum- "There is great reason for it. for they 
 
 -. was recognized by the courts me hooks of a public company and 
 
 of king's bench and chancery from an kept tor public transactions, in which 
 
 early day, and enforced by motion or the public are concerned, and the 
 
 mandamus, but always with caution, hooks are die title of buyers of stock, 
 
 - to prevenl abuse. Rex v. Fra- by act of parliament." tnRexv.Fra- 
 
 ternity of Boatmen, 2 Strange 1223, ternity of Hostmen, the reporter 
 
 and note; Gery v. Hopkins. 7 Mod. states that the court said: "Every 
 
 L29, case L75; Richards v. Pattinson, member of tin rporalion had. as 
 
 P,:ni, I ;:.; Young v. such, a righl to look into the hooks 
 
 !i. i W.B1.27; Rex v. Shelley, 8 tor any matter thai concerned him- 
 
 R. in; Res v. Babb, id. 579, self, though it was in dispute with 
 
 v. Merchant, etc., Co., 2 others." in re Steinway (N. Y.), 53 
 
 Barn A Adol. 115; In re Burton, L. J, v E. Rep, 1103; Com. v. Phoenix, 
 
 ! B B2;InreWes1 Devon Greal etc., Co., 105 Pa. St. Ill; Lyon v. 
 
 Console Mine, I B 2i Ch Div. 106. American, etc., Co., KJ R. t. 472,17
 
 $ 397 THE RIGHTS OF MEMBERSHIP. 410 
 
 granting of the writ, however, is not imperative, but rests 
 within the sound discretion of the court. 1 The corporation is 
 not a necessary party, as the writ may issue against the officer 
 having the custody of the books and records in question. 2 It is 
 also held that a stockholder who is wrongfully denied the right 
 to inspect the corporate records may recover the damages he 
 sustains thereby from the corporation, 3 or recover a penalty 
 which is provided by statute. 4 
 
 § 397. Preference in subscription for new shares. — When a 
 corporation increases its capital stock, the members, at the time 
 of the vote to issue the new stock, are entitled to the privilege 
 of subscribing for the new stock in proportion to their respec- 
 tive shares of the old. 5 The right is now commonly secured 
 by statute, 6 and passes to the transferee of the original stock. 
 The option may be sold. 7 
 
 Each of the stockholders in a corporation formed by the 
 union of two corporations under an agreement that the capital 
 stock shall be divided into four different classes, with provis- 
 ions for the payment of different dividends on each class, on 
 an increase of the capital stock is entitled to purchase in pro- 
 portion to the amount of stock held by him. 8 
 
 Atl. Rep. 61; Foster v. White, 86 Ala. 5 Gray v. Portland Bank, 3 Mas?. 
 
 467, 6 So. Rep. 88; Stone v. Kellogg, 364; Jones v. Morrison, 31 Minn. 140; 
 
 62 111. App.444; Huylar v. Cattle Co., Dousman v. Wisconsin, etc., Co., 40 
 
 40 N. J. Eq.392, 2 Atl. Rep. 274; Stet- Wis. 418; Humboldt, etc., Assn. v. 
 
 tauerv. New York, etc., Co., 42 N. J. Stevens (Neb.), 52 N. W. Rep. 568; 
 
 Eq. 46; Cockburn v. Union Bank, 13 Ohio, etc., Co. v. Nunnemaeher, 15 
 
 La. An. 289. Ind. 294; Mason v. Davol Mills, 132 
 
 1 Rex v. W. & B. C, etc., Co., 3 Ad. Mass. 76; Eidman v. Bowman, 58 111. 
 
 6 El. 477; People v. Walker, 9 Mich. 444; Jones v. Concord, etc., R. Co. 
 328; Foster v. White, 86 Ala. 467; (N. H.), 38 Atl. Rep. 120. 
 
 People v. Paton, 20 Abb. N. Cas. 195; 6 Cunningham's Appeal, 108 Pa. St. 
 
 In re Sage, 70 N. Y. 221. 546. The stockholders can not be 
 
 s State v. Bergenthal, 72 Wis. 314, 39 charged a bonus on the stock to which 
 
 N. W. Rep. 566; Swift v. Richardson, they are given a right to subscribe. 
 
 7 Houst. (Del.) 338; Foster v. White, 'Baltimore, etc., R. Co. v. Hamble- 
 86 Ala. 467. ton (Md., 1893), 26 Atl. Rep. 279; Bid- 
 
 3 Legendre & Co. v. Association, 45 die's Appeal, 99 Pa. St. 278. 
 La. An. 669. 8 Jones v. Concord, etc., R. Co., 67 
 
 * Lewis v. Brainerd, 53 Vt. 519. N. H. 119, 38 Atl. Rep. 120.
 
 420 THE LAW OF PRIVATE CORPORATIONS. § 398 
 
 This rule, however, does not apply where the stock is issued 
 for the purchase of property which will become a part of the 
 common property of the corporation. 1 
 
 I. Dividends. 
 
 § 398. Nature of dividends. — Dividends are the moneys 
 paid by corporations to the shareholders out of the profits 
 earned in the business. 2 They are said to be the corporate 
 funds derived from the business and earnings of the corpora- 
 tion, appropriated by a corporate act to the use of and to be 
 divided among the stockholders. 8 A distinction is thus made 
 between dividends and profits. Profits belong to the corpora- 
 tion and not to the stockholder until after they have been 
 declared by some proper corporate act. After a dividend 
 is declared, the amount apportioned to the individual stock- 
 holder becomes a debt of the corporation and the stockholder 
 may sue the corporation to recover it in the same manner as 
 any other debt. After a dividend is declared, it becomes the 
 property of the individual stockholder, but an accumulated 
 surplus in existence at the time of the insolvency of a corpora- 
 tion goes to the corporate creditors and not to the stockholders. 4 
 In a case where certain stockholders of an insolvent insurance 
 company claimed the surplus funds of the company beyond 
 the capital stock, Chancellor Walworth said: 5 "The claim is 
 founded on the erroneous supposition that it is the duty of the 
 directors of an insurance company to divide all its surplus 
 funds beyond its capital stock periodically among the stock- 
 holders; leaving such capital stock alone as the fund to which 
 the creditors of the company who become such by the loss of 
 property insured are to look for remuneration, but * * * 
 the capita] stock of au incorporated insurance company is not 
 the primary or natural fund for the payment of losses which 
 
 1 Meredith v. New Jersey, etc., Go., Conn. 17; Lockharl v. Van Alstyne, 
 
 i Bq. 211. :;| Mich. 76; Beveridge v. Railway 
 
 •Hyatt v. Alton, 66 V B. 668. Co., 112 \\ V. 1. 
 •Hagarv. Union Nat'l Bank, 63 Me. »Scott \. Eagle, etc., Co., 7 Paige N. 
 
 I herein cited. V. L9£ 
 4 Beei - •■ ■ Bi idgeporl Spi ing < '"., 12
 
 § 399 THE RIGHTS OF MEMBERSHIP. 421 
 
 may happen by the destruction of the property insured. The 
 charter of the company contemplates the interest upon the 
 capital stock, and the premiums received for insurance, as 
 the ordinary fund out of which losses are to be paid. And the 
 surplus of that fund, after paying such losses, is surplus 
 profits within the meaning of the charter; which surplus 
 profits alone are to be divided, from time to time, among the 
 stockholders." 
 
 § 399. Control of directors over dividends. — The stockhold- 
 ers have no absolute right to have a dividend declared, as the 
 matter rests ordinarily in the discretion of the directors. So 
 long as this discretion is honestly exercised, it will not be con- 
 trolled by the court. 1 "The directors of a corporation, and 
 they alone, have the power to declare a dividend of the 
 earnings of the corporation and to determine the amount." 2 
 The discretion must not be abused, 3 but it is necessary to make 
 a very strong case before the courts will interfere. 4 The 
 supreme court of the United States recently said: 5 "Money 
 earned by a corporation remains the property of the corpora- 
 tion and does not become the property of the stockholders un- 
 less and until it is distributed among them by the corporation. 
 The corporation may treat it and deal with it either as profits 
 of its business or as an addition to its capital. Acting in 
 good faith and for the best interests of all concerned, the cor- 
 poration may distribute its earnings at once to the stockhold- 
 ers as income; or it may reserve part of the earnings of a 
 prosperous year to make up a possible lack of profit in future 
 
 'Gibbons v. Mahon, 136 U. S. 549; Mich. 63; Grant v. Ross (Ky.), 37 S. 
 
 Kaufman v. Woolen Mills Co. (Va.), Wi Rep. 263. 
 
 25 S. E. Rep. 1003 ; Fourgeray v. Cord, 3 Laurel Springs, etc., Co. v. Fouge- 
 
 50 N. J. Eq. 185; Pratt v. Pratt, etc., ray, 50 N. J. Eq. 756; Miner v. Bell 
 
 Co., 33 Conn. 446; Beers v. Bridgeport, Isle Ice Co., 93 Mich. 97. 
 
 etc., Co., 42 Conn. 17. The directors 4 New York, etc., R. Co. v. Nickals, 
 
 may make any distribution of profits 119 U. S. 296; Park v. Grant, etc., 
 
 which they deem judicious, when they Works, 40 N. J. Eq. 114; McNab v. 
 
 are not restrained by the charter or by McNab, etc., Co., 62 Hun (N. Y.) 18; 
 
 contract. Park v. Grant, etc.,Works, Zellerbach v. Allenberg, 99 Cal. 57. 
 
 40 N. J. Eq. 114. s Gibbons v. Mahon, 136 U. S. 549. 
 
 2 Hunter v. Roberts, etc.,. Co., 83
 
 422 THE LAW OF PRIVATE CORPORATIONS. § 3&9 
 
 years; or it may retain portions of its earnings and allow them 
 to accumulate and then invest them in its own plant, so as to 
 secure and increase the permanent value of its property. Which 
 of these courses is to be pursued is to be determined by the 
 directors with due regard to the conditions of the company's 
 property and affairs as a whole; and, unless in case of fraud or 
 bad faith on their part, their discretion in this respect can not 
 be controlled by the courts, even at the suit of owners of pre- 
 ferred stock, entitled by express agreement with the corpora- 
 tion to dividends at a certain yearly rate in preference to the 
 payment of any dividend on the common stock but dependent 
 on the profits of each particular year as declared by the board 
 of directors. By becoming a member of a corporation, a stock- 
 holder impliedly contracts with the corporation that his inter- 
 ests shall be subject to the direction and control of the 
 corporate authorities of the corporation for the purpose of 
 accomplishing the ends for which the corporation was created. 1 
 "The directors of such corporations have opportunities not 
 ordinarily possessed by others of knowing the resources and 
 conditions of the property under their control; and are in a 
 better position than stockholders to determine whether, in 
 view of the duties which the corporation owes to the public 
 and of all liabilities, it will be prudent in any particular year 
 to declare a dividend niton the stock. While their authority 
 in respect of these matters may, of course, he controlled or 
 modified by the company's charter, and while the power of the 
 courts may be invoked lor the protection of the stockholders 
 against bad faith upon the pari of (lie directors, we should hesi- 
 tate to assume that either the legislature or the parties intended 
 to deprive a corporation, by its managers, of tie power to pro- 
 tect the interests of all, including the public, by using 
 earnings when necessary, or when in good faith believed to ],<• 
 3sary, for the preservation or improvemenl of the prop- 
 intrusted to its control." 1 Hence mandamus will no! lie 
 
 ■Clearwater v. Meredith, I Wallace : ' New York, •■)«•., R. Co. v. Nickels, 
 (Tj, £ L19U. 8. 296.
 
 § 400 THE EIGHTS OF MEMBERSHIP. 423 
 
 to compel the directors to declare a dividend unless there is a 
 manifest abuse of discretion or a lack of good faith. 1 
 
 § 400. Discretion of directors. — The free exercise of dis- 
 cretion by the directors in reference to the declaration of divi- 
 dends can not be interfered with by contracts of promoters, 
 unless such contracts were ratified by the corporation after its 
 organization. 2 As above stated, the rule is that the directors 
 are the sole judges of the propriety of declaring a dividend; 
 but they are not allowed to act illegally, wantonly or oppres- 
 sively. When the right to a dividend is clear and there are 
 funds from which it can properly be made, a court of equity 
 will compel the company to declare it. 3 The mere fact that 
 the income of the corporation exceeds its liabilities for the year 
 does not entitle the stockholder to have a dividend declared. 4 
 As the directors "are bound to exercise a proper discretion in 
 making a dividend of surplus profits, if they abuse that powei 
 * * they may, in case of any extraordinary loss, * * * 
 make themselves personally liable to the creditors of the com- 
 pany. On the other hand, should they, without reasonable 
 cause, refuse to divide what is actually surplus profits, the 
 stockholders are not without remedy if they apply to the proper 
 tribunal, before the comoration becomes insolvent." 5 
 
 § 401. Protection of corporate property. — It is the duty of 
 the directors to set aside a fund sufficient to make good the de- 
 preciation of the property of the corporation. 6 The fund 
 available for dividends is ascertained by taking into account 
 the cost of repairs and a reasonable allowance for depreciation 
 for wear and tear or constant use, giving credit for all actual 
 improvements. 7 But this principle does not apply when the 
 
 1 March v. Eastern R. Co., 43 N. H. Maine 445; Fougerary v. Cord, 50 N. 
 
 515; King v. Bank, etc., 2 Barn. & J. Eq. 185. 
 
 Aid. 620. 5 Scott v. Eagle, etc., Co., 7 Paige 
 
 2 Coyote, etc., Co. v. Ruble, 8 Ore. (N. Y.) 198. 
 
 284. 6 Davidson v. Gillies, L. R. 16 
 
 3 Richardson v. Vermont, etc., R. Ch. Div. 347. 
 
 Co., 44 Vt. 613. 7 Wliittaker v. Amwell Nat'l Bank, 
 
 4 Belfast, etc., Co. v. Belfast, 77 52 N. J. Eq. 400.
 
 424 THE LAW OF PRIVATE CORPORATIONS. § 402 
 
 corporation is operated for the purpose of using up certain 
 property, such as a mine. Under such circumstances the 
 transaction of business necessarily reduces the value of the 
 property which gives value to the stock. Hence, a mining cor- 
 poration may distribute as dividends the net profits of its oper- 
 ations without reference to the depreciation of its property 
 caused by removing its ore. 1 A mining company which has 
 paid interest out of capital on debentures during the time when 
 the mine was closed by reason of an accident is not bound to 
 apply profits in replacing the amount so paid before declaring 
 a dividend to stockholders. 2 In estimating the profits for a 
 year for the purposes of a dividend, it is not necessary to take 
 into account the decrease in the value of the assets and the im- 
 pairment of the capital stock prior to that year. 3 When the 
 capital of a corporation is reduced under authority of law, the 
 corporation must, before it distributes the fund thus created 
 among the stockholders, retain enough to make the reduced 
 capital of the actual value of the face of the stock. 4 
 
 § 402. When dividends may be legally declared. — Ordina- 
 rily a dividend can only be paid outof net profits, 5 although, if 
 there are no creditors and no dissenting stockholders, there is 
 no objection to the corporation distributing its capital among 
 its stockholders in the form of dividends. 6 Generally, how- 
 ever, if there are no accumulated profits, a dividend which 
 necessarily results in a partial distribution of the assets to the 
 detriment of creditors and stockholders is illegal. 
 
 § 40:!. What are profits. — The "profits," oul of which divi- 
 dend- alone can properly 1m- declared, means simply what re- 
 mains after defraying every expense. 7 It generally means the 
 
 >l etc., Co. v. Pierce, 90 s Main v. Mills, 6 Bias. (C. C.) 98. 
 
 Gal. l81,27Pac. Rep. n. ' People \. Barker, in N. Y. 251. 
 
 tosanquel v. si. John, etc., Co. Under statutory authority, see ll. 1>. 
 
 (Ch.), 77 Uw T. Rep. 206. 75 Law T. Rep. 8. 
 
 Iton v. Natal, etc., Co., 65 Law 'Mobile, etc., R. Co. v. Tennessee, 
 
 T. Rep. (N. 60 786. L58 U. 8. 186. For definitions ol 
 
 i. Bank, 78 N. V. 608; 
 
 Strong v. Railway Co., 98 N. Y. 426.
 
 §403 
 
 THE RIGHTS OF MEMBERSHIP. 
 
 425 
 
 gain which comes or is received from any kind of an invest- 
 ment where both receipts and expenses are taken into account. 
 Thus, profits for the year means the surplus receipts after pay- 
 ing expenses and restoring the capital to the condition it was 
 in on the first day of the year. The net earnings of a railroad 
 are the gross receipts, less the operating expenses of the road 
 to earn such receipts, and among the expenses should be in- 
 cluded the interest on its debt. The net profits of an insur- 
 ance company are the difference between the amount of the loss- 
 es and the sum of the premiums earned and received from in- 
 surance and the interest on the capital. The capital stock of 
 
 profits, see St. John v. Erie R. Co., 10 200; Earl v. Rowe, 35 Maine 414. 
 
 Profits are divided by writers on po- 
 litical economy into gross and net, 
 the former being the difference be- 
 tween the value of advances and the 
 value of returns, and the latter so 
 much of this difference as arises ex- 
 clusively from the capital employed. 
 In People v. Board of Supervisors, 4 
 Hill (N. Y.) 20, Bronson, J., said : "It 
 is undoubtedly true that profits and 
 income are sometimes used as synony- 
 mous terms ; but, strictly speaking, 
 income means that which comes in or 
 is received from any business or in- 
 vestment of capital without referenceto 
 the outgoing expenditure ; while prof- 
 its generally mean the gain which is 
 made upon any business or invest- 
 ment when both receipts and pay- 
 ments are taken into account. In- 
 come, when applied to the affairs of 
 individuals, expresses the same idea 
 that revenue does when applied to the 
 affairs of a state or nation. In St. 
 John v. Erie R. Co., 10 Blatch. 271, it 
 was said : 'Net earnings are properly 
 the gross receipts, less the expense of 
 operating the road or other business 
 of the corporation. Interest on debts 
 is paid out of what thus remains ; 
 that is, out of the net earnings. The 
 remainder is the profit of the share- 
 holders.' " 
 
 Blatch. (U. S.) 271; Warren v. King, 
 108 U. S. 389; Eyster v. Centennial 
 Board, 94 U. S. 500; Phillips v. East- 
 ern R. Co., 138 Mass. 122; Richard- 
 son v. Buhl, 77 Mich. 632; Hubbard 
 v. Weare, 79 Iowa 678. In People v. 
 San Francisco Sav. Union, 72 Cal. 
 199, the court said: "The word prof- 
 its signifies an excess of the value of 
 returns over the value of advances, 
 the excess of receipts over expendi- 
 tures; that is, net earnings." Con- 
 nolly v. Davidson, 15 Minn. 519, Gil. 
 428. The receipts of a business de- 
 ducting current expenses. It is equiv- 
 alent to net receipts. Eyster v Cen- 
 tennial Board, 94 U. S. 500. In com- 
 merce it means the advance of goods 
 sold beyond the cost of purchase. In 
 distinction from the wages of labor, it 
 is well understood to imply the net 
 returns to the capital or stock em- 
 ployed after deducting all the ex- 
 penses, including not only the wages 
 of those employed by the capitalists 
 but the wages of the capitalist himself 
 for superintending the employment of 
 his capital stock. Smith, Wealth of 
 Nations, book 1, ch. 6; Mill, Politi- 
 cal Economy, ch. 15. The rents and 
 profits of an estate. The income or 
 net income are all equivalent ex- 
 pressions. Andrews v. Boyd, 5 Maine
 
 426 THE LAW OF PRIVATE CORPORATIONS. § 403 
 
 such a company is not the primary fund from which losses 
 are to be paid. Unearned premiums on insurance, which is 
 still subject to the risk, are not surplus profits out of which 
 dividends can be declared. The unearned premiums re- 
 ceived by the company upon which the risks are still running, 
 and which may therefore all be wanted to pa} T losses, are not 
 surplus profits which the directors are authorized by the char- 
 ter to distribute among the stockholders. The capital stock 
 of the company is a special fund provided by its charter to 
 secure the assured against great and extraordinary losses 
 which the primary funds may be found insufficient to meet. 
 And if it becomes necessary at any time to break in on this 
 special fund to pay extraordinary losses, it must be made good 
 from the future profits of the company before any further 
 dividends of those profits can be made. 1 A mutual insur- 
 ance company, when not restricted by statute or by-law, may 
 pay a dividend to the members under certain circumstances, 
 although the effect is to reduce the assets of the company pro- 
 vided for the payment of losses. 2 Money paid on stock as a part 
 payment, which is afterwards forfeited, is not to be considered as 
 profits.' Money paid to compensate a corporation for land taken 
 under the power of eminent domain becomes part of the capital 
 and '•••in not be distributed as profits. 4 Generally, in order to 
 determine whether there are any profits, it is necessary to de- 
 duct from the capital the amount of the capital stoek and the 
 expenses and Losses sustained. 1 Borrowed money is, of course, 
 not profits, 6 although it has been held that under a statute 
 which restricted the payment of dividends to surplus profits, 
 where earnings which might properly have been used for 
 
 1 Lexington, etc., Co. \. Page, 17 B. neBS venture* after deducting the capi- 
 Mon. (Kj I1-; Scot! v. Fire Ins. tal invested in Hie business, the ex- 
 Co., 7 Paige Ch. (N. Y.) 198. penses incurred in its conduct, and the 
 
 • McKeanv. Biddle, 181 Pa.St.861. losses sustained in its prosecution." 
 
 ,i/ . Redd, i l'- Won. L78 197. Park v. Grant, <•!<■.. Works, id N. .1. 
 
 • Heard I Iredge, L09 M Eq. 114; Main v. Mills, 6 Bissell 98. 
 12 \i,,. Etep. 6 Miller v. Bradish, 69 [owa 278; 
 
 Pbe words net profits define Hubbard v. Weare, 79 Iowa 678. 
 then They mean what shall 'Davis v. Mining Co., 2 Utah 74. 
 
 remai laai pain t of anj I
 
 § 404 THE RIGHTS OF MEMBERSHIP. 427 
 
 dividends were used for improving the property of the corpo- 
 ration, it could borrow money to pay the dividends. 1 In this 
 case it used the legitimate profits for the purpose for which it 
 could properly have borrowed the money. An agreement to pay 
 a fixed dividend on stock is valid so long as there are profits 
 out of which to pay it, 2 but it can not be enforced where there 
 are no profits and its payment would result in a distribution 
 of the capital. 3 A bank can not declare dividends out of inter- 
 est not yet received. " Money earned as interest, however well 
 secured or certain to be eventually paid, can not in fact be dis- 
 tributed as dividends to stockholders and does not constitute 
 surplus profits." 4 They do not become such until actually 
 paid. 
 
 § 404. Right to dividends declared. — As already stated, a 
 stockholder has no title to profits accumulated by a corpo- 
 ration, so long as a dividend is not actually declared out of 
 such surplus. 5 Until this is done the title to the fund remains 
 in the corporation. As soon, however, as the dividend is de- 
 clared, the title passes to the shareholders as individuals and 
 the amount thus placed to the credit of the shareholder be- 
 comes a debt due to him from the corporation. Thereafter the 
 relations between the corporation and the stockholder as to the 
 dividend is that of debtor and creditor. The dividend is the 
 property of the stockholder and can not be taken by the cred- 
 itors of the corporation in the event of the insolvency of the 
 corporation. 6 In case of insolvency, no specific dividend fund 
 having been set aside, the shareholder must come in and share 
 with the other creditors. 7 After a dividend is declared a cor- 
 poration has no power to revoke its action and refuse to pay the 
 
 Excelsior, etc., Go. v. Pearce, 90 5 Kaufman v. Woolen, etc., Co. (Va.), 
 
 Cal. 131. 25 S. E. Rep. 1003. 
 
 2 McLaughlin v. Railroad Co., 8 6 LeRoy v. Insurance Co., 2 Edw. 
 Mich. 99. Ch. N. Y. 657 ; Van Dyck v. McQuade, 
 
 3 Painesville R. Co. v. King, 17 Ohio 86 N.Y. 38 ; Peckham v. Van Wagenen, 
 St. 534. 83 N. Y. 40. Dividends declared can 
 
 4 People v. San Francisco, etc., not he taxed as the property of a cor- 
 Union, 72 Cal. 199; Miller v. Brad- poration. Pollard v. First Nat'l Bank, 
 ish, 69 Iowa 278. 47 Kan. 406. 
 
 7 Curry v. Woodward, 44 Ala. 305.
 
 42S THE LAW OF PRIVATE CORPORATIONS. § 405 
 
 dividend, in order to carry the account to a surplus fund. 1 
 But it was held in Massachusetts that a vote declaring a divi- 
 dend could be rescinded at any time before the fact that a div- 
 idend had been declared was made known to the public or 
 communicated to the stockholders. 2 
 
 § 405. To whom dividends belong. — The general rule is that 
 dividends belong to the owner of the stock at the time when 
 they are declared, without reference to the time when earned 
 or payable. The declaration of a dividend is, in legal contem- 
 plation, the separation of the amount thereof from the assets 
 of the corporation, and the corporation thereafter holds the 
 amount as the trustee of the party who was a stockholder at 
 the time it was declared. 3 The dividends are treated as though 
 earned at the time they are declared, and hence the vendee of 
 the shares is entitled to all dividends declared alter the trans- 
 fer. 4 The ownership of dividends may, of course, be made 
 
 1 Beers v. Bridgeport Spring Co., 42 2 Font v. Thread Co., 158 Mass. 84. 
 Conn. 17; King v. R. Co., 29 N. J. See In re Le Blanc, 75 N. Y. 598. 
 Law 82; In re Le Blanc, 75 N. Y. 'Hopper v. Sage, 112 N. Y. 530, 8 
 Ford v. Thread Co., 158 Mass. Am. St. Rep. 771 ; Boardman v. Lake 
 84, 32 N. E. Rep. 1030; Wheeler v. Shore, etc., R. Co., 84 N. Y. 157; In 
 Sleigh Co., 39 Fed. Rep. 347. The re Karnochan, 104 N. Y. 618 ; Good- 
 purchaser of stock upon which, before win v.Hardy,57 Maine 143, 99 Am. 
 its delivery, a dividend has been «le- Dec. 758, and note, 
 clared has no right to refuse to pay for 4 Jermain v. Lake shore, etc., R. 
 the Btock until the Beller gives him an Co.,91 N.Y. 483; Hill v. The Newicha- 
 ron the corporation for the pay- wanick Company, -1 X. Y. 593; Ryan 
 m ent of the dividend, [f he ie en- v. Leavenworth, etc., R. Co., 21 Kan. 
 titled tothepaymenl of the dividend 365; Gemmell v. Davis & Co., 75 Md. 
 H1 ,.|, an order is unneces ary and he 546; Cook v. Mfanroe, 15 N< b. 349. A 
 no right to exact it. By insisting transfer passes all dividends declared 
 upon the order, and refusing to make subsequent to the transfer, although 
 
 payment withoul it, he rescinds the earned before. Kane v. Bl Igood, 
 
 contract and loses both the Btock and 7 Johnson's Ch. 90; Currif v. White, 
 
 the dividend, ff, after the contract is 15 N. Y.822. No matter when payable. 
 
 ma de ror the Bale of the shares of Wheeler 7. Sleigh Co., 39 Fed. Rep. 
 
 stock, but before the time appointed 847i Bright v. Lord, 51 Ind. 272; 
 
 refor, a dividend is de- Hopper v. Sage, 112 N. V 530. Con- 
 
 clared.the purchaser is entitled thereto tra, Burrows v. North Carolina R 
 
 nn complying with his contract to pur- Co., 67 N. 0. 876. 
 chase. Phinizy v. Mm 1 717, 
 •jo \.u St. R< p. 842.
 
 § 406 THE RIGHTS OF MEMBERSHIP. 429 
 
 the subject of contract between the vendor and the purchaser 
 of shares. 1 The corporation is entitled to rely upon its regis- 
 ter, and, if it has no notice of the rights of any other person, 
 it will be protected if it pay its dividends to the person in 
 whose name the shares stand on its books. 2 After notice of a 
 transfer, however, it must pay subsequent dividends to the 
 transferee, although the shares have not been transferred on 
 its books. 3 Corporations commonly provide that their trans- 
 fer books shall be closed a certain number of days before a 
 dividend is declared. Such regulations, in the absence of re- 
 strictive statutes, are valid.* Membership in a corporation does 
 not depend upon the possession of a certificate of stock, and 
 therefore a person who is actually a stockholder is entitled to 
 a dividend, duly declared, although he may never have re- 
 ceived a certificate. 5 
 
 § 406. Collection of dividends, — A dividend already de- 
 clared may be recovered in an action at law by the stockholder 
 against a corporation. 6 A suit to enforce the declaration of a 
 dividend must be in equity. The action to recover a declared 
 dividend should be against the corporation and not the cor- 
 porate officers. 7 It can not be against an individual stock- 
 holder who has received a dividend which it is claimed belongs 
 to the plaintiff. 8 Mandamus is not the proper remedy to com- 
 
 1 Union, etc., Co. v. American, etc., Nat'l Bank, 84 N. Y. 393; Dow v. 
 
 Co., 11 R. I. 569, 13 R. I. 673; Kauf- Gould, etc., Co., 31 Cal. 629. 
 
 man v. Woolen Mills Co., 93 Va. 673. 6 Winchester, etc., Co. v. Wickliffe, 
 
 "Brisbane v. Delaware, etc., R. Co., 100 Ky. 531, 66 Am. St. Rep. 356; Jack- 
 
 94 N. Y. 204; Donnally v. Hearndon, son v. Newark, etc., Co., 31 N. J. 
 
 41 W. Va. 519; Bank of Com. Appeal, Law 277; Westchester, etc., R. Co. v. 
 
 73 Pa. St. 59. Jackson, 77 Pa. St. 321 ; Hall v. Rose 
 
 8 Robinson v. New Berne Nat'l Hill, etc., Co., 70 111. 673; Southwest- 
 Bank, 95 N. Y. 637. ern, etc., R. Co. v. Martin, 57 Ark. 
 
 4 Jones v. Terre Haute, etc., R. Co., 355; Hill v. Atoka, etc., Co., 21 S. W. 
 57 N. Y. 196 ; Robinson v. New Berne Rep. 508. 
 
 Nat'l Bank, 95 N. Y. 637. 7 French v. Fuller, 40 Mass. 108; 
 
 5 Ellis v. Essex Bridge, 19 Mass. 243. Smith v. Poor, 40 Maine 415. 
 
 As to the right of corporation to pay 8 Peckham v. Van Wagenen, 83 N. 
 dividends to husband of the owner Y. 40. 
 of the shares, see Graham v. First
 
 430 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 1407 
 
 pel payment of a dividend. 1 Before suit is brought a demand is 
 necessary, 2 although it has been held that the bringing of a 
 suit is a sufficient demand. 3 A dividend draws no interest un- 
 til a demand for its payment has been made and refused. 4 It 
 is generally held that the statute of limitations begins to run 
 from the time of the demand, 5 although some courts hold that 
 it begins to run from the time when the right to make the de- 
 mand accrues. 6 In an action brought to enforce the payment 
 of dividends which have been declared the corporation can 
 not raise the question of the validity of the dividend. 7 If a 
 stockholder is unlawfully excluded from participation in a 
 dividend, his remedy is against the corporation. 8 Where a 
 corporation declares a dividend on all its stock except the 
 shares named in a certain certificate, the exception is void and 
 the owner of the certificate ma}' sue the corporation to recover 
 the dividend. 9 Dividends are payable within a" reasonable 
 time after they are declared. 10 
 
 § 407. How payable — No discrimination. — When not re- 
 stricted by charter the manner of paying a dividend is under 
 
 1 Van Norman v. Central Car, etc., 
 Co., II Mich. 166. 
 
 1 Winchester, etc., Co. v. Wickliffe, 
 
 100 Ky. 531, 66 Am, St. Rep. 356; Ha- 
 
 gar v. Onion Nat'] Bank, <'.:; Maine 
 
 King v. Paterson, etc., R. Co., 
 
 29 X. .1. Law r.iii; Ford v. Easthamp- 
 
 t'.n. etc., < '"., 168 Mass. 84, 35 Am. St. 
 
 Rep. Mil'; Landis v. Baxton, 105 Mo. 
 
 ■I \m. st Rep. W3; Fee v. Fee, 
 
 in Ohio 169, 36 Am. Dec. 103. See 
 
 Lwin v. Hardy, 99 Am. !»>•<■. 758, 
 
 ami null'. 
 
 8 Robinson v. Newburne Nat'l Bank, 
 Y. 637. 
 
 ' Philadelphia, etc., I.'. ('". v. Cow- 
 ell, 28 I'm. st ! .,,. Dec. L28; 
 Thompson Corps., § l'l 1 :'.; Board man, 
 v. Lake i 34 N. Y. 
 157 i I '..i nk <-t Louisville v. i 
 
 lint Mill on ;| 
 
 dividend which hai tw en attached 
 
 prior to the time of the demand foi 
 its payment. Mustard v. Onion Natl 
 Flank, Sfi Maine 177. 
 5 Bank of Louisville v. Gray, 84 Ky. 
 
 •Winchester, etc., Co. v. Wickliffe, 
 100 Ky. 531, oil Am. St. Rep. 356. 
 
 7 Stoddard v. Foundry ('<>.. 34 < lonn. 
 542. 
 
 8 1'cckliam v. Van Wagenen, 83 N. 
 Y. M); Jonee v. Railway Co., -"'7 N. Y. 
 196. 
 
 " Hill v. Atoka, etc, Co. I Mo.), 21 
 B.W. Rep. 608. When- the corpora- 
 tion refuses to transfer the certificate 
 
 to the niic entitled to it . lie may sue 
 
 the corporation ami recover the divi- 
 dend without first bringing an action 
 to compel tin' t ransfer. See I [ughea 
 
 v. Vermont, etc , ('<>., 72 X. Y. •_ l o7. 
 
 10 Beers v. Bri i 12 
 
 Conn. 17.
 
 § 408 THE RIGHTS OF .MEMBERSHIP. 431 
 
 the control of the directors and may be in cash, property or 
 in dividend stock. In a New York case it was said: 1 " There 
 is no statute which requires dividends in telegraph companies 
 or in companies generally to be made in cash. Whether they 
 shall be made in cash or property must always rest in the 
 discretion of the directors. There is no rule of law or reason 
 founded upon public policy which condemns a property divi- 
 dend. The directors could convert the property into cash for 
 a dividend and divide that. So the stockholders can take 
 the property divided to them and sell it and thus realize the 
 cash. Within the domain of law it can make no material dif- 
 erence which course is chosen. If, however, a dividend is 
 made payable in cash, or payable generally, the corporation 
 becomes a debtor and must discharge such debts as it is bound 
 to discharge all its other debts, in lawful currency. It is true 
 that a stockholder can not be compelled to take property di- 
 vided to him; he can not be compelled to take cash dividends. 
 In case of his refusal to take the cash dividends, the corpora- 
 tion may retain it until he shall demand it. In case he shall 
 refuse to take a property dividend, the corporation may retain 
 it and hold it in trust for him, or possibly sell it for his bene- 
 fit." But there can be no discrimination between stock- 
 holders, 2 and this applies to stock which has not been paid in 
 full. 3 Thus, where stock is issued to contractors before they 
 have completed their work, they are entitled to the dividends 
 thereafter declared. 4 After paying a part of the dividend, a 
 corporation can not refuse to pay the other stockholders be- 
 cause the money has been invested in improvements. 5 
 
 § 408. Rights of a pledgee of stock to dividends. — A pledgee 
 wdiose name appears upon the books of the corporation or 
 
 1 Williams v. Western U. Tel. Co., etc., R. Co. v. Hambleton, 77 Md. 341, 
 
 93 N. Y. 162. a distinction is made between orig- 
 
 1 State v. Baltimore, etc., R. Co., inal and increased stock. 
 
 6 Gill. (Md.) 363; Luling v. Atlantic, 4 Central, etc., R. Co. v. Papot, 59 
 
 etc., Co., 45 Barbour (N. Y.) 510 ; Hale Ga. 342, 67 Ga. 675. 
 
 v. Republican, etc., 8 Kan. 466. 5 Beers v. Bridgeport, etc., Co., 42 
 
 3 Oak Bank, etc., Co. v. Crnm, L. Conn. 17. 
 Rep. 8 App. Cas. 65. In Baltimore,
 
 432 
 
 THE LAV\" OF PRIVATE CORPORATIONS. 
 
 §409 
 
 whose rights are otherwise known to the corporation is as be- 
 tween himself and the corporation entitled to dividends declared, 
 and the corporation is liable to him if it pays the dividends to 
 the pledgor. 1 As between the vendor and the vendee and the 
 pledgor and pledgee of shares, a transfer on the books of the 
 corporation is not necessary to perfect an equitable title in the 
 vendee. Hence, dividends declared during the continuance of 
 a pledge belong to the pledgee, although the shares have not 
 been transferred to him on the books of the corporation. But 
 if the transfer is not registered and the corporation in good 
 faith pays the dividends to the pledgor, it will be protected. 2 
 The knowledge of the president, secretaiy and treasurer of the 
 corporation is the knowledge of the corporation. 
 
 § 400. Unlawful payment of dividends — Liability of offi- 
 cers. — In the absence of a statutory provision the directors 
 of a corporation, when they act in good faith, are not liable to 
 the shareholders or creditors of the corporation for damages 
 resulting from the payment of illegal dividends. 3 An absolute 
 liability is sometimes imposed by statute. 1 The directors are 
 in all cases liable if they act fraudulently or are guilty of 
 gross negligence. 5 It would seem upon well settled general 
 principles that "if dividends were made under a misconcep- 
 tion on the part of the directors of what constituted profits, 
 
 ^oyd v. Worsted Mills, L49 Pa. St. 
 363, 24 Ail. Rep. 287; Gemmell v. 
 Davis & Co., 75 Md. 546; Central, etc., 
 Co.v.Wilder,32Neb. 154.49N.W. Rep. 
 The pledgee is as a general rule 
 cntitN'.l in the >li\ idends unless 1 1"' 
 I is reserved t i the pledgor, "The 
 dividends follow the stock into the 
 hands o! the person \\ 1i" is the legal 
 holder >»!' the stock. While the ?_ r < ■ 1 1 - 
 eral property in the stock remains in 
 the pledgor, the pledgee has such a 
 title therein as « ; 11 authorize and re- 
 quire him i" colled tin- di\ idends." 
 < luaranty < '". v. Ea I etc., T. Co., 96 
 \ rmour & < to. v. Bast, <■!<■., 
 i I I.. Rep.604. 
 
 ■Gemmell v. Davis & Co., In M<1. 
 547; Hill v. Mewichawanick Co., 71 
 N.Y. 593; Cecil Nat'l Bank v. Watson- 
 town Bank, 105 I'. S. 217. 
 
 : ' Excelsior, etc., Co. v. Lacey, 63 N 
 Y. 422; Lexington, etc., R. Co. v 
 Bridges, 17 B. Mon. ( Ky.) 556. 
 
 •See I 'ark v. Thomas, 66 N. V. 559; 
 Van Dyck v. McQuade, 86 V Y. 38; 
 Sec Whittaker \. Amwell Nat'l Hank, 
 52N. J. Eq. 100; Chamberlain v.Huge- 
 I...I. etc., ('<».. lis Mass. 532. 
 
 * Excelsior, etc., Co, v. I iacey, 63 
 N. Y i • Oral v. Redd, I B, Mon. 
 I7s, L95; Scotl v. Eire, etc., Co., 7 
 i e N. Y. 198; Btringer'a Case, L 
 R. I eh. A.pp. 175.
 
 § 410 " THE RIGHTS OF MEMBERSHIP. 433 
 
 and under a belief that there were profits to divide, when in 
 fact there were none, they might be reclaimed; because the 
 stockholders who received them were not entitled to them and 
 they had been paid over and received under the operation of a 
 mutual mistake." 1 But when dividends are wrongfully paid 
 out of the capital the money can not be recovered by the corpo- 
 ration, although it may be by its creditors, or by its receiver act- 
 ing in the rights of its creditors, and it is no defense to such an 
 action that the directors acted in good faith in paying the divi- 
 dend. 2 An officer of a corporation is bound to know its condi- 
 tion and has no right to receive a dividend unless it is legiti- 
 mately earned. A dividend paid in violation of this rule may 
 be reclaimed by an assignee of the insolvent corporation. 3 A 
 stockholder who assents to the payment of a salary to an offi- 
 cer of the corporation in excess of that allowed by a resolution 
 of the board of directors, can not participate in a dividend de- 
 clared out of the funds resulting from the repayment by the 
 officer of the excess. 4 Where the directors of a national bank 
 placed a fictitious valuation on the assets in order to declare a 
 stovjk dividend, they are liable to the receiver for the par value 
 of the stock for the benefit of creditors. 5 
 
 § 410. Set-off by the corporation. — The rights of parties to 
 dividends are fixed and determined at the time the dividend is 
 declared. 6 The corporation may, therefore, retain dividends 
 which have been apportioned to a stockholder, and set the 
 amount off against a debt due from the stockholder to the cor- 
 poration. 7 Thus, a bank which has no implied lien upon the 
 
 1 Lexington, etc., Co. v. Page, 17 B. terial. Grant v. Ross (Ky.), 37 S.W. 
 Mon. (Ky.) 412. Rep. 263. 
 
 2 Minnesota, etc., Co. v. Langdon, s Main v. Mills, 6 Biss. C. C. 98. 
 
 44 Minn. 37. Contra, as to receiver of 4 Brown v. DeYoung, 167 111. 549, 47 
 
 a national bank, McDonald v. Will- N. E. Rep. 863. 
 
 iams, 174 U. S. 397. See Lexington, 5 Cockrill v. Abeles,86Fed. Rep. 505. 
 
 etc., Co. v.Page, 17B. Mon. (Ky.) 412, 6 Gemmell v. Davis & Co., 75 Md. 
 
 and Grant v. Ross (Ky.), 37 S.W.. Rep. 546; §404. 
 
 263. The fact that the payment in 7 Hagar v. Union Nat'l Bank, 63 
 
 question was made under authority of Maine 509; Sargent v. Frank Ins. Co., 
 
 a resolution of stockholders is imma- 8 Pick. (Mass.) 90; Donnally v. Hern- 
 
 28— Private Corp. don > 41 w - Va. 519 5 Kin g v - Pater-
 
 434 THE LAW OF PRIVATE CORPORATIONS. § 411 
 
 shares of its stockholders may retain dividends actually de- 
 clared, and apply the amount on the debt of the stockholder, 
 as a dividend is simply so much money in its possession. But 
 the corporation can not retain such money for a debt for which 
 the stockholder is liable only as a surety, and which is not yet 
 due. 1 
 
 § 411. Who entitled to dividends. — It has already been 
 stated that the right to dividends is fixed at the time they are 
 declared. They, therefore, belong to those who are stockhold- 
 ers at that time without reference to the time when the profits 
 out of which the dividend is to be paid were earned. 2 "The 
 purchaser of a share of stock in a corporation takes the stock 
 with all its incidents, and among these is the right to receive 
 all future dividends, that is, the proportionate share of all 
 profits not then divided; and as we understand the law and 
 the usage of such corporations, it is wholly immaterial at what 
 time or from what sources these profits have been earned: they 
 are an incident to the shares, to which the purchaser becomes 
 at once entitled, provided he remains a member of the cor- 
 poration until a dividend is made." 3 It is settled law that 
 "dividends must be general on all the stock so that each stock- 
 holder will receive his proportionate share. The directors 
 have no right to declare a dividend on any other principle. 
 They can not exclude any portion of the shareholders from an 
 equal participation in the profits of the company." 4 
 
 (a) As Between Success/ ve Absolute Owners. 
 
 § 412. In general. — In ordinary transfers of stock nothing 
 aid aboul dividends, and in the great majority of cases 
 
 etc., i: Co., 29 N. J. I-. 604. Con- B March v.Eai tern R.Co.,48 N.H.515. 
 
 ti.i, l'.\ parte Winsor, S8tory ('.('.III. * Stoddard v. Foundry Co., 34 Conn. 
 
 lomon v. First NTat'l Bank, 72 542; Jones v. Railroad Co., 57 N. Y. 
 
 See First Nat'l Bank v. 196. "The stock] lera were .-ill of 
 
 De Mom Pi ■ W. Rep. 417. these ilass, and when such is the 
 
 Jon< Railroad <'", : >7 N. v. ca e the dividends mu I always be 
 
 196; Goodwin v. Hardy, 57 Maine pro rata, equal and without prefer- 
 
 143; March v. Eastern R. Co., 18 V ence." Hillv.Min I VIo.),2lS. 
 
 II 515; Boardman v. Railroad Co., 84 W. Rep. 508; Ryder v. Railroad ( 
 
 N. V 111. 516.
 
 5 412 
 
 THE RIGHTS OF MEMBERSHIP. 
 
 435 
 
 they are governed by the usages of a stock exchange. Com- 
 monly the directors of a corporation resolve that dividends 
 shall be declared from the profits of a certain period payable 
 at a future day certain to those who are shareholders at that 
 time ; or at a certain period prior thereto when the transfer 
 books of the corporation are closed. By the usage of the stock 
 exchange all transfers made before the books are closed are 
 "dividend-on" and all subsequent transfers "ex-dividend." 
 These customs, however, have no application to transfers 
 made elsewhere than on the stock exchange. 1 A transfer of 
 stock carries with it ordinarily the right to all dividends de- 
 clared after the transfer, although earned before the transfer. 
 The right to such dividends passes as an incident of the stock. 2 
 But a dividend declared before the transfer, although payable 
 after the transfer, belongs to the transferrer. 3 A dividend de- 
 clared before the death of a testator becomes a part of the corpus 
 of the estate, and goes to the executor. 4 Generally a corpora- 
 tion is protected if it pays a dividend to the person who ap- 
 pears as the owner of the stock on the corporate books, unless 
 it has notice of the fact that the shares have been transferred. 5 
 If, however, it pays a dividend declared after the transfer to 
 the transferrer, with knowledge of the transfer, it is liable to 
 the transferee. 6 
 
 1 Lombardo v. Case, 45 Barb. (N.Y.) 
 95. 
 
 2 Gemmell v. Davis & Co., 75 Md.546 ; 
 Boardman v. Railway Co., 84 N. Y. 
 157 ; Jermain v. Railway Co., 91 X .Y. 
 483 ; Phelps v. Farmers', etc., Bank, 26 
 Conn. 269 ; March v. Railway Co. ,43 N. 
 H.515. One who sells stock, reserving 
 the dividend that may be declared at a 
 certain date, can not claim a stock 
 dividend when declared. The reser- 
 vation will be construed to apply to 
 cash dividend only. Kaufman v. 
 Woolen Mills Co., 93 Va. 673, 25 S. 
 E. Rep. 1003; Charlottesville, etc., v. 
 Mahan, 136 V. S. 548. 
 
 3 Wheeler v. Sleigh Co., 39 Fed. Rep. 
 347; Hopper v. Sage, 112 N. Y. 530; 
 
 In re Kernochan, 104 NY. 618; Bright 
 v. Lord, 51 Ind. 272, 19 Am. Rep. 732. 
 Contra, Burroughs v. Railway Co., 
 67 N. C. 376, 12 Am. Rep. 611. 
 
 4 In re Kernochan, 104 N.Y. 618; 
 De Gendre v. Kent, L. R, 4 Eq. 283; 
 Wheeler v. Sleigh Co., 39 Fed. Rep. 
 347. 
 
 5 Brisbane v. Railway Co., 94 N. Y. 
 204; Cleveland, etc., R. Co. v. Rob- 
 bins, 35 Ohio St. 483. 
 
 6 Gemmell v. Davis & Co., 75 Md.546, 
 23 Atl. Rep. 1032; Robinson v. Bank, 
 95 N. Y. 637; Hill v. Mining Co., 
 124 Mo, 153, 21 S. W. Rep. 508; Cen- 
 tral Nebraska Nat'l Bank v. AVil- 
 der, 32 Neb. 454, 49 N. W. Rep. 369, 
 Guaranty Co., etc., v. Eaet, etc., Co ,
 
 136 THE LAW OF PRIVATE CORPORATIONS. § 413 
 
 § 413. Conditional sales and transfers. — When an option is 
 given to purchase shares within a certain period, or a sale is 
 made upon a condition subsequent, and the sale is completed 
 or the condition performed, the transfer dates from the time 
 of the agreement and the purchaser is entitled to all dividends 
 declared after that date. Thus, where the defendant sold his 
 shares in a gas company on August 1st, on condition that 
 twenty per cent, of the price should be paid before August 
 20th, and the condition was fulfilled, the purchaser was en- 
 titled to a dividend declared on August 28th. "The comple- 
 tion of the purchase," says the court, "has relation back to 
 the time when the contract was made, which vested from that 
 moment the right to the shares in the purchasers. They pur- 
 chased the shares on that day and at that time and at their 
 then value, and when they paid the remainder of the purchase- 
 money at the time fixed for completion, they had a complete 
 title to the shares, as they bought them on the first of Au- 
 gust." 1 So, where a party on March 6th offered to sell shares 
 to B., if he gave security by March 24th, which was done, it 
 was held that B. was entitled to a dividend declared between 
 such dates. 2 So, where A. sold to B. an option to take cer- 
 tain shares within a year, it was held that the agreement to 
 sell, when consummated, was a sale in present! and that the 
 purchaser was entitled to dividends declared during the time. 3 
 But it has been held that where A. contracted before July 3d 
 to sell -hares of stock to B., at B.'s option, to be accepted by 
 July 16th, on which day the stock was actually transferred to 
 B., that a dividend declared on the stock July 3d belonged to 
 A., although it was not to be paid till August 1st. 4 
 
 ; ."ill. 28 S. E. Rep. •"'"•"•: Armour in Burrows v. North Carolina, etc., R. 
 
 v . Town Co., 98 Ga. 168, 26 B. E. Co., 67 N. 0. 876, l-' Am. Rep. 611, it 
 
 I;,.,, .-,n| is held thai tin' Bale o! shares of stock 
 
 1 Black \ . I [omersham, I.. R. I Ezch. carried with it dividends thai an- .!<■- 
 
 j,j v .jj clared thereupon, although they are 
 
 1 Harris v. Stevens, 7 rl ll. 164. payable at a date subsequent to the 
 
 ■ Carrie v. White, i"> N. V. 822. transfer of the stock. 
 
 ♦ Bright v. Lord, 61 tnd. l'7'J. But
 
 § 414 THE RIGHTS OF MEMBERSHIP. 437 
 
 § 414. Transfers made between the date of declaration and 
 payment. — A shareholder has no legal title to the accumu- 
 lated profits until they are divided, and there can be no appor- 
 tionment of dividends between the successive owners of shares. 1 
 The right to dividends which have been declared belongs to 
 the transferrer, and to those which are declared after the 
 transfer, to the transferee. Incident to the ownership of 
 stock in a corporation, and passing with the assignment of 
 shares thereof, is the right to receive the proportional share of 
 all the profits not divided at the time of the purchase of the 
 shares; and it is immaterial at what time or from what source 
 these profits have been earned. 2 
 
 The declaration of a dividend is equivalent to a separation 
 of the fund from the capital of the corporation. After it is 
 credited to the shareholder the amount is separated from the 
 assets; it is no longer represented by his shares and no longer 
 an incident thereof, and when he transfers his shares, he does 
 not transfer his dividend. 3 
 
 (b) As Between Life Tenant and Remainder-Man. 
 
 § 415. General statement. — Many difficult questions arise 
 in determining the rights of dividends on stock as between 
 successive owners of qualified interests. It is not uncommon 
 for a testator to provide in his will that the income from certain 
 shares of stock shall be paid to one person during his life and 
 that after his death the absolute property in the stock shall pass 
 to another person. In ordinary cases no difficulties arise, as the 
 income on the shares goes to the life-tenant and the principal 
 or capital passes unimpaired to the remainder-man. Ordinary 
 
 'Clapp v. Astor, 2 Edw. Chan. 379; Co., 91 N. Y. 483; Ryan v. Leaven- 
 Kane v. Bloodgood, 7 John. Ch. 90; worth R. Co., 21 Kan. 365. 
 Granger v. Bassett, 98 Mass. 462; "Jermain v. Lake Shore R. Co., 91 
 Jones v. Ogle, L. R. 14 Eq. 419. N. Y. 483; Boardman v. Lake Shore 
 
 2 March v. Eastern R. Co., 43 N. H. R. Co., 84 N. Y. 157; Carpenter v. 
 
 515; Williams v. Tel. Co., 61 How. New York, etc., R. Co., 5 Abb. Pr. 
 
 Pr. 216, 93 N. Y. 162; Hyatt v. Allen, 277; Bright v. Lord, 51 Ind. 272. Conr 
 
 56 N. Y. 553; Jones v. Railway Co., tra, Burroughs v. North Carolina R. 
 
 57 N. Y. 196; Boardman v. Railway Co., 67 N, C. 376, 12 Am. Rep. 611. 
 Co., 84 N. Y. 157 ; Jermain v. Railway
 
 438 THE LAW OF PRIVATE CORPORATIONS. § 41$ 
 
 dividends, that is, dividends payable out of net profits, go to 
 the life-tenant. But when the corporation by reason of an in- 
 crease of its capital or some unusual prosperity, declares an 
 extraordinary dividend in the form of cash or stock, it is not 
 easy to determine whether this shall be considered as income 
 or capital. The authorities proceed upon different principles, 
 and can not be reconciled. About the only principle which is 
 conceded by all the cases is that the intention of the testator 
 or the person creating the trust must govern, if it can be as- 
 certained. 1 The courts in different jurisdictions have estab- 
 lished three well-defined rules. (1) The English rule by which 
 ordinary cash or stock dividends belong to the life-tenant, 
 and extraordinary cash or stock dividends form a part of the 
 corpus and go to the remainder-man. (2) The Massachusetts 
 rule, or the rule in Minot's case, which treats cash dividends 
 whether great or small as income for the life-tenant, and stock 
 dividends whenever earned or declared, as capital for the re- 
 mainder-man. And (3) the Pennsylvania rule, or as it is 
 sometimes called the American rule, under which the court 
 inquires as to the time when the fund outof which the extraor- 
 dinary dividend in question is to be paid, was earned or ac- 
 cumulated; and gives that to the remainder-man which was 
 earned before the life estate began without reference to the 
 time when declared or payable. 
 
 § 416. The English rule. — The English rule which gives to 
 the liN' tenanl .'ill ordinary dividends whether cash or stock, 
 and to tin' remainder-man all extraordinary dividends, would 
 seem to be somewhal modified by later decisions holding that 
 the court would be largely governed by the intention of the 
 corporation. 1 In the early case of Brander v. Brander, 8 it 
 was held thai where government annuities wore received by a 
 bank in exchange lor a subscription of funds to the public 
 
 iMcLoath v. Hunt, 154 NY. it-.), spn.nl. • v. Bouch, I,. R. 29 Ch. Div 
 
 B9 I. I:. \. 280; 8) ner v. Phillips 635, 863. 
 
 (Conn , 16 L l: 1.461. 'Brander v. Brander, I Vee. Jr. 
 
 ■Price v. An.i.i nil. i::;; BOO; Irving, etc., v. Houstoun, 4 Paton 
 
 ten) A pp. Cas. 521.
 
 § 417 THE RIGHTS OF MEMBERSHIP. 439 
 
 service and divided among the shareholders of the bank, 
 they went to the remainder-man, and the income from them 
 to the life-tenant. In one case it was held that there was 
 no distinction between cash and stock dividends, 1 and that all 
 extraordinary bonuses go to the remainder-man and all or- 
 dinary dividends to the life-tenant, although they were in- 
 creased from time to time according to earnings. 2 In a re- 
 cent case in New York, 3 the court said: "It is impossible to 
 read the English cases without being impressed with the state- 
 ment of the judges, so often repeated, that they found great 
 difficulty in formulating any principle upon which the decis- 
 ions rested. An attempt to give a reason for the rule was 
 made in one of the more recent cases, but without much suc- 
 cess. 4 It was all summed up in the end by the court in a 
 single sentence, 'What the company says is income shall be 
 income, and what it says is capital shall be capital.' " 
 
 § 417. The Massachusetts rule. — The underlying principle 
 of this rule, which recognizes all cash dividends as income and 
 all stock dividends as capital, is recognized in Massachusetts, 
 Georgia and Connecticut. It was first established in Minot v. 
 Paine, 5 and has since been adhered to with some modifica- 
 
 1 Paris v. Paris, 10 Ves. Jr. 185. 185; In re Barton's Trust, L. R. 5 
 
 2 Barclay v. Wainwright, 14 Ves. Jr. Eq. 238. Apart from the evident in- 
 67. clination of the judicial mind of that 
 
 3 McLouth v. Hunt, 154 N. Y. 179, 39 day, in that country, to favor entails, 
 L. R. A. 230. perpetuities, and accumulations of 
 
 4 Sproule v. Bouch, L. R. 29 Ch. property, it can hardly be said that 
 
 Div. 635. these cases were well considered. 
 
 5 Minot v. Paine, 99 Mass. 101, 96 Lord Chancellor Eldon admitted this 
 
 Am. Dec. 705; Spooner v. Phillips, 62 in Paris v. Pa-ns, 10 Ves. Jr. 185, 
 
 Conn. 62, 16 L. R. A. 461. See, also, where he said: T confess I don't 
 
 Rand v. Hubbell, 115 Mass. 461, 15 think I can safely rest upon any dis- 
 
 Arn. Rep. 121 ; Millen v. Guerrard, 67 tinction between this case and those 
 
 Ga. 284. In McLouth v. Hunt, 154 that have been determined. I have 
 
 N. Y. 179, 39 L. R. A. 230, the court had great difficulty in stating the 
 
 said: "The appeal is sought to be principle that led to them. But in 
 
 sustained first by a class of cases in the case from Scotland great inquiry 
 
 England, founded upon Brander v. was made as to the length to which 
 
 Brander, 4 Ves. Jr. 800, and followed practice had carried the decisions 
 
 in Irving, etc., v. Houstoun, 4 Pat. here, and at the rolls, and as it ap- 
 
 App. 521 ; Paris v. Paris, 10 Ves. Jr. peared that it had gone to great
 
 440 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §417 
 
 tions. 1 Under this rule, the courts will not enter upon an orig- 
 inal inquiry for the purpose of ascertaining the source of such 
 
 length, the house of lords did not 
 think it proper to disturb that.' Then, 
 proceeding to notice the argument 
 now made in this case, that there is 
 a distinction between stock and cash 
 dividends, he disposes of that conten- 
 tion with a homely but expressive re- 
 mark. He said: 'As to the distinc- 
 tion between stock and money, that 
 i> too thin; and if the law is that this 
 extraordinary profit, if given in the 
 shape of stock, shall be considered 
 capital, it must be capital if given in 
 money.' The rule, as thus established 
 in England, was followed in Massachu- 
 . more as one of convenience than 
 of justice, in a line of cases that are 
 not quite consistent with each other. 
 Mi not v. Paine, 99 Mass. 101, 9G Am. 
 Dec. 705; Daland v. Williams, 101 
 Mass. 571; Leland v. Hayden, 102 
 Mass. 542; Heard v. Eldredge, 109 
 Mass. 258, 12 Am. Rep. 687; Rand v. 
 Hubbell, 115 Mass. 461, 15 Am. Rep. 
 121; Davis v. Jackson, 152 Mass. 58, 
 23 Am. St. Rep. 801. The rule was 
 adopted there mainly upon the au- 
 thority of llie early English cases to 
 which reference has been made. The 
 supreme court of the United States 
 la id down the same rule in Gibbons v. 
 Mahon, 136 0. B. 549, evidently fol- 
 lowing the doctrii t' the English and 
 
 Massachu note to 
 
 Goodwin v. Hardy, 99 Am. Dec 758." 
 ■Thus in Heard v. Eldridge, 109 
 Mass. 258, and Rand v. Hubbell, 1 16 
 . 161, it was held thai ii the divi- 
 dend i -■ merely the result of pre-exist- 
 ing capital of the corporation, as where 
 ,-i p. nt of its property is taken in the 
 
 il the power Of eminent do- 
 main, and the money receft ed is dis- 
 tributed as dividends, it belongs to the 
 remainder-man, See note to 1 1 \ m. 
 
 St. Rep. 633. In Thomas v. Gregg, 78 
 Md. 551, the court said of the Massa- 
 chusetts rule: "This rule has not been 
 altogether acceptable, and has been 
 somewhat qualified, or modified, by 
 subsequent cases in that state, al- 
 though the general principle, as set- 
 tled in Minot v. Paine, is still main- 
 tained. In Daland v. "Williams, 101 
 Mass. 571, the directors having voted 
 to increase the capital stock by 3,000 
 shares, declared a cash dividend of 40 
 per cent, and authorized the treasurer 
 to receive that dividend in payment 
 for 2,800 shares, the remaining 200 
 shares to be sold. The court held that 
 the transaction was virtually a stock 
 dividend, and that the shares must go 
 to the remainder-man's fund. In Le- 
 land v. Hayden, 102 Mass. 542, where 
 the company had invested its surplus 
 earnings in its own stock, and subse- 
 quently declared a dividend of that 
 stock, the life-tenant was held enti- 
 tled to it. The Massachusetts court 
 in these later cases determined that 
 they can, in deciding whether in a 
 given case the distribution is a stock 
 or cash dividend, consider the actual 
 and substantial character of the trans- 
 action, and not its nominal character 
 only. See, also, hand v. Hubbell, 
 115 Mass. Hi! : Heard v. Eldredge, 109 
 Mass. 258; Davis v. Jackson, 152 
 Mass. 58." Iii Rand v. Hubbell, Ch. 
 .1. Gray, in speaking of the earnings 
 of a corporation, said: "When a dis- 
 tribution of said earnings ie made 
 by the corporation among its stock- 
 holders, the question whether such 
 distribution is an apportionment of 
 
 additional Btocfc or a division of prof- 
 its, depends on the Mil >sl a i ici • and in- 
 tent of the action of the corporation, 
 
 bo \\ ii by its votes."
 
 § 417 THE RIGHTS OF MEMBERSHIP. 441 
 
 dividends, but will consider the proceedings of the corporation 
 to determine whether it and its trustees regarded an extraordi- 
 nary dividend in question as profits or as capital, and will treat 
 it as the corporation treated it. If the corporation declares it to 
 be profits, it will belong to the owner of the life estate, and 
 if, on the other hand, the corporation was apparently making 
 an increase in the capital stock to adequately represent pre- 
 existing assets, the remainder-man is entitled to the increase. 1 
 The intention of the corporation is thus made the test. This 
 rule is adopted by the supreme court of the United States, 
 which, after stating the rule that the directors may determine 
 what disposition shall be made of profits, says: 2 "Whether the 
 gains and profits of a corporation should be so invested and 
 apportioned as to increase the value of each share of stock for 
 the benefit of all persons interested in it, either for a term of 
 years or for life, or by way of remainder in fee, or should be 
 distributed and paid out as income, to the tenant for life or 
 for years, excluding the remainder-man from any participation 
 therein, is a question to be determined by the action of the cor- 
 poration itself, at such times and in such manner as the fair 
 and honest administration of its whole property and business 
 may require or permit." 
 
 In Rhode Island it was held that new shares of corporate 
 stock resulting from a distribution of surplus earnings, and 
 distributed to stockholders, are capital and go to the remainder- 
 man. 3 The corporation during the life of the life-tenant dis- 
 tributed new shares in conformity to the recommendations of 
 a committee, which recited that "the contingent fund of the 
 corporation, which to a great extent has already gone into the 
 construction of the road, the virtual extinguishment of the debt 
 of $1,000,000 to the city of Albany by the sinking fund providing 
 for its payment, releasing the income of the road from the pay- 
 ment of interest on these bonds, and contribution to the fund, 
 
 J Rand v. Hubbell, 115 Mass. 461, tically the English rule. The intention 
 
 15 Am. Rep. 121. of the corporation to declare a divi- 
 
 2 Gibbons v. Mahon, 136 T T . S. 549, dend as such must govern. See §416. 
 quoted in Spooner v. Phillips, 62 3 Petition of Brown, 14 R. I. 371. 
 Conn. 62, 16 L. R. A. 461. This is prac-
 
 442 THE LAW OF PRIVATE CORPORATIONS. § 418 
 
 aside from other considerations which might well be urged, 
 fully require, as in justice to the stockholders, that twenty thou- 
 sand new shares shall be issued and distributed." The court 
 said: ' 'The only question necessary now to be decided is whether 
 shares of stock distributed to the stockholder of a corporation 
 are to be taken as income and belong to the life-tenant. We 
 think they are not to be so taken. Such a distribution of shares 
 is in no proper sense a dividend. The surplus property of the 
 corporation which is represented by such stock is still retained 
 by the corporation, and managed and applied in the prosecu- 
 tion of the business. Nor is the value of the stock held by any 
 individual stockholder in anywise changed by such a distribu- 
 tion. He has a greater number of shares, but each share is 
 of proportionately less value." Where a dividend of $25 for 
 each share of its capital stock is declared by a corporation, and 
 any stockholder who wishes is entitled to take an additional 
 share of stock for every four shares of stock held by him instead 
 of receiving his dividend in money, and the earnings of the cor- 
 poration are sufficient to pay the dividend but if used for that 
 purpose then it will become necessary to raise an equal 
 amount to pay for the additions which have been made to the 
 capital, and which had increased its value above the par value 
 of the stock, the dividend must be treated as income, and not 
 capital. 1 Shares which are issued to represent the increase 
 in the value of the property of the corporation, which was 
 caused by the, development of its business and which does not 
 represent ordinary surplus earnings, constitute capital and not 
 income, and go to the remainderman-man.' 
 
 § 1 1 -v The Pennsylvania role, — What is known as the 
 Pennsylvania rule was established in Earp'a Appeal,' and lias 
 been 90 generally adopted thai it is Bometimes called the 
 American rule. The underlying principle Is found in the 
 statemenl thai the courl will award the thing distributed regard- 
 of it- form to whoever is entitled to it. The objeel in all 
 
 ' Davia v. Jackson, L52 Mass. 58, 28 ' Spooner v. Phillips, 62 Conn. 82, 
 Am. St. Rep. 801. L6 I.. R. A. ml. 
 
 ' Earp'a Appeal, 28 Pa 8t. 868.
 
 § 418 THE RIGHTS OF MEMBERSHIP. 443 
 
 cases is to keep the increase in the capital for the remainder- 
 man and the increase in the income for the life-tenant. 1 
 When necessary to determine what is in fact capital and what 
 income, the court will investigate the facts in order to learn 
 the source from which the fund came, and distribute it regard- 
 less of the name by which the corporation called it or the form 
 in which it is distributed. Thus, when a corporation, having 
 actually made profits, proceeds to distribute such profits 
 amongst the stockholders, the tenant for life would be entitled 
 to receive them, and this without regard to the form of the 
 transaction. Equity which disregards form and grasps the 
 substance would award the thing distributed, whether stock or 
 moneys, to whomsoever was entitled to the profits. 2 In the lead- 
 ing case 3 it appeared that the estate of Earp, who died in Novem- 
 ber, 1848, embraced stock in a manufacturing company upon 
 which large surplus profits over and above the current divi- 
 dends had accumulated, both before and after his decease. In 
 July, 1854, the capital stock was increased from $200,000 to 
 $500,000 by creating 6,000 additional shares of $50 each; 
 which were paid for out of the accumulations. At the testa- 
 tor's death these surplus profits were nearly $300,000, and 
 the stock issued had increased to $700,000. The market value 
 of the stock at his death was $125 per share. When the new 
 stock was issued its value was $80. The number of shares be- 
 longing to the estate was 1,350 instead of 540. As the new 
 shares were therefore in part paid from the surplus existing at 
 the death of Robert Earp, and partly from the accumulations 
 after his death, they were properly apportioned between the 
 life-tenant and those entitled to the remainder. It was held 
 (1) that the surplus property accumulated at the death of the 
 testator as respects the estate was essentially part of the stock 
 itself, and was subject to the trust in the will as so much prin- 
 cipal; and (2) that the accumulations after his decease when 
 they came to be divided were income in like manner as the cur- 
 
 1 Oliver's Est., 136 Pa. St. 43, 20 Am. 2 Moss' App., 83 Pa. St. 2H4, 24 Am. 
 *«■■, Rep. 894, note. Rep. 164. 
 
 8 Earp's Appeal, 28 Pa. St. 368.
 
 444 THE LAW CF PRIVATE CORPORATIONS. § 418 
 
 rent dividends, and therefore belonged to the life-tenant, no 
 matter whether the division or distribution thereof was in cash, 
 scrip or stock. 
 
 In another case 1 it appeared that there was no division of 
 surplus profits or of earnings accumulated either before or 
 after the death of the testator, but that the transaction was 
 simply an increase of stock to the stockholders upon payment 
 of the price at par, and $10 per share additional to go to the 
 surplus fund . The market value of the old shares was not shown 
 to have varied between the death of the testatrix and the issue of 
 the new stock, but a slight decrease occurred after the issue. 
 Instead of subscribing to the new issue the executor sold the 
 privilege, and the question was whether the sum realized 
 should be treated as income or principal. The court said: 
 "The entire value of the stock, with all its incidents, at the 
 death of the testatrix constituted the principal of the estate. 
 On this principal the appellant was entitled to the income, 
 whatever value beyond par the stock then had by reason of the 
 large surplus fund of the company, or otherwise, attached to 
 the stock and formed a part of the principal. The appellant 
 was not given any part of this aggregated value of the stock; 
 the income therefrom was all she was entitled to receive. 
 Whatever was capital must remain capital." When corporate 
 stock is by the will of a deceased given in trust, the income 
 thereof for theuseof the beneficiary for life, with remainder over^ 
 the surplus profits which have accumulated in the life-time of 
 the testator, but which have not been divided until after death, 
 belong to the corpus of the estate. The dividends from earn- 
 ings made after his death are income, payable to the lite-ten- 
 ant, whether they are cash, Bcrip or stock. 
 
 The profits of a sale of new stock issued after the testator's 
 death, in lieu of profits applied to the improvement of the cor- 
 porate property in the testator's life-time, is capital and not in* 
 .'•, and belongs to the corpus. 9 
 
 1 Biddle'a App., 99 Pa. si. 278. * Estate of Smith, L40 Pa. St. 844,28 
 
 Am. St. Rep. 287.
 
 § 419 THE RIGHTS OF MEMBERSHIP. 445 
 
 § 419. The general adoption of this rule. — Notwithstand- 
 ing the simplicity of the rule in Minot's case and the 
 fact that it has been accepted by the supreme court of the 
 United States, the Pennsylvania rule has been generally 
 adopted in recent cases. Although it is more difficult to apply, 
 the results are more generally in accord with justice and the 
 intent of the testator. For some time there was doubt as to 
 the position of the New York court of appeal, 1 although the 
 lower court had repudiated the English and Massachusetts 
 doctrine, 2 but New York, 3 along with New Jersey, 4 New Hamp- 
 shire, 5 Kentucky, 6 Maryland 7 and Tennessee, 8 has now adopted 
 the Pennsylvania rule. With reference to the rule that what 
 the company says is income shall be income, the New York 
 court said: 9 "This is but another way of saying that whether 
 accumulated earnings belong to the life-tenant or the remain- 
 der-man depends upon the action of the corporation, and that 
 the property rights of such parties under the will are governed 
 by the mere form of capitalization; that the majority of the 
 board of directors may give them to one or the other at their 
 will. While such a rule might have the merit of simplicity and 
 convenience, it ought not to determine the property rights of 
 parties interested in the corporate property. That a testament- 
 ary provision of this character, for the benefit of both the life- 
 tenant and the remainder-man, who are generally the nearest 
 
 1 Riggs v. Cragg, 89 N. Y. 479. dividend is declared, belongs in 
 
 2 Clarkson v. Clarkson, 18 Barb. 646; equity to the person entitled to in- 
 
 Riggs v. Cragg, 26 Hun '89; Simpson come, except so far as it is derived 
 
 v. Moore, 30 Barb. 637; Goldsmith v. from the earnings of the stock after 
 
 Swift. 25 Hun 201. such severance. The general trend of 
 
 3 Mc Louth v. Hunt, 154 N. Y. 179, judicial opinion in this country is to- 
 39 L. R. A. 230. ward the adoption of this principle, and 
 
 4 Van Doren v. Olden, 19 N. J. Eq. we adopt it without qualification." 
 176, 97 Am. Dec. 650. In Lang v. 5 Lord v. Brooks, 52 N. H. 72. 
 Lang's Exrs. (N. J.), 41 Atl. Rep. 705, 6 Hite v. Hite, 93 Ky. 257, 19 L. R. 
 the court said: "The underlying A. 173. 
 
 principle applicable to this case is 7 Thomas v. Gregg, 78 Md. 545. 
 
 that no corporate dividend, declared B Pritchitt v. Nashville, etc., Co., 96 
 
 after the right to the dividend has be- Tenn. 472, 33 L. R. A. 856. 
 
 come severed from the ultimate own- 9 McLouth v. Hunt, 154 N. Y. 179, 39 
 
 ership of the stock upon which such L. R. A. 230.
 
 440 THE LAW OF PRIVATE CORPORATIONS. § 420 
 
 and dearest objects of the testator's bounty, can in this way 
 be voted up or down, increased or diminished, as the corpora- 
 tion may elect, and that such action precludes the courts from 
 looking into the real nature and substance of the transaction 
 and adjusting the rights of the parties, according to justice and 
 equity, is a proposition that can not be accepted. The mere 
 adoption by the corporation of a resolution can not change 
 accumulated earnings into capital as between the life-tenant 
 and remainder-man." 1 xV corporation passed a resolution 
 reciting that for the three fiscal years, ending September 30, the 
 net earnings of the company had amounted to a certain sum, 
 that it had been used, among other things, for the permanent 
 improvement of the railway and for new construction, and that, 
 therefore, a dividend of twenty per cent, be declared for said 
 period, "payable in common stock of the company." 
 
 This dividend was held to be income and not capital and to 
 go to the life-tenant. It was said that when it is possible for the 
 court to ascertain, with any certainty, whether the distribution 
 of the stock dividend includes net earnings, and, if so, what 
 proportion, and also whether such earnings were intended to 
 be made a part of the capital or merely to be used temporarily, 
 with the intention on the part of the directors of refunding 
 them to the shareholders as income, it is the duly of the court 
 to make such investigations and dispose of the stock in an 
 equitable way between the life-tenant and remainder-man. 2 
 
 II. Actions by STOCKHOLDERS. 
 
 § 420. Actions against third persons — The protection of 
 
 collective rights. — The collective rights <>f a member are such 
 ;i- 1m enjoys within the corporation. They are rights in the 
 corporate concern, rather than againsl it, and should be en- 
 forced through the corporate organization. It is the duty of 
 
 i In Gibbons v. Mahon, 186 Q. B. corporation as manifested by its vote 
 
 Ui. .in-tic Gray, after an exami- or resolution governs. See, also, Rich- 
 
 nation of tin- authorities, concludes ardson v. Richardson, 7.~> Maine 570, 
 
 thai the weight of authority supports W Im. Rep. 428. 
 
 the proposition thai tin- Lntenl of the •Thomas v. Gregg, 78 Md
 
 §420 
 
 THE RIGHTS OF MEMBERSHIP. 
 
 447 
 
 the corporation and not of the shareholder 1 to protect the cor- 
 porate rights, 2 but when the proper officers are unable or un- 
 willing to act the corporation can not act, and it is necessary 
 to permit the members to sue for the protection of their equi- 
 table interests. 3 For fraudulent and wrongful dealing with 
 corporate property, prejudicially affecting the interests of the 
 corporation, and hence the interests of the shareholders, the 
 right of action is primarily in the corporation, and is to be as- 
 serted by it rather than by individual stockholders, unless it 
 is shown to be impracticable for the complaining stockholder 
 to induce the corporation to sue. 4 The cases in which the 
 stockholders will be permitted to maintain an action which 
 should ordinarily be brought by the corporation, are generally 
 brought to prevent a threatened injury, although it may be to 
 recover damages for injuries already suffered. 5 
 
 1 Silk, etc., Co. v. Campbell, 27 N. J. 
 L. 539; Henry v. Elder, 63 Ga. 347; 
 VanKirk v. Adler, 111 Ala. 104. 
 
 2 Bradley v. Richardson, 2 Blatchf. 
 (C. C.) 343. 
 
 3 Flynn v. Brooklyn, etc., R. Co., 158 
 N. Y. 493; Brinckerhoff v. Bostwick, 
 88 N. Y. 52. 
 
 4 Hodgson v. Duluth, etc., R. Co., 
 46 Minn. 454; Hutton v. Joseph Ban- 
 croft & Sons Co., 83 Fed. Rep. 17; 
 Dunphy v. Travelers', etc., Assn., 
 146 Mass. 495; Holton v. Newcastle R. 
 Co., 138 Pa. St. Ill ; Rothwell v. Rob- 
 inson, 39 Minn. 1; Dond v. Wiscon- 
 sin, etc., R. Co., 65 Wis. 108. In Pom- 
 eroy Eq. Jur., § 1094, it is said: "In 
 cases belonging to tbis class, there- 
 fore, whatever be the nature of the 
 particular wrong, whether intentional 
 and fraudulent, or resulting from neg- 
 ligence or want of reasonable pru- 
 dence, and whatever be the indirect 
 loss occasioned to individual stock- 
 holders, no equitable suit for relief 
 against the wrong-doing directors or 
 
 officers can be maintained by a stock- 
 holder or stockholders individually, 
 nor by a stockholder suing represen- 
 tatively on behalf of all others simi- 
 larly situated, unless the special con- 
 dition of circumstances exists to be 
 described in the next following para- 
 graph, namely, that the corporation 
 either actually or virtually refuses to 
 prosecute. Even if the stockholder 
 alleges that the value of his own stock 
 has been depreciated by the defend- 
 ants' acts, or that he has sustained 
 other special damage, he is not there- 
 by entitled to maintain the suit." Os- 
 wald v. St. Paul, etc., Co., 60 Minn. 
 82, 61 N. W. Rep. 902. 
 
 5 Chicago v. Cameron, 120 111. 417. 
 See Samuel v. Holladay, 1 Woolw. 
 400; Carter v. Ford, etc., Co., 85 
 Ind. 180. As to the right of a minor- 
 ity stockholder to an injunction to 
 prevent the voting of exorbitant sala- 
 ries to officers, see Decatur, etc., Co. v. 
 Palm, 113 Ala. 531, 59 Am. St Rep, 
 140.
 
 448 THE LAW OF PBIVATB CORPORATIONS. § 421 
 
 § 421. When a stockholder may sue. — The relation between 
 the corporation and its members is similar to that of trustee 
 and beneficiaries, and the beneficiaries under a trust are not 
 entitled to sue for the protection of the trust unless the trustee 
 has refused or is unable to protect it. 1 A shareholder is en- 
 titled to relief in a court of equity on account of any infringe- 
 ment of his equitable rights as member and beneficiary of the 
 corporation: Provided, first, that the corporation itself be un- 
 able, by reason of the default of its agents, to obtain an ade- 
 quate remedy within a reasonable time ; and, secondly, that 
 the right to obtain redress for an injury be not implicitly re- 
 linquished by the shareholder to the discretion of the regular 
 agents of the corporation as a mutual concession for the sake 
 of peace and good- will. 2 
 
 It must be made to appear to the court that the shareholder 
 will suffer irremediable loss if not permitted to maintain the 
 suit, 3 and that a real effort has been made to induce the proper 
 officers to bring the suit, 4 and that their refusal to act is a 
 breach of trust, and not a mere error of judgment. 5 The de- 
 mand must be made, although the term of corporate existence 
 has expired, when the corporation is by the statute kept alive 
 for the purpose of winding up its business. 6 But when the offi- 
 cers have absconded, and the corporation is practically dis- 
 solved, a stockholder may maintain a suit against a person to 
 whom the corporate property has been fraudulently con- 
 veyed. 7 
 
 The rule that the stockholder can not maintain an action 
 against one who has injured the corporation does not apply 
 where the arts are not only wrongs against the corporation, 
 
 > Western Et. Co. v. Nolan, is N. Y. Radford, etc., Co., 93 Va. 427 ; Rogers 
 
 513, v. Nashville, etc., R. Co., 91 Fed. Rep. 
 
 • Republican, etc., Co. v. Brown, 19 299. 
 
 :. 24 I-. R. A 776; Rns- :t Detroil v. Dean, 106 U. B. 587. 
 sell v.Wakefield, etc., Co., I.. :.". 20 Eq. ' Dimpfell v. Ohio, etc., R. Co., L10 
 
 474; Dodge v.Woolsey, is Bow.(TJ.S.) ''■ B. 209. 
 
 Lottos \ . etc., Lssn., 5 Hawes v. Oakland, 104 U. 8. UJOj 
 
 h s Dak. 201 : Memphis City v. Dean, Rathbonev, Gas Co., 81 W. Va. 798. 
 x Wall. (IT. B 64; People v. State "Taylor v. Holmes, 127 IT. 8. 489. 
 Treasurer, 24 Mich. 468; Mounl v. T Wilcox v. Bickel, 11 Neb. 164.
 
 § 422 THE RIGHTS OF MEMBERSHIP. 449 
 
 but also a violation of a duty owed directly to the individual 
 stockholder. Thus, where the stockholder pledged his stock 
 as collateral with the directors of the corporation, and the lat- 
 ter entered into a conspiracy to depreciate the value of the 
 stock for the purpose of buying it in at less than its value, it 
 was held to be a wrong against both the corporation and the 
 stockholder, and that the action could be maintained by the 
 stockholder. Taft, J., said: 1 "It is undoubtedly true, as the 
 circuit court held, that a stockholder, merely as such, can not 
 have an action on his own behalf against one who has injured 
 the corporation, however much the wrongful acts may have 
 depreciated the value of his shares, but we are of opinion that 
 this principle has no application where the wrongful acts are 
 not only wrongs against the corporation, but are also violations 
 by the wrong-doer of a duty arising from contract or otherwise, 
 and owing directly by him to the stockholders." 2 
 
 § 422. Conditions precedent to right of action. — Before an 
 
 action can be maintained by a stockholder it must appear 
 
 (1) That no agents of the corporation having the requisite 
 authority are willing or able to act; 3 and 
 
 (2) That a demand has been made upon them and that they 
 have refused to act; 4 or 
 
 1 Ritchie v. McMullen, 79 Fed. Rep. Merch. Exch., 45 Mo. App. 206. A 
 522, 25 C. C. A. 50. demand is not necessary where the 
 
 2 Smith v. Hard, 12 Mete. (Mass.) corporation long since ceased to do 
 371; Allen v. Curtis, 26 Conn. 456; business and the directors are un- 
 Wallace v. Bank, 89 Tenn. 630; Con- known. Tennessee, etc., Co. v. Ayers, 
 way v. Halsey, 44 N. J. L. 462; Por- 43 S. W. Rep. 744. "The right to sue 
 ter v. Sabin, 149 U. S. 473. and he sued, to maintain and defend 
 
 8 Bill v. "Western Union, etc., Co., actions concerning corporate rights 
 
 16 Fed. Rep. 14; Hawes v. Oakland, and corporate liabilities, is a power 
 
 104 U. S. 450, Wilgas' Cases. incident to every corporation, * * * 
 
 4 Memphis City v. Dean, 8 Wall. 64; and with this right of the corporation 
 
 Detroit v. Dean, 106 U. S. 537 ; Hawes to maintain and defend actions con- 
 
 v. Oakland, 104 IT. S. 450; Shawhan cerning its corporate rights or liabili- 
 
 v. Zinn, 79 Ky. 300; Roman v. Wool- tics the stockholder can not interfere 
 
 folk, 98 Ala. 219 ; Forrester v. Boston, except when the directors refuse to 
 
 etc., Co. (Mont.), 55 Pac. Rep. 229; act or are guilty of fraud in the main* 
 
 Smith v. Dorn, 9(5 Cal. 73; Albers v. tenance or defense of the action." 
 29 — Private Corp.
 
 450 THE LAW OF PRIVATE CORPORATIONS. § 423 
 
 (3) That the agents themselves are the authors of the 
 wrong. 1 Under such circumstances, no demand to bring suit 
 is required as "the law does not require the minority stock- 
 holders to do so absurd a thing as a condition of seeking relief 
 against the wrongful acts of the directors and majority stock- 
 holders." 2 
 
 § 423. Exceptions to the rule. — To the general rule above 
 stated there are two exceptions : 
 
 ( 1 ) Equity will not interfere if the acts of the managing 
 agents are within the ratifying power of the majority. 3 But 
 this exception has no application where the act complained of 
 is in excess of the power of the majority, 4 or where the relief 
 sought is merely preventive. 
 
 (2) Equity will not interfere unless it appears that a delay 
 of the remedy until a corporate meeting can be held and the 
 guilty agents removed would unduly prejudice the rights of 
 the complainants, or that delay would be useless. 5 
 
 § 424. Illustrations, Foss v. Harbottle. 6 — Two members of 
 
 an incorporated company, called the Victoria Park Company, 
 filed a bill against the directors thereof, charging them with a 
 variety of fraudulent, illegal acts, whereby the property of the 
 company was misapplied, aliened and wasted, and praying that 
 the defendants might make good to the company the damages 
 by reason of the acts complained of, and that a receiver might 
 1m- appointed to apply the property of the company in discharge 
 of its liabilities; and to secure the surplus. The general result 
 ol the act of incorporation was to make the directors a govern- 
 ing body subject to the strict control of the proprietors, who 
 had power, when assembled in general meeting, t<> originate 
 
 Bainee v. Babcock, 96 Cal. 581, 27 49Minn. 183; Rothwell v. Robinson, 
 
 p. Rep, 674; Ore ■ ■ Gouge, 69 39 Minn. 1 ; Gerry v. Bismark Bank, 
 
 N. Y. L64j Brewerv. Boston Theater, 19 Mont. 191. 
 
 HU m Ware v. Bazemore, 58 Fo v. Harbottle, 2 Hare 461. 
 
 ii; 'Bagshaw v. Eastern, etc., K. Co., 
 
 1 Peabody v. Flint, <'• A.llen •'>'-'; Ex- 7 Hare 11 1. 
 
 ., e tc., Co. \. Brown, .i Fed. ■ Mozley v. Alston, ] Ph.Ch.790. 
 
 I<. . j . | ' i o > • \ . I [arbottle, 2 Hare 461 . 
 ' Bjorngaard -. ( toodhoe ( lo. Bank,
 
 §425 THE RIGHTS OF MEMBERSHIP. 451 
 
 proceedings for any purpose within the scope of the company's 
 powers, as well as to control the directors in any act which 
 they might have originated. The court was of the opinion 
 that the acts of the defendants complained of were of such a 
 nature as to be capable of confirmation by the majority of the 
 members of the company; that it did not appear that any at- 
 tempt had been made to bring these acts before a general meet- 
 ing of the shareholders; and that under these circumstances, 
 the court could not interfere at the suit of a minority, what- 
 ever it might have been induced to do had proper means been 
 resorted to and found ineffectual to set the general body of share- 
 holders in motion. 
 
 § 425. Mozley v. Alston. 1 — A bill was filed by two share- 
 holders of a railroad company, against the company and its di- 
 rectors, alleging that the latter had been illegally appointed; 
 that they had possession of the seal of the corporation, and 
 that they were about to use it for various improper purposes. 
 The bill prayed that the directors, who were the defendants, 
 might be restrained from acting as directors, and be ordered 
 to place the seal and the books and documents of the com- 
 pany under control of the lawful directors. It appeared 
 from the statements in the bill that the majority of the share- 
 holders agreed with the plaintiffs in their view of the illegality 
 of the directors' appointment, and the court held that if they 
 were so there was nothing to prevent the company from filing 
 a bill in its corporate character to remedy the alleged viola- 
 tions, and that as the complainants showed no reasons to jus- 
 tify them alone in applying for redress, they were not entitled 
 to its assistance. 
 
 § 426. Hawes v. Oakland. 2 — This is probably the leading 
 case upon this subject in the United States. A shareholder 
 in a water- works company filed a bill in equity against the 
 city, the corporation and its directors, and alleged that the 
 company was furnishing the city with water free of charge 
 
 'Mozley v. Alston, 1 Ph. Ch. 790. 2 104 TJ. S. 450. Approved in De- 
 
 troit v. Dean, 106 U. S. 537.
 
 452 THE LAW OF PRIVATE CORPORATIONS. § 427 
 
 beyond what the law required it to do, and that the directors, 
 contrary to his request, continued to do so to the great injury 
 of himself, the other shareholders and the company. The 
 court held that before the action could be maintained by the 
 shareholder there must be shown : 
 
 1. Some action or threatened action of the directors or trus- 
 tees, which is beyond the authority conferred by the charter 
 or the law under which the company was organized; or, 
 
 2. Such a fraudulent transaction completed or threatened 
 by them, either among themselves or with some other party, 
 or with shareholders, as will result in serious injury to the 
 company or the other shareholders; or, 
 
 3. That the directors, or a majority of them, are acting for 
 their own interest in a manner destructive of the company, or 
 of the rights of other shareholders; or, 
 
 4. That the majority of shareholders are oppressively and 
 illegally pursuing in the name of the company a course in vio- 
 lation of the rights of the other shareholders, which can only 
 be restrained by a court of equity. 
 
 5. It must also lie made to appear that the complainant 
 mad'- ao earnest effort to obtain redress at the hands of the 
 directors and shareholders of the corporation, and thai the 
 ownership of the stock was vested in him at the time of the 
 transactions of which he complains, or was thereafter trans- 
 ferred to liini by operation of law. 
 
 § 127. The rights of transferees. — A transferee of shares 
 acquires the rights of the transferrer, and the right of action 
 passi - viih lie whether it was known to the transferee 
 
 or not. If he is a purchaser in good faith without n< 
 thai the transferrer had precluded himself from suing by 
 acquiescence, he may maintain the suit, as "it can never be 
 held thai lie' acquiescence of the original holder of stock in 
 illegal acts of the directors of a company will hind ;i subse- 
 i holder of thai slock to submit to all future acts of the 
 Milne character. " ' 
 
 1 Bl Metropolitan R •',,., j,. in federal cou Equity Rule '•', 
 
 to thi practice printed in the preface to vol. mi. I
 
 §428 THE RIGHTS OF MEMBERSHIP. 453 
 
 § 428. Discretionary power. — But the courts will not con- 
 trol the discretionary powers of the managing agents of a cor- 
 poration so long as they act honestly and within the power 
 conferred by the charter. 1 Thus, directors will not be com- 
 pelled to bring an action in the name of the corporation or pay 
 dividends, unless there is abuse of discretion. 2 
 
 § 429. Acquiescence. — Neither the corporation nor the share- 
 holders can repudiate an unauthorized transaction after the 
 shareholders have acquiesced in the transaction and allowed 
 the corporation to appropriate the benefits thereunder, but the 
 acquiescence of a number or even of the majority will not bar a 
 suit by the corporation, and the benefits of the proceeding will 
 accrue to all the members. Where the individual member, 
 who himself acquiesces in the wrong, is disqualified from suing, 
 he, nevertheless, is entitled to share in the benefits of the 
 proceeding by the corporation. 
 
 § 430. Parties to the suit. — The suit may be brought by 
 the holder of a single share, or all shareholders may join. 
 If it is brought by a part only, it should purport to be on be- 
 half of the plaintiffs and all others similarly situated. The 
 corporation and all shareholders who are parties to the wrong, 
 complained of should be made defendants. 3 It is essential 
 that the corporation should be made a party defendant. 4 
 
 § 431. Right to restrain ultra vires acts. — A stockholder 
 who has not waived or forfeited his rights 5 may maintain a 
 suit to restrain the corporation from doing an act which is 
 ultra vires, 6 such as performing an illegal contract, 7 diverting 
 
 S. Rep., and comments of Mr. Justice 5 Dimpfell v. Ohio, etc., R. Co., 
 
 Miller in Hawes v. Oakland, 104 TJ. S. 110 U. S. 209; Rabe v. Dunlap, 51 
 
 450; supra, § 296. N. J. Eq. 40, 25 Atl. Rep. 959; Jeffer- 
 
 1 §400; Oglesby v.Attrill,105TJ.S.605. son County Sav. Bank v. Francis, 115 
 
 2 Samuel v. Holladay, 1 Woolw. 400. Ala. 317. 
 
 3 Davenport v. Dows, 18 Wall. 626; 6 Carson v. Gaslight Co., 80 Iowa 
 Davis v. Peabody, 170 Mass. 397. 638; Stewart v. Erie, etc., Co, 17 
 
 *Shawhan v. Zinn, 79 Ky. 300; Minn. 372, Gil. 348; Dodge v. Wools.v, 
 
 Dodge v. Woolsey, 18 How. (U. S.) 18 How. (U. S.) 331. 
 
 331; Memphis, etc., Co. v. William- 7 Morrill v. Boston, etc., R. Co., 55 
 
 son, 9 Heisk. (Tenn.) 314. N. H. 531.
 
 454 THE LAW OF PRIVATE CORPORATIONS. § 431 
 
 the corporate funds to unauthorized purposes, 1 or entering upon a 
 business not authorized by the charter. 2 A single stockholder 
 who acts promptly may enjoin the corporation from accepting a 
 legislative amendment which would substantially alter the cor- 
 porate charter. 3 But the rule is otherwise if the charter was 
 subject to amendment under the law in force when it was 
 granted. 4 A minority stockholder can not invoke the jurisdic- 
 tion of equity for himself and those who may subsequently 
 join him to prevent the majority stockholders from making a 
 contract which is neither ultra vires nor fraudulent. 5 A court 
 of equity will not attempt to adjust controversies which have 
 arisen among shareholders and directors relative to the proper 
 mode of conducting the corporate business. 6 Equity will re- 
 lieve the minority against the action of a majority stockholder 
 who also holds a majority of the mortgage bonds in using the 
 income for improper purposes and declining to accept traffic 
 from other roads which would produce a fund to pay interest 
 due, by which the corporation is to be forced into insolvency 
 and its property sold for the purpose of enabling the majority 
 stockholder to acquire title. 7 
 
 The right to relief may be lost by acquiescence or delay. 
 The business of a corporation was a failure and it was heavily 
 in debt. Its plant was unsalable, and the directors, with the 
 approval of all the shareholders but the plaintiff, acting in 
 good faith, exchanged the plant for the paid-up shares of an- 
 other corporation which was authorized to engage in the same 
 business. The plaintiff knew of the transaction immediately 
 after its completion and made no objection until more than 
 two years had elapsed. He tlen brought an action against the 
 corporation and the directors to recover the proportionate 
 
 -hare of the property transferred, and the court held that, as- 
 
 1 Rothwell v. Robinson, ::■■> Minn. I ; 4 Mower v. Staples, W2 Minn. 284. 
 
 March v. Railway Co., 18 N. H. 515; fi sh;iw v. Davie, 78 Md. 308, 28 L. 
 
 \ hton \ Daahaway \--n.. 840al.61 ; R. A. 294. 
 
 ral R. Co v. Collins, K) Ga. 582. "Republican, etc., Co. 7.Brown,19 
 
 • Oh tc ,Oo. v. Jone3,52Ga. D. B. A.pp. 208, -'I I,. R. A. 77<;. 
 
 27fl, 'DeNeufVille v. New York, etc., R, 
 
 ■Mowrey v. Indianapolis, etc., R. Oo.,81 Fed. Rep. 10, 61 TJ. 8. App. 874. 
 Co., -I Bl . (C. < 7i | 186, infra,
 
 § 432 THE RIGHTS OF MEMBERSHIP. 455 
 
 suming that the transfer was ultra vires, the plaintiff could not 
 recover, on the ground that "It is inequitable for a stockholder, 
 knowing that an act done by the directors and a majority of 
 the stockholders, in good faith, for the benefit of the corpora- 
 tion, is in fact unauthorized, to apparently acquiesce by his 
 silence, but secretly reserve an option to repudiate the act in 
 case of loss, or to enjoy its benefits if it proves profitable." 1 
 
 § 432. Control by the majority. — The right to control the 
 actions of the corporation in carrying out the objects set forth 
 in the charter is vested in the majority of the stockholders, 
 and the court will not, so long as the action is legal, inter- 
 fere with the management at the instance of a minority stock- 
 holder. 2 A court of equity will interfere with this control 
 at the instance of a minority stockholder only when absolutely 
 necessary for the attainment of justice and the prevention of 
 actual fraud. 3 Each and every stockholder contracts that the 
 will of the majority shall govern in all matters coming within 
 the limits of the act of incorporation. In cases involving no 
 breach of trust, but only error or mistake of judgment on the 
 part of directors who represent the corporation, individual 
 stockholders have no right to appeal to the courts to dictate 
 the line of policy to be pursued by the corporation. 4 "We 
 suppose it to be stated as an indisputable proposition," says 
 Chief Justice Bigelow, "that every person, who becomes a 
 member of a corporation aggregate by purchasing and hold- 
 ing shares, agrees, by necessary implication, that he will be 
 bound by all acts and proceedings within the scope of the 
 powers and authority conferred by the charter, which shall be 
 adopted and sanctioned by a vote of the majority of the corpo- 
 ration, duly taken and ascertained according to law. This is 
 the unavoidable result of the fundamental principle that the 
 
 1 Pinkusv. Minneapolis Linen Mills, 105 U. S. 605 ; Shaw v. Davis, 78 Mel. 308 
 65 Minn. 40. s Peatman v. Centerville, etc., Co., 
 
 2 Durfee v. Old Colony, etc., R. Co., 100 Iowa 245, 69 N. W. Rep. 541. 
 
 5 Allen (Mass.) 230; Hawes v. Oak- * Dudley v. Kentucky High School, 
 land, 104 U. S. 450 ; Oglesby v. Attrill, 9 Bush (Ky.) 576.
 
 456 THE LAW OF PRIVATE CORPORATIONS. § \%% 
 
 majority of shareholders can regulate and control the lawful 
 vice of the powers conferred on a corporation by its char- 
 ter. A holder of shares in an incorporated body, so far as 
 his individual rights and interests may be involved in the 
 doings of the corporation, acting within the legitimate sphere 
 of its corporate power, has no more legal control over them than 
 that which he can exercise by his single vote in the meetings 
 of the company." 1 The court will not interfere with a contem- 
 plated contract on the ground that it is improvidentand unwise. 2 
 The minority stockholders can not maintain an action in 
 tlnir own name for the removal of directors on the ground 
 that three persons who controlled a majority of the stock con- 
 trolled the election of the seven directors. 3 
 
 § 433. Limitation on the power of the majority. 4 — The right 
 of the majority to control the policy of a corporation is subject 
 to the implication that the business will be managed in the in- 
 terest of all the stockholders and not merely lor that of the ma- 
 jority. If the majority attempt to obtain for themselves an ad- 
 vantage not shared by the other stockholders, a court of equity 
 will interfere at the suit of the minority. 5 In a case where a 
 railway corporation purchased a majority of thestockof a canal 
 company and elected a board of directors in their own inte 
 and appropriated the entire property of the canal company for 
 railway purposes, the railway company was required to pay to 
 the stockholders and creditors of the canal company the differ- 
 < ace between the value of the property and wnat the railway 
 company paid for it. 6 In speaking of the duties of directors 
 ih<. court Baid: "A director whose personal interests are ad- 
 - to those of the corporation lias no right to he or act as, 
 a director." 
 
 'Dnrfee v. <>M Colony R. Co., 5 bers Among Themselves and Against 
 
 Allen (Mass.) '-'•"•'». Wilgus 1 Cases; the Corporation. 
 
 Flukerv. Railway Co., 18 K:m. ">77. B Menier v. Hooper's, etc., Works, 
 
 Meredith v. New Jei ey, etc., Co., 9 L. R. Ch. 850; Sellers v. Phoenix, 
 
 .1 i;,|. 21 1. etc., Co., IS Fed. Rep. 20; Jones v. 
 
 •Decatur, etc., Co. v. Palm, 113 Ala. Morrison, 81 Minn. 140; Gamble v. 
 
 Wa.U r Co., 123 V Y. 91. 
 
 »8eeV r UguB I Right* of Mem- 'Goodin v. Cincinnati, etc., Co. 1 18 
 
 Ohio si. L69, un 188.
 
 CHAPTER 16. 
 
 TRANSFER OF SHARES. 
 
 §434. 
 
 General statement. 
 
 §450. 
 
 Fraudulent transfer — Rights of 
 
 435. 
 
 The right to transfer shares. 
 
 
 transferee or purchaser of 
 
 436. 
 
 Power to prohibit transfers. 
 
 
 stock certificate. 
 
 437. 
 
 The regulation of transfers. 
 
 451. 
 
 Negligence of owner — Estop- 
 
 438. 
 
 Restrictions imposed by by- 
 
 
 pel. 
 
 
 law or express contract. 
 
 452. 
 
 Transfer on forged power of 
 
 439. 
 
 Regulation of transfers con- 
 
 
 attorney — Liability of corpo- 
 
 
 tinued. 
 
 
 ration. 
 
 440. 
 
 Transfer on books of the cor- 
 
 453. 
 
 Forgery of transfer — Negli- 
 
 
 poration. 
 
 
 gence. 
 
 441. 
 
 Transfer on books, continued. 
 
 454. 
 
 Rights of purchaser of shares 
 
 442. 
 
 The rights of attaching cred- 
 
 
 transferred in violation of a 
 
 
 itors. 
 
 
 trust. 
 
 443. 
 
 Transfers in fraud of creditors. 
 
 455. 
 
 Transfers in breach of trust — 
 
 444. 
 
 Manner of making assignment 
 
 
 Liability of corporation. 
 
 
 and transfer. 
 
 456. 
 
 When the power to sell exists — 
 
 445. 
 
 Transfer after insolvency or 
 
 
 Presumption of right doing. 
 
 
 dissolution. 
 
 457. 
 
 Lien of corporation upon 
 
 446. 
 
 Pledge of stock certificates by 
 
 
 shares. 
 
 
 delivery. 
 
 458. 
 
 Effect of a transfer upon rights 
 
 447. 
 
 Surrender of old certificate — 
 
 
 and liabilities of parties. 
 
 
 Fraudulent reissue. 
 
 459. 
 
 Remedies for a wrongful refusal 
 
 448. 
 
 Evidence of transferee's right. 
 
 
 to transfer. 
 
 449. 
 
 Indorsement of certificate. 
 
 460. 
 
 An action for damages. 
 
 
 
 461. 
 
 A suit in equity. 
 
 
 
 462. 
 
 Mandamus. 
 
 § 434. General statement. — Membership in a private corpo- 
 ration having capital stock may be transferred from one person 
 to another by a transfer of the shares in the manner provided 
 by law. By a complete transfer of shares, the transferee 
 steps into the shoes of the transferrer and thereafter becomes a 
 stockholder in the corporation and is entitled to all the rights 
 and privileges and subject to all the liabilities of membership 
 of which he has, or is presumed to have, notice in such a 
 J See Wilgus' Cases, Rights of Members, Transfer of Shares. 
 (457)
 
 158 THE LAW OF PRIVATE CORPORATIONS. § 435 
 
 corporation. ' There must, of course, be authority from both 
 transferrer and transferee for the making of such a transfer. 
 Ordinarily the certificate of shares contains upon its back 
 a written form of assignment and power of attorney author- 
 izing the corporation to make the transfer upon the books 
 of the corporation. The execution of a deed of gift of cor- 
 porate stock vests the complete beneficial ownership of the 
 shares in the donee and authorizes the corporation upon the 
 presentation of the certificate and deed to make the proper en- 
 tries on its books. 2 Shares of stock can not be transferred to 
 a person on the books of the corporation so as to make him a 
 stockholder without his consent, but an agreement by a party 
 to take the shares of a stockholder will authorize the transfer 
 of the shares to him. 3 
 
 § 435. The right to transfer shares. — It is implied in the 
 constitution of every private corporation that the shareholders 
 may transfer their shares at will by giving notice of the trans- 
 fer to the corporation. 4 Like other personal property, shares 
 of stock may be alienated at will unless the general right is re- 
 stricted by the charter, statute or contract. The right itself is 
 not derived from the charter as has been held, 5 but is an inci- 
 dent of ownership — an incident of the ownership of any 
 species of property, as the unrestricted right of alienation — the 
 jus disponendi.* 
 
 1 Bank v. Lanier, 11 Wall. 369; Pick. (Mass.) 90, 19 Am. Dec. 306; 
 
 i v [Jpton, '.'1 U. S. 56; Scott v. Burrall v. Bushwick R. Co., 75 N. Y. 
 
 Bank, 15 Fed. Rep. 194. 211; Bank of Attica v. Mfgr. Hank, 
 
 •Thompson v. Hudgina, 116 Ala. 20 N. T. 501; Farmers' Bank v. Was- 
 
 therein cited. S'>n, 18 [owa 336; Jackson v. Newark, 
 
 jjua, etc., Co. v. Greene, 88 Fed. etc., Co., 31 N. .!. L. 277; Bloede v. 
 
 Rep. 207, 31 C. C. \. 177. In White Bloede, 84 M.l. 129, Wilgus' Cases 
 
 v. 8alisbary, 33 Mo. 150, it was held. ^Johnson v. Laflin, 5 Dill. (CO.) 
 
 a contract to deliver a certain 65. 
 
 amount in railroad stock was satisfied fi tn re Klaus. 67 Wis. 401 ; Trisconl 
 
 by a transfer on the book without the \ . Winship, 43 La. Ann. 45; Farmers' 
 
 delivery of a certificate. See also etc., Bank v. Wasson, 18 towa 836; 
 
 Boatmen's, etc., Co. v. Able, 48 Mo. Miller v. Great Republic, etc., Co., 50 
 
 136. Mo. 65; Poole v. Middleton, 29 Beav, 
 
 'Trisconl v. Winship, 18 La. Ann. 846; Moore v. Bank of Commerce, 52 
 
 i. Sargent v. Franklin, etc., Co., 8 Mo. 877. The validity of the transfer
 
 § 436 TRANSFER OF SHARES. 459 
 
 § 43G. Power to prohibit transfers. — The directors or manag- 
 ing officers of a corporation have no power to prohibit the trans- 
 fer of shares. Nor is it within the power of the stockholders, 
 unless expressly authorized by the charter, to enact a 
 by-law forbidding the transfer of shares without the consent 
 of the president or board of directors. Where a by-law pro- 
 vided that no valid transfer could be made without the con- 
 sent of the board of directors, the court said: "Its enforce- 
 ment would operate as an infringement upon the property 
 rights of others which the law will not permit. It would, be- 
 sides, operate as a restraint upon the disposition of property 
 in the stock of the corporation, in the nature of restraint of trade, 
 which the courts will not tolerate. As the restriction is not 
 imposed by express authority of the statute of the state, it can 
 not, in such cases, be enforced." 1 
 
 § 437. The regulation of transfers. — Although the corpora- 
 tion can not prohibit the transfer of its shares, it may prescribe 
 reasonable regulations and formalities for the purpose of pro- 
 tecting the corporation. 2 Hence the provisions of a by-law 
 
 depends upon the law of the state by 2 Dane v. Young, 61 Maine 160; 
 
 which the corporation was created. Planters', etc., Ins. Co. v. Selnia, etc., 
 
 Black v. Zacharie&Co., 3 How. (II. S.) Bank, 63 Ala. 585. As to restrictions 
 
 482. A pledgee of shares is entitled upon transfer in by-laws or articles, 
 
 to have the proper entry for the pro- see Bloede v. Bloede, 84 Md. 129, 
 
 tection of his rights made on the 33 L. R. A. 107, Wilgus' Cases; Ireland 
 
 books of the corporation although his v. Globe, etc., Co. (R. I.), 29 L. R. A. 
 
 contract is silent on the subject. But 429. The transfer of membership in 
 
 he is not entitled to have new certifi- such organizations as boards of trade 
 
 cates issued in his name. Spreckels and chambers of commerce are usu- 
 
 v. NevadaBank, 113Cal. 272,33 L. R. ally subjected to careful restrictions. 
 
 A. 459. See Miller v. Houston City The decision in State v. Chamber of 
 
 R. Co., 16 C. C. A. 128, 69 Fed. Rep. Commerce (Minn.), 79 N. W. Rep. 
 
 63. 1026, seems inconsistent with the cor- 
 
 1 Farmers' Bank v. Wasson,48 Iowa rect view of such corporations. The 
 
 336; Wilson v. St. Louis, etc., R. Co., corporation was organized to facilitate 
 
 108 Mo. 588; Sargent v. Franklin, the buying and selling of products, to 
 
 etc. Co., 8 Pick. 90; Quiner v. Mar- inculcate principles of justice and 
 
 blehead, etc., Co., 10 Mass. 476; Feck- equity in trade, and to facilitate the 
 
 heimer v. National Exchange Bank, speedy adjustment of business dis- 
 
 79 Va. 80; Barnes v. Brown, 80 N. Y. putes among the members. Tt had 
 
 527. no capital stock, but the membership
 
 460 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 437 
 
 requiring a transfer on the books of the corporation must be 
 complied with, or there will be no transfer of membership as 
 against the corporation. A grant of power to the directors to 
 regulate transfers does not confer power arbitrarily to 
 restrain transfers at discretion. 1 It merely authorizes the cor- 
 poration to prescribe formalities to be observed in making 
 transfers. A provision that shares shall be "transferable only 
 on the books of the company" will not authorize the directors 
 to refuse to register a transfer, although they may consider the 
 transfer detrimental to the interest of the corporation. 2 The 
 power to regulate "can only go to the extent of prescribing 
 conditions essential to the protection of the association against 
 fraudulent transfers, or such as may be designed to evade the 
 just responsibilities of the stockholder. It is to be exercised 
 reasonably. Under the pretense of prescribing the manner of 
 the transfer, the association can not clog the transfer with 
 useless restrictions, or make it dependent upon the consent of 
 the directors or other stockholders." 3 The corporation can not 
 without express power determine to whom only transfers may be 
 made. 4 It is sufficient that the transferee is a person who is 
 
 was represented by a certificate of to permit the transfer, but the court 
 
 Btock. The by-laws contained a pro- 
 vision regulating a transfer of mem- 
 bership. Notice of the proposed trans- 
 fer was i" )»' posted for ten days, and 
 "if do objection shall have been 
 made on account of any unsettled 
 contracts, claims, demands, ot com- 
 plaints against the bolder of Buch 
 membership," it may l»- transferred 
 upon pa} in 1 - a small tee. I f t here are 
 *iipjrrtii.ii-. their sufficiency shall be 
 determined by the board of directors. 
 \ member w as adjudged a bankrupt 
 and discharged from his debts. His 
 trustee in bankruptcy Bold the certifl- 
 
 held that the debts gave the objectors 
 mi standing, and ordered the transfer 
 made. It is settled by the derisions 
 of the federal courts that a <lci>t is not 
 paid by a discharge in bankruptcy. 
 It is simply unenforcible. 
 
 1 Moffat! v. Farquhar, L. R. 7 Ch. 
 Div. 591 : Ex parte Penney, L. R. 8 
 Oh. App.Cas.446; Robinson v. Bank, 
 I.. R. I l,|. 82. 
 
 •Chouteau Spring Co. v. Harris, 20 
 Mo. 382; Feckheimer v. Nat'l, etc., 
 Bank, 79 Va.80. 
 
 •Johnston v. I.allin. 103 U. 8. 800. 
 
 4 In ( Ihouteau Bpring ( '<>. v. I [arris, 
 
 i ii' I the purchaser demanded a 20 Mo. 882, it was held thai the mere 
 
 transfer of the membership to him. power to regulate transfers does not 
 
 Objections were made by members authorize a refusal to allow a transfer 
 
 who held claim against the bank- to an insolvent. But Bee § 588. in 
 
 rapt which were di charged b) the Moore i Bank, 52 Mo, 377, it was 
 
 order. The board of directoi held that a by-law prohibiting the
 
 § 438 TRANSFER OF SHARES. 461 
 
 capable of assuming the obligations of a shareholder. The trans- 
 fer may be by or to an officer or director so long as it is in good 
 faith, and no advantage is taken of the position of the parties. 
 The motive which induces the purchaser of shares to ask 
 for their transfer is in general immaterial. Where one who 
 represented a rival business corporation, and who had been 
 conducting a series of suits against the Standard Oil Trust, 
 purchased shares in the trust and demanded their transfer, 
 the court said: "The plaintiff purchased the shares of the 
 trust with his own money, and he represents no interests or 
 purposes other than his own in this action. His claim is 
 founded upon a right of property lawfully acquired. * * * 
 When no discretionary power is reserved to that effect, there 
 is not, nor should there be, any rule of law which will enable 
 a corporation or company whose stock is on sale in the open 
 market, to discriminate between bona fide purchasers who in- 
 vest money in it for their own benefit, or to den} r to some of 
 them the right to make their title effectual. * * * In the 
 present case no such discretionary powers seem to have been 
 vested in the trustees. And the purchase of the stock was open 
 to the plaintiff and fairly made by him. Attached to it was the 
 quality of transferability, and with it was presumptively the 
 right of the beneficial holder to have recognition as such by 
 means of transfer to him on the books of the trust. 
 In such case it is difficult to see that motive legitimately be- 
 comes a subject of consideration, unless the relief in view may 
 for that reason result unjustly to others in whose behalf it is 
 resisted, or to the prejudice of their legal rights." 1 
 
 § 438. Restrictions imposed by by-law or express contract. — 
 
 It has been held that a by-law which prohibits a transfer of 
 
 alienation of shares or imposing re- providing that a transfer of the stock 
 
 strietions upon their transfer was of an irrigation company shall be nun lv 
 
 against public policy and void as in only with the bond for which it was 
 
 restraint of trade. issued does not apply to a sale of de- 
 
 1 Rice v. Rockefeller, 134 N. Y. 174, linquent stock for assessments. Spur- 
 
 Wilgus' Cases, citing Bloxam v. Rail- geon v. Santa Ana, etc., Co., 120 Cal. 
 
 way Co., 3 Ch. App. 337; Ramsey v. 71, 39 L. R. A. 701. 
 Gould, 57 Barb. (N. Y.) 398. A by-law
 
 462 THE LAW OF PRIVATE CORPORATIONS. § 438 
 
 shares to one not already a stockholder without first offering 
 the shares to the corporation is invalid, 1 and that in so far as 
 a by-law prohibiting a transfer without the consent of the 
 board of directors implies an express agreement between the 
 corporation and the stockholders it is void as against public 
 policy. 2 So on agreement by the organizers of a corporation 
 that their stock shall be put in trust and not drawn out for six 
 months without the written consent of all is void as against pub- 
 lic policy if it is to be construed so as to prevent a sale of the 
 stock within the six months. 3 But under charter authority 
 the ownership of stock in the corporation may be restricted to 
 a certain class of persons, 4 and in the absence of a charter pro- 
 vision to the contrary the members of a reservoir corporation 
 may lawfully agree that rights in their capital stock shall pass 
 with mill property owned by such members, so that the owner- 
 ship shall be confined solely to those directly interested in the 
 maintenance of the dams. 5 
 
 It was held in Massachusetts 6 that even if a by-law of a cor- 
 poration which gives the board of directors the option to take 
 the shares of any stockholder who desires to sell them at a 
 valuation to be determined by them is invalid, the stockholder 
 is bound by an agreement which adopts the by-law. The by- 
 law provided that a member who desired to sell his shares 
 should cause the shares to be appraised by the directors and 
 thereupon offer them to the corporation at such appraised 
 value, and that if the directors, if they think it for the best 
 
 1 Brinkerhoff , etc., Co. v. Homo, (Part 1)192, 88 L. R. A. 299, it was 
 etc., Co., L 18 Mo. 447, Wilgns' Cases, held that a corporation could not en- 
 1 Feckliriiiicr v. P.ank, 79 Va. 80. force a contract between proposed 
 "■Williams v. Montgomery, 68 Hud incorporators thai they will not 
 (N. Y.) H6; Fisher v. Bash, 35 Hun transfer their stock without giving the 
 N. Y. 641; Nesmith v. Washington option of purchase to the corpora- 
 Bank, 6 Pick. (Mass.) 324. tion. The remedy, if any, is for 
 • Blienv. Kami (Minn.), 79 N. W. breach of contract. In Burden v. 
 Rep. 606. Burden (N. Y.i, 54 N. E. Rep. 17, an 
 ■McGinty v. Atlmi, etc., Co., 165 agreemenl between the promoters 
 [88, Wil" I w bieh contained a restriction upon 
 bw England, etc., Co. v. Abbott, the right to transfer thi i was 
 
 162 Mass. lis, 27 L R, \. 271. in ass d to enter into the charter and 
 
 [reland v. Globe, etc., Co., 20 l>' I. bevalid.
 
 § 438 TRANSFER OF SHARES. 463 
 
 interests of the company, shall tender such appraised value 
 and that the stockholder shall then make a transfer to the 
 corporation. The certificates contained on their face the state- 
 ment that "said shares are transferable in person or by attor- 
 ney, duly constituted, on the books of the company and in the 
 manner and upon the conditions expressed in the by-laws of 
 the company, printed upon the back of this certificate." At 
 the time the certificates were issued the stockholder signed a 
 receipt which stated that he "received the above certificates 
 subject to the conditions and restrictions therein referred to 
 and to the by-laws of the company to which I agree to con- 
 firm." 
 
 In a suit by the corporation against the executors of the estate 
 of the stockholder for specific performance of the agreement 
 to convey, the court said: "The defendant contends that these 
 by-laws are void. We have not found it necessary to consider 
 that question and we express no opinion upon it. We think 
 that the case may well stand on the ground that the defend- 
 ant's testator entered into an agreement with the plaintiff to 
 do what the plaintiff now seeks to compel his executor to 
 do. It is manifest that a stockholder may make a contract 
 with a corporation to do or not to do certain things in re- 
 gard to its stock, or to waive certain rights or to submit to 
 certain restrictions, respecting which the stockholders might 
 have no power of compulsion over him." In Adley v. Whit- 
 stable Co. 1 Lord Eldon says- ' It has been frequently deter- 
 mined that what may well be made the subject of a con- 
 tract between the different interests of a partnership would 
 not be good as a by-law. For instance, an agreement amongthe 
 citizens of London * * * * that they would not sell except in 
 the markets of London would be good; yet it has been declared 
 by the legislature that a by-law to that effect is bad.' ' In the 
 present case, the certificates were issued to the defendant's 
 testator in consideration of the payment by him to the corpo- 
 
 1 Adley v. Whitstable Co., 17 Ves., 8 Met. (Mass.) 321 ; Bank of Attica v. 
 Jr., 315, 322. Bank, 20 N. Y. 501 ; Cook Stock and 
 
 2 Davis v. Second Universalist, etc., Stockholders, §408.
 
 464 THE LAW OF PRIVATE CORPORATIONS. § 438 
 
 ration of the amount due for the stock, and the agreements 
 with it on his part, which they contain. By accepting them 
 without objection and by signing the receipts he must be held 
 to have agreed to the conditions printed on the back of the 
 certificates. The fact that the conditions were contained in 
 by-laws which may have been invalid as such does not render 
 his agreement void if the contract was in substance one which 
 the corporation had power to make. We think that it had 
 such power- It is held in this state that a corporation, unless 
 prohibited, may purchase its own stock; 1 and we see nothing 
 opposed to public policy in such an agreement as this with 
 corporations like this. If honestly carried out by the direc- 
 tors, it tends to secure a trustworthy body of stockholders 
 from which those having a share in the management of the 
 corporation naturally would be selected. It certainly can not 
 I... contrary to public policy that the managers of this and 
 similar institutions should be persons of skill who possess the 
 confidence of the public. The restraint upon alienation is no 
 than is often agreed to. In England it is not unusual 
 to find in the <\i'vd^ of settlement or articles of association un- 
 der which corporations or joint stock companies have hem or- 
 
 ized, and which correspond to the charter and by-laws 
 here, provisions requiring the stockholder, in case he wishes 
 to transfer his stock, to offer it to the directors or to submit to 
 them the name of the transferee for approval." 1 
 
 The suit being between the company and a stockholder to 
 
 irce a contract with the company, and the rights of third 
 parties not being involved, it was held that the plaintiff was 
 entitled to a decree compelling the defendant to convey the 
 shares upon paymenl by it of the amount of the appraisal, and 
 inn from prosecuting an action at law against the 
 corporation to recover dividends upon the Mock. 
 
 iDupee v. Boston, <•!<-., Co., Ml Beav.646;Ex parte Penney, I.. R. 8 
 
 Oh. App. 4 16; Moflatl v. Farquhar, 
 tridge, 6 n. I- L. R. 7 < h. Div. 591 ; Chapp9ll'a Cai e, 
 .. Middleton, ii'.» L. J:, o Oh. App. 902.
 
 § 439 TRANSFER OF SHARES. 465 
 
 § 439. Requisition of transfers continued. — Restrictions 
 upon the power to make a bona fide sale and transfer of shares 
 must be based upon authority conferred by the charter, a by- 
 law adopted under the authority of a charter provision, 1 or a 
 valid contract with the stockholder. 2 A by-law which requires 
 the approval and acceptance of a transfer by the board of 
 directors is invalid unless expressly authorized by statute. 3 
 Charter authority is required for a by-law prohibiting the 
 transfer of shares by a stockholder who is indebted to the cor- 
 poration. 4 "At common law, and independently of statutory 
 provisions granting or authorizing the exercise of the power, 
 a corporation can not prohibit a transfer of its shares on ac- 
 count of the indebtedness of the shareholder to the corpora- 
 tion. Where the stock is personal property, restrictions upon 
 its transfer must have their source in legislative action, and 
 the corporation itself can not create these impediments." 5 
 The national banking act gives a stockholder the right to 
 transfer his shares, and this right can not be taken away by a 
 by-law which prohibits a transfer without the consent of the 
 board of directors. 6 This right can not be restricted by a state 
 statute. 7 
 
 § 440. Transfer on books of the corporation. — The require- 
 ment that the stock can only be transferred upon the books of 
 the corporation is almost universal. Such provision is gen- 
 erally held to be for the protection and benefit of the corpo- 
 ration and as not preventing a shareholder from transferring 
 his shares without an entry on the books. Except as against 
 the corporation the shareholder may, as an incident of his 
 
 1 Johnson v. Laflin, 5 Dill. 65, 103 U. Bank, 45 Mo. 513, 100 Am. Dec. 388 ; 
 S. 800. Bank of Attica v. Bank, 20 N. Y. 501. 
 
 2 See New England, etc., Co. v. Ab- 5 Carroll v. Mullanphy, etc., Bank, 
 bott, 162 Mass. 148, 27 L. R. A. 271. 8 Mo. App. 249. See § 457. 
 
 3 Farmers', etc., Bank v.Wasson, 48 e . Johnson v. Laflin, 5 Dill. 65, 103 U. 
 Iowa 336, 30 Am. Rep. 398. S. 800; Feckheimer v. Bank, 79 Va. 
 
 4 Feckheimer v. Bank, 79 Va. 80; 80; Bank of Attica v. Bank, 20 N. Y. 
 
 Byron v. Carter, 22 La. Ann. 98. But 501. 
 
 see Spurlock v. Railroad Co., 61 Mo. 7 Doty v. First Nat'l Bank, 3 N. Dak 
 
 319; Mechanics' Bank v. Merchants' 9, 17 L. R. A. 259. 
 30-Pkiv.vte Cobp.
 
 468 THE LAW OF PRIVATE CORPORATIONS. § 440 
 
 right of property, transfer both the legal and equitable 
 title to his share. 1 As between the immediate parties to the 
 transaction, a common-law assignment of the shares is effect- 
 ual and will be recognized and enforced as against all parties 
 not showing a superior right. 2 The " purpose of such a regu- 
 lation is to afford the corporation and persons dealing with it 
 the means of ascertaining who are its shareholders. Without 
 an entry of a transfer upon its books it would be practically 
 impossible for the corporation to know who are entitled as its 
 shareholders to vote at its meetings, to whom dividends are to 
 be paid, and who are liable as shareholders to the corporation 
 or its creditors. With such an entry the books become a rec- 
 ord showing who at any particular time are the shareholders, 
 and who as such are entitled to the rights conferred, and sub- 
 ject to the liabilities imposed by membership in the corpo- 
 ration. A regulation of this kind, then being intended merely 
 to promote the convenient administration of the corporate af- 
 fairs, is given binding effect upon the corporation no further 
 than is necessary for the accomplishment of that end. Hence 
 it is competent for the corporation, for whose advantage the 
 regulation is made, to insist upon a strict compliance with the 
 formalities prescribed, if not itself in fault, or to waive them 
 if it sees fit." 3 
 
 In New York it was said: 4 " It has been settled by repeated 
 
 'Baldwin v. Canfield, 26 Minn. 43 ; Nat. Bank, 129 Maes. 279. That a 
 Nicollet Nat. Bank v. City Bank, 38 good equitable title vests in the trans- 
 Minn. 85; Joslyn v. St. Paul, etc., Co., fereesee Hubbard v. Manhattan Trust 
 44 Mum. L83; Lund v. Wheaton, etc., Co., 87 Fed. Rep. 51, 57 U.S. App. 
 Co., 50 Minn. 36, -"-2 N. \V. Rep. 268; 730. 
 
 Continental Nat. Bank v. Eliot Nat. 'American Nat. Bank v. Oriental 
 
 Bank, 7 Fed. Rep. 369; McNeil v. Mills, 17 R. [.551,28 A.tl. Rep. 
 
 Tenth Nat. Bank, 16 N. Y. 325, [sham v. Buckingham, 49 N. Y. 216; 
 
 Wilgus' Cases ; Grymes v. Hone, 49 N. Chemical Nat. Bank. v. Colwell, 182 
 
 Y. 17; Turnpike Co. v. Gerhab(Pa.), N. Y. 250. 
 
 IS Atl.Rep. 90; Thurber v. Crump, 86 •McNeil v. Bank, 16 N. Y. 325, Wil- 
 
 Ky. K)8; Robin boh v. National Bank, go ' Ca es. An entry <>n the 1 ka 
 
 Y . 637; [sham v. Buckingham, ot the corporation is not necessary to 
 
 49 N. Y. 216; Mandlebaum v. Mining vest in the vendee all the title which 
 
 1 : Mich. I'-.i. the vendor had. Parker v. Bethel, 
 
 icollet Nat. Bank v. City Bank, etc., Co., 98 Tenn. 252,81 L. R. \. 
 
 88 Minn. B5; Dickin on v. Central 708. The .transferee will get an equi-
 
 § 441 TRANSFER OF SHARES. 467 
 
 adjudications that as between parties the delivery of the cer- 
 tificate, with assignment and power indorsed, passes the en- 
 tire title, legal and equitable, in the shares, notwithstanding that 
 by the terms of the charter or by-laws of the corporation, the 
 stock is declared to be transferable only on its books, that such 
 provisions are intended solely for the protection of the corpo- 
 ration, and can be waived and asserted at its pleasure, and that 
 no effect is given to them except for the protection of the cor- 
 poration, that they do not incapacitate the shareholder from 
 parting with his interest, and that his assignment, not on the 
 books, passes the entire legal title to the stock, subject only to 
 such liens or claims as the corporation may have upon it, and 
 excepting the right of voting at elections, etc." 
 
 § 441. Transfer on books continued. — Other decisions are 
 to the effect that the provision requiring a transfer on the 
 books of the corporation is exclusive of any other mode. The 
 legal title is held to remain in the transferrer until the certifi- 
 cate is deposited with the corporation for transfer. 1 In an 
 early case the supreme court "took notice of the distinction 
 between the legal and equitable title in cases of bank stock 
 where the charter of the bank had provided for the mode 
 of transfer. The general construction, which has been put 
 upon the charters of other banks containing similar provisions 
 as to the transfer of their stock, is that the provisions are de- 
 signed solely for the safety and security of the bank itself, and 
 of purchasers without notice; and that as between vendor and 
 vendee a transfer not in conformity to such provisions is good 
 to pass the equitable title and divest the vendor of all interest 
 in the stock." 2 
 
 When it was contended that the provision was merely a 
 
 table title which will he protected as title. See Lippitt v. American, etc., 
 
 against all persons not showing a su- Co., 15 R. I. 141, 2 Am. St. Rep. 886. 
 
 perior title. Prince, etc., Co. v. St. 2 Union Bank v. Laird, 2 Wheat, (U. 
 
 Paul, etc., Co., 68 Minn. 121. S.) 390; Block v. Zacharie & Co., 3 
 
 1 In Brown v. Adams, 5 Biss. (C. C.) How. (U. S.) 482; Reed v. Copeland, 
 
 181, it was held that a mere delivery 50 Conn. 479; Bank v. Gridley, 91 111. 
 
 of the certificate to the officers of the 457 ; Leyson v. Davis, 17 Mont. 220, 31 
 
 corporation is not' sufficient to pass L. R. A. 429.
 
 468 THE LAW OF PRIVATE CORPORATIONS. § 441 
 
 regulation for the convenience and protection of the bank, 
 Chief Justice Shaw said: "We can see no ground upon which 
 to restrict the plain provision of the statute. If we may judge 
 of an intended operation of an act of legislation from the use- 
 ful and beneficial purposes it may tend to promote, we should 
 construe it as having a much broader and more comprehen- 
 sive scope." Tt was therefore held that a creditor of the stock- 
 holder who attached the shares before the transfer on the books 
 acquired title as against the holder of an unrecorded transfer. 1 
 Where this rule is adhered to, the holder of shares may 
 make an equitable assignment of his interest without an as- 
 signment of his stock on the books of the company, and the 
 interest of the assignee will be protected in equity. 2 As be- 
 tween the transferrer and the transferee the "transfer is com- 
 plete by the sale, assignment and delivery and payment, with- 
 out registration, whether the transferee gets the legal title be- 
 fore registration or only a complete equitable title.'" In any 
 case, the transferee as against the corporation acquires only 
 the right to have the transfer made to him on the books of the 
 corporation. Where the corporation is entitled to a lien on 
 the shares, he takes the title whether legal or equitable subject 
 to claims the corporation may have against the stock. 4 Until 
 the transfer is made the corporation may treat the transferrer 
 as the stockholder; although if it has notice of the rights of 
 the transferee it will not be justified in disregarding him un- 
 der all circumstances. A transferring stockholder is released 
 from his liabilities as a stockholder by a legal transfer of the 
 shares, and if the corporation wrongfully refuses to make (he 
 transfer, it can not thereafter hold the transferrer to the liabilities 
 
 'Fisher v. Kss.x Bank, •"> Gray U.S. 800. A provision thai thecer- 
 
 (Mass.) 373, Wilgus' Oases. Bee§442, tiflcate shall be negotiable only by 
 
 infra, transfer upon the books of the cora- 
 
 ■Fitchburgh, etc., Bank v. Torrey, pany with its consent Qrs1 obtained, 
 184 \| ; - 239; Lippitl ^.American, will not prevenl the vesting of a com- 
 etc., Co., 15 E. I. i ii ; Peck v. Provi- plete equitable title in the assignee by 
 dence, etc., <'<>., 17 I:, r. 275, 23 Atl. an absolute and unconditional assign- 
 Rep. 967; Smith v. Nashville, etc., ment. Hubbard v. Manhattan, etc., 
 l; Co ,93 Tenn.221, 18 8. W. Rep. <V.s7 Fed. Rep. 51, :;'» CO. A.. 520. 
 
 4 Union Bank v. Laird, '-' Wheat. 
 
 Johnston \. Laflin, 6 Dill. 85, 103 (U. 8.) 390.
 
 § 442 TRANSFER OF SHARES. 469 
 
 of a shareholder. 1 But a different rule might apply as against cor- 
 porate creditors who become such in reliance upon the books of 
 the corporation. In order to be relieved from this liability a 
 transferring stockholder must at least make earnest effort to have 
 the transfer actually made upon the books of the corporation. 2 
 It is the duty of the transferee to have the transfer made on 
 the books of the corporation, and if he neglects to do so the 
 transferrer may compel him to do what is necessary to relieve 
 him from further liability to the corporation or its creditors. 8 
 
 § 442. Rights of attaching creditors. 4 — The authorities are 
 in irreconcilable conflict upon the question of the right to pri- 
 ority as between attaching creditors of the transferrer and the 
 holder of an unrecorded transfer of shares. The conflict re- 
 sults from the different views taken by the courts of the nature 
 and purposes of the requirement of a transfer upon the books 
 of a corporation. Practically all of the leading text- writers 
 take the position that the purchaser at the execution sale under 
 such an attachment gets no title as against those who have ac- 
 quired equities under an unrecorded transfer of the shares. 
 Thus, Morawetz says 5 that "shares in a corporation are mere 
 contract rights or choses in action, while the certificates are 
 treated as the embodiment of the rights and may be considered 
 as chattels. The assignment of a certificate ought, therefore, 
 to have the same effect, as to creditors of the assignor, as the 
 indorsement and delivery of a bill or note. 
 
 A creditor does not, by levying an attachment or execution 
 on property, occupy the position of a bona fide purchaser for 
 value. A creditor is entitled only to step into the place of his 
 debtor in respect to the latter's property and contract rights. 
 
 Chouteau, etc., Spring Co. v. Har- man would do to have the transfer 
 
 ris, 20 Mo. 382. made, but fails, he is not liable. See, 
 
 2 See §570. Shellington v. Howland, also, Harpold v. Stobart, 46 Ohio St. 
 
 53 N. Y. 371 ; Dane v. Young, 61 Maine 397 ; Chemical Nat'l Bank v. Colweil, 
 
 160; Richmond v. Irons, 121 TJ. S. 132 N. Y. 250. 
 
 27; Johnson v. Underbill, 52 N. Y. s Allen v. South Boston, etc., R. 
 
 202. But the negligent vendee will Co., 150 Mass. 200, 15 Am. St. Rep. 
 
 be liable to the vendor for what he 185; Kellogg v. Stockwell, 75 111.68. 
 
 has had to pay. Whitney v. Butler, 4 See Wilgus' Cases. 
 
 118 IT. S. 655. If the vendor does s Morawetz Pri v. Corp., § 196. 
 everything that a prudent business
 
 170 THE LAW OF PRIVATE CORPORATIONS. § 442 
 
 He is not entitled, upon any principles of justice and common 
 honesty, to pay his debt out of property which does not in 
 truth belong to the debtor. A creditor, therefore, ought not to 
 be allowed to levy on shares after the real substantial and 
 equitable ownership has been transferred to a purchaser for 
 value. It is wholly immaterial for this purpose whether the 
 shares have been transferred on the company's books or not. 
 After the assignment the debtor would retain at most a naked 
 legal claim against the corporation, and this is all that the 
 creditor would be entitled to take." 
 
 Cook says 1 that "as a general rule it may be said that a pur- 
 chaser of a certificate of stock is usually protected as fully 
 without a registry on the corporate books as he would be by 
 a registry, so far as subsequent attachments are concerned." 
 
 Pomeroy says 2 that by the great majority of decisions an as- 
 signment of shares without a record on the books of the cor- 
 poration '• is valid as against creditors of the assignor and 
 gives the assignee a precedence over their subsequent judg- 
 ments, executions and attachments." This rule is unques- 
 tionably settled by the weight of authority, although, as pointed 
 out by a writer in the American Law Review, 3 possibly not by 
 the number of decisions. It is difficult to see why the attach- 
 ing creditor should acquire a greater interest in the shares than 
 his debtor had at the time of the attachment. The debtor trans- 
 ferrer having parted with his interest in the property and retain- 
 ing only the bare legal title, the creditor should be permitted to 
 acquire nothing greater. The attachment or execution creditor 
 bas no prior equities and can acquire no existing equities by vir- 
 tue of bis levy. lie parts with no interest or right and is in no 
 worse condition by the failure of the levy than he was before. If 
 the debtor bas no title, the creditor can acquire none by a levy, 
 and there seem to be no reasons in public policy for creating equi- 
 ties where none exist in facl . Therefore a sale, transfer or pledge 
 of corporate Btock, although not entered upon the books of the 
 corporation, should be held effectual as between the parties, 
 
 'Cook Priv. Corp., | 881. Rev., p. 228, where the authorities are 
 
 •Pomeroy Eq. Jar., § 700. collected and the arguments in favoi 
 
 •Mr. I. II. Hatfield, in 80 Am. Law of creditor strongly Btated,
 
 §442 
 
 TRANSFER OF SHARES. 
 
 471 
 
 and take precedence of a subsequent levy thereon in behalf of 
 the vendor's creditors. 1 An unrecorded transfer of national 
 bank stock will take precedence of a subsequent attachment on 
 behalf of a creditor without notice. 2 
 
 1 Lund v. Wheaton, etc., Co., 50 
 Minn. 36; Baldwin v. Canfield, 26 
 Minn. 43; Joslyn v. St. Paul, etc., 
 Co., 44 Minn. 183; Doty v. First Nat'l 
 Bank, 3 N. Dak. 9, 17 L. R. A. 259; 
 Robinson v. Bank, 95 N. Y. 637; Mc- 
 Niel v. Tenth Nat'l Bank, 46 N. Y. 325, 
 Wilgus' Cases; New York, etc., R. Co. 
 v. Schuyler, 34 NY. 30 ; Leitch v.Wells, 
 48 N. Y. 585 ; Cutting v. Demerel, 88 N. 
 Y. 410; Grymes v. Cone, 49 N. Y. 17 ; 
 Bank of Utica v. Smalley, 2 Co wen 
 (N. Y.) 770; Smith v. American, etc., 
 Co., 7 Lansing 317 ; Commercial Bank 
 v. Kortright, 22 Wend. (N. Y.) 348; 
 Stebbins v. Phoenix, etc., Co., 3 Paige 
 (N. Y.) 350; Thurber v. Crump, 86 
 Ky. 408 ; Clark v. German, etc., Bank, 
 61 Miss. 611; Broadway Bank v. Mc- 
 Elrath, 13 N. J. Eq. 24; Rogers v. 
 Stevens, 4 Halst. Ch. (N. J.) 167 ; Mt. 
 Holly, etc., Co. v. Ferree, 17 N. J. Eq. 
 117 ; Smith v. Crescent, etc., Co., 30 La 
 An. 1378 ; Crescent City v.Deblieux, 40 
 La. An. 155; George R. Barse, etc., Co. 
 v. Range, etc., Co., 16 Utah 59; Fin- 
 ney 'sApp.,59Pa.St. 398 ; Eby v. Guest, 
 94 Pa. St. 160; Seeligson & Co. v. 
 Brown, 61 Tex. 114; May v. Cleland 
 (Mich.), 44 L. R. A. 163 ; Mandelbaum 
 v. North American, etc., Co., 4 Mich. 
 464; Newberry v. Detroit, etc., Co., 17 
 Mich. 140; Nat'l Bank v. Port Town- 
 send, etc., Co., 6 Wash. 597 ; First Nat'l 
 Bank v. Dickson (Colo. App.),36Pac. 
 Rep. 618. The rights of a pledgee of 
 stock are superior to that of apurchaser 
 on execution against the pledgor. 
 Dearbornv. Washington, etc., Bank, 18 
 Wash. 8. See, also, Morehead v. West- 
 ern, etc., R. Co., 96 N. C. 362; Lip- 
 pitt v. American, etc., Co., 15 R. I. 
 141, 23 Atl. Rep. Ill; Colbert v. Sut- 
 
 ton, 5 Del. Ch. 294; Noble v. Turner, 
 69 Md. 519, 16 Atl. Rep. 124; Mer- 
 chants' Nat'l Bank v. Richards, 6 Mo. 
 App. 454, 74 Mo. 77 ; White v. Salis- 
 bury^ Mo. 150. The following cases 
 sustain the rights of the attaching 
 creditor: Masury v. Arkansas Nat'l 
 Bank, 87 Fed. Rep. 381 ; Ft. Madison, 
 etc., Co. v. BatavianBank,71 Iowa 270, 
 32 N. W. Rep. 336, 60 Am. Rep. 789; 
 Ottumwa Screen Co. v. Stodghill, 103 
 Iowa 437; Peoples' Bank v. Gridley, 
 91 111. 457; State v. First Nat'l Bank, 
 89 Ind. 302; Topeka, etc., Co. v. Hale, 
 39 Kan. 23; Skowhegan Bank v. Cut- 
 ler, 49 Maine 315, 52 Maine 509; Con- 
 way v. John, 14 Colo. 30 ; Supply, etc., 
 Co.v. Elliott, 10 Colo. 327, 15 Pac. Rep. 
 691, 3 Am. St. Rep. 586 ; Marlborough, 
 etc., Co. v. Smith, 2 Conn. 579; Colt 
 v. Ives, 31 Conn. 25; State v. Com- 
 missioners, 21 Fla. 1 ; Fisher v. Essex 
 Bank, 5 Gray (Mass.) 373; Boyd v. 
 Rockport Mills, 7 Gray 406 ; Dickinson 
 v. Central Bank, 129 Mass. 279 ; Cen- 
 tral Nat'l Bank v.Williston, 138 Mass. 
 244; Fisher, etc., Co. v. Jones, 82 Ala. 
 117; Barstow v. Savage, M. Co., 64 
 Cal. 388; Pinkerton v. Manchester, 
 etc., R. Co., 42 N. H. 424; Scripture 
 v. Soapstone Co., 50 N. H. 571-585; 
 Buttrick v. Nashua, etc., R. Co., 62 
 N. H. 413, 13 Am. St. Rep. 578; 
 Cheever v. Myer, 52 Vt. 66; In re 
 Murphy, 51 Wis. 519. 
 
 2 Doty v. First Nat'l Bank, 3 N. Dak. 
 9, 17 L. R. A. 259; Sibley v. Quinsig- 
 amond Nat'l Bank, 133 Mass. 515; 
 First Nat'l Bank v. Lanier, 11 Wall. 
 (U. S.) 369; Continental Bank v. 
 Bank, 7 Fed. Rep. 369; Hazard v. 
 Bank, 26 Fed. Rep. 94.
 
 472 THE LAW OF PRIVATE CORPORATIONS. § 443 
 
 It is sometimes provided by statute that no transfer of 
 shares shall be valid as against creditors unless a record of 
 the transfer is made in some public office. Under such a stat- 
 ute an attachment takes precedence over an unrecorded trans- 
 fer. 1 Under the Iowa statute, which provides that a transfer 
 of shares is not valid except as between the parties thereto until 
 it is regularly entered upon the books of the company, an at- 
 taching creditor secures the stock, although he had knowledge 
 of the unrecorded transfer. 2 Where there is no requirement of 
 transfer on the books of the corporation a common-law assign- 
 ment by delivery of the certificate with a written transfer con- 
 veys a good title to the shares as against an attaching creditor. 3 
 
 § 443. Transfers in fraud of creditors. — A transfer of the 
 shares upon the books of the corporation may be necessary in 
 order to avoid the effect of a statute which renders the sale of 
 personal property presumptively fraudulent where there is not 
 a complete delivery of the property, as against the creditors of 
 the vendor. In some jurisdictions the presumption is con- 
 clusive, while in others it may be overcome by evidence. Upon 
 this general principle the attaching creditor of the transferrer 
 is sometimes able to prevail over the holder of a certificate 
 which has not been transferred upon the books of the corpora- 
 tion. In Connecticut it was said: 4 "The ground on which 
 stock sold, but not legally transferred, is open to attachment 
 by the creditors of the vendor, is the same upon which 
 personal chattels sold but retained in the possession 
 of the vendor arc liable to attachment by the vendor's 
 
 'Masury v. Arkansas Nat'l Bank, 611. Contra, George B. Barse, etc., 
 
 87 Fed. Rep. 381, citing Berney Nat'] Co. v. Range, etc., Co., 16 Utah 59. 
 
 Bank v. Pinckard, etc., Co., 87 Ala. ■Boston, etc., Assn. v. Cory, 129 
 
 677; Murphy's A pp., 63 Wis.619; Ft. Mass. 435. 
 
 Madison, etc., Co. v. Batavian Bank, *Col1 v. Ives, .".1 Conn. 25. 
 
 71 Iowa 270, 60 Am. Rep. 789; Newell Botchkiss, etc., Co. v. Union Nat'l 
 
 v. Willi t..n, i "lit. Bank, 87 TT. S. App. 86. Under such 
 
 ttumwa Screen Co. v. Stodghill, :i view of the law, it is necessary that 
 
 103 [owa 137, citing Firsl Nat'l Bank the transfer «>n the record should he 
 
 v. Hastings, 7 Colo. App. L29; Lyndon- made within a reasonable time. 
 
 ville Nat'l Bank v. Fol '.in, 7 N. M, Pinkerton v. Railway Co., 42 N. II. 
 
 124
 
 § 444 TRANSFER OF SHARES. 473 
 
 creditors. The principle in each case is that the retention of 
 possession by the vendor is a badge of fraud; that is, is evi- 
 dence of a fraudulent secret trust." 
 
 § 444. Manner of making assignment and transfer. — Where 
 no manner of transfer is prescribed by the charter or by-law 
 it may be made by a delivery of the certificate with the writ- 
 ten assignment thereon. 1 At common law this would transfer 
 both the legal and the equitable title and was good as against 
 the corporation and all other persons. It required a clear 
 provision of the charter itself or of some statute to take from 
 the owner of such property the right to transfer it in accord- 
 ance with the known rules of the common law. By these 
 rules, the delivery of a stock certificate with a written transfer 
 of the same to a bona fide purchaser is a sufficient delivery to 
 transfer the title as against a creditor of the transferer. 2 This 
 common-law right can not be restricted without authority, 
 and the corporation can not, in the absence therefor, require 
 transfers to be made only on the books of the corporation. 3 
 The issue of a new certificate is not necessary to complete a 
 transfer, 4 and the record of the transfer is unnecessary unless 
 required by the charter or by-laws. 5 A valid gift of non- 
 negotiable securities may be made by their delivery to the 
 donee without assignment or indorsement in writing, and a 
 delivery of certificates of stock coupled with words of abso- 
 lute and present gift vests an equitable title to the stock which 
 is valid as against the donor or a volunteer. 6 Where the trans- 
 fer is required to be made on the books of the corporation the 
 facts are to be appropriately recorded in some suitable register 
 or stock book, or in some manner formally entered upon the 
 
 1 Scott v. Bank, 21 Blatch. 203, 15 Mo. 136; Chouteau, etc., Co., v. Har- 
 Fed. Rep. 494. ris, 20 Mo. 382. 
 
 2 Boston, etc., Assn. v. Cory, 129 6 Commonwealth v. Crompton, 137 
 Mass. 435; McNeil v. Tenth Nat'l Pa. St. 138, But see Matthews v. 
 Bank, 46 N. Y. 325. Hoagland, 48 N. J. Eq. 455. An as- 
 
 3 Sargent v. Railway Co., 9 Pick, signment of shares not accompanied 
 (Mass.) 202; Driscoll v. Manufactur- by a delivery of the certificate is not 
 ing Co., 59 N. Y. 96. effective as against a receiver of the 
 
 4 Sayles v. Bates, 15 R. I. 342. debtor. Atkinson v. Foster, 134 111. 
 
 5 Boatman's, etc., Co. v. Able, 48 472.
 
 4 < 4 THE LAW OF PRIVATE CORPORATIONS. § 445 
 
 books. For this purpose the account in a stock ledger show- 
 ing the names of the stockholders, the number and amount of 
 shares belonging to each, and the source of their titles, 
 whether by original subscription and payment or by transfer 
 from others, meets the requirements of the law. 1 Where the 
 shares were pledged to a bank as collateral security for a debt 
 by a delivery of the stock certificate indorsed to the bank, and 
 nothing was done for a month, when the certificates were deliv- 
 ered to a transfer agent in Boston and new ones received, and 
 notice given by the next mail to the office of the corporation in 
 New Hampshire, it was held that the transfer was not good as 
 against an attachment levied in the latter state before the issue 
 of the new certificates, as there was a want of proper diligence 
 in perfecting the delivery of the stock. " Nor could the ex- 
 change of certificates at the transfer agency be regarded as 
 equivalent to record, or the entry for that purpose in the of- 
 fice at Manchester. If forwarded by the transfer agent and 
 recorded, it then would be perfected; but we are unable to re- 
 gard the act of the transfer agent in respect to the record as 
 anything more than the act of a mere agent of the bank. To 
 give to the notice and entry at the transfer agency the effect of a 
 record, or entry upon the stock books of the corporation, would, 
 as we think, be contrary to the policy of the law, which re- 
 quires as the chief evidence of ownership the record or entry 
 upon the books of the corporation kept in this state." 1 
 
 A note by the secretaiy of the corporation on the margin of 
 the stubs of certain certificates of stock transferred as collateral 
 security by the owner, thai the transferee holds them as se- 
 curity for a loan, does not constitute a transfer on the books of 
 tin- corporation as against the creditors of the transferrer, when 
 such transfer was not authorized by either party. 8 
 
 § 445. Transfer after insolvency or dissolution. — "After a 
 corporation has lice.. me insolvent it is the duty of the com- 
 
 'National Bans v. Watsontown 'McFall v. Buckeye, etc., \ an. 
 
 Bank, 106 U. 8. - _M7. (Cal.), 66 Pac. Rep. 268. Aatosuffi- 
 
 'Pinkerton v. Railroad Co., 42 N. cient transfer see Basting v. Northern, 
 
 H. 124. etc., <'".. 61 Minn. 807.
 
 § 446 TRANSFER OF SHARES. 475 
 
 pany to wind up its affairs, call in the outstanding capital, 
 and satisfy the creditors. The shares have ceased to be the 
 subject-matter of legitimate traffic. They are a burden to the 
 owner and a transfer will be merely a subterfuge to avoid lia- 
 bility." 1 This is the rule in the United States, 2 but in En- 
 gland a shareholder may transfer his shares to an insolvent 
 for a nominal consideration and for the sole purpose of escap- 
 ing liability. 3 Upon the dissolution of a corporation the right 
 of a holder to transfer shares necessarily ceases, although a 
 court of equity will recognize a sale of the shareholder's equita- 
 ble claim. 4 
 
 § 446. Pledge of stock certificates by delivery. — The pledge 
 of a stock certificate by mere delivery without a transfer prop- 
 erly signed vests in the pledgee an equitable title only. In 
 case of default in the conditions of the pledge the pledgee can 
 not enforce his security by the ordinary method of sale, but by 
 going into a court of equity he may obtain the relief necessary 
 to enable him to render his security available. 5 But "a pledge 
 of certificates of stock by mere delivery, or an equitable mort- 
 gage thereof, is subject to the equities of third persons and 
 cestuis que trust, although he may have a written agreement 
 from the pledgor to execute a legal transfer of the shares. 
 The rule thus limiting the rights of a pledgee by delivery was 
 
 1 Morawetz Priv. Corp. I, § 166. in defraud of creditors of the corpora- 
 'Everhart v. West Chester, etc., R. tion." Taylor, § 749, citing Dauchy 
 Co., 28 Pa. St. 339; Chouteau, etc., v. Brown, 24 Vt. 197; Nathan v. 
 Co. v.Harris, 20 Mo. 382; Marcy v. Whitlock, 9 Paige (N. Y.) 152; Gaff 
 Clark, 17 Mass. 330; Rider v. Morri- v. Flesher, 33 Ohio St. 107. 
 son, 54 Md. 429. "When shares are 3 De Pass's Case, 4 De G. & J. 544; 
 not fully paid up and the corporation Jessopp's Case, 2 De G. & J. 638. 
 is in failing circumstances, it is the 4 James v. Woodruff, 2 Denio 574; 
 general rule throughout the United Waite Insolvent Corp., § 385. 
 States, that the holder can not validly 5 Nesbit v. Macon, etc., Co., 12 Fed. 
 transfer them to an irresponsible per- Rep. 686; Johnson v. Dexter, 2 Mac- 
 son for the purpose of avoiding fur- Arthur 530; Newton v. Fay, 10 Allen 
 ther liability in regard to them. The (Mass.) 505 ; Wilson v. Little, 2 N. Y. 
 right of transfer can not be exercised 443 ; Colbrooke Col. Sec. (2d ed.), § 276,
 
 476 THE LAW OF PRIVATE CORPORATIONS. § 447 
 
 enforced in a case where the act of a pledge of the stock was 
 a fraudulent misappropriation." ' 
 
 § 447. Surrender of old certificate — Fraudulent reissue, — 
 
 A corporation should not permit a transfer or issue a new cer- 
 tificate until the old certificate is surrendered, as it is charged 
 with notice of the equities of the holder of the outstanding 
 certificate. The transferee who receives new certificates with- 
 out requiring a surrender of the old ones is not a bona fide 
 transferee, and can not hold the corporation liable. 2 One who 
 never receives the certificates, but who nevertheless obtains a 
 registry on the corporate books and receives new certificates 
 without a surrender of the old ones, is not liable in damages 
 to a holder of the old certificates, unless he obtained the regis- 
 try with knowledge that the old certificates had been trans- 
 ferred. 3 If the corporation issues a new certificate it may be- 
 come liable upon both the outstanding certificates to innocent 
 } m rrl lasers for value. 4 The purchaser assumes the duty to 
 see that the vendor of shares surrenders the old certificate and 
 transfers it on the books. It is also the duty of the corporation 
 to see that this is done before it issues a new certificate. 5 The 
 purchaser of a certificate reciting that it is "transferable only 
 
 'Colbrooke Col. Sec, § 277; Shrop- 57N.Y.616. The failure fcorequirethe 
 
 shire Unions R. Co. v. Queen, L. R. 7 production of the old certificate does 
 
 ]■,. & I. Apps. 496. not, of course, effect the rights of the 
 
 2 Moores v. Citizens' Nat'l Bank, 111 person to whom a transfer is made 
 
 I 3, 166. upon the books of the corporation. 
 ■Baker v. Wasson, 53 Tex. 150; Boatmen's, etc., Co. v. Abel, 48 Mo. 
 
 Bcriptare v. Francestown, etc., Co.,50 136. "Any act suffered by the cor- 
 
 N. H. 571. In Houston R. Co. v. Van poration thai invested a third party 
 
 Alstyne, 66 Tex. 439, il is held that a with the ownership of the shares, 
 
 •ration is not bound to recognize without due protection and surrendei 
 
 ape stockholder who ob- of the certificate, rendered it liable to 
 
 tained a registry withoul a surrender the owner; and it was its duty tore- 
 
 of the old certificate, when a regular sisl any transfer in the books without 
 
 try with a surrender of thecer- such production and surrender." 
 
 tiflcates had already been made. Oushman v. Thayer, etc., Co., 76 N. 
 
 ■ Factoi Co v. Marine, etc., Y.865. Bui Bee Guilford v. Western 
 
 ;i La. \ u n . 149; Bankv.Li >r, Union, etc., Co., 59 Minn.332,61 N. 
 
 II Wall. 869; Bridgeport Bant v. New W. Rep.324. 
 
 York,etc.,B Co., 80 Conn. 281 ; Gull- 'Allen v. South Boston R. Co., 15(1 
 ford rn, etc., Tel. Co., 43 Minn. Mass. 200, 15 Am Bt. Rep. 185. 
 
 134 : Holbrook v. New Jet s< y, etc., Co.,
 
 § 447 TRANSFER OF SHARES. 477 
 
 on the hooks of the company, on the indorsement and surrender 
 of this certificate," has a right to rely upon the certificate secur- 
 ing to him the shares which it represents, and he will be fully 
 protected. Until the outstanding certificate is surrendered the 
 corporation can not be compelled to issue a new certificate. 1 
 
 The doctrine of lis pendens has no application to a sale and 
 transfer of shares of stock. 2 
 
 If the surrendered certificate, instead of being canceled, is 
 fraudulently transferred by the officers charged with the duty 
 of issuing shares, the corporation would be liable to the inno- 
 cent purchaser of the same, but it was recently held in New 
 York that there was no liability where the certificates were 
 taken from the safe of the company and fraudulently pledged 
 by the general manager of the corporation. After stating the 
 rule with reference to negotiable instruments and other choses 
 in action, Chief Justice Andrews said: "Nor, in our opin- 
 ion, can the judgment below be sustained upon any principle 
 of agency in Jurgens, express or implied, to issue the surren- 
 dered certificates, which on the issue of the new certificates be- 
 come mere vouchers in the possession of the company. If it 
 can be said that the direction of the president to Jurgens to 
 cancel the certificates made him the agent of the company for 
 that purpose, it was an authority to destroy and not to use. 
 His act in abstracting them from the safe and uttering them 
 as valid certificates had no relation to the authority conferred. 
 It was not an act of the same kind as that he was authorized 
 to perform. He had no apparent authority to issue them as 
 genuine certificates, because he had no authority to issue cer- 
 tificates for any purpose. * * * The certificates were at 
 all times after their surrender, and before they were abstracted 
 by Jurgens from the safe of the defendant, in the legal pos- 
 session of the company. The company never placed them in 
 
 ^oslyn v. St. Paul, etc., Co., 44 57 N. Y. 616; Bean v. Trust Co., 122 
 
 Minn. 183; Lund v.Wlieaton, etc., Co., N. Y. 622; but see Sprague v. Manu- 
 
 50 Minn. 36, 52 N. W. Rep. 268. In facturing Co., Fed. Cas. B. 249, 10 
 
 case of lost certificates, see Guilford Blatchford 173. See an article in 19 
 
 v. Western Union, etc., Co., 59 Minn. Nat. Corp. Rep. 116, and Burford v. 
 
 332, 61 N. W. Rep. 324. Keokuk, etc., Co., 3 Mo. App. 159. 
 
 2 Holbrook v. New Jersey, etc., Co.,
 
 478 THE LAW OF PRIVATE CORPORATIONS. § 448 
 
 the possession of Jurgens or invested him with the indicia of 
 ownership. He had access to the safe as the mere servant of 
 the defendant. The doctrine of implied agency is, we think, 
 wholly inapplicable to the circumstances of the case." 1 
 
 § 448. Evidence of transferee's right. — The officers of the 
 company are the custodians of its stock books, and it is their 
 duty to see that all transfers of shares are properly made, 
 either by the stockholders themselves or persons having au- 
 thority from them. 2 If upon the presentation of a certificate 
 for transfer, they are at all doubtful of the identity of the party 
 offering it with its owner, or if not satisfied of the genuine- 
 ness of a power of attorney produced, they can require the 
 identity of the party in the one case and the genuineness of the 
 document in the other to be satisfactorily established before 
 allowing the transfer to be made. 3 
 
 A transfer from the owner to his agent is not authorized by 
 the fact that the principal has given his agent a general power 
 of attorney " to sell, dispose of, transfer and deliver all or any 
 of my interest in the capital stock of any association, bodies 
 corporate or politic." In such a case the corporation was held 
 liable when it accepted the surrender of the certificate not in- 
 dorsed by either the owner or agent and issued a new certifi- 
 cate in the name of the agent. 4 But the corporation is not 
 bound to assume and act on the theory that a transferrer is at- 
 tempting a fraud. 5 
 
 § 449. Indorsement of certificate, — The execution of an as- 
 
 Bignmenl in blank with power of transfer, upon the back of a 
 
 certificate of stock, is a warranty of the genuineness of the 
 
 paper, which may be enforced by any bona tide purchaser of 
 
 tin- certificate who tills up the assignment with his name. 8 But 
 
 1 Knox v.Eden Musee, etc., Co., Thompson v. Stanley, 25 N. Y. Supp. 
 
 148 N. Y. 141,31 L. R. A. 779. B90; Peck v. Bank of America, L6 
 
 i porationa ma si Bee I bat ao an- l«'. 1 . 710. 
 
 authorized transfers are made and •Taffl v. Presidio, etc., R. Co., 84 
 
 are liable to any one injured by a Cal. 131, 18 Am. St. Rep. 166. 
 
 breach of this duty. Marbury v. Ehlen, Minifies v. Drovers, etc. Bank, 86 
 
 20 \im. St. Rep W7. Md. 118. 
 
 ■Chief Justice Waite In Telegraph 'Matthews v. Massachusetts Nat'l 
 
 Da , np, rl -., i . s. 869; Bank, I Holmes 896.
 
 § 450 TRANSFER OF SHARES. 479 
 
 it is not a warranty that the certificate represents valid 
 shares. 1 
 
 § 450. Fraudulent transfer 2 — Rights of transferee or pur- 
 chaser of stock certificate. — Stock certificates are not negotia- 
 ble instruments, and hence as a general rule the purchaser of 
 such choses in action can acquire no better title than his ven- 
 dor has to convey. The true owner of certificates which are 
 stolen and wrongfully transferred can not be deprived of his 
 property, although he may be of the certificates, unless he has 
 been guilty of some negligence or has placed himself in a po- 
 sition where he is estopped to assert his claim. A person can 
 only be deprived of his property by his own consent or 
 through his own negligence. A bona fide purchaser of a ne- 
 gotiable bill, bond or note, although he buys from a thief, ac- 
 quires a good title if he pays value for it without knowledge of 
 the infirmity of his vendor's title. But as a certificate of 
 stock is not negotiable paper, and the purchaser of such a cer- 
 tificate, although it is indorsed in blank by the owner, obtains 
 no better title to the stock than his vendor had in the absence 
 of all negligence of the part of the owner. 3 " Neither the ab- 
 sence of blame on the part of the officers of the company in 
 allowing an unauthorized transfer of stock nor the good faith 
 of the purchaser of stolen property will avail as an answer to 
 the demand of the true owner." 4 Hence, a bona fide purchaser 
 of stock standing on the company's books in the name of the 
 former owner, regularly indorsed by him, and stolen from the 
 owner, gets no title to the stock. 5 But as against the corpora- 
 tion the purchaser of a certificate of stock in the open market, 
 without knowledge of fraud in its issue by the corporation or 
 its agent, is entitled to have it transferred to him on the books 
 
 1 Peoples Bank v. Kurtz, 99 Pa. St. 5 Barstow v. Savage, etc., Co., 64 
 344. Cal. 388, 49 Am. Rep. 705; East 
 
 2 See Wilgus' Cases. Birmingham, etc., Co. v. Dennis, 85 
 3 Mechanics' Bank v. N. Y., etc., R. Ala. 565, Wilgus' Cases; Machinists 
 
 Co., 13 N. Y. 599. Nat'l Bank v. Field, 126 Mass. 345; 
 
 4 Telegraph Co.v. Davenport, 97 U. S. Shaw v. Spencer, 100 Mass. 382 ; Hall 
 
 369; Knox v. Eden, etc., Co., 148 v. Road Co., 70 111.673. See §§323, 
 
 N. Y. 441, 31 L. R. A. 779. 324, supra.
 
 480 THE LAW OF PRIVATE CORPORATIONS. § 451 
 
 of the company without reference to any fraud or irregularity 
 in its issue. 1 It will be observed that it is the purchaser of 
 the stolen certificates who can acquire no rights as against 
 the true owner. If through any means the certificate is re- 
 turned to the corporation and by it taken up and a new cer- 
 tificate issued, new rights are thereby created, and subsequent 
 innocent transferees of the new certificate are protected in 
 their right against the corporation, while at the same time 
 the original owner of the stock may also require the corpora- 
 tion to protect him in his rights as a stockholder, or respond 
 in damages. 2 The courts have been frequently urged to ex- 
 tend the qualities of negotiability to stock certificates and to 
 clothe them with the qualities of commercial paper, so as to 
 make a transfer in good faith for value equivalent to actual 
 title, although there was no agency in the transferrer, and the 
 certificate has been lost without the fault of the true owner, or 
 has been obtained by theft or robbery. But they have refused 
 to adopt this view and there are no cases entitled to be re- 
 garded as authority which deny to the owner of a stock certifi- 
 cate which has been stolen or lost without his negligence, the 
 right to reclaim it from the hands of any person in whose pos- 
 session it subsequently comes, although the holder may have 
 taken it in good faith and for value. 
 
 § 451. Netflisence of owner — Estoppel. — While the owner 
 
 of shares of stock can not be deprived of his property by 
 
 wrongful acts of others, lie may by his acts place himself in a 
 
 position where be will not be permitted to assort his rights as 
 
 inel one who in the eye of the law is entitled to greater 
 
 1 Cincinnati, etc., R. Co. v. Citizens' value forthem without in. tier of any 
 
 Nat' 1 Bank, 58 Ohio St. 851. "Onein intervening equity." Matthews v. 
 
 .,, ,,i' ;i certificate ol stock ol ffoagland, 48 N. J. Eq. 455. 
 
 an incorporated company, accom- » As to liability of the corporation 
 
 panied b gnmenl in blank, on fraudulent certificates issued by 
 
 ited by the record owner, with its officers t" innocenl persons wr § 
 
 an irrevocable power of attorney.au- 828. T v. Railway Co., 39 Md. 86, 
 
 thorizing the transfer of the stock, is 17 An.. Rep. 540; Alien v. Railway 
 
 preaumptivel) the equitable owner Co., 150 Mass. 200; Fifth Ave. Bank v. 
 
 of the Bhares, whose title thereto can 42dSt.,etc., R.Co., L87N.Y.281 ; Kn<>x 
 
 ,,,,t i„- Impeached it he has given v. Eden Musee, etc., Co.,148N. Y.441,
 
 § 451 TRANSFER OF SHARES. 481 
 
 consideration. Thus, where the holder of a stock certificate 
 indorsed in blank is clothed with power as the agent or trus- 
 tee, and makes a transfer in excess of his power or in viola- 
 tion of his trust, the true owner is estopped to assert his title 
 as against a third person who, acting in good faith, takes a 
 transfer of the certificate for value from the apparent owner. 1 
 Such cases rest upon the principle that it is more just and 
 reasonable, where one of two innocent parties must suffer loss, 
 that he should be the loser who has put trust and confidence 
 in the deceiver than the stranger who has been negligent in trust- 
 ing no one. 2 The possession of a certificate confers an appar- 
 ent right to the ownership of the shares. The holder possesses 
 "all the external indicia of the title to the stock, and the ap- 
 parently unlimited power of disposition over it. He does not 
 appear to have, as is said in some of the authorities cited con- 
 cerning the assignees of choses in action, a mere equitable in- 
 terest which is said to be notice to all persons dealing with 
 him that they take subject to all equities, latent or otherwise, 
 of third parties ; but apparently the legal title and the means 
 of transferring such title in the most effectual manner." 3 The 
 purchaser of a certificate in good faith has a right to rely upon 
 the fact that it will secure to him the shares of stock which it 
 purports to represent. 4 The fact of negligence will, of course, 
 depend upon the circumstances of each case. 
 
 'McNeil v. Tenth Nat'l Bank, 46 sonable that he that employs and puts 
 
 N. Y. 325, Wilgus' Cases ; Merchants' a trust and confidence in the deceiver 
 
 Nat'l Bank v. Livingston, 74 N. Y. should be the loser than a stranger." 
 
 223, Wilgus' Cases; National, etc., Lord Holt in Hern v. Nichols, 1 Salk, 
 
 Co. v. Gray, 12 App. Cas. (D. C.) 289. "Whenever one of two innocent 
 
 276; New York, etc., R. Co. v. Schuy- persons must suffer by the act of a 
 
 ler, 34 N. Y. 30 ; Mt. Holly, etc., Co. v. third, he who has enabled the former 
 
 Ferree, 17 N.J. Eq. 117; Winter v. to occasion the loss must sustain it." 
 
 Montgomery, etc., Co., 89 Ala. 544, Ashurst, J., in Lickbarrow v. Mason, 
 
 Wilgus' Cases ; Otis v. Gardner, 105 2 D. & E. 70. 
 
 111. 436; Walker v. Railway Co., 47 s Rapallo, J., in McNeil v. Tenth 
 
 Mich. 338; Burton's App., 93 Pa. Nat'l Bank, 46 N. Y. 325, Wilgus' 
 
 St. 214; Prallv. Tilt, 28 N. J. Eq. 479. Cases. 
 
 2 "For, seeing that somebody must be 4 Joslyn v. St. Paul, etc., Co., 44 
 
 the loser by this deceit, it is more rea- Minn. 183; Bridgeport Bank v. New 
 
 31— Private Corp. York, etc., R. Co., 30 Conn. 231.
 
 482 THE LAW OF PRIVATE CORPORATIONS. § 452 
 
 § 452. Transfer oil forged power of attorney — Liability of 
 corporation. — If the corporation transfers the shares of one of 
 its members on its books in recognition of a forged power of 
 attorney indorsed upon the certificate, it incurs an alternative 
 liability, either (a) to the original shareholder who is free 
 from fault, for a conversion of his shares, 1 or (6) to a bona 
 fide sub-transferee of the shares who has purchased them on 
 the faith of the new certificate which the corporation has been 
 induced to issue in consequence of the forgery. 2 The rule is 
 the same as in the case of an unauthorized issue of shares by 
 the corporation without authority. The innocent holder of 
 the certificate can not be ordered " to return his certificate be- 
 cause he purchased the shares in good faith and for a valua- 
 ble consideration, and the certificate issued to him is as against 
 the bank conclusive evidence of his title. The bank has no 
 right to compel him rather than any other stockholder to give 
 up his certificate and thereby assume the responsibility of its 
 own illegal act." 3 There is no liability to the first transferee of 
 the certificate, 4 nor to one who took the new certificate with 
 notice of the forgery, or of facts sufficient to put him on in- 
 quiry. 5 But the corporation may maintain an action against 
 him on his warranty of the genuineness of the power of at- 
 torney. 6 
 
 The question of the negligence of the corporation is imma- 
 
 1 Western U. Tel. Co. v. Davenport, 'Machinists' Nat'l Bank v. Field, 
 
 97 U. 8. 369; TaSt v. Railroad Co., 84 126 Mass. 346. 
 
 Cal.131. Bee Easi Birmingham Land 'Simm v. A.nglo-Amer. Tel. Co., 5 
 
 Co. v. Dennis, 85 A I:.. 565, Wilgus' L. R. Q. B. Div. 188. 
 
 The corporation may be 5 Moores v. Bank, 111 TJ. S. 156. 
 
 compelled to issue new certificates in 8 Boston, etc., R. Co., v. Richardson, 
 
 lieu of those cancelled although the 135 .Mass. 173. The subjeci ol the 
 
 assignees were ii cenl purchasers, transfer of shares on forged powers oi 
 
 Chicago, etc., Co. v. Fay, 164 [11.323. attorney is elaborately discussed by 
 
 Pennsylvania Co. v. Franklin, etc., Judge Thompson in 26 Am. L. Rev. 
 
 si Pa. St. W; Bewail v. Boston, 809. Bee also Balkis, etc., Co. v. 
 
 etc., Co., 4 Allen 277; Davis v. Bank Tomkinson, L. R. (1893) k. C. 396. 
 
 of England, 2 Bing. 393. As to the liability of one who indoi i - 
 
 1 Mandlebaum v. Mining <'<>., I a forged certificate in blank to subse- 
 Mich. 165; Machinists' Nat'l Bank v. quenl good faith purchaser see Mat- 
 Field, 126 Ma 345; New York, etc., thews v. Mass. Nat'l Bank, 1 Holmes 
 B Co. v. Schuyler, 84 \. Y. 80. 896.
 
 § 453 TRANSFER OF SHARES. 483 
 
 terial, as it is liable, although entirely free from negligence. 
 It must take the responsibility of the transfer being genuine, 
 and may refuse to recognize the same until satisfied of its gen- 
 uineness. 1 Under the English authorities the person to whom 
 the corporation issues a new certificate becomes a member of 
 the corporation, and the former stockholder who was deprived 
 of his shares by forgery is entitled to recover from the com- 
 pany the value of the shares at the time he was deprived of 
 them. 2 
 
 § 453. Forgery of transfer — Negligence. — In a leading case 3 
 it appeared that the guardian of the owners of certain shares 
 of stock placed the certificates in a box and deposited them in 
 the vault of the bank for safe keeping. The certificates were in 
 the name of the owners, and contained on the back a blank 
 form of transfer and power of attorney. One of the officers of 
 the bank, a brother of the guardian, had access to the box for 
 the purpose of detaching the coupons from certain bonds 
 which were also kept there, and collecting the interest thereon 
 as it became due. He took the certificates, forged the names of 
 the owner to the transfer and power of attorney and sold them 
 to an innocent purchaser for value, who had them transferred 
 on the books of the corporation by means of the forged power 
 of attorney. In a suit against the corporation to compel it to 
 replace the shares, Mr. Justice Field said: "Upon the facts 
 stated there ought to be no question as to the right of the plaint- 
 iffs to have their shares replaced on the books of the company 
 and proper certificates issued to them and to recover the divi- 
 dends accrued on the shares after the unauthorized transfer; 
 or to have alternative judgments for the value of the shares 
 and the dividends. Forgery can confer no power nor transfer 
 any rights. The officers of the company are the custodians of 
 its stock books, and it is their duty to see that all transfers of 
 
 1 Chew v. Bank, 14 Md. 299. poration see Kisterbock's App., 127 Pa. 
 
 2 In re Bahia, etc., R. Co., L. R. 3 St. 601; Keller v. Eureka, etc., Co., 
 Q. B. 584. That the wronged stock- 43 Mo. App. 84. 
 
 holder is entitled to have his name 3 Telegraph Co. v. Davenport, 97 
 placed back on the books of the cor- U. 8. 369.
 
 484 THE LAW OF PRIVATE CORPORATIONS. § 454 
 
 shares are properly made, either by the stockholders them- 
 selves or persons having authority from them. If upon the 
 presentation of a certificate for transfer they are at all doubtful 
 of the identity of the party offering it with its owner, or if not 
 satisfied of the genuineness of a power of attorney produced, 
 they can require the identity of the party in the one case and 
 the genuineness of the document in the other to be satisfactor- 
 ily established before allowing the transfer to be made. In 
 either case they must act upon their own responsibility. In 
 many instances they may be misled without any fault of their 
 own just as the most careful person may sometimes be induced 
 to purchase property from one who has no title, and who may 
 perhaps have acquired its possession by force or larceny. 
 Neither the absence of blame on the part of officers of the com- 
 pany in allowing an unauthorized transfer of stock nor the 
 good faith of the purchaser of stolen property will avail as an 
 answer to the demand of the true owner. The great principle 
 that no one can be deprived of his property without his con- 
 sent except by the processes of the law requires, in the cases 
 mentioned, that the property wrongfully transferred or stolen 
 should be restored to its rightful owner. The maintenance of 
 that principle is essential to the peace and safety of society, 
 and the insecurity which would follow any departure from it 
 would cause far greater injury than any which can fall in 
 cases of unlawful appropriation of property upon those who 
 have been misled and defrauded." 
 
 It was further held that there was no such negligence as 
 would preclude the owner of the shares from asserting her right 
 as against the bank. 
 
 § 454. Kii^hls of purchasers of shares transferred in viola- 
 tion of a trust. — Where the legal title and apparently unre- 
 stricted power "t disposition are vested in a person, the pur- 
 chaser from him for a valuable consideration, without notice 
 of ;i secrel trust upon which the shares are held, is unaffected 
 by the trust. In Buch ;i case the equities of the purchaser are 
 equal to those of the defrauded beneficiary, and the purchaser 
 having also the Legal title will prevail. Tims, a purchaser
 
 § 454 TRANSFER OF SHARES. 485 
 
 from one who lawfully has the certificate of stock upon which 
 there is a power of attorney properly signed by the last regis- 
 tered owner apparently authorizing their absolute transfer to 
 any person, takes the stock free from any secret trust ex- 
 isting back of the registry. 1 But a pledge by a trustee of 
 stock confers no right upon one who takes with actual or 
 constructive knowledge of the trust. As said by the New 
 York Court of Appeals, 2 "Any person who receives prop- 
 erty knowing that it is the subject of a trust, and that it 
 has been transferred in violation of the duty or power of 
 the trustee, takes it subject to the right not only of the cestui 
 que trust, but also of the trustee to reclaim possession of the 
 property. Knowledge of the trustee's violation of the trust 
 condition will be chargeable to the person dealing with him, 
 if the facts were such as in reason to put him upon in- 
 quiry, and to require him to make some investigation, as the 
 result of which the true title and authority of the trustee 
 might have been disclosed. He will then be regarded as hav- 
 ing constructive notice of the terms of the trust whence the 
 trustee derives his power to act." One who purchases from 
 an executor is chargeable with notice of the contents of the 
 will which is on record. 3 A sale by an executor in violation 
 of a statute passes no title to the purchaser, and where an ad- 
 ministrator can transfer personal property in only one way 
 under the statute, a corporation is liable to the estate if it al- 
 lows a transfer by an administrator who has not complied 
 with the law. 4 It is sometimes provided by statute that such 
 transfer shall be void. It was held in Massachusetts that a 
 sale by an equitable owner of stock held by trustees under a 
 trust agreement conveys the vendor's interest subject to the 
 execution of the trust, and is not within the provisions of a 
 
 1 Winter v. Montgomery, etc., Co., 3 Lowry v. Bank, Taney 310; 
 89 Ala. 544, Wilgus' Cases; Lowry v. Stewart v. Firemen's etc., Co., 53 Md. 
 Bank, Taney 310. 564. See Marbury v. Ehlen, 72 Md. 
 
 2 First Nat'l Bank v. Nat'l Broad- 206, 20 Am. St. Rep. 467. 
 
 way Bank, 156 N. Y. 459, 42 L. R. A. 4 Citizens', etc., R. Co. v. Robbins, 
 139; Anderson v. Blood, 152 N. Y. 128 Ind. 449. 
 285 ; 1 Story Eq. Jur., § 400 ; 2 Perry on 
 Trusts, § 831.
 
 4S6 THE LAW OF PRIVATE CORPORATIONS. § 455 
 
 statute which renders void every contract for the sale of stock 
 '• unless the party contracting to sell or transfer the same is at 
 the time of making the contract the owner or assignee thereof, 
 or authorized by the owner or assignee to sell or transfer it." 1 
 
 § 435. Transfers in breach ot trust — ^.ability of corpora- 
 tion. — As a general rule a corporation may safely assume that 
 the person in whose name shares stand on the books of the 
 corporation is the owner thereof and entitled to sell and transfer 
 the same, and receive the benefits resulting from such owner- 
 ship. Unless the corporation has actual or constructive 
 notice of the fact that the holder of the legal title is not the 
 actual and beneficial owner it may safely register a transfer 
 without danger of liability to beneficiaries or equitable owners. 2 
 But the corporation in many respects occupies the position of 
 a trustee for its stockholders, and is responsible for any injuries 
 sustained by the beneficial owner through its negligence. 
 Thus, where the corporation had notice of the facts that the 
 shares of stock in question were held by A as trustee for B 
 under an indenture of trust which authorized the trustee to 
 sell and reinvest the trust property only upon obtaining the 
 written consent of the cestui que trust, the corporation was held 
 liable to B for permitting a transfer of the shares without her 
 consent without making due inquiry as to the authority of the 
 trustee. An examination of the powers of the trustee would have 
 revealed thefactthathehad no authority to make the transfer and 
 ti, ( . failure to make the inquiry was negligence. The court said: 
 
 iDachemin v. Kendall, L49 Mass. Co., L37 Mass. 428; Taii'i v. Presidio, 
 
 171, :: 1.. R. A. 784. etc., R. Co.,84 Cal. L31 ; Shaw v.Spen- 
 
 2 Sniith v. Nashville, etc., R. Co., 91 cer, 100 Mass. 882; Fisher v. Brown, 
 
 Tent). 221; Read v. Cumberland, etc., I'M Mass. 269; Bohlen's Estate, 75 Pa. 
 
 I , The corporation Bt. 804; Porter v. Bank of Rutland, 19 
 
 required to exercise only ordi- Vt.410; Bayard v. Farmers' Bank, 52 
 
 narycare and diligenceto protect its Pa. si. •_':;■_•; Parrotl v. Byers, 40 Cal. 
 
 stockholders against unauthorized <;i I ; Caulkins v. <ias, etc., <'".. 85 
 
 ,,.,,, i i etc., <'"., Tenn.683; Railroad <"•>. v. Humphries 
 
 Rep. 786. 'Miss ). : So. Rep. 522; Marbury v. 
 
 ■Loring v. Salisbury Mills, 126 Ehlen, 72 Md. 206. "An unauthorized 
 
 18; Bird v. Chicago, etc., R. transfer may work a Berious wrong to
 
 § 455 TRANSFER OF SHARE? 487 
 
 "When the holder of a certificate of shares in a corporation 
 is the absolute owner, his assignment and delivery thereof will 
 pass the title to the assignee; and the latter, upon surrendering 
 the former certificate, may obtain a new one in his own name. 
 If the holder appears on the face of the old certificate to be the 
 absolute owner, and the corporation has no notice that the fact 
 is otherwise, it may safely issue a new certificate to the assignee 
 which, if taken in good faith and for a valuable consideration, 
 will vest and perfect the title in him. But for the protection 
 of the rights of the lawful owner of the shares the corporation 
 is bound to use reasonable care in the issue of certificates; if 
 by the form of the certificate or otherwise the corporation has 
 notice that the present holder is not the absolute owner, but 
 holds the shares by such a title that he may not have authority 
 to transfer them, the corporation is not obliged, without evi- 
 dence of such authority, to issue a certificate to his assignee, 
 and if without making any inquiry it does issue a new certifi- 
 cate, and the rightful owner is injured by its negligence and 
 wrongfulact, the corporation is liable to him without proof of 
 fraud or collusion. All the authorities affirm such liability 
 where the corporation has notice that the present holder is a 
 trustee and of the name of his cestui que trust, and issues a new 
 certificate without making any inquiry whether his trust au- 
 thorizes him to make a transfer." The fact that the certificate 
 shows on its face that the holder is a trustee or executor is suf- 
 ficient to put the corporation upon inquiry as to the extent of 
 his powers. 1 The taking up of a stock certificate by the corpo- 
 ration from one to whom a life estate therein has been be- 
 queathed, upon the presentment of the certificate with an in- 
 dorsement by the executors that they have sold the stock to 
 the life tenant, without inquiry as to whether there was an ac- 
 
 the equitable owner, and if the cor- a party to the wrong," Peck v. Bank 
 
 poration allows it to be made with no- of America, 16 R. I. 710. 
 
 tice of the want of authority, or if put l Shaw v. Spencer, 100 Mass. 382. 
 
 upon inquiry, without proper investi- See Brewster v. Sime, 42 Cal. 139; 
 
 gation into the authority, it becomes Bank v. Cady, L. R. 15 A. C. 267.
 
 488 THE LAW OF PRIVATE CORPORATIONS. § 456 
 
 tual sale for value, is such negligence as will render the cor- 
 poration liable for injuries resulting to the remainderman. 1 
 
 § 450. When the power to sell exists — Presumption of 
 right doing. — It is more difficult to determine the liabilit} 7 of 
 the corporation when the trustee has authority to sell the 
 shares, but in fact transfers them for the purpose of misap- 
 propriating the proceeds, or as a pledge to secure his own 
 debt. A holds stock in trust for B, with power to sell the 
 same at his discretion, and exchange for other securities. C is 
 the custodian of the stock with knowledge of A's trust, and 
 also of his power to sell. C permits A by his lawfully con- 
 stituted attorney to transfer a part of the stock on the books 
 of the corporation to another bank. The transfers were in 
 fact by way of pledge to secure the individual debt of the at- 
 torney, and were made without authority and in fraud of the 
 rights of B. C had no knowledge of the wrongful act of A's 
 attorney, except in so far as it was imputed from the fact that he 
 knew that A held the stock in the manner aforesaid. Under these 
 circumstances the supreme court of Rhode Island held that 
 C was not guilty of negligence in permitting the transfer to 
 be made, as it had the right to presume that the transfer was 
 made in pursuance of the authority contained in the will, and 
 nol in fraud thereof. 2 " The power of the trustee to sell the 
 stock, coupled with the presumption that she was acting hon- 
 i atly, and in pursuance of that power, made the transfer ap- 
 parently rightful, or al any rate the act, under the circum- 
 stances, was not such as ought to cause a reasonably prudent 
 man to suspect thai it was wrongful. Ordinary diligence, and 
 not suspicious watchfulness, is the measure of duty which a 
 corporation owes to its stockholders in such cases. In this 
 case we do uol Bee that either suggestion of danger or ground 
 of suspicion exists. " 
 
 'Cox v. I -"i i--i Nat'l Bank, U9N.O. R. t. 275. See, also, Peck v. Bank, 
 
 etc., Co., 16 R. I. 710. 
 " Peel v. Providence, etc., ( '<>., 17
 
 §457 
 
 TRANSFER OF SHARES 
 
 489 
 
 § 457. Lien of corporation upon shares." — A corporation 
 has no lien upon the shares of its members for debts due it 
 unless it is created or authorized by the charter or statute, or by 
 agreement of the parties. 2 Under authority to regulate trans- 
 fers by the weight of authority a lien may be created by a by- 
 law adopted by a majority of the shareholders, 3 which will be 
 valid as against stockholders and purchasers with notice, but 
 there is much authority to the contrary. Where a lien is cre- 
 ated by the charter or by a general law, all persons pur- 
 chasing shares are bound by it, and the corporation may re- 
 fuse to transfer the shares until its claim is satisfied, 4 but if it 
 is created by a by-law it does not bind a purchaser without 
 notice. 5 When the law gives to a corporation a lien on the 
 shares for any debt due the bank from the owner, it has a 
 vested right in the shares which can not be divested by a sub- 
 sequent assignment thereof by the shareholder. 6 The lien is 
 not confined to debts growing out of the original subscrip- 
 
 1 See Cook on Corps., 4th ed., § 522, 
 and cases cited from Alabama, Cali- 
 fornia, New York, Louisiana, Massa- 
 chusetts, Missouri, Mississippi and 
 Pennsylvania. 
 
 2 Gemmell v. Davis, 75 Md. 546; 
 Dearborn v. Washington Sav. Bank, 
 18 Wash. 8; Case v. Bank, 100 U. S. 
 446; Merchants Bank v. Shouse, 102 
 Pa. St. 488 ; Driscoll v. West Bradley, 
 etc., Co., 59 N. Y. 96; Williams v. 
 Lowe, 4 Neb. 382 ; Vansands v. Mid- 
 dlesex, etc., Bank, 26 Conn. 144; Sar- 
 gent v. Insurance Co., 8 Pick. (Mass.) 
 90 ; Farmers', etc., Bank v.Wasson, 48 
 Iowa 336; Bank v. Lanier, 11 Wall. 
 (U. S.) 369. When no restriction is 
 placed by law on the transfer of cor- 
 porate stock, a purchaser of such stock 
 is not affected by any contractual re- 
 strictions on the power of transfer of 
 which he had no notice. Brinkerhoff, 
 etc. , Co. v. Home, etc., Co., 118 Mo. 447, 
 Wilgus' Cases. 
 
 3 Lockwood v. Mechanics Nat'l 
 Bank, 9 R. I. 308; Morgan v. Bank, 
 
 8 Serg. & R. (Pa.) 73; Vansands v. 
 Bank, 26 Conn. 144; Planters', etc., 
 Bank v. Selma, etc., Bank, 63 Ala. 585. 
 
 4 Union Bank v. Laird, 2 Wheat. 
 (U. S.) 390; Bishop v. Globe Co., 135 
 Mass. 132; Oakland, etc., Bank v. 
 State Bank, 113 Mich. 284; John C. 
 Graffin Co. v. Woodside, 87 Md. 146. 
 
 5 Driscoll v. West Bradley, etc., Co., 
 59 N. Y. 96; Anglo-California Bank v. 
 Grangers' Bank, 63 Cal. 359; Bishop 
 v. Globe Co., 135 Mass. 132; Bank of 
 Atchison v. Durfee, 118 Mo. 431; 
 Brinkerhoff, etc., Co. v. Home, etc., 
 Co., 118 Mo. 447, Wilgus' Cases ; Oak- 
 land, etc., Bank v. State Bank, 113 
 Mich. 384. 
 
 6 Geo. H. Hammond Co. v. Hast- 
 ings, 134 IT. S. 401; Prince, etc., Co. 
 v. St. Paul, etc., Co., 68 Minn. 121; 
 Bank of Commerce v. Bank of New- 
 port, 11 C. C. A. 484, 63 Fed. Rep'. 
 898; Jennings v. Bank, 79 Cal. 323, 5 
 L. R. A. 233; Mohawk Nat'l Bank v. 
 Schenectady Bank, 28 NY. Supp. 1100, 
 78 Hun 90.
 
 490 THE LAW OF PRIVATE CORPORATIONS. § 457 
 
 tion and subsequent calls and assessments. It includes a 
 debt which results from the wrongful use of the money of the 
 corporation by its secretary, who was also a stockholder. 1 A 
 stockholder, who, with notice of a by-law which provides that 
 no stockholder owing the corporation a matured debt, shall 
 transfer his stock, or receive a dividend thereon until the debt 
 is paid, contracts a debt to the corporation, will be held to 
 have pledged his stock to the corporation, and the pledge is 
 binding as between the corporation and the assignee of the 
 stockholder. 2 The character and extent of the lien is deter- 
 mined by the terms of the provision creating it. When the stat- 
 ute gives the corporation a lien upon the stock at all times " for 
 all the debts due from them [the stockholders] to such corpora- 
 tion," the lien attaches for debts incurred before the acquisi- 
 tion of the stock. 3 The word " debt " includes the liability on 
 a note not due, 4 and " indebted " includes the collateral lia- 
 bility of a surety. 5 But such provisions do not prevent an as- 
 signment of the equitable interest in the shares, subject to the 
 rights of the corporation. 6 The corporation may waive its 
 lien by allowinga transfer on its books, 7 or by inducing a pur- 
 chaser to act upon the statement that there are no claims 
 against the stock. 8 The mere taking of other security is not 
 a waiver of the lien. 9 But the failure to put a copy of the by- 
 laws in a conspicuous place, as required by the statute, will 
 defeat a lien conferred by the by-law, as against a good-faith 
 transfer of the shares without knowledge of the by-law. 10 A 
 national l>ank can not flcquife a lien on its own shares for 
 debts from its stockholders to the bank. 11 
 
 'National Bank v. Rochester, etc., Bank, 105 IT. 8. 217; Moore v. Bank 
 Co., 17'_' I'm. St. 61 1. of Commerce, 52 M<>. '577. 
 
 * John C. Oraffln Co. v. Woodside, 7 Hill v. Pine River Bank, 45 N. H 
 S7 M.l. I 16. •"• I »>. 
 
 •Schmidt v. Hennepin, etc., Co., 85 •National Bank v. Watsontowr 
 Minn. 511. Bank, 105 U. 8. 217; Bishop v. Globe 
 
 •Granl v. Mechanics Bank, I68erg. Co., 136 Mass. LS2. 
 
 No; Pittsburgh, etc., R. Co. v. 'German Nat'l Bank v. Kentucky 
 e-Thaw, 29 Pa. 8t. 148. T. Co. (Ky.), 40 S. W. Rep. 458. 
 
 Co v.Q Ifellow, 9 ,0 Des Moines Nat'l Bank v. Bank, 
 
 i ii v. Bank, 24 N.Y.288. 97 lows 204. 
 
 Bank v. Watsontown u Bullardv.Bank,18Wall.(U.8.)589.
 
 § 458 TRANSFER OF SHARES. 491 
 
 It has been held that the identity of the shares is not affected 
 by their transfer and that a stockholder is entitled to have the 
 shares transferred although, at the time, subject to a lien for a 
 delinquent assessment; the lien is not affected, but continues. 1 
 A corporation which has knowledge of a pledge of stock 
 can not extend credit to the stockholder and thus acquire 
 a lien on the stock under a statute which provides that 
 transfers or liens affecting the stock if not made or registered 
 upon the books of the corporation are invalid as to subsequent 
 purchasers without notice. 2 The lien is for debts incurred in 
 good faith and can not be asserted against a prior claim to the 
 stock by a third person of which the corporation had notice at 
 the time the debt was contracted although the stock had not 
 then been transferred on the books of the corporation. 3 But 
 the lien given by statute is of course not affected by the mere 
 sale of the stock to an innocent purchaser. 4 So a corporation 
 with knowledge that stock has been pledged acquires no lien on 
 the stock which is prior to the lien of the pledgee for a debt re- 
 sulting from an embezzlement by its stockholder who is its 
 president. 5 The lien of the corporation can not be foreclosed 
 by a bill in equity when there is an adequate remedy by exe- 
 cution and sale of the shares. 6 
 
 § 458. Effect of a transfer upon rights and liabilities of 
 parties. — The legal effect of a complete transfer of shares is a 
 novation of parties. When the transfer is properly and legally 
 made, the transferrer is discharged from any further liability by 
 reason of his ownership of the shares, unless the liability is 
 continued under statutory provisions. 7 If the shares are not 
 fully paid up, the transferee becomes liable for all calls made 
 during his ownership, and the transferrer remains liable for 
 
 1 Craig v. Hesperia, etc., Co., 113 Commerce v. Bank, 27 U. S. App. 
 
 Cal. 7. 486, 63 Fed. Rep. 898. 
 
 Birmingham, etc., Co. v. Bank 5 Hotchkiss, etc., Co. v. "Union 
 
 (Ala.), 20 L. R. A. 600. Nat'l Bank, 37 U. S. App. 86. 
 
 8 Prince, etc., Co. v. St. Paul, etc., 6 Aldine, etc., Co. v. Phillips 
 
 Co., 68 Minn. 121. (Mich.), 42 L. R. A. 534, 76 N. W. 
 
 4 George H. Hammond & Co. v. Rep. 371. 
 
 Hastings, 134 U. S. 401; Bank of ? Rochester, etc., Co. v. Raymond, 
 
 158 N. Y. 576, 53 N. E. Rep. 507.
 
 492 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §458 
 
 calls which were duly made before the transfer. 1 The trans- 
 feree can not defend an action for assessments by showing 
 that the original subscription was induced by fraud. 2 Ordi- 
 narily the transferee becomes liable for any amount unpaid 
 on the subscription ; 3 but, as against the corporation, he is not 
 liable when the certificate asserts that the stock is full paid, 4 
 and he is an innocent purchaser of the shares for value; 5 the 
 transferrer in this event probably continues liable, at least to 
 creditors. 6 As the transferee assumes the subsequent calls, he 
 becomes entitled to all dividends subsequently declared. 7 
 
 " Stockholders are," says Judge Jenkins, 8 " as to property 
 of the corporations, quasi partners, holding per my et per tout. 
 The earnings of the corporation are part of the corporate prop- 
 erty, held by the same tenure, and until separated from the 
 general mass, the interest of the stockholders therein passes 
 with a transfer of the stock, and this, irrespective of the time 
 during which earnings have accrued. By the declaration of 
 a dividend, however, the earnings, to the extent declared, are 
 separated from the general mass of property and appropriated 
 to the then stockholders, who become creditors of the corpora- 
 tion for the amount of the dividend. The relationship of the 
 stockholder to the corporation, as to the amount of the divi- 
 dend, is thus changed from one of partnership ownership, to 
 l Webster v. Upton, 91 IT. S. 65; "West Nashville, ft.-., R. Co. v. 
 
 Hartford, etc., l:. Co. v. Boorman, \-i 
 < 'nun. ">:;n. As to the release of the 
 transferrer from further liability, see 
 White v. < rreen, I 1 *"' low a L76; I [er- 
 rirk v.Wardwell,58 0hioSl 294; Rus- 
 sell v. Easterbrook, 7] Conn. 50. As 
 t«i liability of transferee,White v. Mar- 
 qnardl & Sons, in:. |,,u a 1 1:> ; I tarper 
 v. Carroll, 66 Minn. 187; 8turtevan1 v. 
 National, etc., Works, 88 Fed. Rep. 618, 
 en r. 8. \i.|. 
 
 * Lewie v. Berryville, etc., < '<>., 90 
 V:. i rdwell v. Kelly, 95 Ya. 
 570, I" L. R. \. 240. 
 
 "- App., 115 I'm. st. 88, 2 Am. 
 Rep. 632. 
 
 ♦ Appeal -I Kisterbock, 127 Pa, St. 
 601, n Am. St, Rep. 868. | 822. 
 
 Nashville, etc., Bank, <; Am. st. Rep. 
 <s:;.~>. As to ct'i'cci of a printed state- 
 ment on the certificate as notice, see 
 Jennings v. Bank, 79 Cal.323, L2 Am. 
 st. Rep. 1 15; Branl v. Ehlen,59 M.I. I. 
 
 G Taylor Corps., § 702, Citing Boyn- 
 ton v. Hatch, 17 N. Y. 225; Tallmadge 
 v. I'islikill, etc., Co., l Barb. (N. Y.) 
 382; Pell's Case, L. R. 5 Ch. 11. Bu1 
 Bee Christensen v. Eno, 106 N. Y. 97. 
 
 7 Supply,etc., Co.v. Elliott, LOColo., 
 827, 3 Am. St. R p. 586, and note; 
 Libby v. Tobey, 82 Maim- 397; Lip- 
 pitl \ . American, etc., Co., 16 R. 1. 141. 
 
 h Wheeler v. Northwestern, «•(<•., 
 Co., 39 F( d. Rep. 847. See , 398,
 
 § 459 TRANSFER OF SHARES. 493 
 
 that of creditor. He thereafter stands to the corporation in a 
 dual relation, — with respect to his stock, as partner and part 
 owner of the corporate property, with respect to the dividend 
 as creditor upon a par with other creditors of the corporation. 
 The severance of the earnings from the general mass of cor- 
 porate property, and the promise to pay, arising from the 
 declaration of the dividend, works this change. The earn- 
 ings represented by the dividend, although the fruit of the 
 general property of the company, are no longer represented by 
 the stock, but become a debt of the company to the individual 
 who, at the time of the declaration of dividend, was the owner 
 of the stock. That the dividend is payable at a future date 
 can work no distinction in the right. The debt exists from 
 the time of the declaration of dividend, although payment is 
 postponed for the convenience of the company. The right be- 
 came fixed and absolute by the declaration. This right could, 
 of course, be transferred with the stock by special agreement, 
 but not otherwise. The dividend would not pass as an inci- 
 dent of the stock. 1 * * * The dividends are earnings grow- 
 ing out of the stock, but when declared are immediately sep- 
 arated from it, and exist independently of it. They are hap- 
 pily likened * * * to fallen fruit which does not pass 
 with the sale or gift of the tree." 
 
 § 459. Remedies for a wrongful refusal to transfer. 2 — When 
 
 the corporation wrongfully refuses to permit the registry on 
 its books of a transfer of shares, the party entitled to the 
 transfer may either bring an action for damages or a bill in 
 equity to compel the transfer, and in some jurisdictions he 
 will be entitled to a mandamus. 
 
 § 460. An action for damages, — The usual remedy is an ac- 
 tion for damages and when new shares can be purchased in 
 the market it is reasonably adequate. There is some conflict 
 among the authorities as to the proper measure of damages in 
 case of a conversion of shares by a refusal to permit a transfer 
 
 1 Brundage v. Brundage, 60 N. Y. Boardman v. Railway Co., 84 N. Y« 
 544; Hill v. Newichawanick Co., 8 157. 
 Hun 459, affirmed 71 N. Y. 593; * See Wilgus' Cases.
 
 494 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §461 
 
 to be registered. One group of cases holds that the measure 
 of damages is the market value»of the shares at the time of the 
 conversion, 1 in accordance with the general rule for the meas- 
 ure of damages for the conversion of personal property. "In 
 the absence of special circumstances in an action for conver- 
 sion of personal property as well as one for failure to deliver it in 
 performance of a contract where consideration has been received, 
 the value of the property at the time of such conversion or de- 
 fault, with interest, is the measure of compensation. " : A few 
 cases hold that the measure of damages is the value of the 
 shares on the day of the trial, 3 while a third class holds that it 
 is the highest market price reached by the shares between the 
 time of the refusal to permit the transfer and the day of the 
 trial. 4 
 
 § 461. A suit in equity. — Another remedy of which the 
 party may avail himself is a suit in equity to compel a trans- 
 
 'IJussey v. Manufacturers, etc., 
 
 Bank, 10 Pick. 415; Barnes v. Brown, 
 
 130 N. Y.372; North v. Phillips, 89 Pa. 
 
 St. 250; Work v. Bennett, 70 Pa. St. 
 
 Baker v. Drake, 66 X. Y. 518; 
 
 Colt v. Owens, 90 X. Y.368; Pinkerton 
 
 v. Manchester, etc., R. Co., 42 N. II. 
 
 424; McKenney v. Haines, 63 Maine 
 
 74; Duty v. First Nat'] Bank, 3 N. D. 
 
 9, 53 N. W. Rep. 77; Rio Grande, 
 
 Co. v. Burns, 82 Texas 50, 17 B. 
 
 W. Rep. 1043; Gresham v. Island 
 
 City,etc., Bank Texas Civ. App., 1893), 
 
 21 B. W. Rep. 556; Eortrighl v. Buf- 
 
 felo.etc., Bank, 20 Wend. 90; Nicollet, 
 
 Bank v. City Bank, 38 Minn. 85. 
 
 Balkie, etc., Co. v. Tompkinson, 
 
 L. R. (1893 LC. 396. 
 
 •Barnesv. Brown, ISO N. Y.872. 
 
 ;, . Routh, II C. B. 327; Ber- 
 
 cich v. M.i. 112. 
 
 4 Fromm - Nevada, etc . Co., 
 
 61 Cal. 629; Denl v. Holbrool 
 
 v . K raft, 9 < !al 
 ■. Mitchell, i v I 
 McC 334; Central, etc., Co. v. i\ 
 
 lantic, etc., R. Co., 50 Ga. 444. This 
 was the rule established by the early 
 New York cases. Markham v. Jau- 
 don,41 N. Y. 235; Kortright v. Buf- 
 falo, etc., Bank, 20 Wend. 90; Ro- 
 maine v. VanAllen, 26 X. Y. 309, but 
 in the more recent cases the general 
 rule is adopted that the measure of 
 damages is the value at the date of 
 the conversion. Maker v. Drake, 66 
 N. Y. 518; Harris v. Tumbridge R3 
 N. Y. 92. 
 
 "Morehead v. Western, etc., R . Co., 
 96 N. c. 362, 2 s. K. Rep. 247; Live- 
 zey v. N. P. R. Co., L57 Pa. St. 75; 
 Archer v. Water-works ( '".. ■"'<• N. J. 
 Eq. 33; Slemmons v. Thompson, •_':{ 
 Ore. 215, 31 Pac. Rep. 51 1 : Cushman 
 v. Thayer, etc., Co., 76 N. Y. 865; 
 Walker v. Detroit, etc., R. Co., 17 
 Mich. 338; tasigi v. Chicago, etc., R. 
 Co., 129 Mass. 48; Campbell v. Ameri- 
 can, etc., Co., 122 N. Y. 155; Hill v. 
 /Atoka, etc., Co, ( M< I i 11 B. W. 
 Rep. 508 ; Gould v. Head, li Fed Rep 
 Rici i Rockefeller, 134 N. Y I
 
 § 462 TRANSFER OF SHARES. 495 
 
 fer. 5 "To say that the holder shall not he entitled to the stock 
 because the corporation, without any just reason, refuses to 
 transfer it, and that he shall be left to pursue the remedy of 
 an action for damages, in which he can recover only a nominal 
 amount, would establish a rule which must work great 
 injustice in many cases, and confer a power on corporate bodies 
 which has no sanction in the law. A court of equity will en- 
 force a specific performance on a contract for the sale of real 
 estate, and compel the execution of a deed by the vendor to the 
 vendee, although an action at law may be brought to recover 
 damages for the breach of the contract. Such a case bears a 
 striking analogy to the one now presented, and the same prin- 
 ciple is manifestly applicable when the remedy in law is in- 
 adequate to furnish the proper relief." 1 The bill may be in 
 the alternative for a transfer of the stock or for damages. 2 
 
 § 462. Mandamus. — The great weight of authority is against 
 the rule that mandamus will lie to compel the registry of a 
 transfer of shares. The reason for denying this remedy is thus 
 stated: "The applicants have an adequate remedy, by a spe- 
 
 Wilgus' Cases. Suit for specific per- specifically enforce the contract, but 
 
 forrnance. New England, etc., Co. v. will leave the parties to their remedy 
 
 Abbott, 162 Mass. 148. at law. Eoss v. U. F. E. Co., 1 Wo< »lw. 
 
 Bushman v. Thayer, etc., Co., 76 C. C. 26." Taylor, §790. See Foils' 
 
 N. Y. 365. "This is, it seems, the Appeal, 91 Pa. St. 434. "In such a 
 
 surest, most complete and most just case it is well settled that, although 
 
 remedy for compelling a corporation the common law remedy for damages 
 
 to register a transfer of stock, and for is available, it is inadequate ; the only 
 
 adjusting the various conflicting rights effective remedy is an order of the 
 
 or claims of other parties." Cook I, § court of equity to compel such officers 
 
 391. "A contract for the sale of shares to make transfer of the stock on the 
 
 will be specially enforced in equity books of the company to the assignee, 
 
 if it is not unconscionable (Miss, and thus enable such assignee to en- 
 
 & M. E. Co. v. Cromwell, 91 XJ. S, joy all the rights of the stockholder 
 
 643) r or against public policy, when in such corporation, and likewise to 
 
 from the scarcity of the shares or compel such officers to issue new eer- 
 
 other reasons the purchaser can not tificates of stock upon the surrender 
 
 go into the market and purchase simi- of the old ones." Tiedeman Eq. Jur., 
 
 lar ones. Johnson v. Brooks, 93 N. § 504. 
 
 Y. 337. But if shares similar to the 2 Birmingham Nat'l Bank v. Eoden, 
 
 ones which are the subject of the sale 97 Ala. 404, 11 So. Eep. 883; In re 
 
 are readily purchasable in the mar- Eeading Iron Works, 149 Pa. St. 182, 
 
 ket, equity will not, as a general rule, 24 Atl. Eep. 202.
 
 496 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §462 
 
 cial action on the case, to recover the value of stock if the 
 bank has unduly refused to transfer it. There is no need of 
 the extraordinary remedy by mandamus in so ordinary a case. 
 It might as well be required in every case where trover would 
 lie. It is not a matter of public concern, as in the case of pub- 
 lic records and documents, and there can not be any necessity 
 or even a desire of possessing the identical shares in ques- 
 tion." 1 As said by one writer: 2 "Shares of stock in a trad- 
 ing corporation are supposed to possess a market value which 
 may be made the basis for calculating the measure of damages 
 for the losses resulting from a failure or refusal to enter their 
 transfer on the registry of the corporation. Mandamus is 
 therefore seldom granted to compel their transfer." But there 
 are many authorities 3 which hold that mandamus will lie, par- 
 
 1 Shipley v. Mechanic's Bank, 10 
 John. 484; State v. Rorabauer, 46 
 Mo. 155; Stackpole v. Seymour, 127 
 Mass. 104; Townes v. Nichols, 73 Me. 
 515; Gray v. Portland Bunk, 3 Mass. 
 364 ; Murray v. Stevens, 110 Mass. 95; 
 Baker v. Marshall, 15 Minn. 177 (( rill. 
 13G) ; Tobey v. Hakes, 54 Conn. 274; 
 Burnsville, etc., Co. v. State, 119 Ind. 
 382; Freon v. Carriage Co., 42 Ohio 
 St. 30; Kimball v. Union, etc., Co., 
 II Cal. 173; Bank oi Ga. v. Harrison, 
 66 Ga. 696. 
 
 1 Spelling Extraordinary Relief, II, 
 S 1615. 
 
 3tate v. Mclver, 2 S. 0. (N. B.) 
 25 ; State v. < Iheraw, etc., R. < Jo., L6 
 - 0. 524; In re Klaus 67 Wis. 
 in] ; Green Mount, etc., Co. v. Bulla, 
 r> I ad. i ; People v. < rose, etc., 
 
 99 [II. 355; State v. First Nat'l 
 
 Bank, B9 [nd. 802; People \ . Crockett, 
 
 I i iwford v. Prov., etc., 
 
 - i C. 0. P. 268; Goodwin v. 
 Ottawa, etc., i:. Co., 18 U. C. (C. P.) 
 
 Slemmons v. Thompson, 23 < >re, 
 
 31 Pac. Rep. 61 1: Campbell v. 
 Morgan, I ill. \pp. 100; Norris v. 
 Irish & I'.l. 512; Ward 
 
 v. S. E. R. Co., 2 El. & El. 812; Ex 
 parte Sargent, L. R. 17 Eq. 273. 
 "There is not wanting strong author- 
 ity, both in numbers and eminence, 
 for the doctrine that rightful registry 
 may be compelled by mandamus. 
 When this is the rule, a demand by 
 letter is sufficient, and the writ may 
 issue upon noncompliance therewith. 
 State v. Mclver, 2 S. C. 25. But man- 
 damus will not ho granted where the 
 relator is guilty of bad faith, Bog. v. 
 Liverpool, etc., Co., 21 L. J. (}. 11. (X. 
 S.) 284, nor where the certificates have 
 been issued to another whoso rights 
 would be prejudiced. Bailey v. Stro- 
 hecker, 38 Ga. 259; state v. First 
 Nat'l Bank, 89 [nd, 302; Durham v. 
 M"ii., etc., Co., it Ore. 41, unless, 
 indeed, the applicanl shows a better 
 title. Reg. v. Charwood, etc., Co., 
 i t '. .v F. i r.i, nor even \\ here the 
 duty to register is prescribed by stat- 
 ute, unless the applicant's right to 
 ion i- clear and unquestion- 
 able. Slemmone v. Thompson, 28 
 Ore. 216, 81 Pac. Rep. 51 1. Compare, 
 Bangor, etc., Co. v. Robinson, 52 Fed. 
 Rep, 520." Spelling says that the re is
 
 § 462 
 
 TRANSFER OF SHARES. 
 
 497 
 
 ticularly where there appears to be no good reason why the 
 registry of the transfer should not be allowed. 
 
 an exception to the general rule that proper entries of a transfer after the 
 mandamus will not lie, when by stat- sale of shares on execution against 
 ute it is made the plain ministerial the original shareholder. Extr. Re- 
 duty of the corporation to make the lief, II, § 1616. 
 
 43 — Private Corp.
 
 CHAPTER 17. 
 
 CORPORATE MEETINGS AND ELECTIONS. 
 
 §463. 
 
 In general. 
 
 §480 
 
 Number of votes by each stock- 
 
 464. 
 
 Calling meetings. 
 
 
 holder. 
 
 465. 
 
 The place of meeting. 
 
 481. 
 
 Cumulative voting. 
 
 466. 
 
 Regular and special meetings. 
 
 482. 
 
 The majority and quorum. 
 
 467. 
 
 Notice of corporate meeting. 
 
 483. 
 
 Powers of the majority to man- 
 
 468. 
 
 Adjourned meetings. 
 
 
 age the corporation. 
 
 469. 
 
 Manner of conducting meet- 
 
 484. 
 
 Rights of the minority. 
 
 
 ings. 
 
 485. 
 
 Power of majority to wind up 
 
 470. 
 
 Records — Evidence. 
 
 
 business. 
 
 471. 
 
 Who entitled to vote. 
 
 486. 
 
 Power of majority to accept 
 
 472. 
 
 Right of bondholders to vote. 
 
 
 amendments. 
 
 473. 
 
 Voting by proxy. 
 
 487. 
 
 Power to accept amendments 
 
 474. 
 
 Personal interest of stock- 
 
 
 continued. 
 
 
 holder — Motive governing 
 
 488. 
 
 Immaterial amendments and 
 
 
 vote. 
 
 
 alterations. 
 
 475. 
 
 Voting trusts and agreements. 
 
 489. 
 
 Material beneficial amend- 
 
 476. 
 
 Voting agreements continued. 
 
 
 ments. 
 
 477. 
 
 Voting agreements continued. 
 
 490. 
 
 Elections — Presumption of reg- 
 
 478. 
 
 The Shepaug Voting Trust 
 
 
 ularity. 
 
 
 cases. 
 
 491. 
 
 Inspectors of elections. 
 
 479. 
 
 Specific enforcement of such 
 
 492. 
 
 Illegal votes. 
 
 
 contracts. 
 
 493. 
 
 Control of courts over corpo- 
 rate elections. 
 
 § 403. In general. — The powers which are conferred upon 
 a corporation can be exercised only at a regularly convened 
 meeting of the stockholders or of the board of directors; and 
 the action of individual stockholders or directors elsewl 
 than al a properly convened up Hing does not hind the corpo- 
 ration, unless it is subsequently ratified by proper authority. 1 
 
 'Buttrick v. Nashua, etc., I.\. 82 R.O.Church,89 Hun (N.Y.) 498; North 
 
 H ii;. L8 \m. st Rep. 578; Hudson, etc., Aesn. v. Childs, 82 Wis. 
 
 Gaahwilerv. Willi--,:::: Cal. 11; A.lta, 160; Sayles v. Brown, W Fed. Rep.8. 
 
 etc., Co. v. Alta, etc., Co.,78 Oal. 629; In Longmont, etc., Co. v. Ooffman, 1 1 
 
 People's Bank v. Bt. Anthony's, etc., Colo. 661, it is held thai where a 
 
 (498)
 
 § 404 ' CORPORATE MEETINGS AND ELECTIONS. 499 
 
 For certain purposes it is held that the action of all the stock- 
 holders will bind the corporation, although they acted indi- 
 vidually and not at a regular meeting. 1 But this is excep- 
 tional, and the general rule is as stated above. Thus, the 
 consent of a majority of the stockholders to the appointment 
 of an agent of the corporation to execute a mortgage, given 
 separately and at different times, is ineffective; and a mort- 
 gage executed by one assuming to act as an agent under such 
 an appointment is a nullity. 2 A strictly corporate meeting, 
 that is, a meeting of the stockholders, must be distinguished 
 from a meeting of the board of directors, which ordinarily 
 exercises the general powers conferred upon the corporation. 
 
 § 464. Calling meetings. — Unless otherwise provided by 
 the charter or by-laws, a corporate meeting may be called by 
 the directors, or the general agent of the corporation to whom 
 is entrusted the control and management of its affairs, 
 whenever in their judgment a meeting is necessary. 3 If 
 the manner of calling such meetings is determined by the 
 charter or by-laws, a meeting called in any other way is in- 
 valid unless all the stockholders are present. 4 The board of 
 directors, however, it has been held, may call a meeting, al- 
 though the by-laws confer the power upon other officers. 5 
 Where the authority is vested in the trustees or directors, the 
 president can not call a meeting to elect officers. 6 
 
 § 465. The place of meeting. — A corporate meeting must 
 be held at a time or place which is reasonably convenient 
 for the shareholders who are expected to attend it. It is ordi- 
 
 majority of the board of directors 5 Citizens', etc., Co. v. Sortwell, 8 
 
 acting separately in accordance with Allen (Mass.) 217. See Chamberlain 
 
 usage, approved claims against the v. Painesville, etc., R. Co., 15 Ohio 
 
 corporation, the corporation is bound St. 225. 
 
 by the act. 6 State v. Pettineli, 10 Nev. 141. 
 
 1 See Woodbridge v. Pratt, etc., Co., Statutes sometimes provide for a pro- 
 39 Conn. 304, 37 Atl. Rep. 688. ceeding by which a meeting may be 
 
 2 Duke v. Markham, 105 N. C. 131. called by a justice of the peace when 
 "Stebbinsv. Merritt, 10 Cush. 27,33. the proper officers are absent. See 
 4 See Evans v. Osgood, 18 Me. 213. Gen. St. Minn. 1894, §3409.
 
 500 THE LAW OF PRIVATE CORPORATIONS. § 465 
 
 narily held at the office of the corporation. 1 There is some 
 question as to the validity of acts done at a stockholders' meet- 
 ing held outside of the state which created the corporation. On 
 the ground that such a meeting is a strictly corporate, as distin- 
 guished from a business act, it has been broadly held that 
 the transactions of such a meeting are void, although there is 
 no express prohibition in the charter or by-laws, and all the 
 members consent. " As the corporate faculty can not accom- 
 pany the natural person beyond the bounds of the sover- 
 eignty which confers it, and they can not possess or exercise 
 it there, they can have no more power there to make the arti- 
 ficial being act than other persons not named as associates or 
 incorporators. Any attempt to exercise such a faculty there 
 is merely a usurpation of authority by persons destitute of it, 
 and acting without any legal capacity to act in that manner. 
 It follows that all votes and proceedings of persons professing 
 to act in the capacity of corporators, when assembled without 
 the bounds of the sovereignty granting the charter, are wholly 
 void." 2 If such a meeting is expressly prohibited it is illegal, 
 but in the absence of such a prohibition there appears to be no 
 very good reason why the shareholders of an ordinary business 
 corporation should not provide in their articles that meetings 
 may be called at convenient places outside of the state under 
 whose laws the company is formed. 8 
 
 If the meeting is not prohibited, and all the stockholders 
 consent, it will generally be treated as merely irregular and 
 the transaction binding upon all parties. 
 
 Where an Illinois corporation held a meeting and elected 
 directors in Missouri, and certain stockholders attempted to 
 defeat :iu action on their stock subscriptions on the ground 
 that the proceedings of the meeting in Missouri at which the 
 
 t The office of the presidenl will be Tr.Laigle,69Tex.839; Dakev. Taylor, 
 
 presumed to be the proper place for 87 Fla. 64, 81 I.. R. A.. 484. Confer- 
 
 holding a meeting. Troy, etc., Co. v. ring authority upon an agent to ex- 
 
 Whit,., in- Dai 175, 12 I. R. Al.649. ecute a <I-'<'<1 is nut :( corporate art. 
 
 Miller v. Ewer,27 Me.509 Bee§247, A.rms v. Conant, 86 Vt. 744; Bellows 
 
 .•<;//,,.<. Ormsby v Vermont, etc., Co., v. Todd, 89 la. 209. 
 56 N. V. 823; Franco Texan, etc., ('<>. 'See Morawetz Priv. Corp., § 488.
 
 § 465 CORPORATE MEETINGS AND ELECTIONS. 501 
 
 call was made were void, the court said: 1 " The utmost that 
 can be said, under such circumstances, is that the election 
 was irregular. The corporation having once been put into 
 existence, if the members of the board of directors, whether 
 charter or their appointees, or those elected by the stockhold- 
 ers in St. Louis, accepted their office, and acted under their 
 appointment or election, as the evidence shows was the case, 
 they become de facto directors, and their authority to act on be- 
 half of the corporation could not be questioned by the appel- 
 lants in this collateral suit without showing a judgment of 
 ouster against them in a direct proceeding by the government 
 for that purpose." 
 
 In some states stockholders' meetings held in another juris- 
 diction are forbidden by law. Where the by-laws provided 
 that the meetings should be held at a designated place in the 
 state it was held that a meeting for the election of officers 
 held out of the state, all the stockholders not consenting, was 
 illegal and the election void. 2 
 
 The corporation itself and the stockholders who attend an 
 extraterritorial meeting, and creditors who voluntarily dea) 
 with the corporation, are estopped to deny its validity and 
 regularity. 3 As against officers elected at an illegal meeting 
 
 1 Ohio, etc., R. Co. v. McPherson, ings of such meeting would, within 
 
 35 Mo. 13. the rule laid down by this court in 
 
 2 Hodgson v. Duluth, etc., R. Co., Galveston, etc., R. Co. v. Cowdrey, 
 
 46 Minn. 454. 11 Wall. 459, with regard to directors' 
 
 'Wright v. Lee, 2 S. Dak. 596, 51 meetings, be binding upon all those 
 
 N. W. Rep. 706. participating in, as well as upon those 
 
 In Handley v. Stutz, 139 U. S. 417, acting upon the faith of its validity, 
 the court said: "Nor were the pro- on receiving stock authorized to be 
 ceedings of such meeting any the less issued at such meeting. It is true 
 binding upon those participating in it that there are cases holding that stock- 
 by reason of the fact that it was held holders' meetings can not be legally 
 without call or notice, and outside the held outside of the home state of the 
 boundaries of the state under the laws corporation, but the question has gen- 
 of which the company was incorpo- erally arisen where a majority pres- 
 rated. * * * Beyond the election ent at such meeting has attempted by 
 of officers, however, there is no statu- their action to bind a dissenting mi- 
 tory restriction of corporate action to nority, or had taken action prejudicial 
 the limits of the state, and in the ab- to the rights of third persons, 
 sence of such inhibition the proceed- Ormsby v. Vermont, etc., Co., 56
 
 502 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 466 
 
 held outside of the state, those previously in office retain the 
 right to control the affairs of the corporation. 1 
 
 When a corporation is incorporated in several states a meet- 
 ing in one of the states in respect of the property in that state 
 is valid without a repetition of the meeting in the other states. 1 
 
 § 466. Regular and special meetings. — The charter or by- 
 laws of a corporation ordinarily provide a time for holding 
 regular meetings and for the calling of special meetings. The 
 difference is of importance by reason of the necessity for special 
 notice of special meetings. 
 
 § 467. Notice of corporate meeting, — No power or function 
 entrusted to a body consisting of a number of persons can be 
 legally exercised without notice to all the persons composing 
 such body. 3 Hence there can be no valid stockholders' meet- 
 ing unless all the shareholders have had proper notice of the 
 day, hour and place of meeting. 4 Notice will be presumed 
 until the contrary appears. 5 If the time for the regular meet- 
 ing is fixed by charter, by-law, 6 or by usage, 7 no other notice is 
 necessary. 8 If a by-law fixes merely the day of a meeting, 
 
 N. Y.623; Hilles v. Parrish, 14 N.J. 
 Eq.380. Indeed, so far as we know, the 
 authorities are uniform to the effect 
 (hat the action taken at such meeting 
 ts. hi inling upon those who partici- 
 pated in or take t lie benefit of them. 
 Heatli v. Silverthorn, etc., Co., 39 
 Wi- in;." 
 
 1 Hodgson v. Duluth, etc., Co., 46 
 Minn. 454. 
 
 » (Sahara v.Railroad.Co.,118TJ.8.161. 
 
 '§296, supra) People \. Batchelor, 
 22 N. V. L28. 
 
 'San Buenaventura, etc., I !o. v.Vas- 
 iHult, 60 Cal. 534 ; State v. Bonnell,86 
 Ohio Bt. i". In \in. Nat'l Bank v. 
 Oriental Mills, 17 R. I. 551, 23 Ml. 
 Rep. 795, it was held thai it was suffi- 
 cient to give ' be notice to the bolder 
 of the equitable title, the former holder 
 having the bare legal title not coupled 
 
 with an interest. Notice to the pledgor 
 of shares is sufficient. McDaniels v. 
 FIow.t Brook, etc., Co., 22 Vt. 27-4. 
 Notice to one member of a firm is suf- 
 ficient. Kenton, etc., Co. v. McAlpin, 
 5 Fed. Rep. 737. 
 
 "Sargenl v. Webster, L3 Mete. \S7\ 
 McDaniele v. Flower Brook, etc., Co., 
 22 Vt.274. 
 
 Minn-ill v. Little Falls, etc., Co., 53 
 Minn. 371,21 L. R. A. 171; Winner v. 
 
 Mower, n Vt. 385; state v. Bonnell, 
 35 <>hi<» St. in. 
 
 'Atlantic, etc., Co. v. Sanders, 36 N. 
 M. 252. See Wiggin v. Freewill Bap- 
 tist Church, 8 Mete (Mass.)SOl. 
 
 •Morrill v. Manufacturing Co., 58 
 Minn. 371 ; state v. Bonnell, 85 Ohio 
 St. Ki; Stow v. Wyse, 7 Conn. 214, L8 
 Am. Dec. 99, and imle; Warner v. 
 
 Mower, u Vt.
 
 § 4G8 CORPORATE MEETINGS AND ELECTIONS. 503 
 
 notice must be given of the hour. The notice must fix the 
 exact hour 1 and place of meeting. 2 If the meeting is a special 
 one, or the business of an extraordinary character, 3 such as a 
 sale of the property of the corporation, 4 or the dissolution of the 
 corporation, 5 the notice must also indicate the nature of the busi- 
 ness to be transacted . 6 Notice of a general meeting need not state 
 the business to be transacted. 7 A notice stating that the an- 
 nual meeting will be held at a certain time and place, to act 
 on the report of the directors and transact such other business 
 as may be brought before the meeting, will not authorize an 
 increase of the capital stock at the meeting under a statute 
 which permits such increase "at any meeting called for the 
 purpose." 8 At a special meeting only the particular business 
 for which it was called can be transacted. 9 The notice must 
 be served a reasonable time before the meeting. 10 The acts of 
 a meeting at which all the stockholders are present is valid, 
 although no notice of the meeting was given. 11 So the acts of 
 a majority at a meeting which was not regularly called may 
 be ratified at a subsequent meeting. 12 
 
 § 468. Adjourned meetings. — A meeting may adjourn from 
 time to time without further notice to the shareholders, 13 and 
 
 1 San Buenaventura, etc., Co. v.Vas- under a statute which required that 
 sault, 50 Cal. 534. the meeting should be called for that 
 
 2 Miller v. English, 21 N. J. L. 317. purpose. 
 
 3 Warner v. Mower, 11 Vt. 385 ; Peo- 7 Warner v. Mower, 11 Yt. 385. 
 pie's, etc., Co.v.Westcott, 14 Gray 440. 8 Jones v. Concord, etc., R. Co., 67 
 
 4 Stockholders, etc., v. Louisville, N. H. 119. As to deflniteness re- 
 etc, R. Co., 12 Bush (Ky.) 62. quired in describing the business to 
 
 5 St. Mary's, etc., Assn. v. Lynch be transacted, see Market, etc., R. Co. 
 
 (N. H.), 9 Atl. Rep. 98. v. Helhnan, 109 Cal. 571. 
 
 6 Atlantic, etc., Co. v. Mason, 5 R. I. 9 Warner v. Mower, 11 Vt. 385. 
 
 463; Evans v. Heating Co., 157 Mass. i0 Cassell v. Lexington, etc., Co. 
 
 37, 31 N. E. Rep. 698; In re Bridge- (Ky.), 9 S. W. Rep. 502. 
 
 port, etc., Co., L. R. 2 Ch. 191. » Stutz v. Handley, 41 Fed. Rep. 531, 
 
 A notice which states the object to be s. c. 139 U. S. 417; Stebbins v. Mer- 
 
 "to consider the question of an issue ritt, 10 Cush. (Mass.) 27. 
 
 of bonds of the company, secured by 1Z Richardson v. Railroad Co., 44 Vt. 
 
 a mortgage on its property," is sum- 613. 
 
 dent to authorize the taking of a vote " Smith v. Law, 21 N. Y. 296. In re 
 
 authorizing the giving of a mortgage, Newcomb (N. Y.), 18 N. Y. Supp. 16.
 
 504 THE LAW OF PRIVATE CORPORATIONS. § 4G9 
 
 the adjourned meeting is but a continuation of the meeting 
 adjourned. 1 Corporations "may transact any business at an 
 adjourned meeting which they could have done at the original 
 meeting. It is but a continuation of the same meeting. 
 Whether the meeting is adjourned without interruption for 
 many days, or by adjournment from day to day, or from time 
 to time, many days intervening, it is evident it must be con- 
 sidered the same meeting without any loss or accumulation of 
 powers. 2 In order that notice of a prior meeting may extend 
 and apply to a subsequent meeting, the latter must be held 
 merely for the purpose of completing the unfinished business 
 of the former. 3 The hour of adjournment should be definitely 
 fixed and should be entered upon the minutes in order to affect 
 the members absent from the first with notice of the adjourned 
 meeting. 4 The president of a mining company has no authority 
 to adjourn a meeting of the stockholders against their express 
 will, because in his opinion a majority of the subscribed stock 
 is not represented. 5 
 
 §469. Maimer of conducting meetings. — Members may con- 
 duct a corporate meeting in any manner convenient and agree- 
 able to themselves, so long as they do not violate any of the pro- 
 visions of their charter or by-laws. No particular formalities are 
 required, 6 but the statutory or charter provisions must be ob- 
 served. 7 By-laws regulating the manner of conducting a meet- 
 ing and voting must be consistent with the charter and laws. 8 
 
 § 170. Records — Evidence. — The failure to enter a resolu- 
 tion passed at bhe stockholders' meeting in the minute book of 
 
 Bee Weston, etc., Co. v. Dea Moines, Philips v. Wickham, 1 Paige Oh. 
 
 etc., Bank L03 [owa 165. (N. y.)690; Downing v. Potts, 23 N. 
 
 1 State v. Oronan, 23 Nev. 137, 19 J.L.86. [n re Horbury, etc., Co., L. 
 
 I';i.-. Rep. U. R. n Ch. Div. 109; Hughes v. Parker, 
 
 •Warner v. Mower, M Vt. 385; 20N.H.58. 
 Bmith v. Law, 21 N. Y. 296; People ' People v. Peck, 1 1 Wend. (N. Y.) 
 v. Batchelor, 22 N. Y. L28; Farrarv. 604. The presiding officer <>r mod- 
 Perl ey, 7 Maine 104. eratorneed nol be a stockholder un- 
 iple v. Batchelor, 22 V Y. 128. less ii is required by statute. Btebbins 
 •Thompson v. Williams, 76 Cal. L58. v. Merritt, 10 Cush. (Mass.) -11. 
 
 I man, 23 Nev. i ■ Commonwealth v. Woelper,3 8. A 
 
 Brown, 10 Fed. Rep. 8; R. I Pa.) 30; People v. Crossley, 69
 
 § 471 CORPORATE MEETINGS AND ELECTIONS. 505 
 
 the corporation does not affect its validity, as the corporate 
 acts can generally be proved as well by parol as by the written 
 
 entry. 1 
 
 § 471. Who entitled to vote. — The right to vote at corpo- 
 rate meetings, upon complying with reasonable rules and reg- 
 ulations, is an incident to the ownership of shares in private 
 corporations. Hence, every shareholder has a right to at 
 least one vote, and of this right he can not be deprived by 
 legislation; unless the power was reserved before the stock was 
 issued. If there are no provisions in the charter or by-laws 
 regulating the matter, the right and manner of voting must 
 be determined by the corporate meeting, and not by the pre- 
 siding officer. 2 The corporation may, by properly adopted by- 
 law, prohibit the transfer of the shares on the corporate books 
 for a reasonable period prior to an election. 8 The general 
 rule is that the stock books are prima facie evidence of who 
 is entitled to vote, and as this is one of the objects for which 
 the corporation is required to keep such books, it can not be 
 required to go outside of the books in order to determine who 
 it should recognize. 4 But the books are not, under all circum- 
 stances, conclusive evidence, 5 although the inspectors of elec- 
 tion need not go behind them. 6 The general rule, however, 
 has received so many modifications, that many states have 
 found it necessary to regulate the matter by statutory provis- 
 ion.' The right to vote can not be impaired by a by-law 
 enacted after the stockholder acquired his shares, unless un- 
 
 111. 195 ; Brewster v. Hartley, 37 Cal. Long Island, etc., R. Co., 19 Wend. 38 ; 
 
 15; Camden, etc., R. Co. v. Elkins, Prince Inv. Co. v. St. Paul, etc., Co., 
 
 37 N. J. Eq. 273. 68 Minn. 121; In re Argus Pt. Co. 
 
 »Handley v. Stutz, 139 U. S. 417; (N. Dak.), 48 N. W. Rep. 347. That 
 
 Moss v. Averell, 10 N. Y. 449. See the corporate books are conclusive, 
 
 note on corporate records in Sawyer v. see Morrill v. Little Falls, etc., Co, 
 
 Manchester, etc., R, Co. (N. H.), 13 53 Minn. 371, 21 L. R. A. 174. 
 
 Am. St. Rep. 550-552 ; Schell v. Second 5 Strong v. Smith, 15 Hun (N.Y ) 222. 
 
 Nat'l Bank, 14 Minn. 43 (Gil. 34). 6 In re St. Lawrence, etc., Co., 44 
 
 2 State v. Chute, 34 Minn. 135. N. J. L. 529. 
 
 8 In re Glenn Salt Co., 17 App. Div. 7 Ex parte Willcocks, 7 Cowen | N.Y.) 
 
 234, 153 N. Y. 688. 402; Commonwealth v. Dalzell, 152 
 
 4 Hoppin v. Buffum, 9 R. I. 513; Pa. St. 217, 34 Am. St. Rep. 640; Mc- 
 
 State v. Ferris, 42 Conn. 560; In re Neil v. Tenth Natl Bank, 4(3 N. Y.
 
 506 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §471 
 
 der reserved power. 1 The corporation may at the time of is- 
 suing the shares, provide that the holder shall not participate 
 in the management of the corporation. 2 Thus, it is not un- 
 common for the charter or statute to provide that non-resident 
 stockholders shall not be entitled to vote. 3 Under such cir- 
 cumstances, the provision can not be evaded by a gratuitous 
 transfer of the shares to some other party. 4 The holder of the 
 legal title is entitled to vote unless the rule has been changed 
 l>v the statute or contract, 5 and even when this is the case an 
 exception is usually made in the case of executors, adminis- 
 trators and trustees. 6 A pledgee, in whose name the stock 
 stands on the books of the corporation, is entitled to vote the 
 shares, unless the right has been reserved by the pledgor. 7 
 In such case the pledgee holds the legal title, and in the ab- 
 sence of an agreement to the contrary, the right to vote follows 
 the legal title. As between pledgor and pledgee, the pledgor 
 is entitled to exercise the voting power until the title of the 
 pledgee is perfected; 8 and if the stock stands in the name of 
 
 325. The stock books, when identi- 90 Ala. 396, 9 L. R. A. 650; State v. 
 
 fi<"l. are competent evidence to show, Hunton, 28 Vt. 594. 
 
 prima facie, who are shareholders. e See, where the holder was a mere 
 
 Turnhull v. Payson, 95 U. S. 418; stockholder, Clarke v. Central, etc., 
 
 Boagland v. Bell, 36 Barb. (N. Y.) R. Co., 50 Fed. Rep. 338; Common- 
 
 Vandermerker v. Glenn, 85 Ya. 
 9; Liggett v. Glenn, 2 C. C. A. 285; 
 Glenn v. Lisreett, 47 Fed. Rep. 472 ; In 
 re St. Lawrence, etc., Co., 44 N. J. L. 
 529. In Carey v. Williams, 79 Fed. 
 !:• p. 906, n ". .is held that the corpora- 
 
 wealth v. Dalzell, 152 Pa. St. 217,34 
 Am. St. Rep. 040; Miller v. Murray, 17 
 Colo. 408. A prima facie right to 
 vote does not exist until the stock is 
 registered in the name of the person 
 seeking to vote it. Reynolds v. Brid- 
 
 tion books were not admissible for enthal (Neb.), 77 N. W. Rep. 658. 
 
 this purpose. Bee §348, supra. A B See Hoppin v. Buffum, 9 R. I. 518 ; 
 
 cription list, the signatures Comi wealth v. Dalzell, L52 Pa.St. 
 
 of which are shown to be genuine, is 217,34 Am. St. Rep. 640; Brewster v. 
 
 sufficient proof in the absence of re- Hartley, 37 Cal. L5, 99 Am. Dec. 237; 
 
 butting evidence. Glenn v. Liggett, In re Barker, 6 Wend. 609. 
 
 17 Fed. Rep. 172. 'Commonwealth v. Dalzell. L52 Pa. 
 
 1 Hrew-ter v. Hartley, 87 Cal. 16,99 si. 217, ::i Am. si. Rep. 640; In re 
 
 Am. Dec.237. Argus, etc., Co., 1 N. I». 184,26 \m. 
 
 •Miller v. Ratterman, 17 Ohio St. Rep. 639. Dnder Hie Colorado stat- 
 
 141, 24 N. E. Rep. 196. 
 
 • v. Hunton, 28 Vt. 594. 
 
 DeBardeleben, etc., Co., 
 
 ute the owner of pledged shares may 
 
 vole the shares. .Miller v. .Murray, 
 17 Colo. ins. 
 
 h Hoppin v. Buffum, 9 R. I. 518;
 
 § 471 CORPORATE MEETINGS AND ELECTIONS. 507 
 
 the pledgee on the books of the corporation, the pledgor may, 
 by a suit in equity, compel the pledgee either to transfer the 
 shares to him, or to give him a proxy. But this right can not 
 be exercised for the purpose of changing the results of the 
 election after the shares have been voted by the pledgee. 1 
 
 Where the stock is held jointly, as by three executors, it can 
 not be voted unless all agree upon the vote. 2 In California it 
 is held that one in whose name shares stand on the books as a 
 trustee can not vote them if he has no actual interest in them. 3 
 One who held stock as a mere dummy for the owner, for the 
 purpose of avoiding statutory liability, was held not a bona fide 
 holder within the meaning of a statutory provision, and there- 
 fore not entitled to vote the stock. 4 The shares held by an es- 
 tate may be voted by the executors without a transfer to them 
 on the books of the corporation. 5 Stock held by or for the cor- 
 poration can not be voted either directly or through a trustee. 6 
 When one corporation has power to hold the stock of another 
 it may vote its stock in the same manner as an individual 
 stockholder. 7 But "in the absence of legislative authority 
 or sanction for such a course of proceeding it is against public 
 
 Merchants' Bank v. Cook, 4 Pick. 405. judgment against defendant for con- 
 In State v. Smith, 15 Ore. 98, it was version of the stock, because it had 
 held that the pledgee who had se- refused to transfer the same on its 
 cured a transfer to himself of the corporate books to the name of the 
 stock on the books of the corporation, pledgee before the foreclosure of the 
 under the authority of the express pledge, while still a mere pledgee, 
 language of the assignment of the ^oppin v. Buffum, 9 R. I. 513. 
 stock, empowering the pledgee to 2 Tunis v. Hestonville, etc., R. Co., 
 transfer the stock to his own name 149 Pa. St. 70. 
 
 upon the books, was nevertheless not 3 Stewart v. Mahoney, etc., Co., 54 
 
 entitled to vote the stock. The court Cal. 149. 
 
 held that the power to make the 4 Smith v. San Francisco, etc., R. 
 
 transfer on the books, although un- Co., 115 Cal. 584, 35 L. R. A. 309. 
 
 limited and without condition as to 5 Market St. R. Co. v. Hellman, 109 
 
 time when it might be exercised, Cal. 571. 
 
 could not lawfully be exercised until 6 American, etc., R. Co. v. Haven, 
 the pledgee had destroyed the equity 101 Mass. 398; Ex parte Holmes, 5 
 of the pledgor by foreclosure. This Cowen (N.Y.) 426; M'Neely v. Wood- 
 decision is clearly opposed to that of ruff, 13 N. J. L. 352. 
 the court in Nicollet, etc., Bank v. 7 Davis v. United States, etc., Co., 
 City Bank, 38 Minn. 85. 8 Am. St. 77 Md. 35. 
 Rep. 643, where the court affirms the
 
 SOS THE LAV* OF PRIVATE CORPORATIONS. § 472 
 
 policy to allow one corporation to purchase a majority of the 
 shares in another for the purpose of absorbing it, controlling 
 it, and effecting an unlawful consolidation with it, and a court 
 of equity, having jurisdiction in the premises, will restrain the 
 purchasing corporation from voting at an election in respect of 
 such shares." " 
 
 § 472. Right of bondholders to vote. — When the law confers 
 the voting power upon the stockholders, the corporation can 
 not, by a contract and by-law, confer it upon the bondholders. 
 Thus, where the constitution of the state conferred the power 
 to elect directors upon the stockholders, it was held that a by- 
 law which also gave the right to the holders of the bonds of 
 the corporation was invalid. The by-law was adopted in 
 pursuance of a contract entered into between the corporation 
 and certain individuals who sold a railroad to the corporation 
 and took the bonds and stock of the company in payment. 
 '• The provision made by the corporation, and contained in the 
 bonds and mortgage, that the holders of bonds might vote at 
 any and every meeting of stockholders, is subject to the same 
 objections as the by-laws. Being in violation of express statu- 
 tory and constitutional provisions, the agreement was inopera- 
 tive and void. Nor has such provision become binding by 
 subsequent ratification, acquiescence or estoppel. * * A 
 
 contract which the corporation could not make, itcould not rat i 1'y 
 or make valid by any subsequent act. If there was no power 
 to make it there would be equally a lack of power to confer it. "' 
 
 § 473. Voting by proxy. — At common law all votes must be 
 
 given in person.' There is no right to vote by proxy unless it 
 
 ie conferred by statute, charter, or by-law/ An invariable usage 
 
 ■Thompson Corps., § 8878. Mem- benefit the requiremenl of registry 
 phis, etc., R. Co. v. Wbods,88 Ala. exists, can nol refuse to recognize the 
 !'•.. \m. st. Rep. 81, 7 L. R. A. transferee after it wrongfully refuses 
 Clarke v. Central, etc., E. Co., 50 to permit a transfer. Robinson v. 
 15 I.. R. L. 683. Bee Bank, 96 N. Y. 641; [sham v. Buck- 
 pro. As between the trans- Ingham, 19N. Y.222. 
 i and the transferee there may be *Durkee v. People, 156 111. 856 
 Bpecial circumstances which will ena- Am. st. Rep. 840. 
 ble the ti to vote the stock, 'Taylor v. Griswold, ll N. .1. L 
 although ii i- aol transferred on the 222, 27 Am. Dec. S3. 
 buuks, The corporation, lor whose * Commonwealth v. Bringhurst, 103
 
 §473 
 
 CORPORATE MEETINGS AND ELECTIONS. 
 
 509 
 
 of a corporation to permit voting by proxy is as authoritative 
 as a by-law. 1 General power to enact by-laws includes the 
 power to authorize voting by proxy. 2 No particular form is 
 necessary. 3 The proxy need not be acknowledged or wit- 
 nessed. 4 It need not state the day of election. 5 The blank of 
 the day and hour of the meeting in proxies sent by a stock- 
 holder to the secretary may be filled in by the secretary after 
 their execution. 6 The general rule is that a stockholder can 
 not give an irrevocable proxy, 7 even for a valuable considera- 
 tion, 8 although it has been held that he may transfer the legal 
 title to a trustee for the purpose of voting, as the transfer is 
 presumably revocable at the will of the beneficial owner. 9 
 "Irrevocable proxies," not coupled with an interest, according 
 to this view, are revocable, but not necessarily void. 10 
 
 A right to vote by proxy can only be given by the legal 
 
 Pa. St. 134, 49 Am. Rep. 119; Craig v. 
 First Presbyterian Church, 88 Pa. St. 
 42; Taylor v. Griswold, 14 N.J. L. 
 222; Harben v. Phillips, L. R. 23 Ch. 
 Div. 14; In re St. Lawrence, etc., Co., 
 44 N. J. L. 529; Market St. R. Co. v. 
 Hellman, 109 Cal. 571 ; Commonwealth 
 v. Detwiler, 131 Pa. St. 614; People v. 
 Crossley, 69 111. 195 ; State v. Tudor, 
 5 Day 329; Phillips v. Wickham, 1 
 Paige Ch. (N. Y.) 590 ; Perry v. Tuska- 
 loosa, etc., Co., 93 Ala. 364. See note 
 to 27 Am. Dec. 60. 
 
 Archer v. Murphy, 26 Wash. L. 
 Rep. 98. Same principle, see Bank v. 
 Pinson, 58 Miss. 421, 38 Am. Rep 330; 
 Miller v. Esbach, 43 Md. 1. 
 
 2 Archer v. Murphy, 26 Wash. L. 
 Rep. 98. 
 
 8 "A stockholder who desires to ex- 
 ercise his right to vote on his stock by 
 proxy is undoubtedly bound to fur- 
 nish his agent with such written evi- 
 dence of the latter's right to act for 
 him as will reasonably insure inspec- 
 tors that the agent i-s acting by the 
 authority of his principal, but the 
 power of attorney need n* t be in any 
 prescribed form, nor be executed with 
 
 any peculiar formality. It is sufficient 
 that it appears on its face to confer the 
 requisite authority, and that it be 
 free from reasonable grounds of sus- 
 picion of its genuineness and authen- 
 ticity ; and the court in reviewing the 
 proceedings at an election must be 
 satisfied that the inspectors had rea- 
 sonable grounds for rejecting the 
 proxy." In re St. Lawrence, etc., Co., 
 44 N. J. L. 529; Maria v. Garrison, 13 
 Abb. New Cas. (N. Y.) 210. 
 
 4 In re Cecil, 36 How. Pr. (N.Y.) 477. 
 
 5 In re Townsend, 18 N. Y. Supp. 905. 
 
 6 Ernest v. Loma, etc., Co., 75 Law 
 T. Rep. N. S. 317. 
 
 7 See § 475; Woodruff v. Dubuque, 
 etc., R. Co., 30 Fed. Rep. 91 ; Griffith 
 v. Jewett, 15 Week. L. B. 419; In re 
 Director Germicide Co., 55 Hun 606. 
 
 8 Reed v. Bank of Newburgh, 6 Paige 
 (N. Y.) 337. 
 
 9 State v. Ohio, etc., R. Co., 6 Ohio 
 C. C. 415. See next section. 
 
 10 Brown v. Pacific, etc., Co., 5 
 Blatch. (C. C.) 525; Woodruff v. Du- 
 buque, etc., R. Co., 30 Fed. Rep. 91. 
 See Gage v. Fisher, 5 N. Dak. 297, 65 
 N. W. Rep. 809.
 
 510 THE LAW OF PRIVATE CORPORATIONS. § 474 
 
 owner of the shares, and in the manner authorized by the 
 charter or by-law. Under authority to give a proxy to "a 
 citizen of the United States," a valid proxy can not be given 
 to an alien. 1 After the death of a stockholder, a proxy must 
 be given by his executors. It can not be given by will, nor 
 are the executors bound to observe a provision in the will that 
 a proxy shall be given by them to a certain person. 2 A sale 
 of the stock will revoke the authority given a third person to 
 vote the stock at a stockholders' meeting. 3 Under a statute 
 which authorizes voting by proxy, a by-law providing that no 
 proxy shall be voted by any one who is not a stockholder of 
 the corporation is invalid. 4 
 
 § 474. Personal interest of stockholder— Motive governing 
 
 vote. — A shareholder has a legal right, at a meeting of the 
 shareholders, to vote for a measure, although he has a per- 
 sonal interest therein distinct from that of the other share- 
 holders. In such a meeting each shareholder represents him- 
 self and his own interests solely and does not act as trustee or 
 representative of others. 5 The motives of the stockholder can 
 not, as a general rule, be made the subject of judicial inquiry. 6 
 He may, therefore, vote upon a proposition to ratify a contract 
 made by the directors for the purchase of property by the cor- 
 poration from himself. 7 This rule is not changed by the fact 
 that the stockholder owns the majority of the stock. In such 
 a case the stockholder voted the stock in favor of ratifying a 
 contract which he had made with the corporation as a director, 
 and the supreme court of Canada ordered a rescission of the 
 contract. 8 Chief Justice Richie said : ''It does seem tome 
 
 in, , Barker, 6 Wend. N. Y.)609. Mathews v. Columbus Nut. Bank, 79 
 
 'Tunisv. Railroad Co., I !9Pa. si. 70. Fed. Rep. 558. 
 
 •Ryan v. 8eaboard, etc., R. Co., 89 "Gamble v. Water Co., 123 N. Y- 
 Rep.897. 91,97. 
 
 i Peoples', etc . Bani v. Sup. Court, B For an exception to tin's rule. Bee 
 
 l04Cal.649,29L. R.A.844,48 \m.st. Memphis, etc., R. Co. v. Woods, 88 
 
 147, \ stockholder ie not es- Ua. 880, L8 Am. St. Rep. 81. See § 
 
 ..l to question the validity ol a 471, supra. > 
 
 meeting by the participation o! his 'Bjorngaard v. Goodhue, etc., Bank 
 
 proxy therein, as the latter ia author- 19 Minn 188. 
 
 Ized to vote only at a lawful meeting. 'Beatty v. Transportation <'<>., 12 
 
 Canada 8, 0. 598.
 
 § 474 CORPORATE MEETINGS AND ELECTIONS. 511 
 
 that fair play and common sense alike dictate that if the 
 transaction and act of the director are to be confirmed, it 
 should be by the impartial, independent and intelligent judg- 
 ment of the disinterested shareholders, and not by the inter- 
 ested director himself, who should never have departed from his 
 duty." On appeal, the judgment was reversed by the judicial 
 committee of the Privy Council. 1 "The question involved," 
 said the court, " is doubtless novel by its circumstances, 
 and the decision is important in its consequences. It would 
 be very undesirable even to appear to relax the rules relating 
 to dealings between trustees and beneficiaries ; on the other 
 hand, great confusion would be introduced into the affairs of 
 joint stock companies if the circumstances of shareholders vot- 
 ing in that character at general meetings were to be examined, 
 and their votes practically nullified if they also stood in some 
 fiduciary relation to the company. * * * r phe only unfair- 
 ness or impropriety which, consistently with the admitted facts, 
 could be suggested, arises out of the fact that the defendant 
 possessed a voting power as a shareholder which enabled him, 
 and those who thought with him, to adopt the by-law, and 
 thereby either to ratify and adopt a voidable contract, or to 
 make a similar contract, which latter seems to have been what 
 was intended. * * * It may be right that, in such cases, 
 the opposing minority should be able, in a suit like this, to 
 challenge the lien action, and to show that it is an improper 
 one, and to be freed from the objection that a suit with such an 
 object can only be maintained by the company itself. But the 
 constitution of the company enabled the defendant to acquire 
 the voting power; there was no limit upon the number of shares 
 which a stockholder might hold, and for every share so held he 
 was entitled to a vote. * * He had a perfect right to acquire 
 further shares, and to exercise his voting power in such a 
 manner as to secure the election of directors whose views upon 
 policy agreed with his own, and to support those views at any 
 shareholders' meeting; the acquisition of the United Empire 
 was a pure question of policy, as to which it might be expected 
 that there would be differences of opinion, and upon which the 
 L. R. 12 App. Cas. 598.
 
 512 THE LAW OF PRIVATE CORPORATIONS. § 474 
 
 voice of the majority ought to prevail; to reject the votes of 
 the defendant upon the question of the adoption of the by-law 
 would be to give effect to the views of the minority, and to dis- 
 regard those of the majority." 
 
 Lord Justice Mellish said: "I am of opinion that, although 
 it may be quite true that the shareholders of a company may 
 vote as they please, and for the purpose of their own interests, 
 yet that the majority of shareholders can not sell the assets 
 of the company and keep the consideration." 1 In comment- 
 ing upon this language, Sir George Jessel said: 2 "A man 
 may be actuated in giving his note by interests entirely 
 adverse to the interest of the company as a whole. He 
 may think it more for his particular interest that a certain 
 course may be taken, which may be, in the opinion of others, 
 very adverse to the interests of the company as a whole, but 
 he can not be restrained from giving his note in what way he 
 pleases because he is influenced by that motive. There is, if 
 I may say so, no obligation on a shareholder of a company to 
 give his vote merely with a view to what other persons may 
 consider the interests of the company at large. He has a right, 
 if he thinks fit, to give his vote for motives or promptings of 
 what he considers his own individual interests." 
 
 But a stockholder is not entirely free from obligation to the 
 other stockholders. Thus, a contract between two stockholders 
 and a third person, by which he was to purchase a part of their 
 stock at par, on condition of being elected treasurer of the cor- 
 poration, with a condition that the stock should be taken back, 
 in case it should be desirable for any reason to dispense with 
 the plaint ill's services as treasurer, was held invalid. The pur- 
 pose ;in<l effecl of the contract was to influence the stockholders 
 in the decision of a question affecting the private rights of 
 others, by considerations foreign t<> these rights. The promisee 
 was placed under direct inducement t<> disregard his duties to 
 other members "f the corporation who had ;i right to demand 
 In- disinterested action in the selection of suitable officers. He 
 in a relation of trust and confidence, which required him 
 'Menier v. Hoopers, etc., Works, ■lVmlerv. l.uHhington, L. R. 6 Ch. 
 L. El, 8 Ch, App, Oa L»iv. 70, 71.
 
 § 475 CORPORATE MEETINGS AND ELECTIONS. 513 
 
 to look only to the best interests of the whole, uninfluenced by- 
 private gain." ' 
 
 § 475. Voting trusts and agreements, — Numerous devices 
 have been tried by those who were in control of a corporation, 
 for the purpose of keeping a present majority united for the 
 future. Some such agreements have been sustained, but the 
 courts have as a rule frowned upon them as having a monopo- 
 listic tendency, being in restraint of trade, and against public 
 policy, because severing the voting power from the ownership 
 of the stock. Thus, proxies in form irrevocable have been held 
 revocable at pleasure. The plan of placing the stock in the 
 hands of trustees, with power to hold and vote the same, and 
 issuing to the stockholders certificates specifying the amount of 
 stock deposited and the beneficial interest of the stockholder 
 therein, failed because the courts held that the holders of the 
 certificates could at any time demand the return of the stock 
 to them. 2 Agreements not to sell their stock for a certain time 
 without the consent of the other stockholders, or to purchas- 
 ers agreeable to the old stockholders, were held illegal because 
 in restraint of trade. 3 "The most effective way," says Cook,* 
 "in which the majority of all the stock in a corporation may 
 be pooled or tied up seems to be selling or transferring it to 
 another corporation formed for that purpose. Such corpora- 
 tion may be organized under the laws of many of the states. 
 The objection to this plan is that it enables the directors of 
 the second corporation to sell the stock at any time, and it in- 
 volves, not merely a temporary pooling of the stock, but a per- 
 manent parting with the title and interest in it." 
 
 § 476. Voting agreements continued. — By the weight of 
 authority the law does not absolutely forbid the separation of 
 the voting power from the ownership of the stock. Each case 
 must be determined by its own facts and tendencies. 5 In Ala- 
 
 1 Guernsey v. Cook, 120 Mass. 501. See an article by Mr. Justice Baldwin 
 See Gage v. Fisher, 5 N. Dak. 297, 31 in 1 Yale Law Jour. 1. 
 
 L. R. A. 557. 3 Fisher v. Bush, 35 Hun (N. Y.) 
 
 2 Woodruff v. Dubuque, etc., R. Co., 641. 
 
 30 Fed. Rep. 91 ; Hafer v. New York, * Cook Corp. (3d ed), § 622. 
 etc., R. Co., 14 Weekly Law Bui., 68. 5 Fishery. Bush, 35 Hun (N. Y.)641. 
 33— Private Corp. See In re Argus Co., 138 N. Y. 557,
 
 514 THE LAW OF PRIVATE CORPORATIONS. § 476 
 
 baraa it was held that there was no objection to a contract by 
 which the stockholders irrevocably surrendered their voting 
 power to a trustee for the benefit of the creditors of the corpo- 
 ration. 1 An agreement between several stockholders, whereby 
 the stock is to be placed with a trust company for a period of 
 six months, and not to be sold during that time, is legal 
 when there is no provision depriving the owner of the right 
 to vote on the stock. The contract being made for the purpose 
 of preventing the sacrifice of the stock, was held not void as 
 against public policy, in restraint of trade, or objectionable 
 because suspending the power of alienation. 2 In California 
 it was held that there may legally be a separation of the 
 voting power and the ownership of stock, and that the own- 
 ers of the majority of stock may lawfully agree to be bound 
 by the will of the majority, in voting the stock. It was 
 agreed that each one would hold his own shares, but that 
 they should be voted for five years in. the way to be deter- 
 mined by the majority of the stock included in the agree- 
 ment. 3 In Ohio, an agreement between stockholders to trans- 
 fer their stock to a depositary, who should vote it as directed 
 by a committee of the stockholders for the purpose of adjust- 
 ing differences between the holders of common and preferred 
 shares, was sustained. It was held not to be a voting trust, 
 but merely " a convenient method by means of which distant 
 ;in<l widely separated shareholders became enabled indirectly 
 to participate in the control and management of the company, 
 and from which each could recede at any time ami demand 
 the return of his stock without violating any term of the 
 agreement. The depositary is a proxy required to vote the 
 k as directed by the committee. " It was, therefore, held 
 thai directors elected by the vote of the depositary were le- 
 gally elected. 1 A number of shareholders may agree to com- 
 bine for the purpose of controlling a corporate election and 
 
 'Mobile, etc., I'. Co. v. Nicholas, 8 Siniili v. Ban Francisco, (•(<•., R. 
 
 Co., 1 1 » Oal. 584, 85 L. R. \. 809. 
 •Williams v. Montgomery, lis N. ' Ohio, etc., R. Co. v. State, 49 Ohio 
 thi • ca le b i i" teal at St. 868. 
 alienability of personal prop<
 
 § 477 CORPORATE MEETINGS AND ELECTIONS. 515 
 
 the election of such officers as they deem for the best interests 
 of the corporation. 1 A majority who are in accord as to the 
 future policy of a corporation which is to be formed, may en- 
 ter into a valid agreement for its future management and con- 
 trol, if no statutory provisions are violated. 2 But an agree- 
 ment by a majority of the stockholders who control the board 
 of directors to the effect that the corporation shall be managed 
 by certain persons is invalid. 3 In North Carolina it was held 
 that an agreement by which the shares were to be transferred 
 to trustees, to be voted as directed by a majority of the stock- 
 holders for a period of five years, unless the holders of two- 
 thirds of such stock should vote to end the trust, was con- 
 trary to public policy and void as against the rights of an as- 
 signee of one of the trustees' certificates to have the shares 
 thereby represented issued to him in his own name. 4 
 
 § 477. Voting agreements continued. — In the Alabama 
 case referred to in the previous section, 5 it appeared that the 
 corporation was in the hands of a receiver, and that its total 
 indebtedness was in excess of its assets. An arrangement was 
 made between the creditors and the company whereby the 
 creditors accepted debentures in lieu of their original evidences 
 of debt and the stockholders assigned their stock to a com- 
 mittee of reorganization, which gave to a trust company an 
 irrevocable power of attorney to vote the stock so long as any 
 of the debentures were outstanding. 
 
 The shareholders who thus assigned their stock received in 
 exchange new certificates which entitled them to all the priv- 
 ileges of ownership of the shares, except to the voting power 
 which had been granted to the trust company. Several years 
 after this arrangement had been made, one of the stockhold- 
 ers denied the right of the trust company to vote his stock 
 aud filed a bill for an injunction. It was held that the agree- 
 
 1 Faulds v. Yates, 57 111. 416; Have- and see Woodruff v. Wentworth, 133 
 
 myer v. Havemyer, 11 J. & S. 506, 86 Mass. 309. 
 
 N. Y. 618; Beitman v. Steiner Bros., 4 Harvey v. Linville, etc., Co., 118 
 
 98 Ala. 241. N. C. 693, 32 L. R. A. 265. 
 
 * King v. Barnes, 109 N. Y. 267. 5 Mobile, etc., R. Co. v. Nicholas, 98 
 
 8 Wilbur v. Stoepel, 82 Mich. 344, Ala. 92.
 
 516 THE LAW OF PRIVATE CORPORATIONS. § ^77 
 
 ment was valid and binding, and the court said that, "if there 
 were no precedents, upon principle we should hold that in deter- 
 mining the validity of an agreement which provides for the 
 vesting of the voting power in a person other than the stock- 
 holder, regard should be had to the condition of the parties, 
 the purpose to be accomplished, the consideration of the un- 
 dertaking, interests which have been surrendered, rights ac- 
 quired, and the consequences to result. The law does not 
 make contracts for parties, neither will it annul them, except 
 to preserve its own majesty and to conserve the greater interest 
 of the public. * * * The execution of the decrees 
 of foreclosure by a sale of the property, and the prosecu- 
 tion of the admitted claims against the railroad company, 
 would necessarily have transferred the property to other parties 
 and wiped out every vestige of present available interest or 
 right of the stockholder or hope of future profit. The credit- 
 ors held the vantage ground, and in law their rights and interest 
 were paramount to those of the stockholders. The latter might 
 accept propositions, but were in no condition to dictate terms. 
 These were the circumstances under which the settlement and 
 agreement were made. Stated in short, the compromise and 
 settlement led to the issue of the debentures to the creditors in 
 lieu of their original evidences of debt and a mortgage upon 
 certain property to secure them ; a plan for a sinking fund for 
 their benefit, and the right and privilege under an irrevocable 
 power of attorney to vote the stock until the debentures were 
 paid. The power of attorney was not in perpetuity or abso- 
 lute, but only until the debentures were paid, and a fair con- 
 struction, under the circumstances, required that the voting 
 power should be used fairly and honestly to this end. 
 • * * Good faith on the part of the assenting stock- 
 holdere, whose interests were Hms preserved, and to those who 
 accepted the debentures in lieu of other evidences of debt and 
 irities, and to those who have sinee purchased them upon 
 the faith of the plan of compromise, demand thai the terms of 
 the contracl be fulfilled. Tested by any principle of law, legal
 
 § 477 CORPORATE MEETINGS AND ELECTIONS. 517 
 
 or equitable, the agreement was not only valid, but fair, at 
 least, to the corporation and stockholders." 
 
 Even where there can not ordinarily be a separation of the 
 ownership of the shares and the voting power, there may be 
 such a division and conflict of interests as to justify it. In 
 one case l it appeared that the railway corporation was in great 
 financial difficulties, and the creditors were threatening to be- 
 gin foreclosure proceedings. This would have been injurious 
 to the rights of all the stockholders, and as a compromise it 
 was agreed that the creditors' securities and the certificates of 
 stock should be placed under the control of a reconstruction 
 board with power to adjust priorities, execute mortgages and 
 issue new certificates of stock. This board was armed with 
 wide discretion, but was to act with the advice and consent of 
 another body known as the " voting trust," which consisted 
 of five persons. This voting trust was to supervise the recon- 
 struction of the company, and when that was accomplished 
 the certificates of stock were to be issued to them in order 
 that they might elect a president and manager of the road. 
 They were to hold the legal title to the stock, which was to be 
 transferable only on their books, but they were to give the 
 persons who surrendered their stock certificates a beneficial 
 interest, devoid of the right to vote the stock. The court said: 
 " Under the statutes of this state, and on general principles, 
 the right to vote on stock can not be separated from the own- 
 ership in such sense that the elective franchise shall be in 
 
 1 Shelmerdine v. Welsh, 20 Phila. York, etc., R. Co., 14 Weekly Law 
 Rep. 199, Hare, J., 2 Smith's Corp. Bulletin 68, an agreement of a similar 
 Cas. 1039. In Vanderbilt v. Bennett, character, by which the stock was 
 6 Pa. Co. Ct. R»p. 193, 2 Smith's placed in the hands of the representa- 
 Corp. Cas. 1029, an agreement by tive of a rival company, was held in- 
 which the shares were vested in certain valid, " both on the ground that the 
 trustees who were to have perpetual power is denied to one corporation 
 power to vote the same, for the pur- thus to acquire control of another, 
 pose of carrying out the purpose and and that the stockholder can not 
 policies defined in the agreement, was barter away the right to vote upon 
 invalid. At the most it was said to his stock." See, also, Griffith v. Jew- 
 be simply a power of attorney or ett, 15 Weekly Law Bulletin 419; 
 proxy, and revocable at the option Moses v. Scott, 84 Ala. 608, 4 So. Rep. 
 of any party to it. In Hafer v. New 742.
 
 518 THE LAW OF PRIVATE CORPORATIONS. § 478 
 
 one man, and the entire beneficial interest in another, nor to 
 any extent, unless the circumstances take the case out of the 
 general rule. It matters not that the end is beneficial and 
 the motive good, because it is not always possible to ascertain 
 objects and motives, and if such a severance were permissible 
 it might be abused. The person who votes must consequently 
 be an owner, but it does not follow that he must be the only 
 one. If, for instance, stock is pledged as a collateral, whether 
 the debtor or creditor shall vote depends on the terms on 
 which the pledge is made. The power is, under these circum- 
 stances, necessarily, to some extent, severed from the owner- 
 ship, and the parties may, consequently, determine on which 
 side it shall lie. So much is conceded on each side of this 
 controversy, and the question is, can the debtor and creditor 
 agree to lodge the vote in some one who is to act for both so 
 long as the debt remains and the stock is held as surety for 
 its payment?" The court held that there is no reason that 
 forbids a stockholder to transfer his shares to one man as se- 
 curity for a debt due another, with a stipulation that the 
 holder should have the right to vote, and that the case was not 
 changed by the fact that the intermediary gave the debtor a 
 certificate that the equitable ownership was in him, subject to 
 the payment of the amount due. It further appearing that 
 the trustee had duties to perform, that is, was not a dry trust, 
 the agreement was held valid. 
 
 § 478. The Shepaug Voting Trust cases. — In these cases the 
 supreme court of Connecticut held that it was contrary to pub- 
 lic policy to allow the shareholders to deprive themselves of the 
 power to vole their shares, and thai an irrevocable proxy can 
 qoI be given permanently or for a definite period to one who 
 haa in- beneficial interest or title in the shares. 1 The voting 
 power was placed in a committee, and the court said: "The 
 character ol this trust, bo Ear as the trust company is concerned, 
 is a dry trust. The trusl company has no beneficial interest 
 
 • The Shepaug Voting Trusl Oases, 60 Conn. (Supp.) 553. SeeGrifflthv. 
 Jewett, !•"> W( i 1 ly Law Bulletin 419.
 
 § 479 CORPORATE MEETINGS AND ELECTIONS. 519 
 
 whatever in the shares of stock which are made the subject of 
 the trust. They have no interest in favor of which they can 
 claim a continuance of the trust, neither has the committee 
 named in the trust any interest which they, as such commit- 
 tee, can set up for the continuance of the trust. * * * 
 It is the policy of our law that an untrammeled power to vote 
 shall be incident to the ownership of the stock, and a contract 
 by which the real owner's power is hampered by a provision 
 therein that he shall vote just as somebody else dictates, is ob- 
 jectionable. I think it is against the policy of our law for a 
 stockholder to contract that his stock shall be voted just as 
 some one who has no beneficial interest or title in or to the 
 stock directs, saving to himself simply the title, the right 
 to dividends, and perhaps the right to cast the vote directed, 
 willing or unwilling, whether it be for his interest, for the in- 
 terest of other stockholders, or for the interest of the corpora- 
 tion, or otherwise. This I conceive to be against the policy 
 of the law, whether the power so to vote be for five years or 
 for all time. It is the policy of our law that ownership of 
 stock shall control the property and the management of the 
 corporation, and this can not be accomplished, and this good 
 policy is defeated, if stockholders are permitted to surrender 
 all their discretion and will in the important matter of voting, 
 and suffer themselves to be mere passive instruments in the 
 hands of some agent who has no interest in the stock, equitable 
 or legal, and no interest in the general prosperity of the cor- 
 poration." 
 
 § 479. Specific enforcement of such contracts. — A court of 
 equity will not enforce specific performance of a contract by 
 which one person agrees that another shall control his stock 
 without purchasing it, where the sole object is to secure con- 
 trol of the corporation through the use of the stock which the 
 plaintiff is seeking to acquire. Corporate stock comes within 
 the general rule that the specific performance of a contract for 
 the sale of personal property will not be enforced unless under 
 exceptional circumstances. 1 
 
 Eckstein v. Downing, 64 N. H. 248, 9 Atl. Rep. 626; Appeal of Goodwin,
 
 520 THE LAW OF PRIVATE CORPORATIONS. § 480 
 
 § 480. Number of votes by each stockholder. — At common 
 law each shareholder was entitled to one vote irrespective of 
 the number of shares held, but by statute and custom it is 
 now the rule to allow one vote for each share of stock. 1 In 
 Taylor v. Griswald 8 a by-law which gave each shareholder a 
 vote for each share of stock held by him was held invalid, as 
 contrary to the common law which gives to all members equal 
 rights, and in violation of the charter. The court said : " The 
 charter, if not in terms, yet in its spirit and legal intend- 
 ment, gives each member the same rights, and, consequently, 
 but one vote, whereas this by-law gives them unequal rights 
 and an unequal number of votes. It makes one a member 
 for one purpose, and another a member for another purpose. 
 It imposes a test or qualification unknown to the charter, by 
 which to determine how many votes a member may give, 
 whether one, five, ten or fifty. In short, a by-law excluding 
 a member from office, or from the right to vote at all, unless 
 he owns five, ten or twenty shares, would not be a more palpa- 
 ble, though it might be a more flagrant, violation of the charter. 
 A man with one share is as much a member as a man with fifty, 
 and it is difficult to perceive any substantial difference between 
 a by-law excluding a member with one share from voting at all, 
 and a by-law reducing his one vote to cipher by giving another 
 member fifty or a hundred votes." But in modern times it is 
 the interest and not the member which votes, and the practice of 
 giving the shareholder a vote for each share he holds has be- 
 come so well established that it is fair to imply an intention to 
 follow tliis custom in the absence of any contrary indication. 3 
 A by-law containing such a provision is, of course, valid. 4 
 
 etc., Co.,117 Pa. 614, 12 Atl. Rep. 736. Mark v. De Bardeleben, etc., Co., 96 
 
 In Gage v. Fisher,6 N. Dak. 297, 66 Ah. 396, 9 L. R. \. 650; Common- 
 
 N. \v. Rep. 809, this subjecl is die- wealthv. Detwiller, 13] Pa. St. 614. 
 
 cussed by Chief Justice Corliss with Ml N.J. L. 222 (1884), 27 Am. Dec. 
 
 hi- usual clearness and thorough- 83. Bee Angel] & Ames Corps., 62; 
 
 Res v. < Hnever, 8 T. R. 782 ; Res v. 
 
 1 Procter, etc., Co. v. Finley, 98 Ky. Decant, I sir. 586, Harvard l. aw 
 
 1 tati the number ol l»v\ .. Nov., 1888, p. 156. 
 
 which may be cast by one stock- :) Morawetz Priv. Corp., § 476a. 
 
 bolder is limited by statute. Bee 'Commonwealth v. Detwiller, 181
 
 § 481 CORPORATE MEETINGS AND ELECTIONS. 521 
 
 § 481. Cumulative voting. — Under the system of cumulative 
 voting which has been adopted in a number of states the mi- 
 nority stockholders are authorized to cast a greater number of 
 votes for a particular candidate than they would be entitled to 
 under the ordinary method of casting one vote for each share 
 of stock held. 1 This enables the minority to have a represen- 
 tation on the board of directors, and thus to a certain extent 
 limits the control of the majority over the business policy of 
 the corporation. The right does not exist unless conferred by 
 statute. 2 This method of voting can not be forced upon the corpo- 
 ration contrary to the wishes of the majority of stockholders, as 
 it would impair their contractual rights, unless the state has re- 
 served power to alter, amend, or repeal the corporate charter. 3 
 
 § 482. The quorum and majority. — A quorum is such a 
 number of the members of a body as is necessary to transact 
 the business at a meeting thereof. 1 Less than a quorum have 
 power only to meet and adjourn. The statute or by-laws 
 generally provide that a majority of the stocks shall consti- 
 tute a quorum at a stockholders' meeting, and a majority in 
 
 Pa. St. 614, 18 Atl. Rep. 990; Hays v. poration reserves the right to alter 
 
 Commonwealth, 82 Pa. St. 518. and amend, and in the latter part of 
 
 'See Wright v. Central, etc., Co., 67 the first section requires that all the 
 
 Cal. 532, 8 Pac. Rep. 70, and State v. rules, by-laws and regulations shall 
 
 Pierce, 51 Kan. 241, 29 Pac. Rep. 565, not he repugnant to any law of the 
 
 for construction of constitutional pro- state then in force, or which might be 
 
 visions. passed under the power reserved. In 
 
 2 State v. Greer, 78 Mo. 188; Hays Hays v. Com., 82 Pa. St. 518, such a 
 
 v. Comw., 82 Pa. St. 518 ; Baker's App., mode of voting was held to be within 
 
 109 Pa. St. 461; Smith v. Railroad Co., the protection of the constitution of 
 
 64 Fed. Rep. 272. the United States, as within the obli- 
 
 3 Attorney-General v. Looker, 111 gation assumed by grant of the charter. 
 
 Mich. 498, 69 N. W. Rep. 929; Cross I do not propose to discuss this ques- 
 
 v. Railway Co., 35 W. Va. 174; State tion. Here the power to alter is re- 
 
 v. Stockley, 45 Ohio St. 304 ; Pierce v. served, and such mode of voting is not 
 
 Comw., 104 Pa. St. 150. In Cross v. irrepealable or beyond amendment. 
 
 W. Va., etc., R. Co., 35 W. Va. 174, State v. Miller, 30 N. J. L. 368, 86 Am. 
 
 the court said: "The state constitu- Dec. 188 and notes; Murray v. 
 
 tion and laws authorizing a stock- Charleston, 96 U. S. 432; Railroad Co. 
 
 holder to cumulate his votes consti- v. Gaines, 97 U. S. 697." 
 
 tutes no such impairment, for the rea- 4 Citizens', etc., Co. v. Shortwell, 8 
 
 son, among others, that the legislature Allen (Mass.) 217. 
 in the last section of the act of incor-
 
 522 THE LAW OF PRIVATE CORPORATIONS. § 482 
 
 number at a directors' meeting. 1 A majority of a quorum 
 may bind the corporation. 2 A statute which provides for 
 the adoption of a by-law by a " majority of the stockhold- 
 ers " means a majority in interest of the stockholders, and 
 not necessarily a majority in number. 3 Where the charter 
 and by-laws are silent on the subject, the common-law rule is 
 that such of the stockholders as actually assemble at a prop- 
 erly convened meeting, although a minority of the whole 
 number, and representing only a minority of the stock, con- 
 stitute a quorum for the transaction of business, and may 
 express the corporate will, and the body will be bound by 
 the acts. 4 "There is a distinction," says Chancellor Kent, 
 "between a corporate act to be done by a select and defi- 
 nite body, as by a board of directors, and one to be per- 
 formed by the constituent members. In the latter case a 
 majority of those who appear may act, but in the former a 
 majority of the definite body must be present, and then a 
 majority of the quorum may decide. This is the general rule 
 on the subject., and if any corporation has a different modifi- 
 cation of the expression of the binding will of the corpora- 
 tion, it arises from the special provisions of the act or char- 
 ter of incorporation." 5 
 
 It has been held that a majority of the stock represented at 
 tin' meeting must be voted, 6 but the prevailing rule is that 
 those present and not voting are assumed to vote in the af- 
 firmative, and that a majority of the legal votes actually cast, al- 
 
 'Foster v. Mullanphy, etc., Co., 92 3 Weinburg v. Union, etc., 1\. Co., 
 
 Mo. 79; Ellsworth, etc., Co.v. Fau , 55 N. .1. Eq. 640. 
 
 79 Maine 440; Chase v. Tuttle, 55 'Morrill v. Little Falls, etc., Co., 58 
 Conn. 455; Bargenl v. Webster, LS Minn. 371,21 L. R. A. 174; Craig v. 
 Met. 497. Wl,:,i shall constitue a Firs! Presbyterian Church, 88 Pa. St. 
 quorum may be determined by a by- r_'; Columbia, etc., Co. v. Meier, 89 
 law. A by-law providing thai two- Mo. 58; Ex parte Willcocks, 7 Cow. 
 thirds of the stock shall be necessary 402; Rex v. Varlo, I Cowp. 248, 
 for a quorum may l>" repealed by a "Com., vol. 2, p. 298. See, also, i 
 vote of " majority of ihe stock. Rich- Kyd Corp., p. 401; Ex parte Will- 
 on v. Union Cong. Society, 58 cocks, 7 Cowp. (N. V.) 402; Elliotl 
 N. II Pub. Corp., § 257. 
 
 1 Field v. Field, 9 Wend. N.Y.)894. » Oomw. v. Wickersham, 66 Pa. Bfc 
 
 184.
 
 § 483 CORPORATE MEETINGS AND ELECTIONS. 523 
 
 though a minority of the votes present, prevails. 1 When a 
 meeting is duly called and proper notice given, it is not in- 
 validated by the fact that one of the stockholders is non compos 
 mentis, or under other legal disability. 2 If the rule were other- 
 wise " the legal incapacity of a stockholder, such as coverture, 
 infancy or insanity, would operate as an effectual obstacle to 
 a valid assembly of any aggregate corporation. The law con- 
 fers the attribute of individuality on the entire body consti- 
 tuting a corporation, and in which the individuals are 
 merged. When duly assembled, the corporation itself becomes 
 the individual or person whose acts and proceedings the 
 law alone can regard. If, therefore, it is legally called to- 
 gether, the law presumes that the individual members are 
 competent to transact the business." 
 
 The phrase, " holding at least one-third of the shares of 
 stock," in a by-law requiring that number for a quorum, re- 
 fers to the stock issued and not to the stock authorized, at 
 least when less than one-third of the authorized stock has been 
 issued. 3 
 
 It requires at least two to constitute a ''meeting." One 
 individual can not hold a meeting, although he is the owner 
 of a majority of the stock. 4 It has been held, however, that 
 where one person owns the entire stock, he may bind the cor- 
 poration by contract. 5 
 
 § 483. Powers of the majority to manage the corporation. — 
 
 The majority of a corporation means that portion of the stock- 
 holders present at a general meeting who are entitled to con- 
 trol the corporation by their votes. 6 The right of the majority 
 
 1 State v. Chute, 34 Minn. 135; First L. J. (Q. B.) 104, one stockholder 
 Parish v.Stearns, 21 Pick. (Mass.) 148. held a meeting, transacted the busi- 
 
 2 Stebbins v. Merritt, 10 Cush. ness, voted himself a vote of thanks 
 (Mass.) 27. and adjourned. See Morrill v. Little 
 
 3 Castner v. Twitehell, etc., Co., 91 Falls, etc., Co., 53 Minn. 371. 
 
 Maine 524, distinguishing Ellsworth, 5 Swift v. Smith, 65 Md. 428. But 
 
 etc., Co. v. Faunce, 79 Maine 440. see Button v. Hoffman, 61 Wis. 20. 
 
 4 England v. Dearborn, 141 Mass. 6 Morawetz Priv. Corp., § 476. In 
 
 590; Hopkins v. Roseclare, etc., Co., Chollar, etc., Co. v. Wilson, 66 Cal. 
 
 72 111. 373. In Sharpe v. Dawes, 46 374, the words "majority of share-
 
 524 THE LAW OF PRIVATE CORPORATIONS. § 484 
 
 to control is implied in the contract of membership, and they 
 have supreme authority within the scope of the corporate 
 powers to direct the policy of the corporation. 1 Every person 
 who becomes a member agrees, by necessary implication, "that 
 he will be bound by all the acts and proceedings within the 
 scope of the powers conferred by the charter, which shall be 
 adopted or sanctioned by vote of the majority of the corpora- 
 tion, duly taken and ascertained according to law." 1 
 
 But this power does not extend to changing the scope and 
 object of the corporation, or, except under exceptional circum- 
 stances, to dissolving the corporation before the expiration of the 
 time fixed in the charter. 8 The majority of the stockholders can 
 not exercise powers which are vested in the board of directors 
 by the charter. 4 "The holders of a majority of the stock of a 
 corporation," says Judge Baxter, "may legally control the 
 company's business, prosecute its general policy, make them- 
 selves its agents, and take reasonable compensation for their 
 services. But in thus assuming the control, they also take 
 upon themselves the correlative duty of diligence and good 
 faith. They can not lawfully manipulate the company's busi- 
 ness in their own interests to the injury of other stockholders. 5 
 
 § 484. Rights of the minority. — While the majority of the 
 stockholders is entitled to control the policy and general busi- 
 ness of the corporation, this power must not be used for the 
 purpose of defrauding the minority. 6 In a case where this 
 
 holders," as used ina Btatute, wen- *McCullough v. Moss, 5 Denio 
 
 construed to mean the majority of all (N.Y.)567. The judgment of the di- 
 
 as holding shares, and not the rectors will nol be controlled by the 
 
 holders of a majority of the stuck. courl al the instance of a majority of 
 
 1 See § 132, supra. the stockholders. Wright v. Lee, 2 
 
 i Durfee v. Old Colony, etc., R. Co., S. Dak. 596. 
 
 5 Allen (Mass.) 230; Alexander v. 'Meeker v. [ron Co., 17 Fed. Rep. 
 
 Searcy, 81 Ga. 536; Meeker v. Win- 18. 
 
 throp, etc., Co., 17 Fed. Rep. 18, s. c. 8 See § 431, supra; Bjorngaard v. 
 
 109U.8. 180; [rvin v. Railway Co., Good! etc., Bank, 49 Minn. 483; 
 
 16; ] »udley v. Kentucky < [amble v. Queens, etc.,( V. 123 V Y. 
 
 High School 9 Bush Ky 1676. 91; Commonwealth v. Cullen, IS Pa. 
 
 lartoo v. Association, ill 1ml. St. L33; Chicago, etc., Co. v. Ferkes 
 
 226, L6H E. Rep. : (III. i, :;u V E, Rep. 667; Fougerayv.
 
 § 484 CORPORATE MEETINGS AND ELECTIONS. 525 
 
 was attempted the court said: 1 " Plainly, the defendants have 
 assumed to exercise a power belonging to the majority, in or- 
 der to secure personal profit to themselves, without regard 
 to the interests of the minority. They repudiate the suggestion 
 of fraud, and plant themselves upon their right as a majority to 
 control the corporate interests according to their discretion. 
 They err if they suppose that a court of equity will tolerate a 
 discretion which does not consult the interests of the minority. 
 It can not be denied that minority stockholders are bound 
 hand and foot to the majority in all matters of legitimate ad- 
 ministration of the corporate affairs; and the courts are power- 
 less to redress many forms of oppression, practiced upon the 
 minority under a guise of legal sanction, which fall short of 
 actual fraud. This is a consequence of the implied contract of 
 association by which it is agreed in advance that a majority 
 shall bind the whole body as to all transactions within the 
 scope of the corporate powers. But it is also the essence of the 
 contract that the corporate powers shall only be exercised to 
 accomplish the objects for which they were called into exist- 
 ence, and that the majority shall not control these powers to 
 pervert or destroy the original purposes of the corporation.' ' 
 
 The minority is entitled to be heard, and the majority can 
 not arbitrarily refuse to hear arguments against the proposi- 
 tion before the meeting. 8 But a court of equity will not re- 
 Cord (N. J. Ch.), 24 Atl. Rep. 499. abuse of trust, or misappropriation 
 See Barr v. Pittsburg, etc., Co., 51 of corporate funds, at the instance of 
 Fed. Rep. 33. a single shareholder, to grant relief, 
 
 1 Wallace, J., in Ervin v. Railway and compel a restitution ; and where 
 Co., 27 Fed. Rep. 625. See, also, the holders of the majority of stock 
 Miner v. Belle Isle, etc., Co., 93 Mich, control the directorate, and are them- 
 97, 17 L. R. A. 412; Livingstone v. selves the wrongdoers, without any 
 Lynch, 4 John. Ch. 573 ; Hutton v. showing that the directors have been 
 Hotel Co., 2 Drew & Sm. 514; Brewer requested, or the corporation has re- 
 v. Boston, etc., Co., 104 Mass. 378; fused, to act. Dodge v. Woolsey, 18 
 Kean v. Johnson, 9 N. J. Eq. 401; How. 331; Pond v. Railway Co., 12 
 Rollins v. Clay, 33 Maine 132; Clear- Blatchf. 280; March v. Railway Co., 
 water v. Meredith, 1 Wall. 25 ; Clinch 40 N. H. 548 ; Allen v. Curtis, 26 Conn, 
 v. Financial Corp., L. R. 4 Ch. App. 456; Hersey v. Veazie, 24 Maine 9. 
 117. There is no doubt of the power 2 The majority can not exclude mi- 
 of a court of equity, in case of fraud, nority from the corporate meeting or
 
 526 THE LAW OF PRIVATE CORPORATIONS. § 485 
 
 strain the contemplated action of the majority unless it clearly 
 appears that it is so much opposed to the true interests of the 
 corporation as to lead to the clear inference that no one so acting 
 could be influenced by an honest desire to advance the interests 
 of the corporation. An attempt by the majority to exercise a 
 power not possessed by it may result in releasing minority 
 stockholders from liability on their stock subscriptions. 1 
 
 § 4S5. Power of majority to wind up the business. — A cor- 
 poration can not dissolve itself, and possibly thus defeat the 
 just rights of its creditors, without the consent of the state. 2 
 But when the business is manifestly a failure, by the weight 
 of authority the majority of the stockholders may authorize 
 the sale of the entire property of the corporation and wind up 
 the business. 8 "It is unquestionabty true," says Mr. Justice 
 Givens,* "that a private corporation holds its property as a 
 trust fund for the stockholders, and that, when a majority 
 of the stockholders act together, they are in a sense the 
 corporation, and must act with due regard to the rights of 
 the minority. If the majority decide, arbitrarily and with- 
 out just cause, to sell the property of the corporation to 
 the prejudice of the minority, and thereby compel the winding 
 up of the business of the corporation, it is a fraud upon the 
 minority, and courts of equity will interfere. If, however, 
 just cause exists for selling the property, as when the corpora- 
 tion is insolvent, and the sale is necessary to pay debts, or 
 where, from any cause, the business is a failure and an un- 
 profitable one, and the best interests of all require it, the ma- 
 jority have clearly the power to order the sale, and in such 
 case their acts are not ultra vires. Cook says: 8 'If, however, 
 th<- corporation is an unprofitable and failing enterprise, then 
 
 deprive them of the right to be heard, (R. I. L899), 43 Ail. R. 598, reviewing 
 
 by delegating the general power of <':isr-s. See article in in Nat. Corp. 
 
 management t" :< committee. Great Rep. 35. 
 
 Weal R. •'■■. v. Rnshout, ■"> !><■<;. & •Price v. Bolcomb (Iowa), 56 N. 
 
 Bm. 290. W. Rep. n>7; Sawyer v. Printing 
 
 1 Gamble v. Water <'<>., L28 N. Y.'.H. Co., 77 [owa -2\-i. Bee Barton v. Asso- 
 
 16, Infra. ciation, 1 1 1 [nd. 226. 
 
 ■Phillips v. Providence, etc., Co. » Cook Corp., §§ 666, 662, 667.
 
 § 486 CORPORATE MEETINGS AND ELECTIONS. 527 
 
 a sale of all the corporate property, with a view to dissolution, 
 may be made by the majority of the stockholders.' It would 
 be a harsh rule that would permit one stockholder to hold the 
 others to their investment when just cause existed for closing 
 the business of the corporation." 1 The rule applicable in 
 cases of a co-partnership has been held to apply to such a case. 
 "If it were shown to the court," says Lord Cairns, "that the 
 whole substratum of the partnership — the whole of the busi- 
 ness which the company was incorporated to carry on — has 
 become impossible, I apprehend the court might, either under 
 the act of parliament or on general principles, order the com- 
 pany to be wound up. But what I am prepared to hold is 
 this : that this court, and the winding-up process of the court, 
 can not be used as the means of invoking a judicial decision 
 as to the probable success or non-success of a company as a 
 commercial speculation. ' ' 2 
 
 § 486. Power of majority to accept amendments. — There is 
 some conflict of authority on the question of the right of the 
 majority to accept amendments to the charter which materially 
 change the character of the corporate enterprise. We have 
 already seen that the state can not impose an amendment of this 
 kind on the corporation without its consent unless it has ex- 
 pressly reserved the power to do so, 3 and the question is whether 
 the giving of this consent is fairly within the power conferred 
 upon the majority by the nature of the contract of membership. 
 The rule of the common law is that when a number of persons 
 associate themselves as partners for a business, and time speci- 
 fied by the articles of agreement between them, or become mem- 
 bers of a corporation for definite purposes and objects specified 
 in their charter, the objects and business of the corporation can 
 not be changed or abandoned within the specified time, with- 
 out the consent of all the partners or corporators. One part- 
 ner or corporator, however small his interest, can prevent it. 
 This general rule is admitted, although by law a majority in 
 either case can control or manage the business, against the 
 
 1 Lauman v. Railroad Co., 30 Pa. St. R. 2 Ch. App. 737 ; Miner v. Belle Isle, 
 42. etc., Co., 93 Mich. 97. 
 
 2 See In re Suburban, etc., Co., L. 3 Section 103, supra.
 
 528 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 486 
 
 will and interest of the minority, so long as they act honestly, 
 and within the scope of the partnership or corporate business. 
 The principle seems to be unquestioned, although there is 
 some conflict among the decisions which consider the effect of 
 such material changes and departures under direct authority 
 of the legislature. "This rule is founded on principle, the 
 great principle of protecting every man and his property by 
 contracts entered into, a guiding principle in all right legisla- 
 tion, and incorporated into the constitution of the United 
 States and almost every state of the Union, and the rule is not 
 changed because the new business or enterprise proposed is al- 
 lowed by law, or has been made lawful since the association 
 was formed." 1 Many decisions are to the effect that an amend- 
 ment which effects a radical change in the corporate enterprise 
 will release a stockholder from liability on his contract of sub- 
 
 1 Chancellor Zabriskie in Zabriskie 
 v. Railway Co., 18 N. J. Eq. 178. See, 
 also, Meadow Dam Co. v. Gray, 30 
 Maine 547; Old Town, etc., R. Co. v. 
 Veazie, 39 Maine 571. The leading case 
 of Natusch v. Irving was decided by 
 Lord Eldon in 1824. It is not con- 
 tained in tin- regular reports, but may 
 be found in tin- appendix to (low- 
 on Partnership, 3d ed. 576, and in 
 Lindley on Partnership, p. 511. There 
 a partnership was formed for life in- 
 surance, and after it was entered into 
 an act of parliament made it lawful 
 for such a linn to enter upon the busi- 
 ness of marine insurance, which was 
 prohibited to them before. A majori- 
 ty of the partners determined to em- 
 bars in the bu linese of marine insur- 
 ance thus made lawful. Lord Eldon 
 held them barred by the contract of 
 co-partnership, unless every partner 
 agreed to alter it. In England this 
 docti ine i ; rigidly applied t<> corpo- 
 rations and is recognized in all the 
 \ ml although from the om- 
 ni potent power of parliament re- 
 strained bv do written con ititution, 
 
 it is held that the contract can be 
 changed by act of parliament, yet the 
 court of chancery will enjoin the di- 
 rectors or the corporation, on the appli- 
 cation of a single stockholder, from us- 
 ing the common fund to apply to par- 
 liament for a change. The doctrine of 
 Natusch v. Irving was adopted in New 
 York by Chancellor Kent in the case 
 of Livingston v. Lynch, 4 Johns. Ch. 
 573, and in New Jersey in Kean v. 
 Johnson, 9 N.J. Eq. 401. The opinion 
 of Chancellor Bennett in Stevens v. 
 Rutland, etc., R. Co., 29 Vt. 548, con- 
 tains a very able exposition and ap- 
 plication of the rule. See, also, Angel 
 and Anus on Corp., §§ 391, 393, and 
 §§ 536, 539; Lindley on Partnership, 
 615; Pierce on Railroads, 78. Hart- 
 ford, etc., R. Co. v. Croswell, 6 Hill 
 (N. Y.) 883; Troy, etc., R, Co. v. 
 Ken-, 17 Barb. (N. Y.i 581 ; Macedon, 
 etc., Co. v. Lapham, L8 Barb. ( \ Y.) 
 312; Buffalo, etc., R. Co. v. Pottle, 23 
 Barb. (N, Y.) 21 ; Banel v. Alton, 
 etc., R. Co., 18 ill. 504; Graham v. 
 Birkenhead, etc., R. Co., 2 McN. &
 
 § 487 CORPORATE MEETINGS AND ELECTIONS. 529 
 
 scription. 1 In some cases it is held that the reserved power 
 to alter and amend a charter will authorize the majority of a 
 corporation to extend its enterprises without the consent of the 
 minority of the stockholders. The rule was first adopted to ena- 
 ble corporations to subscribe for the stock and bonds of cor- 
 porations engaged in other enterprises that brought business 
 to them, and was then extended to cases where railroads were 
 authorized to build extensions and branch lines. This rule was 
 adopted in New York, 8 but it was said in New Jersey, 8 "That if 
 the change in the act is simply offering the corporation the privi- 
 lege of entering on another and a different enterprise, it is not 
 within the condition to the subscription. The only construc- 
 tion to be given is that the legislature may alter, not that the 
 stockholders may as between each other. The case of Natusch 
 v. Irving was decided upon this very ground. The act of par- 
 liament had given the company power to embark in marine 
 insurance, but the consent of all the parties was still held 
 necessary. The plain object of the reservation in this case 
 was to give the legislature, not a bare majority of the stock- 
 holders, power. This view of the case is so clear upon princi- 
 ple that I feel constrained to be guided by it, although the 
 weight of decisions in other states is against it." 
 
 § 487. Power to accept amendments, continued. — In a few 
 cases it is held that the majority may accept an amendment 
 offered by the legislature, which authorizes the corporation to 
 enter upon a new and different enterprise. The leading case was 
 an application for an injunction by a minority shareholder to 
 restrain the corporation from constructing an extension to its 
 line of railroad. Chief Justice Bigelow said: 4 "The case for 
 
 1 Ashton v. Burbank, 2 Dill. (C. C.) Plank Road Co. v. Thatcher, 1 Kern 
 
 435; Union Locks, etc., v. Towne, (N. Y.) 102; Buffalo, etc., R. Co., v. 
 
 1 N. H. 44; Manheim, etc., Co. v. Dudley, 4 Kern (N. Y.) 336. 
 
 Arndt, 31 Pa. St. 317; Southern, etc., "Zabriskie v. Railroad Co., 18 N. J. 
 
 R. Co. v. Stevens, 87 Pa. St. 190; Eq. 178. 
 
 Hartford, etc., R. Co. v. Croswell, 5 4 Durfee v. Old Colony, etc., R. Co., 5 
 
 Hill (N. Y.) 383. Allen (Mass.) 230. See also White v. 
 
 2 North, etc.. R. Co. v. Miller, 10 Railroad Co., 14 Barb. N. Y. 559; 
 
 Barb. (N.Y.) 260; White v. Syracuse, Buffalo, etc., R. Co. v. Dudley, 14 
 
 etc., R. Co., 14 Barb. (N. Y.) 559; N.Y 336, §432. 
 34 — Private Corp.
 
 530 THE LAW OF PRIVATE CORPORATIONS. § 487 
 
 the plaintiff mainly rests on the single proposition of law 
 that a corporation established by the legislature of this com- 
 monwealth by acts which * are subject to 
 alteration, amendment or repeal at the pleasure of the 
 legislature, can not engage in any new enterprise or 
 enter upon any new undertaking in addition to that contem- 
 plated by and embraced in the original charter of the company 
 against the consent of any one of its stockholders, although 
 such new enterprise or undertaking is of the same kind with 
 that for which the corporation was originally established, and 
 is authorized, sanctioned and adopted by an express legislative 
 grant and by a vote of the majority of the stockholders duly 
 ascertained according to law. * * * We suppose it may 
 be stated as an indisputable proposition that every person who 
 becomes a member of a corporation aggregated by purchasing 
 and holding shares, agrees, by necessary implication, that he 
 will be bound by all acts and proceedings within the scope of 
 the powers and authority conferred by the charter, which 
 shall be adopted or sanctioned by a vote of the majority of the cor- 
 poration duly taken and ascertained according to law. This is 
 the unavoidable result of the fundamental principle that the ma- 
 jority of the stockholders can regulate and control the lawful 
 exercise of the powers conferred on a corporation by its charter. 
 Tin' holder of shares in an incorporated body, so far as his in- 
 dividual rights and interests may be involved in the doings of 
 the corporation, acting within the legitimate sphere of its cor- 
 porate power, has no other legal control over them than that 
 which he can exercise by his single vote in tin; meetings of 
 the company. * * * When, therefore, it is expressly pro- 
 vided, between the legislature on the one hand and the corpora 
 tion on the other, as part of tin' original contract of incorpo- 
 ration, thai the former may alter or change or abrogate it or 
 any portion of it, it can not be >;m<1 thai any contracl is broken 
 or infringed when the power thus reserved is exercised, with 
 II,,. consenl of the artificial body of whose original creation 
 and existence such reservation formed an essentia] part. 
 h' i! !„• asked by whom uch amendment or alteration is bo he
 
 § 488 CORPORATE MEETINGS AND ELECTIONS. $31 
 
 made, the answer is obvious, by the parties to the contract, 
 the legislature on the one hand and the corporation on the 
 other ; the former expressing its intention by means of a legis- 
 lative act, and the latter assenting thereto by a vote of the ma- 
 jority of the stockholders, according to the provisions of its 
 charter. 
 
 § 488. Immaterial amendments and alterations. — An 
 
 amendment which does not materially change the charter or 
 affect the scope of the corporate enterprise, and thus the con- 
 tract of membership, may be accepted by the majority acting 
 under legislative authority. Under this rule the difficulty is 
 in determining what are material and fundamental altera- 
 tions, and no general rule can be laid down. 1 Thus, where 
 an amendment changed the name, increased the capital and 
 extended the road of a plank road and railroad corporation, the 
 court said: "The change is not fundamental. The new 
 powers conferred are identical in kind with those originally 
 given. They are enlarged merely, the general objects and 
 purposes remaining the same. It may be admitted that under 
 this reserved power to alter and repeal, the legislature would 
 have no right to change the fundamental character of the cor- 
 poration and convert it into a different legal being, for in- 
 stance, a banking corporation, without absolving those who 
 did not choose to be bound." 2 
 
 The majority can not accept an amendment which author- 
 izes an insurance company organized to transact a "life and 
 accident insurance business," to do "fire, marine and inland 
 insurance." Judge Dillon said: 3 "The change in the 
 charter by which a life and accident company was authorized 
 to transact fire, marine and inland insurance, is an organic 
 
 *See cases cited by Justice Strong v. Alton, etc., R. Co., 13 111. 504 
 in Nugent v. Supervisors, 19 Wall. (U. Pacific R. Co. v. Renshaw, 18 Mo. 210 
 S.) 241 ; Witter v. Miss., etc., R. Co., Pacific R. Co. v. Hughes, 22 Mo. 291 
 20 Ark. 463, 493; Taggart v. Railroad Howard v. Glenn, 85 Ga. 238. 
 Co., 24 Md. 563; Union, etc., Assn. 2 Buffalo, etc., Co. v. Dudley, 14 N. 
 v. Neill, 31 Iowa 95; Union, etc., Co. Y. 336; Schenectady, etc., Co. v. 
 v. Hersee, 79 N. Y. 454; Rutland, etc., Thatcher, 11 N. Y. 102. 
 R. Co. v. Thrall, 35 Vt. 536; Everhart 3 Ashton v. Burbank, 2 Dill. C. CL 
 v. Railway Co., 28 Pa. St. 339; Banet, 435.
 
 532 THE LAW OF PRIVATE CORPORATIONS. § 489 
 
 change of such a radical character as to discharge previous 
 subscribers to the stock of the company from any obligation 
 to pay their subscription, unless the change is expressly or 
 impliedly assented to by them. Here there was no such 
 assent, and no acquiescence in the structural change made 
 in the charter of the company. The company could not, 
 against such a subscriber, maintain a suit to collect his sub- 
 scription, and take the money and use it as capital for the 
 transaction of business under the charter as altered. We 
 think in such a case the subscriber is not bound to enjoin action 
 under the amended charter, but may, if he elects, defend 
 against an action to recover on his subscription to the stock. 
 If the company accepted the amended charter, as it did by 
 adopting the new name, it is not essential to such a defense to 
 show that, at the time of the trial, the corporation had actually 
 exercised the enlarged powers conferred upon it. The de- 
 fendants are not bound on their subscription to pay to the 
 company money which, if paid, may be used as capital to 
 carry on the business authorized by the amended charter." 
 
 A subscriber is not released by the acceptance of an amend- 
 ment to the^charter of a railroad corporation authorizing it to 
 build a branch road 1 or slightly altering the route. 2 But a 
 substantial change of the route will discharge the subscriber. 8 
 
 § 489. Material beneficial amendments. — One line of author- 
 ities holds that the majority may, against the wishes of the 
 minority, accept an amendment which, although it materially 
 alters the charter, is manifestly beneficial to the corpora- 
 tion, and along the line of the general objects for which it was 
 originally created. The reasons upon which this rule rests 
 are thus stated by tin' supreme court of Illinois. 4 "An alter- 
 
 1 Peoria, etc., R. Co. v. Preston, 35 504. See, also, Illinois, etc., R. Co. v. 
 
 [ 0W a L15. Zimmer,20 [11.654; Pacific I!. Co. v. 
 
 •Wilson v. Valley, etc., R. Co., 33 Renshaw, 18 Mo. 210; Hartford, etc., 
 
 Ga. 166. R. Co. v. Croswell, •", urn ,\. v., 
 
 etc., Corp. \. Locke, 8 883; Gray v. Navigation (V, :.' Walls. 
 
 268; Buffalo, etc., R. <'". v. ,v s. (Pa.) 156. Sec comment upon 
 
 Pottle, 28 Barb. (N. Y.) 21 ; Moore v. this ens.- in Hartford R. Co. v. Cros- 
 
 Hanover, etc., R. Co., M Pa. St. 824. well, 5 Hill (N. Y.) 383. 
 
 « Banel v. Alton, etc., R. Co., 18 ill.
 
 § 490 CORPORATE MEETINGS AND ELECTIONS. 533 
 
 ation in a charter may be so extensive as to work a dissolution 
 of the contract of subscription. An amendment which essen- 
 tially changes the nature or objects of a corporation will not 
 be binding on the stockholders. A corporation formed for 
 the purpose of constructing a railroad can not be converted 
 into a company to construct an improvement of a different 
 character without the consent of all the corporators. A road 
 intended to secure the advantages of a particular line of travel 
 and transportation can not be so changed as to defeat that gen- 
 eral object. The corporation must remain substantially the 
 same, and be designed to accomplish the same general pur- 
 poses and subserve the same general interests. But such 
 amendments of the charter as may be considered useful to 
 the public and beneficial to the corporation, and which will 
 not divert its property to new and different purposes, may 
 be made without absolving the subscribers from their en- 
 gagement. The straightening the line of the road, the loca- 
 tion of a bridge at a different place on a stream, or a devia- 
 tion in the route from an intermediate point, will not have 
 the effect to destroy or impair the contract between the corpora- 
 tion and the subscribers. We regard these conclusions as rea- 
 sonable and just, and as well calculated to facilitate the construc- 
 tion of improvements and promote the best interests of the 
 public and the stockholders. The incidental benefit which a 
 few subscribers may realize from a particular location ought 
 not to interfere with the general interest of the public and the 
 great mass of the corporators. These interests of the public 
 and the majority of the subscribers may with propriety be con- 
 sulted and encouraged, especially where the alteration will not 
 operate to depreciate the value of stock." 
 
 § 490. Elections — Presumption of regularity. — The manner 
 of electing the officers and directors of a corporation is ordina- 
 rily regulated by the charter or by-laws or by custom. In the 
 absence of any specific provision, all that is essential to a valid 
 election is that the will of the members be fairly expressed. 1 
 
 l In re Chenango Co., etc., Co., 19 etc., 19 Wend. (N. Y.) 135. 
 Wend. (N. Y.> 635- T n re Election,
 
 584: THE LAW OF PRIVATE CORPORATIONS. § 491 
 
 Every presumption is in favor of the validity of the proceed- 
 ings. 1 Thus it will be presumed that a quorum was present 
 until the contrary appears. 2 So, where the by-laws provide 
 that the stockholders' meeting shall be held at the counting- 
 room of the corporation, and it appeared that it was held at 
 the dwelling-house of the manager, it was presumed that the 
 counting-room was in the dwelling-house. 3 
 
 § 491. Inspectors of elections. — The right to appoint in- 
 spectors or judges of election is vested in the shareholders, 
 ami not in the board of directors. 1 Such power, however, may 
 be delegated to the directors by a by-law. The legal owner of 
 stock is entitled to vote upon it, and the inspectors have no 
 power to inquire into the question of the equitable ownership, 5 
 or to assume a judicial power to try the genuineness of a proxy 
 if it is in regular form. 6 The duties are ministerial, and not 
 judicial. 7 The fact that the inspectors are not sworn, or are 
 sworn in an improper manner, will not invalidate an election, 
 if no objection is interposed at the time. 8 
 
 § 492. Illegal votes. — An election is not necessarily ren- 
 dered void by the reception of illegal votes. Where a candi- 
 date at a corporate election receives a majority of the legal 
 votes cast, the receipt of illegal votes in his favor does not 
 defeat his election. 9 Votes for ineligible candidates are gener- 
 ally disregarded or "thrown away." "Votes cast for a candi- 
 date who is disqualified for the office will not be thrown away so 
 as to make the election fall on a candidate having a minority of 
 votes, unless the electors casting such votes had knowledge of 
 1 1 j « ■ facts on which I lie disqualification of the candidate for 
 
 'Hathaway v. Addison, 48 Maine 7 < lomw. v. Woelper, S Berg. & R.29. 
 
 140, H iii re Election of Directors, etc., 19 
 
 ■Citizens', etc., Co. v. Sortwell, 8 Wend. (N.Y.) 135. 
 
 Allen (Mass.) 217. B In re Argus Co., L88 N.Y. 657; First 
 
 ■McDaniels v. Manufacturing Co., Parish v. Stearns, 21 rick. (Mass.) 
 
 22Vt.274. L48; En re Chenango, etc., Co., 19 
 
 •State v Merchant,87 Ohio St. 251. Wend. (N. V.) 635; Ex parte Murray, 
 
 e Morawetz Priv. Corp. I, i 484. 7 Oowen (N. Y.) L53. 
 
 ■ Matter of Cecil, 36 How. Pr. (N. 
 Y. 177.
 
 § 493 CORPORATE MEETINGS AXD ELECTIONS. 535 
 
 whom they voted rested, and also knew that the latter was for 
 that reason disqualified from holding office." 1 It has been held 
 that votes improperly cast should be disregarded by the court.* 
 The objection that illegal votes were cast at an election must 
 be made at the time they are offered. 3 If there are no inspec- 
 tors of election, the meeting itself must determine who are en- 
 titled to vote, as the presiding officer has no such power. A 
 person who refrains from voting because the presiding officer 
 rules that he is not entitled to vote can not afterwards be heard 
 to complain, as he should have appealed from the decision to 
 the meeting. 4 He must show that he properly presented his 
 claim to vote, and that it was rejected by the proper authority. 
 
 § 493. Control of courts over corporate elections. — If the 
 
 proper officers of a corporation fail or refuse to call a meeting 
 for the election of officers or directors at a proper time, they 
 may be compelled to do so at the instance of a stockholder. 5 
 A court of law is the proper tribunal to try the validity of a 
 corporate election, and it is generally held that a court of 
 equity has no jurisdiction, unless it is specially conferred upon 
 it by statute, 6 or the question arises in the determination of a 
 suit which is properly cognizable by a court of equity. 7 An 
 injunction will issue on the application of the real owner of 
 the stock to restrain the voting of stock under a pooling ar- 
 rangement which is against public policy. 8 So it has been 
 held that by an injunction a stockholder may obtain the can- 
 cellation of illegal shares, and restrain the holders from vot- 
 
 2 In re St. Lawrence, etc., Co., 44 N. etc., Co., 32 N. J. Eq. 236; Kean v. 
 
 J. Law 529. See Horton v. Wilder, 48 Union, etc., Co., 52 N. J. Eq. 813; 
 
 Kan. 222; Thompson Corp., § 752. Neall v. Hill, 16 Cal. 145. A method 
 
 2 Baker's App., 109 Pa. St. 461. for reviewing corporate elections is 
 
 3 In re Chenango, etc., Co., 19 Wend, often provided by statute. See Re 
 (N. Y.) 635. Newcomb, 42 N. Y. St. 442; Wicker- 
 
 4 State v. Chute, 34 Minn. 135. See sham v. Brittan, 93 Cal. 34, 15 L. R. 
 19 Wend. 37; 1 Denio 388, 396; 1 A. 106. 
 
 Wend. 98. 7 As to the limitations, see New Eng- 
 
 5 People v. Cummings, 72 N. Y. 433 ; land, etc., Co.v. Phillips, 141 Mass. 535. 
 State v. Wright, 10 Nev. 167. 8 Harvey v. Linville, etc., Co., 118 
 
 6 Mechanics, etc., Bank v. Burnet, N. C. 693, 32 L. R. A. 265.
 
 536 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 493 
 
 ing such shares. 1 So a stockholder may restrain the voting of 
 stock in a manner contrary to the charter of the corporation.' 
 The prevailing view seems to be that a court of equity has no 
 superintendence over corporate elections, although it is said to 
 possess an imperfect jurisdiction, and the tendency is to ex- 
 tend this and to hold that when necessary in order to secure a 
 fair and honest election, it may appoint a master to conduct 
 the same. 3 A proceeding to set aside an election of officers, 
 because not made in conformity to the law, may be brought by 
 one who has not been a stockholder long enough to entitle him 
 to vote under the rules of the corporation.' 
 
 1 T\ T ood v. Church, etc., Assn., 63 
 Wis. 9. 
 
 * Webb v. Ridgely, 38 Md. 364. 
 •Tunis v. Railway Co., 149 Pa. St. 
 
 70; Wright v. Central, etc., R. Co., 67 
 Cal. 532. See Thompson's Corps., 
 §§ 3877, 3878, and cases there cited. 
 
 • Wright v. Central, etc., R. Co., 67 
 Cal. 532. The ordinary method by 
 
 which to try the title to an office is an 
 information in the nature of a quo 
 icarranto. See Elliott Pub. Corp. 
 § 349 ; State v. Sullivan, 45 Minn. 309, 
 11 L. R. A. 272; State v. Bulkeley, 
 61 Conn. 287, 14 L. R. A. 657; People 
 v. Londoner, 13 Colo. 303, 6 L. R. A. 
 444.
 
 CHAPTER 18. 
 
 OFFICERS AND AGENTS AND THE MANAGEMENT OF CORPO* 
 
 RATIONS. 
 
 494. General statement. § 514. 
 
 495. Presumption of authority. 
 
 496. The general management — Di- 515. 
 
 rectors — Directors' meetings. 516. 
 
 497. Place of directors' meeting. 
 
 498. Qualifications of directors. 517. 
 
 499. Powers of directors. 518. 
 
 500. Stockholders' control over di- 519. 
 
 rectors. 520. 
 
 501. Delegation of authority — Ex- 
 
 ecutive committee. 521. 
 
 502. Relation of officers and direc- 522. 
 
 tors to the corporation. 523. 
 
 503. Contracts between a corpora- 
 
 tion and its officers. 
 
 504. When an officer may deal with 524. 
 
 his corporation. 
 
 605. Right of corporation to repudi- 525. 
 
 ate such contract. 
 
 606. Contracts between corporations 526. 
 
 having common officers or 527. 
 directors. 
 
 507. The prevailing rule. 528. 
 
 508. Liability of a corporation for 529. 
 
 torts of its agents. 530. 
 
 509. Ratification. 531. 
 
 510. Liability for torts in ultra vires 532. 
 
 transactions. 533. 
 
 511. Liability of officers for acts in 534. 
 
 excess of authority. 535. 
 
 512. Liability for abuse of trust. 536. 
 
 513. Degree of care required of di- 537. 
 
 rectors. 
 
 Liability of officer is for indi< 
 vidual acts or omissions. 
 
 Supervision of sub-agents. 
 
 Knowledge of contents of cor- 
 porate records. 
 
 Liahility for care of papers. 
 
 Liability for mistakes. 
 
 Liability on contracts. 
 
 Liability to third persons for 
 torts. 
 
 Violation of charter or statute. 
 
 Liability imposed by statute. 
 
 Liability of directors where 
 corporation maintains a nui- 
 sance. 
 
 Liability imposed for benefit of 
 third persons. 
 
 Remedy of the corporation 
 against an officer. 
 
 Statute of limitations. 
 
 No liability to corporate credi- 
 tors. 
 
 Powers of particular officers. 
 
 The president. 
 
 The vice-president. 
 
 The secretary. 
 
 The treasurer. 
 
 De facto officers. 
 
 Notice to officers and agents. 
 
 Compensation. 
 
 Removal from office. 
 
 Creditors can not control man- 
 agement. 
 
 § 494. General statement, — A corporation must necessarily 
 act through agents, and the relation between directors and 
 
 (537)
 
 538 THE LAW OF PRIVATE CORPORATIONS. § 495 
 
 other officers and the corporation is that of principal and 
 agent. Such officers in their dealings with the corporation 
 are governed by the general principles of the law of agency. 1 
 The charter commonly provides that the management of the 
 corporation shall be by certain specified agents, but this is im- 
 plied in the absence of such provision. 2 No formalities are 
 required in the appointment of agents unless provided for by 
 charter, 3 and a corporation may be bound by acquiescence in 
 the acts of a person who assumes the authority of an agent, 
 but who in fact was never authorized to act for the corporation. 4 
 
 § 495. Presumption of authority. — In a recent case 5 the 
 following language of Judge Thompson was quoted with ap- 
 proval: " A very extensive principle in the law of corpora- 
 tions, applicable to every kind of written contract executed 
 ostensibly by the corporation, and to every kind of act done 
 by its officers in its behalf, is that where the officer or agent is 
 the appropriate officer or agent to execute a contract, or to 
 do an act of a particular kind in behalf of the corporation, 
 the law presumes a precedent authorization regularly and right- 
 fully made; and it is not necessary to produce evidence of 
 such authority from the records of the corporation. Under 
 the operation of this principle a deed or mortgage purporting 
 to have been executed by a corporation, which is signed and 
 executed in its behalf by its president and secretary, will be 
 presumed to have been executed by its authority." 6 This rule 
 is of general application. 7 
 
 'Wayne, etc., Co. v. Bammona B Ellison v. Brandstrater (Intl.), 54 
 
 (Md.), 27 V E. Rep. 187; Port v. N. E. Rep. 433. 
 
 Russell, 36 [nd, 80. 8 Thompson Corps., §§ 5029, 5730. 
 
 Protection, etc., Co. v. Foote, 79 'National Bank v. Vigo Nat. Bank, 
 
 [11.361; Hurlbut v. Marshall, 62 Wis. ill [nd. 352; National, etc., Co. v. 
 
 Rockland Co., 94 Fed. Rep. 335; Gor- 
 
 ' Bank v. Dandridge, L2 Wheat, der v. Plattsmouth, etc., Co., 36 Neb. 
 
 rmanv. Fitch, 98 Mass. 548; Merchants, etc., Bank v. Citizens, 
 
 Roberts v. Doming, etc., Co., Ill etc., Co., 159 Mass. 505; New England, 
 
 ■ ir. 132. etc., Co. v. Farmington, etc., Co., 84 
 
 'Goodwin v. Union, etc., Co., 84 M< 284; Bteel Works v. Bresnahan, 
 
 N. ii 80 Mich. 832; City of Lincoln v. Sun,
 
 § 496 
 
 OFFICERS AND AGENTS. 
 
 539 
 
 § 496. The general management — Directors — Directors' 
 meetings, — The general management of the corporation is 
 vested in the board of directors as a board, and not in the in- 
 dividual members thereof, and they have no authority to act 
 save when assembled at a board meeting. The separate action, 
 individually, of the persons composing such governing body 
 is not the action of the constituted body clothed with corporate 
 powers. 1 But a director may be appointed by the board to act 
 as their agent. 2 Directors continue to hold office until their 
 successors are elected and qualified. 3 The directors have no 
 implied power to fill vacancies in their number. 4 The govern- 
 ing body of the corporation can be compelled by mandamus to 
 order an election to choose a board of directors. 5 Notice of a 
 directors' meeting must be given in the same manner as notice 
 of a shareholders' meeting. 6 But when all the directors are 
 
 etc., Co., 59 Fed. Rep. 756, 8 C. C. A. 
 253; Malone v. Trans. Co., 77 Cal. 38 ; 
 Devlin on Deeds, § 343 and note. 
 An act done by the president of a cor- 
 poration pertaining to its business, 
 not clearly foreign to his power, will 
 be presumed to have been authorized. 
 Anderson v. South, etc., Co., 173 111. 
 213. 
 
 1 Baldwin v. Canfleld, 26 Minn. 43 ; 
 Calumet, etc., Co. v. Haskell, etc., 
 Co., 144 Mo. 331, 66 Am. St. Rep. 425; 
 Titus & Scudder v. Cairo, etc., R. Co., 
 
 37 N. J. L. 98; Buttrick v. Railroad 
 Co., 62 N. H. 413; Bank v. Christo- 
 pher, 40 N. J. L. 435 ; Hillyer v. Min. 
 Co., 6 Nev. 51 ; Filon v. Brewing Co., 
 
 38 N. Y. St. 602. But see Bank v. 
 Rutland, etc., R. Co., 30 Vt. 159; 
 Longmont, etc., Co. v. Coffman, 11 
 Colo. 551. Resolutions of a corpora- 
 tion passed at an irregular, unlawful 
 special meeting of the directors are 
 not admissible in evidence against 
 the corporation in support of notes 
 which they attempt to authorize. 
 Pauly v. Pauly, 107 Cal. 8, 48 Am. St. 
 Rep. 98. 
 
 2 Northampton Bank v. Pepoon, 11 
 Mass. 288. 
 
 3 As to what amounts to a resigna- 
 tion of a director, see Chemical, etc., 
 Bank v. Colwell, 132 N. Y. 250; Berry 
 v. Cross, 3 Sandf. Ch. (N. Y.) 1; 
 Briggs v. Spaulding, 141 IT. S. 132. 
 
 4 Moses v. Tompkins, 84 Ala. 613. 
 
 5 People v. Cummings, 72 N. Y. 433. 
 
 6 § 467 supra; Thompson v. Will- 
 iams, 76 Cal. 153, 9 Am. St. Rep. 187; 
 Herrington v. Liston, 47 Iowa 11. As 
 to necessity of notice to a director to 
 attend a special meeting, see note to 
 3 Am. St. Rep. 69-70. American, etc., 
 Bank v. First Nat'l Bank, 82 Fed. 
 Rep. 961, 48 U. S. App. 633. It has 
 been held, under a charter which pro- 
 vided that a specified number of di- 
 rectors should constitute a quorum, 
 that if a quorum is present it is im- 
 material that notice of the meeting 
 was not given the others. Edgerly v. 
 Emerson, 23 N. H. 555; Bank v. Flour 
 Co., 41 Ohio St. 552; State v. Smith, 
 48 Vt. 266; Chase v. Tuttle, 55 Conn. 
 455.
 
 540 THE LAW OF PRIVATE CORPORATIONS. § 497 
 
 present or participate in a meeting, the fact that no notice 
 was given is immaterial. 1 The time of regular meetings may 
 be fixed by the charter, by-laws or by usage. 2 The ordinary 
 business of the board may be transacted under a general notice. 
 When no particular purpose or object is stated in the notice, it 
 is presumed that the meeting was called for the consideration 
 of all matters relating to the ordinary business of the corpora- 
 tion that may come before it. 3 In the absence of evidence to 
 the contrary it will be presumed that proper notice of the 
 meeting was given to all directors.' 1 A majority of the whole 
 number of directors is necessary to constitute a quorum in the 
 absence of an express provision for a lesser number. A ma- 
 jority of the quorum may bind the corporation. 5 But, in order 
 that a quorum may act for the corporation, it is necessary that 
 all the directors should have had notice of the meeting, unless 
 the charter expressly provides that a designated number of di- 
 rectors shall constitute a quorum. 6 A majority of the quorum 
 must be disinterested in respect to matters voted upon. 7 
 
 § 497. Place of directors' meetings. — Stockholders' meetings 
 are generally required to be held in the state where the corpo- 
 ration was created, but the authorities are now uniform that 
 an agent of a corporation may exercise its powers out of the 
 state incorporating it providing there is nothing in its charter 
 or in the nature of its affairs contravening it. If one agent 
 may thus act there would seem to be no sensible reason why a 
 board of directors may not do so, and as directors are only 
 
 1 Minneapolis, etc., Co. v. Nimocks, the adoption of a resolution. Smith 
 
 63 M in ii. :>>S\ ; Troy, etc., Co. v. White, v. Los Angeles, etc., Assn., 78 Cal. 
 
 10 8. Dak. 475. 289, L2 Am. St. Rep. 63. 
 
 'Atlantic, etc., Co. v. Sanders, 3(5 8 Edgerlyv. Emerson, 23 N. H. 555 ; 
 
 N. II. '_v»l' 269. Chase v. Tuttle, 56 Conn. 455. The 
 
 "In re A.rgus Co., 138 N. Y. 557. presumption is in favor o! tin' regu- 
 
 Chase v. Tuttle, 66 Conn. 455, 3 larity of the meeting. Heintzelman 
 
 im. St. Rep. 64. v. Association, 88 Minn. 188; Dispatch 
 
 » Chase v. Tattle, 65 Conn. 165. v. Bellamy, etc., Co., L2 N. II. 205; 
 
 i □ Eyci v. I '<hi tin r, etc., R.Co.,74 Thompson v. Williams, 76 Cal. L53, 9 
 
 Mich. 226, 16 Am. St. Rep. 633; Bar- Am. St. Rep. L87. 
 gent v.Webster, 13 Mete. (Mass.) 497; 'Miner v. tee Co., 93 Mich. 97; 
 
 Leavitl v. Mining Co., 8 Dtah 266. A Smith v. Association, 78 Cal. 289. 
 majority of the quorum is essenl lal to
 
 §408 
 
 OFFICERS AND AGENTS. 
 
 541 
 
 agents the principle is broad enough to include them. 1 The 
 principal office of a corporation is the place where its stock- 
 holders and directors usually meet, and where it elects its 
 officers and transacts its financial business. 2 
 
 § 498. Qualifications of directors. — A director is merely an 
 agent, and any person who has capacity to contract may be a 
 director of a corporation. No special qualifications are neces- 
 sary unless required by the charter or by-laws. 3 A director 
 need not be a shareholder unless required to be such by the 
 charter, or, as is commonly the case, by statute. 4 Where a 
 director is required to be a shareholder, it is sufficient if the 
 shares stand in his name on the books of the corporation. 5 
 But it has been held that when a director is required to be a 
 stockholder, he must be the beneficial owner, and that the 
 
 1 Wood, etc., Co. v. King, 45 Ga. 34. 
 See § 465, supra ; Wright v. Lee, 2 S. 
 Dak. 596, 51 N. W. Rep. 706; Arms v. 
 Conant, 36 Vt. 744; Saltmarsh v. 
 Spaulding, 147 Mass. 224; Bellows v. 
 Todd, 39 Iowa 209; McCall v. Manu- 
 facturing Co., 6 Conn. 428. See, as to 
 stockholders' meetings, Hodgson v. 
 Duluth, etc., R. Co., 46 Minn. 454. 
 
 2 Frick Co. v. Norfolk Bank, 86 Fed. 
 Rep. 725; 57 U. S. App. 286. See 
 also, Jossey v. Georgia R. Co., 102 
 Ga. 706. It may be implied and es- 
 tablished from the acts of the stock- 
 holders and directors. Frick v. Nor- 
 folk Bank, supra; Dade, etc., Co. v. 
 Haslett, 83 Ga. 549. The office of the 
 president will be presumed to be the 
 proper place of holding meetings. 
 Troy, etc., Co. v. White, 10 S. Dak. 
 475. 
 
 3 The treasurer may be a director. 
 Sargent v. Webster, 13 Met. (Mass.) 
 497, 46 Am. Dec. 743. An alien resid- 
 ing in the state may be a director. 
 Commonwealth v. Hemmingway, 131 
 Pa. St. 614. A non-resident may be a 
 
 director. See State v. Smith, 15 Ore. 
 98, and Horton v. Wilder, 48 Kan. 
 222. A corporation may, by a by-law, 
 provide that no one who is an attor- 
 ney in a suit against the corporation 
 shall be eligible as a director. Cross 
 v. West Va., etc., R. Co., 37 W. Va. 
 342, 18 L. R. A. 582. 
 
 4 Wright v. Springfield, etc., R. Co., 
 117 Mass. 226, 19 Am. Rep. 412; Peo- 
 ple v. Northern R. Co., 42 N. Y. 217. 
 One who acts as a director will be 
 treated as one in a controversy be- 
 tween himself and the corporation, 
 although he is not a stockholder. 
 Stetson v. Northern, etc., Co., 104 
 Iowa 393. A member of an assess- 
 ment fire insurance company only 
 can fill the office of director. State 
 v. Manufacturers', etc., Assn., 50 Ohio 
 St. 145, 24 L. R. A. 252. 
 
 5 Re Argus, etc., Co., 1 N. Dak. 434, 
 26 Am. St. Rep. 639; State v. Leete, 
 16 Nev. 242. Compare State v. Hunton, 
 28 Vt. 594 ; Chase v. Tuttle, 55 Conn. 
 455, 3 Am. St. Rep. 64.
 
 542 THE LAW OF PRIVATE CORPORATIONS. § 499 
 
 mere fact that shares are registered in his name is not suffi- 
 cient. 1 A by-law which provides that a director shall cease to 
 be such when he ceases to be a proprietor of shares, by impli- 
 cation, renders one who is not the proprietor of shares ineli- 
 gible to the office of director. 2 A bona fide owner of shares is 
 eligible, although they have not been transferred to him on 
 the books. 3 A director who is required to be a stockholder 
 divests himself of his office by disposing of his stock. 4 A 
 director's qualification shares maybe held by him jointly with 
 another person. 5 
 
 § 499. Powers of directors. — The board of directors has 
 implied power to do whatever the corporation may lawfully do 
 in the transaction of its ordinary business. For the purpose of 
 dealing with others it is the corporation. 6 But the authority 
 "extends merely to the supervision and management of the 
 company's ordinary and regular business." The directors 
 have no implied authority to make a permanent and material al- 
 teration of the business or constitution of the corporation, 
 although the business as so altered is within the company's 
 chartered powers. 7 Thus, they can neither increase the capital 
 stock, 8 nor lease the entire property of the corporation, 9 nor 
 sell the property and wind up the business of the corporation. 10 
 
 »Brainbridge v. Smith, L. R. 41 Ch. cial, etc., Co., 106 HI. 439; Eastern R. 
 
 Div.462, 33 Am. and Eng Corp.Cas. 172 Co. v. Railway Co., Ill Mass. 125; 
 
 ( annotated), Lindley, L.J. ,di8senting, Leavitt v. Oxford, etc., Co., 3 Utah 
 
 overruling the decision of Sir George 266; Bliss v. Kaweah, etc., Co., 65 
 
 Jessel, M. R., in Pulhrook v. Rich- Cal. 502; Donohoe v. Mariposa, etc., 
 
 mond.etc, Co., L. R. 9 Ch. Div. 610. Co., 66 Cal. ".17; Heintzelman v. 
 
 •Dispatch Line v. Bellamy, etc., Druids', etc., Assn., :;s Minn. 138. 
 
 Co., 12 N. II. 205, ::? Am. Dec. 203. The power to ratify the unauthorized 
 
 'State v. Smith, r> ore ms, ii Pac. acts of agents is presumed to he in the 
 
 Rep. 814, L5 Pac. Rep. 137. board <>f directors. Western, etc., 
 
 ♦Chemical Nat. Bank v. Colwell, A.Bsn. v. Ready, 24 Minn. 350. 
 
 'MorawetzPriv.Corp. [,§512; Rail- 
 
 e Glory, etc., Co., L. R. (1894) way Co. v A.llerton, 18 Wall 
 
 :: ch. it:;. h Railway Co. v. Ulerton, L8 Wall. 
 
 ■ Burrill v. Nahani Bank, 2 Met. 238; Eidraan v. Bowman, 68 111. ill. 
 
 L63; Hoyle v. Railway Co., B Martin v. Railway Co., 14 Phila. 10. 
 
 :»i n. v.:;it; Reichwald v. Commer- "Rollins v. Clay, 88 Maine 132.
 
 § 500 OFFICERS AND AGENTS. 543 
 
 But by the weight of authority they may transfer its property 
 to an assignee for the benefit of creditors when the condi- 
 tion of its affairs is such as to reasonably justify such a course. 1 
 The directors have no power to admit in writing the inability 
 of the corporation to pay its debts as the basis of an involun- 
 tary petition in bankruptcy. Such an act is not binding upon 
 the corporation. 2 
 
 § 500. Stockholders' control over directors. — The power of 
 management vested in the board of directors is conclusive in 
 its character. Their will must govern in the absence of fraud 
 or breach of trust, and the courts will not, even on the peti- 
 tion of the majority of the stockholders, compel the directors 
 to do an act contrary to their judgment. 3 
 
 § 501. Delegation of authority — Executive committee. — 
 
 The board of directors of a corporation may delegate the ordi- 
 nary routine business, 4 such as the appointment of an agent 
 to execute a deed 5 or a note, 6 to subordinate agents. Some 
 authorities hold that matters involving discretion can not be 
 delegated, 7 but by the weight of authority a board of directors 
 may delegate its powers to an executive committee, 8 and the 
 majority of this committee constitutes a quorum which can 
 bind the corporation by its acts. 9 
 
 1 § 189, Tripp v. N. W. Nat'l Bank, 41 5 Arms v. Conant, 36 Vt. 744. 
 
 Minn. 400 ; Dana v. Bank of the U. S. 
 5 Watts & S. 223; Ardesco, etc., Co 
 v. North Am., etc., Co., 66 Pa. St. 375 
 DeCamp v. Alward, 52 Ind. 468 
 Chamberlain v. Bromberg, 83 Ala. 576 
 
 6 Leavitt v. Oxford, etc., Co., 3 
 Utah 265. 
 
 7 Weidenfeld v. Sugar, etc., R. Co., 48 
 Fed. Rep. 615; Gillis v. Bailey, 21 N. 
 H. 149; Temple v. Dodge, 89 Texas 
 
 Chase v. Tuttle, 55 Conn. 455; Wil- 68. 
 
 kinson v. Bauerle, 41 N. J. Eq. 635. 8 Sheridan, etc., Co. v. Chatham, 
 
 2 Re Bates, etc., Co., 91 Fed. Rep. 625. etc., Bank, 127 N.Y. 517; Union, etc.,' 
 
 3 Dodge v. Woolsey, 18 How (U. S.) R. Co. v. Chicago, etc., R. Co., 163 
 331 ; Hunter v. Roberts, etc., Co., 83 U. S. 564, 597; Union, etc., R. Co. v. 
 Mich. 63, 47 N. W. Rep. 131; Sims Chicago, etc., R. Co., 51 Fed. Rep. 
 v. St. R. Co., 37 Ohio St. 556; Moses 309; Black River, etc., Co. v. Hol- 
 v. Thompkins, 84 Ala. 613; Pratt v. way, 85 Wis. 344. 
 
 Pratt, head & Co., 33 Conn. 446. 9 Burleigh v. Ford, 61 N. H. 360. As 
 
 4 Manchester, etc., R. Co. v. Fisk, to powers of an auditing committee, 
 33 N. H. 297.
 
 544 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 502 
 
 § 502. Relation of officers and directors to the corporation. 
 
 — The officers and directors of a corporation are variously re- 
 ferred to as agents, trustees or mandatories. 1 Judge Shars- 
 wood sa) 7 s: 2 " It is by no means a well settled point what is 
 the precise relation which directors sustain to stockholders. 
 They are undoubtedly said in some authorities to be trustees ; 
 but that, as I apprehend, is only in a general sense, as we term 
 an agent or any other bailee intrusted with the care and man- 
 agement of the property of another. It is certain that they 
 are not technically trustees. They can only be regarded as 
 mandatories, persons who have gratuitously undertaken to per- 
 form certain duties, and who are, therefore, bound to apply 
 ordinary care and diligence and no more." The directors are 
 not technically trustees, 3 but they are agents who bear a rela- 
 tion of trust and confidence to their principal. They stand in 
 a fiduciary relation to the corporation and are held to the ut- 
 most good faith in their dealings with it.* They must manage 
 
 see Skinner v. Walter, etc., Co., 140 vane v. O'Brien, 58 Kan. 463, it was 
 
 N. Y. 217, executive committee, see said that the directors and managing 
 
 Tracy v. Guthrie, etc., Soc, 47 Iowa officers are quasi or sub modo trustees 
 27. 
 
 ^pering's App., 71 Pa. St. 11,10 
 Am. Rep. 684; Robinson v. Smith, 3 
 Paige (N. Y.), 222, 24 Am. Dec. 216. 
 In re Cameron's, etc., R.Co., 18Beav. 
 339 : Overseers v. Gibbs, L. R. 5 H. L. 
 480. 
 
 B Spering's App., 71 Pa. St. 11. 
 
 3 North Hudson, etc., Assn. v. 
 Childs, 82 Wis. 460, 52 X. W. Rep. 
 800; Wayne, etc., Co. v. H amnions, 
 129 End. 368, '-'7 N. E. Rep. 487. In 
 Briggstf. Bpaulding, I n U. B. L32, the 
 court said: "The relation between 
 
 for the corporation with respect to 
 corporate property, and for the stock- 
 holders with respect to their shares. 
 
 'Hoyle v. Plattsburgh, etc., R. Co., 
 54 N. Y. 314; Cumberland, etc., Co. 
 v. Sherman, 30 Barb. 553; Wardell v. 
 Union Pac. R. Co., 103 U. S. 651; 
 Koehler v. Black River Falls, etc., 
 Co., 2 Black (U. S.) 715. In Twin 
 hick, etc., Co. v. Marbury, 91 l T . S. 
 587, Mr. Justice Miller said: "That 
 a director ol a corporation occupies 
 one of the fiduciary relations where 
 his dealings with the subject-matter 
 
 the corporation and the directors is of the trustor agency, and with the 
 
 rather thai ol principal and agent, 
 
 certainly bo tar as creditors ar n- 
 
 cei ii'-'l. bel ween whom and the corpo- 
 ration the relation is that ol contract, 
 and not ol trust. But, undoubtedly, 
 under circumstances they may be 
 
 beneficiary or party whose interest is 
 Confided to his care, is viewed w ith 
 jealousy by the COUrtS, and may he set 
 
 aside on very Blighl grounds, is a doc- 
 trine founded on (he soundest mor- 
 ality, and which has received the 
 
 treat tion ol clearest recognition in this court and 
 
 trust lut '/in tru$t." in Mul- In others."
 
 § 502 OFFICERS AND AGENTS. 545 
 
 its business with a view to promoting the common interests, 
 and can not directly or indirectly derive personal profit or 
 advantage from their position which is not shared by all the 
 stockholders. By assuming the office they undertake to give 
 their best judgment to the interests of the corporation in all 
 matters in which they act for it, untrammeled by any conflict- 
 ing personal interests. This obligation, that he will in no 
 way use his position to advance his personal interest to the 
 detriment of the corporation, is inherent in the office of di- 
 rector. All secret profits received by a director in any trans- 
 action in connection with corporate affairs must be accounted 
 for to the corporation, although the transaction may also be of 
 advantage to the corporation. 1 " The entire duty of the direct- 
 ors, growing out of their agency, is owed to the bank, which, 
 under the charter, is the sole representative of the stockholders, 
 and the legal defender of their properties. 2 A director who 
 loans the money of the bank at a stipulated rate of interest, with 
 a secret understanding that he shall have an interest in the 
 profits on lands to be purchased with the money must account 
 to the bank for such profits." 3 Where the directors of a corpora- 
 tion bought a steamboat in their individual capacity, and then, 
 as directors of the corporation, purchased for the corporation 
 a one-half interest in the boat at a greatly increased price, the 
 corporation was held entitled to the profits arising from the 
 transaction.* 
 
 The relations of a director and stockholder to the corpora- 
 tion are radically different. The latter may deal with the 
 corporation to his personal benefit and profit, 5 while the former 
 
 1 Bird, etc., Co. v. Humes, 157 Pa. theory that when a corporation be- 
 st. 278. See also Parker v. Nickerson, comes insolvent its property becomes 
 112 Mass. 195; Perry v. Cotton Seed a trust fund for the benefit of its cred- 
 Oil, etc., Co., 93 Ala. 364; Eutland, itors, that thereafter the directors are 
 etc., Co. v. Bates, 68 Vt. 579. * trustees for the benefit of the cred- 
 
 2 Allen v. Curtis, 26 Conn. 456. itors. See Ingwersen v. Edgecombe 
 3 Koehlerv. Iron Co., 2 Black (U. S.) (Neb.), 60 N. W. Rep. 1032. 
 
 715. 5 Rogers v. Nashville, etc., R. Co., 
 
 4 Parker v. Nickerson, 112 Mass. 91 Fed. Rep. 299. 
 195. In some cases it is held, on the 
 35 — Private Corp.
 
 546 THE LAW OF PRIVATE CORPORATIONS. § 503 
 
 may not. It is sometimes said that the directors are trustees for 
 the shareholders ; but this means no more than that they are 
 bound to act for the benefit of all the shareholders alike, and 
 not for the benefit of themselves or any particular stockholder. 
 "There is," said Chief Justice Shaw, 1 "no legal privity, 
 relation or immediate connection between the holders of 
 shares in a bank in their individual capacity on the one side 
 and the directors of the bank on the other. The directors are 
 not the bailees, factors, agents or trustees of such individual 
 stockholders." 
 
 § 503. Contracts between a corporation and its officers. — 
 
 An officer of a corporation has no power when acting for 
 the corporation to bind the coporation by a contract with 
 himself, or to represent it in any transaction with third per- 
 sons in which lie has a personal interest. 2 As said by the su- 
 preme court of Wisconsin: 3 "The idea that the same persons 
 constitute different identities of themselves by being called 
 directors or officers of a corporation, so that as directors or 
 officers they can convey or mortgage to or contract with 
 themselves as private persons, is a violation of common 
 
 1 Smith v. Hurd, 12 Met. (Mass.) other than that of the corporation." 
 371; Lexington, etc., Co. v. Page & Memphis, etc., R. Co. v. Woods, 88 
 Richardson, 17 B. Mon. <Ky.) 412. Ala. 630, 16 Am. St. Rep. 81. Where 
 
 2 Mri tourkey v. Toledo, etc., R. Co., the director is not at the same time 
 1 in U. S. 536; Wardell v. Union Pac. representing his own interest and 
 R. Co.,10:; Q. 8.651 ; Rhodes v. Webb, thai of the corporation he may con- 
 24 Minn. 292; Jones v. Morrison, 31 tract with it, buy or sell property, 
 .Minn. lio. Directors are not trustees borrow its money and give his note 
 for the corporation in the technical therefor, or loan the money and take 
 sense of the word; bul they are pro- in consideration therefor its notes and 
 hibited from dealing with the cestui que enforce their payment incaseofde- 
 
 .- and if they disregard the duties fault. Ward v. Polk, 70 Iml. 309; 
 
 and proprieties of the position by un- Beach v. Miller, 28 III. A.pp. 151 ; < rar- 
 
 dertaking to represent theirown in- retl v. Burlington, etc., Co., 70 Iowa 
 
 - and those of the corporation at 697, 59 Am. Rep. 461 ; Ten Eyck v . P. 
 
 the same time, they " will not be en- <>.. etc., R. Co., 71 Mich. 226, 16 Am. 
 
 cou raged in thus walking in the path St. Rep. 633. 
 
 ol temptation, nor be permitted to 'Haywood v. Lumber Co., 64 Wis. 
 
 retain the fruits gathered while in 639, 26 N. W. Rep. 184; People v. 
 
 pursuit of their own advancement, Board, 11 Mich. 222; Miner v. [ce 
 
 while they should have pursued none Co., 98 Mich. B7.
 
 § 503 OFFICERS AND AGENTS. 547 
 
 sense." It is held that a director has no authority to repre- 
 sent his corporation in a transaction with another corporation in 
 which he is a stockholder. 1 But the interest which will dis- 
 qualify him from acting must be a real and substantial one, 
 such as would be likely to induce the agent to sacrifice the in- 
 terest of his principal. 2 Such cases are, of course, governed 
 by the general rule that officers or directors may not gain 
 advantage to themselves through their control of the corpo- 
 ration, as "they hold a place of trust, and by accepting the 
 trust are obligated to execute it with fidelity, not for their own 
 benefit, but for the benefit of the corporation." 3 The rule is 
 not changed by the fact that other parties who stand in no 
 trust relation to the corporation are interested in the transac- 
 tion. 4 It applies when the transaction is with a firm of which 
 the director is a member, 5 or another corporation in which he 
 is a stockholder 6 or director. 7 But by the great weight of au- 
 thority, contracts between directors and their corporations are 
 voidable and not void. 8 "The duty which disqualifies direct- 
 ors from binding the corporation in a transaction in which 
 they have an adverse interest is one owing to the corporation 
 which they represent and to the stockholders thereof. A prin- 
 cipal may consent to be bound by a contract made for it 
 by an agent who at the same time represents an interest ad- 
 verse to that of the principal. A cestui que trust may elect to 
 affirm a contract which he could have repudiated on the 
 ground that the trustee had an interest in the matter incon- 
 sistent with his trust relation. In like manner, dealings be- 
 tween a corporation represented by some person as director may 
 be accepted as binding by the corporation or the stockholders 
 
 1 Construction company, Gilman, 6 Parker v. Nickerson, 112 Mags. 195. 
 etc., R. Co. v. Kelly, 77 111. 426. 7 United States, etc., Co. v. Atlantic, 
 
 2 Bank v. Flour Co., 41 Ohio St. 552 ; etc., R. Co., 34 Ohio St. 450. 
 Bristol v. Scranton, 63 Fed. Rep. 218. 8 Little Rock, etc., R. Co. v. Page, 35 
 
 8 Koehler v. Black River Falls Co., Ark. 304; Kelley v. Newburyport, etc., 
 
 2 Black (U. S. ) 715. Co., 141 Mass. 496; Manufacturers' 
 
 4 Munson v. Railway Co., 103 N. Y. etc., Bank v. Big Muddy, etc., Co., 97 
 
 58. Mo. 38 ; United States, etc., Co. v. At- 
 
 5 Aberdeen R, Co. v. Blaikie, 1 lantic, etc.,Co.,340hioSt. 450, 32 Am. 
 
 Macq. H. L. 461. Rep. 380.
 
 548 THE LAW OF PRIVATE CORPORATIONS. § 504 
 
 thereof. The general rule is that such dealings are not abso- 
 lutely void, but are voidable at the election of the corporation 
 or the stockholders thereof. They become binding if acqui- 
 esced in by the corporation. * * * The directors of a cor- 
 poration, in the transaction of its business and the disposition 
 of its property, do not sustain any such relation to the general 
 creditors of the corporation as they occupy to the corporation 
 and its stockholders. They are not the agents of such cred- 
 itors, nor can they generally be regarded as trustees, acting in 
 their behalf. The creditors are not entitled to disaffirm the 
 transfer of the property of the corporation made by its director 
 or other agent, merely because the corporation itself or its 
 stockholders could have clone so. The right of the creditors 
 to impeach the transaction depends upon its fraudulent char- 
 acter." 1 
 
 § 504. When an officer may deal with his corporation. 2 — 
 Notwithstanding the general language used in many decisions, 
 there is no rule of law which absolutely prohibits an officer or 
 director of a corporation from contracting with the corporation. 
 The contract is merely voidable, and may therefore be accepted 
 by the corporation. If it is represented by another agent in 
 the transaction the reason for the general rule fails. The su- 
 preme court of the United States says: 3 " It can not be main- 
 
 1 See, generally, notes to 17 Am. St. not properly be counted, however, if 
 
 Rep. 300, etse'j; L6 Am. St. Rep. 639. it is necessary to constitute a major- 
 
 1 O'Connor, etc., Co. v. Coosa, etc., ity, if the question is one in which he 
 
 Co., 95 Ala. 61 1, 36 Am. St. Rep, 251. is personally interested, and if, witli- 
 
 A director acting in n r/ws/degisla- out his vote, the resolution could not 
 
 tive capacity as a member of the board have been carried by the requisite 
 
 ie incompetenl to ad in matters in number of votes. In other words, it 
 
 which his interest is adverse to thai of is not adopted at all ; and he can not 
 
 the corporation. The interested di- enforce any claim or right which is 
 
 , ,,,;,;,- be counted asoneof the baaed Bolely upon it. Bennett v. St. 
 
 persons necessary to constitute a quo- Louis, etc., Co., 19 Mo. App. 340; 
 
 mm, andifthe resolution could have Chamberlain v. Pacific, etc., Co., 54 
 
 been adopted with him voting againsl Cal. 108; Copeland v. Johnson, etc., 
 
 it, the mere fact that his presence was Co., 47 Hun 285; Smith v. Los An- 
 
 necessary to constitute a quorum will geles, etc., Assn., 78 Cal. 289, 12 Am. 
 
 not deprive the resolution of itsvalid- St. Rep. 58. 
 
 Ity. Buellv. Buckingham ACo.,16 Iowa 'Twin lack, etc., Co. v. Marbury, 
 
 284,85 Am. Dec. 516. His vote can '.M U. S. 587.
 
 § 504 OFFICERS AND AGENTS, 549 
 
 tained that any rule forbids one director among several from 
 lending money to the corporation when the money is needed, 
 and the transaction is open and free from blame. No ad- 
 judged case has gone so far as this. Such a doctrine, while it 
 would afford little protection to the corporation against actual 
 fraud or oppression, would deprive it of the aid of those most 
 interested in giving aid judiciously, and best qualified to judge 
 of the necessity of that aid, and of the extent to which it may 
 safely be given." The true rule is that a director or officer of a 
 solvent corporation may deal with it, loan it money and take 
 security therefor, if the transaction is fair and no advantage is 
 taken of his position. 1 The transaction will be carefully scrutin- 
 ized, but if it appears that it was in good faith and beneficial 
 to the corporation, and the stockholders with full knowledge 
 received the benefits, it will be upheld in a court of equity. 2 
 Hence, an officer or agent may purchase property and after- 
 ward sell it to the corporation if he was not guilty of a breach 
 of duty in the purchase. The same principle will permit him 
 to purchase a claim at a discount and afterward enforce it 
 
 1 St. Joe, etc., Co. v. Bank, 10 Colo, him to hojld the property for its bene- 
 
 App.339, 50 Pac. Eep. 1055; Twin Lick, fit, or to disaffirm the sale and have 
 
 etc., Co. v. Marbury, 91 U. S. 587; the property resold. Hoyle v. Platts- 
 
 Harts v. Brown, 77 111.226; Mullan- burg, etc., R. Co., 54 N. Y. 314, 13 
 
 phy Bank v. Schott, 34 111. App. 500, Am. Rep. 595; McAllen v. Woodcock, 
 
 affirmed in 26 N. E. Rep. 640; Beach 60 Mo. 174; Raleigh v. Fitzpatrick, 43 
 
 v.Miller, 130 111. 162; Roseboom v. N. J. Eq. 501. 
 
 Whittaker, 132111.81; Louisville, etc., 2 Keystone, etc., Co. v. Bate, 187 
 
 R. Co. v. Carson (111.), 38 N. E. Rep. Pa. St. 460; Barr v. Pittsburgh, 
 
 140. If the circumstances are such etc., Co., 57 Fed. Rep. 86; Gorder v. 
 
 that a director may contract with a Plattsmouth, etc., Co. (Neb. 1893), 41 
 
 corporation, he may, of course, en- Am. & Eng. Corp. Cas. 87; Keeney v. 
 
 force his claim. Holt v. Bennett, 146 Converse (Mich. 1894), 58 N. W. Rep. 
 
 Mass. 437; Hallam v. Indianola, etc., 325; Twin Lick, etc., Co. v. Marbury, 
 
 Co., 56 Iowa 178. A director may be- 91 U. S. 587 ; Leavenworth v. Chicago, 
 
 come the purchaser at a mortgage fore- etc., Co., 134 U. S. 688; Battelle v. 
 
 closure sale of the property of the cor- Northwestern, etc., Co., 37 Minn. 89; 
 
 poration. Saltmarsh v. Spaulding, 147 Garrett v. Plow Co., 70 Iowa 697; 
 
 Mass. 224. Also at an execution or ju- Welch v. Bank, 122 N. Y. 177; Holt v. 
 
 dicial sale, although it is probable that Bennett, 146 Mass. 437 ; Saltmarsh v. 
 
 the corporation might elect to compel Spaulding, 147 Mass. 224.
 
 550 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §504 
 
 in full against the corporation. 1 But a purchase of land by a 
 director from the corporation at a greatly inadequate price 
 raises a presumption of fraud and throws upon the officer the 
 burden of showing the good faith of the transaction. 2 
 
 If it is apparent that a contract or other business trans- 
 action between a director and the corporation was not at- 
 tended by collusion between him and his fellow-direct- 
 
 1 Morawetz Priv. Corp. I, § 521, ap- 
 proved in St. Louis, etc., R. Co. v. 
 Chenault, 36 Kan. 51. 
 
 1 Woodruff v. Howes, 88 Cal. 184. 
 In Miner v. Belle Isle, etc., Co., 93 
 Mich. 97, McGrath, J., said: "The 
 authorities upon the question of the 
 validity of contracts made by directors 
 with c<>ri>( nations are by no means 
 harmonious. It is laid down in many 
 of the text-books that such contracts 
 are voidable at the instance of the cor- 
 poration. 1 Beach Corp., §§ 241,242; 
 Morawetz Corp.. §§ 243 245; Taylor 
 Corp., §§ 629,630; 2 Field Briefs, 193. 
 Again it has been held that a director 
 may deal witli the company in like 
 manner as with an individual, if he 
 deals honorably, and without endeav- 
 oring to influence or control it. hi 
 Am. Law Rev. 917; Harts v. Brown, 
 77 111. 226; United States, etc., Co. v. 
 Atlantic, etc., R. Co., 34 Ohio St. 450; 
 Mayor v. In man, etc., Co., 57 Ga. 370. 
 dm own courts, in People v. < >veryssel, 
 II Mich. 222, and in Railway Co. v. 
 Dewey, 1 1 Mich. 177, have held that 
 
 such contracts were not only voida- 
 ble hnt absolutely void. * * * All 
 tin- author i r i ■ • - agree that it is essential 
 thai the majority of the quorum ot' a 
 board of directors shall he disinter- 
 i in reaped to the matter voted 
 iihon." i Beach < !orp., 276 ; Smith v. 
 
 ■iation,7S('al. 289, W'herea loan 
 
 board of three are ant borized to make 
 
 a vrr:i n t to a railroad, and two of them, 
 
 on.- being director of the raili 
 
 make the grant, the court will set it 
 aside. San Diego v. Railroad Co., 44 
 Cal. 106; Bill v. Telegraph Co., 16 
 Fed. Rep. 14. A salary voted to the 
 president by a quorum of directors, 
 two being absent, and the president 
 being one of the three, is not enforc- 
 ible. Copeland v. Manufacturing Co., 
 47 Hun 235. Where the chief stock- 
 holder, who is president, induces the 
 directors, his dummies, to vote a large 
 salary to him, the corporation may 
 defeat the officers' action at law to re- 
 cover it. Davis v. Railroad Co., 22 
 Fed. Rep. 883. Where the majority of 
 stock of a corporation was held by one 
 family, who voted away the corporate 
 profits for salaries, the minority may 
 call upon a court of equity to remedy 
 the fraud. Sellers v. Iron Co., 13 Fed. 
 Kep. 20. A stockholder may compel 
 the contractors to disgorge when 
 they obtain a contract through their 
 associates or hirelings being made 
 directors. Currier v. Railroad Co., 85 
 linn | N.Y. ) 355. When two contract- 
 ors cause a railroad corporation to be 
 tunnel, in w Inch one contractor he 
 
 comes a director, ami the other direct- 
 ors are clerks of the second contract- 
 or, and the construction control is 
 made with these two by means of 
 
 dummy Intermediaries, at an improv- 
 ident price, one of the contractors can 
 
 qoI compel the other to divide the 
 profits, .lacks. hi v. McLean, ."'i Fed. 
 Rep. 213. See rlirsche v. Sims (H. L. 
 . L. R. < L894), A..0. 654.
 
 § 504 OFFICERS AND AGENTS, 551 
 
 ors ; that they represented the corporation according to their 
 best judgment ; that the contract was open, fair and without 
 concealment on the part of the contracting director, and 
 without taking advantage of any information which he may 
 have had to the exclusion of his fellow-directors, it is en- 
 forcible both at law and in equity, whether the corporation 
 acquiesces in or resists such enforcement. 1 The Iowa Supreme 
 Court declined to consent to the proposition " that a director of 
 an insolvent corporation can not take from it security by mort- 
 gage or other conveyance, securing a lien upon its property, 
 even though acting in good faith and without fraud in the 
 transaction. A creditor may accept payment or security from 
 an insolvent debtor free from the claim of other creditors. A 
 corporation may make payment of its debts, or give its prop- 
 erty in security thereof , just as any person may do. If, there- 
 fore, the director holds the indebtedness of an insolvent cor- 
 poration he may take payment or security, if an honest trans- 
 action. No reason can be given why a director who holds a 
 valid debt against his corporation can not, though it be insolv- 
 ent, in a fair and honest way take its property in security. If 
 the property, money or other consideration for the debt was 
 fairly used for the benefit of the corporation, was added to its 
 assets and used in its business, it would be unreasonable to 
 hold that the director is deprived of the remedy held b} 7 other 
 creditors." 2 Therefore, a contract between a corporation and 
 one of its directors, which is open, fair and free from fraud, and 
 sanctioned by a majority of the board of directors, not includ- 
 ing himself, is binding upon the corporation. 3 Such transac- 
 
 1 Beach v. Miller, 130 111. 162, 17 would have been the same if he had 
 
 Am. St. Rep. 291; Watts' App., 78 Pa. not voted. Clark v. American, etc., 
 
 St. 370; Garrett v. Burlington, etc., Co., 86 Iowa 436, 17 L. R. A. 557. 
 
 Co., 70 Iowa 697, 59 Am. Rep. 461. 3 T\vin-Lick, etc., Co. v. Marbury, 
 
 2 Garrett v. Burlington, etc., Co., 70 91 U. S. 587; Barr v. Plate Glass Co., 
 
 Iowa 697, 59 Am. Rep. 461. See also 57 Fed. Rep. 86, 17 U. S. App. 124; 
 
 Stetson v. Northern, etc., Co., 104 Roseboom v. Whittaker, 132 111. 81, 23 
 
 Iowa 393. A director's note for N. E. Rep. 339; Louisville, etc., R. 
 
 his own salary will not render the Co. v. Carson, 151 Hi. 444; Hallam v. 
 
 proceedings void when the result Hotel Co., 56 Iowa 178, 9 N. W. Rep.
 
 552 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 505 
 
 tions will, however, be carefully scrutinized by the courts, 1 and 
 the burden is on the officer to show that it is free from fraud 
 and fair to the corporation. 2 Where a disinterested majority 
 of the board of directors assent, the binding force of the con- 
 tract is made to turn upon the fairness or unfairness of the 
 contract to the corporation. But there are some jurisdictions 
 in which the corporation is permitted to repudiate the contract 
 upon showing the mere fact of the relation. 3 
 
 § 505. Right of corporation to repudiate such contract. — A 
 
 corporation may repudiate or ratify any transaction entered 
 into by its agents or officers without authority, if it is of a 
 character which it might have originally authorized. 4 The 
 right to repudiate is, however, subject to the provision that the 
 corporation must return the property or money which it re- 
 ceived from the agent under the contract. 5 As already stated, 
 a corporation can not repudiate a contract between it and one 
 of its officers or directors, which is fair and honest, and in the 
 
 111 ; Garrett v. Plow Co., 70 Iowa 697; 
 Buell v. Buckingham & Co., 1G Iowa 
 284; Parker v. Nickerson, 137 Mass. 
 487 ; Holt v. Bennett, 146 Mass. 437 ; 
 Salt marsh v. Spaulding, 147 Mass. 
 224; Ten Eyck v. Railroad Co., 74 
 Midi 226. See Miner v. Belle Isle, 
 etc., Co., 93 Mich. 'J7. 
 
 1 Thomas v. Railroad Co., 109 U. S. 
 522. 
 
 Clones v. Morrison, 31 Minn. 1 10; 
 Wilkinson v. Hauerle, 41 IS. J. Eq. 
 635. 
 
 3 Sc<- Muiison v. Railroad Co., 103 
 
 N. V. 58; Barr v. New York, etc, R. 
 
 !•_'.-. N. V. 263; Boyle v. Railroad 
 
 ,i N. V. ;i i ; Pearson v. Rail- 
 
 lorp., 62 N. II. 537. 
 
 1 Hoffman, etc., Co. v. Cumberland, 
 etc., Co., L6 Md. 156,77 Am. Dec. 311 ; 
 Hob 1 Co. v. Wade, '.'7 r. s. L8; 
 ,.,ri v. Lehigh Valley R. Co., 38 
 \. .i. i. 505; Meeker v. [ron Co., 17 
 Fed. Rep. I s ; Thomas v. Railwaj I to., 
 109 l'. 8. 522. Dealings between cor- 
 
 porations represented by the same of- 
 ficers and directors may be accepted 
 as binding by each corporation and 
 the stockholders thereof, as such deal- 
 ings are not absolutely void but 
 merely voidable at the election of the 
 directors or the stockholders; and they 
 become binding if acquiesced in by 
 the corporation and the stockholders. 
 O'Conner, etc., Co. v. Coosa, etc., Co., 
 95 Ala. iil 1, 36 Am. si. Rep.251 ; Buell 
 v. Buckingham&Co , Hi Eowa284 ; Ash- 
 hurst's App., (it) Pa. Si. 290. See also 
 note to Beach v. Miller, 17 Am St. 
 Rep. 298. It stands on practically the 
 same ground as a transaction between 
 a t rustee ami a cestui que trust in that it 
 may he avoided by the cestui que trust, 
 if he repudiates it within a reasonable 
 time after it comes to his knowledge. 
 Buell v. Buckingham & <'"., 16 iowa 
 284j Ashlmrst's App., 60 I'a. St. 290. 
 '•iardner v. Butler, 87 N. .1. Eq 
 702.
 
 § 506 OFFICERS AND AGENTS 553 
 
 making of which the corporation is represented by other dis- 
 interested agents. All contracts made by a corporate officer 
 with a corporation are, at the most, merely voidable at the 
 election of the corporation, and therefore binding upon the 
 corporation until repudiated. 1 This must be done within a 
 reasonable time after knowledge of the facts. 2 Such a contract 
 can not be avoided when all those who are interested in the 
 corporation consented that it might be made, and the property 
 received under the contract is retained by the corporation. 3 
 
 § 506. Contracts between corporations having common of- 
 ficers or directors. — It has been held in a few cases that a con- 
 tract between corporations having common officers or directors 
 is presumably fraudulent, and may be avoided irrespective 
 of its merits, although there was a majority in favor of mak- 
 ing the contract without counting the common directors. In 
 some of these decisions it is said that the contract is void ; in 
 others that there is a conclusive presumption of fraud, while 
 others merely say that there is a presumption of fraud, and 
 that when this is overcome by evidence which discloses a fair 
 and honest contract, it will be sustained. 4 Under such cir- 
 cumstances, that is, where a director is incapable of making a 
 contract, it may, nevertheless, become binding by the acqui- 
 escence of the shareholders. 5 
 
 § 507. The prevailing rule. — The weight of authority is 
 against the strict rule which renders all contracts be- 
 tween corporations having common officers or directors void. 
 
 J Twin Lick, etc., Co. v. Marbury, 91 Neb. 463; Currier v. New York, etc., 
 
 U. S. 587; Barr v. New York, etc , R. R. Co., 35 Hun (N. Y.) 355; Sweeny 
 
 Co., 125 N. Y. 263. v. Wheeling, etc., Co., 30 W. Ya. 443. 
 
 3 See Twin Lick, etc., Co. v. Mar- Under the Engish statute, 7 and Vict., 
 bury, 91 U. S. 587. ch. 10, section 29, which prohibits a 
 
 3 Battelle v. Pavement Co., 37 Minn, director from voting on a contract in 
 
 89. See Barr v. Glass Co., 57 Fed. which he is interested, it is held that 
 
 Rep. 89. a contract, in the making of which this 
 
 4 Metropolitan, etc., R. v. Manhat- provision is violated, is void. See 
 tan, etc., Co., 14 Abbott N. Cas. 103, Ernest v. Nicholls, 6 H. L. Cas. 401. 
 272-294, 11 Daly 373; O'Conner, etc., 5 O'Conner, etc., Co. v. Coosa, etc., 
 Co. v. Coosa, etc.. Co., 95 Ala. 614; Co., 95 Ala. 614. 
 
 Fitzgerald v. Fitzgerald, etc., Co., 44
 
 554 THE LAW OF PRIVATE CORPORATIONS. § 507 
 
 Where two corporations, through their boards of directors, 
 make a contract with each other, the common directors are 
 not within the rigid rule of the cases which hold that one who 
 acts in a fiduciary capacity can not deal with himself in his 
 individual capacity, and that any contract thus made will be 
 declared void, without reference to its fairness or the benefits 
 derived from it by the cestui que trust. Two corporations have 
 the right, within the scope of their chartered powers, to deal 
 with each other ; and this right is not destroyed or paralyzed 
 by the fact that some of the directors are common to both. 
 Of course, if such directors should wrongfully and willfully 
 use their powers to the prejudice of one of the corporations, 
 their action, if not acquiesced in and if not contested at the 
 proper time, can be avoided as in any other case of actual 
 fraud. But such common directors owe the same fidelity to 
 both corporations, and there is no presumption that they will 
 deal unfairly with either. While their acts may be voidable 
 they certainly are not void. 1 It is proper that a contract of 
 this character should be subjected to close scrutiny, 2 and if 
 it appears that there was actual fraud or any advantage was 
 of either corporation, it should be set aside. 8 The same rule 
 
 l San IHego, etc., Co. v. Pacific they represent being adverse, the con- 
 
 etc, Co. (Cal.), 33 L. R. A. 788; tracts may be set aside at the in- 
 
 Pauly v. Pauly, 107 Cal. 8, 48 Am. St. stance of any person having an in- 
 
 Rep. 98; Adams, etc., Co. v. Senter, terest which may have been sacri- 
 
 26 Mich. 73; Leavenworth Co. Com. ficed. Such contracts may be sus- 
 
 v. Chicago, etc., R. Co., 134 U. 8. 688; tained by proving that the directors, 
 
 Coe v. East, etc., R. Co., 52 Fed. Rep. although they represented conflicting 
 
 631; Bill v. W. U. Tel. Co., 16 Fed. interests, acted in good faith. IVar- 
 
 Rep. 14; Flagg v. Manhattan, etc., R. son v . Concord, etc., R. Co., 62 N. II. 
 
 Co., 10 Fed Rep. H3; Jesup v. I Hi- 537, L3 Am. St. Rep. 690; Goodin v. 
 
 tral R. Co., 13 Fed. Rep. 183; Cincinnati, etc., Co., L8 Ohio St. L69, 
 
 b v. Robinson, 65 Md. 419; United 98 Am. Dec. 95; Memphis, etc., R. 
 
 v. Atlantic, etc., Co., Co. v. Woods, 88 Ala. 630, 16 Am. St. 
 
 do St. 160, 32 Am. Rep. 380; Rep. 81. 
 
 Washington Nat'l Bank, n •Roy, etc., Co. v. Scott, etc., Co., 11 
 
 li. 560. When contracts are en- WaBh.399; Langan v. Francklyn, 29 
 
 tered into between two corporations, AbbottN.Cas. 102 ; Davidson v. Mexi- 
 
 a majority <<\ the board • ol directors can, etc., R, Co., 58 Fed. Rep. <'»•">•'{. 
 
 ,,f the two corporations being the B U«ion Pac. R. Co. v. Mobilier, 186 
 
 and Hi" interests \\ bich .Mass. :\U7.
 
 § 508 OFFICERS AND AGENTS. 555 
 
 applies to contracts between corporations having the same 
 executive officers as well as directors. Thus, a valid contract 
 may be made between two corportions which have the same 
 president. 1 Contracts which might have been avoided by the 
 corporation may become binding by ratification. 2 The unan- 
 imous consent of all the stockholders is not necessary to the 
 ratification of a voidable or unauthorized contract, as acts 
 which might have been authorized by the majority may be 
 ratified by the majority. "The corporation may, however, 
 ratify an unauthorized transaction of its agents ; and this may 
 be done by the unanimous acquiescence of the shareholders, or 
 by vote of the majority, if the transaction was of such a 
 character that the majority might have authorized it at the 
 outset." 3 
 
 § 508. Liability of a corporation for torts of its agents* 1 — 
 
 The general question of the liability of corporations for torts 
 has already been considered. 5 Their liability for the torts of 
 their agents is governed by the general law of agency. As a 
 general proposition a corporation is liable for the torts of its 
 officers and agents when committed in the course of their actual 
 or apparent employment. If the act is expressly authorized, 
 or is ratified by proper authority, there is, of course, no question 
 as to the liability of the corporation for the resulting damages. 
 If the corporation confers upon an agent the apparent author- 
 ity to do an act, it can not escape responsibility for the wrong- 
 ful manner in which the act is done by the person whom it 
 
 1 McComb v. Barcelona, etc., Assn., E. Rep. 1097. Before such a contract 
 
 134 N. Y. 598; Mayor v. Inman, etc., can be avoided it is necessary that 
 
 Co., 57 Ga. 370. what has been received under it be 
 
 8 San Diego, etc., R. Co. v. Pacific, returned. Thomas v. Brownville, etc., 
 
 etc., Co. 112Cal.53,33L.R. A. 788. For R. Co., 109 U. S. 522. 
 
 illustrations of what constitutes rati- 3 Morawetz Priv. Corp., §525, quoted 
 
 fication, see Roberts v. National Bank, in San Diego, etc., R. Co. v. Pacific, 
 
 11 Wash. 550; United States, etc., Co. etc., Co., 112 Cal. 53. 
 
 v. Atlantic, etc., Co., 34 Ohio St. 450, 4 See Wilgus' Cases, Liability of Cor- 
 
 32 Am. Rep. 380; Kitchen, etc., Co. v. porations for Torts. 
 
 St. Louis, etc., Co. , 69 Mo. 224 ; Evans- s See ch. 10, supra. 
 ville, etc., Co. v. Bank (Ind.), 42 N.
 
 556 THE LAW OF PRIVATE CORPORATIONS. § 508 
 
 thus holds out to the world as authorized to represent it in 
 such matters. But if the wrongful act is not done under actual 
 or apparent authority, the responsibility for it can not be 
 transferred from the agent to the corporation. A corporation 
 is liable for the tortious acts of its agent when a natural per- 
 son would be liable for the act under the same circumstances. 1 
 Hence the statement of the rule as to natural persons by Story 2 
 is equally applicable to corporations: "A principal is to be 
 held liable to third persons in a civil suit for the frauds, de- 
 ceits, concealments, misrepresentations, negligences and other 
 malfeasances and misfeasances and omissions of duty of his 
 agent in the course of his employment, although the principal 
 did not authorize or justify or participate in, or indeed, know 
 of such misconduct, or even if he forbade the acts or disapproved 
 of them. In all such cases the rule applies respondeat superior, 
 and is founded upon public policy and convenience, for in no 
 other way could there be any safety to third persons in their 
 dealings directly with the principal or indirectly with him 
 through the instrumentality of agents. In every such case the 
 principal holds out his agent as competent and fit to be trusted, 
 and thereby in effect warrants his fidelity and good conduct in 
 all matters within the scope of his agency." 
 
 If the act was done in the course of the agent's employment, 
 the corporation can not escape liability on the ground that it 
 was unauthorized, or that it was expressly forbidden, nor does 
 the fact that the agent acted willfully or maliciously affect the 
 question. 3 Thus, a railroad company is liable in damages for 
 an assaull by its conductor upon :i passenger. 1 But the agent 
 represents the corporation only when acting tor it within the 
 actual or apparent scope of his authority, and it has been 
 therefore held that a street railway company is not liable for 
 malicious prosecution and false arrest by its president and 
 
 'Denver, etc., R. Co. v. Harris, 122 "Wheeler, etc, Co. v. Boyce, 3G 
 
 Fifth Avenue, etc., Bank v. Kan. 850. 
 
 Forty-second St., etc., Co., 137 N. Y. 'North Chicago, etc., R. (V v. 
 
 L . : ;i ' Gastka, 128 ill. 618; Dwinelle, etc., R 
 
 •Agency, $ 452. Co. v. Railway Co., 120 N. V. 117; 
 
 Cracker v. Railway ('<>.. 86 Wis. 657,
 
 § 509 OFFICERS AND AGENTS. 557 
 
 superintendent on a charge of passing counterfeit money by 
 dropping a lead coin in the fare box. 1 Nor is a corporation 
 liable for the fraud of its president, who in negotiating a loan 
 to himself falsely represents that certain certificates of stock in 
 the corporation, which he offers as collateral for the loan, are 
 genuine. 2 A corporation is not liable for the act of its manager, 
 who received certain certificates of stock with directions to 
 cancel them, but who fraudulently reissued them for his own 
 benefit. 3 In these cases the act was not within the actual or 
 apparent authority conferred by the corporation upon the 
 agent; and in order to hold the corporation it would be neces- 
 sary to show that the specific act was either expressly author- 
 ized or ratified. 4 
 
 § 509. Ratification. — A corporation may become liable for 
 the unauthorized torts of its agent by ratification, either ex- 
 pressly, or through the acceptance of the benefits arising 
 therefrom with knowledge of the facts and circumstances. 
 Thus, where the agents of a corporation organized for educa- 
 tional purposes, wrongfully engaged in the business of convey- 
 ing passengers from the railway station to the grounds of its 
 school buildings, it was held liable for personal injuries occa- 
 sioned by the negligence of such agents, where it appeared 
 that the managing officers knew that the business was being 
 carried on, and received and retained the income resulting 
 therefrom. 5 
 
 1 In Central, etc., Co. v. Brewer, 78 delivering their testimony, did not 
 Md. 394, 27 L. R. A. 63, it was held support the theory of adoption or rat- 
 that the superintendent of a street ification. 
 
 railway company has no implied au- 2 Manhattan, etc., Co. v. Forty- 
 
 thority to cause the arrest of a pas- second St., etc., Co., 139 N. Y. 146. 
 
 senger for putting counterfeit coin in See Moores- v. Bank, 111 U. S. 156. 
 
 a fare box ; and the fact that the 3 Knox v. Eden Musee, etc., Co., 
 
 president, superintendent and driver 148 N. Y. 441. 
 
 testified before the court afforded no 4 See Central R. Co. v. Brewer, 
 
 legally sufficient evidence of ratifica- supra. 
 
 tion or adoption. If they were with- 5 Nims v. Mt. Hermon, etc., School, 
 
 out authority in causing the arrest, 160 Mass. 177, 22 L. R. A. 364, 
 
 the subsequent testimony given for Wilgus' Cases; Eastern, etc., R. Co. 
 
 the state by them, or the manner in v. Broom, 6 Exch. 314, Wilgus' 
 
 which they demeaned themselves in Cases.
 
 558 THE LAW OF PRIVATE CORPORATIONS. § 510 
 
 § 510. Liability for torts in ultra vires transactions. — When 
 it is sought to hold a corporation liable for the torts of its 
 agents, the only question properly for consideration is the au- 
 thority of the agent. In some cases, however, the courts have 
 said that the employment of the agent must have been in a trans- 
 action in which it was within the power of the corporation to en- 
 gage. If the act was ultra vires, it was said that the corporation 
 could not authorize it to be done by its agent, and that there- 
 fore there was no liability of the corporation for the tortious 
 acts of the agent committed in the course of the ultra vires 
 transaction. 1 Thus, in Maryland, where it was sought to hold 
 a national bank liable for false representations made by its 
 teller, in the sale of certain bonds, the court said: "We are 
 clearly of the opinion that the business of selling bonds on 
 commission is not within the scope of the powers of the corpo- 
 ration, and the bank could not, under any circumstances, 
 carry it on ; and being thus beyond the corporate powers, the 
 defense of ultra vires is open to the appellee. And it follows 
 from this that the bank is not responsible for any false repre- 
 - ntations made by its teller to the appellant, by which she 
 was induced to purchase the bonds in question." So, in 
 Georgia, an action against a railroad corporation and an indi- 
 vidual as partners failed because it was held that the corpora- 
 tion had no power to become a member of a partnership. 3 But 
 the rule now established is that, if a corporation engages in an 
 ultra vires transaction, it is liable for the torts of its agents, 
 committed under apparent authority in the course of the 
 transaction. This rule is strongly stated in the well known 
 Bissell case, 1 where the distinction between the power and ca- 
 pacity, as distinguished from the right to do an act, was noted, 
 and certain railroad corporations operating their roads jointly 
 miller an ultra vires act were held liable for personal injuries 
 
 1 Bathe v. Society, 7:: [owa 11. New York, <■!<■., R. Co. v. Raring, 17 
 
 •Wecklerv. Bank, 12 Md. 581. N.J. !.. L37; Hutchinson v. Railway 
 
 lunn v. Railway Co., 74 Ga. 509. Co., 6 Heisk. (Tenn. 634; Nims v. 
 
 •22 N. Y. 26 ilso Buffettv. Mi. Hermon School, 160 Mass. 177, 
 
 Railway • ''>.. i<> V Y. 168; Central, 39 \m. St. I: W7, 22 L. i; \. 364, 
 
 i; etc., ( " v. Smith, 76 Ala. •'»:•_'; Wilgus' Cases.
 
 § 511 OFFICERS AND AGENTS. 559 
 
 caused to a passenger through the negligence of their agents. 
 Where a street railway corporation attempted to avoid lia- 
 bility for a personal injury, on the ground that it was en- 
 gaged in an ultra vires transaction, not having been granted 
 the necessary franchise, the court said: 1 "But the doctrine 
 of ultra vires does not apply to torts of this nature. It would 
 indeed be an anomalous result in legal science if a corporation 
 should be permitted to set up that, inasmuch as a branch of 
 the business prosecuted by it was wrongful, therefore all the 
 special wrongs done to individuals in the course of it were 
 remediless. But in such situations corporations, like individ- 
 uals, can not take advantage of their own wrong by way of de- 
 fense. If corporations are not to be held responsible for inju- 
 ries done to persons in the transaction of a series of wrongful 
 acts, such an immunity would have wide scope. All wrongs 
 done by such bodies are in a sense ultra vires, and if the want 
 of a franchise to do a tortious act be a defense, then corpora- 
 tions have a dispensation from liability for these acts peculiar 
 to themselves." 
 
 § 511. Liability of officers for acts in excess of authority. — 
 
 Directors and other officers who exceed their authority may be 
 liable not only to the corporation for any damages occasioned 
 thereby to it, but also personally to the parties with whom 
 they have dealt. 2 " There can be no doubt that if the direct- 
 ors or officers of the company do acts clearly beyond their 
 power whereby loss ensues to the company, or dispose of its 
 property, or pay away its money without authority they will 
 be required to make good the loss out of their private estate." 
 This is the rule whether the disposition made of the money or 
 property of the corporation is one either not within the lawful 
 power of the corporation, or if within the power of the corpo- 
 
 1 New York, etc., R. Co. v. Haring, and Mechanics' Bank v. Colby, 64 
 
 47 N. J. L. 137. Cal. 352. 
 
 2 Solomon v. Penoyar, 89 Mich. 11 ; 'Thompson Liability of Officers, 
 
 Citizens', etc., Assn. v. Coriell, 34 §375; Discount Co. v. Brown, L. R. 
 
 N. J. Eq. 383; Nelligan v. Campbell, 8 Eq. 381 ; Flitcrof. t's case, L. R. 21 Ch. 
 
 20 N. Y. Supp. 234. But see Farmers' Div. 519; Insurance Co. v. Jenkins 
 
 3 Wend. 130.
 
 560 THE LAW OF PRIVATE CORPORATIONS. § 512 
 
 ration, is not within the power or authority of the particular 
 officer or officers. 1 
 
 This liability for unauthorized acts, although prohibited by 
 statute or by-law, rests in fact upon the common-law rule 
 which renders every agent liable, who exceeds his authority or 
 neglects his duty. 2 But the officer is not liable to the corpo- 
 ration for ultra vires acts which were authorized by the stock- 
 holders, either expressly or by acquiescence. 3 The fact that 
 the board of directors in violation of their own duty attempted 
 to authorize an officer to do an act in violation of his duty, is 
 no defense to an action on the officer's official bond. 4 
 
 § 512. Liability for abuse of trust. — The directors of a pri- 
 vate corporation who willfully abuse their trust or misapply 
 the funds of the company by which a loss is sustained, are 
 personally liable to make good the loss, and they are equally 
 liable if they suffer the corporate funds or property to be 
 wasted by gross neglect and inattention to the duties of their 
 position. 5 So, if there is neglectful abandonment of his official 
 duty by a director, or if he leaves the entire control of the 
 company's business to other agents and fails to exercise proper 
 supervision, he is liable for losses which due attention and 
 diligence on his part might have prevented. If there is cul- 
 pable negligence of this character on the part of a director, an 
 action at law may be maintained against him by his principal, 
 as in other cases of agency, without joining his associates. 6 
 An officer who has misappropriated the funds of a corporation 
 
 1 North Hudson, etc., Assn. v. •Minor v. Bank, 1 Pet. (TJ. S.) 46. 
 Childs, 82 Wis. 460, 52 N. W. Rep. s Doe v. N. \V. & Co., 78 Fed. Rep. 
 
 800. 62; Robinson v. Smith, :i Paige 221, 24 
 
 * Briggs v. Bpaulding, 141 U. S. K52; Am. Dec. 212; Brinckerhoff v. Host- 
 
 North Hudson, etc., Assn. v. Childs wick, 88 N. Y. 52; Delano v. Case, 
 
 (Wis.), 52 N. W. Rep. 600; Throop 121 111.247; Perry v. Oil Mill Co., 93 
 
 Liability of Officers, § 357. Aatowhal Ala. 364; Wilkinson v. Bauerle,41N. 
 
 acta are sufficient to charge the offi- .1. Eq. 635; Marshall v. Bank,85Va. 
 
 i'c I'crry v. Tuscaloosa, etc., Co. 676, L7 Am. St. Rep. 84. 
 (Ala.), 9 So. Rep. 217; Wayne, etc., "Horn, He, C<>. v. Ryan, 12 Minn, 
 
 Co. ■. Hammone find.), 27 N. E. L96; Hun v. Cary, 82 N. Y.65,87 Am. 
 
 Rep. 187; Ellis v. Ward, 187 111. 580, Rep. 646; Empire, etc., Bank v. Beard, 
 
 E. Rep. i 80 N. V. Sup. 756. 
 
 s Holmes v. Willard, L25 N. V. 7:>.
 
 § 513 OFFICERS AND AGENTS. 561 
 
 can not cure the breach of duty and entitle himself to the fur- 
 ther custody of the assets by simply restoring the money. 1 
 
 § 513. Degree of care required of directors. 2 — Officers and 
 directors of a corporation, when they act in good faith within 
 their authority and the limits of the power conferred upon 
 them by the charter, are not responsible to the corporation for 
 losses resulting from mere mistakes of judgment. Their lia- 
 bility, if any, must result from a failure to exercise the ordi- 
 nary care and diligence which is required from them under 
 the circumstances. This degree of care is that which a pru- 
 dent man exercises in his own affairs. 3 In a recent case 4 it was 
 said: "In respect to directors, or those acting ex officio as 
 such, the rule of liability has been the subject of much discus- 
 sion. In the recent case of Briggs v. Spaulding, 5 in which, 
 although there was a strong dissent, the rule may be regarded 
 as settled, in the federal courts at least, and in the courts of 
 several of the states as there laid down, and to the effect that 
 directors, although often called trustees, are not such in any 
 technical sense, but that they are mandataries, the relation 
 between them and the corporation being rather that of princi- 
 pal and agent; but, under circumstances, they may be treated 
 as occupying, in consequence of the powers conferred on them, 
 the position of trustees to cestuis que trustent; that the degree 
 of care required of them depends upon the subject to which it 
 is to be applied, and each case is to be determined upon its 
 own circumstances; that, as they render their services gratuit- 
 ously, they are not to be held to the degree of responsibility of 
 
 1 Fougeray v. Cord (N. J. Eq.), 24 trim, 123 Ind. 24, 23 N. E. Rep. 858. 
 Atl. Rep. 499. As to suspicious circumstances which 
 
 2 See Wilgus' Cases. should cause a director to make in- 
 
 3 Wallace v. Lincoln Sav. Bank, 89 quiry, see Gibbons v. Anderson, 80 
 Tenn. 630, 24 Am. St. Rep. 625; Sper- Fed. Rep. 345; Robinson v. Hall, 63 
 ing's App., 71 Pa. St. 11; 10 Am. Fed. Rep. 222, 25 U. S. App. 48, 12 C. 
 Rep. 684; Hun v. Cary, 82 N. Y. 65, C. A. 674. Note to 48 Am. St. Rep. 921.' 
 37 Am. Rep. 546; Watts' App., 78 * North Hudson, etc., Assn. v. 
 Pa. St. 370; Horn v. Silver, etc., Co., Childs (Wis.), 52 N. W. Rep. 600. 
 
 42 Minn. 196; Williams v. McDonald, 5 141 U. S. 132. See, also, Warner 
 37 N. J. Eq. 409; Mowbray v. An- v. Penoyer, 82 Fed. Rep. 181. 
 36— Private Corp.
 
 562 THE LAW OF PRIVATE CORPORATIONS. § 514 
 
 bailees for hire, 1 or expected to devote their whole time and at- 
 tention to their duties; that they are not, in the absence of any 
 element of positive misfeasance, and solely on the grounds of 
 passive negligence, to be held liable, unless their negligence is 
 gross, or they are fairly subject to the imputation of a want of 
 good faith. * * * The degree of care they are bound to exer- 
 cise is that which ordinary prudent and diligent men would 
 exercise under similar circumstances in respect to a like gratu- 
 itous employment, regard being had to the usages of business 
 and the circumstances of each particular case ; that they are 
 not liable, in the absence of fraud or intentional breach of 
 trust, for negligence, mistakes of judgment and bad manage- 
 ment in making investments on doubtful or insufficient secur- 
 ity. Where they have not profited personally by their bad 
 management, or appropriated any of the property of the cor- 
 poration to their own use, courts of equity treat them with in- 
 dulgence. Were a more rigid rule to be applied, it would be 
 difficult to get men of character and pecuniary responsibility 
 to fill such positions." 2 
 
 § 514. Liability of officer is for individual acts or omissions. 
 
 — It is for their own acts and negligence only that officers 
 and directors of a corporation are liable to the corporation. 
 Hence, the corporation can not hold a director merely because 
 he is a director personally liable for damages occasioned by 
 the wrongful acts or negligence of other directors. "Upon a 
 close examination of all the reported cases," said Mr. Justice 
 Sharswood,' "although there are many dicta not. easily recon- 
 cilable, yet, I have found no judgment or decree which has 
 held directors to account, e.\<-o|>t when they have themselves 
 been guilty of some fraud on the corporation or have known 
 or connived at some fraud in others, or where such fraud 
 liii^ht have been prevented had (hey given ordinary attention 
 
 1 linn v. Cary, 82 N. Y. 65; Horn, 150; Ackerman v. Halsey, 37 N\ J. 
 
 etc., Co. v. Ryan, 12 Minn. 196. Eq. 356; In re Denham & Co., 25 L. 
 
 Lpp.,71 Pa. St. ll;Swent- R. Ch. Div. 752 ; Watts' \.pp., 78 Pa, 
 
 ssei 23 Ml. Rep K)5; In St. 870; Hun v. Cary, 82 V Y. 65, 
 
 ra i Co., I-. R. L0 Ch. Div. ■ Spering's App., 71 Pa. St. LI.
 
 § 515 OFFICERS AND AGENTC 563 
 
 to their duty. I do not mean to say by any means that their 
 responsibility is limited to these cases, and that there might 
 not exist such a case of negligence or of acts clearly ultra vires 
 as would make perfectly honest directors liable. But it is 
 evident that gentlemen selected by the stockholders from their 
 own body ought not to be judged by the same strict standard 
 as the agent or trustee of a private estate. Were such a rule 
 applied, no gentleman of character and responsibility would be 
 willing to accept such places." 1 The corporation has a remedy 
 against the directors and officers for negligence, fraud, breach 
 of trust, or for acts done in excess of their authority, but the 
 case against each is distinct, depending upon the evidence 
 against him, unless two or more have joined or participated 
 in the wrongful act, in which case all participants may be 
 joined as defendants. 2 The liability for acts of sub-agents is 
 based upon the want of care in selecting or supervising such 
 agents. Thus, the directors are not insurers of the fidelity of 
 the agents whom they have appointed, who are not their 
 agents, but the agents of the corporation, and they can not be 
 held responsible for losses resulting from the wrongful acts or 
 omissions of other directors or agents, unless the loss is a con- 
 sequence of their own neglect of duty, either in failing to 
 supervise the business with attention or in neglecting to use 
 proper care in the appointment of agents. 3 It is no ground 
 of liability or even of censure, that directors knowing of the 
 bank's embarrassment, conceal the fact from creditors; for 
 such is their duty, unless the embarrassment is such as to im- 
 peratively demand suspension. 4 
 
 § 515. Supervision of sub-agents. — With reference to the 
 claim that the directors of a corporation should have exercised 
 
 1 Association v. Coriell, 34 N. J. Eq. Fed. Eep. 781 ; Savings Bank v. Ca- 
 
 383; Land, etc., Co. v. Lord Fermoy, perton, 87 Ky. 306; Stapleton v. 
 
 L. R. 5 Ch 763. Odell, 47 N. Y. Supp. 13; New York, 
 
 2 North Hudson, etc., Assn. v. etc., Co. v. Higgins, 29 N.Y. Supp. 416; 
 
 Childs, 86 Wis. 292, 52 N.W. Rep. 600; Higgins v. Hayden (Neb.), 73 N. W. 
 
 Briggs v. Spaulding, 141 IT. S. 132; Rep. 280; Isham v. Post (N. Y.), 35 N. 
 
 Warner v. Penoyer, 82 Fed. Rep. 181. E. Rep. 1084. 
 
 3 Briggs v. Spaulding, 141 U. S. 132. 4 Robinson v. Hall, 59 Fed. Rep. 
 
 See also Wheeler v. Aiken Bank, 75 648.
 
 564 THE LAW OF PRIVATE CORPORATIONS. § 516 
 
 greater care in checking up the books of a bank, and examin- 
 ing into the conduct of a managing officer, the supreme court 
 of the United States said: 1 "Certainly it can not be laid down 
 as a rule that there is an invariable presumption of rascality 
 as to one's agents in business transactions, and that the degree 
 of watchfulness must be proportioned to that presumption. 
 ' I know of no law,' said Vice-Chancellor McCoun, 2 'which re- 
 quires the president or directors of any moneyed institution to 
 adopt a system of espionage in relation to their secretary or 
 cashier or any subordinate agent, or to set a watch upon all 
 their actions. While engaged in the performance of the gen- 
 eral duties of their station they must be supposed to act hon- 
 estly, until the contrary appears; and the law does not require 
 their employer to entertain jealousies and suspicions without 
 some apparent reason. Should any suspicious circumstance- 
 transpire to awaken a just suspicion of their want of in- 
 tegrity, and it be suffered to pass unheeded, a different rule 
 would prevail, if a loss ensued. But without some fault on 
 the part of the directors amounting either to negligence or 
 fraud, they can not be liable.' " It was therefore held that 
 the failure of directors to cause a thorough examination of the 
 books of the bank to be made within ninety days after their 
 election was not negligence, when the bank was generally 
 regarded as in good condition and the managing officer was 
 a man of good reputation in the community. 
 
 § 516. Knowledge of contents of corporate records. — A di- 
 rector or stockholder is not chargeable with actual knowledge 
 of the business transactions of the corporation merely because 
 he is such director or stockholder. 3 The directors of a corpo- 
 
 1 Brigge v. Spaulding, I II U. S. 132. had he given proper attention to the 
 
 h, -in Pedro, etc., Co. v. Reynolds, business. Bee Cameron v. Kenyon- 
 
 Il'I Oal. 74, the manager ol a corpo- Connell, etc, ('<>. (Mont.), 44 L. R. 
 
 ration whose duties were to Btiperin- A.. 608. 
 
 tend, ovei lee, and direel the business 2 Scott v. DePeyBter, l Ed. Ch. 518. 
 
 of the corporation, was held liable for 3 Rudd v. Robinson, 126 N. Y. 113, 
 
 thefts by a bookkeeper, on tin' ground 'Si Am. Bt. Rep. 816. Bee Houston v. 
 
 thai they wouldhave been avoided Thornton, 122 N. C. :{<;:., i;f) Am. St.
 
 § 516 OFFICERS AND AGENTS. 565 
 
 ration can not as a matter of law be charged with knowledge 
 of what is disclosed by the books and records of the corpora- 
 tion. Thus, in an action in which it was sought to hold the 
 directors liable for negligence the supreme court said that 
 knowledge of what the books and papers would have shown 
 can not be imputed to the directors. 1 Chief Justice Fuller 
 quoted with approval the following language of Judge Earl: 2 
 "He was simply a director and as such attended some of the 
 meetings of the board of directors. As he was a director, 
 must we impute to him for the purpose of charging him with 
 fraud a knowledge of all the affairs of the company? If the 
 law requires this then the position of a director in any large 
 corporation like a railroad or banking or insurance company, 
 is one of constant peril. The affairs of such a company are 
 generally of necessity largely intrusted to managing officers. 
 The directors generally can not know and have not the ability 
 or knowledge requisite to learn by their own efforts the true 
 condition of the affairs of the company. They select agents in 
 whom they have confidence and largely trust to them. They 
 publish their statements and reports relying upon the facts and 
 figures furnished by their agents; and if the directors, when 
 actually cognizant of no fraud, are to be held liable in an ac- 
 tion of fraud for an error or misstatement in such statements 
 and reports, then we have a rule by which every director is 
 made liable for any fraud that may be committed upon the 
 company in the abstraction of its assets and diminution of its 
 capital by any of its agents, and he becomes substantially an 
 insurer of their fidelity. It has not been generally understood 
 that such a responsibility rested upon the directors of a corpo- 
 ration and I know of no principle of law or rule of public pol- 
 icy which requires that it should." 
 
 On the same question Sir George Jessel said: 3 " It is con- 
 tended that Hallmark, being a director must be taken to have 
 
 Rep. 699, annotated, 21 Am. St. Rep. 'Briggs v. Spaulding, 141 U. g. 132, 
 662. As to when knowledge of pro- 162. 
 
 ceedings are to be imputed to officers 2 Wakeman v. Dalley, 51 N. Y. 27, 
 and shareholders, see note to 22 Am. 32. * 
 
 St. Rep. 821. 3 Hallmark's Case, L. R. 9 Ch. Div. 
 
 329.
 
 5G6 THE LAW OF PRIVATE CORPORATIONS. § 517 
 
 known the contents of all the books and documents of the 
 company, and so to have known that his name was on the 
 register of shares for fifty shares. But he swears that in fact 
 he did not know that any shares had been allotted to him. Is 
 knowledge to be imputed to him under any rule of law? As 
 a matter of fact no one can suppose that a director of a com- 
 pany knows everything which is entered in the books ; and I 
 see no reason why knowledge should be imputed to him which 
 he does not possess in fact. Why should it be his duty to 
 look into the list of shareholders? I know no case except Ex 
 parte Brown, 1 which shows that it is the duty of a director to 
 look at any of the entries in the books ; and it would be ex- 
 tending the doctrine of constructive notice far beyond that or 
 any other case to impute to this director the knowledge which 
 it is sought to impute to him in this case." 
 
 A principal stockholder in a corporation who knew that a. 
 person was employed by it as its president was held bound by 
 the contents of its corporate books in respect of his salary 
 when they were open to her examination and she failed to 
 make an examination within a reasonable time. 2 
 
 § 517. Liability for care of papers. — The liability of the 
 officers of a corporation for corporate funds and papers intrusted 
 to their care is that of an ordinary trustee or bailee for hire. 8 
 
 § 518. Liability for mistakes. — Directors are not liable for 
 mistakes of fact if they exercise due diligence and care. Thus 
 they are not personally liable for erroneously paying a divi- 
 dend out of capital if they made a careful investigation and 
 honestly believed that there were profits out of which to pay 
 the dividend. 4 So where the directors act in good faith and 
 with proper diligence, they arc not responsible for mistakes of 
 law. 5 They are not, bound to consult counsel, 1 ' and the fact 
 
 1 in Beav. 97. 'Hodges v. New England, etc., Co., 
 
 •Church i Cementico Co. (Minn.), I R. I. 812, 58 Am. Dec. 624; Wil- 
 
 77 N. W. Rep. 548. I'mms v. McDonald, 37 N. .1. Eq. 409; 
 
 ■Mowbray v. Antrin (Ind.), 23 N. Spering's Appeal, 71 Pa. St. 11, 10 Am, 
 
 i: I: ;. Rep. 684. 
 
 ■Excelsior, etc., Co. v. Lacey, 68 'Vance v. Phoenix, etc., Co., 4 Lea 
 
 N. V. IL'L'. (Trim.) 385.
 
 § 519 OFFICERS AND AGENTS. 567 
 
 of having consulted counsel, while evidence of care, will not 
 necessarily exempt them from liability if they do not act in 
 good faith. 1 
 
 § 519. Liability on contracts. 2 — The liability of the officer or 
 agent of a corporation on a contract made by him on behalf of 
 the corporation is governed by the general principles of the 
 law of agency, and not by any principles peculiar to the law 
 of corporations. If the agent exceeds his authority, he is 
 himself liable upon the contract. 3 It has been held that the 
 agent is liable in contract when he acts in good faith, and in 
 tort when he acts in bad faith ; that he is liable on an implied 
 warranty of authority; 4 and that the liability is in all cases in 
 tort. 5 A person who 'acts as the agent of a foreign corporation 
 which is not authorized to do business in the state, knowing 
 such to be the fact, is personally liable on the contract. 6 
 
 § 520. Liability to third persons for torts. — An officer of a 
 corporation who, in the course of his employment, is guilty of 
 a tort, is personally liable to the person injured for the dam- 
 ages caused thereby, notwithstanding the fact that the corpo- 
 ration may also be liable. 7 But it must appear that the act 
 was committed by such officer, or that it was his duty to at- 
 tempt to prevent it, and that he failed to do so. 8 Thus, the 
 manager of a corporation in charge of its works is personally 
 liable for damages because of his negligent failure to erect a 
 
 1 See Caulkins v. Gas Light Co., 85 6 Lasher v. Stimpson, 145 Pa. St. 30. 
 
 Tenn. 683, 4 Am. St. Rep. 786. "As to liability for misrepresenta- 
 
 2 See Wilgus' Cases, Relation of Of- tion as to solvency of the corporation, 
 ficers to Dealers and Non-Dealers. see Houston v. Thornton, 122 N. C. 
 
 3 See note to 53 Am. Dec. 649; 365, 65 Am. St. Rep. 699 and note, p. 
 Kroeger v. Pitcairn, 101 Pa. St. 311, 707. See, also, notes to 8 Am. St. 
 47 Am. Rep. 718; Feeter v. Heath, 11 Rep. 604 and 48 Am. St. Rep. 921, 7 
 Wend. (N. Y.) 478; Keener v. Har- Am. Dec. 255. 
 
 rod, 2 Md. 63. 8 Nunnelly v. Southern, etc., Co., 
 
 4 Farmers', etc., Co. v. Floyd, 47 Ohio 94 Tenn. 397, 28 L. R. A. 421, anno- 
 St. 525; Nelligan v. Campbell, 20 N. tated ; Cameron v. Kenyon-Connell, 
 Y. Supp. 234; Lasher v. Stimpson, 145 etc., Co. (Mont.), 44 L. R. A. 508; 
 Pa. St. 30; Lewis v. Tilton, 64 Iowa People v. England, 27 Hun (N. Y.) 
 220, 19 N. W. Rep. 911. 139. 
 
 6 Jefts v. York, 10 Cush. (Mass.) 392.
 
 568 THE LAW OF PRIVATE CORPORATIONS. § 521 
 
 scaffold which is necessary for the protection of persons pass- 
 ing near the building. 1 So, an officer and general manager 
 of a lumber company is personally liable for setting an inex- 
 perienced and ignorant employe at work upon dangerous ma- 
 chinery without giving him proper instructions. 2 The officers 
 of a mining company are personally liable for damages caused 
 to a riparian proprietor by the long-continued discharge of 
 muddy water into a stream with their knowledge and con- 
 sent. 3 The directors are liable to a person who, by fraudulent 
 representation made by the directors, are induced to contract 
 with a corporation to their injury. Such an act is founded 
 upon the personal tort of the directors. 1 A purchaser of mort- 
 gage bonds issued by a corporation who relies upon a state- 
 ment on their face that they are first mortgage bonds, may re- 
 cover the damages sustained thereby from the corporate offi- 
 cers who issued the bonds with the intention that the state- 
 ment should be acted on as true by the purchaser. 5 Officers 
 and directors who knowingly issue or cause to be issued a 
 prospectus containing false statements of material facts, which 
 have a natural tendency to mislead, are liable personally to 
 persons who purchase the corporate stock in reliance thereon. 6 
 Such a case must, of course, come within the general rules 
 governing other actions for false representation. 7 
 
 § 521. Yiolation of charter or statute. — The liability of an 
 officer for neglect of the duty which he owes to the corpo- 
 ration does not rest upon the fact that the act is prohibited by 
 statute, but upon the violation of a common law duty. Thus 
 Morawetz says: 8 The liability of directors for damages caused 
 
 1 Mayer v. Thompson, etc., Co., 104 B Morgan v. Skid.lv, (12 X. Y. 319. 
 
 Ala. 'ill, 28 L. !:. A. 133. See §370. 
 
 enbergv. Wnitcomb, etc., Co., 7 Cole v. Cassidy, 138 Mass. 137. 
 
 90 Wis. 225, 28 L. R. A. 439. 'Morawetz Priv. Corp., § 556, 
 
 "Nunnelly v. Southern, etc., Co., 94 quoted with approval in Brigga v. 
 
 Tenn. 397, 28 L. R. i. 421. Spaulding, in Q. S. 132. See also' 
 
 4 Salmon v. Richardson, ■':'> Conn, North Hudson, etc., Assn. v. Childs, 
 
 360 86 Wis. 292. 
 
 ni; oi Atchison Oo. v. Byere, L89 
 Mo. 627.
 
 § 522 OFFICERS AND AGENTS. 569 
 
 by acts expressly prohibited by the company's charter or act 
 of incorporation is not created by force of the statutory prohi- 
 bition. The performance of acts which are illegal or pro- 
 hibited by law may subject the corporation to a forfeiture of 
 its franchises and the directors to criminal liability; but this 
 would not render them civilly liable for damages. 1 The lia- 
 bility of directors to the corporation for damages caused by 
 unauthorized acts rests upon the common law rule which ren- 
 ders every agent liable, who violates his authority to the dam- 
 age of his principal. A statutory prohibition is material under 
 these circumstances, merely as indicating an express restric- 
 tion placed upon the powers delegated to the directors when 
 the corporation was formed. 
 
 § 522. Liability imposed by statute. — The officers and di- 
 rectors of a corporation are, by statute, in some states made 
 liable for the debts of the corporation. The liability is some- 
 times absolute to a certain amount, 2 or for an amount in ex- 
 cess of a designated indebtedness, 3 but more commonly it is 
 penal for a breach or neglect of duty, 4 as a failure to make a 
 report, 5 or the making of a false report, 6 or violating any of 
 the provisions of the act under which the corporation is incor- 
 porated whereby it becomes insolvent. 7 Such statutes are 
 strictly construed, and under them a clear case must be made 
 out in order to render the officer liable. 8 
 
 *But see Baxter v. Coughlan 95; Matthews v. Patterson, 16 Colo. 
 
 (Minn.), 72 N. W. Rep. 797. 215. Paying a dividend out of capi- 
 
 2 State Bank v. Andrews, 18 N. Y. tal. Eorke v. Thomas, 56 N. Y. 559. 
 
 Supp. 167. 'Patterson v. Minnesota, etc., Co. ; 
 
 'Thatcher v. King, 156 Mass. 490; 41 Minn. 84; Clow v. Brown, 150 Ind. 
 
 Tradesman's, etc., Co. v. Knoxville, 185. 
 
 etc., Co.,95Tenn.634, 31 L. R. A. 593. 8 Garrison v. Howe, 17 N. Y. 458; 
 
 4 Patterson v. Minnesota, etc., Co., Bruce v. Piatt, 80 N. Y. 379. The stat- 
 41 Minn. 84. ute of limitation governing penalties 
 
 5 Gold v. Clyne, 134 N. Y. 262, 31 N. applies. Merchants' Bank v. Bliss, 35 
 E. Rep. 980, 17 L. R. A. 767; Bank v. N. Y. 412. In Jones v. Barlow, 62 X. 
 Pierson, 112 Mich. 410. Y. 202, it was held that the statute be- 
 
 6 Torbett v. Godwin, 62 Hun 407; gins to run from the time when the 
 
 Ferguson v. Gill, 19 N. Y. Supp. 149; cause of action accrues to the creditor, 
 
 Chittenden v. Thannhauser, 47 Fed. and not from the time of the default 
 
 Rep. 410; Pier v. Hanmore, 86 N. Y. in making the report.
 
 570 THE LAW OF PRIVATE CORPORATIONS. § 522 
 
 The failure by the directors of a corporation to file an annual 
 report of its assets and liabilities, as required by the statute, 
 will not render them personally liable for a contingent liabil- 
 ity of the corporation under an executory contract, which does 
 not become an existing debt until the corporation has expired 
 bv the terms of its articles of incorporation. 1 It is essential 
 to the liability of directors for default in filing a report that 
 their occupancy of that relation, that such default, and that the 
 debt of the corporation , have existence at the same point of time. 2 
 The liability of the directors dependent on default in filing a 
 report is measured by the obligation of the company and the 
 remedy against it and them is concurrent. 3 The report need 
 not be made after the corporation has ceased to have a legal ex- 
 istence. After the death of the company, it could make no re- 
 port, and the directors are not chargeable with liability founded 
 upon such omission. It has been held that even after a de facto 
 dissolution no report is necessary for the protection of the 
 directors. 1 But the mere fact that the corporation lias ceased 
 to do business does not excuse the failure to file the report. 5 
 A creditor who seeks to hold a director liable for the failure to 
 file a report must show that he is a creditor, and the fact that 
 he lias obtained judgment is prima facie evidence that he is a 
 creditor. 6 A director will not be permitted to profit by his 
 own wrong, and, hence, neither a director who is a creditor 
 nor his assignee can maintain an action against the other 
 directors for a breach of duty of which he is also guilty. 7 No 
 vested right can be acquired in a penalty, and, therefore, stat- 
 ute- of Hi is character which impose liability upon the direct- 
 
 1 Gold v. Clyne, 134 N.Y. 262,17 L. corporation to forfeiture of its char- 
 
 i; \. 707. ter, sec People v. Buffalo, etc., Co., 
 
 -!,:,!.• r. etc., Co. v. Bliss, 27 N. Y. L3J N. Y. I 10, L5 I.. R. A. '-'lit. 
 
 297; Duckworth v. Roach, 81 N. Y. I'.i. "Sanborn v. Lefferts, . r ,s x. v. L79. 
 
 v. Barlow, 62 N. Y. 202; Sec International Bank v. Faber, 86 
 
 Trinity Church v. Vanderbilt, 98 N. Fed. Rep. 448, 67 CT. S. \|>i>. 153. 
 
 V. [70. fi Miller v. White, 60 N. Y. L37. 
 
 •Huguenot Bank v. Stud well, 74 N. "Knox v. Baldwin, 80 N. Y. 610. 
 
 ¥.621; Bonnell v. Griewold, 80 N.Y. The liability may b» enforced by a 
 
 Gold v. Clyne, L34 N. Y. 262, 17 creditor stockholder. Banborn v. Lef- 
 
 l. i; .\. 767. Foi it"- effect of b fail- ferta, 68 N. Y. L79. 
 ore to file b report, as subjecting the
 
 §523 OFFICERS AND AGENTS, 571 
 
 ors may be repealed and the right of action taken away at any 
 time before judgment is entered. 1 Where a statute makes 
 the directors personally liable when they consent to the crea- 
 tion of indebtedness in excess of the assets of the corporation, 
 it must be shown that the consent was given in the capacity of 
 a director. The term indebtedness, in such connection, in- 
 cludes bonded indebtedness. The liability is for the benefit 
 of creditors whose debts were thus illegally contracted, and 
 must be enforced by a bill filed for the benefit of all creditors 
 similarly situated. 2 
 
 § 523. Liability of directors where corporation maintains a 
 nuisance. — It is the duty of the directors of a corporation to 
 avoid the creation of nuisances by their corporation through 
 its employes acting within the line of their duty. The non- 
 performance of this duty, which results in the creation and 
 maintenance of a continuing nuisance by the corporation 
 which causes the death of a third person, amounts to a misfea- 
 sance on their part, or of malfeasance, if they have actual 
 knowledge of and authorized the nuisance. Where the tort 
 has been committed through the directors, they can not escape 
 liability by showing that they acted in a vicarious character. 3 
 In an action against the directors of a corporation to recover 
 damages for personal injury occasioned by the explosion of 
 giant powder kept by the corporation within the city limits in 
 violation of law, the court said: 4 "The corporation therefore, 
 
 J Knox v. Baldwin, 80 N. Y. 610; strangers to so use his own property 
 
 Gregory v. Bank, 3 Colo. 332. or that under his control as not to in- 
 
 8 Tradesman's, etc., Co. v. Knoxville, jure another. Baird v. Shipman, 132 
 
 etc.,Co.,95Tenn.634,31L. R. A. 593. 111. 16, 7 L. R. A. 128; note to Nun- 
 
 3 The liability of a director in tort is nelly v. Southern, etc., Co., 28 L. R. 
 
 not to be avoided by his "vicarious A. 421; Jenne v. Sutton, 43 N. J. L. 
 
 character" where the tort of a corpora- 257, 39 Am. Rep. 578; Mayer v. 
 
 tion has been committed through the Thompson, etc., Co., 104 Ala. 611, 28 
 
 director. Nunnelly v. Southern, etc., L. R. A. 433. 
 
 Co., 94 Tenn. 397, 28 L. R. A. 421; 4 Cameron v. Kenyon-Connell, etc., 
 
 Bank v. Byers, 139 Mo. 627; Delaney Co. (Mont.), 56 Pac. Rep. 358, 44 L. 
 
 v. Rochereau& Co., 34 La. An. 1123, 44 R. A. 508, and extensive note on lia- 
 
 Am. Rep. 456. The relation of con- bility of the officers of a corporation 
 
 tract to a corporation neither adds to for the torts or negligence of the cor- 
 
 nor subtracts from a man's duty to poration.
 
 572 THE LAW OF PRIVATE CORPORATIONS. § 523 
 
 by maintaining this nuisance became subject to indictment for 
 misdemeanor as well as liable in a civil action for injury to per- 
 sons or property caused by the nuisance. 1 * * * As said before, 
 the trustees manage the stock, property and concerns of the cor- 
 poration; wherefore it is difficult to see how all responsibility in 
 this management can be avoided as long as the trustees hold 
 their offices. Certainly the ministerial work in a corporation 
 can be delegated to subordinate agents, and often must be. 
 The details of a corporation's business necessitates this; and if 
 directors act in good faith and with reasonable care and dili- 
 gence in appointing and supervising such inferior agents they 
 are not personally responsible for damages occasioned by the 
 agents' negligence or even crime. But a director can not 
 wholly escape his duty of supervision or transfer his authority 
 to represent his principal at least without the principal's con- 
 sent. Otherwise he could evade every responsibility imposed 
 by law upon him by simply absenting himself from meetings, 
 or by avoiding information of the acts of the other directors in 
 expressing the will of the corporation or by delegating an em- 
 ploye to act as trustee for him. 2 * * * 
 
 Third persons may hold directors liable in positive tort, upon 
 the principal that a positive wrong done by a servant or ordi- 
 nary agent must be applied to the misfeasance of directors also. 3 
 It is therefore the duty of the trustees of a corporation 
 dealing in explosives to exercise such reasonable supervision 
 over the management of their company's business as will re- 
 sult in the observance of the utmost care on the part of the 
 subordinates who directly handle the explosives. This rule 
 grows out of the great principle of social duty thai every 
 man in the management of his own affairs, whether by him- 
 ot by his agents or servants, shall so conduct them as 
 ii"i to injure .-mother; and if he does not, and another thereby 
 ains damage, he Bhall answer for it. 4 It is likewise their 
 duty to avoid the creation of nuisances by their corporation 
 
 l Heeg v. Licht, 80 N. Y. 579, 36 B Salmon v. Richardson, 30 Conn. 
 Am. Rep. 854. 360, 79 Am. Dec. 255. 
 
 Morawetz Priv. Corp., |586. *Farwel] v. Huston, etc., Corp., 4 
 
 Mete. (Mas- 19, 38 Am. Dec. 839.
 
 § 524 OFFICERS AND AGENTS. 573 
 
 through its employes acting within the line of their duties. Nor 
 will inaction of itself overthrow the force of this obligation 
 upon trustees to so control their corporation's business as to 
 not negligently injure third persons. Along with the assump- 
 tion of the duties of trusteeship go the duties of exercising rea- 
 sonable care in the manner of performing those duties. This 
 reasonable care appears not to have been exercised in this case 
 where the corporation by its trustees permitted a public nui- 
 sance to be created, and to continue, whereby, as a consequence 
 of the act of permitting it, a third person not in fault has been 
 killed. Because directors are themselves agents, it is none 
 the less true that they owe a common law duty to third per- 
 sons. If they violate that duty they are responsible, whether 
 the violation is the result of a wrongful omission or commis- 
 sion." 1 
 
 § 524. Liability imposed for benefit of third persons. — In 
 
 some states there are statutes which impose upon the directors 
 and managing officers of corporations a liability for the benefit 
 of third persons who are injured by some forbidden act or neg- 
 ligence of the officer. 2 Where a statute prohibits the doing of 
 an act or imposes a duty upon one for the protection and ben- 
 efit of individuals, if he disobeys the prohibition or neglects to 
 perform the duty, he is liable to those for whose protection the 
 statute was enacted for any damages resulting proximately 
 from such disobedience or neglect. Where a statute made it 
 a criminal offense for an officer or director of any bank to ac- 
 cept deposits of money when he knows or has good reason to 
 know that the bank is unsafe or insolvent, the court said: 3 
 "The purpose of this statute is to protect depositors in a bank 
 by punishing its officers for receiving deposits when the bank 
 is insolvent. By necessary implication it makes it the duty of 
 the directors or other officers of the bank to refrain from ac- 
 cepting or receiving deposits when they know the bank to be 
 insolvent. The solvency or insolvency of a bank is a matter 
 
 1 Mechem Agency, § 572. N. W. Rep. 797. See Bishop Non-Con- 
 
 2 See Bruce v. Piatt, 80 N. Y. 379; tract Law, § 132; Cooley Torts, p. 780; 
 Pier v. Hanrnore, 86 N. Y. 95. Bott v. Pratt, 33 Minn. 323; Osborn 
 
 "Baxter v. Coughlin (Minn.), 72 v. McMasters, 40 Minn. 103.
 
 574 THE LAW OF PRIVATE CORPORATIONS. § 525 
 
 peculiarly within the knowledge of its directors. On the other 
 hand, depositors have no means of accurately informing them- 
 selves on the subject. They must act on the presumption that 
 directors are not violating the law by keeping their bank open 
 to receive deposits when it is insolvent. This case falls then 
 within the rule that where the statute prohibits the doing of 
 an act, or imposes a duty on one for the benefit and protection 
 of individuals, if he disobeys the prohibition or neglects to per- 
 form the duty, he is liable to those for whose protection the 
 statute was enacted for any damages resulting proximately 
 from such disobedience or neglect." 
 
 § 525. Keniedy of the corporation against an officer. — Where 
 a corporation has been damaged by the fraud or negligence of 
 one of its officers or agents, it may proceed against him in an 
 action for damages, or for an accounting in equity. 1 Ordin- 
 arily the action must be brought in the name of the corpora- 
 tion, although, as has been explained elsewhere, an action of 
 this character may be maintained by an individual stockholder 
 under certain circumstances. 
 
 § 526. Statute of limitations. — The statute of limitations does 
 not run against the claim of a corporation against an officer 
 for misappropriation of corporate funds, as the relation is one 
 of trust. 2 
 
 § 527. No liability to corporate creditors. — The liability of 
 ;in officer for mismanagement, fraud or negligence, which 
 caus< is loss to the corporation, is to the corporation and not to 
 its creditors, but the claim against the officer forms a part of 
 the assets of the corporation and may be reached by the cred- 
 itors in a proper proceeding. The right is sometimes based 
 upon the trust-fund theory, and sometimes upon the general 
 rule thai the creditors have the right to reach the equitable 
 
 'Horn, etc., Co. v. Ryan, 42 Minn. Bon Corps., § 4128. Contra, Williams 
 
 196; Robinson v. Smith, 3 Paige I N. v. Halliard, 38 V J. Eq. 373. Bee 
 
 •22,24 Am. Dec. 212; Hodges v. Wallace v. Lincoln, etc., Bank, 89 
 
 ... c,,., i R.I. 312, 63 Am. Dec. Tenn. 630, 24 Am. St. Rep. 625. See, 
 
 ... in re Lands, etc., Co., L. R. 
 
 2 Kllis v. Ward, L37 III. I 26 N. (1894) l Ch. 616; 7 Eng. R. Cas. 614, 
 
 I.. Rep. 530. Approved in SThomp- with English and American notes.
 
 § 528 OFFICERS AND AGENTS. 575 
 
 assets of the corporation, and to have them applied to the sat- 
 isfaction of their claim. 1 An action at law can not be main- 
 tained by a creditor against an officer whose wrongful con- 
 duct has resulted in injury to the corporation. 2 But after the 
 corporation has become insolvent the creditor who has recov- 
 ered judgment against the corporation may proceed against the 
 officer. 3 The proper proceeding is by way of a creditor's bill.* 
 
 § 528. Powers of particular officers. 5 — The powers of corpo- 
 rate officers are such as are conferred upon them by the terms 
 of their agency. It may be expressly conferred by charter, 
 by-laws, or a resolution, or implied from the nature of the 
 office, and the duties ordinarily devolving upon such officers, 
 or agents. The duties and powers commonly granted to such 
 officers as president, secretary and treasurer are well under- 
 stood, and within the scope of this apparent authority the offi- 
 cer acts for the corporation and can bind it by contracts made 
 in its name. Within the line of his ordinary duties, such an 
 officer requires no express authority. 6 After citing many de- 
 cisions in support of the general propositions, Mr. Cook says: 7 
 "These decisions show that a corporation is bound by its 
 agents' acts only when a partnership would be bound under 
 similar circumstances, and in general a corporation may ratify 
 and adopt the unauthorized acts of its agents. There are no 
 arbitrary rules as to the mode of making a corporate contract. 
 A contract may be inferred from corporate acts and customs 
 without a vote or formal act. It is not necessary that such 
 
 1 Morawetz Priv. Corp. 2, § 795. by contract. Limer v. Traders Co., 
 
 2 Zinn v. Mendel, 9 W. Va. 580; 44W.Va. 175; Allemong v. Simmons, 
 
 Smith v. Poor, 40 Me. 415. 122 Ind. 199. See Woodbury, etc., 
 
 8 Gratz v. Redd, 4 B. Mon. (Ky.) Co. v. Mulliken & Gibson, 66 Vt. 465, 
 
 178; Ellis v. Ward, 137 111. 509; Wil- and Gaynor v. Williamsport, etc., R. 
 
 kinson v. Bauearle, 41 N. J. Eq. 635. Co., 189 Pa. St. 5, 41 Atl. Rep. 978. 
 
 4 Schley v. Dixon, 24 Ga. 273. Parties contracting with officers of a 
 
 5 See Wilgus' Cases, Louisville, etc., corporation must ascertain the scope 
 R. Co. v. McNay, 98 Ind. 391. of their authority. Des Moines, etc., 
 
 6 See, generally, Jones v. Williams, Co. v. Tilford, etc., Co. (Iowa), 70 N. 
 
 139 Mo. 1, 61 Am. St. Rep. 437, anno- *W. Rep. 839. 
 
 tated. Bank v.Dunn, 6 Pet. (U.S.) 51. 7 Cook Priv. Corp., § 720, citing 
 
 A director of a corporation is not an many cases, 
 agent in the sense that he can bind it
 
 576 THE LAW OF PRIVATE CORPORATIONS. § 529 
 
 assent and acceptance should be under seal and in writing or 
 be spread upon the records. The acceptance of the consideration 
 of an unauthorized contract by the corporation, however, with- 
 out knowledge of the terms of the contract or of the account upon 
 which it is paid is not in itself a ratification of the contract." 
 
 § 529. The president. — The president of a corporation de- 
 rives his authority from the power which elects him. This is 
 ordinarily the board of directors. He has no authority by 
 virtue of his office to control or dispose of the property of the 
 corporation. He can not act or contract for the corporation, 
 without express authority, to any greater extent than any other 
 director. By the great weight of authority, "a president has 
 no inherent power to represent or contract for the corporation. 
 His duties are confined to presiding and voting as a director. 
 The fact, however, that he is almost always the corporate offi- 
 cer who is directed to sign the corporate contracts that have 
 been authorized by the board of directors has led to the en- 
 largement of his importance as a corporate officer. Hence the 
 rule has arisen in New York that a contract which is appar- 
 ently a corporate contract, being duly signed by the president, 
 is presumed to be a corporate contract until the want of author- 
 ity is shown by the corporation." l Authority to do a particu- 
 lar act may be shown by the fact that the same or similar acts 
 have frequently been done by the officer with the knowledge 
 of the corporation. 2 The president may of course bind the 
 
 'Cook Priv. Corp., §716; Potts v. powers of a general manager, see 
 
 Wallace, L46 r. s. r.s'.i; Crush, etc., Helena Nat. Hank v. Rocky, etc., Co., 
 
 Co v. Montgomery (Ala.), 21 So. 20 Mont. 379, 63 Am. St. Rep. 628; 
 
 Rep. 960. in Titue v. Cairo, etc., R. Thayer v. Nehalem, etc., Co., 81 Ore. 
 
 Co., 37 N. .1. L. 98, the court said: 437,51 Pac. Rep.202; Butte, etc., Co. 
 
 " In the absence of anything In the v. Montana, etc., Co. (Mont.), 55 
 
 act of incorporation bestowing special Pac. Rep. L12. Sec, generally, notes 
 
 power apon the president, he lias to ll L. R. A.. 356, til Am. St. Rep. 
 
 from his official station no more con- 459. 
 
 trol over the corporate property and 'Swasey v. Emerson, 168 Mass. lis. 
 funds than any other director." Bee, Thai long usage may confer authority, 
 also, as to powers of president, Pa- Bee Estes v. German Nat'l Hank, 62 
 cific Bank v. Stone, 121 Cal. 202; Ark. 7; Missouri, etc., R. Co. v. Sid- 
 White v. Taylor, 118 Mich. 543; Main ell, 67 Fed. Rep. 164. 
 v. ( iasserly, »; T Cal. 127. A.e to I he
 
 § 529 
 
 OFFICERS AND AGENTS. 
 
 77 
 
 corporation by contracts when authorized to do so by the board 
 of directors, 1 and the authority to do so may be implied from 
 a long course of acquiescence on the part of the directors, 2 as 
 where, with the knowledge and consent of the directors, the 
 president has for a long period practically conducted the entire 
 business of the corporation. 3 The president of a corporation 
 has no implied power to direct the treasurer to refuse payment 
 of a subscription, 4 to employ an architect, 5 to execute a mort- 
 gage in the name of the corporation, 6 even when he has been 
 given power to pledge notes and contracts/ to execute notes in 
 the name of the corporation, 8 to confess judgment for the cor- 
 poration, 9 to assign a patent-right in payment of a corporate 
 debt, 10 to sell treasury stock," to negotiate a loan for the corpora- 
 tion and pay a large brokerage commission, 12 to make a contract 
 increasing the price of construction work, 13 to agree that sureties 
 on a note shall not be bound, 14 to borrow money for the corpo- 
 ration, 15 to release a claim in favor of the corporation, 16 to sell 
 
 1 Castle v. Belfast, etc., Co., 72 Me. 
 167 ; Baker v. Cotter, 45 Me. 236. 
 
 2 Fitzgerald, etc., Co. v. Fitzgerald, 
 137 U. S. 98; Martin v. Niagara Falls, 
 etc., Co., 122 N. Y. 165. 
 
 3 G. V. B. Mining Co. v. Nat. Bank 
 (C. C. App.) , 95 Fed. Rep. 23 ; Senour, 
 etc., Co. v. Clarke, 96 Wis. 469; 
 McComb v. Barcelona, etc., Assn., 
 134 N. Y. 598; Fifth Nat'l Bank v. 
 Navassa, etc., Co., 119 N. Y. 256; 
 Sherman, etc., Co. v. Morris, 43 Kan. 
 282. The management of the busi- 
 ness may be entrusted to the presi- 
 dent, either by an express resolution 
 of the board of directors, or by their 
 acquiescence in a course of dealing. 
 Jones v. AVilliams, 139 Mo. 1, 37 L. R. 
 A. 682. 
 
 4 Potts v. Wallace, 146 TJ. S. 689. 
 
 5 Wait v. Nashua, etc., Assn.(N. H.), 
 23 Atl. Rep. 77; Mathias v. White, 
 etc., Assn. (Mont.), 48 Pac. Rep. 624. 
 
 6 Alta, etc., Co. v. Alta, etc., Co., 78 
 Cal.629; National State Bank v. Vigo, 
 37 — Private Corp. 
 
 etc., Bank, 141 Ind. 352; England v. 
 Dearborn, 141 Mass. 590. 
 
 7 Currie v. Bowman, 25 Ore. 364. 
 
 8 Estes v. German, etc., Bank, 62 
 Ark. 7; Edwards v. Carson, etc., Co., 
 21 Nev. 469. 
 
 9 Raub v. Balirtown, etc., Assn., 56 
 N.J. L. 262; Ford v. Hill, 92 Wis. 
 188. 
 
 "Kansas, etc., Co.v. DeVol, 72 Fed. 
 Rep. 717. 
 
 "In re Utica, etc., Co., 154 N. Y. 
 268, 48 N. E. Rep. 521. 
 
 12 Tobin v. Roaring, etc., R. Co., 86 
 Fed. Rep. 1020. 
 
 "Grant v. Duluth, etc., R. Co., 66 
 Minn. 349, 69 N. W. Rep. 23. 
 
 "Bank v. Bennett, 33 Mich. 520; 
 Bank v. Tisdale, 84 N. Y. 655. 
 
 15 Life, etc., Co. v. Mech., etc., Co., 
 7 Wend. (N. Y.) 31; Western Nat'l 
 Bank v. Armstrong, 152 U. S. 346. 
 
 ,6 01ney v. Chadsey, 7 R. I. 224; 
 Rhodes v. Webb, 24 Minn. 292. See 
 Indianapolis, etc., Co. v. St. Louis, 
 etc., R. Co., 120 U. S. 256.
 
 57S THE LAW OF PRIVATE CORPORATIONS. § 529 
 
 and assign notes held by the corporation bank, 1 to bind a 
 national bank by a purchase of bonds and stock for it, 2 to let 
 a railroad construction contract, 3 to sell property belonging to 
 the corporation, unless he has made similar contracts before, 
 without objection, 4 to issue drafts in the name of the corpora- 
 tion, 5 to execute accommodation paper, 6 to agree on its behalf 
 with a person who sells it property to be paid for in stock, to 
 repurchase the stock if he becomes dissatisfied with it. 7 The 
 president may employ an attorney for the corporation; 8 but 
 may not commence an action. 9 But it has been held that he 
 has no power to employ an attorney, 10 although the general offi- 
 cers and manager may employ an attorney to represent the bank 
 in all matters growing out of the general business of the cor- 
 poration. 11 A corporation may of course ratify the acts of the 
 officer by accepting and retaining the benefits of his act. 12 The 
 powers of the president of a corporation have been somewhat 
 extended by the Illinois courts, where it is held that he has 
 power to agree that an absolute subscription may be changed 
 to a conditional subscription in such a way as to estop himself, 
 and creditors and stockholders, with knowledge of the facts mi- 
 
 1 llollowell, etc., Bank v. Hamlin, 14 9 Ashuelot, etc., Co. v. Marsh, 55 
 Mass. 178. Mass. 507. Contra, Lucky, etc., Co. v. 
 
 2 First Nat'l Bank v. Hoch, 89 Pa. Abraham, 26 Ore. 282. That the 
 St. 324. president may bring a writ of entry 
 
 •Templin v. Chicago, etc., R. Co., to foreclose a mortgage, see Trustees, 
 
 73 Iowa 548; Griffith v. Chicago, etc., etc., v. Connolly, 157 Mass. 272. The 
 
 I;, (v.., 71 Iowa 85. president, in the exercise of his in- 
 
 4 Pittsburg, etc.,Co. v. Reese, 118 Pa. herent power to take charge of the 
 
 St. ;;-,.-, litigation of the bank, may assign a 
 
 8 Dabney v. Stevens, 40 How. Pr. judgment to a trustee in order that an 
 
 (S. Y.) 34] action may be brought for its collec- 
 
 'McLellan v. Detroit, etc., Works, tion. Guernsey v. Black, etc., Co., 99 
 
 56 Mich. 679. Iowa 471. 
 
 'Olds v. Phillipsburg, etc., Co. "Pacific Bank v. Stone (CaL), 63 
 
 (Tenn.), 48 B. W. Rep. 285. Pac. Rep. 684. 
 
 i American, etc., Co. v. Oakley, 9 "Lewis v. Publishing Co., 77 Mo. 
 
 Paige \. Y. | 496; Mumford v. Haw- A.pp. 484. 
 
 5Denio856; Davis v. Memphis, ,2 \\Y!Ih v. St. Paul, etc., Co., 63 
 
 ■t.-., R. Co., 22 Fed. Rep. 888; Dallas, Minn. 870; Scott v. Middleton, etc., 
 
 rtc., Co, v. Crawford 'Tex.), 1 1 S. \v. R.Co.,86 N. Y.200; Omaha, etc., Co. 
 
 I;,.,, v. Burns, 49 Neb. 229.
 
 § 530 OFFICERS AND AGENTS. 579 
 
 der certain conditions, 1 to execute a note for the corpora- 
 tion, 2 to sign a chattel mortgage in the name of the corpora- 
 tion, 3 or to contract for transportation of railroad iron. 4 The 
 president and general manager of an insurance company may 
 bind it by a contract that its mortgagor may have a certain 
 time within which to redeem from a foreclosure sale. 5 
 
 § 530. The vice-president, — The rules which govern the 
 powers and conduct of the president of a corporation apply 
 also to the vice-president. 6 Unless otherwise provided by stat- 
 ute, the charter or by-laws of the corporation, the deed of the 
 corporation may be executed as well by the vice-president as 
 by the president. And when so executed with the necessary 
 formalities, it will be presumed that the vice-president had 
 authority to act on behalf of the corporation. 7 
 
 § 531. The secretary. — The secretary ordinarily represents 
 the corporation in the conduct of its routine business, but his 
 authority, like that of all other officers, is derived from the 
 terms of his employment. He has no inherent power by vir- 
 tue of his office to make contracts for the corporation. 8 He is 
 
 1 Morgan Co. v. Thomas, 76 111. 120. of president, see Sparks v. Dispatch 
 
 •Matson v. Alley, 141 111. 284; Transfer Co.. 104 Mo. 531, 24 Am. St. 
 
 Snyder Bros. v. Bailey (111.), 46 N. E. Rep. 351, and note 24 Am. St. Rep. 137. 
 
 Rep. 452. 6 See, generally, as to the powers of 
 
 3 Anderson v. South Chicago, etc., a vice-president, Missouri, etc., Co. 
 Co. (111.), 50 N. E. Rep. 655. v. Faulkner, 88 Tex. 649; Cox v. 
 
 4 Chicago, etc., R. Co. v. Coleman, Robinson, 82 Fed. Rep. 277; Smith v. 
 18 111. 297. Smith, 62 111. 493; Huse v. Ames, 104 
 
 fi Union, etc., Co. v. White, 106 111. Mo. 91 ; Dallas v. Columbia, etc., Co., 
 
 67. The president and business man- 158 Pa. St. 444; Streeten v. Robinson, 
 
 ager of a corporation has no implied 102 Cal. 542. 
 
 power to create an indebtedness 7 Ellison v. Brandstrator (Ind.), 54 
 
 against it by assuming for it liability N. E. Rep. 433. Citing Smith v. Smith, 
 
 for an individual debt of his own, 62111.493; Colman v. Land Co., 25 W. 
 
 without a just consideration to the Va. 148 ; Bowers v. Hechtman, 45 Minn, 
 
 corporation. Barnhardt v. Star Mills 238; Shaffer v. Hahn, 111 N. C. 1. 
 
 (N. C), 31 S. E. Rep. 719. In Larason 8 Wolf Gaines v. Davenport, etc., R. 
 
 v. Beard (C. C. App.), 94 Fed. 30, it Co., 93 Iowa 218; Read v. Buff urn, 79 
 
 was held that when the president of a Cal. 77, 12 Am. St. Rep. 131. In the 
 
 bank draws drafts upon the funds of discharge of his ordinary duties the 
 
 the bank to pay his personal debts, secretary represents the corporation, 
 
 the drawee is put upon inquiry as to Hastings v. Brooklyn, etc., Co., 138 N. 
 
 his authority. As to implied authority Y. 473.
 
 580 THE LAW OF PRIVATE CORPORATIONS. § 532 
 
 the proper custodian of the corporate seal, and when he affixes 
 it to a deed or other instrument, the presumption is that he 
 did it by the direction of the corporation, and it devolves upon 
 those who dispute the validity of the instrument to prove that 
 he acted without authority. 1 
 
 § 532. The treasurer. — The treasurer is the general fiscal 
 agent of the corporation and is commonly given powers in 
 the management of its financial matters. But he has no power 
 by virtue of his office alone to borrow money and give the cor- 
 porate notes therefor. 2 The authority to sign notes on behalf 
 of the corporation need not appear in the by-law r s,nor need it have 
 been expressly given by a vote of the directors or stockholders. 
 It may be inferred from usage, and will be implied when he 
 has been accustomed to act as the managing agent of the cor- 
 poration. 3 But if the corporation permits the treasurer to act 
 as its general fiscal agent, and holds him out to the public as 
 having the general authority implied from his official name 
 and character and by its silence and acquiescence allows him to 
 draw and accept drafts and sign and endorse notes, it is bound 
 by his acts when done within the scope of such apparent au- 
 thority. 4 The question is also affected by the character of the 
 business transacted by the corporation. Thus, in a recent case 
 it was held that the treasurer of a gas light company had au- 
 
 1 Ellison v. Brandstrator (Ind.), 54 69 Fed. Rep. 912, 32 U. S. App. 654; 
 
 N. E. Rep. 433. The secretary can Grommes v. Sullivan, 81 Fed. Rep. 
 
 not bind the corporation for the price 45, 53 TJ. S. App. 359. As to power to 
 
 of goods ordered by him from another endorse paper for discount and sale, 
 
 corporation with which he is con- see Blake v. Domestic, etc., Co. 
 
 nected. Stillwell, etc., Co. v. Niles, (N. J.), 38 Atl. Rep. 241. 
 
 etc., Co. (Mich.), 72 N. W. Rep. 1107. "Chicago, etc., Co. v. Chicago Nat'l 
 
 "Craft v. South Boston, R. Co., Bank, 176 111. 224. 
 
 150 Mass. 207, 5 L. R. A. 641 ; 22 N. E. 4 Merchants Nat'l Bank v. Citizens, 
 
 Rep 920; Appeal ol Philler, Hil Pa. etc., Co., 159 Mass. 505; McNeil v. 
 
 St. L67; In re Millward-Cliff, etc., Co. Boston Chamber of Com., 154 Muss. 
 
 \il. Rep. L072; Fifth Ward 277; Mining Co. v. Anglo-Cal. Bank, 
 
 Bav. Bank v. First Nat'l Bank, 48 N. 104 U. S. 192; Credit Co. v. Howe, 
 
 .1. |,. 513; Chemical, etc., Bank v. etc., R. Co., 54 Conn. 357; Page v. Fall 
 
 Wagner, 93 Ky. 525, 20 8. W. Rep. 535 ; River, etc., Co., 31 Fed. Rep. 257; 
 
 Page v. Fall River, etc., R. Co., 31 Fed. Blake v. Domestic, etc., Co. (N. J.), 
 
 Rep. 257; Lester v. Webb, 1 Allen 34. 88 Atl. Rep. 241; Case Mfg. Co. v. 
 
 ;!-,, Glidden, etc., Co. v. Bank, Boxman, 138 V. s. 431.
 
 § 533 OFFICERS AND AGENTS. 581 
 
 thority by virtue of his office to sign a promissory note which 
 would bind the corporation. The court said: "Upon consid- 
 eration of the decisions cited, we think it fair to say that the 
 making and endorsing of negotiable paper is to be presumed to 
 be within the power of the treasurer of a manufacturing and 
 trading corporation, whenever, from the nature of its ordinary 
 business as usually conducted, the corporation is naturally to 
 be expected to use its credit in carrying on its commercial 
 transactions. Such paper is the usual and ordinary instru- 
 ment of utilizing credit in commercial dealings, and it is for the 
 interest of the corporation and of the community that the best 
 instrument should be employed. It is no less for the interest 
 of all that, if negotiable paper is to be employed, its validity 
 should not be open to objections which would impair its use- 
 fulness by requiring at every step an inquiry into the authority 
 by which it is issued." 1 
 
 § 533. De facto officers, — The injustice which would result 
 from requiring those who are obliged to deal with corporations 
 to investigate and decide who are rightfully exercising the 
 functions of a corporate office, and the great inconvenience of 
 litigating the title to such offices in collateral proceedings, has 
 led to the adoption of the rule that he who publicly exer- 
 cises the functions of such an office, not in a single instance 
 only but continuously, will be treated as a de facto officer and 
 his acts upheld as against third persons and the corporation. 2 
 
 1 Merchants Nat'l Bank v. Citizens, 271; Adams v. Mills, 60 N. Y. 533; 
 etc., Co., 159 Mass. 505; Matson v. Odd Fellows v. Bank, 42 Mich. 461; 
 Alley, 141 111. 284. The treasurer of a Stevens v. Carp River, etc., Co., 57 
 water-works company has no implied Mich. 427; Kalamazoo, etc., Co. v. 
 power to borrow money. First Nat'l McAlister, 36 Mich. 327; Tripp v. 
 Bank v. Council Bluffs, etc., Co., 9 New, etc., Co., 137 Mass. 499. 
 N. Y. Supp. 859. As to powers of 2 Hamm v. Drew, 83 Tex. 77; Ca- 
 treasurer in other respects see Jack- hill v. Kalamazoo, etc., Co., 2 Dong, 
 son v. Campbell, 5 Wend. 571; Ded- (Mich.), 124, 43 Am. Dec. 457. Note 
 ham Inst. v. Slack, 6 Cush. 408; in 19 Am. and Eng. Corp. Cas. 160. 
 Brown v. Winnisimmet, 93 Mass. 326; As to the application of the same 
 Perkins, etc., Co., v. Bradley, 24 Vt. 66 ; principle to officers of public corpora- 
 State v. Felton (N. J.), 19 Atl. Rep. tion, see Elliott Pub. Corps., § 265, 
 123 ; Alexander v. Cauldwell, 83 N. Y. and cases there cited. See, also, note 
 480; Phillips v. Campbell, 43 N. Y. to L. R. A. 418.
 
 582 THE LAW OF PRIVATE CORPORATIONS. § 534 
 
 It is only necessary for a person, who deals with a corporation, 
 "to inquire what power directors of the corporation have and 
 what acts the corporation has authorized them to do. They 
 are not required to investigate the qualifications which the 
 corporation has prescribed to itself, as the condition upon 
 which any one should be elected a director or permitted to 
 act as such. The corporation and not the general public have 
 the means of knowing whether a director, whom they have 
 elected as such, is qualified to act as a director, according to 
 their by-laws. If he is not qualified at the time of his elec- 
 tion, it is within their power to require him either to possess 
 himself of the requisite qualifications, or else to proceed to 
 another election. If, instead of doing this, they leave his 
 election as a director upon record, as though he were at law 
 eligible, and thus hold him out and permit him to hold him- 
 self out as a director, and he acts as such, they are bound by 
 his acts as fully as though he were properly qualified." 1 A 
 person exercising the functions of a director, but who was 
 elected at a meeting held in another state, is a de facto director. 2 
 A contract made by de facto officers binds the corporation. 3 
 
 § 534. Notice to officers and agents. 4 — An officer or agent 
 of a corporation represents the corporation when he is acting 
 within the scope of his duties, and his knowledge acquired 
 while so engaged with reference to matters pertaining to that 
 branch of the business of the corporation is the knowledge of 
 the corporation. 5 Facts coming to the knowledge of an agent 
 while engaged about the business of his agency, are, in law, 
 
 I Thompson's Corps., §3893; Dia- 5 Cragie v. Hartley, 99 N. Y. 131; 
 
 patch Line v. Bellamy, etc., Co., Smith v. Board, etc., 38 Conn. 208; 
 
 L2 N. B. 205, 37 Am. Dec. 203; Dela- Atlantic, etc., Mills v. Indian, etc., 
 
 ware, etc., Co. v. Pennsylvania, etc., Mill (Mass.), 17 N. E. Rep. 496; Lor- 
 
 Co., 21 Pa. St. 131. ingv. Brodie, 134 Mass. 453; Johnson 
 
 'Ohio, etc., I:. Co. vr. McPherson,35 v.Shortridge (Mo., L887),6S. W. Rep. 
 
 Mo. 13, 86 Am. Dec. 128. 64; Huron, etc., Co. v. Kittleson (S. 
 
 •Wilson v. Kings, etc., R. Co., ill Dak.), 57 N. W. Rep. 233; Merchants 
 
 N. Y. 487, 27 N. Y. St. Rep. 81. \\<- Nat'l Bank v. Lovitt, 114 Mo. 519; 
 
 pointment of an officer. Ellisv.North Casco Nat'l Bank v. Clark, L39 N. Y. 
 
 Oaroli l . 123. 307, 314; Johnson v. Firsl Nat'lBank, 
 
 I 79 Wis. IK', 24 Am. St. Rep. 722.
 
 § 534 OFFICERS AND AGENTS. 583 
 
 presumed to be known to the principal. 1 This applies to all 
 agents of corporations of whatever degree as notice to an 
 "agent of a corporation with respect to a matter covered by 
 his agency must be as efficacious as to its directors or its presi- 
 dent, since these are only agents, with larger powers and 
 duties, it is true, but not more fully charged with respect to 
 the particular thing than he whose authority is confined to 
 that one thing." 2 Where the treasurer of a bank stole 
 money from another person and placed it with the funds of 
 the bank in order to cover a defalcation which was not known 
 by the other officers, the bank acquired no title to the money 
 as against the true owner, as it was charged with knowledge 
 of the facts. 3 Notice to a director is not notice to the corpora- 
 tion except "in the business to which the knowledge is mate- 
 rial through the agency of such director acting either alone or 
 as one of the board." 4 The question always is, was the knowl- 
 edge obtained while engaged in the business of the corpora- 
 tion? 5 The knowledge of an agent acquired in the course of 
 the corporate business is notice to the corporation. 6 Knowl- 
 edge, obtained by an agent of a corporation while engaged in 
 
 Consolidated, etc., Co. v. Kansas, edge as such, and who upon the or- 
 
 etc, Co., 45 Fed. Rep. 7; Slattery v. ganization of the corporation became 
 
 Schwannecke, 118 N. Y. 543. its president and manager, is the 
 
 2 Saint v. Wheeler, etc., Co., 95 Ala. knowledge of the corporation. Huron, 
 362, 10 So. Rep. 539. etc., Co. v. Kittleson (S. Dak., 1894), 
 
 3 Atlantic Cotton Mills v. Indian 57 N. W. Rep. 233. Where the secre- 
 Orchard Mills, 147 Mass. 268 ; Huron, tary and manager owned or controlled 
 etc., Co. v. Kittleson, 4 S. Dak. 520, a large part of the capital stock, and 
 57 N. W. Rep. 233. managed the business as he pleased 
 
 4 Buttrick v. Nashua, etc., R. Co., for the purpose of advancing his own 
 
 62 N. H. 413; Nat'l Security Bank v. interests, his knowledge was held to 
 
 Cushman, 121 Mass. 490; Davis, etc., be the knowledge of the corporation. 
 
 Co. v. Davis, etc., Co., 20 Fed. Rep. Anderson v. Kinley (Iowa, 1894), 58 
 
 699. N. W. Rep. 909. Where a corporation 
 
 5 Bank v. Clark, 139 N. Y. 307, 36 takes title to real estate through the 
 
 Am. St. Rep. 705. A corporation has incorporators, all of whom had knowl- 
 
 knowledge of facts which are known edge of a defect in the title, it is 
 
 to all its officers and stockholders, charged with notice of such defect. 
 
 Holly Mfg. Co. v. New Chester, etc., Simmons, etc., Co. v. Doran, 142 U. 
 
 Co., 48 Fed. Rep. 879. The knowl- S. 417. 
 
 edge of the principal promoter of a 6 Willard v. Denise,50 N. J. Eq.482, 
 
 corporation, who acquired his knowl- 26 Atl. Rep. 29.
 
 584 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 535 
 
 another transaction is not the knowledge of the corporation. 1 
 A corporation is not chargeable with the knowledge of one of its 
 officers acquired in a matter in which the officer acts on his 
 own behalf and in his own interest and does not represent the 
 corporation. 2 
 
 Where a defective deed purported to convey certain lands, 
 one of the directors of a corporation, while not acting for 
 the corporation, saw the record, but did not inform any of 
 the agents of the corporation, and it was held that the corpora- 
 tion was not charged with knowledge of the facts. 3 
 
 § 535. Compensation. — Neither the directors nor other offi- 
 cers are entitled to compensation for ordinary official serv- 
 ices unless it is provided for by the charter or by-laws adopted 
 by the stockholders. 4 But if the director is employed to per- 
 form extraordinary services which do not pertain to his office of 
 director, he is entitled to the reasonable or agreed value of such 
 services. 5 Directors and other officers can not fix their own 
 
 Fairfield, etc., Bank v. Chase, 72 
 Maine 226; Constant v. University, 
 111 N. Y. 604. 
 
 2 Buffalo Co. Nat'l Bank v. Sharpe 
 (Neb., 1894), 58 N. W. Rep. 734; 
 Koehlerv. Dodge, 31 Neb. 328; Barnes 
 v. Gas, etc., Co., 27 N. J. Eq. 33; 
 Bank v. Christopher, 40 N. J. Law 
 435 ; Wickersham v. Zinc Co., 18 Kan. 
 481 ; Merchants' Bank v. Lovitt, 114 
 Mo. 519; Farmers', etc., Bank v. 
 Payne, 25 Conn. 444; Frenkel v. 
 Hudson, 82 Ala. 158; Innerarity v. 
 !., 139 Mass. 332; Casco Nat'l 
 Hank v. Clark, 139 N. Y. 307. 
 
 ■ Tamil Foundry Co. v. Dart., 26 
 Conn. 376. 
 
 'Crumlisb v. Central, etc., Co., 38 
 W. Va. 390, 23 L. I;. A. L20; Mar- 
 tindale v.. Wii ion Case Co., 134 Pa. 
 348, 19 Am. st. Rep. 706; A.meri- 
 Central R. Co. v. Miles, 52 in. 
 171; Holder v. Railway <'<•., 71 III. 
 L06; Jones v. Morrison, 31 Minn. 1 10; 
 Citizens' Nat'l Bank v. Elliott, 55 Low b 
 
 104, 39 Am. Rep. 167; Manx, etc., Co. 
 v. Branegan, 40 Ind. 361 ; New York, 
 etc., R. Co. v. Ketclmni, 27 Conn. 
 170. See note in 16 Am. St. Rep. on 
 compensation of directors. A vote 
 of the directors of a corporation au- 
 thorizing the president to draw one 
 hundred dollars per month in addi- 
 tion to his salary to be used "for 
 all special purposes " in connection 
 with its business will not be assumed 
 to be for an unlawful purpose. 
 Clark v. American, etc., Co., 86 Iowa 
 436, 17 L. R. A. 557. See In re Anglo- 
 Austrian, etc., Co., 61 L. J. Ch.481, 
 7 Eng. Rul. Cas. 600, with English 
 and American notes. See, also, Tew 
 v. First Nat'l Bank, 130 Mass. 391, 
 and Fitzgerald, etc., Co. v. Fitzgerald, 
 137 CT. S. 98. 
 
 "Corinne, etc., Co. v. Joponce, l- r »2 
 I'.s. 105; SantaClara,etc.,Co.v. Mer- 
 edith, 49 Md. 389, 33 Am. Rep. 264; 
 Citizens Nat'l bank v. Elliott, 55 Iowa 
 104, 39 Am. Rep. L67; Rogers v. I last-
 
 § 535 OFFICERS AND AGENTS. 585 
 
 compensation. Unless otherwise provided by charter the di- 
 rectors may fix the compensation of other officers, but they 
 have no authority to appropriate the funds in paying claims 
 which the corporation is under no legal or moral obligation to 
 pay, as for past services which have been rendered and paid 
 for at a fixed salary previously agreed upon, or under a previ- 
 ous agreement that there should be no compensation. 1 An 
 officer who is also a director can not vote on a proposition to 
 fix his own salary. 2 
 
 In a recent case in the United States Circuit Court of Ap- 
 peals, Judge Sanborn said: 3 "Ordinarily the employment of 
 a servant by a corporation raises the implication of a contract 
 to pay fair wages or a reasonable salary for the services ren- 
 dered, because it is the custom to pay such compensation and 
 men rarely sacrifice their time and expend their labor or their 
 money in the service of others without reward. Directors of 
 corporations, however, usually serve without wages or salary. 
 They are generally financially interested in the success of the 
 corporation they represent, and their service as directors se- 
 cures its reward in the benefit which it confers upon the stock 
 which they own. In other words, the custom is to pay the 
 ordinary employes of corporations for the services they render, 
 but it is the custom of directors of corporations to serve gratui- 
 tously, without compensation or the expectation of it. The 
 presumption of law follows the custom. From the employ- 
 ment of an ordinary servant, the law implies a contract to 
 pay him. From the service of a director the implication is 
 that he serves gratuitously. The latter presumption prevails, 
 in the absence of an understanding or an agreement to the con- 
 trary, when directors are discharging the duties of other 
 officers of the corporation to which they are chosen by the direc- 
 tory, such as those of president, secretary and treasurer. More- 
 
 ings, etc.,R.,22Minn.25;TenEyckv. 1 Jones v. Morrison, 31 Minn. 140. 
 Pontiac,etc.,R.Co.,74Mich.226;Illi- 2 Jones v. Morrison, 31 Minn. 140; 
 
 nois, etc., Co. v. Hough, 91 111. 63. A Miner v. Ice Co., 93 Mich. 97. 
 director may recover for services as su- 3 National, etc., Co. v. Rockland 
 
 perintendent. Harris v. Lemming, Co. (C. C. A.), 94 Fed. Rep. 335. 
 etc., Co. (Tenn.), 43 S. W. Rep. 869.
 
 586 THE LAW OF PRIVATE CORPORATIONS. § 535 
 
 over, as the members of boards of directors act in a fiduciary ca- 
 pacity, they are without the power or authority to dispose of the 
 property of the corporation without consideration. Conse- 
 quently they may not lawfully vote back pay to an officer who has 
 been serving a corporation voluntarily without any agreement 
 that he shall receive any reward for the discharge of his duties. 
 It is beyond their powers to create a debt of the corporation by 
 their mere vote or resolution. * * * Some authorities have 
 gone so far as to hold that officers of a corporation, who are also 
 its directors, can not recover for the discharge of their duties 
 unless their compensation is fixed by a by-law or a resolution 
 of the board before their services are rendered. 1 The fact is, 
 however, that in the active, and actual business transactions 
 of the world, many officers of corporations, who are also mem- 
 bers of their boards of directors, spend their time and their en- 
 ergies for years in the interest of their corporations, and 
 greatly benefit the owner of the stock, under agreements that 
 they shall have just, but indefinite, compensation for their 
 services. We are unwilling to hold that such officers should 
 be deprived of all compensation because the amounts of their 
 salaries were not definitely fixed before they entered upon the 
 discharge of their duties. A thoughtful and deliberate con- 
 sideration of this entire question, and an extended considera- 
 tion of the authorities upon it, has led to the conclusion 
 that this is the true rule: Officers of a corporation who are also 
 directors, and who without any agreement, express or implied, 
 with the corporation or its owners, or their representatives, 
 have voluntarily rendered their services, can recover no back 
 pay or compensation tberefor; and it is beyond the power of 
 the board of directors, after such services are rendered, to pay 
 for them out of the funds of the corporation, or to create a 
 debt of the corporation on account of them. 2 But such officers 
 
 l Gridleyv. Railroad Co., 71 111.200; Transportation Co., 78 Fed. Rep. 62; 
 
 Kilpatricl dge Oo., *9 Pa. St. Association v. Stonemetz, 29 Pa. St. 
 
 U* V£i , Wood v. Manufacturing Co., 634; RailroadOo.v. Ketchum, 27 Conn. 
 
 23, 170; Road Co. v. Branegan, 40 Ind. 
 
 Jones v. Morrison, 31 Minn. I 10; 861. 
 
 Blue v. Bank, 1 15 End. 518; Doe v.
 
 § 536 OFFICERS AND AGENTS. 587 
 
 who have rendered their services under an agreement, either 
 express or implied, with the corporation, its owners or repre- 
 sentatives, that they shall receive reasonable but indefinite 
 compensation therefor, may recover as much as their services 
 are worth; and it is not beyond the power of the board of 
 directors to fix and pay reasonable salaries to them after they 
 have discharged the duties of their offices." 1 It was therefore 
 held that when, after the organization of the corporation, it 
 was agreed and understood at an informal meeting of all the 
 stockholders that the officers should be paid a reasonable com- 
 pensation for their services, and by a by-law the board of 
 directors was given power to fix the compensation of officers, 
 , their subsequent act in voting the president reasonable salary 
 \ for past services was legal and that a note executed therefor by 
 the corporation was binding on the corporation. 
 
 The officers may be compelled to account for all sums with- 
 drawn for salaries, where they have voted and paid the salaries 
 largely for the purpose of depriving the stockholders of the 
 results of a successful issue of pending litigation, although 
 a part was paid for actual services rendered. 2 
 
 § 536. Removal from office. — There appears to be no well de- 
 fined power to remove corporate officers from office. Officers 
 and agents who do not hold under a contract for a fixed 
 period may, of course, be removed without cause at any time. 
 Those who hold for a definite time may be removed by the 
 body which elected or appointed them for cause, or without 
 cause, being liable for damages for breach of contract. 5 
 An officer who is elected to fill an office, the tenure of which is 
 fixed by the charter, can not be removed until the expiration 
 
 1 Missouri, etc., Co. v. Richards, 8 3 In re Griffing, etc., Co. (N. J.), 41 
 Kan. 101; Rogers v. Railway Co., Atl. Rep. 931 ; Thomp. Corp., §§ 802, 
 22 Minn. 25-27; Railroad Co. v. Tier- 805; Hunter v. Sun, etc., Co., 26 La. 
 nan (Kan.), 15 Pac. Rep. 544, Wilgus' An. 13; Rex v. Richardson, 1 Bur- 
 Cases; Stewart v. Railroad Co., 41 row's Repts. 517, Wilgus' Cases. See 
 Fed. Rep. 736; Rosborough v. Canal also Imperial, etc., Hotel Co. v. 
 Co., 22 Cal. 556. Hampson, L. R. 23, Ch. Div. 1. 
 
 2 Eaton v. Robinson, 19 R. 1. 146, 29 
 L. R. A. 100.
 
 588 THE LAW OF PRIVATE CORPORATIONS. § 537 
 
 of the term. One who accepts a corporate office is bound by 
 notice of a by-law which provides a method of removal from 
 the office. 1 The right to an office can be determined only by 
 a quo warranto. 2 Directors have no power to remove one of 
 their number, or other officer elected by the stockholders, 
 even for cause, 3 and the rule seems to be that even the share- 
 holders have no inherent power to remove a director who has 
 been elected for a definite time, as his election is a contract 
 between him and the members of the company. 4 But where 
 the removal of a director is absolutely necessary to the protec- 
 tion of a corporation a member may apply to a court of equity 
 which will grant such relief as justice requires. 8 
 
 § 537. Creditors can not control management. 6 — The gen- 
 eral rule that a simple contract creditor can not come into 
 equity and have the property of his debtor subjected to the 
 payment of his claim applies to corporations as well as to 
 natural persons. Until he has secured a specific lien, the cor- 
 poration may manage its property free from the control of its 
 creditors, as there is no direct or express trust attached to the 
 property. The mere fact of the existence of the relation of 
 debtor and creditor gives the creditor no right to interfere 
 with the management of the corporation by restraining it from 
 the making of contracts and the disposing of its property. 
 "The plaintiffs were simple contract creditors of the com- 
 pany. Their claims had not been reduced to judgment, 
 and they had no express claim by mortgage, trust deed or 
 otherwise. It is the settled law of this court that such cred- 
 itors can not come into equity and obtain the seizure of the 
 property of the debtor, and its application to the satisfaction 
 
 'Douglass v. Merchants', etc., Co., * Imperial, etc., Co. v. Hampson, L. 
 
 L18N.Y.484. R. 23, CI). Div. 1. See, generally, Burr 
 
 *Perryv.Oil Mill Co., 93 Ala. 364; v. McDonald, 3 Grat..(Va.) 215; Btate 
 
 Johnston v. Jones, 23 N..I. Eq. 216; v. Bryce, 7 Ohio (Pt. 2) 82 ; Bayless v. 
 
 Neall v. Hill, L6 Cal. L45.76 Am. Dec. Orn, Freem. Ch. L61 L76. 
 
 Peoplev. Albany, etc., E. Co., 6 'Morawetz Priv. Corp. 1, §542. Bee 
 
 Lam Btate v. Vicker, 11 Am. St. Rep. 675. 
 
 •Nathan v. Tompkins, 82 Ala. 487; "Bee Wilgus' Cases, Rights of Cor- 
 
 Commonwealtb v. Detwiller, 131 Pa. poration as Against Creditors. 
 St. 614, 7 I.. R. \. 3
 
 § 537 OFFICERS AND AGENTS. 589 
 
 of their claims, and this, notwithstanding a statute of this 
 state may authorize such a proceeding in the courts of the 
 state. The line of demarcation between legal and equitable 
 remedies in the federal courts can not be obliterated by- 
 state legislation. Nor is it otherwise in case the debtor is a 
 corporation and an unpaid stock subscription is sought to be 
 enforced." 1 Before a court of equity will take jurisdiction, 
 the case must be brought under one of the recognized heads 
 of equity jurisdiction, such as fraud or breach of trust. Where 
 a creditor attempted to enjoin the making of a lease the court 
 said: 2 "The plaintiffs can not maintain this bill unless upon 
 the ground that any creditor can maintain a bill in equity 
 against an individual debtor upon like allegations. But there 
 is no allegation of fraud or breach of trust or any other ground 
 of jurisdiction which brings the case within the general equity 
 powers of a court of chancery. The bill is an attempt by a 
 creditor to restrain his debtor from making what is alleged 
 to be an improvident contract. The rights of the parties are 
 governed by the rules of the common law. The plaintiffs, as 
 creditors, might by an attachment have obtained security 
 which would take precedence of the contemplated lease; but if 
 they could not, the court has no power to restrain the debtor 
 from making a disposition of his property which is permitted 
 by the common law unless fraud or a breach of trust is alleged 
 and shown. .The allegation that the defendant corporation is 
 insolvent does not aid the plaintiffs. In the absence of a stat- 
 ute giving the power, this court has no authority to act as a 
 court of insolvency for the liquidation of the affairs of an in- 
 solvent railroad corporation." 
 
 Where the creditors of a corporation sought to enjoin it 
 from issuing debenture stock and doing other ultra vires acts, 
 Lord Hatherly said: 3 "The only remedy for a creditor in 
 that case is to obtain his judgment and take out execution ; or 
 
 1 Hollins v. Brierfield, etc., Co., 150 2 Pond v. Framingham, etc., R. Co., 
 
 U. S. 371 ; Tube Works v. Ballou, 146 130 Mass. 194. 
 
 U. S. 517; Cattle Co. v. Frank, 148 3 Mills v. Railway Co., L. R. 5 Ch. 
 
 U. S. 603. App. 621.
 
 590 THE LAW OF PRIVATE CORPORATIONS. § 537 
 
 it may be that he may have a power, if the case warrants it, 
 of applying to wind up the company. But it is wholly un- 
 precedented for a mere creditor to say, 'Certain transactions are 
 taking place within the company, and dividends are being 
 paid to shareholders which they are not entitled to receive, 
 and, therefore, I am entitled to come here and examine the 
 company's deed, to see whether or not they are doing what is 
 ultra vires, and to interfere in order that, as by a bill quia 
 timet, I may keep the assets in a proper state of security for 
 the payment of my debt whensoever the time arrives for its 
 payment.' ' Sales and transfers of the corporate property can 
 be questioned only by those creditors who have a specific lien, 
 or have reduced their claims to judgment, and as judgment 
 creditors assert that such transfers are fraudulent as to them. 1 
 Fraudulent conveyances and transfers of corporate property 
 for the purpose of delaying creditors are governed by the same 
 rules as similar conveyances by natural persons, and only 
 those who became creditors prior to the transfer in question 
 can complain. 2 
 
 1 Scott v. Neely, 140 U. S. 106. to the effect of a transfer to a new cor- 
 
 2 Graham v. Railway Co., 102 U. S. poration, see Montgomery, etc., Co. v. 
 148; Sutton, etc., Co. v. Hutchinson, Dienelt, 133 Pa. St. 585; Gray v. 
 11 C. C. A. 320, 63 Fed. Rep. 496. As Steamship Co., 115 U. S. 116.
 
 CHAPTER 19. 
 
 THE COMMON LAW LIABILITY OF STOCKHOLDERS. 
 
 § 538. In general. § 549. One man corporations, contin- 
 
 539. Liability to corporation meas- ued. 
 
 ured by the contract of sub- 550. Corporations organized to do 
 
 scription. business exclusively in an- 
 
 540. Acts prior to incorporation. other state. 
 
 541. The incorporation of a partner- 551. Liability for capital wrong- 
 
 ship business. fully distributed. 
 
 542. Debts contracted before dis- 552. Liability upon shares issued 
 
 tribution of stock. below par. 
 
 543. Liability resulting from illegal 553. Fraudulent acts. 
 
 or defective incorporation. 554. Enforcement — Defenses. 
 
 544. Liability as partners. 555. Enforcement of liability in a 
 
 545. Conflicting theories and decis- foreign jurisdiction. 
 
 ions. 556. Decree determining assets and 
 
 546. The tendency of the decisions. debts, and making assess- 
 
 547. Where there is not even a de ments — Conclusiveness. 
 
 facto corporation. 557. Conclusiveness of decree, con- 
 
 548. "One man" corporations. tinued. 
 
 § 538. Ill general. — The liability of a stockholder at com- 
 mon law is determined and measured by the contract of sub- 
 scription. When this contract with the corporation is fully 
 performed, there is no further liability to the corporation or to 
 its creditors. This freedom from personal liability was origi- 
 nally the distinctive feature of a corporation and was the prin- 
 cipal inducement for the organization of business corporations 
 rather than the formation of partnerships and joint stock com- 
 panies. But within recent years many constitutions and legis- 
 latures have, upon grounds of supposed public policy, imposed 
 additional liability upon stockholders for the benefit of credit- 
 ors of corporations. Many statutes simply declare a liability 
 which already existed at common law. The liability which re- 
 sults from a failure to become properly incorporated is not 
 strictly an imposed liability but rather a liability for debts cre- 
 ated when there were no stockholders and hence when the per- 
 sons claiming to be such were not entitled to the protection af- 
 forded by the relation. 
 
 (591)
 
 592 THE LAW OF PRIVATE CORPORATIONS. § 539 
 
 § 539. Liability to corporation measured by the contract of 
 subscription. — The common law liability of a stockholder to a 
 corporation is simply a question of contract between him and the 
 corporation, and, in the absence of a statutory or constitutional 
 provision to the contrary, all liability is terminated by the pay- 
 ment of the full par value of his stock. 1 He is not, therefore, 
 liable for the debts of the corporation unless made so by law or 
 special contract. 2 The rule is exactly the reverse in the case of 
 the members of a joint stock company who are liable jointly 
 and severally for the debts of the company unless restricted by 
 statute. 3 The members of a corporation may enlarge their lia- 
 bility over that imposed by the charter by contract, but not, by 
 by-laws or resolutions without the consent of all those who are 
 to be affected thereby. 4 The statutory liability may be contract- 
 ual in its nature, as one who becomes a stockholder is charged 
 with the knowledge of the laws which create the corporation 
 and impliedly contracts with all who become creditors of the 
 corporation that he will assume the liability imposed by the 
 law. 5 But there is no privity between such a stockholder and 
 the creditors of the corporation, and it is only after the insol- 
 vency of the corporation and in a proper equitable or statutory 
 proceeding that the creditors have any right against such 
 stockholder. The stockholder is, however, in all cases liable 
 in some form of proceeding to pay according to the terms of 
 his contract what remains unpaid on his subscription. 6 As a 
 general rule, there is no liability to creditors after the corpora- 
 tion has become insolvent unless a liability to the corporation 
 
 1 Gainey v. Gilson, 149 Ind. 58, 48 fin v. Rich, 45 Maine 507, 71 Am. Dec. 
 
 N. E. Rep. '133. It must be remem- 559. 
 
 bered, however, that (In- liability may "Walburn v. Ingilby, 1 Myl. & K. 
 
 bemcMsnn-.l by the apparent rather 61,76; Frost v. Walker, 60 Maine 468. 
 
 than the actual contract between tbe 4 Trustees v. Flint, 13 Met. (Mass.) 
 
 cribei and the corporation. See 539; Flint v. Pierce, 99 Mass. 68, 96 
 
 ii'. N-s on liability of stockholders in Am. Dec. 691. 
 
 99 \i,,. Dec. 132, and 27 Am. L. Reg. B §564, infra. Nimickv. Mingo, etc., 
 
 (U.S.) 168. Liability ol ■lire-tors, Co., 25 W. Va. 184; Flash v. Conn, 
 
 502, supra, Tradesmen's Pub. Co. 109 U. 8. 371. 
 
 v. Car Wheel Co., 95 Tenn. 634. 'Walker v. Lewis, 49 Tex. 123; 
 
 •Shaw v. Boylan, 16 [nd. 884; Oof- Warfield, etc., Co. v. Marshall, etc., 
 
 Co., 72 Iowa 666, 2 Am. St. Rep. 263.
 
 § 540 COMMON LAW LIABILITY OF STOCKHOLDERS. 593 
 
 exists or the stockholder has by his conduct estopped himself 
 from availing himself of his defense. 1 A release by the cor- 
 poration is not always good as against the creditors of the cor- 
 poration. 2 A bona fide purchaser of shares in the market, under 
 the belief that they are paid up, is not liable to the creditors 
 of the corporation, for the par value, although the representa- 
 tions of the corporation prove to be false. 3 The liability usu- 
 ally attaches to the person whose name appears as the owner of 
 the stock upon the books of tlie corporation. 1 * Ii there is no 
 ground for estoppel, a person to whom shares of stock are 
 issued by a corporation as security for a debt is not liable to 
 the corporation or its creditors as a stockholder. 5 
 
 § 540. Acts prior to incorporation. — Personal liability may 
 attach to parties for acts done before they become members, 
 but while engaged in the organization of the corporation. Un- 
 less such contracts are expressly conditioned upon the incorpo- 
 ration of the company, and its ratification of their acts, the 
 promoters are personally liable thereon. 6 The relation is sim- 
 ilar to that of an agent of an undisclosed principal. 7 If the 
 corporation after its creation ratifies the act of the promoter, 
 the creditor may proceed against either. 8 The promoters are 
 liable for such preliminary expenses as they have authorized, 
 but they are not partners and there is no presumption of 
 agency to act one for the other. It must be shown that the 
 contract was made with the party or his authorized agent. 
 
 § 541. The incorporation of a partnership business.— The 
 
 liability of the members of a partnership on existing contracts 
 is not affected by a change from a partnership to a corpora- 
 
 1 Union, etc., Assn. v. Seligman, 92 4 Crease v. Babcock, 10 Met. (Mass.) 
 Mo. 635, 1 Am. St. Rep. 776; Burgess 525. 
 
 v. Seligman, 107 U. S. 20; First Nat'l 5 § 569. Burgess v. Seligman, 107 
 
 Bank v. Gustin, etc., Co., 42 Minn. U. S. 20; Fisher v. Seligman, 7 Mo. 
 
 327, 18 Am. St. Rep. 510, App. 383; Thompson's Corps., § 2935. 
 
 2 See Upton v. Honsborough, 3 Biss. * Ante, § 55. 
 
 417 ; Thompson's Corps., § 1517. 7 Hurt v. Salisbury, 55 Mo. 310. 
 
 3 Young v. Erie, etc., Co., 65 Mich. 8 Whitwell v. Warner, 20 Vt. 425; 
 111 ; Johnson v. Lullman, 15 Mo. App. Kelner v. Baxter, L. R. 2 C. P. 174. 
 55, 88 Mo. 567. 
 
 38— Private Corp.
 
 594 THE LAW OF PRIVATE CORPORATIONS. § 542 
 
 tion. 1 But if, as is often the case, the firm name is retained 
 as the name of the corporation, it is incumbent upon the 
 members to advertise the fact of the change, 2 and a failure to 
 do so will render the members liable as partners to parties who 
 become creditors after the incorporation without knowledge of 
 the fact of incorporation. 3 
 
 § 542. Debts contracted before distribution of stock. — It 
 
 seems that, in the absence of a statute, the members of a corpo- 
 ration are jointly and severally liable for debts contracted after 
 the incorporation is completed, but before the capital stock is 
 distributed. 4 Where the members are by statute made liable for 
 the debts of the corporation contracted before the capital stock 
 is paid in, and a certificate thereof recorded, the liability at- 
 taches to all who were stockholders when the debt was con- 
 tracted, and are such when the liability is sought to be en- 
 forced, but not to those who became stockholders after the debt 
 was contracted, and disposed of their shares before the action 
 was brought. 5 
 
 § 543. Liability resulting from illegal or defective incorpora- 
 tion. 6 — There is much diversity of opinion as to the liability of 
 the members of a defectively or irregularly organized corpora- 
 tion. It is generally conceded that persons who attempt to form 
 a corporation will not escape individual liability if they do not 
 so far comply with the law as to create at least a de facto cor- 
 poration. In order to secure the exemption which results 
 from incorporation it is, at the least, necessary that the corpo- 
 ration be of such a character as to be able to defend its right to 
 exist as against all persons except the state. 7 An incorpora- 
 tion which is merely a cloak to cover illegal transactions will 
 
 1 Broyles v. McCoy, 5 Sneed (Tenn.) Almy, 1 17 Mass. 476. Compare Bur- 
 nap v. Raskins, etc., Co., 127 Mass. 
 
 Martin v. Fewell, 79 Mo. 401, Wil- 586. 
 
 ises. "Sayles v. BateB, L5 R. I. 342. 
 
 •McGowan v. American, etc., Co., "See Wilgus' Cases, particularly 
 
 L21 0.S.575; McFall v. McKeesport, De Facto Corporations and Corpora- 
 
 ;• . L6 Ail. Rep. 178. tions by Estoppel. 
 
 'Hawea v. Anglo-Saxon, etc., Co., 7 ^>'f Taylor Priv. Corp., § 148; 
 
 101 M I i i Nat'l Bank v. Morawetz Priv. Corp., § 748.
 
 § 544 COMMON LAW LIABILITY OF STOCKHOLDERS. 595 
 
 not protect the stockholders from personal liability. 1 If the 
 corporation is illegal or not even de facto, the members are 
 generally held liable for the debts, either as partners, or on 
 some principle of the law of agency. Where the public policy 
 of the state forbids the organization of corporations for certain 
 kinds of business, those who organize a corporation to carry 
 on such business are liable as partners, and those who deal 
 with them in the assumed corporate name are not estopped. 2 
 
 § 544. Liability as partners. — In order that there may be 
 exemption from personal liability there must be either a legal 
 incorporation, the existence of a de facto corporation, or of a 
 condition of affairs which will raise an estoppel as against par- 
 ties who might otherwise deny the fact of incorporation. In 
 some cases it is held that where parties attempt to organize a 
 corporation and fail to comply with the statutory provisions, 
 requisite to legal incorporation, the} r are liable to creditors as 
 partners. 3 It has also been held that the fact that a person has 
 dealt with such an organization as a corporation will not estop 
 him from repudiating a contract and holding the members of 
 the defective organization as partners. 4 This, however, is 
 manifestly inconsistent with the generally admitted rule that 
 one who deals with a de facto corporation as such can not 
 thereafter be heard to deny its legal existence. Where the lia- 
 bility exists it is only on the part of those who were members 
 at the time the debt was contracted. 5 It exists only when the 
 corporation is created for the purpose of carrying on a com- 
 mercial business for the profit of its members. If the object 
 of the organization is other than commercial although pecu- 
 
 1 McGrew v. City Produce Exch., Garnett v. Richardson, 35 Ark. 144. 
 85 Tenn. 572, 4 Am. St. Eep. 771; In some states a liability as partners 
 Paterson v. Arnold, 45 Pa. St. 41(5. is imposed by statute. Heuer v. Car- 
 empire Mills v. Alston, etc., Co. michael, 82 Iowa 288; Abbott v. 
 (Tex. App.), 15 S. W. Rep. 505, 12 L. Omaha, etc., Co., 4 Neb. 416. See 
 R. A. 366, annotated. note on partnership liability of stock- 
 3 Bigelow v. Gregory, 73 111. 197; holders in case of defective or illegal 
 Coleman v. Coleman, 78 Ind. 344; Mar- incorporation, 17 L. R. A. 549. 
 tin v. Fewell,79 Mo.401,"\Vilgus'Cases; 4 Empire Mills v. Alston Grocery 
 Richardson v. Pitts, 71 Mo. 128; Ab- Co., supra, and cases there cited, 
 bott v. Omaha, etc., Co., 4 Neb. 416; 5 Fuller v. Rowe, 57 N. Y. 23; Staf- 
 Whipple v. Parker, 29 Mich. 369; ford Bank v. Palmer, 47 Conn. 443.
 
 596 THE LAW OF PRIVATE CORPORATIONS. § 545 
 
 niary profit may result to the members, they will not be liable 
 for the debts of the corporation unless they have authorized or 
 ratified the contracts. 1 
 
 § 545. Conflicting theories and decisions. — After noting 
 the conflict among the decisions, and that in some states a 
 liability as partners is imposed by statute, Judge Thompson 
 says: 2 "Outside of the question of the existence of such stat- 
 utes, and chiefly in jurisdictions where they do not exist, there 
 is a class of cases holding to the simple, just and easily applied 
 doctrine that where a number of coadventurers assume or at- 
 tempt, under the provisions of a general statute, to organize 
 themselves into a corporation, and fail to take the steps which 
 that statute makes essential to their becoming incorporate, and 
 assume to contract corporate debts without having taken such 
 steps they are liable for such debts as partners. 3 Totally op- 
 posed to these conceptions is the doctrine of some of the courts 
 that, in the case last named, the shareholders in the defectively 
 organized corporation do not become liable as partners, gen- 
 eral or special. 4 These cases, in general, proceed upon the 
 theory that the members are not in such a case, liable as part- 
 ners, (a) because they have not agreed among themselves to 
 be so liable, (6) because they have not agreed with the other 
 part}' to the contract to be so liable, (c) because they have not 
 held themselves out to him as partners; and some of them fall 
 back upon the well-known doctrine 5 that a partnership is not 
 necessarily formed by an abortive agreement to form a corpo- 
 ration; 6 and some of them dwell upon the impropriety of the 
 courts making contracts between parties which they have not 
 made between themselves. Finally there is a class of cases 
 maintaining the doctrine that where the corporation has been 
 
 1 Bigelow v. Gregory, 73 111. 197; Wilgus' Cases; Trowbridge v. Scudder, 
 
 Johnson v. Corser, 34 .Minn. 355. 11 Cush.(Mass.)83; First Nat'] Bank v. 
 
 * Thompson's Corps ,§ 2992. Almy, 117 Mass. 476; Stafford Nat'] 
 
 •Bigelow v. Gregory, 7:; III. 197; Bank v. Palmer, 47 Conn. 443; Central 
 
 Coleman v. Coleman, 78 [nd. 344; City, etc., Bank v.Walker,66 N.Y. 424; 
 
 Garnetl v. Bicharson, 36 A.rk. 144; Blanchard v. Kaull, 44 Cal. 440, 450. 
 
 AMx.tt v. Omaha, etc., Co., 4 Neb. 'See Thompson's Corps., § 421. 
 
 U6. 'Blanchard v. Saul, 44 Cal. 440. 
 
 4 Fay v. Noble, 7 Cash. (.Muss.) 188,
 
 § 546 COMMON LAW LIABILITY OF STOCKHOLDERS. 597 
 
 defectively organized, but nevertheless has a colorable organiza- 
 tion, and exists and carries on its business as a corporation de 
 facto, the state not electing to interfere, — there being no fraud 
 nor any statute making the stockholders individually liable, — 
 one who enters into a contract with it as a corporation estops 
 himself from attempting to enforce the contract against its 
 members as partners or original undertakers. 1 The general 
 theory of these cases is that the creditor is estopped by his own 
 contract from so proceeding against the stockholders, and that 
 he will not be allowed in the face of his own contract to im- 
 peach the franchise of a de facto corporation, so long as the 
 state is content that it should exist. It is conceded in some of 
 the cases that this principle can have no application in a case 
 where the corporation does not exist de facto, but is a mere 
 pretense or usurpation; and in reason and justice it is abso- 
 lutely essential to the support of this view that there should 
 be a corporation having a corporate fund answerable for the 
 debt as fully as though the organization of the corporation had 
 been legally efficient." 
 
 § 546. The tendency of the decisions. — The tendency of 
 the decisions is toward holding that no partnership liability 
 attaches where the parties acted in good faith and attempted 
 to organize under a statute which authorized the organization 
 of such a corporation. The weight of authority is in favor of 
 protecting members from liability where business has been 
 carried on in good faith, under the belief that the incorpora- 
 tion was valid. 2 To hold such persons as partners " involves 
 not only the nullification of the contract which was actually 
 contemplated by the parties, but the creation of a different con- 
 tract, which neither of the parties intended to make." 3 Mr. 
 Cook says: "During the past few years, however, the great 
 
 1 Sniders, etc., Co. v. Troy, 91 Ala. L. R. A. 549, annotated, Wilgus' 
 224, 11 L. R. A. Rep. 515, 24 Am. St. Cases; Humphreys v. Mooney, 5 
 Rep. 887, Wilgus' Cases; Cory v. Lee, Colo. 282, and note. But mere intent 
 93 Ala. 468; Planters' etc., Bank v. to form a corporation is not enough. 
 Padgett, 69 Ga. 159 ; American, etc., Martin v. Fewell, 79 Mo. 401, Wilgus' 
 Co. v. Heidenheimer, 80 Tex. 344, 26 Cases. 
 
 Am. St. Rep. 743. 3 Morawetz Priv. Corp. 2, §748; 
 
 2 Rutherford v. Hill, 22 Ore. 218, 17 Planters' Bank v. Padgett, 69 Ga. 159,
 
 598 THE LAW OF PRIVATE CORPORATIONS. § 546 
 
 weight of authority has clearly established the rule that when 
 a supposed corporation is doing business as a de facto corpora- 
 tion, the stockholders can not be held liable as partners, al- 
 though there have been irregularities, omissions or mistakes in 
 incorporating or organizing the company. * * It must 
 
 be admitted that this conclusion of the law is reasonable and 
 just. * * * The courts have gradually departed from the 
 old decisions on this subject and have wisely refused to hold 
 the stockholder liable. Recent cases have so settled the law 
 beyond reasonable controversy." 1 
 
 Mr. Justice Brewer says: 2 " I think the rule is this: that 
 where persons knowingly and fraudulently assume a corporate 
 existence, or pretend to have a corporate existence, they can 
 be held liable as individuals; but where they are acting in 
 good faith, and suppose that they are legally incorporated — 
 that they are stockholders in a valid corporation — and where 
 the corporation assumes to transact business for a series of 
 years, and the assumed corporate existence is not challenged 
 by the state, then they can not be held liable as individuals." 
 In a recent Alabama case the court said: 3 "The doctrine that 
 a creditor who has dealt with a de facto corporation in its cor- 
 porate capacity, can not charge the stockholders as partners 
 with the corporate debts, there being no fraudulent intent al- 
 leged and proved, seems to us to be sustained by the weight 
 of authority, maintained by stronger reasoning, consistent 
 with well-settled principles, and in harmony with the policy 
 of the state." 
 
 1 Cook Corps. 1,§234; Whitney v. Consolidated, etc., Co. (111., 1891), 27 
 
 Wyman, 101 U. S. 392; Christian v. N. E. Rep. 596; Cory v. Lee, 93 Ala. 
 
 Bowman, 49 Minn. 99; Lamed V. Beal 4(58; American, etc., Co. v. Heiden- 
 
 (N. H.), 23 All. Rep. L49; Vanneman heimer, 80 Tex. 344. See, also, Fin- 
 
 v. Young CX. J.), 20 All. Rep. 53; negan v. Noerenberg, 52 Minn. 239, 
 
 Bates v. Wilson (Colo.), 24 Pac. Rep. Wilgus' Cases. 
 
 99; Walton v. Riley, 85 Ky. 413; 8 Gartside, etc., Co. v. Maxwell, 22 
 
 Welch v. Importers' Bank, 122 N.Y. Fed. Rep. 197. 
 
 177; Reinhard v. Virginia, etc., Co. •Snider's Sons Co. v. Troy, 91 Ala. 
 
 (Mo.), L8 B. W. Rep. 17; Beacord v. 224, 24 Am. St. Rep. 887, 11 L. R. A. 
 
 Pen- II. -Ion, 55 J 1 ii .',7'.); Bushnell v. 515, Wilgus' Cases.
 
 §547 
 
 COMMON LAW LIABILITY OF STOCKHOLDERS. 
 
 599 
 
 § 547. Where there is not even a de facto corporation, 1 — 
 
 There is substantial agreement among the courts that where 
 there is not even a de facto corporation, the associates are lia- 
 ble, either as partners or as agents, for obligations incurred in 
 the name of the association. Thus, if there is no law author- 
 izing the creation of such a corporation, or if the incorporat- 
 ing act is unconstitutional, all organizations effected there- 
 under will be treated as partnerships. 2 The liability of the 
 
 1 See Wilgus' Cases, Corporations 
 by Estoppel. 
 
 2 Eaton v. United States, etc., Co., 
 76 Mich. 579, 6 L.R.A. 102 ; Johnson v. 
 Corser, 34 Minn. 355; Guckert v. 
 Hacke, 159 Pa. St. 303, Wilgus' Cases ; 
 Empire Mills v. Alston, etc., Co. (Tex.), 
 15 S. W. Rep. 200; Kaiser v. Bank, 56 
 Iowa 104; Bigelow v. Gregory, 73 111. 
 197; Abbott v. Refining Co., 4 Neb. 
 416 ; Coleman v. Coleman, 78 Ind. 344 ; 
 Wechselberg v. Bank, 64 Fed. Rep. 90, 
 12 C. C. A. 56, Wilgus' Cases ; Booth 
 v. Wonderly, 36 N. J. L. 250; Vreden- 
 berg v. Behan, 33 La. Ann. 627. 
 Sheren v. Mendenhall, 23 Minn. 92, 
 was an action against Mendenhall and 
 Baldwin as partners, under the name 
 of the "State Savings Association." 
 It appeared that the defendants un- 
 dertook to become a corporation under 
 the general laws, but the court held 
 that the law under which it attempted 
 to incorporate did not authorize the 
 formation of such a corporation, and 
 the defendants were held liable as 
 partners. Johnson v. Corser, 34 Minn. 
 355, was a case not of irregularity in 
 omitting to conform to some require- 
 ment of the law, but an attempt to 
 organize a corporation such as was 
 not authorized by the law. In an 
 action against the members, all the 
 parties concerned in or authorizing 
 the contract personally were held lia- 
 ble, but the court refused to apply the 
 doctrine of implied agency recognized 
 
 in the law of partnership. The court 
 said: "The plaintiff asserts, as a rule 
 of law applicable to the case, that 
 from the mere failure to perfect the 
 contemplated incorporation, the asso- 
 ciation, after proceeding to carry on 
 the proposed enterprise, became a 
 partnership, and the members co- 
 partners, with authority, implied from 
 the relation, in each member to bind 
 all the associates by any act within 
 the scope of the business carried on 
 by the association. We can not sanc- 
 tion the application to this case of 
 the doctrine of implied agency, as it 
 is recognized in ordinary business co- 
 partnerships. * * * As far as ap- 
 pears, the business undertaken and 
 carried on by the defendants, was 
 not of a partnership character, nor 
 the purpose such as to suggest the re- 
 lation of co- partners between those 
 engaged in it." In Foster v. Moulton, 
 35 Minn. 458, Wilgus' Cases, the court 
 said : "It was manifest that the under- 
 standing between the members and 
 the basis upon which the certificates 
 of membership were issued, was a cor- 
 poration in fact as it was in form. 
 It is, at least as between the members 
 themselves, to be treated as a cor- 
 poration de facto, and the plaintiff 
 estopped from treating the members 
 as partners." See Finnegan v. Noern- 
 berg, 52 Minn. 239, Wilgus' Cases: 
 Christian v. Bowman, 49 Minn. 99.
 
 600 THE LAW OF PRIVATE CORPORATIONS. § 548 
 
 contracting parties is sometimes based upon the rule that by 
 assuming to act for a principal that does not exist, the agent 
 becomes personally liable, as for a breach of implied warranty 
 to make good the undertaking. 1 Where an action was brought 
 against a stockholder on a note given by a pretended corpora- 
 tion the court said: 2 "The apparent corporation was not a 
 corporation. The statute of New Hampshire requires five as- 
 sociates, and the articles of agreement must be recorded in the 
 town in which the principal business is to be carried on, and 
 the place in which the business is to be carried on must be 
 distinctly stated in the articles ; otherwise there is no corpora- 
 tion. The defendant's pretended associates were associates 
 only in name ; he alone was interested in the enterprise. The 
 articles of agreement were recorded in Nashua, and stated that 
 the business was to be carried on there ; but it was not in fact 
 carried on there, and was not intended to be. The defendant 
 took all the shares of the capital stock, and paid in, to himself, 
 as treasurer, -only fifty per cent, of the amount thereof. This 
 is not a case where there has been a defective organization of 
 a corporation which has a legal existence under a valid char- 
 ter. Here there was no corporation. It was just the same as 
 if the defendant had done nothing at all in the way of estab- 
 lishing a corporation, but had conducted his business under 
 the name of the Forbes Woolen Mills, calling it a corporation. 
 The business was his personal business, which he transacted 
 under that name." 
 
 § 548. "One man" corporations. 3 — The courts have had con- 
 siderable trouble with what have come to be known as one 
 man corporations. By the weight of authority the fact that 
 all the shares of the stock have come into the hands of one 
 person does not operate as a dissolution of the corporation, or 
 make it a fraud upon the public for him to continue the busi- 
 
 »Thompson Corps., § 418. 3 See Louisville Banking Co. v. Eis- 
 
 » Montgomery v. Forbes, 148 Mass. enman, 94 Ky. 83, 42 Am. St. R. 335, 
 24P, Wilgas' Cases. 19 L. R. A. 604, Wilgus' Cases.
 
 § 548 COMMON LAW LIABILITY OF STOCKHOLDERS. 601 
 
 ness in the corporate name. 1 In a celebrated English case 
 it appeared that one Salomon was carrying on business as a 
 merchant, and while solvent he organized a corporation for 
 the purpose of taking over and carrying on his business. The 
 memorandum of association was signed by Salomon, his wife, 
 daughter and four sons, who each subscribed for one share. 
 Twenty thousand shares were allotted to Salomon, who also 
 received debentures amounting to ten thousand pounds, which 
 constituted a first lien upon the property of the corporation. 
 Subsequently these debentures were canceled, and others for 
 the same amount at the request of Salomon issued to one Brod- 
 erip as security for a loan of five thousand pounds, which was 
 made to Salomon and by him loaned to the corporation. 
 Broderip commenced an action to enforce his security. A 
 receiver was appointed and an order for compulsory winding 
 up made. The corporation owed unsecured debts to a large 
 amount, of which more than one-half was owed to Salomon. 
 The receiver paid Broderip 's debt, and Salomon claimed 
 the balance as the owner of the debentures. The receiver 
 disputed the validity of the debentures on the ground of 
 fraud, and claimed a rescission of the agreement for the 
 transfer of the business, and the cancellation of the debentures. 
 The trial court held that the company was a mere nominee of 
 Salomon, and that the case stood as if the nominee instead of 
 being a company had been merely some individual agent of 
 Salomon, to whom he had proposed to sell his business. The 
 trustee in bankruptcy would then have had the right to make 
 Salomon indemnify the agent against the debts that he had 
 contracted by the direction of his principal. The right of the 
 liquidator was held to be precisely the same, notwithstanding the 
 debentures (which were a mere form), intended to give the ap- 
 pearance of reality to a sale which was in fact no sale, because 
 it was a sale by a man to an agent for his own profit. Salo- 
 mon was required to indemnify the company against the 
 
 1 Louisville, etc., Co. v. Kaufmann be transferred to him, may be held 
 
 (Ky.), 48 S. W. Rep. 434. A sole responsible for its debts. Angle v. 
 
 stockholder who wrongfully caused Chicago, etc., R. Co., 151 U. S. 1. 
 all the property of the corporation to
 
 602 THE LAW OF PRIVATE CORPORATIONS. § 548 
 
 amount of its unsecured debts, and a judgment was entered 
 against him. Upon appeal the judgment was affirmed. 1 
 
 Lord Justice Lindley said: "There can be no doubt that in 
 this case an attempt has been made to use the machinery of 
 the company's act for a purpose for which it never was intended. 
 The legislature contemplated the encouragement of trade by 
 enabling a comparatively small number of persons, namely 
 not less than seven, to carry on business with a limited joint 
 stock or capital and without the risk of liability beyond the 
 loss of such joint stock or capital. But the legislature never 
 contemplated an extension of limited liability to sole traders or 
 to a fewer number than seven. In truth the legislature clearly 
 intended to prevent anything of the kind for section 48 takes 
 away the privilege conferred by the act from those members of 
 limited companies who allow such companies to carry on busi- 
 ness with less than seven members; and by section 79 the re- 
 duction of the number of members below seven is a ground for 
 winding up of the company. Although in the present case 
 there were and are seven members, yet it is manifest that six 
 of them are members simply in order to enable the seventh 
 himself to carry on business with limited liability. The object 
 of the whole arrangement is to do the very thing which the 
 legislature intended not to be done; and ingenious as the scheme 
 is, it can not have the effect desired so long as the law remains 
 unaltered. * * * The incorporation of the company can not 
 be disputed. Whether by any proceeding in the nature of a 
 scire facias the court could set aside the certificate of incorpo- 
 ration is a question which has never been considered, and on 
 which I express no opinion; but be that as it may, in such an 
 action as this the validity of the certificate can not be im- 
 peached. The company must, therefore, be regarded as a cor- 
 1 1' >i;ition, but as a corporation created for an illegitimate pur- 
 pose." Lord Justice Lopes said: "The incorporation of 
 the company was perfect. The machinery by which it was 
 formed was in every reaped perfect, every detail had been ob- 
 served, bul notwithstanding the business was in truth and 
 fact the business of A.aron Salomon; he bad the beneficial in- 
 1 Broderip v. Salomon, L. B. (1895) 20h. Div. 323.
 
 § 549 COMMON LAW LIABILITY OF STOCKHOLDERS. 603 
 
 terest in it; the company was a mere nominis umbra, under 
 cover of which he carried on his business as before, securing 
 himself against loss by a limited liability of one pound per 
 share, all of which shares he practically possessed and obtain- 
 ing a priority over the unsecured creditors of the company by 
 the debentures, of which he had constituted himself the 
 holder." Notwithstanding the fact that the incorporators had 
 complied in every respect with the statute authorizing the 
 organization of such companies the decision of the lower court 
 was affirmed and the appeal of Salomon dismissed. 
 
 § 549. One-man corporations, continued. — An entirely dif- 
 ferent view of the case was taken in the house of lords, 
 where the order appealed from by Salomon was reversed, 1 
 where it was said that the only question of importance 
 was whether the respondent company w r as a corporation, 
 and in order to determine that question it was simply neces- 
 sary to examine the statute. The lord chancellor said: "I 
 must pause here to point out that the statute enacts nothing as 
 to the extent or degree of interest which may be held by each 
 of the seven, or as to the proportion of interest or influence 
 possessed by one or the majority of the shareholders over the 
 others. One share is enough. Still less is it possible to con- 
 tend that the motive of becoming shareholders or of making 
 them shareholders is a field of inquiry which the statute itself 
 recognizes as legitimate. If they are shareholders, they are 
 shareholders for all purposes, and even if the statute was silent 
 as to the recognition of trusts I should be prepared to hold 
 that if six of them were the cestui que trusts of the seventh, 
 whatever might be their rights inter se, the statute would have 
 made them shareholders to all intents and purposes with their 
 respective rights and liabilities; and dealing with them in 
 their relation to the company, the only relation which I be- 
 lieve the law would sanction, would be that they were corpo- 
 rators of a corporate body. * * * Either the limited com- 
 
 1 Salomon v. Salomon, etc., Co., gomery v. Forbes, 148 Mass. 249, Wil- 
 Lim., L. R. App. Cas. 1897, 22 ; 75 Law gus' Cases. 
 Times N. S. 427. See, also, Mont-
 
 604 THE LAW OF PRIVATE CORPORATIONS. § 550 
 
 pany was a legal entity or it was not. If it was, the business 
 belonged to it and not to Mr. Salomon; if it was not, there 
 was no person and no thing to be an agent at all; and it is 
 impossible to say at the same time that there is a company and 
 there is not. * * * The truth is that the learned judges 
 have never allowed in their own minds the proposition that 
 the company has a real existence. They have been struck by 
 what they considered the inexpediency of permitting one 
 man to be, in influence and authority, the whole company, and 
 assuming that such a thing could not have been intended by 
 the legislature, they have sought various grounds upon which 
 they might insert into the act some prohibition of such a result. 
 Whether such a result be right or wrong, politic or impolitic, 
 I say, with the utmost deference to the learned judges, that 
 we have nothing to do with that question if this company 
 has been duly constituted by law, and whatever may be the 
 motives of those who constituted it, I must decline to insert 
 into that act of parliament limitations which are not to be 
 found there." - 
 
 § 550. Corporations organized to do business exclusively in 
 
 another state, — The decisions are not uniform on the question 
 
 as to whether a corporation can be created by one state with 
 
 power to do business only in a state other than that of its creation . 
 
 In Massachusetts and Texas such an incorporation will not 
 
 protect the members from liability as partners. 1 The same 
 
 doctrine was established in New Jersey 2 at an early day. This 
 
 is the general rule where there is lack of good faith on the part of 
 
 either the state or the corporators, as " no rule of comity will 
 
 allow one state to spawn corporations, and send them forth 
 
 into other states to be nurtured and do business there, when said 
 
 first mentioned state will not allow them to do business within 
 
 its own borders." 3 In Now York and at present in New Jersey 
 
 1 Montgomery v. Forbes, 148 Mass. if<>ston the face of their proceedings 
 
 249, 19 N. E. Rep. 342, Wilgu that their attempted organization, 
 
 Empire Mills v. Alston (Tex. A.pp.), 15 under the general laws of New York 
 
 s. W. Rep. 200, 12 I.. !«'. A. 366, an- respecting corporations, was a fraud 
 
 notated. upon the law of this stale" 
 
 i Hill v. Beach, L2 N.J. Eq. 31, B Land Grant, etc., Co. v. Coffey 
 
 the court said : "It is perfectly man- Co., 6 Kan. 245.
 
 §550 
 
 COMMON LAW LIABILITY OF STOCKHOLDERS. 
 
 605 
 
 the stockholders will not be held liable as partners, although the 
 corporation was created for the purpose of doing all its busi- 
 ness in foreign states if there was no fraud or evasion of the 
 laws of the state of incorporation. 1 In'a recent case the court of 
 appeals of New York said: 2 "Whatever inferences can be drawn 
 as to the motives which took them into a foreign jurisdiction to 
 organize a corporation under its laws, I agree with the general 
 term that any such question has been once and for all settled 
 by our recent decision in the case of Demarest v. Flack. 3 It 
 appeared in that case that citizens of this state, incorporated 
 under the laws of West Virginia, to carry on a certain busi- 
 ness, with the principal office of the company in New York 
 City, where only it had been conducting its operations. 
 It was claimed that these facts invalidated the corporation, 
 and that there was a manifest evasion of, and fraud upon, the' 
 laws of the state. But it was held that they constituted no 
 1 Demarest v. Flack, 128 N. Y. 205, dent corporations by relieving them 
 
 of a burden which we place upon do- 
 mestic corporations. As was said in 
 Martine v. International, etc., Soc, 
 '53 N. Y. 339, 347 : 'It would be most 
 unreasonable for these foreign corpo- 
 rations to ask the privilege of doing 
 business under our laws in competi- 
 tion with domestic institutions, and 
 then ask exemption from the obliga- 
 tions and liabilities which attach to 
 the latter.' It is a matter of common 
 knowledge as well as of grave public 
 concern in this state, that for the sake 
 of a paltry license tax, certain sister 
 states are competing with each other 
 in granting loose charters without 
 adequate protection for the public, 
 and thus inducing the promoters of 
 corporations to organize under their 
 statutes, when there is no intention 
 of investing capital or doing business 
 in the state where the organization is 
 affected. Such selfish and unfriendly 
 legislation should not be encouraged 
 by the court of the state which is 
 most injured by it." 
 
 13 L. R. A. 854; Merrick v. Van Sant- 
 voord, 34 N. Y. 208; Second Nat'l 
 Bank v. Hall, 35 Ohio St. 158. See 
 Wright v. Lee, 2 S. Dak. 596, 51 N. 
 W. Rep. 706; Oakdale, etc., Co., v. 
 Garst, 18 R. I. 484, 28 Atl. Rep. 973; 
 Missouri, etc., Co. v. Reinhard, 114 
 Mo. 218; Trowbridge v. Scudder, 11 
 Cush. (Mass.) 83. 
 
 2 Lancaster v. Amsterdam, etc., Co., 
 140 N. Y. 576, 35 N. E. Rep. 964. 
 
 3 128 N. Y. 205. In People v. Board 
 of Assessors (N. Y.), N. Y. Law 
 Journal of May 3, 1899, it was held by 
 a divided court that the good will of 
 a corporation organized under the 
 laws of West Virginia by residents of 
 New York for the purpose of doing 
 business wholly in New York was 
 capital employed in New York and 
 therefore taxable in New York. The 
 court said : "If we hold that the good 
 will of a foreign corporation is not 
 taxable here simply because it is in- 
 tangible, although it grew up here, 
 has a market value here and nowhere 
 else, we place a premium on non-resi-
 
 606 THE LAW OF PRIVATE CORPORATIONS. § 551 
 
 reason for refusing recognition to the corporation; that there 
 was no essential difference between a corporation, formed un- 
 der the laws of a foreign state, the members of which were ita 
 own citizens, and one so formed, the members of which were 
 citizens of our own state. If our citizens are attracted to 
 other jurisdictions for purposes of incorporation, because of 
 more favorable corporation or taxation laws, I can not see in 
 that fact, however, and in whatever sense to be deplored, any 
 reason that they should be prevented from employing here 
 the corporate capital in the various channels of trade or 
 manufacture. That, as it seems to me, would be a rather hurt- 
 ful policy, and one not to be attributed to the state." 
 
 § 551. Liability for capital wrongfully distributed. — It has 
 
 been held that if any portion of the capital is paid to the 
 stockholders under the name of dividends it may be recovered 
 by the representative of the creditor, although the stockholder 
 had no knowledge but that the dividends had been earned 
 and were properly paid. Equity will require such stock- 
 holders to contribute pro rata for the payment of the debts. 1 
 "The stockholders have no rights to anything but the residuum 
 of the capital stock, after the payment of all the debts of the 
 corporation. If before all such debts are discharged, they take 
 into their hands any of the funds of the corporation, they hold 
 them subject to an equity which it is against conscience to re- 
 sist. " : But the supreme court of the United States in a late 
 case held thai the receiver of a national bank can not recover 
 a dividend paid entirely out of capital when the stockholder 
 receiving the dividend acted in good faith, believing the same 
 to be paid out of profits, and the bank at the time of the pay- 
 ment was not insolvent. 3 Legitimate profits form no part of 
 the capital stock, and a stockholder can not be required to 
 surrender bona fide dividends declared and distributed at a 
 time when the corporation was solvent. 4 
 
 1 Minnesota, etc., Co. v. Langdon, v. Drew, 57 N. Y. 587 ; Gratz v. Redd, 
 
 [inn. 37. I B. Men. (Ky.) 178. 
 
 'Kohl v. Lilienthal, 81 Cal. 378; B McDonald v.Williams,174U.S. 397. 
 
 Clapp v. Peterson, 104 III. 26; Cran- *Reidv. Eatonton, etc., Co., 10 Ga. 
 
 dall v. Lincoln, 52 Conn. 73; Bartleti 98, 2 Am. Rep. 563.
 
 § 552 COMMON LAW LIABILITY OF STOCKHOLDERS. 607 
 
 § 552. Liability upon shares issued below par. — The rule 
 that holds original subscribers to the stock of a corporation 
 liable to pay the full face value of shares for the benefit of the 
 creditors of the corporation, notwithstanding a contract with 
 the corporation by which it has agreed to accept a less amount 
 in full payment, has been already discussed. 1 Such a contract 
 is valid as against the corporation, at least by estoppel, 2 but it 
 is impeachable by parties who extend credit to the corporation 
 after the issue of such stock. 3 The trust-fund theory, as origi- 
 nally established, required that the par value of the share 
 must be paid into the corporation treasury when necessary to 
 liquidate the claims of creditors, unless the stockholders are 
 able to show a greater equity than that possessed by the credi- 
 tors. But it has been considerably modified. "There is not 
 much room to doubt the soundness of the conclusion that 
 where the rights of creditors are not concerned, an agreement 
 between the corporation and its shareholders that they are to 
 have their shares upon the payment of a sum less than the 
 par or nominal value will estop the corporation from main- 
 taining an action to collect the balance. But it was formerly 
 supposed, in conformity with the holding of the supreme court 
 of the United States, just referred to, that a subscriber to the 
 shares of a corporation could be compelled to pay, if necessary 
 to liquidate its debts, the entire par value of his shares, no 
 matter what agreement he may have made with the corpora- 
 tion in respect to their payment, at the time of his subscrip- 
 tion or afterwards. But this doctrine, as already seen, has 
 been recently modified by the supreme court of the United 
 States, to the extent of holding that, in the absence of circum- 
 stances creating an equitable estoppel in favor of the creditor of 
 the corporation, and against the shareholder, the latter can 
 not be compelled to pay, even for the purpose of liquidating 
 
 *See § 329, supra. When shares are liability. Fort Madison Bank v. Al- 
 
 issued as full paid for property re- den, 129 U. S. 372. See § 340, supra. 
 
 ceived in payment, there must be z Ante, § 329. Kenton, etc., Co. v. 
 
 actual fraud in the transaction to ena- McAlpin, 5 Fed. Rep. 737. 
 
 ble the creditors of the corporations 3 Washburn v. Green, 133 IT. S. 30; 
 
 to hold the stockholder to a further Upton v. Tribilcock, 91 U. S. 45; Sco- 
 
 vill v. Thayer, 105 U. S. 143.
 
 608 THE LAW OF PRIVATE CORPORATIONS. § 553 
 
 the debts of the corporation after its insolvency, anything be- 
 yond what the corporation agreed with hirn to accept as full 
 payment. This is tantamount to holding that, as far as the 
 rights of creditors, who became such prior to the issuing of the 
 shares, are concerned, whatever the corporation agreed to ac- 
 cept as payment is payment, even though it agreed to give 
 away the shares, or to issue them as a bonus, or in considera- 
 tion of some past benefit, it is to be deemed payment. This 
 lifts the obligation of the shareholder to pay the par value of 
 his shares, even for the purpose of liquidating the debts of the 
 corporation, out of the category of principles of public policy, 
 and lets it down to the mere doctrine of an equitable estop- 
 pel. The meaning is that, except in cases where creditors have 
 been deceived and misled by the corporation pretending to 
 have a capital which it has not, a creditor can enforce no 
 right against a shareholder greater than the corporation itself 
 could enforce against him." 1 This is believed to be an ac- 
 curate statement of the law at the present time. 
 
 § 553. Fraudulent acts. — The stockholders are not liable for 
 the torts of the corporation, but they are liable for their 
 own torts committed under pretense of acting for the corpora- 
 tion. Thus they "may have originally contracted debts in the 
 name and upon the credit of the corporation, without any pur- 
 pose of payment or without any reasonable probability that 
 payment could be made by the corporation; or they may have 
 diverted all the funds of the corporation to their own use, in 
 either case evincing a settled purpose of defrauding creditors." 1 
 It was held that a stockholding creditor did not become person- 
 ally Liable for the corporate debts by securing a preference out 
 of the corporate property. But in order to make the stock- 
 holders personally liable the creditor must show that he was 
 induced to become such by their deceit. 3 
 
 §554. Enforcement — Defenses. — A debt growing out of a 
 contract of subscription may be enforced by the corpora- 
 
 "Thompson Corps., §2953. Swan Land, etc., Co. v. Frank, 148 
 
 •Whitwell v. Warner, 20 Vt. 425; U. 8. 603. 
 Medill v. Collier, L6 Ohio St. 699. Bee "Sisson v. Matthews, 20 Ga. 848.
 
 § 554 COMMON LAW LIABILITY OF STOCKHOLDERS. 609 
 
 tion in an action at law, or after its insolvency by its as- 
 signee or receiver in an appropriate action for the benefit of 
 its creditors. 1 Ordinarily the same defenses are available 
 against the assignee or receiver as would have been available 
 against the corporation. But the party may have put himself 
 in such a position as to be unable to assert his defense against 
 the creditors. Certain contracts, valid as between a subscriber 
 and a corporation, are not, however, binding upon creditors 
 of the corporation. Thus a contract between a corporation 
 and a subscriber that the subscription is not to be collected or 
 is to be payable only in part is void as against creditors of 
 the corporation, although binding upon the corporation and 
 the stockholders who assented to it. 2 A conditional subscrip- 
 tion may be binding in favor of creditors, although the con- 
 ditions have not been performed, if the subscriber has waived 
 the condition by acting as a stockholder. 3 So certain conditions 
 will be treated as void in favor of creditors. Thus, in some 
 jurisdictions, a subscription made prior to incorporation is un- 
 authorized and void, and will be treated as unconditional and 
 binding. 4 A stockholder can not set up the illegality of the 
 scheme of the corporation which did not appear on the face 
 of the contract of subscription or the prospectus referred to 
 in the contract in order to escape from liability to creditors 
 whose debts have been contracted upon the faith of the sub- 
 scription. 5 The liability for unpaid subscriptions, when im- 
 posed by the constitution of the state, can not be avoided by 
 a provision in the charter which attempts to exempt the stock- 
 holders from such liability. 6 
 
 1 Hatch v. Dana, 101 U. S. 205. As 3 Cornell & Michler's Appeal, 114 
 to right of the creditor by bill in Pa. St. 153. 
 
 equity, or other appropriate proceed- * Burke v. Smith, 16 Wallace 17. S. 
 
 ings, to have unpaid subscription 390; Caley v. Railroad Co., 80 Pa. St. 
 
 subjected to the payment of his debt, 363. 
 
 see Hawkins v. Glenn, 131 U. S. 319; 5 Cardwell v. Kelly, 95 Va. 570, 40 
 
 Handley v. Stutz, 139 U. S. 417. L. R. A. 240. 
 
 2 Burke v. Smith, 16 Wallace U. S. 6 Van Pelt v. Gardner, 54 Neb. 701, 
 390; Upton v. Triblicock, 91 U. S. 45. 75 N. W. Rep. 874. 
 
 39 — Private Corp.
 
 610 THE LAW OF PRIVATE CORPORATIONS. § 555 
 
 § 555. Enforcement of liability in a foreign jurisdiction. 1 — 
 The liability of a non-resident stockholder on his contract of 
 subscription can be enforced in any forum where jurisdiction of 
 the person can be obtained. The enforcement of this simple 
 contract liability growing out of the express or implied prom- 
 ise to pay contained in the contract of subscription, is to be 
 distinguished from the right to enforce the statutory lia- 
 bility which is considered elsewhere. The contract of sub- 
 scription is governed by the laws of the state by which the 
 corporation was created. 2 The right to recover unpaid sub- 
 scriptions in another state should not be treated as resting 
 upon the doctrine of comity, but upon the universally recog- 
 nized right to enforce a valid contract wherever the defendant 
 can be found. 3 The right to sue the stockholder in a foreign 
 state rests upon his contract to pay for the shares, and, hence, 
 it can not be maintained in those states which do not recognize 
 an implied contract to pay as arising out of a mere subscrip- 
 tion for shares. 4 A suit on an assessment against a stock- 
 holder, made under a decree of a court of the state, is enforci- 
 ble in a foreign jurisdiction. 5 In some states the receiver of a 
 foreign corporation is allowed to recover the amount of an 
 unpaid subscription, 6 while in other states the right of a re- 
 ceiver to sue in a foreign jurisdiction is denied. 7 A creditor 
 seeking to enforce the liability of a stockholder for an unpaid 
 
 1 See Wilgus' Cases. Hosmer, 101 Mich. 119, 25 L. R. A. 
 
 2 Jessup v. Carnegie, 80 N. Y. 441, 739; Mutual, etc., Co. v. Phoenix, 
 
 36 Am. Rep. 643; Penobscot, etc., R. etc., Co. (Mich.), 34 L. R. A. 694; 
 
 Co. v. Bartlett, 12 Gray 244, 71 Arn. Western Nat'l Bank v. Lawrence 
 
 Dec. 753; Hancock Nat'] Bank v. (Mich.), 76 N. "W. Rep. 105. 
 
 Ellis, 166 Mass. 414, 42 L. R. A. 396; 6 Cnykendall v. Miles, 10 Fed. Rep. 
 
 Bell v. FarwHl, 170 111. 489. See also 342; Dayton v. Borst, 31 N. Y. 435; 
 
 Stebbine v. Scott, 172 .Mass. 356, 52 N. Maun v. Cooke, 20 Conn. 178; Pugh 
 
 I. Rep. 535; Ooffing v. Dodge, 167 v. Hurtt, 52 How. Pr. 22; Baldwin v. 
 
 .231; Marshall v. Sherman, 148 Hosmer, 101 Mich. 119; Fawcett v. 
 
 N. y. 9. Sup.SittingofI.H.(Conn.),24L.R.A. 
 
 3 Mandel v. Swan, etc., Co., 154 111. 815; Buswell v. Sup. sitting, etc., 161 
 
 177,27 L. I;. A.:: I.;. Mass. 224, 23 L. R. A. 840. 
 
 •New Haven, etc., Co. v. Linden, 7 Wyman v. Eaton (la.), 1&L. R. A. 
 
 etc., Co., 142 Mass. 349. 695; Booth v. Clark, 17 How. (U. S.) 
 
 " Morris v. Glenn, 87 Ala. 628. By 822; Beach on Receivers, §683. 
 an ancillary receiver. Baldwin v.
 
 § 556 COMMON LAW LIABILITY OF STOCKHOLDERS. 611 
 
 subscription should proceed by a creditor's bill, 1 although 
 there are cases which hold that even after judgment against a 
 corporation, the creditors must seek their remedy in the state 
 where the corporation was created and there have the relations 
 of the creditors and stockholders toward each other determined. 2 
 
 § 556. Decree determining assets and debts, and making 
 assessments — Conclusiveness. 3 — It is now well settled that an 
 assessment for an unpaid stock subscription made under a de- 
 cree of a court of the corporate domicile is binding upon all 
 the stockholders without reference to their residence or the 
 fact of service. Some cases have held such a decree equiva- 
 lent to a judgment against the individual stockholder, but 
 these decisions have been modified by a recent decision of the 
 supreme court of the United States. An order authorizing an 
 assessment upon the capital of a state bank, made by a court 
 under statutory authority upon the petition of the receiver, is 
 binding upon all stockholders and can not be collaterally at- 
 tacked by them, although they were non-residents and not be- 
 fore the court. 4 So an order and decree of the court of the corpo- 
 rate domicile appointing a receiver for an insolvent bank, ascer- 
 taining the deficiency and directing an assessment upon the 
 stockholders, was held binding upon the stockholders who 
 were not parties to the proceeding. 5 In proceedings in a court 
 of another state to wind up a domestic corporation as an in- 
 solvent, in which the court has jurisdiction of the subject-mat- 
 
 1 Lemcke v. Tredway, 45 Mo. App. 4 Sheafe v. Larimer, 79 Fed. Rep. 
 507, 94 Mo. 410. But judgment must 921. As to the binding force of assess- 
 first be obtained against the corpora- ments by the court upon stockholders 
 tion in the state of the corporate dom- in insolvent corporations, wherein the 
 icile unless it is shown to be impossi- court is the successor of the corpora- 
 ble. Rule v. Omega, etc., Co. (Minn.), tion, see Marson v. Deither, 49 Minn. 
 67 N. W. Rep. 60. And see Reining- 423; In re Minnehaha, etc., Assn., 53 
 ton, etc., v.Samara Bay Co., 140 Mass. Minn. 423; Hale v. Harden, 95 Fed. 
 494. § 576, infra. Rep. 747. Call invalid for indefinite- 
 
 2 See §579, Infra. Young v. Farwell, ness, North, etc., Co. (Wis.), 46 L. R. 
 139 111. 326. In Turner Bros. v. Ala- A. 174. 
 
 bama, etc., Co., 25 111. App. 144, it was 5 Howarth v. Ellwanger, 86 Fed. 
 
 held that the creditor might proceed Rep. 54; Hawkins v. Glenn, 131 U. 
 
 by way of attachment or garnishment. S. 319. See Hale v. Hardon, 95 Fed. 
 
 8 See Wilgus' Cases. Rep. 747.
 
 612 THE LAW OF PRIVATE CORPORATIONS. § 557 
 
 ter and of the corporation, the members thereof are parties 
 through representation by the corporation and until attacked 
 and set aside in appropriate judicial proceedings, an assess- 
 ment made in the action upon the members is conclusive evi- 
 dence in the courts of another state of the necessity for making 
 the assessment and to that extent binds each of the members 
 without notice to him. 1 Such a decree as to the amount of 
 assets and debts of an insolvent mutual insurance company 
 and of the amount of assessments necessary to liquidate its 
 debts was held conclusive on a stockholder when sued in the 
 courts of another state upon a note which was in the posses- 
 sion of the company and under the control of the court when 
 the decree was made. 2 
 
 §557. Conclusiveness of decree, continued. — The supreme 
 court of the United States has modified its earlier decisions 
 and now holds that, although such a judgment is conclu- 
 sive so far as it establishes the amount of debts and liabili- 
 ties of the corporation and the necessity for an assessment, 3 
 the stockholder may still plead any defense which goes to 
 show that he is not liable on his contract of subscription, 
 such as payment or the statute of limitations. 4 Mr. Justice 
 
 1 Longworthy v. Garding (Minn.), Lehman, etc., Co. v. Glenn, 87 Ala. 
 77 N. W. Rep. 207. Citing Telegraph 618; Glenn v. Williams, 60 Md. 93 ; 
 Co. v. Purdy, 162 U. S. 329. Howard v. Glenn, 85 Ga. 238. 
 
 2 Mutual, etc., Co. v. Phoenix, etc., *Great Western,etc.,Co.v.Purdy,162 
 Co., 108 Mich. 170, 34 L. R. A. 694, an- U.S. 329. In Warner v. Delbridge.etc, 
 notafced. In Parker v. Lamb, 99 Iowa Co., 110 Mich. 590, 34 L. R. A. 701, the 
 265, 34 L. R. A. 704, it was held court said: " If this contract is to be 
 that one assessment on premium treated as a Michigan contract the 
 notes made by a receiver of a mu- holding should be sustained, unless it 
 tual insurance company under a de- beheld that the order making the as- 
 cree of court is not an adjudication sessment, madeatthes«i?Asof the home 
 binding on the courts of another state company, is conclusive, not only as to 
 as against a maker of one of such the authority to make the assessment, 
 notes who was not a party to the pro- but as to the extent of the defendant's 
 eeedinge which resulted in the assess- liability. This question was recently 
 incut, ami ulio before the bankruptcy before the court in the case of Mutual, 
 of the company had surrendered his etc., Co.v. Phoenix, etc., Co., 108Mich. 
 policy and received hack his note. 170, 34 L.R. A. 694, and the conclusion 
 
 ■See Glenn v. Liggett, L35U.S.533; was (hen reached thai I he decision of 
 Hawkins v. Glenn, 13] I'. 8. 319; a sister state is binding upon the 
 Glenn v. Springs, '_'<i Fed. Rep. 494; courts of thin slate in all these re-
 
 §557 
 
 COMMON LAW LIABILITY OF STOCKHOLDERS. 
 
 613 
 
 Gray said: "The order of that court was, in effect, as it was in 
 terms, simply a call or assessment upon all stockholders who 
 had not paid for their shares in full. It was such as the direc- 
 tors might have made before the appointment of a receiver; 
 and in making it, the court, having by that appointment as- 
 sumed the charge of the assets and affairs of the corporation, 
 took the place and exercised the office of the directors. 1 The 
 order of assessment, whether made by the directors as provided 
 in the contract of subscription or by the court as the successor 
 in this respect of the directors, was doubtless, unless directly 
 attacked and set aside by appropriate judicial proceedings, 
 conclusive evidence of the necessity for making such an assess- 
 ment and to that extent bound every stockholder without per- 
 sonal notice to him. 2 But the order was not and did not pur- 
 
 the federal supreme court, and the 
 doctrine of the cases upon which we 
 relied for our decision limited, and in 
 Great Western, etc., Co. v. Purdy, 162 
 U. S. 329, it is held that an order 
 making a call or assessment upon all 
 stockholders of a corporation who 
 have not paid their shares in full is 
 merely such a call as the directors 
 might have made before the matter 
 was brought within the court's juris- 
 diction, and is not a judgment against 
 the particular stockholder, so as to 
 be entitled to such full faith and 
 credit, under the constitution and 
 laws of the United States, and that 
 in such action defendant is entitled 
 to rely on any defense which he 
 might have to an action upon the 
 contract of subscription." 
 
 ^covill v. Thayer, 105 IT. S. 143; 
 Hawkins v. Glenn, 131 U. S. 319- 
 329; Lamb v. Lamb, 6 Biss. 420- 
 424; Glenn v. Sexton, 68 Cal. 353; 
 Great Western, etc., Co. v. Gray, 122 
 111. 630; Great Western, etc., Co. v. 
 Loewenthal, 154 111. 261. 
 
 2 Hawkins v. Glenn, 131 TJ. S. 319; 
 Glenn v. Liggett, 135 U. S. 533 ; Glenn 
 v. Marbury, 145 TJ. S. 499. 
 
 spects. This conclusion was based 
 upon the constitutional provision that 
 full faith and credit shall be given in 
 each state to the public acts, records 
 and judicial proceedings of every 
 other state. Art. 4, § 1. An examina- 
 tion of the decisions of the federal 
 supreme court led us to the conclu- 
 sion that a stockholder of a corpora- 
 tion is so far an integral part of the 
 corporation that, in view of the law, 
 he is privy to the proceedings touch- 
 ing the body of which he is a mem- 
 ber, and that a determination that an 
 assessment upon the policy-holders in 
 a certain amount and for certain ob- 
 ligations of the company should be 
 made was final and conclusive, and 
 could not be attacked collaterally 
 when suit was brought upon such as- 
 sessment in a foreign state. In reach- 
 ing this conclusion, the question in- 
 volved being a federal question, we 
 felt ourselves bound by the deter- 
 mination of the federal court in Haw- 
 kins v. Glenn, 131 U. S. 319, and 
 Glenn v. Liggett, 135 TJ. S. 533. But 
 since the decision of this court in 
 Mutual, etc., Co. v. Phoenix, etc., Co., 
 the question has been again before
 
 614 THE LAW OF PRIVATE CORPORATIONS. § 557 
 
 port to be a judgment against any one. * * * It did not merge 
 the cause of action of the company against any stockholder on 
 his contract of subscription, nor deprive him of the right when 
 sued for an assessment to rely on any defense which he might 
 have to an action upon that contract. In this action, there- 
 fore, brought by the receiver in the name of the company as 
 authorized by the order of assessment to recover the sum sup- 
 posed to be due from the defendant, he had the right to plead 
 a release or payment or the statute of limitations or any other 
 defense going to show that he was not liable upon his contract 
 of subscription." 

 
 CHAPTER 20. 
 
 THE CONSTITUTIONAL AND STATUTORY LIABILITY OF STOCK- 
 HOLDERS. 
 
 § 558. General statement. 
 
 559. Power of legislature to im- 
 
 pose liability. 
 
 560. Limitations by contract. 
 
 561. Exceptions in favor of certain 
 
 classes of corporations. 
 
 562. Repeal of statute — Rights of 
 
 creditors. 
 
 563. Constitutional provisions 
 
 — When self-executing. 
 I. Nature of the Liability. 
 
 564. "When contractual. 
 
 565. When peual. 
 
 566. Survival of the right of action. 
 
 567. Liability of officers and direct- 
 
 ors. 
 
 II. Against Whom the Liability is En- 
 
 forcible. 
 
 568. As to time of holding stock. 
 
 569. Trustees, pledgees and execu- 
 
 tors. 
 
 570. Unrecorded transfers— Liabil- 
 
 ity of transferrer and trans- 
 feree. 
 
 III. The Debts for Which the Stock- 
 
 holders are Liable. 
 
 571. The debt of the corporation — 
 
 Release. 
 
 572. Nature of the obligation. 
 
 573. Debts due laborers and em- 
 
 ployes. 
 
 574. Creditors who are also stock- 
 
 holders and officers. 
 
 IV. Enforcement of the Liability. 
 
 § 575. At the domicile of the corpora* 
 tion. 
 
 576. Remedy against the corpora* 
 
 tion — Judgment. 
 
 577. Judgment against the corpo* 
 
 ration — Conclusiveness. 
 
 578. By whom the liability is en* 
 
 forcible. 
 
 579. Enforcement in foreign juris* 
 
 dictions. 
 
 580. Proceedings in the federaJ 
 
 courts. 
 
 581. Decisions in various states — 
 
 Massachusetts. 
 
 582. Decisions in New Hampshire. 
 
 New York and Illinois. 
 
 583. Where a special statutory rem- 
 
 edy is provided. 
 
 584. Where no statutory remedy is 
 
 provided. 
 
 585. Ancillary proceedings. 
 
 586. Original proceedings in court 
 
 of corporate domicile. 
 
 587. Conclusiveness of the decree of 
 
 the court of the domicile. 
 
 588. Rights of receiver in a foreign 
 
 jurisdiction. 
 V. Miscellaneous Bights and Defenses' 
 
 589. The right of set-off. 
 
 590. Statute of limitations. 
 
 591. Contribution among stock- 
 
 holders. 
 
 § 558. General statement. — In most of the states the mem- 
 bers of private corporations are now charged with an imposed 
 
 (615)
 
 616 THE LAW OF PRIVATE CORPORATIONS. § 559 
 
 liability in addition to that which grows out of their contracts 
 with the corporation. This liability must of course depend 
 upon the constitutions and statutes, and there is so great di- 
 versity among these as to render it impracticable to attempt to 
 state general rules applicable in all jurisdictions. The liabilities 
 thus imposed may, however, be roughly classified as follows: 
 (1) A joint and several liability as partners; (2) a joint and 
 several liability as guarantors; and (3) a limited and several 
 liability to be enforced absolutely or, more commonly, upon 
 regular proceedings against the corporation proving ineffectual. 
 The first class abrogates entirely the rule of limited liability 
 and is governed by the law of partnership. 1 The member be- 
 comes a principal debtor. 2 Under the second class the liability 
 is secondary and collateral to that of the corporation, and is 
 governed in a general way by the rules of guaranty. Thus, 
 any act on the part of the creditor which will release a guaran- 
 tor will release a stockholder from his liability. 3 The liability 
 under the third class is ordinarily limited to (a) an amount 
 equal to the shares of capital stock held by the member; or (b) 
 an amount equal to the ratio which the members' proportion 
 of the capital stock bears to the entire corporation indebted- 
 ness. "The distinctive characteristic of this liability is that 
 each member stands liable for a definite sum and no more, ir- 
 respective of the amount for which the others are liable. It is 
 a several, unequal and limited liability as to which each mem- 
 ber stands alone, except that, if he pays more than his propor- 
 tion of the debts of the company, he may, as in other cases, 
 have contribution from his fellow shareholders." 4 
 
 § 559. Power of legislature to impose liability. — There is no 
 question as to the power of the legislature to impose a statu- 
 
 >See Corning v. McCullough, 1 397,15 Am. St. Rep. 618, and Ault- 
 N. Y. 47; Allen v. Bewail, 2 Wend, man's App., 98 Pa. St. 500. 
 (N. V.) 327, <; Wend. 335; Moss v. 'Thompson Liability of Share- 
 ley, 2 Hill N. V.) 265. holders, § 37. See Clarke v. Cold 
 Booth v. Dear, 96 Wis. 516, 71 Spring, etc., Co. (Minn., 1894) 59 
 N. W. Rep. 816. N. W. Rep. 632. As to the manner of 
 ■Sayles v. Brown, K) Fed Rep. 8; proving who are stockholders.see §471; 
 Hanson v. Donkersley, 37 .Midi. L84. Hinsdale Sav. Bank v. N. H. Banking 
 Harpold v. Stobart, 46 Ohio St. Co.,59 Kan. 716,68 Am. St. Rep. 391.
 
 § 560 LIABILITY OF STOCKHOLDERS. 617 
 
 tory liability upon the stockholders of a corporation, if the 
 power to alter and amend the corporate charter has been re- 
 served, 1 and the limit of liability is not determined by the con- 
 stitution. 2 If there is no such reservation, the liability can be 
 imposed upon those only who become stockholders after the 
 passage of the law. A constitutional provision imposing a 
 liability does not impair the power of the legislature to impose 
 an additional liability. 3 A liability beyond that imposed by 
 the charter and contract of subscription can not be imposed by 
 a by-law without the unanimous consent of the stockholders. 4 
 
 § 560. Limitations by contract, — A creditor may, by an ex- 
 press contract 5 at the time the debt was contracted, or by his 
 conduct, 6 waive his right to proceed against stockholders for the 
 collection of his debt. The only difficulty has been in proving 
 the agreement. Evidence that at the time of the signing of 
 the articles of association, and during the negotiations which 
 resulted in their execution, it was verbally agreed among those 
 who signed the articles and became stockholders that they 
 should not be individually liable for corporate debts, is inad- 
 missible because it tends to vary the terms implied by law of 
 the articles of incorporation. 7 But the stockholder may show 
 that at the time of the giving of certain notes by the corporation 
 it was orally agreed between the payee and the corporation that 
 
 1 Sleeper v. Goodwin, 67 Wis. 577, law of the commonwealth. Such a 
 31 N. W. Rep. 335; Ireland v. Pales- power would be liable to great abuse, 
 tine, etc., Co., 19 Ohio St. 369. and would subject every member of 
 
 2 Van Pelt v. Gardner, 54 Neb. 701. a corporation, however liberal its char- 
 As to the rule where the power to alter terin excluding individual liability, to 
 or amend the charter has not been re- be made responsible for the entire in- 
 served, see Dow v. North., etc., R. Co., debtedness of the corporation by the 
 67 N. H. 1 ; Gray v. Coffin, 9 Cash, act of those convened at a meeting of 
 (Mass.) 192. the corporation." 
 
 3 Allen v. Walsh, 25 Minn. 543. 5 United States v. Stanford, 70 Fed. 
 
 4 Trustees v. Flint, 13 Mete. (Mass.) Rep. 346; 44 U. S. App. 68; 17 C. C. 
 539. The court said: "It is not, in the A. 143; affirmed, 161 U. S. 412; Rob- 
 opinion of the court, within the cor- inson v. Bidwell, 22 Cal. 379. 
 porate powers conferred upon this and 6 Ohio, etc., Co. v. Merchants', etc., 
 similar corporations, to impose upon Co., 11 Humph. (Tenn.) 1, 53 Am. 
 their members by any such by-law Dec. 742. 
 
 any personal and individual liability 7 Oswald v. Minneapolis Times Co., 
 to third persons beyond such as are 65 Minn. 249. 
 specified in the charter or the general
 
 618 THE LAW OF PRIVATE CORPORATIONS. § 560 
 
 there should be no personal liability on the part of the stock- 
 holders for the debt, although no reference was made to the 
 agreement in the notes. 1 The court said: 
 
 "In terms, the notes promise only the payment of a sum of 
 money by the company on a certain day. They have nothing 
 to say about the defendants at all. If, then, the agreement is 
 held to vary them in their legal effect, it must be on the 
 ground that the statute which makes stockholders liable in 
 certain cases makes that liability a term of the notes by impli- 
 cation. With regard to this it will be observed that the stat- 
 ute does not create a chartered partnership which remains a 
 partnership and contracts as such, although granted certain 
 charter powers. It does not make or leave the members pri- 
 mary contractors or debtors. It creates a corporation out and 
 out, and then imposes a secondary and subsidiary liability 
 upon the members 'for its (the corporation's) debts or con- 
 tracts.' The liability of a member does not arise until after 
 the contract has been broken, a judgment recovered upon it 
 and execution returned unsatisfied. The corporation is the 
 only promisor or debtor ; it alone breaks the contract by its 
 failure to pay, and it alone is sued. The liability of the mem- 
 bers is no part of the original undertaking, but a consequence 
 attached by the law to its breach. But the rule excluding 
 evidence of oral agreements to vary a writing goes no farther 
 than the writing goes. And at most the writing only expresses 
 the obligation assumed by the party signing it. * * * The 
 most obvious and natural view is, that the promise is the only 
 tiling which the writing has undertaken or purports to express, 
 either in words or by legal implication. Certainly the writing 
 
 1 Brown v. Eastern Slate Co., 134 in the latter the consent to issue 
 j. 500. The court further said: them. But it is not necessary to de- 
 '• We have nol considered whether cide the point, because, even taking 
 theoral agreement is to he regarded it to have been the contract of the 
 as made with the corporation, or with corporation, the plaintiff could not 
 these stockholders in person through strike at the members of that corpora- 
 te agency of the directors. It would t ion in a court of equity through and 
 seem to be possible to takeiteither by means of a transaction which bound 
 way; the consideration in the former him not to do so." 
 case being the delivery of the notes,
 
 § 561 LIABILITY OF STOCKHOLDERS. 619 
 
 does not extend to the remedies which the law will furnish for 
 the collection of damages, even from the promisor himself, as 
 is shown by the fact that they are governed by the lex fori, 
 and a fortiori, not to the collateral statutory liability of third 
 persons not parties to the writing." 
 
 § 561. Exceptions in favor of certain classes of corpora- 
 tions, — Certain classes of corporations, such as those organ- 
 ized for manufacturing or mechanical purposes, are sometimes 
 excepted from the operation of the statutes which impose per- 
 sonal liability upon the stockholders. The exception in favor 
 of manufacturing corporations applies only to such as are 
 organized for the purpose of carrying on an exclusively manu- 
 facturing business. If the articles of association state the 
 purpose of conducting a manufacturing business, and also 
 other kinds of business not incidental to or necessarily con- 
 nected with the manufacturing business, the corporation is not 
 within the exception, although it actually engages only in a 
 manufacturing business. 1 So a corporation organized for " the 
 manufacture, purchase, repair and sale " of agricultural in- 
 struments, which sells goods manufactured by others, is not a 
 manufacturing corporation exclusively, and the stockholders 
 are subject to the statutory liability. 2 Persons can not escape 
 
 Arthur v. Willius, 44 Minn. 409; purchase, repair and sale of plows, 
 
 Densmore v. Shepard, 46 Minn. 54; cultivators, and other farming and 
 
 First Nat'l Bank v. Winona, etc., Co., agricultural implements of all kinds, 
 
 58 Minn. 167, 59 N. W. Rep. 997; State the purchase and sale of all materi- 
 
 v. Minnesota, etc., Co., 40 Minn. 213. als necessary or convenient in the 
 
 2 In First Nat'l Bank v. Winona, prosecution of said business, and to 
 
 etc., Co., 58 Minn. 167, 59 N. W. Rep. take, own, hold, mortgage, lease and 
 
 997, the court said: "The principal convey any and all real estate neces- 
 
 point urged by appellants is that the sary or useful therein.' One of the 
 
 stockholders of the defendant corpo- findings of fact made by the court be- 
 
 ration are not liable, because it is ex- low on the trial is as follows : 'That 
 
 clusively a manufacturing corporation, in fact the actual business carried on 
 
 It was organized under title 2, ch. 34, by said plow company at all times 
 
 Gen. St. 1878, and the purposes for since its organization, and intended 
 
 which it was incorporated are ex- by its incorporators to be carried on 
 
 pressed in its articles of incorporation by it, was exclusively that of manu- 
 
 as follows: 'The general nature of facturing plows and other agricultural 
 
 its business shall be the manufacture, implements, and the disposing of the
 
 620 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 56i 
 
 the constitutional liability by organizing as a manufacturing 
 corporation when it is evident that the primary object of the 
 organization is wholly foreign to manufacturing. 1 Mining is 
 not a manufacturing business. 2 A " mechanical business," 
 within a provision exempting manufacturing or mechanical 
 corporations, means a business closely allied to or incidental to 
 some manufacturing business, such as the mining of iron ore 
 in connection with the manufacture of iron products. 3 But a 
 
 product of its manufacture, except 
 that for a limited time it handled and 
 sold on commission goods manufac- 
 tured by other persons and corpora- 
 tions, in connection with, and for the 
 purpose of, reducing the expenses of 
 selling and handling its own product.' 
 We are of the opinion that by its arti- 
 cles of incorporation this defendant 
 is both a manufacturing and mercan- 
 tile corporation. Such articles of in- 
 corporation provide for the 'purchase' 
 and 'sale of plows, cultivators and other 
 farming and agricultural implements 
 of all kinds,' as well as for the ' manu- 
 facture,' 'repair,' and sale of those arti- 
 cles. In this respect the case is quite 
 similar to that of Densmore v. Shep- 
 ard, 46 Minn. 51, 48 N. W. Rep. 528, 
 681. See, also, Arthur v. Willius, 44 
 Minn. 409, 46 N. W. Rep. 851 ; Mohr 
 v. Elevator Co., 40 Minn. 343, 41 N. 
 W. Rep. 1074. The fact that the 
 stockholders, as found by the court, 
 did not intend to carry on any- 
 thing but :m exclusively manufactur- 
 ing business, and (hat the corpora- 
 tion never did carry on any other 
 business except such commission busi- 
 ii'--, can make no difference, 'And 
 if the corporation is organized for the 
 purpo e, I' declared in the articles of 
 ciation, of carrying on both a 
 manufacturing business, and also some 
 other kind of business not properly 
 incidental to, or necessarily connect- 
 ed with, a manufacturing business, 
 
 the mere fact that the corporation 
 never exercised all of its powers, 
 and never in fact engaged in or car- 
 ried on anything but a manufactur- 
 ing business, will not bring it with- 
 in the constitutional exception.' Ar- 
 thur v. Willius, 44 Minn. 409, 46 N. 
 W. Rep. 851." 
 
 1 State v. Minn., etc., Co., 40 Minn. 
 213; Mohr v. Minn., etc., Co., 40 
 Minn. 343. 
 
 a Byers v. Franklin Coal Co., 106 
 Mass. 131. 
 
 3 Cowling v. Zenith, etc., Co., 65 
 Minn. 263, 33 L. R. A. 508. In con- 
 sidering the meaning of "mechanical" 
 as used in the constitution the court 
 said: "We are of the opinion that it 
 was the intention of the makers of 
 the constitution to exempt from lia- 
 bility the stockholders of corporations 
 organized to carry on any such kind 
 of mechanical business as is inci- 
 dental to or closely allied with some 
 kind of manufacturing business. 
 Thus, a concern engaged in the busi- 
 ness of manufacturing iron might 
 well, as a mere extension of that busi- 
 ness, or as incidental to it, mine its 
 own ore, especially so if the manufac- 
 turing plant and the mines were in 
 the same locality." An elect ric Si reet 
 railway company is not a "railroad" 
 within the meaning of a statute winch 
 exempts the stockholders of railroad 
 corporations from liability. Fergu- 
 son v. Sherman, 116 Cal. 169.
 
 § 562 LIABILITY OF STOCKHOLDERS. 621 
 
 corporation organized in part for buying, selling, leasing and 
 dealing in mineral lands is not organized for an exclusively 
 manufacturing business so as to exempt the stockholders from 
 liability. 1 The articles of association of a corporation stated 
 that " its business shall be the manufacture of clothing of 
 every description, and the sale of clothing so manufactured, 
 and the transaction of all other business necessary and inci- 
 dental to such manufacture and sale of clothing." The cor- 
 poration was held to be a manufacturing corporation, and the 
 mere fact that it engaged in some business not authorized by 
 the articles of association did not render its stockholders lia- 
 ble for the corporate debts under the constitution. 2 
 
 § 562. Repeal of statute — Rights of creditors. — In all cases, 
 the remedy by which a right is to be enforced is under the 
 general control of the legislature, and may be modified or 
 repealed if another reasonably adequate remedy is provided. 3 
 But the existing creditors of a corporation have a vested right 
 in the existing contractual liability of the stockholders, of 
 which they can not be deprived by a repeal of the statute. 4 
 
 § 563. Constitutional provisions — When self -executing. — 
 
 Whether such provisions imposing liability upon the stock- 
 
 1 Anderson v. Anderson, etc., Co., Green v. Biddle, 8 Wheat. (U. S.) 1, 
 
 65 Minn. 281, 33 L. R. A. 510. 84 ; Sturges v. Crowninshield,4 Wheat. 
 
 8 Nicollet Nat'l Bank v.Frisk-Turner (U. S.) 122, 200, 201 ; Mason v. Haile, 
 
 Co., 71 Minn. 413. 12 Wheat. (U. S.) 370, 378; Beers v. 
 
 3 Fourth Nat'l Bank v. Francklyn, Haughton, 9 Pet. (U. S.) 329, 359), 
 
 120 U. S. 747. "Whether a given seems to have settled substantially 
 
 statute, changing the relation of upon the doctrine that the remedy 
 
 debtor and creditor, reaches the con- does not apply to those who become 
 
 tract or affects the remedy merely, creditors after the repeal. Ochiltree 
 
 has been undoubtedly the most per- v. Railroad Co., 21 Wall. (U.S.) 249." 
 
 plexing question of constitutional 4 Hawthorne v. Calef, 2 Wall. (U. S.) 
 
 interpretation which has arisen in 10. See Brown v. Eastern State Co., 
 
 this country. The supreme court of 134 Mass. 590; Hope, etc., Co. v. 
 
 the United States, after a line of de- Flynn, 38 Mo. 483, 90 Am. Dec. 438 ; 
 
 cisions in which the pendulum has Grand Rapids Sav. Bank v. Warren, 52 
 
 oscillated very considerably (see Mich. 557; Norris v. Wrenschall, 34 
 
 Walker v. Whitehead, 16 Wall. (U. Md. 492. Contra, Coffin v. Rich, 45 
 
 S.) 314, 317; Van Hoffman v. City of Maine 507, 71 Am. Dec. 559. 
 Quincy, 4 Wall. (U. S.) 535, 550, 552;
 
 622 THE LAW OF PRIVATE CORPORATIONS. § 563 
 
 holders are self-executing, or require legislative action to give 
 them effect, depends upon the intention of the people by which 
 they are adopted, as deduced from the language used. If such 
 was the intention of the law-making power r constitutional 
 provisions are self-executing. "A constitution," says Mr. 
 Justice Mitchell, 1 " is but a higher form of statutory law, and 
 it is entirely competent for the people, if they so desire, to 
 incorporate into it self-executing enactments. These are much 
 more common than formerly, the object being to put it beyond 
 the power of the legislature to render them nugatory by re- 
 fusing to enact legislation to carry them into effect. Pro- 
 hibitory provisions in a constitution are usually self-executing 
 to the extent that anything done in violation of them is void. 
 But instances of affirmative self-executing provisions are 
 numerous in almost every modern constitution." 2 If the lan- 
 guage of the constitution is general and the extent of the lia- 
 bility not determined, legislation will be necessary. 3 
 
 The Minnesota constitutional provision is self -executing and 
 creates an individual liability on the part of the stockholder 
 for corporate debts to an amount equal to the amount of stock 
 held or owned by him. 4 The Kansas constitutional provision, 
 over the construction of which there has been so much litiga- 
 tion, provides that "dues from corporations shall be secured 
 by individual liability of the stockholders to an additional 
 
 1 Willis v. Mabon, 48 Minn. 140; 31 maker, 24 Cal. 518; Larrabee v. Bald- 
 Am. St. Rep. 626; Dupee v. Swigert, win, 35 Cal. 155, 
 
 127 111. 494; Fowler v. Lamson, 146 ' l For instances of this, see State v. 
 
 111. 472. Judge Thompson, after re- Weston, 4 Neb. 216; Thomas v. 
 
 f.rring to the decision in Willis v. Owens, 4 Md. 189; Reynolds v. Tay- 
 
 Mabon, 48 Minn. 140; 31 Am. St. lor, 43 Ala. 420; Miller v. Marx, 55 
 
 Rep. 626, says: "The writer is con- Ala. 322, and People v. Hoge, 55 Cal. 
 
 tent to refer for his statement of his 612. 
 
 own virus upon the question to that :1 French v. Teschemaker, 24 Cal. 
 
 admirable decision." Corps., § 3004. 518; Morley v. Thayer, 3 Fed. Rep. 
 
 For decisions to the effect thai con- 737; Jerman v. Benton, 79 Mo. L48; 
 
 atitutional provisions are not self-exe- Bowie v. Lott, 24 La. Ann. 214. 
 
 cuting, see Graves v. Slaughter, 15 * Art. 10, § 3, Const. Minn. ; Willis v. 
 
 Pel D.8.) ii'»; Blakeman v. Benton, Mabon, 48 Minn. 140, 31 Am. St. Rep. 
 
 9 Mo. App. 107; French v. Tesche- 626.
 
 § 563 LIABILITY OF STOCKHOLDERS. 623 
 
 amount equal to the stock owned by each stockholder and such 
 other means as shall be provided by law; but said individual 
 liability shall not apply to railroad corporations, nor corpora- 
 tions for religious and charitable purposes." 1 Of this provision, 
 the supreme court of Illinois said: 2 "That provision seemed 
 to impose on the legislature the duty of securing dues from 
 corporations, but limited the power and discretion of that body 
 to the extent to which it could make stockholders liable. It 
 is only in exceptional cases that constitutional provisions en- 
 force themselves. Usually they must be supplemented by 
 legislation to become operative. The intention of the instru- 
 ment must ordinarily prevail, and in its ascertainment we must 
 look at the consequences of a particular construction. * * * 
 To treat the provision as self-operating would do violence to 
 two leading principles of construction; by rejecting a clause 
 of the instrument and giving it no force and effect, and hold- 
 ing an ambiguous clause self-executing when that clause is of 
 the most doubtful construction. It is apparent from a consid- 
 eration of the provision itself that legislation was contem- 
 plated as necessary to carry into effect and enable the remedy 
 to be applied and g've the intended security to the creditor, and 
 the clause can not be treated or construed as self-operative." 
 Of the same provision, the New York court said: 3 "We think 
 it quite clear that the provision of the constitution re- 
 ferred to is not self-executing, and of itself creates no liability 
 whatever. The language used plainly contemplates that legis- 
 lation was necessary in order to make it effectual. It was in- 
 tended simply to confer authority upon the legislature of that 
 state to legislate upon the subject, and perhaps to impress upon 
 that body the duty of securing the debts of corporations by 
 imposing upon the stockholders an individual liability." 
 
 1 Art. 12, § 2, Const, of Kansas. 3 Marshall v. Sherman, 148 N. Y. 9, 
 
 2 Tuttle v. Nat'l Bank of Republic, 51 Am. St. Rep. 654, and note. See, 
 161 111. 497, 34 L. R. A. 750; Bell v. also, Bank v. Lawrence (Mich.), 76 
 Farwell, 176 111. 489, 68 Am. St. Rep. N. W. Rep. 105. 
 
 194.
 
 624 THE LAW OF PRIVATE CORPORATIONS. § 564 
 
 I. Nature of the Liability. 
 
 § 564. When contractual.— The statutory liability of stock- 
 holders is ordinarily held to be contractual, although this will 
 depend of course upon the language and purpose of the consti- 
 tutional or statutory provision. 1 In Massachusetts, where the 
 courts have been slow to enforce this liability, it was recently 
 said: 2 "The obligation imposed by the statutes of Ohio upon 
 the stockholders for the purpose of securing the payment of 
 the debts of the corporation is quasi ex contractu. It must be 
 taken that all persons who become stockholders in an Ohio 
 corporation know the law under which the corporation is or- 
 ganized, and assent to the liability which that law imposes 
 upon stockholders; and that all persons who deal with the cor- 
 poration rely upon the liability of the stockholders as security 
 for the payment of whatever debts may be due them from the 
 corporation." 
 
 The supreme court of Pennsylvania expressed the opinion, 
 but did not decide, 3 that the Kansas statute imposed a 
 contractual liability, and the same conclusion was reached 
 by the United States Circuit Court sitting in New Jersey. 4 
 In some states the liability is said to be merely "statutory," 
 as distinguished from contractual or penal. 5 A liability im- 
 posed upon the stockholders, officers or agents of a corporation 
 for dereliction of duty, as for a violation of the provisions of a 
 statute, such as the requirement that annual reports of the 
 condition of the corporation shall be made and published, is 
 penal in its nature. 6 A joint and several liability imposed 
 
 1 Bank v. Francklyn, 120 U. S. 747; 8 Cushing v . Perot, 175 Pa. St. 66. 
 
 Cashing v. Perot, 175 Pa. St . 66 ; 34 L. See also Beii v. Farwell (111.), 52 N. 
 
 R. A. 7.'i7; Bowel! v. Manglesdorf & E. Rep. 346. 
 
 Co., 33 Kan. 194; AppealOf Aultmann, '"Western Nat'l Bank v. Reckless, 
 
 98 Pa. St. 505; Rhodea v. U. B. Nat'l 96 Fed. Rep. 59. 
 
 Bank, 24 U.S. A.pp. 607; 34 L. R. A. 5 Rice v. Hosiery Co.,56N. H. 114, 
 
 742; National Bank v. Whitman, 76 128; Marshall v. Sherman, 148 N. Y. 
 
 ].-,., I Rep. 697. 9; New Haven etc., Co. v. Linden 
 
 •Posl .v- Co. V.Toledo, etc., R. Co., Spring Co., 142 Mass. 349, 353. 
 
 in Mass. 341; quoted in Hancock ,; Merchants' Nat'l Bank v. N. W., 
 
 Nat'l Bank v. Kills (Mass.), 42 L. R. etc., Co., 48 Minn. 349; Globe Pub. 
 
 A. K»i. Co. v. State Bank (Neb.), 59 N. W.
 
 § 565 LIABILITY OB 1 STOCKHOLDERS. 625 
 
 upon the stockholders in an amount equal to the amount of 
 their stock for all debts created before all the stock is paid in is 
 contractual. 1 The liability imposed by the national banking act 
 is contractual and survives against the personal representatives 
 of the stockholder. 2 Whether the liability is primary or collateral 
 depends upon the language of the statute. In California and 
 other states having similar statutes, it is held to be primary and 
 absolute, and the right of action consequently accrues against 
 the stockholder and the corporation at the same time. 3 
 
 § 565. When penal. — A penal statute is an act by which a 
 forfeiture is imposed for transgressing the provisions of a 
 statute. It may be remedial in one part and penal in another. 
 The effect and not the form of the statute is to be considered, 
 and if its object is clearly to inflict a punishment on a party 
 for doing what is prohibited, or failing to do what is com- 
 manded to be done, it is penal in its character. 4 Thus, a stat- 
 ute which requires the officials of a corporation to publish an 
 annual statement of its affairs, and in the event of failing to 
 do so makes the directors jointly and severally liable for all 
 debts of the company, is penal. Such provisions are intended 
 for the protection of creditors and the prevention of frauds 
 upon the public in respect to the financial condition of the cor- 
 poration. The liability is created by the statute and is in the 
 nature of a penalty imposed for neglect of duty. 5 
 
 Rep. 683; Diversey v. Smith, 103 111. 5 Globe, etc., Co. v. State Bank, 41 
 
 378. Neb. 175, 27 L. R. A. 854; Bank v. 
 
 1 Flash v. Conn, 109 U. S. 371. Bliss, 35 N. Y. 412; Miller v. White, 
 
 2 Richmond v. Irons, 121 U. S. 27; 50 N. Y. 137; Easterly v. Barber, 65 
 Hencke v. Twomey, 58 Minn. 550. N. Y. 252; Knox v. Baldwin, 80 N. Y. 
 
 3 Davidson v. Rankin, 34 Cal. 503; 610; Veeder v. Baker, 83 N. Y. 156; 
 Morrow v. Superior Court, 64 Cal. Pier v. Hanmore, 86 N. Y. 95; Stokes 
 383; Fuller v. Ledden, 87 111. 310; v. Stickney, 96 N. Y. 323; Manufac- 
 Stewart v. Lay, 45 Iowa 604. turing Co. v. Beecher, 97 N. Y. 651 ; 
 
 4 Diversey v. Smith, 103 111. 378; Godsden v. Woodward, 103 N. Y. 242; 
 Globe, etc., Co. v. State Bank (Neb.), Sayles v. Brown, 40 Fed. Rep. 8. The 
 59 N. W. Rep. 683 ; Huntington v. above section of the New York statute 
 Attrill, 146 U. S. 657; Merchants', was copied in Colorado and of it the 
 etc., Bank v. N. W. Mfg., etc., Co., 48 court said : "This statute is in its na- 
 Minn. 349; Aylsworth v. Curtis, 19 ture penal. It describes a determinate 
 R. I. 516, 61 Am. St. Rep. 785. penalty for neglect of a duty imposed 
 
 40— Private Corp.
 
 626 THE LAW OF PRIVATE CORPORATIONS. § 566 
 
 § 566. Survival of the right of action. — Whether the right 
 to proceed against a stockholder upon his statutory liability- 
 survives his death will depend upon the nature of the lia- 
 bility. If it is penal, it will not survive; if it is contractual, 
 it survives, and may be enforced against the estate in the 
 hands of his personal representative. 1 A New York statute 
 provided that "in limited liability companies, all the stock- 
 holders shall be severally and individually liable to the cred- 
 itors of the company in which they are stockholders, to an 
 amount equal to the amount of stock held by them respectively, 
 for all debts and contracts made by such company until the 
 whole amount of capital stock fixed and limited by such com- 
 pany shall be paid in, and a certificate thereof has been 
 made and recorded." The liability imposed by this statute 
 was held to survive the death of the stockholder. "It is not," 
 said the court, 2 "like the liability of a trustee for neglecting 
 to make a report or for declaring dividends out of capital 
 stock, or acts of a kindred character. These are breaches of 
 duty on the part of the managing agents of the corporation 
 for which the statute has made them liable, and this liability 
 can not be said to rest upon or grow out of the contract. The 
 liability of a stockholder in the present case is different. Upon 
 becoming the owner of the stock he voluntarily assumes the 
 
 by law upon the trustees of a corpora- 'Cochran v. Wiechers, 119 N. Y. 
 tion organized under our general in- 399, 29 N. Y. St. Rep. 388, 7 L. R. A. 
 corporation act. The amount of the 553; Flash v. Conn, 109 U. S. 371; 
 forfeiture is measured by the aggre- Richmond v. Irons, 121 U. S. 27. 
 gate debt contracted by the company. See Dane v. Dane, etc., Co., 14 Gray 
 The liability is not founded uim.h (Mass.) 488. The liability, however, 
 ract bill arises from misconduct is not of such a nature that a claim 
 m oilier." Gregory v. Bank, 3 Colo, can be filed in the probate court 
 332; Larsen v. .lames (Colo.), 29 Pac. againsl the estate of a deceased stock- 
 Rep, is:;. Statutory provisions of holder. It must firsl be reduced to 
 similar character were held to be judgment in the manner provided by 
 penal in Mitchell v. Hotchkiss, 18 the statute. Nolan v. Hazen, 44 Minn. 
 Conn. 9; Steam Kngine Co. v. Huh- 478. 
 
 bard, 101 r. s. L88; Globe, etc., Co. "Cochran v. Wiechers, 119 N. Y. 
 
 v. The State Bant (Neb.), 69 N. W. 399, 29 N. Y. St. Rep. 388, 7 L. R. A. 
 he,,. 683; Derrickaon v. Smith, 27 
 N.J. L. 166; Breitungv. Lindauer, 87 
 .Mich. 217.
 
 § 567 LIABILITY OF STOCKHOLDERS. 027 
 
 obligation imposed by the statute, and the creditors of the cor- 
 poration who trust it may be said to do so upon the faith of 
 the statute which is part of the contract. The statutory obli- 
 gation is inherent in and forms a part of every contract that 
 the corporation makes with creditors, prior to the time 
 that the certificate required by the statute is filed." It is 
 settled that an action to recover a statutory penalty does not 
 survive the death of the party liable. 1 
 
 § 5G7. Liability of officers and directors. — The liability im- 
 posed upon the officers or directors of a corporation for a fail- 
 ure to comply with some statutory requirement is commonly 
 spoken of as penal. But, by the highest courts, it is held 
 that this is true only in a limited sense, and not in that inter- 
 national sense which will prevent its enforcement in a foreign 
 jurisdiction. The New York statute provided: "If any certifi- 
 cate or report made, or published notice given, by the officers 
 of any such corporation shall be false in any material repre- 
 sentation, all the officers who shall have signed the same shall 
 be jointly and severally liable for all the debts of the corpora- 
 tion contracted while they are officers thereof." Under this 
 statute a judgment was obtained against one of the directors 
 in New York, and thereafter an action was commenced upon 
 the judgment in Canada, where it was held that the action 
 could not be maintained, as the liability was penal. The 
 Privy Council, however, reversed this decision on the ground 
 that the statute was not penal in the sense of international 
 law. 2 It was admitted that the courts of no state execute the 
 penal laws of another state. "But," said Lord Watson, "a 
 proceeding, in order to come within the scope of this rule, 
 must be in the nature of a suit in favor of the state whose law 
 has been infringed." The same conclusion was shortly after- 
 wards reached by the supreme court -of the United States in a 
 suit which grew out of the same facts. 3 In Illinois a lia- 
 
 1 Chitty Plead., 1,7th Am. Ed., 103; 3 Huntington v. Attrill, 146 U. S. 
 Hambly v. Trott, 1 Cowp. 372. 657. See Fitzgerald v. Weidenbeck, 
 
 2 Huntington v. Attrill, L. R. (1893) 76 Fed. Rep. 695. 
 A. C. 150; 8 L. T. R. 341 (P. C. 1892).
 
 828 THE LAW OF PRIVATE CORPORATIONS. § 568 
 
 bility imposed upon the directors of an insurance company, 
 which issued policies before the capital stock was fully 
 paid in, and a certificate thereof recorded, was treated 
 as a penalty. 1 The court said: ''Whether all the capital, 
 or all but a nominal sum, or whether but an insignificant 
 amount of the capital has been collected and paid in, would 
 obviously be unimportant inquiries. He is only required to 
 show that he is a creditor of the company, that the defendant 
 is a trustee or incorporator, and that the whole amount of the 
 capital of the company has not been paid in, and a certificate 
 thereof recorded. * * * The statute in effect says the 
 thing shall not be done, and if it is done, the trustees and 
 corporators shall be liable, etc. In all the cases referred to 
 the statute says the thing may be done, and the stockholders, 
 etc., shall be liable, either absolutely, or until some sub- 
 sequent thing shall be done. In one case the liability is a 
 consequence of violating the law, or suffering it to be violated; 
 in the other, liability is incurred in strict compliance with the 
 law. In short, in the one case the liability is for a wrong done 
 — a tort; in the other it is upon contract. * * * The lia- 
 bility is not, in fact, to those alone who are injured, but exists 
 equally where no actual injury has been done, as, for instance, 
 where the corporation is abundantly able to pay all its debts; 
 but the liability is for a wrong done to the public, which, pre- 
 sumably, to some extent is a wrong also to every creditor. 
 * * * The liability is because of the wrong — i. e. , the failure 
 to perform the duties enjoined by the statute, and not upon 
 the contract of subscription." 
 
 II. Against Whom the Liability is Enforcible. 
 
 § 508. As to time of holding stock. — No general rule can be 
 stated applicable to all the states, as (he question must be de- 
 termine! by fin; Qature of the liability. It has been held, upon 
 the theory of an original, primary Liability, that the liability 
 attaches to persons only who were stockholders at the time 
 
 1 Divereey v. Smith, in:: ill. 378. It Inn' imposed upon the officers of the 
 will in: noted that the liability was corporation.
 
 §568 
 
 LIABILITY OF STOCKHOLDERS. 
 
 629 
 
 the debt was contracted. 1 Where the charter of a corpo- 
 ration provided that "each of the stockholders of said company 
 shall be personally liable for the debts of said company to an 
 amount equal to the amount of the capital stock held by such 
 stockholder and no more," it was held that stockholders at a 
 time when a debt of the corporation was contracted, and those 
 who became stockholders before the debt was paid, were indi- 
 vidually liable for the debts. 2 It is now settled in Minnesota 
 that the liability attaches to those who own the stock at the time 
 the action to enforce the liability is commenced. 3 Under the 
 Michigan statute one who was a stockholder in an insolvent 
 corporation, when labor was performed for it, is liable for the 
 debt 4 . A prior bona fide transfer of the shares terminates the 
 statutory liability, 5 even for the debts contracted while he was 
 a stockholder. 6 Those who were stockholders when the debt 
 
 1 Moss v. Oakley, 2 Hill (N. Y.) 265 ; 
 reversed in 5 Denio (N. Y.) 567, where 
 it was held that the liability attached 
 to those who were stockholders when 
 the suit was commenced. Bnt see 
 Williams v. Hanna, 40 Ind. 535. 
 
 2 Gebhard v. Eastman, 7 Minn. 56, 
 Gil. 40. The date of the debt is im- 
 material when the ownership of the 
 stock was prior thereto and continued 
 until after an action was brought 
 against the corporation. Barron v. 
 Burrill, 86 Maine 66. As to the lia- 
 bility of successive owners of shares, 
 under a statute which imposes the 
 liability for one year after a transfer 
 of the shares, see Harper v. Carroll, 
 66 Minn. 487. 
 
 3 Olson v. State Bank, 57 Minn. 552, 
 59 N. W. Rep. 635; First Nat'l Bank 
 v. Winona, etc., Co., 58 Minn. 167, 59 
 N. W. Rep. 997. In Olson v. State 
 Bank, 57 Minn. 552, 59 N. W. Rep. 
 635, the court said: "Does one 
 who acquires stock in a banking 
 corporation incur the statute liability 
 in respect to corporate debts previ- 
 ously contracted, or does he incur it 
 only in respect to debts subsequently 
 
 contracted? The decisions of the 
 courts in the different states seem at 
 variance, the greater number hold- 
 ing that those who own the stock 
 when the remedy is sought by the 
 creditors — that is, when the action to 
 enforce the liability is brought — are 
 liable in respect to all the corporate 
 debts, no matter whether contracted 
 before or after they acquired their 
 stock. The decisions in each state 
 are based on the terms of the statute 
 in each, as construed by the court; 
 and as the terms of the statutes in the 
 different states vary, but little aid is 
 afforded by the decisions in other 
 states." It is not material when the 
 debt was contracted. Maine, etc., Co. 
 v. Southern, etc., Co. (Maine), 43 Atl. 
 Rep. 24; Rhode Island, etc., Co. v. 
 Moulton, 82 Fed. Rep. 979. 
 
 4 Macomber v. Wright, 108 Mich. 
 109, 65 N. W. Rep. 610 ; Kamp v. Win- 
 termute, 107 Mich. 635. 
 
 5 §570,supra; Van Demark v. Barons, 
 52 Kan. 779; Rochester, etc., Co. v. 
 Raymond, 158 N. Y. 576. 
 
 6 Middletown Bank v. Magill, 5 
 Conn. 28; Dauchy v. Brown, 24 Vt.
 
 630 THE LAW OF PRIVATE CORPORATIONS. § 569 
 
 was contracted and are stockholders when it is sought to be 
 enforced, are liable, but not those who became such after the 
 debt was contracted and transferred the shares before an action 
 was brought to collect the debt. 1 It is sometimes provided that 
 the stockholders shall remain liable for one year after the date 
 of the transfer of his shares. The liability is then confined to 
 such debts as were incurred before the transfer. The novation 
 is complete and the transferrer released at the end of the year. 2 
 
 § 569. Trustees, pledgees and executors. — The statutory 
 liability is intended to rest upon the owner of the shares, but by 
 reason of the application of the doctrine of estoppel, it is some- 
 times imposed upon trustees, executors, agents and persons 
 holding in a representative capacity. If the person in whose 
 name the stock stands on the books of the company appears to 
 be the owner, the appearance will be taken as the fact in favor of 
 the creditors of the corporation. Thus, one who takes stock as 
 collateral security for a debt, and has it transferred to him 
 on the books of the corporation, is liable to the creditors of 
 the corporation as a stockholder. 3 As this liability is based 
 upon estoppel it exists only when there are facts which con- 
 stitute an estoppel. 4 Thus, a pledgee of shares is not liable as 
 
 197. See Mason v. Alexander, 44 ment of the corporation is liable as a 
 
 Ohio St. 318, 7 N. E. Rep. 435; Har- present stockholder. Harper v. Car- 
 
 pold v. Btobart, 46 Ohio St. 397, 21 N. roll, 66 Minn. 487. 
 
 E. Uep. 637; Sayles v. Bates, 15 R. I. 3 Pauly v. State Loan, etc., Co., 165 
 
 ;; | g. TJ. S. 606; State v. Bank of New Eng- 
 
 1 Sayles v. Bates, 15 R. I. 34; Bar- land, 70 Minn. 398, 68 Am. St. Rep. 
 rick v. Gifford, 47 Ohio St. 180. 538, annotated; Nat'l Com. Bank v. 
 
 2 II arper v. Carroll, (12 Minn. 152. McDonnell, 92 Ala. 387; National 
 As to the effect of transfer, Bee § 434, Bank v. Case, 99 IT. S. 628; Goodwin 
 supra) Sprague v. Nat'l Bank, etc., v. Sleeper, 67 Wis. 677; Harper v. 
 172 ill. L49; Rhode [aland, etc., Co. Carroll, 66 Minn. 487. See notes, 15 
 v. BIoulton,82 Fed. Rep.979. A trans- C. C. A. 133, 3 Am. St. Rep. 865, and 
 fer ma; be made while the corpora- 68 Am. St. Rep. 542. In MrKim v. 
 fcion is insolvent for the purpose of Glenn, 66 Md. 478, a broker who pur- 
 escaping liability. Peter v. Onion, chased stock for a client in his own 
 etc., Co., 66 Ohio St. 181. Bui see§ 137, name was held personally liable, 
 and Aultman's Appeal, 98 Pa. St. 606. 4 Welles v. Larrabee, 36 Fed. Rep. 
 One who assigns stock by a transfer 866. 
 
 no1 registered until aftei the assign-
 
 § 570 LIABILITY OF STOCKHOLDERS. 631 
 
 a stockholder, if the shares have not been transferred to him 
 or if the corporate books show that he holds the stock as col- 
 lateral. 1 The same rule governs the liability of trustees 2 
 and executors. 3 Although a person holding stock in such a 
 capacity may be liable to the extent of the trust estate/ he is 
 not personally liable if the fact that he is not the beneficial 
 owner appears on the corporate books. The estate of a de- 
 ceased shareholder is liable for his share of the liabilities of 
 the corporation, to the same extent as any other stockholder. 5 
 The manner of enforcing the liability will depend upon the 
 statutes of the jurisdiction. After judgment it may be proved 
 against the estate, 6 but before judgment it is a "contingent 
 claim " and can not be thus proved. 7 
 
 § 570. Unrecorded transfers — Liability of transferrer and 
 transferee. — It is generally stated in the books that until a 
 transfer is recorded in the transfer books of the corporation, 
 the transferee is not chargeable as a stockholder; that while 
 he is bound to protect and indemnify his transferrer, he is not 
 liable to the corporation or corporate creditors, and that the 
 transferrer is not released from liability until the transfer is 
 duly registered. 8 But "an examination of the authorities will 
 
 1 Anderson v. Warehouse Co., Ill 4 Sayles v. Bates, 15 R. I. 342, 5 Atl. 
 U. S. 479; Paulyv. State Loan, etc., Rep. 497. 
 
 Co., 56 Fed. Rep. 430, 58 Fed. Rep. 5 Cochran v. Wiechers, 119 N. Y. 
 
 666, 7 C. C. A. 422 ; affirmed in 165 IT. 399, 7 L. R. A. 553 ; New England Com. 
 
 S. 606. Welles v. Larrabee, 36 Fed. Bank v. Newport Steam Factory, 6 R. 
 
 Rep. 866; First Nat'l Bank v. Hing- I. 154, 75 Am. Dec. 688. See §566, 
 
 ham Mfg. Co., 127 Mass. 563. supra. If the title to the shares 
 
 2 Kerr v. Urie, 86 Md. 72, 38 L. R. passes to the legatee he also takes the 
 A. 119. liability. Montgomery, etc., Assn. v. 
 
 3 Welles v. Larrabee, 36 Fed, Rep. Robinson, 69 Ala. 413. As to the ex- 
 866. In some states it is provided by tent of the heirs' liability, see Payson 
 statute that trustees and executors v. Hadduck, 8 Biss. (C. C.) 293, and 
 shall not be liable. Provisions of cases there cited. 
 
 National Banking Act, Rev. St. IT. S., 6 Nolan v. Hazen, 44 Minn. 478. 
 
 § 5152, construed In re Bingham, 7 Hospes v. Northwestern, etc., Co., 
 
 10 N. Y. Supp. 325, 32 N. Y. St. Rep. 48 Minn. 174, 15 L. R. A. 470. 
 
 782 ; Diven v. Lee, 36 N. Y. 302. Lia- 8 If the transfer is waived by the 
 
 bility of estate of deceased non-resi- corporation and the purchaser of the 
 
 dent stockholder. Grand Rapids Sav. shares acts as a stockholder, he is 
 
 Bank Appeal, 52 Mich. 557. liable as such to creditors. Upton v.
 
 632 THE LAW OF PRIVATE CORPORATIONS. § 570 
 
 prove that this rule has not always been rigidly adhered to, but 
 is subject to numerous exceptions and qualifications. It has, 
 for example, been frequently held that where the corporation 
 accepts the transferee as a stockholder, and he exercises any of 
 the rights or accepts any of the benefits of a shareholder, he 
 will be liable as such, although no transfer has been made on 
 the books of the company. It has also been held that where 
 the transferrer has done all he was required to do in the prem- 
 ises, but that through the negligence or fault of the company 
 no transfer was entered on its books, the transferrer was re- 
 leased ; applying the principle that a party can not take advan- 
 tage of his own wrong, and that in equity that will be consid- 
 ered done which ought to be done." 1 
 
 The owner of certain shares employed an auctioneer to sell 
 them at public auction and they were bid off by a purchaser 
 who paid the auctioneer for them and received from him the 
 certificates of stock with a power of attorney duly executed in 
 blank. The purchaser had been employed by the president 
 of the bank to make the purchase for a customer of the bank 
 who had deposited the money for the purpose in the bank. 
 The certificate and power of attorney was delivered to the 
 president, but no formal transfer was ever made on the books 
 of the bank. The bank became insolvent, and after a receiver 
 was appointed, an action was brought against the transferrer to 
 collect an assessment under the statute. It was held that the 
 responsibility of the transferrer ceased upon the surrender of 
 the certificate to the bank and the delivery to its president of 
 the power of attorney sufficient to effect and intended to effect, 
 as the president knew, a transfer of the stock on the books of 
 the bank. 2 But "where the seller delivers the stock certificate 
 and power of attorney to the buyer, relying upon the promise 
 
 Burnbam, 3 Bias. 131 ; Bell's Appeal, Minn. .".07 (an action against a trans- 
 
 115 Pa. si. 88, 2 Am. St. Rep. 582; feree on a call), citing Whitney v. 
 
 Laing v. Barley, L01 111. 591. See Butler, 118 TJ. S. 655 ; Ex parte Bagge, 
 
 lacv. Western, etc., Co., 77 Iowa 13 Beav. L62; Young v. McKay, 50 
 
 \';it'l I'.ank of Fed. Rep. 894 ; Chouteau Spring Co. 
 
 America, L72 III. 1 19. v. Harris, 20 Mo. 382. 
 
 ' 1; Northern, etc., Co., 61 'Whitney v. Butler, lis V. S. 655.
 
 § 571 LIABILITY OF STOCKHOLDERS. 633 
 
 of the latter to have the necessary transfer made, or where the 
 certificate and power of attorney are delivered to the bank 
 without communicating to the officers the name of the buyer, 
 the seller may well be held liable as a shareholder until, at 
 least, he shall have done all that he reasonably can do to effect 
 a transfer on the stock register." 
 
 But a transfer to the president of a bank as vendee of the 
 shares is not sufficient to discharge the vendor under this rule. 1 
 In Ohio it is held that the seller must, at his peril, see that 
 the transfer is made and his name removed from the books. 2 
 
 III. The Debts for Which the Stockholders are Liable. 
 
 § 571. The debt of the corporation — Release. — The right to 
 proceed against a stockholder is dependent upon the existence 
 of a debt due from the corporation to its creditors. In Minne- 
 sota it was held that the release of the debt and a judgment by 
 a court discharging the debtor pursuant to the provisions of 
 the insolvency law, released and discharged the stockholders 
 from the personal liability imposed by the constitution. 3 
 Shortly after this decision the legislature amended the insolv- 
 ency law by providing "that the release of any debtor under 
 this act shall not operate to discharge any other party liable as 
 surety, guarantor, or otherwise for the same debt, 4 and the 
 court held that the word "otherwise," as here used, included 
 stockholders who are liable for the debts of the corporation. 5 
 
 § 572. Nature of the obligation. — The imposed liability is 
 generally for the debts of the corporation contracted or existing 
 at a designated time. The word debt is generally construed 
 to apply to obligations arising upon contract, and not to such 
 as result from the torts of the corporation. 6 But under some 
 
 1 Richmond v. Irons, 121 U. S. 27. 4 Laws of 1889, ch. 30, § 1, amend- 
 
 2 Harpold v. Stobart, 46 Ohio St. ing ch. 148, Laws of 1881. 
 
 397; 15 Am. St. Rep. 618. 5 Willis v. Mabon, 48 Minn. 140; 
 
 3 Mohr v. Minn., etc., Co., 40 Minn. Tripp v. N. W. Nat'l Bank, 41 Minn. 
 
 343. Insolvency law of 1881 is appli- 400. See Aultman's App..9SPa. St, 500. 
 
 cable to private corporations. Tripp 6 Child v. Boston, etc., Works, 137 
 
 v. N. W. Nat'l Bank, 41 Minn. 400. Mass. 516, 50 Am. Rep. 328; Bohn
 
 634 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §572 
 
 statutes a cause of action arising on tort is treated as a debt 
 of the corporation. 1 The liability extends to the deficiency of 
 debts secured by mortgages, as well as to unsecured debts. 2 A 
 debt is not contracted by a corporation by the mere making of 
 a contract for goods, before a delivery of the goods or a breach 
 of the contract, under a statute making stockholders liable for 
 debts contracted before the filing of a certificate. 3 Indebted- 
 ness maturing after the dissolution of a corporation, which 
 
 v.Brown, 33 Mich. 257; Doolittle v. 
 Marsh, 11 Neb. 243. In Heacock v. 
 Sherman, 14 Wend. (N. Y.) 59, it was 
 held that the stockholders of an in- 
 corporated company were not indi- 
 vidually liable for damages occasioned 
 by a bridge built by the company be- 
 ing out of repair, although by the 
 terms of the act of incorporation they 
 were to be liable for "any demands 
 against the company," the act con- 
 templating liability only for damages 
 arising ex contractu.. 
 
 1 Flenniken v. Marshall, 43 S. C. 80, 
 28 L. R. A. 402. In Eider v. Fritchey, 
 49 Ohio St. 285, an action to subject 
 the stockholders to liability for a judg- 
 ment obtained for personal injury 
 was successful. The constitution pro- 
 vided that "dues from corporations 
 shall be secured by such individ- 
 ual liability of stockholders," etc. 
 The court said: "All concede that 
 this is a remedial provision, and to 
 hold that there must be applied to it 
 the same test as if it were a penal 
 law, is to hold that all remedial 
 laws must be so construed, for every 
 remedial law must of necessity be in 
 derogation of the common law. * * * 
 Ii most be manifest that the intent 
 was to provide thai those who derive 
 advantage from the authority of the 
 state given by our incorporation laws 
 shall at the same time assume re- 
 Bponsibility for the acts of the arti- 
 ficial creatures which they have called 
 
 into being, affecting the rights of oth- 
 ers. * * * It is conceded that if in 
 a cause of action a tort can be treated 
 as a 'debt,' the liability of the stock- 
 holders for it would follow. The af- 
 firmation of this is asserted and the 
 following authorities are cited in its 
 support : Carver v. Manufacturing Co.', 
 2 Story 432; Milldam Foundry v. Ho- 
 vey, 21 Pick. 417; Gray v. Bennett, 3 
 Met. 522; Smith v. Omans, 17 Wis. 
 395. To the contrary of this coun- 
 sel for plaintiff in error cite Bohn v. 
 Brown, 33 Mich. 257; Cable v. Mc- 
 Cune, 26 Mo. 371 ; Doolittle v. Marsh, 
 11 Neb. 243; Heacock v. Sherman, 14 
 Wend. (N. Y.) 59; Archer v. Rose, 3 
 Brewster 264; Child v. Iron Works, 
 137 Mass. 516 ; Cook Stock and Stock- 
 holders, § 220; Morawetz,§§608, 613; 
 Nanson v. Jacobs (Mo.), 6 S. W. Rep. 
 246; Evans v. Lewis, 30 Ohio St. 11; 
 Crouch v. Gridley, 6 Hill 250; Kel- 
 logg v. Schuyler, 2 Denio 73, and Zim- 
 mer v. Schleehauf, 115 Mass. 52. 
 * * * In conclusion, we are of the 
 opinion that the word 'dues' should 
 receive a beneficial construction, one 
 which will include within its scope, as 
 well a demand for unliquidated dam- 
 ages for a tort, as a claim for a debt 
 arising upon a coni ract." 
 
 •' Maine, etc., Co. v. Southern, etc., 
 Co. (Maine;, 43 All. Rep. 24. 
 
 • Wing& Evans v. Slater, 19 R. I. 
 697, :;:< L. B. A. 566.
 
 § 573 LIABILITY OF STOCKHOLDERS. 635 
 
 grew out of a contingent liability existing at the time of the 
 dissolution, is within a statute 1 which imposes a liability on 
 stockholders for the debts of the corporation. 2 
 
 § 573. Debts due laborers and employes. — Statutes often im- 
 pose upon the shareholders a personal liability for debts due to 
 its servants, laborers, employes and apprentices, who ''usually 
 look to the reward of their day's labor or services for im- 
 mediate or present support, from whom the company does not 
 expect credit, and to whom its future ability to pay is of no 
 consequence. ' ' 3 Such provisions ordinarily apply only to those 
 who perform manual labor, 4 and do not include such employes 
 as foremen, superintendents and other officials. 5 But a super- 
 intendent, who performs manual labor, who is an employe 
 and not an officer of the corporation, is a servant within the 
 meaning of a statute which imposes an individual liability for 
 debts due clerks, servants and laborers. 6 An attorney at law 
 regularly employed on a salary is not an employe within a 
 statute referring to "laborers, servants or employes." 7 One 
 who makes a loan to a corporation to enable it to pay its work- 
 men without intending to acquire the rights of the laborers to 
 a preference can not afterward protect himself by taking an 
 assignment from the workmen. 8 Such statutes impose a liabil- 
 ity in addition to what remains unpaid upon their subscrip- 
 
 1 1 Kan. Gen. St. 1889, §§ 32, 44. Brockway v. Innes, 39 Mich. 47 ; Dukes 
 
 2 Cottrell v. Manlove, 58 Kan. 405. v. Love, 97 Ind. 341. See Palmer v. 
 
 As to the right to recover costs and Van Santvoord, 153 N. Y. 612. 
 
 receiver's expenses, see Harper v. 6 Sleeper v. Goodwin, 67 Wis. 577. 
 
 Carroll, 66 Minn. 487. As to liability A bookkeeper is not within the statute. 
 
 for debts when the stock of the corpo- Wakefield v. Fargo, 90 N. Y. 213. A 
 
 ration was fraudulently issued as fully traveling salesman is not a laborer. 
 
 paid up, see Wallace v. Carpenter, Jones v. Avery, 50 Mich. 326. A per- 
 
 etc, Co., 70 Minn. 321, 68 Am. St. son employed at a salary by a mowing 
 
 Rep. 530. machine company to go from place to 
 
 'Wakefield v. Fargo, 90 N. Y. 213, place and set up machines and to sell 
 
 217; Moyer V.Pennsylvania Slate Com- and solicit sales is an employe. Pal- 
 
 pany, 71 Pa. St. 293; Harris v. Nor- mer v. Van Santvoord, 153 N. Y. 612. 
 
 veil, 1 Abb. N. Cas. 127; Sleeper v. 7 Bristor v. Smith, 158 N. Y. 157, 53 
 
 Goodwin, 67 Wis. 577; Short v. Med- N. E. Rep. 42. 
 
 berry, 29 Hun 39. 8 Re Fair Hope, etc., Estate, 183 Pa. 
 
 4 Adams v. Goodrich, 55 Ga. 233. St. 96. 
 
 5 Coffin v. Reynolds, 37 N. Y. 640;
 
 636 THE LAW OF PRIVATE CORPORATIONS. § 574 
 
 tions, 1 and the member is not relieved from this individual 
 liability by a transfer of his shares. 2 
 
 § 574. Creditors who are also stockholders and officers. — 
 
 The statutory liability of stockholders may be enforced for the 
 benefit of creditors who are also stockholders and directors of 
 the corporation. It was so held where it appeared that the di- 
 rectors and officers had become creditors of the corporation by 
 loaning it money for the purpose of carrying on its business. 3 
 But it has been held that a director to whom the corporation 
 is indebted for salary is not a creditor within the contempla- 
 tion of such a statute. 4 
 
 IV. Enforcement of the Liability. 
 
 § 575. At the domicile of the corporation. — The manner of 
 enforcing the liability of stockholders is so generally regulated 
 by statute as to make it impractical to consider it in detail. 
 In some states the creditor is authorized to bring an action at 
 law against an individual stockholder, but probably the most 
 common remedy is of an equitable nature, where all the stock- 
 holders and creditors are brought into court and the fund 
 equitably divided. 5 The tendency is toward simplifying the 
 procedure, and providing for an action or proceeding by the 
 receiver of the corporation. The recent statutes and decisions 
 of the state under consideration must be examined. 6 
 
 § 576. Remedy against the corporation — Judgment. — Where 
 the liability is secondary, it is necessary that the creditor shall 
 exhaust his remedies against the corporation before proceed- 
 
 1 Milioy v. Spun- Mountain, etc., 6 See Booth v. Dear, 96 Wis. 516; 
 Co., 4.", Mich. 231. Harper v. Carrol], 66 Minn. 487. 
 
 2 Jackson v. Meek, 87 Tenn. 69, 10 6 For an illustration of what it is 
 Am. St. Rep. 620. possible for an able and ingenious 
 
 i aid v. Minneapolis Times Co., court to <1<> with a blind and cumbrous 
 65 Minn. 249. But see Potter v. Ma- statute, see the Minnesota cases con- 
 chine Co., 127 Mass. 692. etruingch. 76, Gen. Stat. 1878, from 
 •McDowall v. Bheehan, 129 N. Y. Allen v. Walsh, 25 Minn. 543, to Har- 
 200. As to his remedy, see Tayer v. per v. Carroll, 66 Minn. 487. Happily, 
 Tool Co., 4 Gray (Mass.) 75. much of it Is swept away by Gen. 
 
 Laws Minnesota L899, ch. 272.
 
 §577 
 
 LIABILITY OF STOCKHOLDERS. 
 
 637 
 
 ing to enforce the statutory liability of the stockholders. 1 In 
 the absence of a statute to the contrary, a judgment against the 
 corporation and an execution thereon returned nulla bona is 
 generally held to be a prerequisite to the right to proceed 
 against the shareholder, 2 and this is sufficient evidence that the 
 remedy against the corporation has been exhausted. 3 But if it 
 appears that the corporation is notoriously insolvent, 4 or that 
 there are no corporate assets to sequester, and the only relief 
 obtainable is the enforcement of the statutory liability of the 
 stockholders, an action for that purpose may be brought by a 
 simple contract creditor. 5 
 
 § 577. Judgment against the corporation — Conclusiveness. — 
 
 It may be taken as the settled law that a judgment against a 
 corporation is conclusive upon the question of corporate indebt- 
 edness in a subsequent action against a stockholder of the cor- 
 poration. 6 "It has been repeatedly held," says Judge Ald- 
 
 1 Globe, etc., Co. v. State Bank, 41 
 Neb. 175, 27 L. R. A. 854. See Booth 
 v. Dear, 96 Wis. 516; Cook Corp., §219. 
 
 -National, etc., Co. v. Ballou, 146 
 U. S. 517; Swan, etc., Co. v. Frank, 
 148 U. S. 603; Fourth Nat'l Bank v. 
 Francklyn, 120 U. S. 747; Libby v. 
 Tobey, 82 Maine 397; Fowler v. Lam- 
 son, 146 111. 472 ; Allen v. Arnold, 18 R. 
 1. 809 ; Remington v. Bay Co., 140 Mass. 
 494; Sturges v. Vanderbilt, 73 N. Y. 
 384 ; Rocky Mt. Bank v. Bliss, 89 N. Y. 
 338. But an adjudication in bank- 
 ruptcy will render a judgment against 
 the corporation unnecessary. Shell- 
 ington v. Howland, 53 N. Y. 371. In 
 Flash v. Conn, 109 U. S. 371, the court 
 said: "The object of section 24 was 
 to compel the creditor to exhaust 
 the assets of the company before seek- 
 ing to enforce the liability of the 
 stockholder. When the declaration 
 shows that this was done, and that a 
 literal performance of the condition 
 would have been vain and fruitless, 
 the performance of the condition may 
 
 well be held to have been excused." 
 9 Baines v. Babcock, 95 Cal. 581. 
 The return of an execution against 
 the corporation "no property found" 
 is sufficient to justify a suit against a 
 stockholder under Kan. Gen. St. 1897, 
 ch. 66, § 850, and in the absence of 
 fraud on the part of the sheriff it can 
 not be challenged by a stockholder. 
 Tbompson v. Pfeiffer (Kan.), 56 Pac. 
 Rep. 763. 
 
 4 Latimer v. Citizens' State Bank, 
 102 Iowa 162, 71 N. W. Rep. 225; Salt 
 Lake, etc., Co. v. Tintic, etc., Co., 13 
 Utah 423, 45 Pac. Rep. 200. See also 
 Sleeper v. Goodwin, 67 Wis. 577; 
 Hirshfeld v. Bopp, 145 N. Y. 84. 
 
 5 See Minneapolis Paper Co. v. 
 Swinburne Co., 66 Minn. 378; Sturte- 
 vant-Larabee Co. v. Mast, etc., Co., 
 66 Minn. 437. 
 
 6 Holland v. Duluth, etc., Co., 65 
 Minn. 324; Slee v. Bloom, 20 Johns. 
 (N.Y.) 669; Farnum v. Ballard, etc., 
 Shop, 12 Cush. (Mass.) 507; Came 
 v. Brigham, 39 Maine 35 ; Nichols v.
 
 638 THE LAW OF PRIVATE CORPORATIONS. § 578 
 
 rich, 1 "and the great weight of authority is that a judgment 
 against a corporation in favor of a creditor without notice to a 
 stockholder, conclusively establishes the fact of indebtedness, 
 while in a comparatively few jurisdictions, it is treated as prima 
 facie evidence only." 2 
 
 § 578. By whom the liability is enforcible. — No general 
 rule can be stated as to who must enforce the statutory liabil- 
 ity of stockholders. If the matter is not determined by the 
 statute, it depends upon the nature of the liability and for 
 whose benefit it is imposed. If the liability is regarded as 
 an asset of the corporation, it passes to the receiver or assignee 
 in insolvency of the corporation, and must be enforced by him 
 for the benefit of the corporate estate. 3 The liability when 
 contractual is sometimes held to be an asset of the corpora- 
 tion. "If the defendant's liability under the statute to the 
 creditors of the corporation in which he is a stockholder is con- 
 tractual — and it is only in that aspect that it can be enforced 
 at all outside of Kansas — then it was like any other claim, an 
 asset for the payment of the corporate debts, and as such the 
 right to sue on it passed to the receiver. This is the general 
 rule, so far as we are aware, and is so manifestly in accord- 
 Stevens (Mo.), 27 S. W. Rep. 613; one of proof and not of pleading. 
 Schertz v. First Nat'l Bank, 47 111. Am., etc., Co. v. Wood worth, 79 
 App. 124. See §§ 556, 587. Fed. Rep. 951. See generally Bank v. 
 
 1 Hale v. Hardon (C. C. A.), 95 Fed. Francklyn, 120 U. S. 747; Hawkins v. 
 Rep. 747. Where an action at law is Glenn, 131 U. S. 319; Glenn v. Lig- 
 brought in a federal court in New gett, 135 U.S. 533; McVicker v. Jones, 
 York to charge a stockholder in a 70 Fed. Rep. 754; Rhodes v. Bank, 66 
 Kansas corporation underthe Kansas Fed. Rep. 512, 13 C. C. A. 612; Bank 
 statute to the extent of hie liability v. Rindge, 57 Fed. Rep. 279; Borland 
 with a judgment against the corpora- v. Haven, 37 Fed. Rep. 394, 413; 
 tion, it is sufficienl to allege the re- Glenn v. Springs, 26 Fed. Rep. 494. 
 ■ v .,f the judgment, a return of See Btephensv. Pox, 83N. Y. 313. 
 
 eution unsatisfied, without aver- "Sheafe v. Larimer, 79 Fed. Rep. 
 ring the original debt, as Hie Kansas iiL'l ; Howarth v. Ellwanger, 86 Fed. 
 te makes the judgment at least Rep. 54. The liability can not, under 
 umptive evidence; and it is im- §2933, Ind. R. St., be enforced by an 
 
 material that the New York courts assign* f the corporation. Runner 
 
 in similar quire the original v. Dwiggins, 147 Ind. 238, 3(5 L. R. A. 
 
 deht to he pleaded, as the question is 645.
 
 § 578 LIABILITY OF STOCKHOLDERS. 639 
 
 ance with justice, as well as convenience, that in the absence 
 of an express decision of the supreme court of Kansas to the 
 contrary, we must presume that such is the law of that state." 1 
 The Massachusetts court says: 2 "We are unable to assent to 
 the decision of the supreme court of Pennsylvania * * * that 
 the liaoility of the defendant passed to the receivers of the 
 corporation as an asset, because we think that the liability as 
 created by the statute of Kansas is directly to the creditors, and 
 can not be enforced by receivers in their own name or in the 
 name of the corporation." Mr. Cook says that the claim against 
 the stockholders " is not to be numbered among the assets of 
 the corporation. * * * A receiver has no power to enforce such 
 a liability." 3 High says: 4 "The authorities are not wholly 
 reconcilable as to the right of a receiver of a corporation to 
 maintain an action in behalf of its creditors to recover of 
 shareholders an individual liability imposed by charter or 
 statute upon stockholders for the protection of creditors." In 
 Illinois it is said: 5 "The creditor stands on an independent 
 platform above that of the receiver, having no concern with 
 the corporation, and the stockholder is bound under the law to 
 answer to him. The stockholder is not under the control or 
 in the power of the receiver, but holds a fund, so to speak, 
 out of which the creditors of the company may be paid." If 
 the liability is directly to the creditors, it forms no part of the 
 corporate assets and can not be enforced by the corporation or 
 its representative. 6 Ordinarily, when the action is brought by 
 
 1 dishing v. Perot, 175 Pa. St. 66, authorizing him to collect the "rights 
 34 L. R. A. 737. and credits" of the assignor. 
 
 2 Hancock Nat'l Bank v. Ellis, 172 4 Receivers, § 317a. 
 
 Mass. 39, 42 L. R. A. 396. See former 5 Arenz v. Weir, 89 111. 25. See 
 
 decision in 166 Mass. 414. First Nat'l Wincock v. Turpin, 96 111. 135; Mun- 
 
 Bank v. Hingham, etc., Co , 127 Mass. ger v. Jacobson, 99 111. 349; Jacobson 
 
 563; Chambei'lin v. Hugunot, etc., v. Allen, 20 Blatchf, 525; Billings v. 
 
 Co., 118 Mass. 532. Robinson, 94 N. Y. 415; Pfohl v. 
 
 3 Corps., § 218. In Runner v. Dwig- Simpson, 74 N. Y. 137. The Nebraska 
 gins, 147 Ind. 238, 36 L. R. A. 645, it court not only imposes, but limits the 
 was held that an assignee of an in- liability. 
 
 solvent bank can not enforce the lia- 6 Van Pelt v. Gardner, 54 Neb. 701; 
 bility under Ind. Rev. St. 1894, § 2908, Olsen v. Cook, 57 Minn. 522; Int.
 
 640 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 §579 
 
 a creditor against the stockholders, it must be for the benefit 
 of all the creditors, and all the stockholders must be joined. 1 
 
 § 579. Enforcement in foreign jurisdictions. — The decis- 
 ions with reference to the right to enforce the statutory liabil- 
 ity of stockholders against stockholders who reside in a for- 
 eign jurisdiction are in a very unsatisfactory condition. It is 
 stated in general terms that if the liability sought to be en- 
 forced is in the nature of contract, and is not opposed to the 
 legislation or public policy of the state in which it is sought 
 to enforce it, the courts of such state will entertain jurisdic- 
 tion. It is admitted that a liability which is penal in its na- 
 ture can not be enforced in a foreign jurisdiction. It is also 
 generally conceded that the liability imposed by constitutions 
 and statutes for the debts of a corporation is contractual, and 
 
 Trust Co. v. Loan, etc., Co. (Minn.), 
 65 N. W. Rep. 78. In re People's, etc., 
 Co., 56 Minn. 180; Minneapolis, etc., 
 Co. v. City Bank, 66 Minn. 441, 38 L. 
 R. A. 415; Farnsworth v. Wood, 91 
 N. Y. 308. See Minneapolis, etc., Co. 
 v. Swinburne Co., 66 Minn. 378; 
 Strutevant-Larrabee Co. v. Mast, etc., 
 Co., 66 Minn. 437. After the courts 
 held that the statutory liability of 
 stockholders in a bank could not be 
 enforced by the receiver of the bank, 
 the legislature enacted a statute au- 
 thorizing such proceedings. See Gen. 
 Laws 1897, ch. 341. The complicated 
 and uncertain proceedings provided 
 by ch. 76, Gen. Laws Minn., 1887, 
 have now, at least in part, been super- 
 Beded by ch. 272, Gen. Laws 1899, 
 which provides a proceeding similar 
 to thai of tin' national banking act. 
 The action against the stockholders 
 may be prosecuted by the receiver, or 
 if he fails to act, by a creditor for the 
 benefit of all the creditors. 
 
 1 Barper v. Carroll, 66 Minn. 487,69 
 N. W. Rep. 610; Van Peltv. Gardner, 
 51 Neb. 701. Under the Minnesota 
 
 statute one creditor can not maintain 
 an independent action at law against 
 a single stockholder. Hanson v. Da- 
 vidson (Minn.), 76N.W. Rep. 254. In 
 Western Nat'l Bank v. Reckless (G. 
 C. N. J.), 96 Fed. Rep. 70, Mr. Justice 
 Gray said: "We must assume the 
 correctness of the statement in the 
 declaration, in consideration of the 
 demurrer, that under the Kansas 
 constitution and laws, and the con- 
 struction put upon them by the court 
 of last resort in that state, an action 
 at law by a single judgment creditor, 
 lies against a single stockholder to en- 
 force the liability created and pro- 
 vided for by said constitution and 
 laws. The correctness of this state- 
 ment is moreover established by an 
 examination of the said provisions." 
 See Mech. Sav. Bank v. Fidelity, 
 etc., Co., 87 Fed. Rep. 113; Dexter v. 
 Edmands, 89 Fed. Rep. 467. By a 
 Kansas statute enacted in 1899, the 
 right of action is now in the receiver. 
 Sit Kisse berth v. Prescott, 95 Fed. 
 Rep. 357.
 
 § 579 
 
 LIABILITY OF STOCKHOLDERS. 
 
 641 
 
 therefore enforcible wherever the stockholder can be found, if 
 there exists an appropriate remedy in such jurisdiction. But 
 the courts of many of the states have been zealous to find 
 technical difficulties in the way of a plaintiff who sought to 
 collect his claim, and by a narrow and illiberal construction 
 have practically deprived the creditors of a portion of the se- 
 curity, on the faith of which their debts were contracted. This 
 has been particularly true of Massachusetts, New York 1 and 
 
 1 The New York court of appeals is 
 the only court which has had the 
 courage to state the true reasons for 
 the apparent judicial determination 
 to protect their citizens from liability 
 growing out of their foreign invest- 
 ments. In Marshall v. Sherman, 148 
 N. Y. 9, 34 L. R. A. 757, O'Brien, J., 
 said : "There is still another aspect of 
 the question which deserves attention, 
 and it must be viewed in the light of 
 notorious facts, which, though not 
 appearing in the record, are matters 
 of current history and common knowl- 
 edge, to which we can not shut our 
 eyes. Within recent years numerous 
 business enterprises have been pro- 
 moted in some of the western states, 
 the money for the prosecution of 
 which has been to a large extent bor- 
 rowed here, either in the form of di- 
 rect loans upon some kind of security, 
 or by inducing many of our citizens to 
 purchase stock in corporations organ- 
 ized for the purpose under local laws. 
 Much of these investments, amount- 
 ing to a vast sum in the aggregate, has 
 been lost. This result is in some de- 
 gree to be attributed to financial de- 
 pression, and the consequent derange- 
 ment of business, but in a much greater 
 degree to the gross mismanagement 
 and dishonesty of the managers and 
 promoters. The funds thus procured 
 have been used largely in furtherance 
 of local and private interests, and in 
 41 — Private Corp. 
 
 disregard of every prudent safeguard 
 for the protection of the investors, 
 and sometimes in defiance of every 
 principle of common honesty. In 
 some cases, when the managei*s well 
 knew they were hopelessly involved, 
 they continued to transact business, 
 borrowing recklessly and pledging the 
 assets in their possession or under 
 their control. When the crash came 
 these assets were sold by the pledgees, 
 and, of course, sacrificed in many 
 cases, leaving large deficiencies, which 
 honest and prudent management could 
 have converted into a surplus. A 
 careful investigation of some of the 
 disastrous failures of loan, investment, 
 trust, land and mortgage companies, 
 as well as banks and other corpo- 
 rations, will reveal this condition 
 of things. It will not be difficult 
 for speculators to purchase large 
 claims against these defunct corpora- 
 tions at a very low price if they can 
 be readily enforced here against 
 stockholders who have made and lost 
 investments in the stock." Any re- 
 spect which this statement is entitled 
 to must be reflected from the great 
 court from which it emanated. It 
 amounts to saying to the citizens of 
 New York: You may invest your 
 money in the stock of non-resident 
 corporations under a contract by 
 which you shall receive the benefits 
 and share the burdens equally with
 
 642 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 580 
 
 New Hampshire; although very recently the supreme court 
 of Massachusetts 1 has reversed its former decisions and adopted 
 a rule more consonant with justice and the comity which 
 should exist between states of the Union . This departure is 
 in line with the present tendency of judicial decisions, partic- 
 ularly in the federal courts. 
 
 § 580. Proceedings iii the federal courts.— The federal 
 courts have been much more inclined to enforce the statutory 
 liability of stockholders than the state courts. The right to en- 
 force such liability presents a question of general law on which 
 the federal courts follow their own precedents. 2 Thus, the fed- 
 eral court refused to follow the decision of the court of appeals 
 of New York, which held that the liability under the Kansas 
 statute could not be enforced in New York. ''The declining of 
 jurisdiction by those courts," said Wheeler, J., 3 "can not, how- 
 
 your associates. If all goes well, and 
 your agents and managers prove pru- 
 dent and honest, the gain is yours. 
 If you select dishonest or incapable 
 managers of your business, and the 
 enterprise fails, this court, although 
 these matters are not pertinent in a 
 case where a party is seeking to en- 
 force a clear legal right, will see that 
 all the loss shall fall upon your asso- 
 ciates who reside in the foreign state. 
 The foreign state will, through its 
 comity, see that you secure the prof- 
 its, if there are any ; and we will pro- 
 tect you against the "injustice" of be- 
 ing required to pay your share of the 
 losses. In commenting upon this de- 
 cision, Judge Aldrich, in Hale v. 
 Bardon, 95 Fed. Rep. 747, says: "We 
 can not adopt this view for the reason 
 that in judicial proceedings, except 
 where the question of fraud or reck- 
 less management is made an issue, 
 suet) considerations are contrary to 
 principle, in the direction of repudia- 
 tion, subversive of judicial right and 
 of justice, and fraught with danger 
 to the idea of permanent and uniform 
 
 rule. A judicial result influenced by 
 such considerations can stand neither 
 the test of the rule of right nor of the 
 requirements of prudence. In the 
 next decade the stockholders may re- 
 side in the west and the creditors in 
 the east. In the next case, the cred- 
 itors may reside in the east as well as 
 the stockholders ; or, as in the pres- 
 ent case, the creditors may be scat-* 
 tered over many states. It is not a 
 question where the pecuniary inter- 
 ests are, but a question of right— a 
 question whether an unquestioned 
 liability shall be enforced outside of 
 the parent forum after all has been 
 done there that can be done, or 
 whether the unquestionable right 
 shall exist without a remedy." 
 
 1 Hancock Nat'l Bank v. Ellis, 166 
 Mass. 414, and 172 Mass. 39; Stebbins 
 v. Scott, 172 Miss. 356. 
 
 2 Texas, etc., R. Co. v. Cox, 145 
 IT. S. 593, 614 ; Flash v. Conn, 109 U. S. 
 371. 
 
 ■Bank v. Whitman, 76 Fed. Rep. 
 697, ")1 U. S. App. 536.
 
 § 580 LIABILITY OF STOCKHOLDERS. 643 
 
 ever, take from this court what properly belongs to it, and the 
 decision of what belongs to this must ultimately be determined 
 by the supreme court of the United States. The decisions of 
 that court must be followed here, as understood." From the 
 recent federal decisions ' the following general principles may 
 be deduced. First, a contractual liability imposed upon stock- 
 holders by the laws of the corporate domicile is enforcible in 
 any federal court wherein jurisdiction of the parties can be 
 obtained. Second, the nature or character of "the liability im- 
 posed, whether to the creditors severally and individually or 
 in common, involves the interpretation of the law of the cor- 
 porate domicile, and the interpretation by the courts of the 
 domicile will be accepted by the federal courts. Third, where 
 the laws of the corporate domicile provide a remedy for the 
 enforcement of the right, it will be adopted and applied by the 
 federal court, so far as consistent with their own rules of pro- 
 cedure. In a recent case in the court of appeals, 2 it was said: 
 "We may well observe at the outset that for many years the 
 steady trend of federal decision has been in the direction of 
 upholding and enforcing extraterritorially this class of liabili- 
 
 1 Fourth Nat'l Bank v. Francklyn, refer, in this connection, to the more 
 120 U. S. 747; Flash v. Conn, 109 recent cases in the U. S. courts, of 
 U. S. 371; Rhodes v. Bank, 24 U. S. Rhodes v. Bank, 24 U. S. App. 607; 
 App. (7th Cir.) 607, 66 Fed. Rep. 512, Whitman v. Bank, 28 C. C. A. 404; 
 34 L. R. A. 742; Whitman v. Bank, Elkhart Nat'l Bank v. Northwestern, 
 83 Fed. Rep. 288, 28 C. C. A. 404 (2d etc., Co., 87 Fed. Rep. 252; Dexter v. 
 Cir.) ; National Bank v. Whitman, Edmands, 89 Fed. Rep. 467, and to 
 76 Fed. Rep. 697 ; American, etc., Co. the more recent decisions of the state 
 v. Woodworth, 79 Fed. Rep. 951, 82 courts, as showing the present ten- 
 Fed. Rep. 269; McVickar v. Jones, 70 dency of judicial decisions in such 
 Fed. Rep. 954; Bank v. Rindge, 57 jurisdictions. Bagley v. Tyler, 43 Mo. 
 Fed. Rep. 279; Hale v. Hardon, 95 App. 195; Guerney v. Moore, 131 Mo. 
 Fed. Rep. 747 (U. S. App., 1st Cir.) ; 650; Ferguson v. Sherman, 116 Cal. 
 Brown v. Trail, 89 Fed. Rep. 641. 169; Cushing v. Perot, 175 Pa. St. 66; 
 
 2 Hale v. Hardon, 95 Fed. Rep. 747. Hancock Nat'l Bank v. Ellis, 172 
 Judge Aldrich said: "It does not Mass. 39, and the admirable opinion 
 seem necessary to refer to the numer- of Chief Justice Field in that case, 
 ous decisions of the supreme court and to the exceedingly well-reasoned 
 and those of the various circuit courts cases of Western Nat'l Bank of New 
 of appeal, and of the circuit courts so York v. Lawrence (Mich.), 76 N. W. 
 often cited, which sustain the general Rep. 105, and Bell v. Farwell, 176 111. 
 proposition. We shall, therefore, only 489, 52 N. E. Rep. 346."
 
 644 THE LAW OF PRIVATE CORPORATIONS. § 581 
 
 ties according to the fair intendment of the local law in cases 
 properly within the provisions thereof, except where enforce- 
 ment would unreasonably interfere with local vested creditor's 
 interests in states where enforcement is sought extraterri- 
 torially on grounds of comity, and perhaps in some cases, 
 where such enforcement would offend the general public policy 
 of the state, while among the courts of the states there has 
 been a diminishing diversity of decisions upon questions grow- 
 ing out of such statutory liabilities." The federal courts sit- 
 ting in a state are bound by a valid statute of the state which 
 forbids the courts of the state to entertain actions of this char- 
 acter. But such a statute of New Jersey was held unconstitu- 
 tional in so far as it applied to a creditor of a corporation of 
 a foreign state who was given by its laws a personal right of 
 action against any one of its stockholders for the collection of 
 his debt. The creditor had, prior to the passage of the act, 
 not merely as a matter of comity, but under the general prin- 
 ciples of jurisprudence, a remedy for the enforcement of his 
 contract in the courts of New Jersey of which he was deprived 
 by the act. 1 
 
 § 581. Decisions in various states — Massachusetts. — Each 
 state pursues what it regards as the best public policy in the 
 matter of enforcing the liability imposed upon its citizens by the 
 laws of other states. It is admitted in all cases that one who 
 becomes a member of a foreign corporation subjects himself to 
 the laws of the foreign state as regards his rights and liabili- 
 ties. The enforcement of his liabilities must, however, be 
 governed by the laws of his domicile unless personal service can 
 be obtained upon him in the state of the corporate domicile. The 
 federal courts enforce the stockholders' liability in cases within 
 their jurisdiction, and there is a tendency in the same direction 
 on the part of the state courts. The nature of the liability, as 
 determined by the courts of the state of the corporate domicile, 
 will generally be accepted as conclusive by the courts of other 
 states, and a liability declared to be contractual will be enforced 
 whenever jurisdiction over the person or property of the stock- 
 1 Western Nat'l Banfc v. Reckless, 96 Fed. Rep. 70.
 
 § 581 LIABILITY OF STOCKHOLDERS. 645 
 
 holder can be obtained unless some question of procedure is 
 involved. The diversity of decisions is so great that general 
 rules can not be formulated, and the question must be deter= 
 mined by a careful study of the decisions of the state in ques- 
 tion. Some of the states which have been most strict in re- 
 fusing a remedy to the foreign creditor against the domestic 
 stockholder have recently changed front and come into line 
 with the federal courts. Thus in a comparatively recent case 
 in Massachusetts the court said that "the question can hardly 
 be considered as an open one in this commonwealth. This 
 court has often declined to exercise jurisdiction to enforce a 
 liability imposed upon stockholders in corporations established 
 in other states under statutes of these states." 1 The decisions 
 were placed upon the ground that "it is a suit against a foreign 
 corporation which involves the relation between it and its stock- 
 holders and in which complete justice can only be done by the 
 courts of the jurisdiction where the corporation was created." 2 
 But in a later case, this court held that an action by a 
 creditor to enforce the liability of a stockholder under the 
 Kansas statute, is transitory, and may be brought in any 
 court of general jurisdiction over similar actions in any state 
 or country, where service can be made according to the law 
 of the place. 3 The action was by a single judgment cred- 
 itor against a single stockholder. In the course of an admir- 
 able decision, Chief Justice Field said: "The courts of Kansas, 
 from the nature of the question, can never directly decide that 
 the liability of a non-resident stockholder under the general 
 statutes of Kansas is one that may be enforced in any court of 
 general jurisdiction in any other state or country where per- 
 
 1 Bank of North America v. Rindge, Erickson v. Nesmith, 4 Allen (Mass.) 
 
 154 Mass. 203 ; New Haven Nail Co. v. 233. 
 
 Linden Spring Co., 142 Mass. 349; Post 2 Post & Co. v. Toledo, etc., R. Co., 
 
 & Co. v. Toledo, etc., R. Co., 144 Mass. 144 Mass. 341, 59 Am. Rep. 86. 
 
 341, 59 Am. Rep. 86; Kansas, etc., Co. 3 Hancock Nat'l Bank v. Ellis, 172 
 
 v. Topeka, etc., R. Co., 135 Mass. 34, 46 Mass. 39, 42 L. R. A. 396, 55 Am. St. 
 
 Am. Rep. 439; Halsey v. McLean, 12 Rep. 414. See, also, Aldrich v. An- 
 
 Allen (Mass.) 438, 90 Am. Dec. 157 ; chor, etc., Coal Co., 24 Ore. 32, 41 Am, 
 
 Penobscot, etc., R. Co. v. Bartlett, 12 St. Rep. 831, and note. 
 Gray (Mass.) 244, 71 Am. Dec. 753;
 
 646 THE LAW OF PRIVATE CORPORATIONS. § 581 
 
 sonal service can be made upon the stockholder. Only courts 
 of other jurisdictions can decide that question. The courts of 
 Kansas can only express an opinion to that effect if they enter- 
 tain it in cases before them, as one of the reasons for the judg- 
 ment they render in those cases. That opinion the supreme 
 court of Kansas has expressed. 1 * * * The courts of the 
 United States inferior to the supreme court have uniformly 
 held that the liability under the statutes of Kansas which we 
 are considering can be enforced against a stockholder in any 
 state or district where he can properly be served with process. 2 
 These decisions are in accordance with the principles of the de- 
 cisions of the supreme court of the United States with reference 
 to statutes of other states somewhat similar to those of Kansas. 3 
 The decisions of state courts other than those of Kansas are 
 not uniform upon the questions whether the statutory liability 
 of a stockholder to creditors of the corporation under these stat- 
 utes of Kansas can be enforced by a suit against the stock- 
 holder in any state where he resides and can be served with 
 process." 4 After stating the rule that the action can not be 
 maintained where the foreign statute creates as pecial remedy, 
 the court said: "When the liability is distinctly imposed by 
 statute upon the stockholders severally, it would be unfortu- 
 nate if it should not be enforced against stockholders not resi- 
 dent within the state under whose laws the corporation has been 
 
 'Howell v. Manglesdorf, 33 Kan. s Flash v. Conn, 109 TJ. S. 371; 
 
 194. Huntington v. Attrill, 146 U. S. 657. 
 
 ' Whitman v. National Bank, 51 U. 4 In favor of the doctrine are Guer- 
 
 S. App. 536, 83 Fed. Rep. 288, 28 C. C. ney v. Moore, 131 Mo. 650; Bagley v. 
 
 A. 404, affirming National Bank v. Tyler, 43 Mo. App. 195. See Ferguson 
 
 Whitman, 76 Fed. Rep. 697; Brown v. Sherman, 116 Cal. 160,37 L. R. A. 
 
 v. Trail, 89 Fed. Rep. 641 ; American, 622; Gushing v. Perot, 175 Pa. St. 66, 
 
 etc., Oo. v. Woodworth, 7!) Fed. Rep. 34 L. R. A. 737; Bell v. Farwell, 176 
 
 951, 82 Fed. Rep. 269; McVickar v. 111.489. Contra are Fowler v. Lam son, 
 
 Jones, 70 Fed. Rep. 754; Rhodesv. U. 146 111. 472, 37 Am. St. Rep. 163, and 
 
 8. Nat'l Bank, 66 Fed. Rep 512, 13 monographic note; Tuttle v. National 
 
 C. C. A. 612, 34 L. R. A 712; Bank, Bank of the Republic, 161 111. 497, 34 
 
 etc., v. Rindge, 57 Fed. Rep. 279. Sec L. R. A. 750. But see Bell v. Farwell, 
 
 Auer v. Lombard, 33 U. 8. App. 438, 176 111. 489, and Hancock Nat'l Bank 
 
 72 Fed. Rep. 209, L9 C. C. A. 72; Me- v. Farnuro (II. I. App. 1898), 40 Atl. 
 
 chanics' Sav. Bunk v. Fidelity, p'c, Rep. 341. 
 Co.,87 Fed. Rep. 113
 
 § 582 LIABILITY OF STOCKHOLDERS. 647 
 
 established, for the reason that due process could not be served 
 on them within the state, and the courts of the state where 
 they reside would not take jurisdiction of suits to enforce the 
 liability. It certainly concerns the due administration of jus- 
 tice that non-resident stockholders should be compelled by pro- 
 ceedings somewhere to perform the statutory obligations toward 
 creditors of the corporation which they have assumed by becom- 
 ing stockholders. * * * The courts of Kansas hold that 
 the action must be against the stockholders severally, and not 
 jointly. * * * The creditor can by action collect the amount 
 of his judgment remaining unpaid of any stockholder 'to any 
 extent equal to the amount of stock by him or her owned, to- 
 gether with any amount unpaid thereon.' The stockholder is 
 discharged, as against all creditors of the corporation, when 
 he has paid the debts of the corporation to this extent. We are 
 unable to see in what manner the enforcement of these statutes 
 by the courts of Massachusetts against stockholders resident 
 here, at the instance of a creditor of the corporation, does any 
 injustice to the citizens of Massachusetts." The court dis- 
 sented from the view of the Pennsylvania court 1 that the lia- 
 bility passed to the receiver of the corporation as an asset and 
 could be enforced by him. 
 
 § 582 . Decisions in New Hampshire, New York and Illinois. — 
 
 In a late case in New Hampshire it was held that the liability 
 imposed by the Kansas constitution and statutes could not be 
 enforced in that state. 2 The court said: "The question of the 
 enforcement of the laws of a foreign state is not a question of com- 
 ity to that state, but of the power of the courts of the former. No 
 court has any authority or power except such as is conferred up- 
 on it by the organic law or the statutes of the state that creates 
 it. ' ' The liability was held to be "statutory ' ' and not contractual. 
 "The provision of the Kansas constitution referred to is plainly 
 not self-executing and of itself creates no liability whatever. 
 The only real basis of the plaintiff's right of action, legal, 
 moral, or equitable, is the fiat of the Kansas legislature, for if 
 
 1 Cushing v. Perot, 175 Pa. St. 66, 34 2 Grippin, etc., Co. v. Laighton, (N. 
 L. R. A. 737. H.), 44 Atl. Rep. 538.
 
 648 THE LAW OF PRIVATE CORPORATIONS. § 582 
 
 it be conceded (contrary to the fact as we understand it), 
 what the courts of that state have directly held, that the relation 
 as stockholder to creditors is contractual, the holding is 
 properly to be regarded as a decision on general legal princi- 
 ples merely, and as such not binding upon us. * * * 
 The alleged obligations of the defendant as a stockholder of 
 the corporation are essentially different from those which 
 arise in this state from that relation, and furthermore, the 
 plaintiffs properly concede that their form of procedure should 
 have been by an action at law. * * * Not only are the 
 Kansas statutes relating to the liability of the stockholders 
 and its enforcement radically different in theory and practice 
 from ours, but there is no way in which they can be enforced 
 here, so as to secure substantial justice according to the New 
 Hampshire understanding and interpretations of that term. 
 The practical difficulties are numerous, patent and insuperable. ' ' 
 New York also refuses to allow the liability imposed by the 
 Kansas statute to be enforced in her courts. 1 A creditor, 
 after obtaining a judgment against the insolvent corporation, 
 and receiving part payment thereof from the receiver of the 
 corporation, brought an action at law against a stockholder 
 residing in New York to recover the balance. The com- 
 plaint set out the provisions of the constitution and statutes 
 of Kansas and the defendant demurred. It was held that 
 the constitutional provision was not self-executing; that the 
 statutory liability was not primary and contractual; and that 
 the liability could only be enforced at the domicile of the cor- 
 poration by the remedy provided by the statute. "If under 
 any circumstances the action could be maintained in this ju- 
 risdiction it must be in such a form and by such modes of pro- 
 cedure as like liabilities created under our statutes are en- 
 forced against our citizens. * * * It is quite well estab- 
 lished that in a case like this an action at law by a single 
 creditor against a single stockholder for the recovery of a spe- 
 cific sum of money can not be maintained in our courts, un- 
 der our statutes declaring the liability of stockholders. In 
 
 1 Marshall v. Sherman, 148 N. Y. 9, 32 L. R. A. 757, 51 Am. St. Rep. 654.
 
 § 582 LIABILITY OF STOCKHOLDERS. 649 
 
 such cases the liability must be enforced in equity in a suit 
 brought by and in behalf of all the creditors against all the 
 stockholders, wherein the amount of the liability and all the 
 equities can be ascertained and adjusted. * * * It would, 
 perhaps, be impossible to state the principle upon which the 
 decision should rest without apparently coming in conflict with 
 some of the numerous cases on the subject at some point. The 
 great weight of authority, as will be seen, is against the right 
 to maintain such an action." A later case in New York grew 
 out of an attempt to enforce the liability under the laws of 
 Washington. The court of the corporate domicile adjudged 
 the corporation insolvent, appointed a receiver, ascertained the 
 deficiency, ordered an assessment against the stockholders and 
 directed the receiver to collect the assessments by suits in foreign 
 jurisdictions where personal service could be obtained on the 
 stockholders. The receiver represented all the creditors, and 
 the fund resulting from the enforcement of the liability was for 
 the benefit of all the creditors and became a part of the prop- 
 erty in the hands of the corporation. 1 The receiver was al- 
 lowed to maintain an action in New York against a resident 
 stockholder. 2 
 
 Illinois refused to enforce the same constitutional and statu- 
 
 1 See Cole v. Satsop R. Co., 9 Wash, the laws of that state, and that from 
 487. the whole structure of them it is ap- 
 
 2 Howarth v. Angle, 25 Misc. Rep. parent that they were intended to 
 (N. Y.) 551. Affirmed in 39 App. Div. operate and be enforced only within 
 151, where the court skid : "The learned that jurisdiction. We think that case 
 counsel for appellant calls our atten- is distinguishable from the one in 
 tion to Marshall v. Sherman, 148 N. Y. hand. In the case in hand the lia- 
 9. That action was brought by a cred- bility of the defendant has been judi- 
 itor of the Miltonvale State Bank, a cially ascertained and declared, and 
 corporation organized under the laws the receiver represents all the credit- 
 of Kansas, and the questions there ors, and is seeking to maintain an 
 considered arose upon a demurrer action against the defendant upon his 
 to the sufficiency of the complaint, statutory liability as stockholder of 
 In the course of the opinion delivered the insolvent corporation. The course 
 in that case, it was said that the stat- pursued by the receiver is like the 
 utes of Kansas provided for a special course provided for the enforcement 
 and peculiar remedy against the stock- of liability of stockholders in this 
 holders of a corporation created under state."
 
 650 THE LAW OF PRIVATE CORPORATIONS. § 583 
 
 tory provisions on similar ground. The proceedings were in 
 the same form as in the New York case. It was held that the 
 Kansas statute provided a special remedy for the enforcement 
 of the liability, and that comity did not require the application 
 of this remedy in another state which had a different and in- 
 consistent method of procedure. 1 But in a late case, where the 
 declaration alleged that under the laws of Kansas as interpreted 
 by the highest court of that state, an action at law could be 
 maintained by a single creditor against a single stockholder, 
 it was held on demurrer that an action can be maintained in 
 Illinois without first proceeding in equity in Kansas. 2 In the 
 former case the court had determined the construction to be 
 given the Kansas statute for itself. 
 
 In Michigan it was held that the liability under the same 
 statute is individual to the creditor, is transitory and enforcible 
 whenever service can be'had. 3 In Pennsylvania it was said 
 that the liability under the same statute was contractual and 
 passed to a receiver of the corporation as an asset, and that the 
 right to sue a stockholder in that state, if it existed, was in the 
 receiver. 4 
 
 § 583. Where a special statutory remedy is provided. — It is 
 
 the settled rule that a special remedy for the enforcement of 
 the liability of the stockholder, provided by the laws of the 
 state of the corporate domicile, will not on grounds of comity 
 be enforced in the courts of another state which has a different 
 and inconsistent procedure for the enforcement of such liabil- 
 ities, when it will result in injustice to the citizens of the latter 
 state. 5 There can be no objection to this general rule, if "in- 
 justice " is not so construed as to apply to the act of requiring 
 the citizens of such state to comply with their contract obliga- 
 
 1 Tuttle v. Nat'l Bank of theRepub- 5 May v. Black, 77 Wis. 101 ; First 
 lie, 161 111. 497. Nat'l Bank v. Gustin, etc., Co., 42 
 
 2 Bell v. Farwell, 176 111. 489, 52 N. Minn. 327, 6 L. R. A. 676, 18 Am. St. 
 E. Rep. 346, 68 Am. St. Rep. 194. Rep. 510; Hancock Nat'l Bank v. 
 
 Bank v. Lawrence (Mich.), 76 N. Ellis, 172 Mass. 39, 42 L. R. A. 396; 
 
 W. Rep. 105. Bank v. Rindge, 154 Mass. 203, 13 L„ 
 
 'Cashing v. Perot, 175 Pa. St. 66, R. A. 56; Coffing v. Dodge, 167 Mass. 
 
 34 L. R. A. 737. 231.
 
 § 584 LIABILITY OF STOCKHOLDERS. 651 
 
 tions. Where it was sought to enforce the liability under the 
 Kansas constitution in Illinois the court said: 1 "In this case 
 the right to recover rests on the statute of the state of Kansas 
 alone, as the constitutional provision is not self-enforcible, 
 and the liability is only attempted to be made resultant from 
 legislation providing a special remedy and by the construction 
 placed on that legislation by the courts of that state. The 
 statutes of the state of Kansas have no force and effect in an- 
 other state, and the enforcement of a remedy in this action in 
 this state depends upon our express or tacit assent, which is 
 usually expressed as the comity between states. The extent to 
 which this principle of comity may proceed is subject to quali- 
 fications and restrictions which, in almost all cases, are to be 
 determined by the particular sovereignty. A remedy special to a 
 particular foreign state is not by any principle of comity in- 
 forcible here, and must be applied within the jurisdiction of 
 the domicile of the corporation. * * * Each state deter- 
 mines its method of procedure in its courts and their jurisdic- 
 tions. In this there is neither injustice nor hostility to a sister 
 state. But it would be hostile to every principle of sovereignty 
 to be compelled to import into this state the peculiar remedies 
 and various special methods of procedure invented by the leg- 
 islation of the various states. This principle has been vari- 
 ously recognized . ' ' This rule was recently applied in California 2 
 in an action brought to enforce the liability imposed by the 
 statutes of Illinois, which made a transferrer of shares liable 
 for the debts of the corporation to the extent of the amount un- 
 paid on the stock and provided a special remedy for collecting 
 the debt by way of garnishment. 
 
 § 584. Where no statutory remedy is provided. — When the 
 legislature creating a corporation declares that the stockhold- 
 
 J Tuttle v. National Bank of the Re- 39 Mich. 594; Barrick v. Gifford, 47 
 
 public, 161 111. 497, 34 L. R. A. 750, Ohio St. 180; Smith v. Huckabee, 53 
 
 citing Young v. Farwell, 139 111. 326; Ala. 191 ; Terry v. Little, 101 IT. S. 
 
 Patterson v. Lynde, 112 111. 196; May 216; National Tube Works v. Ballou, 
 
 v. Black, 77 Wis. 101 ; Nirnick v. Min- 146 U. S. 517. 
 
 go, etc., Co., 25 W. Va. 184; Allen v. 2 Russell v. Pacific R. Co., 113 Cal. 
 
 Walsh, 25 Minn. 543; Peck v. Miller, 258, 34 L. R. A. 747.
 
 652 THE LAW OF PRIVATE CORPORATIONS. § 585 
 
 ers therein shall be individually liable for the debts of the cor- 
 poration under certain circumstances, but fails to provide a 
 method of procedure by which the liability shall be enforced, 
 it is generally held that it can be enforced in another state, 
 according to the procedure of the forum. In California it 
 was recently said, in considering an Illinois statute: 1 "It is 
 contended that the statute "merely creates a liability which is 
 in the nature of a contract liability and which is enforcible 
 wherever the stockholder can be found. The general rule upon 
 this subject is very well established. Where a statute creates a 
 right and prescribes a remedy for its enforcement, that remedy 
 is exclusive. Where a liability is created which is not penal, 
 and no remedy is prescribed, the liability may be enforced 
 wherever the person is found. The procedure will, however, 
 be entirely governed by the law of the forum. If the law 
 creating a liability provides for a particular mode of enforcing 
 it, the mode limits the liability. If it be a contract the par- 
 ties here contracted with the understanding that they can be 
 held liable in no other way, 2 and such a liability can not be 
 enforced in another state." 3 
 
 § 585. Ancillary proceedings. — Where the statutes of the 
 corporate domicile provide for proceedings of an equitable 
 nature for the determination and enforcement of the statutory 
 liability of stockholders, it is generally held that the remedy is 
 exclusive, and that no proceedings can be maintained against 
 the stockholders resident in a foreign jurisdiction. But in a 
 recent, case, the United States Court of Appeals in the First 
 Circuit approves a proceeding which is very satisfactory, and, 
 if adhered to, will render it comparatively easy to enforce such 
 
 1 Russell v. Pacific R. Co., 113 Cal. 36 Am. Rep. 643; Erickson v. Nes- 
 
 34 L. B. A. 747. But see Mar- mith, 4 Allen (Mass.) 233. See Hodg- 
 
 sh;ill v. Sherman, 148 N. Y. 9. son v.Cheever, 8 Mo. App.318; Paine 
 
 2 Fourth Nat'l Bank v. Francklyn, v. Stewart, 33 Conn. 516; Aldrich v. 
 120 f. S. 747. Anchor, etc., Co.. 24 Ore. 32; Bice v. 
 
 •Young v. Farwell, 139 111. 320; Merrimac, etc.,Co.,56N. H. 114. But 
 
 Banh v. Bindge, L54 Mans. 203, 13 L. see Hancock Nat'] Bank v. Ellis, 172 
 
 R. A. 56; Fowler v. Lamson, L46 III. Mass. 3'.), and Bell v. Farwell, 176111. 
 
 472; Jessup v. Carnegie, 80 N. V. ill, 489.
 
 § 585 LIABILITY OF STOCKHOLDERS. 653 
 
 liability in the federal courts. Under the self-executing pro- 
 vision of the Minnesota constitution, it is held by the courts of 
 the state that the liability is contractual, and that the cumber- 
 some method provided for its enforcement is of an equitable 
 nature. In proceedings under the statutes, a receiver was 
 appointed to enforce the judgments entered against the stock- 
 holders, with authority to proceed against the non-resident 
 stockholders not served in the original proceeding. This re- 
 ceiver was distinct from the receiver in the general insolvency 
 proceedings. An action was commenced in the United States 
 District Court in Pennsylvania by one of the creditors who had 
 obtained judgment against the corporation in Minnesota in the 
 sequestration proceedings. The corporation and all the stock- 
 holders residing in Pennsylvania were made defendants, but 
 the action was dismissed on the ground that the corporation 
 was a necessary defendant, and that the court had no jurisdic- 
 tion over it. The decision was affirmed by the court of appeals, 
 which, however, intimated an auxiliary bill might be the 
 proper remedy in another jurisdiction. 1 
 
 An action at law was also commenced by the receiver in the 
 United States Circuit Court for Massachusetts against the 
 stockholders within the jurisdiction of that court. It was 
 brought on the theory that the stock liability created by the 
 statute was in the nature of a trust fund primarily confided to 
 the court of the jurisdiction of the corporate domicile; and 
 that that court alone had jurisdiction to entertain the pro- 
 ceedings necessary to determine the necessity for and the 
 extent to which the fund should be resorted to by creditors. 
 Such an ancillary proceeding has no equitable features and was 
 hence brought at law in the name of the receiver. 2 In this 
 instance the court of the corporate domicile had said : 3 "As 
 the amount and the par value of the stock issued and out- 
 standing is a matter of record, and readily proven in any 
 
 1 Elkhart Nat'l Bank v. Northwest- 209 ; Alderson v. Dole, 74 Fed. Rep. 
 em, etc., Co., 87 Fed. Rep. 252. 29. 
 
 2 See Auer v. Lombard, 72 Fed. Rep. 3 Hanson v. Davison (Minn.), 76 
 
 N. W. Rep. 254.
 
 654 THE LAW OF PRIVATE CORPORATIONS. § 585 
 
 action, there is nothing to prevent the prosecution, after such 
 decree is entered, of an ancillary action in another jurisdiction 
 by the receiver appointed to collect and distribute the funds 
 arising from the stockholder's liability in the general action, or 
 by any other party or person who may be appointed by the 
 court for the purpose, against any stockholder who is not made 
 a party to the original action, to collect from him the amount 
 of his liability on account of the debts of the corporation for 
 the benefit of all the creditors." 
 
 It was held by the court of appeals of the first circuit that 
 the non-resident stockholders were bound by the action of the 
 Minnesota court, and that the plaintiff in his capacity as re- 
 ceiver for the creditors, might, in aid of the proceedings in 
 Minnesota, maintain an action at law for such purpose in an- 
 other jurisdiction. In an elaborate decision, marked by great 
 breadth of thought, Judge Aldrich said, 1 with reference to the 
 conclusiveness of the proceedings in the Minnesota court: 
 "While we consider the cases 2 authorities to the extent that the 
 stockholders are bound by the action of the corporation, or its 
 successors in the exercise of corporate powers essential to the 
 collection of debts, in respect to corporate matters, like requir- 
 ing the payment of unpaid subscriptions to stock, which are 
 part of the assets, and as to ascertainments in which the corpo- 
 ration is interested, like the ascertainment of the indebtedness 
 of the corporation, we do not think they go to the length claimed 
 by the plaintiff in this case, for the reason, as has already be*en 
 said, the individual liability is not an asset of the corporation. 
 Indeed, the Minnesota court did not undertake to render judg- 
 ment upon the non-resident stockholders' liability, nor against 
 the Minnesota stockholders upon their individual liability, 
 otherwise than upon service, which is prerequisite to judg- 
 ments in personam." 3 
 
 1 Hale v. Hardon (C. C. A.), 95 Fed. (Minn.), 76 N. W. Rep. 254; Reile v. 
 
 Rep. 7 17. Bee § 587. Rundle, 103 U. S. 222. 
 
 •Hawkins v. Glenn, L31 U.S.319; "Pennoyer v. Neff, 95 U. 8.714; 
 
 The Great West. Tel. Co. v. Purdy, Hekking v. Pfaff, 91 Fed. Rep. 60, 50 
 
 162 U. S. 329; Hanson v. Davison U.S. App. 484.
 
 § 586 LIABILITY OF STOCKHOLDERS. 655 
 
 § 586. Original proceedings in court of corporate domicile. — 
 
 Where the law of the corporate domicile provides an equitable 
 proceeding for the enforcement of the stockholders' liability, 
 and contemplates the creation of a fund out of which the cred- 
 itors are to be paid, the courts of the corporate domicile must 
 determine the questions which arise before it can be known 
 whether it will be necessary to call upon the stockholders. In 
 an Illinois case, where a creditor brought an action at law to 
 enforce the liability imposed by the constitution of Kansas, 
 it was held that the action could not be maintained. 1 The court 
 said : ' 'The important question to be here determined is whether 
 the courts of this state will, in any form, take jurisdiction of a 
 question arising as to the respective relations of creditors and 
 stockholders of a corporation of another state, where a special 
 remedy is provided by statute, before there is a determination 
 by the courts of such state of the just proportion of the corporate 
 indebtedness to be borne by solvent stockholders of such corpo- 
 ration. No decree of the courts of this state could result in tak- 
 ing an account and dissolving a corporation of another state. 
 It is for the courts of that state to enter a decree stating the ac- 
 count, winding up the affairs of the corporation, and determin- 
 ing the relation of the stockholders, creditors and corporation 
 to each other. When that question has been determined by the 
 courts of that state, then, if it becomes necessary, the creditors, 
 stockholders and the corporation, or its representative, may, as 
 against stockholders who are domiciled here, appeal to the courts 
 of this state, and have, as against such domiciled stockholders, 
 adequate relief." 
 
 In a recent case in Wyoming the court said: 2 "Until the 
 courts in Utah, in some appropriate proceeding, shall have 
 judicially ascertained, and by decree determined, the amount 
 of the deficiency for which the stockholders are responsible, it 
 
 1 Tuttle v. National Bank of the Re- N. W. Rep. 254; National Bank v. 
 public, 161 111. 497, 34 L. R. A. 750. Say ward, 86 Fed. Rep. 45. 
 See also Young v. Farwell, 139 111. 2 McLaughlin v. O'Neill (Wyo.), 51 
 326; Hanson v. Davison (Minn.), 76 Pac. Rep. 243-250. An action by the 
 
 receiver.
 
 656 THE LAW OF PRIVATE CORPORATIONS. § 587 
 
 is not perceived how any recovery can be had in this state, or 
 any other, against a single stockholder." 
 
 In Massachusetts the court said: 1 "This court does not take 
 jurisdiction of a suit to enforce the liability of stockholders in 
 a foreign corporation, not because it would be a suit to enforce 
 a penalty or a suit opposed to the policy of our laws, but be- 
 cause it is a suit against a foreign corporation, which involves 
 the relation between it and its stockholders, and in which com- 
 plete justice can only be done by the courts of the jurisdiction 
 where the corporation was created. * * * If an assess- 
 ment is to be laid upon the members or stockholders, or a con- 
 tribution enforced from them, according to the law of the state 
 under which the corporation is created, the courts of that state 
 alone can afford complete and effectual judicial relief." 
 
 § 587. Conclusiveness of the decree of the court of the 
 domicile. — The decree of the court of the corporate domicile 
 determining the relation between the corporation and its 
 stockholders and creditors, the amount of the corporate debts, 
 and the necessity for and the amount of the assessment, unless 
 impeached for fraud, is conclusive and binding upon foreign 
 stockholders who were not served with process within the juris- 
 diction and did not appear in the proceedings. The stock- 
 holders are represented by the corporation in the action, and 
 the judgment is in effect against the stockholders in their cor- 
 porate capacity. In principle there is no difference in this re- 
 spect between an action to enforce an unpaid subscription and 
 one to enforce a stockholder's liability. 2 
 
 § 588. Rights of receiver in a foreign jurisdiction. — Although 
 under the laws of the corporate domicile it may be established 
 that the receiver is the proper person to enforce the stockholder's 
 liability, when he goes into the foreign jurisdiction he is liable 
 to be confronted by the rule that a receiver can not main- 
 tain an action in a jurisdiction other than that of the court by 
 
 1 Post & Co. v. Railroad, Ut Mass. W. Rep. 254; Hale v. Hardon,95 Fed. 
 341. Sec § 582, supra. Rep. 747. See § 556, supra. 
 
 'Hanson v. Davison (Minn.), 76 N.
 
 § 588 LIABILITY OF STOCKHOLDERS. 657 
 
 which he was appointed. This rule is generally said to be es- 
 tablished and has recently been enforced for the purpose of 
 preventing the enforcement of stockholders' liability. 1 Mr. 
 High states the general rule, but says: 2 " It is thus apparent 
 that the exceptions to the rule denying to receivers any extra- 
 territorial right of action have become as well recognized as 
 the rule itself, and the tendency of the courts is constantly to- 
 ward an enlarged and more liberal policy in this regard. It is 
 believed that the doctrine will ultimately be established giving 
 to receivers the same rights of action in all the states of the 
 Union with which they are invested in the state or jurisdic- 
 tion in which they are appointed." A more recent writer 
 says: 3 " The tendency of courts is in the direction of a liberal 
 extension of the doctrine of interstate comity, and is against a 
 narrow and provincial policy which would deny proper effect 
 to judicial proceedings of sister states simply because they are 
 foreign and not domestic." The exception referred to leaves 
 the rule that a receiver will he permitted to maintain an ac- 
 tion in a foreign state when it will not interfere with the rights 
 and privileges of the citizens of the state or contravene the 
 policy of the laivs of that state. It remains somewhat a mat- 
 ter of favor discretionary with the court whose aid is invoked. 
 As said in Alabama: 4 "In the absence of statutory regula- 
 tions, the appointment and title of a receiver may be recog- 
 nized and he may sue in the courts of another state, unless 
 such suit works injustice or detriment to the citizens thereof, 
 or contravenes the policy of its laws." The same rule 5 pre- 
 
 1 Wyman v. Eaton, 107 Iowa 214, 43 99 N. Y. 433 ; Dyer v. Power, 39 N. Y. 
 L. R. A. 695. The rule was first es- St. Rep. 136; Story v. Furman, 25 
 tablished by Booth v. Clark, 17 How. N. Y. 214 ; Runk v. St. John, 29 Barb. 
 (XL S.)321. See comment upon this 585; Pugh v. Hurtt, 52 How. (Pr.) 22; 
 case in Hale v. Hardon, 95 Fed. Rep. Peters v. Foster, 10 N. Y. Supp. 389; 
 747. Barclay v. Quicksilver, etc., Co., 6 
 
 2 Receivers, § 241. Lans. 25. In Howarth v. Angle, 25 
 
 3 Smith Receivers, § 169. Misc. Rep. (N. Y.) 551 (39 App. Div. 
 
 4 Boulware v. Davis, 90 Ala. 207. 151), it was held that where the court 
 
 5 Stoddard v. Linn, 159 N. Y. 265; of a foreign state in which a corpora- 
 Toronto Gen. T. Co. v. C, B. & Q. R. tion was organized, has declared the 
 Co., 123 N. Y. 37 ; Matter of Waite, corporation insolvent, appointed a re- 
 
 42— Private Cokp.
 
 658 
 
 THE LAW OF PRIVATE CORPORATIONS. 
 
 § 589 
 
 vails in New York and in most of the states, 1 as well as in the 
 federal courts. 2 
 
 V. Miscellaneous Rights and Defenses. 
 
 § 589. The right of set-off. — In actions brought by or on 
 behalf of all the creditors of a corporation to enforce the com- 
 mon law liability of its stockholders, the stockholder can not, 
 unless permitted by statute, avail himself of a counter claim 
 or set-off he may have against the corporation. 3 If the liabil- 
 
 ceiver, and determined his right to 
 sue, and the liability of the stock- 
 holders, and has directed an assess- 
 ment for the deficiency to be levied 
 upon them ; and the assessment has 
 been levied, and the receiver has 
 been directed by the foreign court to 
 sue such stockholders as have re- 
 fused to pay the assessment, he, as 
 receiver, may, where no rights of do- 
 mestic stockholders are concerned, 
 maintain an action in the courts of 
 New York against the resident stock- 
 holders to recover the unpaid assess- 
 ment; and their liability is to be 
 determined by the law of the state 
 under which they became stockhold- 
 holders. In distinguishing the case 
 of Marshall v. Sherman, 148 N. Y. 9, 
 the court said: "The stockholders' 
 liability created by the statute of 
 Kansas can not in any event be en- 
 forced by an action at law by a single 
 creditor against a single stockholder 
 for the recovery of a specific sum of 
 money in the state of New York, in 
 which state the stockholders' statutory 
 liability can be enforced only by a 
 suit in equity, brought by or in behalf 
 of all the creditors against the stock- 
 holders, wherein the a mount of the lia- 
 bility can be ascertained and adjusted. 
 Here the liability of each of the de- 
 fendants has been ascertained and 
 adjusted, and the action is by the re- 
 ceiver representing all the stockhold- 
 
 ers, and the only party under the 
 laws of the state of Washington who 
 can maintain an action against the 
 defendants upon their statutory lia- 
 bility as stockholders in the insolvent 
 corporation." Under the Washington 
 statute the liability can be enforced 
 only in equity. See Wilson v. Book, 
 13 Wash. 676. 
 
 1 Bagby v. A. M. & 0. R. Co., 86 Pa. 
 St. 291 ; Metzner v. Bauer, 98 Ind. 425 ; 
 Cooke v. Town of Orange, 48 Conn. 
 401 ; Lycoming, etc., Co. v. Wright, 
 55 Vt. 526. 
 
 2 Peck v. Elliott (C. C. A.), 79 Fed. 
 Rep. 10; Schultz v. Insurance Co., 77 
 Fed. Rep. 375 (C. C. A.), 80 Fed. Rep. 
 337; Kennedy v. Gibson, 8 Wall. (U. 
 S.) 498; Keyser v. Hitz, 133 U. S. 138 ; 
 Casey v. Galli, 94 IT. S. 673. For 
 the different kinds of receivers, see 
 Hale v. Hardon, 95 Fed. Rep. 747; 
 Relfe v. Rundle, 103 U. S. 222; Davis 
 v. Gray, 16 Wall. 203, 209. 
 
 3 Thompson v. Reno Sav. Bank, 19 
 Nev. 103; 3 Am. St. Rep. 797, aim. 
 In re Empire City Bank, 18 N. Y. 199; 
 Bissit v. Kentucky River Nav. Co., 15 
 Fed. Rep. 353; Wheeler v. Millar, 90 
 N. Y.353; Tama Water Power Co. v. 
 Hopkins, 79 Iowa 653; Shickle v. 
 Watts, 94 Mo. 110; Mathis v. Prid- 
 ham (Tex. L894),20 S. \V. Rep. L015; 
 Singer, etc., Co. v. Given, 61 Iowa 93; 
 Boulton Carbon Co. v. Mills. 78 Iowa 
 1W; Thebua v. Smiley. Ill) 111. 316.
 
 § 589 LIABILITY OF STOCKHOLDERS. 659 
 
 ity is on a contract of subscription he must pay what is due 
 and share ratably with the other creditors. Where it was 
 attempted to offset a debt against such a liability the court 
 said: "The debt which appellant owed for his stock was a 
 trust fund devoted to the payment of all the creditors of the 
 company. As soon as the company became insolvent, and this 
 fact became known to the appellant, the right of set-off for 
 an ordinary debt to its full amount ceased. It became a fund 
 belonging equally in equity to all the creditors, and could not 
 be appropriated by the debtor to the exclusive payment of his 
 own claim." 1 But the creditors can not, after insolvency, in 
 the absence of fraud, question a set-off which was allowed by 
 the corporation while it was a going concern. 2 Whether the 
 stockholder can set off a claim against the corporation in a 
 proceeding to enforce his additional or strictly statutory liabil- 
 ity, depends upon the nature of the liability created by the 
 particular statute. If it is of such a nature that any cred- 
 itor can maintain an independent action against any stock- 
 holder to enforce a several and original liability, the stock- 
 holder may set off debts due him from the corporation. 3 If 
 the stockholder purchases debts against the corporation, after 
 he knows of its insolvency, he can have only the amount he 
 paid therefor set off against his liability. 4 But if the object 
 of the statute is to create a fund from which the creditors are 
 to be paid ratably, the shareholder must "contribute his pro- 
 portion thereto, and then come in with other creditors in the 
 distribution of the corporate assets." 5 The demands of the 
 
 1 Sawyer v. Hoag, 17 Wall. (U. S.) 4 Thompson v. Meisser, 108 111. 359; 
 610. But see Saving Bank v. Butch- Balchv. Wilson, 25 Minn. 299; Bulk- 
 ers', etc., Bank, 130 Mo. 155. ley v. Whitcomb, 121 N. Y. 107. In 
 
 2 Goodwin v. McGehee, 15 Ala. 232; Abbey v. Long, 44 Kan. 688, it was 
 Thompson v. Meisser, 108 111. 359; held that they could be set off for 
 Paine v. Central Vermont R. Co., 118 their face value. 
 
 IT. S. 152. 5 In re Empire City Bank, 18 N. Y. 
 
 s Coquard v. Prendergast, 35 Mo. 199; Thompson v. Meisser, 108 111. 
 
 App. 237; Wheeler v.Millar, 90 N.Y. 359; Weber v. Fickey, 47 Md. 196; 
 
 353; Jerman v. Benton, 79 Mo. 148; Witters v. Sowles, 32 Fed. Rep. 130; 
 
 Boyd v. Hall, 56 Ga. 563; Thompson Thebus v. Smiley, 110 111. 316. 
 v. Meisser, 108 111. 359.
 
 660 THE LAW CF PRIVATE CORPORATIONS. § 590 
 
 stockholders individually can not be interposed as equitable 
 set-offs to a demand against the corporation, although the cor- 
 poration is insolvent. 1 
 
 § 590. Statute of limitations. — The nature of the liability 
 necessarily determines the application of the statute of limita- 
 tions. Where the liability is primary and the obligation rests 
 upon the stockholder from the time the debt is contracted the 
 statute of limitations begins to run at the time the debt be- 
 comes due. 2 But where the obligation is in the nature of a 
 surety, or is made dependent upon the insolvency of the cor- 
 poration, the statute begins to run from the time this is deter- 
 mined. If the liability is penal in its nature, as that imposed 
 by a statute upon directors who violate its provisions, 3 it is gov- 
 erned by the section of the statute of limitations relating to pen- 
 alties and forfeitures. 4 The statutory limitation of six years 
 upon a liability created by statute other than that upon a pen- 
 alty or forfeiture, applies to the double liability of stockholders 
 for the debts of corporations. 5 
 
 The statute does not begin to run until the creditor acquires 
 the right to sue the stockholder. Hence, when it is necessary 
 to acquire judgment against the corporation the statute begins 
 to run from the time of the return of an execution unsatisfied. 6 
 It was recently held in New York that the statute did not be- 
 gin to run as against a foreign receiver in favor of a resident 
 stockholder until the assets had been marshalled and the de- 
 ficiency ascertained. 7 
 
 'Gallagher v. Germania Brewing 6 Taylor v. Bowker, 111 U. S. 110; 
 
 Co., 63 Minn. 214. Younglove v. Lime Co., 49 Ohio St. 
 
 2 Schalucky v. Field, 124 111. 617; 663. 
 
 Hyman v. Coleman, 82 Cal. 650. 7 Howarth v. Angle, 25 Misc. Rep. 
 
 8 Patterson v. Stewart, 41 Minn. 84. (N. Y.) 551. Whether the liability ia 
 
 4 Merchants' Nat'l Bank v. North- governed by the statute of the corpo- 
 
 western, etc., Co., 48 Minn. 349; Mer- rate domicile or of the lex fori, see 
 
 chants' Bank v. Bliss, 35 N. Y. 412; Hobbs v. Nat'l Bank of Com., 96 Fed. 
 
 Wiles v. Suydam, 64 X. Y. 173. Rep. 396. 
 
 '• Merchants' Nat'l Bank v. North- 
 western, etc., Co., 48 Minn. 349.
 
 § 591 LIABILITY OF STOCKHOLDERS. 661 
 
 § 591. Contribution among stockholders.— Where the stat- 
 utory liability is joint and several and in the nature of con- 
 tract, a stockholder who is required to pay more than his pro- 
 portion is entitled to contribution from the other stockholders. 1 
 There can be no contribution if the liability is penal. 2 Unless 
 otherwise provided by statute, the remedy is by a suit in 
 equity. 3 
 
 1 Harper v. Carroll, 66 Minn. 487 ; 2 Sayles v. Brown, 40 Fed. 8. 
 Wincock v. Turpin, 96 111. 135 ; Allen 3 O'Reilly v. Bard, 105 Pa. St. 569. 
 v. Fairbanks, 40 Fed. 188, 45 Fed. 
 445.
 
 CHAPTER 21. 
 
 INSOLVENCY AND DISSOLUTION. 
 
 §592. 
 593. 
 594. 
 
 595. 
 596. 
 597. 
 598. 
 599. 
 
 600. 
 
 Manner of dissolution. 
 
 Impairment of contracts. 
 
 Expiration of term of exist- 
 ence. 
 
 Dissolution by legislative act. 
 
 Surrender of charter. 
 
 Forfeiture of charter. 
 
 Loss of integral part. 
 
 Statutory methods of dissolu- 
 tion—By the state. 
 
 Voluntary liquidation. 
 
 §601. 
 
 602 
 
 603. 
 604. 
 605. 
 
 606. 
 
 Statutory provisions for a tem- 
 porary continuance of the 
 corporation. 
 
 Insolvency, sale or loss of prop- 
 erty — Abandonment of busi- 
 ness. 
 
 Powers of a court of equity. 
 
 Proceedings by state. 
 
 Effect of dissolution, generally. 
 
 Effect upon corporate debts 
 and assets. 
 
 § 592. Manner of dissolution. — The dissolution of a corpora- 
 tion is that condition of law and fact which ends the capacity 
 of the body corporate to act as such and necessitates a final 
 liquidation and extinguishment of all the legal relations subsist- 
 ing in respect of the corporate enterprise. 2 A dissolution may 
 be effected (1) by the expiration of the statutory period of its 
 existence, (2) an act of the legislature under a reserved power 
 to repeal, (3) the surrender of the charter with the consent of 
 the state, (4) the forfeiture of the charter for misuse or non- 
 use of its powers, (5) the loss of an integral part, without 
 whose existence the functions of the corporation can not be 
 exercised, and (6) compliance with whatever statutory require- 
 ments may exist in order to effect a voluntary dissolution. 3 
 
 Proprietors, etc., 9 R. I. 590; Mer- 
 chants' & P. Line v.Wagner,71 Ala.581. 
 
 a Taylor Priv. Corp., §429. 
 
 3 2 Kyd Corp., 447; 2 Kent Com. 
 (13th ed.), 306 ; 1 Bl. Com., 485 ; Angell 
 & Ames Corp., p. 501 ; Oakes v. Hill, 
 14 Pick. (Mass.) 442. See generally 
 notes to 7 Am. St. Rep. 684, 717; 57 
 
 'See Wil^us' Cases, particularly 
 Boston Glass Mfg. Co. v. Langdon, 24 
 Pick. (Mass.) 49; Higgins v. Down- 
 ward, 8 Houst. (Del.) 227; Louisville 
 Banking Co. v. Eisenman, 94 Ky. 83; 
 Bradley v. Reppell, 133 Mo. 545; 
 Brooklyn Steam T. Co. v. Brooklyn, 
 78 N. 5T.524; McGintyv. Athol It. Co., 
 155 Mass. 183; Philips v. Wickham, 
 1 Paige Ch. (N. Y.) 690; Mechanics' 
 Bank v. Heard, 37 Ga. 401 ; Wilson v. 
 
 (662) 
 
 Am. St. Hep. 76; 12 Am. Dec. 239; 40 
 Am. Dec. 737; 99 Am. Dec. 336.
 
 § 593 INSOLVENCY AND DISSOLUTION. 663 
 
 § 593. Impairment of contracts. — Parties deal with corpo- 
 rations subject to the possibility of losses arising from their 
 dissolution, 1 and the fact that a forfeiture of the charter will 
 impair outstanding contracts does not affect the power of the 
 court to decree such forfeiture. 2 Laws authorizing the disso- 
 lution of corporations ''enter directly into the contract, and as 
 corporations have the power to dissolve themselves or consent 
 to a forfeiture of corporate franchises, all persons must be re- 
 garded as having contracted upon the hypothesis of the exist- 
 ence and possible exercise of this power." 3 A court of equity 
 will not, in the absence of fraud, at the instance of creditors 
 who have levied an attachment on the property of the corpora- 
 tion, restrain the stockholders from dissolving the corporation. 4 
 But a dissolution does not destroy the obligation of the com- 
 pany's contracts, as the equitable rights of creditors survive 
 the act of dissolution and attach to the assets and property of 
 the corporation in the hands of its liquidators. 5 
 
 § 594. Expiration of term of existence. — The original idea 
 of a corporation involved perpetuity, but under modern statutes 
 the life of a corporation is universally limited to a term of 
 years with possibly a provision for renewal. By the weight 
 of authority a corporation is ipso facto dissolved by the expira- 
 tion of this period, 6 although there are some decisions to the 
 effect that it continues to exist as a de facto corporation and 
 that its exercise of corporate franchises can be questioned only 
 by the state in direct proceedings. 7 
 
 1 Read v. Frankfort Bank, 23 Maine tinguishing Fisk v. Railroad Co., 10 
 318. As to the remedy after dissolu- Blatchf. 518. 
 
 tion, see Schlieder v. Dielman (La.), 5 People v. O'Brien, 111 N. Y. 1; 
 
 10 So. Rep. 934. Morawetz Priv. Corp., II, § 1035 ; Cur- 
 
 2 Mamma v. Potomac Co., 8 Pet. (U. ran v. Arkansas, 15 How. (U. S.) 304. 
 S.) 281; Wash., etc., Co. v. State, 19 6 § 597, infra. Bradley v. Reppell, 
 Md. 239. 133 Mo. 545, 54 Am. St. R. 685, 32 S.W. 
 
 3 State v. Gaslight Co., 5 Rob. (La.) Rep. 645, Wilgus' Cases; Sturges v. 
 539; Schlieder v. Dielman (La. 1892), Vanderbilt, 73 N. Y. 384. 
 
 10 So. Rep. 934; Railroad Co. v. State, 7 May be sued for a tort after its 
 
 29 Ala. 573; Green's Brice Ultra Vires, charter has expired. Miller v. Coal 
 
 §§138,435. Co., 31 W. Va. 836. See Bushnell v. 
 
 4 Cleveland City, etc., Co. v. Taylor Machine Co., 138 111. 67. As to the 
 Bros., etc., Co., 54 Fed. Rep. 85, dis- term of existence, see §70, supra;
 
 664 THE LAW OF PRIVATE CORPORATIONS. § 595 
 
 § 595. Dissolution by legislative act. — In the United States 
 a corporation can not be dissolved by an act of the legislature 
 without the consent of the corporators, unless the power was 
 reserved at the time the charter was granted. 1 A repeal of the 
 charter pursuant to an unconditional power reserved by the 
 state is effective without a judicial decree when it clearly ap- 
 pears from the statute that such was the legislative intent. 2 
 Where the dissolution is to take place upon the happening of 
 some contingency, the legislature may provide that the disso- 
 lution shall result without a judicial decree. 3 But unless such 
 clearly appears to have been the legislative intent, a decree of 
 forfeiture is necessary. 4 "The better opinion would seem to 
 be that for most purposes the happening of the contingency 
 upon which the corporation is to cease should also be judicially 
 declared." 5 Generally this is necessary. 6 "Upon the absolute 
 repeal of a charter by the legislature acting within the limits 
 of constitutional authority the corporation ceases to exist and 
 no judgment can afterwards be rendered against it in an action 
 at law. 7 But such repeal does not impair the obligation of 
 contracts made by the corporation with other parties during 
 its existence, or prevent its creditors or stockholders from as- 
 serting their rights against its property in a court of chancery 
 in accordance with the reasonable regulations of the legislature 
 or with the general principles and practice of equity." 8 
 
 § 596. Surrender of charter, — A corporation may be dis- 
 solved by the voluntary surrender of the charter and its accept- 
 ance by the state. As said by the supreme court of Massa- 
 chusetts: "Charters are in many respects compacts between 
 the government and the corporators. And as the former can 
 
 State v. Hannibal, etc., Road Co., 138 5 Taylor Pri v. Corp., §432; Flint 
 
 Mo. 332, 36 L. R. A. 457. & Fentonville Plank Road Co. v. 
 
 1 §99, supra. Bruffett v. Great West- Woodhull, 25 Mich. 99, Wilgus' Cases. 
 
 ern R. Co., 25 111. 310. "Kincaid v. Dwindle, 59 N. Y. 
 
 * Sturges v. Vanderbilt, 73 N. Y. 548; Moore v. Schoppert, 22 W. Va. 
 
 884; Terry v. Merchants', etc., Bank, 282. 
 
 86 Ga. 177. 7 § 593. Marion, etc., Co. v. Perry, 
 
 3 In re Brooklyn, etc., R. Co., 75 71 Fed. Rep. 426, 41 IT. S. App. L4, 33 
 
 N. V. 335. L. R. A. 252. 
 
 •LaGrange, etc., R. Co. v. Rainey, 8 Tin >rnton v. Railroad Co., 123 Mass. 
 
 7 Coldw. (Term.) 420. 32.
 
 § 597 INSOLVENCY AND DISSOLUTION. 665 
 
 not deprive the latter of their franchise in violation of the 
 compact, so the latter can not put an end to the compact with- 
 out the consent of the former. It is equally obligatory on 
 both parties. The surrender of a charter can only be made by 
 some formal solemn act of the corporation; and it will be of 
 no avail until accepted by the government. There must be 
 the same agreement of the parties to dissolve that there was 
 to form a contract. It is the acceptance which gives efficacy 
 to the surrender." 1 But, as said by Mr. Taylor: 2 "The pres- 
 ent applicability of the preceding citations to stock corpora- 
 tions is somewhat doubtful. Formerly corporations usually 
 received special charters; but now stock corporations at least 
 are almost universally organized under general enabling acts. 
 A mode of dissolution is ordinarily provided; and if no such 
 provision exists, the most experienced legal adviser might be 
 puzzled to advise how an acceptance of the surrender of fran- 
 chises could be brought about unless by lobbying a special bill 
 through the legislature. Besides, the idea of the necessity of 
 the acceptance of a surrender of franchises on the part of the 
 authority granting them seems intimately connected with the 
 old doctrine, now certainly a thing of the past, that on the dis- 
 solution of a corporation all its debts were extinguished. There 
 seems to be no valid reason why an ordinary stock corporation, 
 charged with the performance of no public duty, should not be 
 allowed to close up its business at any time and dissolve." 3 
 
 § 597. Forfeiture of charter. 4 — The grant of a corporate privi- 
 lege or franchise is always subject to the implied condition 
 that it will not be abused. 5 When the corporation has done 
 
 1 Boston, etc., Co. v. Langdon, 24 chants' & P. Line v. Wagner, 71 Ala. 
 Pick. (Mass.) 49, Wilgus' Cases ; Town 581, Wilgus' Cases. 
 v. Bank, 2 Doug. (Mich.) 530. See 3 Holmes, etc., Co. v. Holmes, etc., 
 Mylreav. Railroad Co. (Wis.), 67 N.W. Co., 127 N. Y. 252. 
 Pep. 1138. The franchise can not be sur- 4 See Wilgus' Cases, The State and 
 rendered by the officers of the corpora- the Corporation. 
 
 tion. Jones v. Bank of Leadville, 10 5 Chicago, etc., Co. v. Needles, 113 
 Colo. 464. See opinion of counsel, as U.S. 574. When a corporation violates 
 to the surrender of the Connecticut the provisions of its act of incorpora- 
 charter, in 1 Trumbull's Hist, of tion, or any other law binding upon it, 
 Conn. 407. and so misuses its franchise in mat- 
 
 3 Taylor Priv. Corp., § 434; Mer- ters which concern the essence of the
 
 666 THE LAW OF PRIVATE CORPORATIONS. § 597 
 
 some act or omission which is expressly made a cause of for- 
 feiture, or the violation of the law of its existence is of such 
 a nature as to injuriously affect the public interests, the state 
 will, in a proper proceeding brought for the purpose, deprive 
 the corporation of its charter. 1 But leave will not be granted 
 to institute such a proceeding where the corporation is solvent 
 and carrying out the purposes of its creation, unless there is a 
 clear and willful abuse or non-use of its franchise. 2 As a 
 general rule, in the absence of a legislative statement to the 
 contrary, a forfeiture can be effected only by the judgment of a 
 proper tribunal in proceedings brought by the state to enforce 
 the forfeiture. 3 It does not result ipso facto from acts or neg- 
 lect which will justify the forfeiture. 4 Where a penalty is 
 prescribed for an act it is generally held to be the only pun- 
 ishment intended by the legislature and a forfeiture will not 
 be declared. 5 The state may waive the forfeiture, but only 
 through the action of the legislature. 6 Mere neglect of the of- 
 ficers of a corporation to have its property listed for taxation 
 is not sufficient ground for a forfeiture of its charter. 7 
 
 A deliberate attempt by a corporation to evade an important 
 provision of the insurance law of the state is ground for a for- 
 feiture. 8 The mere non-residence of the officers, directors and 
 stockholders of a domestic corporation is not, in the absence of 
 a statute requiring residence, a ground for the forfeiture of its 
 franchise. 9 But the fact that a corporation has removed its 
 contract between it and the state, so ville, etc., Co., 92 Wis. 496, 32 L. R. 
 that it no longer fulfills the purposes A. 391; Spartanburg v. Spartanburg, 
 for which it was created, the state has etc., R. Co., 51 S. C. 129; Leese v. 
 an interest in restraining the fur- Atchison, etc., R. Co., 24 Neb. 143, 
 ther exercise of its corporate powers, 8 Am. St. Rep. 179. 
 ami may maintain an action for the 4 Parker v. Bethel, etc., Co., 9GTenn. 
 appointment of a receiver. State v. 252, 31 L. R. A. 70(5. 
 American, etc., Assn., 64 Minn. 349. 'State v. Real Estate Bank,5Ark. 595 
 
 1 Mat. •v.oiHTlin, etc., Assn., 350hio 6 Dern v. Salt Lake City R. Co. 
 St 258. (Utah), 56 Par. Rep. 556; People v. 
 
 2 state v. Minnesota, etc., Co., 40 Phoenix Bank, 24 Wend. (N. Y.) 431. 
 Minn. 213; People v. Chicago, etc., 'North, etc., Co. v. People, 147 111. 
 I change, 170 111. 556, 39 L. R. A. 234, 24 L. R. A. 462. 
 
 People v. N. R., etc., Co., 121 "International Fiat. Alliance v. 
 K. v. 583. Stat.', 86 M'l. 550. 
 
 'See § 94, Buprd; State v. Janes- 9 North, etc., Co. v. People, 147 111.234.
 
 § 597 {INSOLVENCY AND DISSOLUTION. 667 
 
 principal place of business and all of its agencies out of the 
 state of its creation, in contravention of the public policy of 
 the state as shown by its general system of legislation, is a 
 sufficient ground for forfeiting its charter. A charge against 
 a corporation of falsely and fraudulently posing as a domestic 
 corporation when it has in fact removed to a foreign state is 
 not proven by the fact that the local office is not at all times 
 open and the books there, if the corporate property is within 
 the state and the officers and books are at the office as fre- 
 quently as required by the business. The mere fact that the 
 books have been kept most of the time in a foreign state con- 
 trary to the statute is not a sufficient ground of forfeiture, if 
 the places of location are both near the boundary line and the 
 books have been produced at the general office whenever any- 
 one entitled to see them wished for them. 1 A statute which 
 provides that the secretary and treasurer of every domestic cor- 
 poration shall reside, have their place of business and keep the 
 books of the corporations within the state is not complied with 
 by the residence within the state of a person who is nominally 
 secretary and treasurer, while the corporate business is trans- 
 acted in another state. 2 Mere non-user 3 and the sole owner- 
 ship of all the stock by one person will not cause a dissolution 
 without a judicial decree. 4 An act by a corporation tending to 
 cause injury to the public by affecting the welfare of the peo- 
 ple is an abuse of its franchise for which the charter may be 
 forfeited on an information in the nature of quo warranto. 5 
 
 1 Simmons v. Norfolk, etc., Co., C. 353. Forfeiture for non-user or 
 113 N. C. 147; 22 L. R. A. 677. otherwise is a question between the 
 
 2 State v. Park. & Nelson L. Co., 58 state and the corporation, and can not 
 Minn. 330. he raised by a private litigant. Peti- 
 
 3 That a corporation is not ipso facto tion of Philadelphia, etc., R. Co., 187 
 dissolved by an act of non-user or mis- Pa. St. 123 ; Coquard v. National, etc., 
 user, which is a cause of forfeiture, Co., 171 111. 480. 
 
 see State v. Spartanburg, etc., R. 4 Parker v. Bethel, etc., Co., 96 
 
 Co. (S. C), 28 S. E. Rep. 145; State Tenn. 252. 
 
 v. Atchison, etc., R. Co., 24 Neb. 143, 5 People v. Chicago, etc., Exch., 
 
 8 Am. St. Rep. 164 ; Atchison, etc., R. 170 111. 556, 39 L. R. A. 373. The un- 
 
 Co.v.Nave, 38 Kan. 744, 5 Am. St. Rep. lawful granting of a diploma by a 
 
 800. Non-user of one of several priv- school of osteopathy, in good faith un- 
 
 ileges is not ground for forfeiture, der legal advice, is not a ground for 
 
 Wadesboro, etc., Co. v. Burns, 114 N. the forfeiture of its charter. Corpora-
 
 668 THE LAW OF PRIVATE CORPORATIONS. § 597 
 
 Thus, the charter of a water-works company will be annulled 
 if, instead of furnishing pure wholesome well water, as re- 
 quired by its charter and contract, it, during four droughts in 
 two years, supplies impure river water and refuses for insuffi- 
 cient reasons to sink additional wells. The fact that all water 
 supply will cease if the charter is vacated, and that after suit 
 is commenced the company offers to sink the required wells, 
 will not prevent the decree being entered. 1 
 
 The exercise of franchises and privileges not granted by law 
 may be a serious usurpation and encroachment which when it 
 injures or puts in hazard the rights of any person will justify 
 the forfeiture of its charter. 2 An insurance company may forfeit 
 its charter by deliberately exceeding the amount it is allowed 
 by law to insure on one life. 3 A statute which authorizes an 
 injunction to restrain the exercise of franchises and privileges, 
 or the transaction of unauthorized business by a corporation 
 does not exclude the remedy by proceedings to forfeit the char- 
 ter. 4 The right of the state to declare the forfeiture of the 
 charter of a waterworks company for breach of duty imposed 
 by the charter is not taken away by a provision in a contract 
 between the company and the city that the city may rescind 
 the contract if the company fails to observe its conditions. 5 
 Long delay in moving for a forfeiture, and active compulsion 
 upon the company by requiring it to extend its operations, is a 
 waiver of the right to forfeit the franchise of a water company 
 for neglecting to keep accurate accounts of the cost of construc- 
 tion as required by the ordinance which authorizes the con- 
 struction of the works, and provides for the purchase of the 
 
 tions are political trustees, and their 4 International Frat. All. v. State, 
 
 charters will not be forfeited for either 8G Md. 550, 40 L. R. A. 187. An ac- 
 
 acts of omission or commission done tion may be brought by the attor- 
 
 in good faith. State v. National School ney-general in the name of the state, 
 
 of Osteopathy, 76 Mo. App. 439. under the Wisconsin statutes, to va- 
 
 1 Capital, etc., Co. v. State, 105 Ala. cate the charter of a street-railway 
 
 40G, 29 L. R. A. 743. corporation for failure to exercise its 
 
 'Hartnetl v. I 'lumbers' Sup. Assn., franchise. Wright v. Milwaukee, etc., 
 
 169 Mass. 229, 38 L. B. A. L94. Co., 95 Wis. 29,86 L. R. A. 47. 
 
 'International Prat. All. v. State, "Capital City, etc., Co. v. State, 
 
 ■St; Md. 550, 40 L. R. A. J 87. 105 Ala. 406, 29 L. R. A. 743.
 
 § 598 INSOLVENCY AND DISSOLUTION. 669 
 
 plant by the city under certain conditions. 1 Findings that a 
 corporation has for a long time failed to complete the work for 
 which it was created; that its members have ceased to have an 
 interest in the management of its business or the completion 
 of its work, and that a judicious sale of its property would greatly 
 advance the work already done will justify an order of disso- 
 lution. 2 
 
 § 598. Loss of integral part. 3 — The dissolution of a corpora- 
 tion by the loss of an integral part can very rarely occur in 
 modern times. The rule that a corporation is dissolved by the 
 death of all its members has no application to modern business 
 corporations. Their shares pass by assignment, bequest or 
 descent, and must always be the property of some person who 
 is necessarily a member of the corporation. 4 But if all the 
 members of a non-stock corporation die or withdraw, and there 
 is no method by which their places can be filled, the corpora- 
 tion is dissolved. 5 But it is not dissolved by the failure to elect 
 officers where a method is provided for filling vacancies. 6 The 
 common law rule is thus stated by Chancellor Kent: 7 "A cor- 
 poration may also be dissolved when an integral part of the 
 corporation is gone, without whose existence the functions of 
 the corporation can not be exercised, and when the corporation 
 has no means of supplying that integral part and has become 
 incapable of action. The incorporation becomes then virtually 
 dead or extinguished." 
 
 § 599. Statutory method of dissolution by the state. — Stat- 
 utes now generally provide methods for the dissolution and 
 
 1 State v. Janesville, etc., Co., 92 poration. Richards v. Minnesota, etc., 
 Wis. 496. Bank (Minn.), 77 N. W. Rep. 822. 
 
 2 State v. Cannon River, etc., Assn., 3 See Wilgus' Cases. 
 
 67 Minn. 14. A corporation organ- 4 Boston, etc., Co. v. Langdon, 24 
 
 ized as a savings bank under Minne- Pick. (Mass.) 49, Wilgus' Cases. 
 
 sota Laws, 1867, chapter 23, which 5 Lehigh, etc., Co. v. Lehigh, etc., 
 
 paid its depositors, sold its assets and Co., 4 Rawle (Pa.) 9; Russell v. Mc- 
 
 good-will, and did no business for Lellan, 14 Pick. (Mass.) 63. 
 
 sixteen years, and then under Laws 6 Parker v. Bethel, etc., Co., 96 Tenn. 
 
 1889, chapter 233, changed its name 252. 
 
 and place of business, and exercised 7 2 Kent's Com. (13th ed.), 309. See 
 
 its corporate powers without objection 1 Rolle Abr. 514. 
 
 by the state, is at least a de facto cor-
 
 670 THE LAW OF PRIVATE CORPORATIONS. § GOO 
 
 winding up of corporations. It may be either at the instance 
 of stockholders or of the state. Thus, in Minnesota, an action 
 may be brought by the attorney-general in the name of the state 
 for the purpose of vacating the charter or annulling the exist- 
 ence of a corporation other than municipal, whenever such cor- 
 poration (1) offends against any of the provisions of the act or 
 acts creating, altering or renewing such corporation; or (2) vio- 
 lates the provisions of any law by which such corporation for- 
 feits its charter by abuse of its powers; or (3) whenever it has 
 forfeited its privileges or franchises by failure to exercise its 
 powers; or (4) whenever it has done or omitted to do any act 
 which amounts to a surrender of its corporate rights, privi- 
 leges and franchises; or (5) whenever it exercises a franchise 
 or privilege not conferred upon it by law. The statute also 
 provides for vacating or annulling the act of incorporation 
 when it appears that it was obtained through some fraudulent 
 suggestion or concealment of a material fact. 1 
 
 § 600. Voluntary liquidation. — It is a well-settled rule that, 
 in the absence of a statutory provision, the shareholders in a 
 private business corporation can not extinguish its charter or 
 dissolve it, and that a court of equity can not dissolve it at 
 their instance. The majority of the stockholders may discon- 
 tinue the business, but this will not ordinarily effect a dissolu- 
 tion until followed by a decree of a court of competent jurisdic- 
 tion. 2 But in some states it is provided that when a majority 
 in number or interest of the members 3 desire to close the busi- 
 ness and wind up the corporation, they may apply by a peti- 
 tion to the proper court of the county where the corporation 
 has its principal place of business, setting forth in substance 
 the grounds of their application; and the court, after such no- 
 tice, as it deems proper to all parties interested, may proceed to 
 hear (lie matter, and, for reasonable cause, adjudge a dissolu- 
 tion of the corporation. A corporation so dissolved is deemed 
 
 l 8ee Gen. St. Minn. 1878, ch. 79, be instituted by stockholders holding 
 
 §§1,2. not less than one-third interest. See 
 
 2 § ikil', Treadwell v. Salisbury, etc., Weigand v. Alliance, etc., Co., 44 W. 
 
 Co., 7 Gray (Mass.) 393, 104. Va. 133. 
 
 3 A suit seeking a dissolution may
 
 § 601 INSOLVENCY AND DISSOLUTION. 671 
 
 and held extinct in all respects as if the charter had expired 
 by its own limitation. 
 
 § 601. Statutory provisions for a temporary continuance of 
 corporation. — It is now generally provided by statute that a 
 corporation shall continue for a certain period after its formal 
 dissolution for the purpose of winding up its business. 1 The 
 proceedings under such a statute are governed entirely by the 
 statute. 2 The majority of the stockholders during this period 
 can not sell the corporate property to a new corporation of 
 which they are directors and stockholders, at a valuation de- 
 termined by themselves, against the will of the minority and 
 compel the minority to accept either stock in the new corpora- 
 tion or pay on the basis of the estimated value of the property. 
 Minority stockholders are entitled to have the property sold. 3 
 A national bank continues to exist after the expiration of the 
 statutory period of its existence, as a legal person capable of 
 suing and being sued, until its affairs are fully settled. 4 
 
 § 602. Insolvency, sale or loss of property — Abandonment of 
 business. 5 — The legal existence of a corporation is not affected 
 by its insolvency, as the possession of property is not necessary 
 to corporate existence. 6 "If their property is impaired or 
 wholly gone, this seems to be no reason, before such surrender 
 or forfeiture, to prevent the members from furnishing renewed 
 capital and then proceeding to use the corporate power." 7 A 
 corporation is not dissolved by the mere disposal of all of its 
 
 x For illustrations, see State v. Fo- Spratt v. Livingston, 32 Fla.«507, 22 
 garty, 105 Iowa 32; Miller v. New- L. R. A. 453. 
 
 burg, etc., Co., 31 W. Va. 836; Am. 3 Mason v. Mining Co., 133 U. S. 50. 
 Surety Co. v. Great, etc., Co. (N. J.), 4 Farmers' Nat'l Bank v. Backus 
 43 Atl. Rep. 579; Singer v. Talcot, (Minn.), 77 N. W. Rep. 142. 
 etc., Co., 176 111. 48. 5 See Wilgus' Cases. 
 
 2 As to these statutes, see Hanan v. 6 Moseby v. Burrow, 52 Tex. 396; 
 Sage, 58 Fed. Rep. 651; Life Assn. v. National Bank v. Insurance Co., 104 
 Fassett, 102 111. 315; Bowe v. Minn., U. S. 54. 
 
 etc., Co., 44 Minn. 460; Cooper v. 7 Coburn v. Boston, etc., Co., 10 
 Oriental Sav. Assn., 100 Pa. St. 402; Gray (Mass.) 243; Boston, etc., Co. v. 
 Wright v. Nostrand, 94 N. Y. 31 ; Her- Langdon, 24 Pick. (Mass.) 49, Wilgus' 
 ring v. N. Y., etc., R. Co., 105 N. Y. Cases; Reichwald v. Hotel Co., 106 
 340 ; Nelson v. Hubbard, 96 Ala. 238 ; 111. 439 ; Auburn, etc., Co. v. Sylvester, 
 Foster v. Bank, 16 Mass. 245. See 68 Hun (N. Y.) 401.
 
 672 THE LAW OF PRIVATE CORPORATIONS. § 603 
 
 property, 1 or by the fact that one member has acquired all the 
 stock, 2 or that its shares are held by a less number of persons 
 than the law requires for the organization of a corporation, 3 or 
 by the burning of the mill, to operate which the corporation was 
 organized. 4 The sale of all the property may have the effect of 
 terminating the business for which the corporation was organ- 
 ized, but it does not dissolve it. 5 Such a sale no more dissolves 
 the corporation than would the giving of a mortgage that might 
 ultimately result in all the property being taken from the cor- 
 poration. The corporation still exists, and is properly made 
 a party to an action as an existing corporation. A corpora- 
 tion is not dissolved by an assignment for the benefit of credit- 
 ors, 6 the appointment of a receiver," or the discontinuance of 
 business. 8 
 
 § 603. Powers of a court of equity, — As a general rule a 
 court of equity has no power, unless it is conferred by statute, 
 to decree the dissolution of a corporation by forfeiture of its 
 franchises, either at the suit of an individual or at the suit of 
 the state, as there is an adequate remedy at law by quo war- 
 ranto. 9 " General jurisdiction of suits against corporations no 
 
 1 See Louisville, etc., Co. v. Kauf- corporation, see Bartholomew v. Der- 
 man (Ky.), 48 S. W. Rep. 434 ; James by Rubber Co., 69 Conn. 521, 61 Am. 
 v. Western, etc., Co., 121 N. C. 523; St. Rep. 57, and note; Benbow v. 
 Weigand v. Alliance, etc., Co., 44 W. Cook, 115 N. C. 324, 44 Am. St. Rep. 
 Va. 133. 457. §485, supra. 
 
 2 Louisville, etc., Co. v.Eisenman, 94 6 Town v. Bank, 2 Doug. (Mich.) 
 Ky. 83, Wilgus' Cases. It remains a 530; State v. Butler, 86 Tenn. 614. 
 corporation aggregate, but the fran- 7 Kincaid v. Dwindle, 59 N.Y. 548; 
 chise is suspended until the shares are State v. District Court (Mont.), 56 
 transferred, when corporation may Pac. Rep. 219; Moseby v. Burrow, 52 
 continue its business in the corporate Tex. 396. 
 
 name. Button v. Hoffman, 61 Wis. 8 Saline National Bank v. Prescott 
 
 20. But see Swift v. Smith, etc., Co., (Kan.), 57 Pac. Rep. 12; Brandt v. 
 
 r,r> Md. 428. Benedict, 17 N. Y. 93; Slee v. Bloom, 5 
 
 8 Parkerv.Bethel,etc.,Co.,96Tenn. Johns. Ch. (N. Y.) 366, 19 Johns. 
 
 252. (N. Y.) 456. 
 
 4 In re Belton, 47 La. Ann. 1614, 30 9 Republican, etc., Co. v. Brown, 58 
 
 L. R. A. 648. Fed. Rep. 644, 19 IT. S. App. 203. 24 
 
 6 Price v. ITolcomb, 89 Iowa 123, 56 L. R. A. 776; Wallace v. Pierce- W'al- 
 
 N. W. Rep. 107; Bump v. Butler Co., lace, etc., Co., 101 Iowa 313, 38 L. R. 
 
 93 Fed. Rep. 290. As to power of the A. 122; Folger v. Columbian, etc., Co., 
 
 majority to sell all the property of the 99 Mass. 267; Strong v. McCagg, 55
 
 § 603 INSOLVENCY AND DISSOLUTION. 673 
 
 more implies a power to destroy a corporation at the suit of an 
 individual than jurisdiction of private suits against individ- 
 uals authorizes the court to entertain a prosecution for crime, 
 to pass sentence of death, and to issue a warrant for execution. 
 The only modes of dissolving a corporation known to the com- 
 mon law were, by the death of all its members, by act of the 
 legislature, by a surrender of the charter, accepted by the gov- 
 ernment, or by forfeiture of the franchise, which could only 
 take effect upon a judgment of a competent tribunal on a pro- 
 ceeding in behalf of the state ; and neither a court of law nor 
 a court of equity had jurisdiction to decree a forfeiture of the 
 charter or dissolution of the corporation at the suit of an indi- 
 vidual." 1 "Equity may properly," says Mr. High, "com- 
 pel officers of corporations to account for any breach of trust 
 in their official capacity; yet in the absence of statutes extend- 
 ing its jurisdiction, it will usually decline to assume control 
 over the management of the affairs of a corporation upon a 
 bill * * * alleging fraud, mismanagement and collusion on 
 the part of the corporate authorities, since such interference 
 would necessarily result in the dissolution of the corporation, 
 and the court would thus accomplish indirectly what it has no 
 power to do directly. The remedial power exercised by courts 
 of equity in such cases ordinarily extends no further than the 
 granting of an injunction against any special misconduct on 
 the part of the corporate officers; and although the facts shown 
 may be sufficient foundation for such an injunction, the court 
 will not enlarge its jurisdiction by taking the affairs of the 
 corporation out of the management of its own officers and 
 placing them in the hands of a receiver." 2 But a court of 
 
 Wis. 624; Bliven v. Peru, etc., Co., 9 80 N. Y. 599; Hitch v. Hawley, 132 
 
 Abb. N. Cas. 205; Mason v. Supreme N. Y. 212. 
 
 Court, 77 Md. 483; Oakes v. Hill, 14 1 Folger v. Columbian, etc., Co., 99 
 
 Pick. 442; Hunt v. Le Grand, etc., Co., Mass. 267; Boston, etc., Co. v. Lang- 
 
 143 111. 118; Supreme Sitting, etc., v. den, 24 Pick. 49. See Texas, etc., Co. 
 
 Baker, 134 Ind. 293. For the English v. Starrow, 92 Fed. Rep. 5. 
 
 rule see In re Lloyd Generale Italiano, 2 High on Receivers, § 238. See Re- 
 
 L. R. 29 Ch. Div. 219; Hardonv. New- publican Mountain Silver Mines v. 
 
 ton, 14 Blatchf. 376; Hodges v. Screw Brown, 7 C. C. A. 412, 58 Fed. Rep. 
 
 Co., 3 R. I. 9; Denike v. Cement Co., 644, and cases there cited. A court of 
 43— Private Corp.
 
 674 THE LAW OF PRIVATE CORPORATIONS. § 604 
 
 equity may, in order to give complete relief from frauds prac- 
 ticed through a corporate organization, and, if necessary, will, 
 dissolve the corporation. 1 
 
 § 604. Proceedings by state. — No one can take advantage 
 of a breach of the conditions on which a corporation was 
 granted its franchises for the purpose of depriving it of such 
 franchises but the state by which it was created, 2 unless au- 
 thorized to do so by statute. 3 A number of persons who were 
 members of the defendant corporation obtained a rule requir- 
 ing the corporation to show cause why an information in the 
 nature of a quo warranto should not be filed against it, for the 
 purpose of dissolving it and procuring an adjudication that its 
 corporate powers were void. The statute under which the 
 corporation had been formed "required the holders of stock to 
 pay fifty per cent, of their subscriptions within sixty days 
 after the first meeting of the company, and that no insurance 
 on any one risk should be made for a larger sum than ten per 
 cent, of the capital stock actually paid in." The complainants 
 
 one state may appoint a receiver for a not be properly handled by the gen- 
 corporation organized in another state, eral receiver. See In re Jarvis, etc., 
 and doing business within its own Co., 11 Law Times Rep. 373. 
 territory and having property there. l Miner v. Belle Isle Ice Co., 93 Mich. 
 This may be done although the courts 97, Wilgus' Cases, 
 in the home state of the corporation 2 Elizabethtown, etc., Co. v. Green, 
 may have placed its affairs in the 46 N.J. Eq. 118; State v. Curtis, 35 
 hands of a receiver. The receiver ap- Conn. 374, Wilgus' Cases; Heard v. 
 pointed in the foreign state will be Talbot, 7 Gray (Mass.) 113; Toledo, 
 regarded as ancillary or auxiliary to etc., R. Co. v. Johnson, 49 Mich. 148; 
 the receiver appointed in the statf Greenbrier, etc., Co. v. Ward, 30 W. 
 to which the corporation owes its crea Va. 43 ; Renick v. Bank, 13 Ohio Rep. 
 tion. See Holbrook v. Ford, 153 111. 298; Boston, etc., Co. v. Langdon, 24 
 633, 27 L. R. A. 324; Hunt v. Colum- Pick. 49, Wilgus' Cases. The fact that 
 bian, etc., Co., 55 Maine 290, 92 Am. a suit by the attorney-general to annul 
 Dec. 592; Lewis v. American Sav. and the existence of a corporation as an 
 Loan Assn., 98 Wis. 203; In re Mathe- illegal combination to regulate the 
 son Brothers, Limited, L.R. 27 Ch.Div. price of a commodity was instituted 
 225. Although a court has jurisdiction on the petition of another such corpo- 
 to appoint an ancillary receiver to take ration is immaterial. People v. Milk 
 control of the assets of u foreign corpo- Exchange, 145 N. Y. 267, 27 L. R. A. 
 ration within its jurisdiction, it should 437. 
 
 be exercised only when there is : < State v. Webb, 97 Ala. Ill, Wilgus' 
 
 reason to believe that the assets will Cases.
 
 § 605 INSOLVENCY AND DISSOLUTION. 675 
 
 alleged that the defendant corporation had violated both pro- 
 visions of the statute. Chief Justice Parsons said: 1 "We have 
 not inquired into the truth of these allegations, as we are sat- 
 isfied that in this case such inquiry would be immaterial, be- 
 cause this rule is not moved for in behalf of the common- 
 wealth. * * * An information for the purpose of dissolving 
 the corporation or of seizing its franchises can not be prose- 
 cuted but by the authority of the commonwealth. * * * 
 For the commonwealth may waive any breaches of any condi- 
 tion, expressed or implied, on which the corporation was cre- 
 ated; and we can not give judgment for the seizure by the 
 commonwealth of the franchises of any corporation, unless 
 the commonwealth be a party in interest to the suit, and thus 
 assenting to the judgment." The proceeding is now generally 
 regulated by statute. At common law the proceeding to enforce 
 a forfeiture of corporate franchises might be by scire facias, or 
 by quo warranto. The former was used when there was a 
 legal corporation which was abusing its powers, and the latter 
 when there was no legal incorporation and a mere assumption 
 of power. 2 
 
 § 605. Effect of dissolution, generally. — Upon the dissolution 
 of a corporation it is dead, and loses all power to act, and its 
 affairs must be wound up by an officer appointed for the pur- 
 pose. Thereafter it can neither institute nor defend a suit, 3 and 
 a judgment entered against it is a nullity. 4 All pending suits 
 
 1 Commonwealth v.Union, etc., Co., maintain or defend suits relating to 
 5 Mass. 230. the settlement of its business. 
 
 2 2 Kent. Com., 313; Wheeler v. 4 Marion, etc., Co. v. Perry, 74 Fed. 
 Pullman, etc., Co., 143 111. 197. Rep. 425, 41 U. S. App. 14, 33 L. R. A. 
 
 3 Saltmarsh v. Planters, etc., Bank, 252; Thornton v. Marginal, etc., R. 
 
 17 Ala. 761; Muscatine, etc., v. Funck, Co., 123 Mass. 32; Dobson v. Simon- 
 
 18 Iowa 469; City Ins. Co. v. Bank, ton, 86 N. C. 492; Krutz v. Town Co., 
 68 111. 348; Boston, etc., Co. v. Lang- 20 Kan. 397. Scire facias to review a 
 don, 24 Pick. 49, Wilgus' Cases. In judgment recovered as a corporation 
 Decree v. Hankinson (C. C. A.), 92 can not be maintained after its dis- 
 Fed. Rep. 49, reversing 84 Fed. Rep. solution. Mumma v. Potomac Co., 8 
 876, it was held that the dissolution of Pet. (U. S.) 281. Can not be proceeded 
 a corporation by the forfeiture of its against unless specially authorized by 
 charter does not deprive it of the statute. Combes v. Keyes, 89 Wis. 
 power to convey its property or to 297, 27 L. R. A. 369.
 
 676 THE LAW OF PRIVATE CORPORATIONS. § 606 
 
 are abated, 1 but the dissolution of a defendant corporation after 
 an action on contract has been submitted and taken under ad- 
 visement by the court will not abate the action, as the court 
 will date the findings and enter judgment as of the time when 
 the action was submitted. 2 The forfeiture of the charter will 
 not prevent the sale of its property under a levy of an execu- 
 tion made before the dissolution. 3 A statute making void a 
 judgment confessed by a corporation after a petition has been 
 filed for its dissolution will not affect the control of the prop- 
 erty attached according to the laws of another state under the 
 judgment. 4 
 
 § 606. Effect of dissolution upon corporate debts and assets. 
 
 — The property and property-rights of a corporation are not 
 under the present law destroyed by the expiration of the cor- 
 porate charter. 5 By the common law rule, upon the dissolu- 
 tion of a corporation its real estate reverted to the grantor, its 
 personal property went to the sovereign, and its debts were 
 extinguished. 6 "According to the old settled law of the land," 
 says Chancellor Kent, 7 "where there is no special statute 
 provision to the contrary, upon the civil death of a corpora- 
 tion all of its real estate remaining unsold reverts back to the 
 original grantor and his heirs. The debts to and from the 
 corporation are all extinguished. Nei'ther the stockholders nor 
 the directors or trustees of the corporation can recover those 
 debts or be charged with them in their natural capacity. All the 
 
 1 Nat'l Bank v. Colby, 21 Wall. (IT. Fed. Rep. 49. This is without refer- 
 
 S.) 609; McCulloch v. Norwood, 58 ence to the matter of a preference. 
 N. Y. 562; Thornton v. Marginal, etc., 4 Com. Nat'l Bank v. Motherwell, 
 
 R. Co., 123 Mass. 32. Effect of consoli- etc., Co., 95 Tenn. 172, 29 L. R. A. 
 
 dation, Evans v. Interstate, etc., R. 164. 
 Co., 106 Mo. 594. 5 People v. O'Brien, 111 N. Y. 1, 7 
 
 2 Shakman v. U. S., etc., Co., 92 Am. St. Rep. 684, and note; Fleitas v. 
 
 Wis. 366, 32 L. R. A. 383. In Stein- New Orleans (La.), 24 So. Rep. 623. 
 houer v. Colmar (Colo. App.), 55 Pac. 6 Angell & Ames Corp., § 779; Life 
 
 Rep. 291, it was held, under Tien. St., Assn. v. Fassett, 102 111. 315; Com- 
 
 § 270, that a judgment could be en- mercial Bank v. Lockwood, 2 Harr. 
 
 tered after dissolution if the cause of (Del.) 8. 
 action arose before the dissolution. 7 Kent Com. (13 ed.), 307; 11 Kyd. 
 
 8 Boyd v. Ilankinson (C. C. A.), 92 Corp., 516; Co. Litt. 136.
 
 § 606 INSOLVENCY AND DISSOLUTION. 677 
 
 personal estate of the corporation vests in the people as succeed- 
 ing to this right and prerogative of the crown at common law. " 
 But this rule is no longer applicable to business corporations, 
 and the courts of equity will see that the assets of a corpora- 
 tion are collected and applied to the payment of its debts and 
 any surplus distributed among stockholders. 1 It still applies, 
 however, upon the dissolution of a corporation which has no 
 stockholders and no debts, such as a mutual insurance com- 
 pany, and to religious and charitable corporations. 2 Thus, 
 upon the dissolution of the corporation known as the Church 
 of Jesus Christ of Latter Day Saints, it was held that the prop- 
 erty of the corporation escheated to the United States. The court 
 said, 3 that "when a business corporation instituted for the 
 purposes of gain or private interest is dissolved, the modern 
 doctrine is, that its property after the payment of its debts 
 equitably belongs to its stockholders. But this doctrine has 
 never been extended to public or charitable corporations. As 
 to these the ancient established rule remains, namely, that 
 when a corporation is dissolved, its personal property, like that 
 of a man dying without heirs, ceases to be the subject of pri- 
 vate ownership, and becomes subject to the disposal of the 
 sovereign authority; whilst its real estate reverts or escheats to 
 the grantor or donor, unless some other course of devolution 
 has been directed by positive law, though still subject, as we 
 shall hereafter see, to the charitable use." The property of 
 the corporation devolved upon the United States, subject to be 
 disposed of according to the principles applicable to property 
 devoted to religious and charitable uses, the real estate being 
 also subject to a condition of forfeiture and escheat contained 
 in the act of congress. 
 
 1 Wheeler v. Pullman, etc., Co., 143 porated military company, which has 
 111. 197; Heman v. Britton, 88 Mo. been disbanded by order of the gov- 
 549; Asheville Div. v. Aston, 92 N. C. ernor for non-compliance with the 
 578; Hightower v. Thornton, 8 Ga. law, see Cummings v. Hollis (Ga.),33 
 486; Wilson v. Leary, 120 N. Car. 90, S. E. Rep. 919. 
 
 58 Am. St. Rep. 778. » La t e Corp. of Church of Jesus 
 
 2 Titcombv. Insurance Co., 79 Maine Christ v. United States, 136 U. S. 1, 
 315. As to the property of an incor- Wilgus' Cases.
 
 INDEX 
 
 [Beferences are to Sections.'] 
 
 A 
 
 ABANDONMENT, 
 
 dissolution by, 602. 
 
 ACCEPTANCE, 
 
 of charter, 25. 
 
 of amendment to charter, 103, 487. 
 
 ACCUMULATIVE DIVIDENDS, 
 
 nature of, 314. 
 
 ACQUIESCENCE, 
 
 estoppel by, 86. 
 
 in ultra vires acts, 220. 
 
 in fraud, 323. 
 
 effect of on corporate acts, 429. 
 
 See Delay ; Laches. 
 ACTIONS, 
 
 by and against foreign corporations, 273-282. 
 to enforce stock subscription, 382. 
 by stockholder to recover dividends, 406. 
 how dissolution affects, 605. 
 
 ACTIONS BY STOCKHOLDERS, 
 against third persons, 420. 
 protection of collective rights, 420. 
 when stockholder may sue, 421. 
 conditions precedent to right of action, 422. 
 illustrations of, 423-426. 
 rights of transferees, 417. 
 discretionary power, 428. 
 acquiescence, 429. 
 parties to the suit, 430. 
 right to restrain ultra vires acts, 431. 
 control by the majority, 432. 
 limitations on the power of the majority, 433. 
 
 (679)
 
 680 INDEX. 
 
 [References are to Sections.'] 
 
 ADJOURNED MEETINGS, 
 
 power to hold, 468. 
 
 See Meetings. 
 ADMINISTRATORS, 
 
 right to vote stock, 471. 
 
 ADOPTION, 
 
 contract of promoter, 59. 
 
 AGENTS, 
 
 by-laws limiting power of, 155. 
 
 corporations act through, 170. 
 
 liability for torts of, 234. 
 
 acts beyond authority of, 234. 
 
 service on those of foreign corporation, 276. 
 
 designating to accept service of process, 280. 
 
 liability for fraud of, 323, 369. 
 
 subscribing to stock through, 347. 
 
 authority of in taking subscriptions, 371. 
 
 effect of refusal to act, 422. 
 
 how appointed, 494. 
 
 directors ratifying acts of, 499, 509. 
 
 relation to the corporation, 502. 
 
 liability for torts of, 508. 
 
 liability where they act willfully, 508. 
 
 liability for ultra vires acts of, 510. 
 
 personal liability of, 511. 
 
 when directors are not, 528 re. 
 
 notice to, 534. 
 
 when incorporators liable as, 547. 
 
 See Officers and Agents. 
 ALIEN, 
 
 as director, 498. 
 
 ALIENATION OF PROPERTY, 
 
 limitation upon right of, 187. 
 
 AMALGAMATION, 
 
 See Consolidation. 
 AMENDMENT, 
 
 of corporate charter, 99, 100. 
 
 acceptance of, 103. 
 
 must not create new charter, 104. 
 
 offer of, 105. 
 
 remedy for illegal to charter, 106. 
 
 power of majority to accept to charter, 106 n, 486, 487. 
 
 of by-laws, 159. 
 
 minority may object to, 486.
 
 INDEX. 681 
 
 [Beferences are to Sections.] 
 AMENDMENT— Continued. 
 
 injunction against acceptance of, 487. 
 acceptance of immaterial, 488. 
 right to accept beneficial, 489. 
 
 AMOUNT OF STOCK, 
 
 of capital stock, 302. 
 necessary to be subscribed, 354. 
 
 ANNUAL REPORT, 
 
 failure of directors to file, 522. 
 
 See Report. 
 
 ARTICLES OF INCORPORATION, 
 
 essentials of, 36, 38, 39, 41. 
 signing and filing, 39. 
 filing and publication of, 42. 
 as evidence, 50. 
 effect of signatures, ^50. 
 
 ASSESSMENTS, 
 
 to pay preliminary expenses, 354 n. 
 
 lien on shares for, 457. 
 
 suit to enforce, 555. 
 
 conclusiveness of decree making, 556, 557. 
 
 See Calls. 
 ASSETS AND DEBTS, 
 
 decree determining, 556. 
 how dissolution affects, 606. 
 
 ASSIGNEE, 
 
 corporation acting as, 37 n. 
 
 ASSIGNMENT FOR CREDITORS, 
 
 power of corporation to make, 189. 
 
 ASSIGNMENT OF SHARES, 
 
 See Transfer of Shares. 
 
 ATTACHING CREDITORS, 
 
 transfer of shares of stock to, 442. 
 
 ATTACHMENT, 
 
 of shares, effect of, 442. 
 
 when transfer of stock precedes, 442. 
 
 ATTORNEY, 
 
 authority of president to employ, 529.
 
 682 INDEX. 
 
 [References are to Section*.] 
 ATTORNEY-GENERAL, 
 
 quo warranto proceedings by, 93. 
 asking forfeiture of charter, 597. 
 
 AUTHORITY, 
 
 board of directors delegating, 501. 
 liability where officers exceed, 511. 
 
 See Powers. 
 
 AUXILIARY PROCEEDINGS, 
 
 in enforcing stockholders' liability, 585. 
 
 B 
 
 BANKING CORPORATIONS, 
 
 congress creating, 28. 
 
 BELIEF, 
 
 expressions of do not amount to fraud, 374. 
 
 BENEFITS, 
 
 accepting under promoter's contract, 60. 
 
 effect on defense of ultra vires, 218 n. 
 
 estoppel by retention of, 219. 
 
 liability for those received under illegal contracts, 227. 
 
 BONA FIDE HOLDER, 
 
 of over-issued negotiable paper, 184. 
 of fraudulently issued stock, 321. 
 of stock, rights of, 324. 
 
 BONA FIDE PURCHASER, 
 
 of shares of stock, 332. 
 creditor is not, 442. 
 
 BONDHOLDERS, 
 
 right to vote at corporate meetings, 472. 
 
 BONDS, 
 
 power of railway company to guaranty, 180. 
 
 BONUS STOCK, 
 
 validity of, 335, 336. 
 
 BOOKS, 
 
 right to inspect, 393. 
 transfer of stock on, 440. 
 
 BREACH OF TRUST, 
 
 in transfer of shares, liability, 455.
 
 INDEX. 683 
 
 [References are to Sections.] 
 
 BURDEN OF PROOF, 
 
 as to compliance with foreign statute, 272. 
 to disprove fraud, 504. 
 
 BUSINESS, 
 
 in which corporation may engage, 139. 
 what constitutes, 266. 
 power of majority to wind up, 485. 
 effect of abandonment of, 602. 
 
 BY-LAWS, 
 
 definition, 144. 
 
 resolution distinguished from, 144 n. 
 
 power to make, 145. 
 
 subjects of, 145 n. 
 
 who has power to make, 146. 
 
 manner of adoption, 147. 
 
 must conform to charter, 148. 
 
 must not be repugnant to law of land, 149. 
 
 violating public policy, 150. 
 
 regulating bringing of suits, 150 n. 
 
 must be reasonable, 151. 
 
 must be general, 152. 
 
 effect on insurance contracts, 153. 
 
 effect on officers and members, 153. 
 
 notice of, 153 n. 
 
 effect on third persons, 154. 
 
 limiting powers of agents, 155. 
 
 rules and regulations published by corporations, 156. 
 
 imposing forfeiture, 157. 
 
 expulsion of members, 158. 
 
 amendment, repeal and waiver, 159. 
 
 how restrictions in affect contracts, 214. 
 
 effect on members, 293. 
 
 as to amount of capital stock, 302. 
 
 prohibiting transfers of shares, validity, 436. 
 
 regulating transfers of shares, 437, 438. 
 
 validity, 439. 
 
 prescribing manner of transferring stock, 444. 
 
 creating lien on shares, 457. 
 
 regulating corporate meetings, 464. 
 
 fixing place of corporate meetings, 465. 
 
 regulating manner of conducting meetings, 469. 
 
 giving bondholders right to vote, 472. 
 
 conferring right to vote by proxy, 473. 
 
 determining quorum, 482 n. 
 
 as to directors' meetings, 496.
 
 684 INDEX. 
 
 [Beferences are to Sections.] 
 BY-LAWS— Continued. 
 
 prescribing qualifications of directors, 498. 
 conferring powers upon officers, 528. 
 fixing compensation of officers, 535. 
 officers charged with notice of, 536. 
 
 c 
 
 CALLED MEETINGS, 
 
 when and how may be held, 464. 
 
 CALLS, 
 
 on stock subscriptions, 383. 
 how to be made, 383. 
 uniformity in, 384. 
 demand, 384. 
 lien on shares for, 457. 
 liability of transferee for, 458. 
 
 CAPITAL, 
 
 defined, 299. 
 
 distinguished from capital stock, 300 n. 
 
 essential to securement of franchise, 352. 
 
 effect of subscriptions in excess of, 361. 
 
 distributing among stockholders, 402. 
 
 right of remainder-man to, 418. 
 
 as trust fund for creditors, 485. 
 
 liability for that wrongfully distributed, 551. 
 
 CAPITAL STOCK, 
 
 stating amount in articles of incorporation, 41. 
 
 subscriptions to as condition precedent, 43. 
 
 taxation of, 112, 117. 
 
 what it represents, 113 n. 
 
 membership in corporation having, 284. 
 
 capital defined, 299. 
 
 capital stock defined, 300. 
 
 distinguished from capital, 300 n. 
 
 shares of stock, 301. 
 
 amount of, 302. 
 
 dividend stock, 303. 
 
 stock certificates, 304. 
 
 non-negotiable instruments, 305. 
 
 different kinds of stock, 306. 
 
 preferred stock, 307, 308. 
 
 status of holders ol preferred stock, 312. 
 
 rights of holders of preferred stock, 313. 
 
 accumulative dividends, 314.
 
 INDEX. 685 
 
 [References are to Sections.] 
 CAPITAL STOCK— Continued. 
 nature of, 315, 319. 
 as trust fund, 317. 
 fraudulently issued stock, 320, 327. 
 watered stock, 328, 342. 
 payment for in property, 340. 
 directors can not increase, 499. 
 profits not a part of, 551. 
 
 CARE, 
 
 degree of required of officers, 513. 
 
 CERTIFICATE OF STOCK, 
 seal unnecessary, 143 n. 
 issue of new one, 253. 
 defined, 304. 
 
 not negotiable instrument, 305. 
 estoppel by recital in, 322. 
 liability on forged, 324. 
 issued to secretary, validity, 325. 
 denying those fraudulently issued, 325 n. 
 recital that paid up, 332. 
 effect of recitals in, 332. 
 when tender of required, 356. 
 surrender on transfer of shares, 441. 
 issuing new one on transfer of stock, 444. 
 surrender on transfer of shares, 447. 
 indorsement of, 449. 
 not negotiable instrument, 450. 
 rights of purchaser of stolen, 450. 
 transfer of in breach of trust, 455. 
 
 See Transfer op Shares. 
 
 CHARITABLE CORPORATIONS, 
 
 definition and nature of, 19. 
 CHARTER, 
 
 source of, 6, 7. 
 
 acceptance of, 25. 
 
 granting to non-residents, 73 n. 
 
 attacking by quo warranto, 93. 
 
 forfeiture and repeal, 94. 
 
 legislature repealing, 94. 
 
 defined, 95. 
 
 as a contract, 96, 97. 
 
 contracts contained in, 98. 
 
 right to repeal or amend, 99, 100. 
 
 effect of repeal of, 102.
 
 686 INDEX. 
 
 [Beferences are to Sections.] 
 CHARTER— Continued. 
 
 contracts survive repeal of, 102. 
 
 accepting amendment to, 103. 
 
 amendment does not create new one, 104. 
 
 remedy for illegal amendment to, 106. 
 
 construction of, 111. 
 
 authority to transfer, 127. 
 
 constitutional protection, 130. 
 
 construction of, 134. 
 
 when liberally construed, 139. 
 
 by-laws to conform to, 148. 
 
 conferring authority to consolidate, 195. 
 
 acts not authorized by, 259. 
 
 fixing amount of capital stock, 302. 
 
 subscriptions before grant of, 352. 
 
 fixing amount of stock to be subscribed, 354. 
 
 subscriptions necessary to obtain, 364. 
 
 regulating corporate meetings, 464. 
 
 conferring right to vote by proxy, 473. 
 
 power to alter or amend, 486. 
 
 power of majority to accept amendments to, 486, 487. 
 
 immaterial amendments and alterations, 488. 
 
 right of majority to accept beneficial amendments, 489. 
 
 liability of officers for violating, 521. 
 
 conferring powers upon officers, 528. 
 
 fixing compensation of officers, 535. 
 
 suing for tort, after expiration of, 594 n. 
 
 surrender of, 596. 
 
 attorney-general asking forfeiture of, 597. 
 
 See Articles of Incorporation. 
 CITIZENSHIP, 
 
 of corporation, 8, 63-68. 
 
 constitutional law, 65. 
 
 effect of license on, 67. 
 
 how affected by place of doing business, 67. 
 
 as affecting suits, 274 n. 
 
 CIVIL CORPORATIONS, 
 
 visitorial power over, 90. 
 
 CLAIMS, 
 
 directors purchasing against corporation, 502. 
 
 CLUBS, 
 
 expulsion from, 294, 294 n. 
 
 courts reviewing proceedings of expulsion from, 298. 
 See Non-Stock Corporations.
 
 INDEX. 
 
 687 
 
 [References are to Sections."] 
 COLLATERAL ATTACK, 
 
 on corporate existence, 70. 
 on de facto corporation, 71. 
 on right to exercise a franchise, 78. 
 
 COMBINATIONS, 
 
 legality, 177 n. 
 
 See Trusts. 
 COMITY, 
 
 recognizing foreign corporations, 240, 247. 
 rule of between the states, 254-260. 
 private international law based on, 254 n. 
 
 COMMERCIAL PAPER, 
 
 power to indorse and guarantee, 180. 
 certificate of stock is not, 305, 450. 
 
 COMMISSION, 
 
 promoter not to receive, 53. 
 
 COMMON DIRECTORS, 
 
 contracts between corporations having, 506, 507. 
 
 COMMON LAW, 
 
 as to subscription to stock, 43 n. 
 
 COMMON LAW LIABILITY OF STOCKHOLDERS, 
 
 in general, 538. 
 
 liability to corporation measured by the contract of subscription, 539. 
 
 acts prior to incorporation, 540. 
 
 the incorporation of a partnership business, 541. 
 
 debts contracted before distribution of stock, 542. 
 
 liability resulting from illegal or defective incorporation, 543. 
 
 liability as partners, 544. 
 
 conflicting theories and decisions, 545. 
 
 the tendency of the decisions, 546. 
 
 where there is not even a de facto corporation, 547. 
 
 "one man" corporations, 548, 549. 
 
 corporations organized to do business exclusively in another state, 550. 
 
 liability for capital wrongly distributed, 551. 
 
 liability upon shares issued below par, 552. 
 
 fraudulent acts, 553. 
 
 enforcement, defenses, 554. 
 
 enforcement of liability in a foreign jurisdiction, 555. 
 
 decree determining assets and debts and making assessments, 556. 
 
 conclusiveness of decree, 557. 
 
 COMPENSATION, 
 
 of officers and agents, 535.
 
 688 INDEX. 
 
 [Beferences are to Sections."] 
 COMPETITION, 
 
 validity of contracts to prevent, 174. 
 
 CONDITIONAL SALE, 
 
 right to dividends on, 413. 
 
 CONDITIONAL SUBSCRIPTIONS 
 
 nature of, 352. 
 
 CONDITIONS, 
 
 in grant of franchise, 121. 
 imposing on foreign companies, 262. 
 penalty for failing to comply with, 269. 
 estoppel to allege non-compliance with, 271. 
 complying with before becoming a member, 288. 
 subscription on, 352. 
 
 how secret affect stock subscriptions, 353. 
 delivery of subscription contract on, 357. 
 performance of those to subscription, 358. 
 waiver of that in subscription, 358, 374. 
 upon which records may be inspected, 394. 
 effect of on subscription, 554. 
 
 CONDITIONS PRECEDENT, 
 
 to organization of corporation, 40. 
 
 subscriptions as, 43. 
 
 to consolidation, 195. 
 
 effect of failure to comply with in making contracts, 270. 
 
 to right of action by stockholders, 422. 
 
 CONDITIONS SUBSEQUENT, 
 
 in subscriptions, 359. 
 
 CONFLICT OF LAWS, 
 
 effect on contracts, 244. 
 
 CONGRESS, 
 
 power to create corporations, 28. 
 control over interstate commerce, 114. 
 control over telegraph companies, 118. 
 
 CONSIDERATION, 
 
 recovering that paid on ultra vires contract, 209. 
 
 for agreement to take stock, 344. 
 
 for stock subscription, 349. 
 
 where stockholder limits liability, 560 n. 
 
 CONSOLIDATED CORPORATION, 
 taxation <>f, l 19a. 
 rights of creditors against, 198 n.
 
 INDEX. 689 
 
 [.References are to Sections."} 
 
 CONSOLIDATION, 
 
 authority for, 34. 
 
 effect on exemption from taxation, 119a. 
 
 power of, 195. 
 
 effect of, 196. 
 
 powers and privileges after, 197. 
 
 how affects exemption from taxation, 197. 
 
 effect on franchises, etc., 198. 
 
 liabilities of new corporation, 198. 
 
 CONSPIRACY, 
 
 liability for, 234. 
 
 CONSTITUTIONAL LAW, 
 
 creation of corporations, 32, 33. 
 corporate citizenship, 65. 
 corporation as person, 68. 
 obligation of contracts, 96, 97. 
 Dartmouth college case, 97. 
 statutes affecting the remedy, 110. 
 protecting franchise or charter, 130. 
 rights of corporations, 246. 
 removal of causes, 264. 
 payment for shares of stock, 342. 
 liability of stockholders, 563. 
 
 See Unconstitutional Statutb. 
 
 CONSTITUTIONAL RIGHTS, 
 
 waiver of by foreign corporation, 264. 
 
 CONSTRUCTION, 
 
 of corporate grants, 111. 
 of corporate charters, 134. 
 
 CONSTRUCTION BONDS, 
 
 validity of, 336. 
 
 CONTEMPT OF COURT, 
 
 punishing corporations for, 238. 
 
 CONTRACT, 
 
 stockholders' binding the corporation, 10. 
 as evidence of corporate existence, 50 n. 
 personal liability of promoters on, 55. 
 corporate liability on promoter's, 58. 
 adopting that of promoter, 59. 
 accepting benefits under that of promoter, 60. 
 extent of liability on that of promoter, 61. 
 44— Private Corp.
 
 690 INDEX. 
 
 [References are to Sections.] 
 
 CONTR A.CT— Continued. 
 
 between corporation and state, 89. 
 
 charter as, 96. 
 
 contained in corporate charter, 98. 
 
 how dissolution of corporation affects, 101. 
 
 surviving repeal of charter, 102. 
 
 in excess of corporate powers, 134. 
 
 power to make, 169. 
 
 when ultra vires, 169. 
 
 when need not be under seal, 170. 
 
 when corporation bound by implied, 170. 
 
 formalities to be observed in making, 171. 
 
 against public policy, 172. 
 
 validity of those to prevent competition, 174. 
 
 validity of that granting special privileges, 175. 
 
 validity of trust agreements, 177, 178. 
 
 validity of those by trusts, 179. 
 
 ultra vires, 201. 
 
 validity of that not to perform duties, 201. 
 
 when ultra vires, 202. 
 
 reasons for the rule of ultra vires, 203. 
 
 effect of performance of ultra vires, 205. 
 
 presumption of validity of, 211. 
 
 limitations upon authority of corporate officers, 213. 
 
 restrictions contained in by-laws, 214. 
 
 malum in se, 223. 
 
 against public policy, 224. 
 
 prohibited by statutes, 225, 226. 
 
 effect of informalities in executing, 229. 
 
 effect of conflict of laws, 244. 
 
 power to make in foreign state, 247. 
 
 effect where contrary to law of forum, 256. 
 
 validity of those made out of state, 267. 
 
 effect of statutory requirements on, 268. 
 
 enforcing that with foreign corporation, 268 n. 
 
 validity where statute not complied with, 269. 
 
 subscription to stock as, 343, 344. 
 
 nature of that for stock, 344. 
 
 married woman's, 346. 
 
 form of for stock, 348. 
 
 how premature by corporation affects subscription, 368. 
 
 how fraud affects contract of subscription, 369. 
 
 merely voidable for fraud, 371. 
 
 regulating transfer of shares, 438. 
 
 as to transfer of shares, validity, 438. 
 
 by corporation with its officers, 503. 
 
 when officer may make with corporation, 504.
 
 INDEX. 691 
 
 [Beferences are to Sections."] 
 CONTRACT— Continued. 
 
 repudiating that with officer, 505. 
 
 between corporations having common officers or directors, 606. 
 
 ratification of voidable, 507. 
 
 liability of officers on, 519. 
 
 authority of president to make, 529. 
 
 secretary no inherent power to make, 531. 
 
 made by de facto officers, 533. 
 
 fixing liability of stockholder, 539. 
 
 subscription, defenses to, 554. 
 
 limiting liability of stockholders by, 560. 
 
 when stockholder's liability dependent on, 564. 
 
 impairment of by dissolution, 593. 
 
 CONTRIBUTION, 
 
 among stockholders, 591. 
 
 CONVERSION OF SHARES, 
 
 measure of damages for, 460. 
 
 CONVEYANCES, 
 
 power to disturb, 102 n. 
 
 CORPORATE ACTS, 
 out of state, 248. 
 effect of acquiescence in, 429. 
 
 CORPORATE CAPACITY, 
 
 is a franchise, 120. 
 
 CORPORATE CREDITORS, 
 
 when officers not liable to, 527. 
 
 CORPORATE DOMICILE, 
 
 enforcing stockholders' liability in, 586. 
 
 CORPORATE ELECTIONS, 
 
 See Elections. 
 
 CORPORATE ENTERPRISE, 
 
 change by amendments to charter, 486. 
 
 CORPORATE EXISTENCE, 
 proof of, 49, 50. 
 how to raise question of, 70. 
 estoppel to question, 71, 81 n, 88. 
 denying in actions on stock subscriptions, 84. 
 limit of, 142. 
 fraud in assuming, 546. 
 property not essential to, 602.
 
 692 INDEX. . 
 
 [References are to Sections.'] 
 CORPORATE FRANCHISE, 
 ratifying claim of, 29. 
 
 See Franchises and Privileges. 
 
 CORPORATE GRANTS, 
 construction of, 111. 
 
 CORPORATE MEETINGS AND ELECTIONS, 
 
 where to hold, 247. 
 
 in general, 463. 
 
 called meetings, 464. 
 
 the place of meeting, 465. 
 
 regular and special meetings, 466. 
 
 notice of corporate meetings, 467. 
 
 adjourned meetings, 468. 
 
 manner of conducting meetings, 469. 
 
 records, evidence, 470. 
 
 who entitled to vote, 471. 
 
 right of bondholders to vote, 472. 
 
 voting by proxy, 473. 
 
 personal interest of stockholder, 474. 
 
 motive governing vote, 474. 
 
 voting trusts and agreements, 475-477. 
 
 the Shepaug voting trust cases, 478. 
 
 specific performance of voting trust contract, 479. 
 
 number of votes by each stockholder, 480. 
 
 cumulative voting, 481. 
 
 the majority and quorum, 482. 
 
 powers of majority to manage the corporation, 483. 
 
 rights of the minority, 484. 
 
 power of majority to wind up business, 485. 
 
 power of majority to accept amendments, 486, 487. 
 
 immaterial amendments and alterations, 488. 
 
 material beneficial amendments, 489. 
 
 presumption of regularity of elections, 490. 
 
 inspectors of elections, 491. 
 
 illegal votes, 492. 
 
 control of courts over corporate elections, 493. 
 
 CORPORATE NAME, 
 designation of, 47. 
 change of, 47. 
 protection of, 48. 
 injunction to protect, 48. 
 discretion of corporate officer as to, 48.
 
 INDEX. 693 
 
 [Beferences are to Sections."] 
 CORPORATE OFFICERS, 
 
 limitations upon authority of, 213. 
 
 service on one temporarily in the state, 277. 
 
 liability for fraud in transfer of stock, 450. 
 
 See Officers and Agents. 
 
 CORPORATE POWERS, 
 enumeration of, 4. 
 source and limits of, 133 n. 
 notice of, 212. 
 
 what ones notice to be taken of, 215. 
 effect of irregularities in exercise of, 228. 
 to be exercised at regular meetings, 463. 
 See Powers. 
 
 CORPORATE PROPERTY, 
 
 situs as affecting taxation, 113. 
 taxation of, 117. 
 rights of stockholders in, 392. 
 duty of directors to protect, 401. 
 right to restrain sale of, 537. 
 
 CORPORATE RECORDS, 
 
 knowledge of contents of, 516. 
 
 CORPORATE RIGHTS, 
 
 under Roman law, 4n. 
 
 duty of corporation to protect, 420. 
 
 CORPORATE SEAL, 
 
 secretary as custodian of, 531. 
 
 CORPORATION, 
 
 defined, 2. 
 
 origin of, 3. 
 
 powers of, 4. 
 
 classes of, 11. 
 
 created by congress, 28. 
 
 citizenship of, 63-68. 
 
 as a person, 68, 89 n. 
 
 franchise of being a, 123. 
 
 service of process on, 276, 277. 
 
 as subscriber to stock, 346. 
 
 releasing subscriber, 386. 
 
 liability for transferring shares in breach of trust, 466. 
 
 lien on shares, 457. 
 
 contracting with its officers, 503. 
 
 when officer may deal with, 504.
 
 694 INDEX. 
 
 {^References are to Sections.] 
 CORPORATION— Continued. 
 
 right of director to deal with, 504. 
 
 repudiating contract with officer, 505. 
 
 voting stock held by it, 471. 
 
 bona fide intent to form, liability of members, 546. 
 
 when one man may form, 548. 
 
 when no personal liability against stockholders, 561. 
 
 when stockholders bound by judgment against, 577. 
 
 CORPORATION AGGREGATE, 
 defined, 16. 
 
 CORPORATION SOLE, 
 defined, 16. 
 
 CORPORATORS, 
 
 number of, 547. 
 
 counter claim against liability of stockholder, 589. 
 
 COURSE OF EMPLOYMENT, 
 
 effect of notice acquired in, 534. 
 
 COURTS, 
 
 reviewing expulsion proceedings, 298. 
 power to control corporate elections, 493. 
 
 CREATION AND ORGANIZATION OF CORPORATIONS, 
 
 generally, 21. 
 
 by what authority, 22. 
 
 essentials of legal incorporation, 23. 
 
 agreement between incorporators, 24. 
 
 acceptance of the grant, 25. 
 
 delegation of power to charter corporations, 26. 
 
 delegation of ministerial duties, 27. 
 
 power of congress to create corporations, 28. 
 
 ratification of claim of corporate franchise, 29. 
 
 corporation by prescription, 30. 
 
 creation by implication, 31. 
 
 methods of legislative action, 32. 
 
 constitutional limitations, 33. 
 
 by consolidation, 34. 
 
 under general laws, 35n, 50. 
 
 in general, 35. 
 
 general requirements, 36. 
 
 purposes for which corporations may be organized, 37. 
 
 substantial compliance with statutory requirements, 38. 
 
 illustrations, 39. 
 
 conditions precedent to organization of corporation de jure, 40. 
 
 articles of incorporation, 41.
 
 INDEX. 
 
 [Beferences are to Sections."] 
 CREATION AND ORGANIZATION OF CORPORATIONS-Contfntud. 
 filing and publishing articles, 42. 
 
 subscription for capital stock aa condition precedent, 43. 
 date of incorporation, 44. 
 who may be incorporators, 45. 
 number of incorporators, 46. 
 protection of corporate name, 48. 
 proof of incorporation, 49. 
 promoters, 51n, 62. 
 
 CREDITORS, 
 
 rights where corporation dissolved, 101. 
 
 right to require calls to be made, 183. 
 
 powers to make assignment for, 189. 
 
 preferring stockholder as, 189. 
 
 fraud on, 192. 
 
 liability of consolidated company to, 198. 
 
 how affected by discharge in insolvency, 246. 
 
 interest in capital of corporation, 317. 
 
 when they have no lien, 318. 
 
 how affected by watered stock, 330. 
 
 rights against watered stock, 334. 
 
 when stockholders liable to, 341. 
 
 right to rely on subscriptions, 352. 
 
 right to reach subscriptions on insolvency, 377, 378. 
 
 shareholder as, 404, 458. 
 
 attaching shares of stock, 441, 442 
 
 is not bona fide purchaser, 442. 
 
 transfer of shares in fraud of, 443 
 
 estoppel by attending corporate meeting, 465. 
 
 capital as trust fund for, 485. 
 
 may take advantage of fraud, 503. 
 
 when directors personally liable to, 522. 
 
 when officers not liable to, 527. 
 
 can not control management, 537. 
 
 attacking fraudulent conveyances, 537. 
 
 liability of stockholders for benefit of, 538. 
 
 when not bound by release of stockholder, 539. 
 
 when estopped from proceeding against stockholders, 545. 
 
 right to bill in equity, 554 n. 
 
 proceeding by creditor's bill, 555. 
 
 waiving rights against stockholders, 560. * 
 
 rights of against stockholders, 562. 
 
 receiver representing, 562. 
 
 rights of where stockholders and officers, 563. 
 
 enforcing liability of stockholders, 578. 
 
 695
 
 <396 INDEX. 
 
 [Beferences are to Sections."] 
 CRIME, 
 
 punishing corporation for, 236. 
 involves intent, 237. 
 
 procedure in prosecuting corporation for, 239. 
 See Torts and Crimes. 
 
 CUMULATIVE VOTING, 
 when allowed, 481. 
 
 D 
 
 DAMAGES, 
 
 subscription obtained by fraud, 56. 
 
 caused by fraudulent prospectus, 57. 
 
 liability for punitive, 235. 
 
 caused by fraud in issuing stock, 323. 
 
 on stock subscription, 345. 
 
 for refusal to take stock, 366. 
 
 failure to permit inspection of books, 396. 
 
 transfer of shares on forged power of attorney, 452. 
 
 for wrongful refusal to transfer stock, 459, 460. 
 
 for refusal to register stock, 462. 
 
 corporation suing director for, 525. 
 
 DARTMOUTH COLLEGE CASE, 
 nature and effect of, 97. 
 
 DE FACTO CORPORATION, 
 
 consolidated company as, 34 n. 
 
 when results, 41 n. 
 
 when there is, 69. 
 
 state attacking, 70 n. 
 
 collateral attack on, 71. 
 
 definition, 72. 
 
 necessity for valid law, 73. 
 
 good faith attempt to organize, 74. 
 
 user of franchise, 75. 
 
 organization under unconstitutional statute, 76. 
 
 fraudulent organization, 79. 
 
 powers of, 80. 
 
 estoppel to deny existence of, 87. 
 
 power to make contracts, 169 n. 
 
 liable as partners, 544. 
 
 liability of members where there is not, 547. 
 
 DE FACTO OFFICERS, 
 
 power and authority of 533.
 
 INDEX. 697 
 
 [References are to Sections.'] 
 DE JURE CORPORATION, 
 when there is, 69. 
 
 DEATH, 
 
 effect on stock subscription, 365. 
 
 DEBTS, 
 
 power to contract, 182 n. 
 
 after consolidation, 195 n. 
 
 liability of consolidated company for, 198. 
 
 capital stock pledged for, 317. 
 
 collecting subscriptions to pay, 389a. 
 
 lien on shares for, 457. 
 
 when officers liable for, 522. 
 
 when stockholder liable for, 539. 
 
 before distribution of stock, liability on, 542. 
 
 liability for in " one man " corporation, 548. 
 
 when officers liable for, 565. 
 
 for which stockholders are liable, 571, et seq. 
 
 denned, 572. 
 
 liability for those to laborers and employes, 573. 
 
 how dissolution affects, 606. 
 
 DECEIT, 
 
 corporate liability for, 234 n. 
 
 DECEPTION, 
 
 service of process obtained by, 281. 
 
 DECLARATIONS, 
 
 effect of stockholders', 8. 
 
 DECREE, 
 
 making assessment, effect of, 556, 557 c 
 
 DEED, 
 
 presumption as to authority for execution, 495. 
 
 DEFECTIVE INCORPORATION, 
 liability resulting from, 543. 
 
 DEFENSE, 
 
 ultra vires as, 207, 215 n. 
 estoppel to assert that of ultra vires, 216-221. 
 insolvency is not to an action on subscriptions, 382. 
 to contract of subscription, 554.
 
 698 INDEX. 
 
 [References are to Sections."} 
 DEFINITION, 
 
 of corporation, 2. 
 
 different corporations, 12-20. 
 
 various kinds of corporations, 17, 18, 19. 
 
 joint stock company, 20. 
 
 of consolidation, 34. 
 
 of promoters, 51. 
 
 de facto corporations, 72. 
 
 of charter, 95. 
 
 of tax, 118. 
 
 of toll, 118. 
 
 of franchise, 120. 
 
 of by-law, 144. 
 
 of ultra vires, 201. 
 
 of capital, 299. 
 
 of capital stock, 300. 
 
 of shares of stock, 301. 
 
 of dividends, 398. 
 
 of profits, 403. 
 
 of income, 419. 
 
 of quorum, 482. 
 
 of majority, 482. 
 
 of debt, 572. 
 
 DEFRAUDED STOCKHOLDERS, 
 remedies of, 375. 
 
 DELAY, 
 
 creating estoppel, 220. 
 
 in questioning fraud, 323. 
 
 in asking for forfeiture of charter, 697. 
 
 DELEGATION, 
 
 of power to create corporations, 26. 
 
 DELEGATION OF AUTHORITY, 
 by directors, 501. 
 
 DELIVERY, 
 
 pledge of stock certificates by, 446. 
 
 DEMAND, 
 
 for inspection of records, 395. 
 before suit by stockholder, 421, 422. 
 
 DEPOSIT, 
 
 payment of on stock subscription, 355.
 
 INDEX. 699 
 
 [Eeferences are to Sections."] 
 DEVISE, 
 
 to United States, validity, 161 n. 
 power to take real estate by, 164. 
 statute limiting that to corporation, 165. 
 
 DILIGENCE, 
 
 subscriber using to discover insolvency, 381. 
 
 DIRECTORS, 
 
 when personally liable, 92. 
 
 making by-laws, 146. 
 
 when may be preferred creditors, 189. 
 
 power to assign for creditors, 189 n. 
 
 validity of preferences in favor of, 189n. 
 
 personal liability of, 245. 
 
 service of process on, 277. 
 
 making calls, 383. 
 
 control over dividends, 399. 
 
 discretion of as to dividends, 400. 
 
 duty to protect corporate property, 401. 
 
 regulating manner of paying dividend, 407. 
 
 stockholders suing to restrain actions of, 426. 
 
 when disqualified to act, 433. 
 
 can not prevent transfer of shares, 436. 
 
 as principals for other officers, 494. 
 
 meetings of, 496. 
 
 length of term of office, 496. 
 
 place of meeting, 497. 
 
 qualifications of, 498. 
 
 as shareholder, 498. 
 
 powers of, 499. 
 
 ratifying agents' acts, 499. 
 
 stockholders' control over, 500. 
 
 delegating authority, 501. 
 
 relation to the corporation, 502. 
 
 not to receive secret profits, 502. 
 
 not to contract with themselves, 503. 
 
 right to deal with his corporation, 504. 
 
 loaning money to corporation, 504. 
 
 taking note for their own salary, 504. 
 
 effect where interested, 504 n. 
 
 enforcing contract with corporation, 504 n. 
 
 voting for their own salary, 504 n. 
 
 purchasing at foreclosure sale, 504 n. 
 
 contracts between corporations having same ones, 606, 607. 
 
 when contracts with are void, 507. 
 
 liability for acts in excess of authority, 511.
 
 700 INDEX. 
 
 [Beferences are to Sections. 1 } 
 DIRECTORS— Continued. 
 
 degree of care required of, 513. 
 
 supervision over subagents, 515. 
 
 knowledge of contents of corporate records, 516. 
 
 when liable for debts, 522. 
 
 liability for maintaining nuisance, 523. 
 
 when not regarded as agents, 528 n. 
 
 conferring powers upon president, 529. 
 
 effect of notice to. 534. 
 
 when entitled to compensation, 535. 
 
 power to fix compensation of officers, 535. 
 
 when subject to penalties, 567. 
 
 DISAFFIRMANCE, 
 
 after part performance, 208. 
 
 DISCRETION, 
 
 as to declaration of dividends, 399. 
 of directors as to dividends, 400. 
 as to transfers of shares, 437. 
 
 DISCRETIONARY POWER, 
 
 courts will not control that of officers, 428. 
 
 DISCRIMINATION, 
 
 effect of in declaring dividends, 407. 
 
 DISFRANCHISEMENT, 
 
 in joint stock companies, 291. 
 in non-stock corporations, 292, 
 grounds for, 292. 
 
 DISSOLUTION, 
 
 expiration of charter, 77. 
 
 effect of on corporate contracts, 101. 
 
 effect of transfer of shares after, 445. 
 
 See Insolvency and Dissolution. 
 DIVIDEND, 
 
 on preferred stock, 313. 
 
 accumulative, 314. 
 
 right of preferred shareholder to, 314 n. 
 
 nature of, 398. 
 
 control of directors over, 399. 
 
 discretion of directors, 400. 
 
 protection of corporate property, 401. 
 
 when may be legally declared, 402. 
 
 what are profits, 403.
 
 INDEX. 701 
 
 [References are to Sections."] 
 
 DIVIDEND— Continued. 
 right to declare, 404. 
 to whom they belong, 405. 
 collection of, 406. 
 
 how payable, no discrimination, 407. 
 right of pledgee of stock to, 408. 
 unlawful payment of, 409. 
 set-off by the corporation, 410. 
 who entitled to, 411. 
 
 as between successive absolute owners, 412-414. 
 as between life tenant and remainder-man, 415-419. 
 recovery of capital distributed as, 551. 
 
 DIVIDEND STOCK, 
 
 right to issue, 303. 
 
 DOMESTIC CORPORATION, 
 
 foreign corporation becoming, 64. 
 consolidating with foreign, 190 n. 
 
 DOMICILE, 
 
 that of corporation, 241. 
 
 DUTIES, 
 
 validity of contract not to perform, 201. 
 
 E 
 
 EARNINGS, 
 
 when stockholders entitled to, 399. 
 as profits, 403. 
 
 EASEMENT, 
 
 use of street for street railway company, 122. 
 
 ECCLESIASTICAL CORPORATIONS, 
 
 nature and extent of, 17, 18. 
 
 ELECTION, 
 
 combination to control, 476. 
 
 presumption of regularity, 490. 
 
 inspectors of, 491. 
 
 illegal votes, 492. 
 
 control of courts over, 493. 
 
 statute authorizing review of, 493w. 
 
 See Corporate Meetings and Elections. 
 
 ELEEMOSYNARY CORPORATIONS, 
 definition and nature of, 19.
 
 702 INDEX. 
 
 [Beferences are to Sections.'] 
 EMINENT DOMAIN, 
 
 corporate franchise subject to, 108. 
 
 lessee may not exercise, 128. 
 
 when foreign corporation may exercise, 256. 
 
 EMPLOYES, 
 
 liability for debts to, 573. 
 
 EQUITABLE CONVERSION, 
 doctrine of, 166. 
 
 EQUITY, 
 
 when shareholder entitled to relief in, 421. 
 when will not interfere for stockholder, 423. 
 protecting minority stockholders, 432. 
 resorting to to secure transfer of shares, 461. 
 power to control corporate election, 493. 
 creditors resorting to, 537. 
 power to declare dissolution, 603. 
 
 ESTATE, 
 
 that may be taken in real estate, 167. 
 
 ESTOPPEL, 
 
 by ratification, 59 n. 
 
 to deny promoter's contract, 60. 
 
 to question corporate existence, 71. 
 
 to question law under which corporation organized, 88. 
 
 as a defense to ultra vires acts, 204. 
 
 to assert defense of ultra vires, 216-221. 
 
 by part performance of contract, 218. 
 
 by retention of benefits, 219. 
 
 to allege non-compliance of conditions, 271. 
 
 to deny membership, 289. 
 
 to deny corporate existence, 289 n. 
 
 to attack preferred stock, 311. 
 
 by recital in stock certificate, 322. 
 
 to deny subscription, 358. 
 
 of shareholder to deny subscription, 378. 
 
 of subscriber to stock, 389. 
 
 to deny transfer of shares, 451. 
 
 by participating in corporate meeting, 465. 
 
 to question acts of de facto officers, 533. 
 
 to deny liability, 544. 
 
 ESTOPPEL TO DENY CORPORATE EXISTENCE, 
 
 general statement, 81. 
 
 the general rule, 82. 
 
 in actions against members as partners, 83.
 
 INDEX. 703 
 
 [References are to Sections.'] 
 ESTOPPEL TO DENY CORPORATE EXISTENCE— Continued. 
 actions on stock subscriptions, 84, 
 subscriptions in contemplation of incorporation, 85. 
 by acquiescence, 86. 
 limited to de facto corporations, 87. 
 under unconstitutional statutes, 88. 
 
 EVIDENCE, 
 
 to show incorporation, 49, 50. 
 
 of transactions at corporate meetings, 470. 
 
 as to who are stockholders, 558 n. 
 
 EXCISE TAX, 
 
 on corporation, 114 n. 
 
 EXCLUSIVE FRANCHISE, 
 
 grant of, 107. 
 
 power to grant, 108 n. 
 
 EXECUTION, 
 
 effect of sale of shares on, 442. 
 
 EXECUTIVE COMMITTEE, 
 
 directors delegating authority to, 501. 
 
 EXECUTOR, 
 
 collecting dividends, 412. 
 purchase of shares from, 454. 
 right to vote stock, 471. 
 giving proxy, 473. 
 liability of on stock, 569. 
 
 EXEMPLARY DAMAGES, 
 
 See Punitive Damages. 
 
 EXEMPTION FROM TAXATION, 
 
 validity of, 119a. 
 never presumed, 119a, 
 effect of consolidation on, 119a. 
 effect where railroad sold, 128. 
 how consolidation affects, 197. 
 
 EXPENSES, 
 
 of promoters, 62. 
 assessment to pay, 354 n. 
 
 EXPRESS POWERS, 
 
 enumeration of, 138. 
 powers implied from, 139.
 
 704 INDEX. 
 
 [Beferences are to Sectiont.] 
 EXPULSION, 
 
 grounds for, 294. 
 
 proceedings for, 295. 
 
 notice before, 296. 
 
 court reviewing proceedings, 298. 
 
 EXPULSION OF MEMBERS, 
 right to, 158. 
 
 EXTRA TERRITORIAL FORCE, 
 laws do not have, 242. 
 
 EXTRA TERRITORIAL POWERS, 
 nature of, 240-246. 
 
 F 
 
 FALSE IMPRISONMENT, 
 
 corporate liability for, 233, 234 n. 
 
 FALSE REPORT, 
 
 liability of directors for making, 522. 
 
 FALSE REPRESENTATION, 
 
 liability for those of agent, 510. 
 liability of officers for, 520. 
 
 FEDERAL AGENCIES, 
 taxation, 115. 
 
 FEDERAL CONSTITUTION, 
 
 restricting taxing power, 114. 
 
 FEDERAL COURTS, 
 
 enforcing stockholder's liability in, 580. 
 
 FINE, 
 
 corporation subject to, 236. 
 for contempt of court, 238. 
 
 FORECLOSURE SALE, 
 
 director purchasing at, 504 n. 
 
 FOREIGN CORPORATION, 
 
 consolidated company as, 34 n. 
 
 becoming domestic corporation, 64. 
 
 as person, 68. 
 
 as de jure corporation, 87 n. 
 
 visitorial power over, 90 n. 
 
 taxation of, 114. 
 
 excise tax on, 114 n.
 
 INDEX. 70a 
 
 [Eeferences are to Sections."] 
 FOREIGN CORPORATION- Continued. 
 consolidating with domestic, 195 n. 
 submitting to state laws, 243. 
 comity recognizing, 247. 
 power of state to exclude, 249. 
 when liable as partner, 249. 
 limitations on power of state to control, 250. 
 no visitorial power over, 252. 
 effect of state comity on, 254-260. 
 power to hold real estate, 255 n. 
 when may exercise power of eminent domain, 256. 
 discrimination against, 258. 
 powers of, 258. 
 
 acts not authorized by charter, 259. 
 restrictions imposed on, 260. 
 statutory restrictions on, 261-267. 
 waiver of constitutional rights by, 264. 
 removal of causes by, 264. 
 what constitutes " doing business" by, 266. 
 berrowing money from, 266. 
 
 effect of failure to compiy with statutory requirements, 268, 272. 
 enforcing contract with, 268 n. 
 when note to can not be enforced, 270 n. 
 estoppel to question contract with, 271. 
 actions by and against, 273-282. 
 service of process on, 275. 
 suits against, 275 n. 
 service on agent of, 276. 
 statute regulating service of process on, 279. 
 designating agent to accept service of process, 280. 
 proceedings by state against, 282. 
 
 FOREIGN INSURANCE COMPANY, 
 
 power to regulate, 251. 
 
 FOREIGN JURISDICTION, 
 
 enforcing subscription in, 555. 
 enforcing stockholder's liability in, 579. 
 rights of receiver in, 588. 
 
 FOREIGN STATE, 
 
 jurisdiction over foreign corporations, 243. 
 power of corporation, 247. 
 corporate acts out of state, 248. 
 holding corporate meetings in, 465. 
 corporation organized to do business in, 550. 
 suing stockholder in, 555. 
 45 — Private Corp.
 
 706 INDEX. 
 
 [References are to Sections.] 
 FORFEITURE, 
 
 for ultra vires acts, 93 n. 
 distinguished from repeal, 94. 
 of franchises, 129. 
 by-laws imposing, 157. 
 release of subscriber by, 387. 
 when a cumulative remedy, 388. 
 for failure to file report, 522 n. 
 effect of delay in asking for, 597. 
 for non-user, 597 n. 
 
 FORFEITURE OF STOCK, 
 
 liability of stockholder after, 388. 
 
 FORGERY, 
 
 in transfer of shares of stock, 453. 
 
 FORMALITIES, 
 
 lack of in exercising corporate power, 229. 
 
 FORUM, 
 
 effect where contracts contrary to law of, 256. 
 
 FOURTEENTH AMENDMENT, 
 citizenship under, 65. 
 
 FRANCHISE, 
 
 corporate name as, 48. 
 
 user as evidence of corporation, 75. 
 
 collateral attack on right to exercise, 78. 
 
 ultra vires contracts as abuse of, 93. 
 
 grant of exclusive, 107. 
 
 subject to eminent domain power, 108. 
 
 corporate capacity is, 120. 
 
 conditions on granting, 121 n. 
 
 as real property, 122. 
 
 mortgage of, 122 n. 
 
 forfeiture by non-user, 129 n. 
 
 how affected by consolidation, 197. 
 
 FRANCHISES AND PRIVILEGES, 
 nature of a franchise, 120. 
 eonditions in, 121. 
 
 to use street for railway purposes, 121. 
 nature of rights acquired, 122. 
 of being a corporation, 123. 
 in whom franchise vests, 124. 
 sale and transfer of, 125. 
 corporation charged with public duties, 126.
 
 INDEX. 
 
 [Beferences are to Sections."] 
 FRANCHISES AND PRIVILEGES -Continued. 
 transfer under legislative authority, 127. 
 construction of, 127. 
 
 pertaining to use of particular property, 128. 
 forfeiture of, 129. 
 constitutional protection of, 130. 
 
 FRAUD, 
 
 by promoter, 53. 
 
 subscriptions obtained by, 56. 
 
 by use of prospectus, 57. 
 
 effect of in organizing corporation, 79. 
 
 in state control over corporations, 91. 
 
 on creditors, 192. 
 
 liability for, 234. 
 
 liability for that of agents, 323. 
 
 paying for stock with overvalued property, 341. 
 
 when stockholder not bound by, 341 n. 
 
 when parol declarations amount to, 353 n. 
 
 how it affects contract of subscription, 369, 370, 371. 
 
 contract merely voidable for, 371. 
 
 liability for that of promoters, 372. 
 
 what ones will vitiate stock subscription, 373. 
 
 expression of belief or opinion, 374. 
 
 diligence to discover, 379, 380. 
 
 stockholders suing to prevent, 426. 
 
 on creditors by transfer of shares, 443. 
 
 in issue of certificates, 447. 
 
 in transfer, effect of, 450. 
 
 minority objecting to, 484. 
 
 creditors may take advantage of, 503. 
 
 presumption of when contract made with officer, 504. 
 
 burden of disproving, 504. 
 
 contract between corporations having common directors, 506. 
 
 in assuming corporate existence, 546. 
 
 in "one man" corporation, 548. 
 
 in organizing corporation to do business in foreign state, 550. 
 
 in sale of stock below par, 552. 
 
 FRAUDULENT ACTS, 
 
 stockholders not liable for, 553. 
 
 FRAUDULENT CONVEYANCES, 
 
 creditors setting aside, 537. 
 
 FRAUDULENT REPRESENTATIONS, 
 in sale to corporation, 54. 
 when no liability for, 58. 
 liability for those of promoters, 372. 
 
 707
 
 708 INDEX. 
 
 [References are to Sections."} 
 
 FRAUDULENTLY ISSUED STOCK, 
 
 c verissue of stock, 320. 
 
 bona fide holders of, 321. 
 
 estoppel by recital in stock certificate, 322. 
 
 liability for fraudulent acts of agents, 323, 324. 
 
 liability on, 824. 
 
 liability to innocent purchaser of, 325. 
 
 recovery of money paid for, 326. 
 
 payment for stock, 327. 
 
 FUTURE INCOME, 
 
 power to mortgage, 188. 
 
 a 
 
 GAINS, 
 
 right of life tenant to, 417. 
 
 GAS COMPANIES, 
 
 state control over, 91. 
 
 power to deal in patents, 139 «. 
 
 GENERAL LAW, 
 
 creating corporations, 32, 33. 
 incorporation under, 35-50. 
 
 GENERAL MANAGER, 
 
 power and authority of, 529 ». 
 
 GENERAL POWERS, 
 theory of, 132. 
 
 GOOD FAITH, 
 
 effect of in organizing corporation, 74. 
 
 GOOD-WILL, 
 
 where to be taxed, 550 n. 
 
 GUARANTEED STOCK, 
 nature of, 307. 
 
 GUARANTY, 
 
 corporate power to make, 180. 
 
 H 
 
 HIGHWAY, 
 
 corporate liability for obstructing, 236. 
 
 HISTORY, 
 
 of corporations, 8, 4, 567.
 
 INDEX. 709 
 
 [Beferences are to Sectfau.] 
 I 
 
 ILLEGAL ACTS, 
 
 consequences of, 93. 
 
 ILLEGAL CONTRACTS, 
 
 liability for benefits received tinder, 227. 
 
 ILLEGAL INCORPORATION, 
 liability resulting from, 543. 
 
 ILLEGAL SHARES, 
 
 injunction to prevent voting of, 493. 
 
 ILLEGAL VOTES, 
 
 effect of at corporate elections, 492. 
 
 ILLUSTRATIVE CASES, 
 
 of franchises, 121. 
 
 of profits, 403. 
 
 of actions by stockholders, 424-426. 
 
 of ultra vires acts, 431. 
 
 of ratification of voidable contracts, 507. 
 
 of powers of president, 529. 
 
 of enforcement of stockholders' liability, 681, 582. 
 
 IMPAIRMENT OF CONTRACTS, 
 
 by dissolution of corporation, 593. 
 
 IMPLICATION, 
 
 creation of corporations by, 31. 
 
 IMPLIED AGREEMENT, 
 
 to pay for shares of stock, 366. 
 
 IMPLIED CONTRACT, 
 
 by grant of franchise, 107. 
 when corporation bound by, 170. 
 in stock subscription, 349. 
 
 IMPLIED POWERS, 
 
 from express powers, 139. 
 
 INCIDENTAL POWERS, 
 of corporations, 140. 
 
 INCOME, 
 
 right of life tenant to, 415, 418. 
 defined, 419.
 
 710 INDEX. 
 
 {References are to Sections.] 
 INCORPORATED SOCIETIES, 
 nature of, 297. 
 
 INCORPORATION, 
 date of, 44. 
 proof of, 49, 50. 
 effect of in several states, 64. 
 
 INCORPORATORS, 
 
 agreement between, 24. 
 
 who may be, 45. 
 
 number of, 46. 
 
 when liable as partners, 545. 
 
 INDEBTEDNESS, 
 
 limitations upon amount of, 183. 
 taking stock to secure, 191. 
 power of president to create, 529 n. 
 
 INDICTMENT, 
 
 corporation subject to, 236. 
 for maintaining nuisance, 523. 
 
 INDIVIDUAL LIABILITY, 
 
 of officers, 514. 
 
 INDORSEMENT, 
 
 corporate power to make, 180. 
 
 of certificate, 449. 
 
 power of treasurer to make, 532. 
 
 INHABITANT, 
 
 corporation as, 66. 
 
 INJUNCTION, 
 
 to protect corporate name, 48. 
 
 against ultra vires acts, 93, 537. 
 
 does not lie against legislative action, 121 n. 
 
 right of minority stockholder to maintain, 420. 
 
 against voting trust agreement, 477. 
 
 against acceptance of amendment, 487. 
 
 in reference to corporate elections, 493. 
 
 INNOCENT HOLDER, 
 
 of fraudulently issued stock, 323. 
 
 INNOCENT PARTIES, 
 
 right to rely on subscriptions, 377, 378.
 
 INDEX. 711 
 
 [References are to Sections."] 
 INNOCENT PURCHASERS, 
 
 of fraudulently issued stock, 325. 
 
 INSOLVENCY, 
 
 effect of discharge in, 246. 
 
 rights of creditors to reach subscriptions, 377, 378. 
 
 right to rescind subscription after, 379. 
 
 right to rescind subscription before, 380. 
 
 subscribers using diligence to discover, 381. 
 
 no defense to action on subscriptions, 382. 
 
 effect of transfer of shares after, 445. 
 
 majority winding up business on, 485. 
 
 decree making assessments, 556, 557. 
 
 continuing corporation after, 601. 
 
 INSOLVENCY AND DISSOLUTION, 
 
 manner of dissolution, 592. 
 
 impairment of contracts, 593, 
 
 expiration of term of existence, 594. 
 
 dissolution by legislative act, 595. 
 
 surrender of charter, 596. 
 
 forfeiture of charter, 597. 
 
 loss of integral part, 598. 
 
 statutory methods of dissolution, 599. 
 
 voluntary liquidation, 600. 
 
 statutory provisions for a temporary continuance of the corporation, 601. 
 
 abandonment of business, 602. 
 
 sale or loss of property, 603. 
 
 powers of a court of equity, 604. 
 
 effect of dissolution, 605. 
 
 effect of upon corporate debts and assets, 606. 
 
 INSOLVENCY PROCEEDINGS, 
 effect of, 246. 
 
 INSOLVENT COMPANY, 
 
 sale of stock by, 337. 
 
 INSOLVENT CORPORATION, 
 
 powers of to make assignment, 189. 
 
 effect of purchasing its own shares, 192, 193. 
 
 right of director to take mortgage from, 504. 
 
 INSPECTORS, 
 
 at corporate elections, 491. 
 
 INSURANCE, 
 
 effect of by-laws on, 153. 
 not interstate commerce, 251.
 
 712 INDEX. 
 
 [References are to Sections.'} 
 
 INSURANCE COMPANY, 
 
 what are profits in, 403. 
 
 INSURANCE CONTRACTS, 
 validity of, 267. 
 
 INTEGRAL PART, 
 
 dissolution by loss of, 598, 
 INTENT, 
 
 crimes involve, 237. 
 
 INTEREST, 
 
 stock bearing, 313 n. 
 on dividend, 406. 
 
 INTERSTATE COMMERCE, 
 
 power of congress over, 114. 
 telegraph companies, 118. 
 validity of tax on, 119. 
 state no power to regulate, 250, 251. 
 insurance is not, 251. 
 
 IRREGULARITIES, 
 
 effect of in articles of incorporation, 41. 
 effect of in exercise of corporate power, 228. 
 effect of in stock subscription, 388. 
 
 J 
 
 JOINT LIABILITY, 
 
 when stockholders liable for, 564. 
 
 JOINT STOCK COMPANY, 
 
 definition and nature of, 20. 
 disfranchisement in, 291. 
 
 JUDGES, 
 
 at corporate elections, 491. 
 
 JUDGMENT, 
 
 on stock subscription, 555 n. 
 
 effect of that on assessment, 557. 
 
 effect of on stockholders, 576, 577. 
 
 conclusiveness of, 587. 
 
 effect of after corporation dissolved, 605. 
 
 JUDGMENT CREDITORS, 
 
 right to control management of corporation, 537.
 
 INDEX. 713 
 
 [References are to Sections."} 
 JUDICIAL NOTICE, 
 
 none of by-law, 144. 
 JURISDICTION, 
 
 how citizenship affects, 63, 64. 
 
 over foreign corporation, 243. 
 
 in which stockholders' liability may be enforced, 579. 
 
 to decree dissolution, 603. 
 
 JURY TRIAL, 
 
 none in contempt proceedings, 238. 
 
 K 
 
 KNOWLEDGE, 
 
 extent to which directors charged with, 516. 
 when corporation bound by that of officer or agent, 534. 
 See Notice. 
 
 LABORERS, 
 
 liability for debts to, 573. 
 
 LACHES, 
 
 in denying contract of promoter, 59. 
 
 effect where there is fraud, 323. 
 
 effect on right to rescission, 376. 
 
 in repudiating contract with officer, 505. 
 See Delay. 
 LAND, 
 
 See Real Estate. 
 LAW, 
 
 by-law not to be repugnant to, 149. 
 
 no extra territorial force, 242. 
 
 fixing amount of stock to be subscribed, 354. 
 
 LEASE, 
 
 power to execute, 186. 
 
 LEGISLATIVE ACT, 
 
 dissolution by, 595. 
 
 LEGISLATIVE ACTION, 
 
 can not be enjoined, 121 n. 
 
 LEGISLATIVE AUTHORITY, 
 
 for consolidation. 195. 
 
 to issue preferred stock, 310.
 
 714 INDEX. 
 
 [Beferences are to Sections."] 
 LEGISLATURE, 
 
 delegation of power, 26, 27. 
 
 authorizing consolidation, 34, 
 
 power and authority over corporations, 64. 
 
 repealing charter, 94. 
 
 amending or repealing charter, 99, 100. 
 
 right to exercise police power, 109. 
 
 authorizing transfer of franchises, 127. 
 
 regulating stock subscriptions, 349. 
 
 power to impose liability on stockholders, 359. 
 
 LESSEE OF RAILROAD, 
 authority of, 128. 
 
 LIABILITY OF STOCKHOLDERS, 
 
 general statement, 558. 
 
 power of legislature to impose, 559. 
 
 limitations by contract, 560. 
 
 exceptions in favor of certain classes of corporations, 561. 
 
 repeal of statutes, effect, 562. 
 
 constitutional provisions, 563. 
 
 when contractual, 564. 
 
 when penal, 565. 
 
 survival of the right of action, 566. 
 
 liability of officers and directors, 567. 
 
 as to time of holding stock, 568. 
 
 trustees, pledgees and executors, 569. 
 
 unrecorded transfers, transferrer and transferee, 570. 
 
 debts for which they are liable, 571-574. 
 
 how enforced, 575-588. 
 
 remedy against corporation, 576. 
 
 conclusiveness of judgment against the corporation, 577. 
 
 by whom enforcible, 579. 
 
 enforcement in foreign jurisdictions, 579. 
 
 proceedings in the federal courts, 580. 
 
 rule in various states, 581, 582. 
 
 where a statutory remedy is provided. 583. 
 
 where no statutory remedy is provided, 584. 
 
 ancillary proceedings, 585. 
 
 original proceedings in court of corporate domicile, 586. 
 
 conclusiveness of the decree of court of domicile, 587. 
 
 rights of receiver in foreign jurisdiction, 588. 
 
 right of set-off, 589. 
 
 statute of limitations, 590. 
 
 contribution among stockholders, 591. 
 
 LIBEL, 
 
 liability for, 233. 
 corporation liable for, 236.
 
 INDEX. 715 
 
 [References are to Sections."] 
 
 LICENSE, 
 
 effect on citizenship of corporation, 67. 
 
 distinguished from franchise, 121. 
 
 to do business in foreign state, 249. 
 
 granting to foreign corporation and revoking, 265. 
 
 LICENSE TAX, 
 
 on foreign corporation, 262. 
 
 LIEN, 
 
 when creditors have none, 318. 
 
 of corporation on shares, 457. 
 
 how that on shares affected by transfer, 467. 
 
 how that on shares enforced, 457. 
 
 LIENHOLDERS, 
 
 right to control management, 537. 
 
 LIFE-TENANT, 
 
 interest in dividends, 415. 
 
 right to dividends, 416, 417, 418, 419. 
 
 LIQUIDATION, 
 
 when voluntary permitted, 600. 
 
 LIS PENDENS, 
 
 no application to transfer of shares, 447. 
 
 LOANS, 
 
 power of national banks as to, 194. 
 when corporation may make, 199. 
 
 LOBBYING CONTRACTS, 
 validity, 223. 
 
 LOCAL ASSESSMENT, 
 
 no exemption from, 119a. 
 
 LODGE, 
 
 expulsion of members, 292 n. 
 
 LOST CERTIFICATE, 
 
 new one in place of, 253. 
 liability on, 324. 
 
 M 
 
 MAJORITY, 
 
 when required to do business, 4 n. 
 power to sell all the property, 60 n.
 
 716 INDEX. 
 
 [Beferences are Ur Sections."} 
 MAJORITY— Continued. 
 
 power of to amend by-laws, 106 n. 
 
 power to issue preferred stock, 309. 
 
 control by, 432. 
 
 limitations on power of, 433. 
 
 acting outside of regular or called meeting, 463. 
 
 powers of, 482. 
 
 power of to manage corporation, 483. 
 
 power to wind up business, 485. 
 
 power to accept amendments to chartw, 486, 487. 
 
 accepting immaterial amendments and alterr^iort 1 *, 48*. 
 
 right to accept beneficial amendments, 48tf 
 
 MALICIOUS PROSECUTION, 
 corporate liability for, 233. 
 
 MALUM IN SE, 
 
 ultra vires act which is, 216. 
 validity of contracts which are, 223. 
 
 MALUM PROHIBITUM, 
 
 ultra vires act which is, 216. 
 
 MANAGEMENT, 
 
 right of stockholders to participate in, 390. 
 powers of majority in reference to, 483. 
 by directors, 496. 
 creditors can not control, 537. 
 
 MANAGEMENT OF CORPORATIONS, 
 
 See Officers and Agentb. 
 MANAGER, 
 
 liable for acts of negligence, 515 n. 
 
 MANDAMUS, 
 
 to secure inspection of records, 394. 
 
 to secure inspection of books, 396. 
 
 not proper to compel declaration of dividends, 399. 
 
 not proper to compel payment of dividends, 406. 
 
 as remedy to secure registry of shares, 462. 
 
 MANUFACTURING COMPANY, 
 
 liability of stockholders in, 561. 
 
 MARRIED WOMAN, 
 
 as subscriber to stock, 346.
 
 INDEX. 
 
 [References are to Section$.'\ 
 
 MEASURE OF DAMAGES, 
 
 on stock subscription, 345. 
 for conversion of shares, 460. 
 
 See Damages. 
 
 MEETINGS AND ELECTIONS, 
 
 See Corporate Meetings and Elections ' 
 
 MEETINGS OF DIRECTORS, 
 time and place, 496, 497. 
 
 MEMBERS, 
 
 notice of by-laws, 153 n. 
 expulsion of, 158. 
 bound by by-laws, 293 n. 
 
 MEMBERSHIP, 
 
 how may be transferred, 434. 
 
 See Rights of Membership. 
 
 MEMBERSHIP IN A CORPORATION, 
 
 non-stock corporations, 283. 
 
 corporations having capital stock, 284. 
 
 who can be members, 285. 
 
 method of obtaining shares, 286. 
 
 effect of delivery of stock certificate, 287. 
 
 compliance with conditions, 288. 
 
 estoppel to deny, 289. 
 
 holder of illegally issued shares, 290. 
 
 disfranchisement in stock companies, 291. 
 
 disfranchisement in non-stock companies, 292. 
 
 nature of in non-stocK companies, 293. 
 
 grounds for expulsion, 294. 
 
 proceedings for expulsion, 295. 
 
 notice before expulsion, 296. 
 
 in incorporated and unincorporated societies, 297. 
 
 review by courts of expulsion proceedings, 298. 
 
 MINING COMPANY, 
 
 liability of stockholders, 561. 
 
 MINISTERIAL DUTIES, 
 delegation of, 27. 
 
 MINORITY, 
 
 rights of, 420, 484. 
 
 right to restrain ultra vires acts, 431. 
 
 equity protecting, 432. 
 
 cumulative voting by, 481. 
 
 right to be heard, 484. 
 
 objecting to amendments, 486. 
 
 717
 
 718 INDEX. 
 
 [Beferences are to Sections.] 
 MISREPRESENTATION, 
 
 as to solvency, liability of officers for, 520 n. 
 
 MISTAKES, 
 
 liability of officers for, 518. 
 
 MISUSER, 
 
 forfeiture, 100 n. 
 dissolution because of, 597 n. 
 
 MONEY, 
 
 power of corporation to borrow, 182. 
 when corporation may loan, 199. 
 recovering ultra vires loan of, 226. 
 borrowing from foreign corporation, 266. 
 director loaning to the corporation, 504. 
 treasurer no inherent power to borrow, 532. 
 
 MONOPOLY, 
 
 trust as, 117 n. 
 
 See Trust. 
 
 MORTGAGE, 
 
 to invalid corporation, 76 n. 
 
 of franchise, 126 n. 
 
 of corporate franchise, 127. 
 
 power of corporation to execute, 182. 
 
 power to give, 188. 
 
 part valid and part void, 224 n. 
 
 presumption as to authority for execution, 495t ] 
 
 right of director to take, 504. 
 
 authority of president concerning, 529. 
 
 MOTIVE, 
 
 as affecting vote of stockholder, 474. 
 
 MUNICIPAL CORPORATIONS, 
 
 nature of, 13. 
 
 subscribing for stock, 346 n. 
 
 MUNICIPAL ORDINANCE, 
 
 validity of one imposing taxes, 118. 
 
 MUNICIPALITY, 
 
 as subscriber to stock, 346.
 
 INDEX. 
 [Beferences are to Sections."] 
 
 N 
 
 NAME, 
 
 effect of change of, 48 n. 
 
 See Corporate Name. 
 
 NATIONAL BANKS, 
 
 state taxation of, 116. 
 power as to loans, 194. 
 recovering ultra vires loans, 226. 
 
 NEGLIGENCE, 
 
 as to transfer of shares, 451, 453. 
 in allowing transfer of shares, 452. 
 liability of directors for, 512. 
 when manager liable for acts of, 515 n. 
 
 NEGOTIABLE INSTRUMENTS, 
 stock certificates are not, 450. 
 
 NEGOTIABLE PAPER, 
 
 power to indorse and guarantee, 180. "] 
 
 power of corporation to make, 182. 
 
 when ultra vires, 182. 
 
 liability to holder of over-issued, 184. 
 
 unauthorized in hands of innocent purchaser, 229. 
 
 NET PROFITS, 
 
 See Profits. 
 NEW CERTIFICATE, 
 
 issuing on transfer of stock, 444. 
 
 NEW SHARES, 
 
 preference in subscription for, 397. 
 when remainder-man entitled to, 417. 
 
 NON-NEGOTIABLE INSTRUMENT, 
 
 certificate of stock is not, 305. 
 
 NON-RESIDENTS, 
 
 organizing corporation, 73 n. 
 discrimination against, 258. 
 
 NON-STOCK CORPORATIONS, 
 membership in, 283. 
 disfranchisement in, 292. 
 nature of membership in, 293. 
 
 719
 
 720 INDEX. 
 
 [Beferences are to Section*.] 
 NON-USER, 
 
 forfeiture for, 100 n. 
 effect on franchise, 129. 
 effect of, 597. 
 
 NOTE, 
 
 liability of stockholder on, 547. 
 
 NOTICE, 
 
 effect of to stockholder, 8 n. 
 
 of by-laws, 153. 
 
 of corporate powers, 171 n., 183, 203, 212. 
 
 when to be taken of corporate powers, 215. 
 
 before expulsion, 296, 298 n. 
 
 of allotment of stock, 351. 
 
 of withdrawal of subscription, 365. 
 
 of call, 384. 
 
 to corporation of transfers of shares, 435. 
 
 of trust in shares, 454. 
 
 to corporation of trust in shares, 455. 
 
 of corporate meeting, 466. 
 
 when not required of adjourned meeting, 468. 
 
 of directors' meeting, 496. 
 
 to officers and agents, 534. 
 
 NOVATION OF PARTIES, 
 
 by transfer of shares, 458. 
 
 NUISANCE, 
 
 ultra vires acts as, 93. 
 corporation liable for, 236. 
 liability of directors for, 523. 
 indictment as remedy against, 523. 
 
 NUMBER OF VOTES, 
 
 by each stockholder, 480. 
 
 o 
 
 OBJECTS, 
 
 for which corporations may be organized, 37. 
 
 OBLIGATION OF CONTRACTS, 
 charter as contract, 96, 97. 
 dissolution of corporation, 101. 
 
 OFFICE OF CORPORATION, 
 
 holding meetings at, 465.
 
 INDEX. 721 
 
 [Beferences are to Sections."] 
 
 OFFICERS AND AGENTS, 
 effect of by-laws on, 153. 
 
 liability for wrongfully paying dividends, 409. 
 courts will not control discretionary power of, 428. 
 general statement, 494. 
 presumption of authority, 495. 
 general management, 496. 
 directors, 496. 
 directors' meetings, 496. 
 place of directors' meetings, 497. 
 qualification of directors, 498. 
 powers of directors, 499. 
 stockholders' control over directors, 500. 
 delegation of authority, 501. 
 executive committee, 501. 
 
 relation of officers and directors to the corporation, 502. 
 contracts between corporation and its officers, 503. 
 when an officer may deal with his corporation, 504. 
 right of corporation to repudiate such contract, 505. 
 contracts between corporations having common officers or directors. 
 
 506, 507. 
 liability of corporation for torts of its agents, 508. 
 ratification of acts, 509. 
 
 liability for torts in ultra vires transactions, 510. 
 liability of officers for acts in excess of authority, 511. 
 liability for abuse of trust, 512. 
 degree of care required of directors, 513. 
 liability of officer is for individual acts or omissions, 514. 
 supervision of subagents, 515. 
 knowledge of contents of corporate records, 516. 
 liability for care of papers, 517. 
 liability for mistakes, 518. 
 liability on contracts, 519. 
 liability to third persons for torts, 520. 
 violation of charter or statute, 521. 
 liability imposed by statute, 522. 
 
 liability of directors where corporation maintains a nuisance, 523. 
 liability imposed for benefit of third persons, 524. 
 remedy of the corporation against an officer, 525. 
 statute of limitations, 526. 
 no liability to corporate creditors, 527. 
 powers of particular officers, 528. 
 the president, 529. 
 the vice-president, 530. 
 the secretary, 531. 
 the treasurer, 532. 
 
 46— Private Corp.
 
 722 INDEX. 
 
 [References are to Sections.] 
 OFFICERS AND AGENTS— Continued. 
 de facto officers, 533. 
 notice to officers and agents, 534. 
 compensation, 535. 
 removal from office, 536. 
 creditors can not control management, 537. 
 when subject to penalties, 567. 
 rights as creditors, 574. 
 
 See Elections. 
 
 "ONE MAN" CORPORATION, 
 when may be formed, 548. 
 liability of shareholder in, 549. 
 
 OPINION, 
 
 expression of not fraud, 374. 
 
 ORAL NOTICE, 
 
 of withdrawal of subscription, 365. 
 
 ORDINANCE, 
 
 granting right to use street for railway purposes, 121. 
 
 ORGANIZATION, 
 
 conditions precedent to, 40. 
 
 ORGANIZING CORPORATION, 
 
 substantial compliance with statute, 38. 
 
 OVERISSUE OF STOCK, 
 effect of, 320. 
 
 OVERVALUED PROPERTY, 
 
 remedy where stock paid for in, 341. 
 
 OWNERSHIP OF SHARES, 
 
 separation of voting power from, 475-477. 
 
 P 
 
 PAPER, 
 
 power to indorse and guarantee, 180. 
 liability for care of, 517. 
 
 PAR, 
 
 issuing shares of stock below, 329. 
 liability on shares issued below, 552. 
 
 PAROL DECLARATIONS 
 as fraud, 353 n.
 
 INDEX. 723 
 
 [Beferences are to Sections.] 
 
 PAROL EVIDENCE, 
 
 to prove incorporation, 49, 50. 
 
 of transactions at corporate meetings, 470. 
 
 PART PERFORMANCE, 
 
 disaffirmance after, 208. 
 estoppel by, 218. 
 
 PARTICULAR POWERS, 
 
 list of, 169-199rt. 
 
 PARTIES, 
 
 to suit by stockholder, 430. 
 
 how transfer of shares affects, 458. 
 
 PARTNERS, 
 
 members of corporation as, 83. 
 
 when foreign corporation liable as, 249. 
 
 stockholders compared to, 458. 
 
 liability after incorporation of partnership, 541. 
 
 when incorporators liable as, 544. 
 
 corporators liable as, 545. 
 
 liability as, 546. 
 
 where there is not even de facto corporation, 547. 
 
 PARTNERSHIP, 
 
 compared to corporation, 20. 
 partner selling property to, 54. 
 power of corporation to enter into, 181. 
 notice to of corporate meeting, 467 n. 
 effect of incorporation of, 541. 
 
 PATENTS, 
 
 power of gas company to deal in, 139 n. 
 
 PAYMENT, 
 
 for stock with property, 340. 
 for shares, statutes regulating, 342. 
 of deposit on stock subscription, 355. 
 for stock, how may be made, 552. 
 
 PAYMENT FOR STOCK, 
 
 how may be made, 327. 
 
 PENAL STATUTES, 
 
 obligations imposed by, 245. 
 where to enforce, 245.
 
 724 INDEX. 
 
 [Beferences are to Sections."] 
 PENALTY, 
 
 no vested interest in, 88 n. 
 
 failing to comply with statutory requirements, 269. 
 
 how lack of affects validity of contract, 270. 
 
 no vested right in, 522. 
 
 when stockholders' liability in nature of, 565. 
 
 when officers and directors subject to, 567. 
 
 PERPETUAL SUCCESSION, 
 right of, 140, 142. 
 
 PERSON, 
 
 corporation as, 8, 65, 68, 89 n, 236. 
 foreign corporation as, 68. 
 
 PERSONAL INJURY, 
 
 when directors liable for, 523. 
 
 PERSONAL INTEREST, 
 
 as affecting right of stockholder to vote, 474. 
 
 PERSONAL LIABILITY, 
 
 of officers, 516, et seq. 
 
 officers, statute imposing, 522. 
 
 how that of directors determined, 522. 
 
 where corporate organization defective, 543. 
 
 when stockholders not liable for, 561. 
 
 for debts to laborers and employes, 573. 
 
 PERSONAL PROPERTY, 
 
 taxing that of corporation, 113. 
 power to acquire, 185. 
 power to alienate, 186. 
 corporate power to mortgage, 188. 
 capital stock as, 315. 
 disposition of on dissolution, 606. 
 
 PLACE, 
 
 where corporation may transact business, 136. ' 
 where corporate meetings are held, 465. 
 
 PLEDGE, 
 
 of stock certificates by delivery, 446. 
 effect on right to vote stock, 477. 
 
 PLEDGEE, 
 
 right of to dividends, 408. 
 stock, rights of, 442. 
 right to vote stock, 471. 
 liability of on stock, 569.
 
 INDEX. 
 
 [Beferences are to Sections.'} 
 PLEDGOR AND PLEDGEE, 
 
 right to dividends as between, 408. 
 
 POLICE POWER, 
 
 fourteenth amendment does not destroy, 65 n. 
 corporations subject to, 109. 
 
 POOLING CONTRACTS, 
 validity, 174. 
 
 POWER OF ATTORNEY, 
 
 transfer of shares on forged, 452. 
 
 POWERS, 
 
 of corporations, 4. 
 
 under Roman law, 4 n. 
 
 of de facto corporation, 80. 
 
 generally, 131. 
 
 theory of corporate power, 132, 133. 
 
 source and limits of, 133 n. 
 
 principles of construction, 134. 
 
 presumption of power and regularity, 135. 
 
 place where powers may be exercised, 136. 
 
 when not limited by term of corporate existence, 187, 
 
 express, 138. 
 
 powers implied from express powers, 139. 
 
 business in which corporation may engage, 139. 
 
 incidental powers, 140. 
 
 perpetual succession, 142. 
 
 to have a seal, 143. 
 
 to make and enforce by-laws, 144-159. 
 
 to take and hold land, 160-168. 
 
 to hold stock in another corporation, 190. 
 
 after consolidation, 197. 
 
 notice of those of a corporation, 203. 
 
 of directors, 499. 
 
 of particular officers, 528. 
 
 how conferred upon officers, 528. 
 
 illustrations of those of president, 529. 
 
 See Extra Territorial Powers. 
 
 PREFERENCES, 
 
 power to make for creditors, 189. 
 
 validity of those in favor of directors, 189 n. 
 
 PREFERRED SHAREHOLDERS, 
 
 right to dividends, 314 n. 
 
 725
 
 726 INDEX. 
 
 [References are to Sections."] 
 PREFERRED STOCK, 
 defined, 306, 307. 
 power to issue, 308. 
 power of majority, 309. 
 under legislative authority, 310. 
 estoppel to attack, 311. 
 status of holders of, 312. 
 rights of holders of, 313. 
 dividends on, 313. 
 
 PRELIMINARY AGREEMENT, 
 
 to form corporation, effect of, 345a. 
 
 PREMATURE CONTRACT, 
 
 how that by corporation affects subscription, 368. 
 
 PRESCRIPTION, 
 
 corporations by, 30. 
 
 PRESIDENT, 
 
 service of process on, 277. 
 holding meetings at office of, 465 n. 
 power and authority of 529. 
 how business entrusted to, 529 n. 
 
 PRESUMPTION, 
 
 of legal incorporation from delay, 50 n. 
 
 as to citizenship of corporation, 63, 64. 
 
 none of exemption from taxation, 119a. 
 
 of corporate powers, 135. 
 
 of validity of contracts, 211. 
 
 as to powers of foreign corporation, 255. 
 
 that foreign corporation complied with statute, 272. 
 
 that party is a stockholder, 348 n. 
 
 of right-doing in sale of stock, 456. 
 
 as to notice of corporate meeting, 467. 
 
 as to capacity of stockholder, 482. 
 
 of regularity of elections, 490. 
 
 of authority of agents, 495. 
 
 as to regularity of meetings, 496 n. 
 
 of fraud, contract with officer, 504. 
 
 that seal authoritatively affixed, 531. 
 
 PRINCIPAL, 
 
 when bound by notice to agent, 534. 
 
 PRINCIPAL AND AGENT, 
 
 torts of agent, 508.
 
 INDEX. 727 
 
 [References are to Sections."] 
 
 PRIVATE CORPORATION, 
 
 defined, 15. 
 
 power to require reports from, 92. 
 
 PRIVATE INTERNATIONAL LAW, 
 foundation for, 254 n. 
 
 PRIVILEGES, 
 
 after consolidation, 197. 
 
 See Franchises and Privileges. 
 
 PROCEDURE, 
 
 in prosecuting corporation for crime, 239. 
 
 in enforcing liability of stockholders, 585, 586. 
 
 PROCESS, 
 
 service on foreign corporations, 275. 
 service on agent of corporation, 276. 
 service on officer temporarily in state, 277. 
 service on officer of corporation, 277. 
 illustrative cases of service of, 278. 
 statutes regulating service of, 279. 
 designating agent to accept service of, 280. 
 service of obtained by deception, 281. 
 
 PROFITS, 
 
 promoter not to make, 53. 
 
 paying to holders of preferred stock, 313. 
 
 distinguished from dividends. 398. 
 
 declaring dividend out of, 399. 
 
 what are, 403. 
 
 when life tenant entitled to, 415. 
 
 directors to account for, 502. 
 
 not a part of capital stock, 551. 
 
 PROMISSORY NOTE, 
 
 authority of treasurer to execute, 532. 
 
 PROMOTERS, 
 
 defined, 51. 
 
 fiduciary position of, 52. 
 
 not to receive secret profits, 53. 
 
 owners of property as, 54. 
 
 accounting to stockholders, 53. 
 
 personal liability of on contracts, 55. 
 
 when liable for fraud, 56. 
 
 using fraudulent prospectus, 57. 
 
 liability of corporation on contracts of, 58.
 
 728 INDEX. 
 
 [References are to Sections.] 
 PROMOTERS— Continued. 
 
 adopting contract of, 59. 
 
 accepting benefits under contract of, 60. 
 
 expenses and services of, 62. 
 
 notice to of withdrawal of subscription, 365. 
 
 liability for fraudulent representations of, 372. 
 
 when corporation bound by knowledge of, 534. 
 
 liability of, 540. 
 
 PROOF OF INCORPORATION, 
 
 in direct proceedings, 49. 
 in indirect proceedings, 50. 
 
 PROPERTY, 
 
 promoter selling to the corporation, 54. 
 
 represented by capital stock, 113 n. 
 
 power to acquire and hold, 140. 
 
 paying for stock with, 337. 
 
 payment for stock in, 340. 
 
 paying dividend in, 407. 
 
 directors may transfer, 499. 
 
 not necessary to corporate existence, 603. 
 
 disposition of on dissolution, 606. 
 
 PROSPECTUS, 
 
 effect of fraudulent, 57. 
 
 PROXY, 
 
 right to vote by, 473. 
 how to be executed, 473. 
 executors giving, 473. 
 power to revoke, 475. 
 
 PUBLIC CORPORATIONS, 
 
 nature of, 12. 
 state control over, 91. 
 duty to serve all, 91. 
 ultra vires acts of, 204. 
 
 PUBLIC DUTIES, 
 
 corporations charged with, 126, 187. 
 
 PUBLIC POLICY, 
 
 by-law against, 150. 
 
 against holding real estate, 161 n. 
 
 contracts against, 172, 224. 
 
 punishing corporations for crimes, 236. 
 
 how determined, 257.
 
 INDEX. 729 
 
 [Beferences are to Sections."] 
 PUBLIC POLICY— Continued. 
 
 in reference to transfer of shares, 438. 
 as to transfer of shares, 438. 
 when voting trust agreement against, 476. 
 voting trust agreement against, 478. 
 
 PUBLICATION, 
 
 articles of incorporation, 42. 
 
 PUNITIVE DAMAGES, 
 liability for, 235. 
 corporation liable for, 237. 
 
 PURCHASERS OF SHARES, 
 
 transferred in violation of a trust, rights of, 454. 
 
 PURPOSES, 
 
 for which corporations may be organized, 37. 
 
 Q 
 
 QUASI-PUBLIC CORPORATIONS, 
 denned, 14. 
 state control over, 91. 
 effect of ultra vires acts of, 93. 
 
 QUO WARRANTO, 
 
 when lies, 10. 
 
 to question corporate existence, 70. 
 
 failure to file reports, 92. 
 
 who to institute, 93. 
 
 against foreign corporation, 282. 
 
 as remedy where watered stock issued, 333. 
 
 to try title to corporate officer, 493 n. 
 
 to determine right to an office, 536. 
 
 QUORUM, 
 
 of members, 482. 
 
 power of majority of, 482. 
 
 by-law determining, 482 n. 
 
 presumption that there is at an election, 490. 
 
 of directors, 496. 
 
 of executive committee, 501. 
 
 R 
 
 RAILROAD, 
 
 right to lay in street, 121.
 
 730 INDEX. 
 
 [References are to Sections."] 
 RAILROAD COMPANY, 
 taxation of, 113. 
 
 how consolidation affects taxation, 119a. 
 power to guaranty bonds, 180. 
 how consolidation affects duties of, 198. 
 conditional subscription to stock of, 352. 
 liability for assault on passenger, 508. 
 
 RAILROAD RATES, 
 power to fix, 91. 
 
 RATIFICATION, 
 
 of claim of corporate franchise, 29. 
 
 of contract of promoter, 59. 
 
 estoppel by, 59 n. 
 
 when none of ultra vires contract, 207. 
 
 of ultra vires acts, 221. 
 
 of acts of agents, 371. 
 
 of contract with director, 503. 
 
 of contract made with officer, 505, 507 n. 
 
 of voidable contracts, 507. 
 
 of torts of agents, 509. 
 
 of president's acts, 529. 
 
 of treasurer's acts, 532. 
 
 REAL ESTATE, 
 
 franchises as, 122. 
 
 purpose for which may be held, 160 n. 
 
 limiting amount of that held, 161 n. 
 
 corporate power to mortgage, 188. 
 
 power of foreign corporation to hold, 255 n. 
 
 disposition of on dissolution, 606. 
 
 REAL ESTATE— POWER TO TAKE AND HOLD, 
 
 rule at common law, 160. 
 
 statutes affecting, 161. 
 
 manner of acquiring title, 163. 
 
 taking by devise, 164, 165. 
 
 doctrine of equitable conversion, 166. 
 
 estate that may be taken, 167. 
 
 REASONABLE TIME, 
 
 to accept corporate charter, 25. 
 
 RECEIVER, 
 
 asserting defense of ultra vires, 219 n. 
 collecting stock subscriptions, 389a. 
 enforcing subscriptions, 555.
 
 INDEX. 731 
 
 [References are to Sections."] 
 RECEIVER— Continued. 
 
 enforcing liability of stockholders, 578. 
 
 representing creditors, 582. 
 
 rights of in foreign jurisdiction, 588. 
 
 appointment of does not amount to dissolution, 602. 
 
 RECITAL, 
 
 estoppel by that in stock certificate, 322. 
 effect of in shares of stock, 331. 
 
 RECORD, 
 
 of transfer of shares, 442. 
 of corporate meetings, 470. 
 
 See Inspection of Records. 
 
 REGISTRY OF SHARES, 
 
 mandamus as remedy, 462. 
 
 REGULAR MEETINGS, 
 how held, 466. 
 
 RELEASE, 
 
 of stockholder, when creditor not bound by, 539. 
 
 RELEASE OF SUBSCRIBER, 
 
 by consent, 385. 
 by corporation, 386. 
 by forfeiture, 387. 
 
 RELIGIOUS SOCIETIES 
 as corporations, 18. 
 
 REMAINDER-MAN, 
 
 interest in dividends, 415. 
 right to dividends, 416-419. 
 
 REMEDY, 
 
 illegal amendment to charter, 106. 
 
 validity of statutes affecting, 110 
 
 where stock paid for in overvalued property, 341. 
 
 of defrauded stockholders, 375. 
 
 forfeiture of shares as, 388. 
 
 to secure inspection of records, 394. 
 
 for wrongful refusal to permit inspection of records, 396. 
 
 for wrongful refusal to transfer stock, 459. 
 
 of the corporation against officers, 525. 
 
 against corporation on debt, 576. 
 
 for enforcing liability of stockholders, 583, 584. 
 
 to secure dissolution, 603
 
 732 INDEX. 
 
 [Beferences are to Sections."] 
 REMOVAL, 
 
 of officers, 536. 
 
 REMOVAL OF CAUSES, 
 
 right to by foreign corporation, 264. 
 
 RENTALS, 
 
 taxation of, 118 n. 
 
 REPEAL, 
 
 distinguished from forfeiture, 94. 
 
 of corporate charter, 99, 100. 
 
 of by-laws, 159. 
 
 of statute as to stockholders' liability, 562. 
 
 REPORTS, 
 
 power to require, 92. 
 
 liability of directors for failing to make, 522. 
 
 RESCISSION, 
 
 of subscription for fraud, 374. 
 
 necessity for prompt action, 376. 
 
 of subscription after insolvency, 379. 
 
 right of as to subscription before insolvency, 380. 
 
 of declaration of dividends, 404. 
 
 RESOLUTION, 
 
 distinguished from by-law, 144 n. 
 
 RESTRAINT OF TRADE, 
 
 agreement not to sell stock, 475. 
 
 RESTRICTIONS, 
 
 imposed on foreign corporations, 260. 
 
 See Statutory Restrictions. 
 
 RETALIATORY STATUTES, 
 
 against foreign corporations, 263. 
 
 RIGHT OF ACTION, 
 
 survival of on stockholders' liability, 566. 
 
 RIGHTS OF MEMBERSHIP, 
 
 participation in the management, 390. 
 
 general rights of stockholders, 391. 
 
 rights in the corporate property, 392. 
 
 right to inspect records, 393. 
 
 condition upon which inspection is permitted, 394. 
 
 demand for inspection of records, 395. 
 
 remedy for wrongful refusal to permit inspection of record, 396. 
 
 preference in subscription for new shares, 397. 
 
 See Dividends; Actions by Stockholders.
 
 INDEX. 733 
 
 [Beferences are to Sections.] 
 RULES AND REGULATIONS, 
 
 corporations publishing, 156. 
 as to votes at corporate meetings, 471. 
 See By-Laws. 
 
 s 
 
 SALE, 
 
 of franchises, 125. 
 
 right to dividends on, 413. 
 
 after declaration but before payment of dividend, 414. 
 
 rights of corporate creditors to question, 537. 
 
 SCIRE FACIAS, 
 
 to secure dissolution, 604. 
 
 See Quo Warranto. 
 SEAL, 
 
 authority to have, 143. 
 
 not necessary to stock certificate, 143 n. 
 
 corporate acts under, 170. 
 
 when contracts need not be under, 170. 
 
 SECRET CONDITIONS, 
 
 effect on stock subscription, 353. 
 
 SECRET PROFITS, 
 
 promoter not to make, 53. 
 directors not to receive, 502. 
 
 SECRETARY, 
 
 power and authority of, 531. 
 place of domicile, 597. 
 
 SERVANTS, 
 
 liability for torts of, 234. 
 
 SERVICE OF PROCESS, 
 
 obtained by deception, 281. 
 
 See Process. 
 SERVICES, 
 
 of promoters, 62. 
 
 paying for stock by, 337. 
 
 SET-OFF, 
 
 of dividends against stockholder, 410. 
 against stockholder's liability, 589.
 
 734 INDEX. 
 
 [References are to Sections."] 
 SHAREHOLDER, 
 
 taxation, how affected by, 112. 
 
 as creditor, 404. 
 
 when no duty on to protect corporate rights, 420. 
 
 release by transfer of shares, 441. 
 
 director as, 498. 
 
 SHARES OF STOCK, 
 
 taxation of, 117. 
 
 method of obtaining, 286. 
 
 illegally issued, rights of holder, 290. 
 
 defined, 301. 
 
 recovery of money paid for void ones, 326. 
 
 how may be paid for, 327. 
 
 issue below par, 329. 
 
 effect of recital that they are fully paid, 331. 
 
 bona fide purchasers of, 332. 
 
 accepted as a gratuity, 338. 
 
 payment for, 342. 
 
 form of contract for, 348. 
 
 implied agreement to pay for, 366. 
 
 forfeiture of, 387. 
 
 forfeiture of as a remedy, 388. 
 
 preference in subscription for new ones, 397. 
 
 rights acquired by transferee of, 427. 
 
 transfer on forged power of attorney, 452. 
 
 purchasing those held in trust, 454. 
 
 lien of corporation on, 457. 
 
 how lien on enforced, 457. 
 
 liability on those issued below par, 552. 
 
 See Transfer op Shares; Stock. 
 
 SLANDER AND LIBEL, 
 
 liability for, 233, 234 n. 
 
 SOCIETIES, 
 
 See Non-Stock Corporations. 
 SOLVENCY, 
 
 misrepresentation as to, 520 n. 
 
 SPECIAL ACT, 
 
 creating corporations, 32. 
 
 SPECIAL ASSESSMENTS, 
 liability for, 18 n. 
 
 SPECIAL MEETINGS, 
 how held, 466. 
 notice of, 467.
 
 INDEX. 736 
 
 [Befermces are to Sections.'] 
 
 SPECIAL POWERS, 
 theory of, 132. 
 
 SPECIAL PRIVILEGES. 
 
 validity of contract granting, 175. 
 
 SPECIAL TERMS, 
 
 stock subscriptions on, 360. 
 
 SPECIFIC PERFORMANCE, 
 
 ultra vires contract, 206, 207. 
 
 of contract to transfer stock, 461, 463. 
 
 of voting trust agreement, 479. 
 
 STATE, 
 
 effect of incorporation in several, 64. 
 
 attacking corporate existence, 70. 
 
 control over corporations, 89. 
 
 visitorial power over corporations, 90. 
 
 control over quasi-public corporations, 91. 
 
 reserving right to amend or repeal charter, 99, 100. 
 
 granting exclusive franchise, 107. 
 
 right to exercise power of eminent domain, 108. 
 
 police power over corporations, 109. 
 
 power to tax corporations, 112. 
 
 taxing national banks, 116. 
 
 asking forfeiture of franchise, 129. 
 
 limiting corporate powers, 131. 
 
 questioning ultra vires acts, 168. 
 
 corporate acts out of, 248. 
 
 power over foreign corporations, 249-253. 
 
 no power to regulate interstate commerce, 250, 251. 
 
 no visitorial power over foreign corporations, 252. 
 
 comity between, 254-260. 
 
 validity of contracts made outside of, 262. 
 
 proceedings by against corporation, 282. 
 
 holding corporate meetings outside of, 465. 
 
 questioning corporate franchises, 594. 
 
 method by in dissolving corppration, 599. 
 
 proceedings by for dissolution, 604. 
 
 STATE LAWS, 
 
 foreign corporation submitting to, 243. 
 
 STATUTE, 
 
 authorizing incorporation, 36. 
 validity of those affecting remedy, 110. 
 regulating right to hold real estate, 161. 
 limiting devise to corporation, 165.
 
 736 INDEX. 
 
 [References are to Sections."] 
 STATUTE— Continu ed . 
 
 forbidding trusts, 178. 
 
 validity of contract in violation of, 179. 
 
 authorizing purchase of stock in other corporation, 191. 
 
 conferring authority to consolidate, 195. 
 
 contracts prohibited by, 225, 226. 
 
 retaliatory against foreign corporations, 263. 
 
 regulating payment for shares of stock, 342. 
 
 governing subscriptions to stock, 345. 
 
 fixing amount of stock to be subscribed, 354. 
 
 regulating inspection of records, 394. 
 
 regulating transfer of shares, 442. 
 
 prescribing manner of transferring stock, 444. 
 
 creating lien on shares, 457. 
 
 regulating right to vote at corporate meetings, 471. 
 
 conferring right to vote by proxy, 473. 
 
 limiting number of votes, 480 n. 
 
 authorizing cumulative voting, 481. 
 
 authorizing review of corporate election, 493 n. 
 
 liability of officers for violating, 521. 
 
 imposing personal liability on officers, 522. 
 
 imposing liability upon directors, 524. 
 
 fixing liability of stockholders, 558. 
 
 how repeal of affects liability of stockholders, 562. 
 
 following in enforcing liability of stockholders, 583. 
 
 prescribing method of dissolving corporation, 599. 
 
 regulating method of dissolution, 604. 
 
 STATUTE OF LIMITATIONS, 
 
 applicable to subscriptions, 389a. 
 
 governing corporation's action against director, 526. 
 
 on stockholder's liability, 590. 
 
 STATUTORY REQUIREMENTS, 
 
 effect where foreign corporation fails to comply with, 268-272. 
 penalty for failing to comply with, 269. 
 
 STATUTORY RESTRICTIONS ON FOREIGN CORPORATIONS, 
 
 in general, 261. 
 
 conditions which may be imposed, 262. 
 
 retaliatory statutes, 263. 
 
 waiver of constitutional rights, 264. 
 
 granting and revocation of license, 265. 
 
 meaning of "doing business," 266. 
 
 STOCK, 
 
 forfeiture for non-payment of calls, 157. 
 power to hold in another corporation, 190.
 
 INDEX. 737 
 
 {References are to Sections.'] 
 STOCK— Continued. 
 
 statutory authority to purchase in other corporation, 191. 
 
 taking to secure indebtedness, 191. 
 
 corporation taking on sale of property, 191. 
 
 corporation purchasing its own, 192. 
 
 when a corporation may hold its own, 192, 193. 
 
 overissue of, 320. 
 
 how may be paid for, 327. 
 
 payment for in property or services, 337. 
 
 paid for by overvalued property, 339. 
 
 agreement to take in company to be organized, 344. 
 
 municipal corporations subscribing for, 346 n. 
 
 dividends must cover all, 411. 
 
 rights of life tenant and remainder-man in, 415-419. 
 
 validity of agreement not to sell, 475. 
 
 right to vote that pledged, 477. 
 
 when majority of must be voted, 482. 
 
 liability for debts contracted before distribution of, 542. 
 
 who liable on, 568. 
 
 See Capital Stock. 
 STOCK BOOKS, 
 
 duty to enter transfers on, 448. 
 as evidence of right to vote, 471. 
 
 See Books. 
 STOCK CERTIFICATE, 
 
 right to compel issue of new one, 253. 
 
 effect of delivery of, 287. 
 
 pledge of by delivery, 446. 
 
 rights of transferee or purchaser of, 450. 
 
 See Certificate of Stock. 
 
 STOCK SUBSCRIPTIONS, 
 
 actions on, denying corporate existence, 84. 
 in genera], 343. 
 
 agreement to take shares in company to be organized, 344. 
 where there are no statutory provisions, 345. 
 statement of rules, 345a. 
 who may subscribe, 346. 
 subscriptions through an agent, 347. 
 the form of the contract, 348. 
 the consideration, 349. 
 signing articles of incorporation, 350. 
 application, allotment and notice, 351. 
 conditional subscriptions, 352. 
 secret conditions, 353. 
 
 subscription of amount named in charter or required by law, 354. 
 47 — Private Corp.
 
 738 INDEX. 
 
 [References are to Sections."} 
 STOCK SUBSCRIPTIONS— Continued. 
 payment of deposit, 355. 
 tender of certificate, 356. 
 
 conditional delivery of subscription contract, 357. 
 performance of condition, 358. 
 waiver of condition, 358. 
 conditions subsequent, 359. 
 upon special terms, 360. 
 in excess of authorized capital, 361. 
 amount of subscription by one person, 362. 
 who may receive, 363. 
 necessary to obtain a charter, 364. 
 withdrawal of, 365. 
 
 implied agreement to pay for shares, 366. 
 the New England rule, 367. 
 
 how premature contract by corporation affects, 368. 
 effect of fraud on, 369. 
 the English doctrine, 370. 
 when contract voidable merely, 371. 
 fraudulent representations by promoters, 372. 
 what frauds will vitiate,373. 
 expressions of belief or opinion, 374. 
 remedies. of defrauded stockholders, 375. 
 rescission, prompt action, 376. 
 insolvency, right of creditors, 377. 
 rule in United States, 378. 
 
 right to rescind after insolvency continued, 379. 
 rights of creditors before insolvency of corporation, 380. 
 insolvency, rule of diligence, 381. 
 enforcement by action, 382. 
 calls, 383, 384. 
 
 release of subscriber by consent, 385. 
 release by corporate action, 386. 
 forfeiture of, 387. 
 
 when forfeiture a cumulative remedy, 388. 
 estoppel of subscriber, 389. 
 the statute of limitations, 389a. 
 
 See SLBSCRIPTIONfc. 
 
 STOCKHOLDERS, 
 
 relation to corporation, 8. 
 
 do not own corporate property, 8 n. 
 
 effect of notice to, 8 n. 
 
 binding corporation, 10. 
 
 promoter accounting to, 53. 
 
 when estopped to deny object of corporation, 84 n. 
 
 making by-laws, 146. 
 
 effect of by-laws on, 153.
 
 INDEX. 
 
 [References are to Sections."] 
 STOCKHOLDERS— Continued. 
 preferring as creditor, 189. 
 estoppel to assert doctrine of ultra vires, 216. 
 how affected by watered stock, 330. 
 when liable to creditors, 341. 
 when not bound by fraud, 341 n. 
 remedies where defrauded, 375. 
 notice to of call on stock, 384. 
 liability for debts, 389a. 
 general rights of, 391. 
 right to subscribe for new shares, 397. 
 when capital may be distributed among, 402. 
 when title to dividends passes to, 404. 
 action by to recover dividends, 406. 
 set-off of dividends against, 410. 
 when may sue for corporation, 421. 
 conditions precedent to right of a-ction by, 422. 
 when equity will not interfere for, 423. 
 illustrative cases of actions by, 424-426. 
 parties to suit by, 430. 
 right to restrain ultra vires acts, 431. 
 control by majority, 432. 
 limitation on the power of the majority, 433. 
 right to transfer shares, 435. 
 duty to protect against wrongful transfers, 455 n. 
 duty of corporation to protect, 456. 
 compared to partners, 458. 
 objecting to meeting held in foreign state, 465. 
 when bound by corporate meeting 467. 
 when bound by adjourned meeting, 468. 
 right to vote at corporate meetings, 471. 
 voting on matter in which he has personal interest, 474. 
 motive as affecting vote of, 474. 
 right to transfer power to vote stock, 476. 
 number of votes by each one, 480. 
 cumulative voting, 481. 
 one can not hold meeting, 482. 
 power of majority, 483. 
 rights of minority, 484. 
 control over directors, 500. 
 relation to directors, 502. 
 ratifying contract with directors, 503. 
 knowledge of contents of corporate records, 516. 
 effect of notice to, 534 n. 
 fixing compensation of officers, 535. 
 single one acquiring all the property, 548. 
 
 739
 
 740 INDEX. 
 
 [References are to Sections."} 
 STOCKHOLDERS— Contin ed. 
 
 liability where corporation organized to do business in foreign state, 
 550. 
 
 required to return capital wrongfully distributed, 551. 
 
 not liable for torts of corporation, 553. 
 
 effect of judgment against on assessment, 557. 
 
 manner of proving who are, 558 n. 
 
 liability for debts, 572, 573. 
 
 when personally liable for debts to laborers and employes, 573. 
 
 rights as creditors, 574. 
 
 who may enforce liability against, 578. 
 
 set-off against liability of, 589. 
 
 contribution among, 591. 
 
 asking for dissolution, 599 n. 
 See Common Law Liability of Stockholders ; Liability of Stockholders ; 
 Majority ; Membership iij Corporation ; Rights of Membership. 
 
 STOLEN CERTIFICATES, 
 liability on, 324. 
 rights of purchaser of, 450. 
 
 STREET, 
 
 grant of for railway purposes, 121. 
 
 STREET RAILWAY COMPANY, 
 
 nature of right to use street, 121, 122. 
 
 STRICT CONSTRUCTION, 
 
 of corporate charters, 134. 
 
 SUBAGENTS, 
 
 liability for acts of, 514. 
 supervision of, 515. 
 
 SUBSCRIBERS TO STOCK, 
 
 contract between, 344, 345. 
 
 when may escape from subscription, 374. 
 
 release of, 385. 
 
 estoppel of, 389. 
 
 SUBSCRIPTION, 
 
 prior to incorporation, 43. 
 
 obtained by fraud, 56. 
 
 in contemplation of incorporation, 85. 
 
 how amendment to charter affects, 104 n. 
 
 waiver of formalities to, 28(5 n. 
 
 what amounts to withdrawal of, 365 n.
 
 INDEX. 741 
 
 [References are to Sections."} 
 SUBSCRIPTION— Continued. 
 
 change in corporate enterprise releasing, 486. 
 
 liability on, 538. 
 
 measure of liability on, 539. 
 
 enforcement of, 554. 
 
 liability on conditional, 554. 
 
 enforcing in foreign jurisdiction, 555. 
 See Common Law Liability of Stockholders ; Liability of Stockhold- 
 ers; Stock Subscriptions. 
 
 SUBSCRIPTION CONTRACT, 
 
 conditional delivery of, 354. 
 
 SUBSEQUENT CREDITORS, 
 
 rights against watered stock, 334. 
 
 SUMMONS, 
 
 See Process. 
 SUPERINTENDENT, 
 
 director's compensation as, 535 n. 
 
 SURRENDER OF CHARTER, 
 effect of, 596. 
 
 SURRENDERING CERTIFICATE, 
 
 on transfer of shares, 447, 
 
 T 
 
 TAXATION, 
 
 of corporations, 112. 
 
 situs of taxable property, 113. 
 
 laws no extraterritorial force, 113. 
 
 federal agencies, 115. 
 
 of national banks by state, 116. 
 
 "other moneyed capital," 117. 
 
 of telegraph companies, 118. 
 
 validity of municipal ordinance imposing, 118. 
 
 of government telegraph messages, 118 n. 
 
 railroad rentals, 118 n. 
 
 various agencies of commerce, 119. 
 
 exemption from, 119a. 
 
 of consolidated corporation, 119a. 
 
 of franchises, 122. 
 
 nature of right of exemption from, 128. 
 
 of corporate good-will, 550 n, 
 
 TAXING POWER, 
 
 restrictions imposed by federal constitution, 114.
 
 742 INDEX. 
 
 [Beferences are to Sections."] 
 TELEGRAPH COMPANIES, 
 state control over, 91. 
 taxation of, 118. 
 
 TELEGRAPH MESSAGES, 
 taxation of, 118. 
 
 TELEPHONE COMPANIES, 
 state control over, 91. 
 
 TENANT IN COMMON, 
 corporation as, 167 n. 
 
 TENDER, 
 
 of certificate of stock, when required 356. 
 
 TERM OF EXISTENCE, 
 
 status after expiration of, 77. 
 
 THIRD PERSONS, 
 
 how by-laws affect, 154. 
 
 liability of officers to for torts, 520. 
 
 holding -directors liable in tort, 523. 
 
 liability imposed on directors for benefit of, 524. 
 
 TITLE, 
 
 to franchises, when vests, 124. 
 manner of acquiring to real estate, 163. 
 when that to dividends passes, 404. 
 to dividends, 412. 
 
 TIME, 
 
 of corporate existence, effect, 37. 
 
 TOLL, 
 
 defined, 118. 
 
 TORTS, 
 
 liability of consolidated company for, 198. 
 
 liability for, 221. 
 
 liability for those of agents, 508. 
 
 liability for those of officers, 508. 
 
 ratifying those of agent, 509. 
 
 liability for those in ultra vires transactions, 510. 
 
 liability of officers to third persons for, 520. 
 
 stockholders not liable for those of corporation, 553. 
 
 suing for after expiration of charter, 594 n.
 
 INDEX. 743 
 
 [References are to Sections."] 
 TORTS AND CRIMES— LIABILITY FOR, 
 general statement, 232. 
 growth of the law, 233. 
 the modern rule, 234. 
 liability for punitive damages, 235. 
 commission of crime, 236. 
 crimes involving intent, 237. 
 contempt of court, 238. 
 
 TRAFFIC AGREEMENTS, 
 validity, 176. 
 
 TRANSFER BOOKS, 
 
 closing for dividends, 405, 412. 
 
 TRANSFER OF FRANCHISES, 
 
 rights in regard to, 125. 
 
 power and authority concerning, 127, 128. 
 
 TRANSFER OF SHARES, 
 
 general statement, 434. 
 
 the right to transfer shares, 435. 
 
 power to prohibit transfers, 436. 
 
 the regulation of transfers, 437, 439. 
 
 restrictions imposed by by-law or express contract, 438. 
 
 transfer on books of the corporation, 440, 441. 
 
 the rights of attaching creditors, 442. 
 
 transfers in fraud of creditors, 443. 
 
 manner of making assignment and transfer, 444. 
 
 transfer after insolvency or dissolution, 445. 
 
 pledge of stock certificates by delivery, 446. 
 
 surrender of old certificate, 447. 
 
 fraudulent reissue of shares, 447. 
 
 evidence of transferee's right, 448. 
 
 indorsement of certificate, 449. 
 
 rights of transferee where transfer is fraudulent, 450. 
 
 negligence of owner, estoppel, 451. 
 
 transfer on forged power of attorney, 452. 
 
 forgery of transfer, negligence, 453. 
 
 rights of purchasers of shares transferred in violation of a trust, 454. 
 
 transfers in breach of trust, liability of corporation, 455. 
 
 when the power to sell exists, 456. ■ 
 
 lien of corporation on shares, 457. 
 
 effect of upon rights and liabilities of parties, 458. 
 
 remedy for a wrongful refusal to transfer, 459. 
 
 action for damages for, 460. 
 
 a suit in equity, 461. 
 
 mandamus, 462. 
 
 how affects liability on stock, 568.
 
 744 INDEX. 
 
 [References are to Sections."} 
 
 TRANSFER OF STOCK, 
 
 right to dividends on, 412. 
 
 dividends, 413, 414. 
 
 how unrecorded affects liability of stockholders, 570. 
 
 TRANSFEREE OF SHARES, 
 rights of, 427. 
 liability for calls, 458, 570. 
 
 TRANSFERER OF STOCK, 
 liability of, 570. 
 
 TREASURER, 
 
 may be director, 498. 
 power and authority of, 532. 
 place of domicile, 597. 
 
 TROVER, 
 
 for converting shares of stock, 315 n. 
 
 TRUST, 
 
 validity of contracts by, 179. 
 
 shares transferred in violation of, rights of purchasers, 454. 
 
 purchasing shares held in, 454. 
 
 liability for transferring shares in breach of, 455. 
 
 liability for abuse of, 512. 
 
 See Voting Trusts and Agreements. 
 
 TRUST AGREEMENTS, 
 validity of, 176. 
 illustrations of, 177. 
 statutes forbidding, 178. 
 
 TRUST FUND, 
 
 capital stock as, 317. 
 capital is for creditors, 485. 
 shares of stock as, 552. 
 
 TRUST-FUND DOCTRINE, 
 
 meaning of, 318. 
 criticisms on, 319. 
 
 TRUSTEE, 
 
 power of corporation to act as, 199a. 
 
 sale of shares by, 456. 
 
 right to vote stock, 471. 
 
 validity of agreement giving voting power to, 477 n. 
 
 directors as, 502. 
 
 directors acting as, 513. 
 
 liability of on stock, 569.
 
 INDEX. 745 
 
 [Beferences are to Sections.'] 
 
 u 
 
 ULTRA VIRES, 
 
 when negotiable paper is, 182. 
 
 purchase of corporation's own stock, 192. 
 
 general statement, 200. 
 
 proper use of the phrase, 201. 
 
 the strict rule concerning, 202. 
 
 reason for the rule concerning, 202. 
 
 on what doctrine rests, 203 n. 
 
 conflicting views, 204. 
 
 estoppel to question acts of, 204. 
 
 as a defense, 207, 215 n. 
 
 estoppel to assert defense of, 216-221. 
 
 defense without accounting for benefits, 218 n. 
 
 receiver asserting defense of, 219 n. 
 
 loan, recovery, 226. 
 
 ULTRA VIRES ACTS, 
 consequences of, 93. 
 forfeiture for, 93 n. 
 who may question, 168. 
 purchasing stock in another corporation, 190. 
 acquiescence in, 220. 
 ratification of, 221. 
 issue of watered stock, 333. 
 right of stockholder to restrain, 431. 
 illustrative cases of, 431. 
 right of creditors to restrain, 537. 
 
 ULTRA VIRES CONTRACTS, 
 as abuse of franchise, 93. 
 illustrations of, 169. 
 effect where executed, 205, 209. 
 specific performance of, 206, 207. 
 disaffirmance after part performance, 208. 
 recovery of consideration paid, 209. 
 enforcing, 209 n. 
 
 limitations upon the authority of corporate officers, 213. 
 restrictions contained in by-laws, 214. 
 effect where partly executed, 218. 
 estoppel by retention of benefits, 219. 
 
 ULTRA VIRES TRANSACTIONS, 
 liability for torts in, 510.
 
 746 INDEX. 
 
 [Beferences are to Sections.] 
 UNCONSTITUTIONAL STATUTE, 
 
 organization of corporation under, 76. 
 attacking corporation organized under, 88. 
 
 UNINCORPORATED SOCIETIES, 
 nature of, 297. 
 
 UNPAID SUBSCRIPTIONS, 
 enforcing, 554. 
 
 UNRECORDED TRANSFERS, 
 
 effect on stockholders' liability, 570. 
 
 USAGE, 
 
 as to voting by proxy, 473. 
 conferring authority on officers, 529 n. 
 
 USER, 
 
 corporation by, 75. 
 
 VENDEE OF SHARES, 
 
 right of to dividends, 405. 
 
 VENDOR AND VENDEE, 
 
 right to dividends as between, 408. 
 
 VESTED RIGHT, 
 
 none in penalty, 88 n, 522. 
 in corporate franchise, 102. 
 
 VICE-PRESIDENT, 
 
 power and authority of, 530. 
 
 VISITORIAL POWER, 
 
 over corporations, 90. 
 
 over foreign corporations, 90 n, 252. 
 
 VOID SHARES, 
 
 recovery of money paid for, 326. 
 
 VOIDABLE CONTRACT, 
 
 ratification of, 221, 507. 
 
 VOLUNTARY LIQUIDATION, 
 when permitted, 600.
 
 INDEX. 747 
 
 [Beferences are to Sections.] 
 VOTE, 
 
 right to cast at corporate meetings, 471. 
 
 right of bondholders to cast, 472. 
 
 casting by proxy, 473. 
 
 number by each stockholder, 480. 
 
 cumulative voting, 481. 
 
 illegal at corporate election, 492. 
 
 VOTING POWER, 
 
 separation of from ownership of shares, 475-477. 
 
 VOTING TRUSTS AND AGREEMENTS, 
 
 nature and validity of, 475^177. 
 the Shepaug voting trust cases, 478. 
 specific performance of, 479. 
 injunction against, 477. 
 against public policy, 478. 
 
 w 
 
 WAIVER, 
 
 of by-laws, 159. 
 
 of formalities to subscription, 286 n. 
 of condition in subscription, 358, 374. 
 of lien on shares, 457. 
 
 WATER COMPANIES, 
 
 state control over, 91. 
 
 WATERED STOCK, 
 
 meaning of phrase, 328. 
 
 issue of shares below par, 329. 
 
 as between stockholder and creditor, 330. 
 
 recital that shares shall be deemed fully paid up, 331. 
 
 bona fide purchasers of shares, 332, 333. 
 
 liability to subsequent creditors only, 334. 
 
 bonus stock given to "sweeten" bonds, 335. 
 
 construction bonds and bonus shares, 336. 
 
 stock issued by a going concern with impaired capital, 337. 
 
 shares accepted as a gratuity, 338. 
 
 illustrations, 339. 
 
 payment in property, 340. 
 
 remedy where there is overvaluation, 341. 
 
 constitutional and statutory provisions as to payment of shares, 342. 
 
 WILLFULNESS, 
 
 effect where agent acts with, 508.
 
 748 INDEX. 
 
 [References are to Section*.] 
 WINDING UP BUSINESS, 
 power of majority, 485. 
 
 WITHDRAWAL OF SUBSCRIPTION, 
 
 oral notice of, 365. 
 what amounts to, 365 n. 
 
 WORDS AND PHRASES, 
 
 "continuous existence," 2 n. 
 
 "perpetual succession," 2 n. 
 
 "person," 65. 
 
 "inhabitant," 66. 
 
 "debtor" and "creditor," 68. 
 
 "other moneyed capital," 117. 
 
 "franchise," 120. 
 
 "ultra vires, "200. 
 
 "person," 236. 
 
 "doing business," 266. 
 
 "watered stock," 306, 328. 
 
 "debt," 457. 
 
 "majority of shareholders," 486 ». 
 
 WRONGS, 
 
 liability for, 238.
 
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