and the subscribers do not become members of the corporation. A person subscribing for shares as agent for another, but without authority, does not become a shareholder in place of the principal whose name he subscribed.

If the charter under which a corporation is formed provides that persons wishing to become members of the company shall subscribe for shares upon stock books, this evidently contemplates that the contract between the shareholders shall be made in writing, and according to the forms provided, and hence an oral agreement will not under any circumstances be sufficient to constitute the contractor a shareholder. This, however, has no application to a contract to purchase shares and to become a shareholder in a corporation after it has been fully organized.

The contract of membership in a corporation is not terminable at the will of either of the parties to it, as in case of any ordinary contract of partnership; a shareholder in a corporation has no power to dissolve his connection with the company of which he is a member; nor can the agents of a corporation consent, on behalf of the company, to the withdrawal of any stockholder.

A shareholder in a corporation can escape from the obligations of his contract only by one of the following methods: (1) by a transfer of his shars, and an acceptance of the transfer on the part of the corporation, thus effecting a complete novation; (2) by a forfeiture and sale under authority expressly conferred upon the company by its charter; (3) dissolution of the company; (4) by act of the majority in winding up the business of the company and surrendering its charter; (5) by act of the shareholder, where permission to withdraw is expressly conferred by the charter; (6) by unanimous consent of the members of the company, under legislative authority.

Directors.

Any person of sound mind, who is capable of acting as agent for another, may be ele ted director or trustee of a corporation, unless some special qualification is prescribed by the charter or by-laws of the company.

The directors of a corporation are generally required to be shareholders by express provision of the company's charter.

The directors of a corporation should be men of practical business experience and judgment, and should be selected by the majority by reason of their peculiar fitness to manage the corporate affairs.

A board of directors has no authority to make a material and permanent alteration of the business or constitution of the company,

even though the alteration be within the company's chartered powers. Such an alteration can be effected only by authority of the stockholders at a general meeting. Directors of a corporation have no authority to wind up the company, or to sell any property which is necessary in order to carry on its business. Directors cannot depart from the company's chartered purposes.

Directors have no right, under any circumstances, to use their official positions for their own benefit, or the benefit of anyone except the corporation itself.

Directors of a corporation have no authority to represent it in transactions with another corporation in which they are shareholders, if their interest in the latter company might induce them to favor it at the expense of the company whose interests have been intrusted to their care. A director or agent may deal with the corporation if the latter is represented by other agents.

If directors of a corporation knowingly issue unauthorized and void certificates of shares, or invalid transferable obligations of the company, they are liable to any purchaser or subsequent transferee of the certificates or obligations who takes them relying on their apparent validity. The company may likewise be liable, under these circumstances, in an action for damages, on account of the deceit practiced by its agents.

Meetings.

The majority are authorized to act for the corporation of which they constitute a part only when called together in a proper manner. The object of requiring the majority to express their will by vote at a meeting is to enable all the shareholders to consult and deliberate together. Every shareholder is entitled to be present at such meeting, and to have a reasonable hearing. For this reason, it is essential that all the stockholders be properly notified of a meeting before it is held. If notice to any one was omitted, those present at the meeting have no authority to act for the whole body of members, and the transactions at the meeting will not be binding as corporate acts.

But if the charter or by-laws of a company fix the time and place at which regular meetings shall be held, this is itself sufficient notice to all the stockholders, and no further notice is necessary.

A meeting of the stockholders is not binding upon the company unless it was called by some person having authority, or unless all the members entitled to vote are present. The charter or by-law should state explicitly to whom authority should be given to call meetings.

The notice of a meeting of the shareholders of a company must

fix the exact time and place of the meeting, and in certain cases, state the nature of the business to be transacted.

must

A distinction has been made between regular and special meetings. Regular meetings are held at stated times, according to the charter or by-laws of the company, while special meetings are called at irregular or unusual times, at the option of the officer having authority to make the call. A notice calling a special or extraordinary meeting must state particularly what the purpose of calling the meeting is; and no business can be transacted at the meeting except in relation to the matters specified.

The right to vote at the meetings of a corporation belongs only to its members or stockholders.

The members of a company must vote personally, and cannot vote by proxy unless the right to vote by proxy is expressly conferred by the company's charter or by-laws.

The general rule is, that the directors of a corporation have no implied authority to act singly; they can act only as a board, unless especially authorized to act individually. Notice of the meetings of directors of a corporation must be given in the same manner as notice of the meetings of shareholders.

Transfer of Shares.

A transfer of shares in a corporation means the substitution of a new shareholder in place of the outgoing shareholder in the company, and an assumption by the new holder of all the rights and obligations which attached to the transferring shareholder by reason of his ownership of the shares. This involves a novation of the contract of member hip. The transferor ceases to be a shareholder in the company; he is thus discharged from all further liability to contribute capital, unless the cont ary be expressly provided in the company's charter. A transferor of shares loses all right to share in the company's profits and to participate in the management of its affairs.

The transferee becomes a shareholder in the place of the retiring member, and impliedly assumes all the obligations which rested upon the former holder as member of the company, and is liable for calls to the same extent as the former holder.

It is usual to provide in the articles of association or by-laws of a corporation that no transfer of shares shall be allowed until all unpaid calls shall have been satisfied.

The general rule is, that, as between a company and its shareholders, a transferor is discharged from all liability on account of calls made after the execution of the transfer, and that the obligation to pay

these calls falls upon the transferee; but a transferee of shares cannot be held liable upon a call made before he became a shareholder in the company.

A corporation is never obliged to treat shares as paid up until they have in fact been paid up.

If shares are transferred after a call has been made, but before it has been paid, the transferor remains liable to the corporation. Should the transferor subsequently pay the call, the company would be obliged to credit the shares with the amount paid whoever may have become the holder of the shares. But if the call should remain unsatisfied and the shares not be paid up, the company would be entitled to make a new call upon the subsequent holder.

If a corporation should issue certificates declaring the shares to be paid up, a bona fide purchaser would be entitled to become a shareholder, free from further liability, whether the shares were in fact paid up or not.

The right of a transferee of shares to dividends declared after the transfer was executed, but payable out of profits earned before that time, must be considered separately, as against the company and as against the transferor.

The general rule is, that, as between a corporation and its shareholders, those persons are entitled to dividends who are shareholders at the time the dividends are declared, irrespective of the time at which they were earned.

A provision in the charter of a corporation authorizing the board of directors "to regulate" transfers, does not give them the power to restrain transfers at their discretion, or to prescribe to whom they shall be made; it merely enables them to prescribe reasonable formalities to be observed in executing transfers.

After a corporation has become insolvent, it is the duty of the company to wind up its business, call in the outstanding capital, and satisfy creditors. After a company has failed, every shareholder may claim that every other shareholder who was a party to the speculation and shared in the chances of success shail bear a proportionate part of the loss; and a transfer of shares to an insolvent, or any other person unable to perform the obligations which rested upon the transferor, is unauthorized and will not hold.

The right of a shareholder to transfer his shares necessarily ceases upon dissolution of the corporation; for after a dis olution the contract of membership is a an end

The incorporating statutes, or by-laws, of corporations having

transferable shares in almost every instance provide that the shares shall be transferable only on the books of the company, and that a new certificate shall be issued to the transferee upon surrender of the outstanding certificates.

It would be practically impossible to know who are entitled to vote at meetings, to whom dividends can be paid, and who are liable, as shareholders, to the company and to the creditors, if a transfer should be executed without an entry of the transfer upon the company's books.

Shares are generally bought and sold, like tangible property, by delivery of the certificates issued by the company to the holder. These certificates indicate on their face to what extent the shares have been paid up.

If shares are sold by delivery of the certificates, it is reasonable to suppose that they are sold in the condition in which they appear to be at the time of the sale. If the certificates show that the shares have been paid up only partially, it is a fair implication that they are sold as partly paid up shares, and that the purchaser, and not the seller, is to be responsible for the amount remaining unpaid. It would seem to be immaterial in this respect whether a call was made before the sale or not.

In determining the right to dividends as between the vendor and purchaser of shares, it is a well settled rule of construction that the vendor retains the right to all dividends declared before the sale, and the vendee is entitled to all declared thereafter, unless otherwise agreed upon by the parties. This is the rule, whether the dividend be payable before or after the sale, and whe her the sale be private, or on the stock exchange, or in the open market.

The fact that shares are held or transferred by a person as executor is notice that there is a will open to inspection upon the public records, and the company and persons taking a transfer of the shares are bound, at their peril, to take notice of the contents of the will.

It is the duty of a corporation which has issued a negotiable certificate for shares, and whose shares are transferable upon the books, not to permit a transfer to be executed upon the books, or to issue a new certificate, until the outstanding certificate has been surrendered. Both the company and the transferee would be chargeable wi h notice of the rights of the holder of the outstanding certificate, and if the latter was equitably entitled to the shares, he would have a right to set the transfer aside. If the company should recognize the transfer as valid, and refuse to accord to the holder of the certificate