The provisions of the bankrupt act of 1867, which vest the property of a bankrupt in the assignee, and require the bankrupt, at the request of the assignee, to execute all necessary conveyances and transfers, do not take away the right of the bankrupt to vote in respect of shares of stock still standing in his name; and where the bankrupt does so vote in respect of such shares, together with the assignee, the other stockholders have no such interest in the question, whether the strict right to vote is in the bankrupt or in the assignee, as will enable them to object thereto.1

§ 732. Right to Vote in Respect of Shares Pledged or Mortgaged. In the absence of a contrary rule in the governing statute or by-laws authorized thereby, the pledgor of shares which have been hypothecated is entitled to vote, unless the pledgee has been made a shareholder as between himself and the corporation, by having the shares transferred to him on the corporate books.2 And it has been held without qualification, that "in a clear case of hypothecation the pledgor may vote. The possession may continue with him, consistently with the nature of the contract, and the stock remain in his name. Till enforced, and the title made absolute in the pledgee, and the name changed on the books, he should be received to vote. It is a question between him and the pledgee, with which the corporation have nothing to do. On the other hand, if the stock has

Broadway Underground &c. R. Co.,
29 Hun. (N. Y.), 348. Right to repre-
sentation in boards of directors, as
between stockholders of a parent bank
and stockholders of a branch bank:
State v. Thompson, 27 Mo. 365. Num-
ber of votes possessed by the State as
a stockholder in a particular railway
company: State v. New Orleans &c. R.
Co., 20 La. An. 489. Case of such dif-
ficulty that the court could not decide
the number of votes possessed by the
State, but remitted it to the legislature:
Commonwealth v. Bank of Pennsylva-
nia, 3 Watts & S. (Pa.) 173. Compare
Van Dyke v. Stout, 8 N. J. Eq. 333.
1 State v. Ferris, 42 Conn. 560.

2 Scholfield v. Union Bank, 2 Cranch C. C. (U. S.) 115.

3 Ex parte Willcocks, 7 Cow. (N. Y.) 402; 8. c. 17 Am. Dec. 525, 528. This case has been cited in subsequent cases, to the principle that a corporation has no concern with private agreements between holders of its stock and third persons. Matter of Long Island R. Co., 19 Wend. (N. Y.) 44; Matter of Mohawk &c. R. Co., Id. 146. It has also been cited to the principle that the pledgor of hypothecated stock may vote thereon. New York &c. R. Co. v. Schuyler, 38 Barb. (N. Y.) 542, per Ingraham, J.

been transferred on the books of the corporation to one to whom it has been delivered under a contract of pledge, he is, prima facie, entitled to vote in respect of the shares, and after he has voted, the corporate election will not be set aside because of his having voted, although his vote determined the result. The corporation is not bound to inquire into the circumstances under which he holds as trustee, but if those circumstances are such that the pledgor has a right to a re-transfer, he may enforce that right in equity. The general rule is that the right to vote remains in the pledgor or mortgagor until the pledge or mortgage has been foreclosed; and while, as elsewhere seen,2 the inspectors of the election cannot inquire into the equities upon which the shares are held, or look behind what appears on the face of the transfer books, yet the courts can; and if it appears to them that a pledgee of corporate stock has, without authority from the pledgor, caused it to be registered on the company's books in his name as trustee, they will restrain him from voting thereon. Nor need the pledgor, in order to maintain an action to restrain such voting, show that his rights would thereby be injuriously affected.*

1 Hoppin v. Buffum, 9 R. I. 513; s. c. 11 Am. Rep. 291. See also Vowell v. Thompson, 3 Cranch C. C. (U. S.) 428. To illustrate: M., the pledgee of stock which stood on the books as "M. Trustee," had repeatedly voted in respect of the shares without objection, and voted them at an election of directors under such circumstances that his vote determined the result. In quo warranto against the officers declared elected, it was held, (1) that M. was entitled to vote, in the absence of any claim by the pledgors to do so; (2) that after the election it was too late for the pledgors to ask the court to disturb the result. Hoppin v. Buffum, 9 R. I. 513; s. c. 11 Am. Rep. 291. The case might better have been put upon the naked ground that those in whose name the stock is registered are the only ones entitled to vote, and that if the register is not

correct it should be rectified prior to the election. Compare State V. Lehre, 7 Rich. L. (S. C.) 234, 256. Scholfield v. Union Bank, 2 Cranch C. C. 115.

2 Post, § 748.

3 McHenry v. Jewett, 26 Hun (N. Y.), 453.

4 Ibid. The owner of corporate shares pledged them. The pledgee, before the debt became due, caused a transfer to be made on the corporate books. It was held, that the pledgor was entitled, notwithstanding, to vote on the shares, and that a by-law limiting the right of voting to stockholders, requiring transfers to be made on the corporate books only, and a certifled transcript as evidence of the right to vote, did not affect the case. State v. Smith, 15 Or. 98 (Lord, C. J., dissenting).

§ 733. Further of this Subject. Statutes have been enacted in some jurisdictions confirming this right. Thus, a recent statute of Arizona provides that persons holding shares of stock of incorporated companies as security for money loaned thereon, or as security for other indebtedness, shall be prohibited from voting at any election, general, or special, of such companies.1 It has been held that the pledgor and pledgee may arrange by contract, as between themselves, which one shall vote in respect of the shares.2 But, on the contrary, it has been held that where the right to vote at corporate elections is, by the governing statute, vested in the stockholders, one to whom shares of the corporate stock has been by the corporation transferred in trust, under a contract of pledge for a third person who has advanced money to the corporation, cannot vote at corporate elections for directors in respect of the shares so held in pledge, although it is provided in the contract of pledge that he shall have the right to do so. The reason is plain; the governing statute having prescribed who shall vote at corporate elections, it is not competent for the corporation to make a different rule,otherwise a corporation could make for itself a new charter, or re-create itself. And again, it has been held that where stock is held under a written contract with the corporation, as security for advances made by the holders of it to the corporation, it is not competent to show by parol evidence that there was a verbal understanding that the holders of it were to have the privilege of voting in respect of the stock. It has been held that, where the legal title, and with it the right to vote, is in the pledgor, and the shares stand on the books in the name of the pledgee, the pledgor has a remedy in equity against the pledgee to compel him to re

1 Ariz. Act March 21, 1889; Acts 1889 No. 50, p. 76; and see post, §2936. 2 Ervin v. Philadelphia &c. R. Co. (C. P. Phila.), 7 Rail. & Corp. L. J. 87.

3 Brewster v. Hartley, 37 Cal. 15; s. c. 99 Am. Dec. 237. This case is cited in Griswold v. Seligman, 72 Mo. 122, to the point that a corporation cannot be its own stockholder; but in respect of the conclusion which the Supreme Court of Missouri deduced

from this principle, that the pledgee is a shareholder and liable to creditors as such, the California decision cannot be quoted as an authority.

4 Griswold v. Seligman, 72 Mo. 110. Compare Union Savings Association v. Seligman, 92 Mo. 635; Fisher v. Seligman, 75 Mo. 13; Bray v. Seligman, 75 Mo. 40; Erskine v. Lowenstine, 82 Mo. 301.

transfer the shares or else to give him a proxy to vote in respect of them.1

§ 734. Right to Vote in Respect of Shares Held or Owned by the Corporation Itself.- Corporations have, as hereafter seen,2 a qualified power to deal in their own shares.3 They may acquire them from defaulting shareholders, by forfeiture or by sale to foreclose their lien upon them, as in the case of banking corporations that have a lien upon them for a general balance due.5 But stock thus owned or held by the corporation cannot be voted at corporate elections, although it is held by a trustee in pledge, to secure a debt under a contract which allows him to vote it." The reason rises to the dignity of a rule of public policy. It will not be permitted to a company to procure stock which the officers may wield for the purposes of an election.s As the right to vote in respect of stock transferred in pledge ordinarily remains in the pledgor,' for stronger reasons it so remains where the pledge has been made to the corporation itself.10

1 Vowell v. Thompson, 3 Cranch C. C. (U. S.) 428. The right of a pledgee to vote is discussed in a learned note and decisions on the subject collected in 19 Am. & Eng. Corp. Cas. 533 n. 2 Post, § 2054, et seq.

3 Monsseaux v. Urquhart, 19 La. An. 482.

Post, § 2068.

5 Post, § 2820.

McNeely v. Woodruff, 13 N. J. L. 352; Ex parte Holmes, 5 Cow. (N. Y.) 435. By statute in Missouri stock held or hypothecated to the corporation cannot be voted. Rev. Stat. Mo. 1889, § 2487.

So held under the California statute in Brewster v. Hartley, 37 Cal. 15; s. c. 99 Am. Dec. 237; Ex parte Holmes, 5 Cow. (N. Y.) 426; American Railway Frog Co. v. Haven, 101 Mass. 398; s. c. 3 Am. Rep. 377, 381; Union Savings Association v. Seligman, 92 Mo. 635. This rule does not extend to a case where the stock is held in trust for a stockholder. Ex parte Barker, 6 Wend. (N. Y.) 509.

Ex parte Holmes, 5 Cow. (N. Y.) 435. See also Ex parte Desdoity, 1 Wend. (N. Y.) 98; McNeely v. Woodruff, 13 N. J. L. 352. An agreement among stockholders of a railroad company, vesting in trustees the right to vote the stock at all meetings of the corporation, has been held void, as contrary to public policy, and as substantially amounting to a repeal of the Pennsylvania statute in regard to the right to vote incident to the ownership of railroad stock. Vanderbilt v. Bennett, 6 Pa. County Ct. 193.

9 Ante, § 732.

10 Where the question was whether certain shares could be voted at a corporate election, and it appeared that there was a by-law of the corporation providing that when a director was indebted to the corporation, eightyfive per cent of his stock should be considered as hypothecated and held as security, and not transferred till the debt was paid; and it appeared that some 450 shares of such stock were voted on at an election, the validity of

The rule which restrains the corporation, through its officers, from voting in respect of shares held by it, or in trust for it, has been held, under particular circumstances, to apply where the corporate funds were not used in the transactions by which the shares were deposited with its officers.1

§ 735. Right of Pledgor to Proxy from Pledgee. It has been decided that a pledgor of stock, which stands on the books of the corporation in the name of the pledgee, may, by a suit in equity, compel a transfer to him, or oblige the pledgee to give him a proxy to vote. It has also been held that the mortgagor of stock is, until foreclosure and sale, entitled to vote as a stockholder, and accordingly a decree has been passed requiring the mortgagee to give to the mortgagor a power of attorney to vote in respect of the stock until the foreclosure of the mortgage.3

§ 736. No Right to Vote by Proxy at Common Law. At the common law all voting at every election is required to be