V. Other Theories and Holdings §§1245 1262 22. Alteration of the Contract 23. Conditional Stock Subscriptions 24. Effect of Fraud on Stock Subscriptions . Article I. General Principles II. §§1267-1299 §§1305-1356 §§13491356 What Frauds will and what will III. Remedies of the Defrauded Share holder Against the Company Article IV. Time within which a Rescission must be Claimed V. Remedies Against the Persons Guilty of the Fraud VI. Fraudulent Issues and Over-Issues 25. The Surrender of Shares and Release of S$1438 - 1456 S$14601487 §§1490 - 1506 III. In what Kind of Property IV. New Doctrine that a Corporation can Give Away its Unissued V. Rights of Bona Fide Purchasers of VI. Miscellaneous Holdings Assessments and Calls Article I. In General II. III. Sufficiency and Notification of the Assessment . §§1665-1676 §§ 1680-1687 $$1691 1697 §§1700-1757 $$1700 - 1721 . $$1724 - 1743 850 CHAPTER XIX. NATURE OF CAPITAL STOCK AND SHARES IN GENERAL. SECTION 1059. Scope of this chapter. 1060. Definitions of "capital stock." 1061. Difference between actual stock and potential stock. 1062. Distinction between capital stock and tangible property. 1063. What is capital stock, viewed as a trust fund for creditors. 1064. When capital includes profits and surplus. 1065. Shares sometimes inappropriately called "stock." 1066. Shares are personal property. 1067. So are shares in unincorporated joint-stock companies. 1068. Not goods, wares and merchandise. 1069. Not "moneys." 1071. Shareholders not co-owners. 1072. Execution against interest in corporate property. corporate property though all join in the deed. 1074. Incorporating a partnership: mode of succeeding to the partnership assets. 1075. Cannot act for the corporation, or bind it by admissions. 1076. Not in a trust relation towards the corporation. 1077. Cannot sue the directors at law. 1078. Not responsible for its torts. 1079. Not in privity with each other. 1080. Not necessary parties to suits in respect of corporate rights. 1081. Not affected with notice, etc. 1082. To what extent in privity with the corporation. 1083. No distinction in these respects between incorporited and unincorporated companies. 1084. A comparison between shares in a partnership and shares in a company. 1085. Capital stock a liability of the corporation. § 1059. Scope of this Chapter. In commencing an extensive discussion of the subject of corporate stock and stockholders, it will be useful to give, in a preliminary chapter, an outline sketch of the nature of corporate stock and shares, and the relation of the holders of such shares to the corporation and to each other. § 1060. Definitions of "Capital Stock.” It has been said: The word 'capital' applied to corporations, is often used inter changeably with the words capital stock,' and both are frequently used to express the same thing- the property and assets of the corporation. Strictly, the capital stock of a corporation is the money contributed by the corporators to the capital, and is usually represented by shares, issued to subscribers to the stock on the initiation of the corporate enterprise." 1 Another court has said: "It is a mistake to suppose that the stock of an individual consists of so much money owned by him, in the bank; the money in the bank is the property of the institution, and to the ownership of which the stockholder has no more claim than a person who is not at all connected with the bank. The stockholder has an entire and perfect ownership over his own stock, and may sell and transfer it to whomsoever he pleases, and from doing which the bank has no power to restrain him.” 2 § 1061. Difference between Actual Stock and Potential Stock. It has been pointed out in a well reasoned opinion by Mr. Justice McLean, that mere authorized or potential stock is improperly called stock or capital stock, until it is actually subscribed for by individuals. He said: "The corporate powers of the company were conferred for the express purpose of creating stock as a means of constructing the railroad. As well might the route for the road designated be called a railroad, as to call the corporate means of creating the stock, stock. In a legal point of view, it is important to call things by their right names. This is especially necessary when the effect of the exercise of corporate powers is to be determined. Stock can be created only by contract, whether it be in the simple form of a subscription, or in any other mode. There must be an agreement to take the stock, and nothing short of this can create it. This imparts to the stock the quality of property, which before it did not possess. It is called capital stock in the charter, because the corporate capacity to create it is given. The term stock, as used in the charter, before it is taken by 1 Andrews, J., in Christensen v. Eno, 106 N. Y. 97, 100; s. c. 60 Am. Rep. 429, 431. See also Burrall v. Bushwick R. Co., 75 N. Y. 211, 212, and cases cited. 2 Brightwell v. Mallory, MS. Cited 9 Yerg. (Tenn.) 501; Union Bank of Tennessee v. State, 9 Yerg. (Tenn.) 501. |