West. Tel. Co. 5 Biss. 363; Buckley v. Briggs, 30 Mo. 452; and see Re Laud Credit Co. Law R. 4 Ch. 460; Re General Estates Co. Law R. 3 Ch. 758. 6 Town of Queensbury v. Culver, 19 Wall. 83; Tucker v. Raleigh, 75 No. Car. 267; Thompson v. Lambert, 44 Iowa, 239. See Wilson v. Shreveport, 29 La. An. 673. 7 Western Boatmen's Assoc. v. Kribban, 48 Mo. 37. Compare Pickering v. Stephenson, Law R. 14 Eq. 322; Morton v. Smith, 5 Bush, · 467. 8 Richards v. Merrimack etc. R. R. Co. 44 N. H. 127; Watts' Appeal, 78 Pa. t. 370; Trustees etc. v. Shulze, 61 Ind. 511; West v. Madison County Agr. Board, 82 D1. 205; Commonw. v. Smith, 10 Allen, 448; Re Patent File Co. Law R. 6 Ch. 83. 9 Re Inns of Court Hotel Co. Law R. 6 Eq. 82. 10 Callaway etc. Co. v. Clark, 32 Mo. 305; and see Wheeler v. San Francisco etc. R. R. Co. 31 Cal. 46; Downing v. Mt. Wash. etc. Co. 40 N. H. 230. 11 State v. Comm'rs etc. 3 Zab. 510; and compare Holmes v. Eastern Counties Railw. Co. 3 Kay & J. 975; Flanagan v. Great West. Railw. Co. Law R. 7 Eq. 116. 12 Watts' Appeal, 78 Pa. St. 370. 13 Re British etc. Cork Co. Law R. 1 Eq. 231. 14 Dorsey etc. Rake Co. v. Marsh, 6 Fish. Pat. Cas. 387. 15 Lyndeborough Glass Co. v. Mass. Glass Co. 111 Mass. 315. 16 Hoppock v. United etc. R. R. Co. 27 N. J. Eq. 286. 17 Armstrong v. Penn'a R. R. Co. 38 N. J. L. 1. 18 Barney v. Oyster Bay etc. Steamboat Co. 67 N. Y. 301. 19 Dupee v. Boston Water-Power Co. 114 Mass. 37. 20 Snow v. Wheeler, 113 Mass. 179. Compare Wilson v. Owen, 30 Mich. 474. 21 Gundlach v. Germania Mechanics' Assoc. 4 Hun, 339. 8 § 104. Effect of estoppel or ratification on transactions ultra vires. A corporation has the power to waive a right,1 and may be bound by estoppel in pais.2 Thus, a strict compliance with the conditions of a contract beneficial to the corporation may be waived; & and where an act is within the scope of the corporate powers, the corporation may be estopped from objecting that the form adopted was not the exact mode prescribed in the charter.4 So, in an action against a corporation to recover money loaned to it, the corporation is estopped from setting up the defense that the money was borrowed and used for an ultra vires purpose, although the lender knew the purpose intended.5 But the doctrine of estoppel in pais is not carried to the extent as to enable a corpora tion to do in effect what the law forbids, or what it never could by legal possibility have done. A municipal corporation is not estopped from asserting the invalidity of its bonds by any contract of its officers or agents, nor by any acts of acquiescence and approval on the part of the inhabitants of the municipality after knowledge of the facts. 8 So, where a lease made by a corporation is invalid, as being ultra vires, the acceptance of rent by the corporation under such lease will not render it valid.9 And transactions which are ultra vires in the strict sense10 are incapable of ratification; 11 but if a transaction be ultra vires in the more limited sense of the term, 12 it may be rendered binding by subsequent ratification.13 Acts, ultra vires, of a corporation which is a creature of the laws of two different states, cannot be ratified by a subsequent statute enacted by the legislature of one only of such states.14 1 See Barton v. Plank Road Co. 17 Barb. 397; Hale v. Union etc. Ins. Co. 32 N. II. 295. 2 Erie Railw. Co. v. Delaware etc. R. R. Co. 21 N. J. Eq. 283; Newburg Petroleum Co. v. Weare, 27 Ohio St. 343; Simpson v. Windham etc. Ins. Co. 57 N. H. 160; Webb v. Comm'rs etc. Law R. 5 Q. B. 642. 3 New England Car Spring Co. v. Union India Rubber Co. 4 Blatchf. 1. 4 Hood v. N. Y. etc. R. R. Co. 22 Conn. 1; Boyce v. Trustees etc. 46 Md. 359; City Fire Ins. Co. v. Carrugi, 41 Ga. 660; Copper Miners' Co. v. Fox, 16 Q. B. 229. 5 Bradley v. Ballard, 55 Ill. 413; and see West v. Madison County Agr. Board, 82 id. 205. 6 Re Comstock, 3 Sawy. 218. 7 Penna. etc. Steam Nav. Co. v. Dandridge, 8 Gill & J. 248; Marion Sav. Bank v. Dunkin, 54 Ala. 471; Hitchcock v. City of Galveston, 96 U. S. 341. 8 Weismer v. Village of Douglass, 64 N. Y. 91; and see McPherson v. Foster, 43 Iowa, 48; South Ottawa v. Perkins, 94 U. S. 260. Compare Beloit v. Morgan, 7 Wall. 619. 9 Ogdensburg etc. R. R. Co. v. Vermont etc. R. R. Co. 6 Thomp. & C. 488. 10 See ante, § 98. 11 Taymouth v. Kohler, 35 Mich. 22; Peterson v. Mayor etc. 17 N. Y. 449; Riche v. Ashbury Railw. etc. Co. Law R. 7 H. L. 653, 672. 12 See ante, § 98. 13 See Armstrong v. Stokes, Law R. 7 Q. B. 598; Inhabitants of Arlington v. Pierce, 122 Mass. 270; State v. Florida R. R. Co. 15 Fla. 690; People v. Swift, 31 Cal. 26. 14 Fisk v. Chicago etc. R. R. Co. 4 Abb. N. S. 378; 53 Barb. 513. CHAPTER X. STOCK AND STOCKHOLDERS. S 105. Terms defined. § 106. Nature of property in stock. § 107. Power of corporation to deal in stock. § 108. Subscription to stock. $ 109. Subscriptions prior to complete organization. § 110. Subscriptions upon condition. § 111. Subscriptions as affected by fraud. § 112. Payment for stock. § 113. Subscriptions as connected with commencement of business. § 114. Variation in amount of capital. § 115. Preferred shares of stock. 6 116. Calls. § 117. Assessments. $ 118. Who liable to calls and assessments. § 119. Payment, how enforced. § 120. Discharge of subscriber from liability. § 121. Assent, estoppel, etc. $122. Transfer of shares. § 123. Effects and incidents of transfers. § 124. Lien of the corporation on stock. § 125. Profits and dividends. § 126. Individual liability of stockholders. § 105. Terms defined.—In reference to a corporation, the word "capital," for most purposes, signifies the aggregate of the sums subscribed and paid in, or secured to be paid in, by the shareholders.1 The term "stock," when not employed to denote the same thing as capital, has reference to the interests of the shareholders or individuals.2 The interest of each individual shareholder is a share of the net produce of the capital stock of the corporation, when brought into one fund. A "share" mere ideal thing, and not a chattel personal susceptible of possession actual or constructive. In the Texas stat BOONE CORP.-18. "is a ute relating to the taxation of bank stock, the words 'share and "stock" are used as synonymous terms.5 The word "property," within the meaning of the Kentucky Civil Code, includes stock in an incorporated company.6 1 See Hightower v. Thornton, 8 Ga. 486; Reid v. Eatonton Manuf. Co. 40 fd. 98; Palmer v. Lawrence, 3 Sand. 161; Mut. Ins. Co. v. Supervisors etc. 4 N. Y. 442; International Life Assur. Soc. v. Comm'rs etc. 17 How. Pr. 206; 28 Barb. 318; St. Louis etc. R. R. v. Loftin, 30 Ark. 693; State v. Morristown Fire Assoc. 3 Zab. 195; Burrall v. Bushwick R. R. Co. 75 N. Y. 211, 216. Compare New Haven v. City Bank, 31 Conn. 106; South Bay Co. v. Gray, 30 Me. 547; Bailey v. Clark, 21 Wall. 284. 2 See People v. Comm'rs etc. 23 N. Y. 192, 220; Burrall v. Bushwick R. R. Co. 75 N. Y. 211, 216. 3 Bradley v. Holdsworth, 3 Mees. & W. 334. 4 Arnold v. Ruggles, 1 R. I. 165; and see Dunn v. Com. Bank, 11 Barb. 580. 5 Harrison v. Vines, 46 Tex. 15. 6 Field v. Montmollin, 5 Bush, 455. § 106. Nature of property in stock. — In some instances statutes declare shares and dividends to be personal property. But independent of any statutory provision, shares in the stock of a corporation are deemed personal property,2 or of the nature of choses in action.8 They are a subject of conversion, for which suit can be maintained, and a recovery of the value had. And, in Massachusetts, a contract for the sale of shares of stock is within the meaning of the statute of frauds. But stock is not regarded as money; nor are shares of stock, strictly speaking, chattels." And where lands are vested in the individual shareholders, and the management is only in the corporation, the shares are real estate. 1 See Union Bank of Tennessee v. State, 9 Yerg. 490; Myres v. Perigal, 17 Eng. L. & Eq. 109; Mohawk etc. R. R. Co. v. Clute, 4 Paige, 384; Cape Sable Co.'s Case, 3 Bland, 670. 2 Brightwell v. Mallory, 10 Yerg. 196; 595; Gilpin v. Howell, 5 Pa. St. 57; Weaver 50 id. 314; Griffith v. Watson, 19 Kans. 23; 350; Edwards v. Hall, 6 DeGex M. & G. 74. Conn. 567; Price v. Price, 6 Dana, 107. Tippets v. Walker, 4 Mass. 3 Howe . Starkweather, 17 Mass. 240; Arnold v. Ruggles, 1 R. L 165; Allen v. Pegram, 16 Iowa. 163; Slaymaker v. Gettysburg Bank, 10 Pa. St. 373; Rex v. Capper, 5 Price, 217. 4 Kuhn v. McAllister, 1 Utah T. 273. But compare Atkins v. Gam. ble, 42 Cal. 86: 10 Am. R. 282. 5 Tisdale v. Harris, 20 Pick. 9; Eastern R. R. Co. v. Benedict, 10. Gray. 212. So, in Missouri: Fine v. Hornsby, 2 Mo. App. 61. But the statute of frauds does not apply to shares, stocks, etc. in England:. Watson v. Spratley, 10 Exch. 222; Humble v. Mitchell, 11 Ad. & E. 205; and see Whittemore v. Gibbs, 24 N. H. 484; Dawter v. Griffin, 40 Ind. 593. 6 See King v. Churchwardens etc. 6 East, 182; Nightengal v. Devisme, 5 Burr. 2589. 7 Howe v. Starkweather, 17 Mass. 240; Denton v. Livingston, 9 Johns. 96; Hutchins v. State Bank, 12 Met. 421; Arnold v. Ruggles, 1 R. I. 165. 8 Weekley . Weekley, 2 Younge & C. 281; Bligh v. Brent, id. 268; Drybutter v. Bartholomew, 2 P. Wms. 127. § 107. Power of corporation to deal in stock.In England, corporations cannot, without an express power so to do, deal in their own shares; but, without an express power, a corporation may deal in the shares of other corporations.2 The rule is otherwise in the United States; the authorities holding that, in the absence of any statutory prohibition, a corporation may sell its own stock, take its own stock in pledge or payment, and even purchase its own stock; 5 provided the transaction is bona fide, and not for the purpose of defrauding creditors. So, a bequest to a corporation of its own stock was held to be valid. But without a power specifically granted, or necessarily implied, a corporation cannot become a stockholder in another corporation; and especially where the object is to obtain the control or affect the management of the latter.9 1_Re London etc. Bank, Law R. 5 Ch. 444; Re Marseilles etc. Railw. Co. Law R. 7 Ch. 161; Hope v. International etc. Soc. Law R. 4 Ch. Div. 327. 2 Re Asiatic Bank Corp. Law R. 4 Ch. 252; Re Barned's Bank, Law R. 3 Ch. 105. 3 Robinson v. Beall, 26 Ga. 17; Supervisors etc. r. Wisconsin etc. R. R. Co. 121 Mass. 460; State Bank v. Fox, 3 Blatchf. 431. 4 Coleman v. Columbia Oil Co. 51 Pa. St. 74; Williams v. Savage Manuf. Co. 3 Md. Ch. 4.8. 5 City Bank v. Bruce, 17 N. Y. 507; Hartridge v. Rockwell, R. M. Charlt. 260. See Brown v. Donnell, 49 Me. 421; Currier v. Slate Co. 56 N. H. 262. 6 See Gillett v. Moody, 3 N. Y. 479; State v. Smith, 48 Vt. 266; Sav. Bank v. Wulfekuller, 19 Kan. 60; Brewster v. Hartley, 37 Cal. 15. 7 Rivanna Nav. Co. v. Dawsons, 3 Gratt. 19. 8 Talmage v. Pell, 7 N. Y. 328, 348; Mut. Sav. Bank v. Meriden Agency, 24 Conn. 159; Franklin Co. v. Lewiston Sav. Bank, 68 Me. 43. |