holder at the time of paying his first premium, by deducting it from his first premium, amounts to a rebate within the meaning of that word as used in the statute. If it were true that the policy holder had no interest in the fund, the proposed transaction might amount to a rebate; but it clearly appears, upon an examination of the trust agreement, that he has an interest in the safety fund, which he loses when he surrenders his assessment policy. As stated above, he is entitled to a semi-annual interest payment from the fund, varying in amount according to the size of the fund, so long as his policy remains outstanding. How long the fund will be so held cannot now be determined. These interest payments he loses by surrendering his policy; while, on the other hand, the insurance company is clearly the gainer by the surrender of his policy, for the reason that all obligations attached to the safety fund are discharged when all such policies are surrendered, so that the fund will be so far the absolute property of the corporation that it may be divided among the stockholders or invested for their benefit. Even if the policy holder should not take out new insurance, it would be an advantageous contract for the company to offer to pay him the same sum proposed, as an inducement to him to surrender his policy. It follows, therefore, that the proposition of the company is not made, primarily at least, as an inducement to insure, but to secure his release of his interest in the safety fund. He has acquired, under his old policy, a valuable interest in that fund, which, by his acceptance of the offer of the company, he gives up; while, on the other hand, the company, by the cancellation of his old policy, is relieved, so far as his policy is concerned, from the conditions upon which the fund is held. One of the considerations, therefore, for the payment of the $10 is the surrender of the old policy, and, by consequence, the interest of the policy holder in the safety fund. The mere fact that, for convenience, the amount is deducted from his first premium in the new policy, does not change the essential character of the transaction. It is true that, upon a voluntary surrender of his old policy by the insured, the company pays nothing for a release of his interest. There is no reason why it should, the surrender being voluntary and without consideration. It is also true that the offer is limited to such old policy holders as exchange them for new policies. Notwithstanding these facts, it remains true that the release by the insured of his interest in the safety fund is, in part at least, a consideration for the payment of the $10. The whole transaction is a barter between the company and one of its policy holders, under the terms of which the insured remains a policy holder, gives up certain rights which he has, and in the place of them acquires new rights; while, on the other hand, the company pays the sum of $10, and acquires certain releases of value to it from him. Such a transaction, in which there are considerations of various natures on each side, although one of them involves the taking out of a new policy in exchange for an old policy, is not, in my judgment, within the terms of the statute forbidding the payment of a rebate as an inducement to persons to take out insurance. It ought to be added, however, as a necessary consequence of the foregoing considerations, that, if the deduction of $10 is made. from the first payment of one who formerly held an assessment policy, but whose policy has lapsed so that he no longer has any interest in the safety fund, such a deduction would be within the terms of the statute prohibiting rebates, unless, under the terms of his former policy, he has the right to have it revived. To the General. 1900 RESIDENCE EVIDENCE OF INTENTION ENLISTMENT. A person actually living in a city within the Commonwealth, who has filed his primary declaration of intention to become a citizen of the United States, describing himself as a resident of such city, and who enlists therefrom, is prima facie a resident of this Commonwealth, and is entitled to the benefits of St. 1898, c. 561. The length of such residence is not material under the statute, except so far as it is confirmatory evidence of the intention of the party. Your letter of May 3 requires my opinion upon the question and Receiver- whether John Kennelly, upon the facts submitted with your letter, was a resident of Massachusetts at the time of his enlistment, within the meaning of that word as used in St. 1898, c. 561, so as to entitle him to the benefits of the provisions of that chapter. May 3. It appears by the facts submitted that he came to this country from some foreign port, arriving in New York on the twentysecond day of June, 1898, which, as it happens, was the day on which the act in question was signed. He subsequently came to Springfield, where, on the nineteenth day of July of the same year, he filed his primary declaration of intention to become a citizen of the United States, describing himself as a resident of Springfield. He enlisted on the twenty-fifth day of July. Prima facie he was a resident of Springfield at the time of his enlistment. He was there, and described himself as of that place. If he came there only for the purpose of enlistment, and not to become a resident of that city, he would not be within the act; but unless you are able to show otherwise, his removal to Springfield, declaration of intention and enlistment in that city are sufficient, in my opinion, to constitute him a resident and to entitle him to the benefits of the act in question. The length of time of residence is not material under the statute, excepting so far as it is confirmatory evidence of the intention of the party. NEW ENGLAND COTTON YARN COMPANY - PRIVATE CORPO- The enactment of the bill to incorporate the New England Cotton Yarn Company, a private corporation, would afford no greater opportunity for the practice of "stock watering" than is given to such corporations in the general laws of this Commonwealth. Corporations formed for the carrying on of private business, except for the requirement that they begin such business upon a fully paid capital are left free under the general laws from any supervision over the investment of their capital stock. Stock watering is the issuance of capital stock that does not represent full value paid in, either in cash or in property. Since the Commissioner of Corporations has the final decision upon the value of property taken in exchange for shares (Pub. Sts., c. 106, § 48), the issuance of watered stock depends upon the ability of the commissioner to determine accurately the value of such property. of Representa I have the honor to acknowledge the receipt of a copy of an To the House order adopted by the Honorable House of Representatives, April tives. 26, 1900, requiring the opinion of the Attorney-General upon the May 4. 1900 following question: "Would the enactment of the 'Bill to incorporate the New England Cotton Yarn Company,' now before the House, afford said corporation, under any circumstances, the opportunity, in the issue of its securities, to practise what is commonly known as stock watering?" Massachusetts has for many years undertaken to prohibit the issuance of stock by corporations organized under its laws excepting for equivalent value in cash or property. Pub. Sts., c. 106, §§ 47, 48. Before 1894 it had never attempted to regulate the investment or disposition of the capital stock so paid in; but in that year certain statutes were enacted, commonly called the antistock-watering statutes, which undertook, as to certain publicservice corporations, to regulate not only the paying in, but, to a certain extent, the expenditure, as well, of the capital stock of such corporations. They are: St. 1894, c. 450, relating to gas and electric light companies; c. 452, relating to telegraph, telephone, aqueduct and water companies; c. 462, relating to railroad and street railway companies; and c. 472, relating to the increase of the capital stock of the foregoing corporations. These statutes provide, in substance, that only so much capital stock be issued by such corporations as is shown to the satisfaction of the board having charge of such corporations to be necessary for the purposes for which it is authorized, and also that it shall not be expended for any other purpose. On the other hand, corporations formed for the carrying on of private business, in which citizens generally are interested only as possible creditors, are, under our general laws, left free from any supervision or interference by the Commonwealth in the conduct of their business. The State requires only that they begin business with a fully paid capital stock. How they shall expend proceeds of the stock so paid in, is left to the officers of such corporations, under the supervision of their stockholders, and with the right, in certain cases, of investigation by creditors if there has been improvidence or fraud. For example: when a cotton mill is organized, the general laws undertake to require that the corporation shall not begin business until its capital stock is fully paid in; but how it shall expend its money, how much it shall pay for plant, for supplies or for labor, are questions left wholly to the regulation of the corporation and its officers, so far as the State is concerned. Another example of this distinction may be found in the bill under consideration. Section 5 provides for the redemption, at the election of the corporation, of its preferred shares at a fixed value. This provision, however, has to do only with the expenditure of the capital stock and not with the original paying in of such stock. It is entirely possible, therefore, under our laws, for a corporation to begin business with a capital fully paid in, and yet afterwards so to mismanage its affairs and misspend its capital that the property which its capital stock is supposed to represent disappears in whole or in part. But this is not stock watering, in the strict sense of that term, which means only the issuing of stock which does not represent value received, at the time it is issued. When, if ever, the State enters upon the difficult task of supervising the conduct of the business of private corporations, as it already has of public-service corporations, and of the investment of their capital stock, it will undoubtedly be by general laws applicable to all such corporations. In view of this well-settled policy of the Commonwealth, I assume that the question submitted by your honorable body relates only to the paying in of the original capital stock and of any increase thereof, and has nothing to do with the possible results of the carrying on of its business, results common to this and to all other private corporations. So interpreted, the question submitted is, practically, whether the bill permits the corporation to issue capital stock that does not represent full value paid in, either in cash or in property. The proposed corporation is expressly made subject by the bill to all the duties, restrictions and liabilities contained in all general laws now or hereafter in force relating to such corporations, except as therein provided. The exceptions referred to are: first, that by the second section the original capital stock is fixed at one million dollars; whereas, under the general statutes, the capital stock of a manufacturing corporation is fixed by the incorporators, and may be any sum not less than five thousand dollars; and, |