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, must state the nature of the business to be transacted.

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 membership. The transferor ceases to be a shareholder in the company; he is thus discharged from all further liability to contribute capital, unless the contrary 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 torestrain 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 dissolution the contract of membership is at 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 whether 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 with 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

his legal rights, it would become liable to make good his damages; and if it should issue a new certificate to the transferee, it would become liable upon both the outstanding certificates to innocent purchasers for value.

Preferred Shares.

Shares which confer upon the holder special privileges or benefits that do not belong to the other members of the corporation are called Preferred Shares. The precise nature of the privileges or benefits thus conferred depends upon the terms of the resolution under which the shares are issued, and the form of the certificate delivered to the holders.

Thus, it is often provided that the holders of the preferred shares shall have priority in the distribution of profits, and shall receive annual dividends at a specified rate before the other shareholders receive anything; the payment of these dividends is sometimes expressly guaranteed. The agreement of a company to pay to preferred shareholders certain annual dividends is always subject to an implied condition that the payments shall be made only out of net profits which are legally applicable to the payment of dividends.

If a corporation has agreed or guaranteed that the holders of preferred shares shall be paid dividends at a certain rate per annum, and the profits at the time are insufficient to enable the company to perform its agreement, the arrears must be made up out of the profits subsequently earned, and no dividends can be paid to the holders of the common stock until the preferred shareholders have been fully paid.

Ordinarily, preferred shareholders have no preference in the distribution of the company's capital when the business is wound up. A right of this kind cannot be presumed from the fact that a preference has been given in the payment of dividends; but, under an express agreement, a preferred shareholder may be entitled to withdraw the amount of his shares before the other stockholders can take anything.

Forfeiture of Stock.

The members of a corporation may be compelled to contribute their respective shares of the capital stock by an action at law brought in the name of the corporation; and, at common law, this is the only remedy which can be resorted to. A corporation has no lien upon the shares of its members to secure the payment of assessments, unless it be expressly conferred by provision of the charter, by general statute,