demurrer concedes, for the purposes of this discussion, that the managers of the Lowell & Lawrence Railroad Company have thus acted, in respect to the minority of stockholders in the Salem & Lowell Railroad Company. It requires no great sagacity to see how similar frauds may be practiced in behalf of many other railroads against connecting or rival roads, so that a system of railroad connections may become a system of frauds. If it may be practiced with impunity between railroad corporations; it may, also, be practiced between manufacturing corporations, and a managing majority may, at their pleasure, sacrifice the interests of the minority for the benefit of another corporation owned by them. The same remark is true in respect to several other classes of business corporations. The question thus presented is of great importance, because there is no known practicable method of establishing and managing railroads except by means of corporations; and many other great enterprises and branches of business which require, for their successful prosecution, a large and permanent investment of capital, are, also, usually and most conveniently established and managed by means of corporate organizations."

In the case of Lloyd v. Loaring, 6 Vesey, Jr., 773, 777, which was a suit by three persons in behalf of themselves and all the other members of a lodge of freemasons, which a majority of the members had undertaken to consolidate with another lodge, Lord ELDON said: "If I consider them as individuals, the majority had no right to bind the minority. One individual has as good a right to possess the property as any other, unless he can be affected by some agreement."

In the Chamberlain of London's case, 5 Co., 63, it was held, that the inhabitants of a town, "as a community of known description, recognized by law, (thereby acting as a corporation) might make ordinances or by-laws for the reparation of the church or highway, or of any such thing, which is for the general good of the public, and, in such a case, a greater part shall bind the whole; but if it be for their private profit, as the well ordering of

their common of pasture, or the like, there, without a custom, (that is, without some law to that effect,) they cannot make by-laws; and if there be a custom, then the greater part shall not bind the less, if it be not warranted by the custom."

In other words, the majority can never sell out or dispose of the interests of the minority, without a special grant from the legislature for that purpose, and the minority must have acquired their rights, or joined the association or corporation, with that distinct understanding and agreement.

Chancellor KENT upheld this doctrine, and these principles, to the fullest extent, in the case of Livingston v. Lynch, 4 Johnson's Ch., 594, where a certain number of persons had formed an association, under the laws of New York, and had subscribed articles, which a majority afterwards undertook to change and abrogate. In deciding the case, he said that there was not a doubt upon his mind that the articles "were of the character and authority of permanent constitutional provisions, binding upon all the members when adopted by all, as a solemn private contract, and that they can only be abolished by the like concurrent will by which they were adopted.

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"We are not to intend, without express words, that each of these tenants in common, especially where the interests were so unequal and so momentous, surrendered his invaluable right, founded on settled principles of law, not to be controlled, in the government of his individual interest, without his consent." He then adds: "The general principle of law is, in such private associations, the majority cannot bind the minority, unless it be by special agreement." Page 595-6.

On page 597, the chancellor said: "If any one article might be abolished by a vote of the majority, so might every other article; and the rights and property of each individual member would be placed in the utmost jeopardy, at the control of others, without any security from compact, or the dictates of his own judgment.

"The law gives no such control to others over one's own property, or individual interest, except in the case of partnerships and of ship owners, which stand on peculiar grounds of commercial and maratime policy; and even in those cases, there is particular protection provided for the dissenting owner."

say:

In New Orleans, Jackson & Great Northern Railroad Co. v. Harris, 27 Miss., 536, which was an action brought by the company against Harris, who had subscribed stock in the Canton Railway, and by him transferred to the plaintiff in error. The court "If the legislature possessed the authority to confer upon any number of the stockholders in said company, who might be the owners of a majority of the stock, the power to accept any proposed amendments to the charter, and by such acceptance, to bind the remainder of the stockholders, it might, with equal propriety, so far as the isolated question of power was concerned, delegate the same right to a minority, owning but a small proportion of the stock, or to any specified number less than a majority, or even to a single corporator. A charter is: 1st, a contract, within the meaning of the constitution of the United States, between the State granting the charter and the corporation itself, the obligation of which it is not within the power of the legislature to impair. 2d, the contract subsisting between the members of a corporate body and the corporation, is equally within the protection of the constitution. According to the doctrine that the legislature had the right to confer upon any number of the stockholders, who might own more than one half of the stock subscribed, the authority to accept of amendments to the charter, it is evident that the charter might be altered in its most essential stipulations, not only without the approbation, but against the consent of the great body of the corporators, thereby subjecting them to duties and responsibilities not imposed by their contract with the company. This, we think, can not be done without a clear violation of the constitution. Hence, we conclude that the act in question did not invest the stockholders, representing a majority of the stock subscribed, with authority to accept the amendment proposed to the charter.

The charter, in these cases, constitutes the fundamental articles of the association. It defines the rights and powers of the corporation, determines its objects, and fixes the individual contract of the member with the corporation itself. His contract is as clearly defined as the charter can make it. It must be conceded, that the legislature have no constitutional power, unless reserved in the grant, to change or alter, without consent, an act of incorporation, "and thereby to cast upon them additional obligations, or take from them rights guaranteed by their charter. Its power over the corporation can be no greater; it can impose no additional obligation without his assent, or release him from any duty, against the will of the party thereby to be affected. In what respect can the power of a corporation transcend the authority of the legislature? He must have as perfect a right to stand upon his contract with the corporation, in opposition to the action of a majority, as he would to insist upon his rights under it, against the action of the legislature. This is a proposition too clear to be doubted, in all cases in which there is no stipulation, express or implied, that he shall be bound by the voice of the majority.

The incapacity of the majority to alter, fundamentally, the charter, against the consent of even a single corporator, was recognized by the Vice Chancellor, in the case of Curtiss v. the Manchester & Bolton Canal Company, 13 Eng. Ch. R., 131, note. In that case, an injunction was granted upon the application of a single shareholder in an incorporated company, restraining the company from affixing their corporate seal to a petition to parliament for an act to convert a part of the canal into a railway, and from using the corporate funds for that purpose. So, in Manly against the same company, an injunction was granted for a similar purpose. Ib., 132. So, also, in Ware v. the Grand Junction Water Company, 2 Rup. & Mylne, 461, the same principle was applied to a corporation upon the application of a single shareholder.

When a person become a member of an incorporated company, by his subscription to the stock, he agrees to be bound by the

terms of his contract, as defined in the charter of incorporation; he agrees to be bound by the acts of the corporation, and its officers, performed within the scope of the charter powers; but upon no principle can it be held, that he impliedly consents to any alteration which would work a radical change in the structure of the association, which might be voted or accepted by even a majority of the whole of the corporators, and thereby be subjected to burdens and obligations wholly foreign to the purposes and objects of the original charter. It is our opinion, therefore, that the acceptance was absolutely void, for want of power, on the part of the stockholders representing a majority of the stock, to vote an acceptance of the amendatory act. It follows, hence, that the transfer and assignment were, also, void and ineffectual.

VIII.

Rights of the minority stockholders in corporations.

That the whole are bound by the majority, when their acts are conformable to the charter, or articles of their constitution, and not inconsistent with them, we do not deny; but when they are not thus conformable and are inconsistent with the objects and purposes for which the body corporate was organized, we say they are not bound at all, in any way. "Thus," as Angel & Ames say, in their work on corporations, section 500, "thus, when a company is authorized, by an act of parliament, to raise money for a specific purpose, only, it is not competent to any majority of the shareholders of the company to divert such money to another purpose, against the will of a single shareholder-nor, indeed, would unanimity among the shareholders, make such a diversion lawful."

And thus we say. Thus, neither can the Galena and Chicago Union Railroad Company sell out all of its property, money and franchises to the Chicago and North Western Railway Company, or apply its tolls, revenues, and funds to supporting that road, and paying its debts, or the debts of Kenosha and Rockford Railroad