In Mann v. Pentz, 2 Sandford Ch., 258, it was decided that a shareholder holding one hundred shares of stock, on which more than half of the nominal amount had been paid, by an agreement with the directors, received full scrip for sixty shares, and soon after relinquished the remainder to the corporation. On the corporation subsequently passing into the hands of a receiver, it was held, that the creditors and other stockholders who did not assent, were not affected by that arrangement, and that such shareholder inust make the whole hundred shares full stock, if it were necessary to discharge the corporate liabilities; and this was on the ground that, the shareholder had, by subscribing, contracted with all the other shareholders that he would furnish so much as he subscribed to the capital stock, and this shows the interest which each shareholder has in the funds of a corporation.

In the case of Mann v. Currel, 2 Barbour's Rept., 299, the court decided that a certificate of stock is a contract between the stockholder and the corporation, and that a person remains a stockholder until he surrenders up his stock to the company and a transfer is made on the books of the company; and then the court adds that, an agreement to consolidote the stock could not affect the rights of creditors of the company or of the other stockholders who were not parties to the arrangement.

Charters of corporations are contracts made by the legislature in behalf of every person interested in anything to be done under

them.

1 Shelford on Railways, p. 71.

Blakemore v. Glamorganshire Canal Navigation Co., 1 My. & K., 162-3.

Rex v. Cumberworth, 3 B. & Ad., 108; 1 Nev.

& P., 197.

Rex v. Greenwich R. Co., 4 Nev. & M., 458.

Lee v. Milnre, Mees. & W., 839.

Shand v. Henderson, 2 Dow P. C., 521.

Lee v. Milner, 4 Y. & Coll., 618.

Hence, every substantial alteration of a charter, without the consent of the corporation, is void.

The Commonwealth v. Cullen, 13 Penn., 133.

In Blakemore v. the Glamorganshire Canal Co., 1 Myl. & Keen, 162, Lord ELDON says: "When I look upon these acts of Parliament, I regard them all in the light of contracts made by the legislature on behalf of every person interested in anything to be done under them; and I have no hesitation in asserting that, unless that principle is applied in construing statutes of this description, they will become instruments of greater oppression than anything in the whole system of administration under our constitution. Such acts of parliament have now become extremely numerous, and from their number and operation they so much affect individuals, that I apprehend those who come for them to parliament, do, in effect, undertake that they shall do and submit to whatever the legislature empowers and compels them to do; and that they shall do and shall forbear all that they are required to do and to forbear, as well with reference to the interests of the public as with reference to the interests of individuals.

See also to the same effect,

Lee v. Milner, 2 You. & Coll., 618.

2. The contract of a shareholder in a corporation cannot be altered or varied by the corporation without the assent of the individual shareholder; and every substantial alteration, without his consent, is void.

Hartford & New Haven R. R. Co. v. Croswell, 5 Hill, 386. This was a case where the legislature of Connecticut in May, 1833, passed an act incorporating the Hartford and New Haven R. R. Co., with power to construct a railroad from the town of Hartford to the city of New Haven. In May, 1839, the legislature of Connecticut amended the act of incorporation authorizing the company to procure, charter, or purchase and hold such number of steamboats to be used in connection with their road, as they might deem

expedient, to an amount not exceeding $200,000. On the 2d of July, the board of directors resolved to accept the amendment, and in September, 1839, the stockholders formally accepted the amendment; but the defendant, who was a subscriber to the original stock, was not present and it did not appear that he had ever signified his acceptance. The defendant was called upon to pay an installment, but refused. Suit was brought against him. The defence was, that the plaintiffs were seeking to enforce a different contract from that into which the defendant entered when he subscribed for the stock. The opinion was rendered by C. J. NELSON, who said:

"The contract thus entered into was as specific and definite as the charter of the company could make it; and the meaning and intent of the parties cannot therefore be mistaken. It was a contract to take stock in an association incorporated for a particular object, having such limited and well defined powers as were necessary to the accomplishment of that object. The defendant assented to the object by his subscription, and thereby agreed that his interest should be subject to the direction and control of the powers thus expressly conferred, but nothing more.

"Since entering into this contract, the plaintiffs have procured an amendment of their charter, by which they have superadded to their original undertakings a new and very different enterprise, and for aught that can be known, a very hazardous one, with the necessary additional powers to carry it into effect. Instead of confining their operations to the construction and management of their railroad between Hartford and New Haven, they have undertaken to establish and maintain a line of water communication by means of steamboats, at an expense not to exceed $200,000; to all which, it is insisted, the contract of the defendant has become subject without his approbation or assent.

"It is most obvious, if incorporated companies can succeed in establishing this sort of absolute control over the original contract

entered into with them by the several corporators, there is no limit to which it may not be carried, short of that which defines the boundary of legislative authority. The proposition is too monstrous to be entertained for a moment. Corporations possess no such power. Indeed, they can exercise no powers over the corporators beyond those conferred by the charter to which they have subscribed, except on the condition of their agreement to consent. This is so in the case of private associations, where the articles entered into and subscribed by the members are regarded as the fundamental law or constitution of the society, which can only be changed by the unanimous voice of the stockholders. (Livingston v. Lynch, 4 John Ch., Rept. 573; Coll. on Part., 641.) So here, the original charter is the fundamental law of the association-the constitution which prescribes limits to the directors, officers and agents of company not only, but to the action of the corporate body itself, and no radical change or alteration can be made or allowed, by which new and additional objects are to be accomplished or responsibilities incurred by the company, so as to bind the individuals composing it, without their assent.

"The question has been the object of consideration in Massachusetts and Pennsylvania; and in each, the courts have not hesitated to maintain the inviolability of the contract as originally entered into, denying to the company the power of altering it essentially, and of binding the subscribers who have not given their assent."

Macedon & Bristol Plank R. Co. v. Lapham,

18 Barb. 318.

Chapman et al. v. M. R. & L. E. R. R. Co., 5 Ohio State, 136.

Hester v. Memp. & C. R. R., 32 Miss. 373.

Champion v. Memp. R. R. Co., 35 Miss. 692.

The number of cases which could and can be adduced in support of the above doctrine, is almost innumerable, and can be found in the reports of almost every State in the Union-and the great

principle which they establish is, that no legislature can alter or change the fundamental contract of the shareholders; and if this is so, how can a set of stockholders, who happen temporarily to be in the majority, alter and change that contract without the consent of all the parties to that contract? Are not the minority of stockholders as much parties to the contract as the majority? Is it in the power of human ingenuity to disprove this position?

"An assent of stockholders to amendments changing or extending the objects, or increasing the powers, or enlarging the liabilities of the corporation, in any matter fundamental, is not to be presumed, but must be proved.

"There is no proof in this case, that these plaintiffs or their grantors have ever consented to any change in the contract as originally made between the corporations, of which they are members, whatever the directors or a majority of the corporation may have done on their own account."

March v R. R. Co., 43 N. H. 525–6.

If the sale, consolidation and extermination of the Galena and Chicago Union Railroad Company, as a distinct and independent corporation, and its amalgamation with the Chicago and North Western Railway Company, and all of the railroads it has ever built, bought, or absorbed-together with the assumption of millions of debts and liabilities-is not something of an alteration and change of the fundamental contract of the shareholders of that company, and of the objects with which it was formed, then the human understanding is incapable of comprehending what constitutes a change or alteration in the affairs

of man.

In the case of Wetter v Mississippi Railroad Company, 20 Ark. 463, the court held that, where the charter, under which a railroad corporation was formed, having definitely fixed the termini and route of the road before the appellant became a subscriber to its capital stock, this was held to give the law of his contract.