to establish and legislate for such banks has not, since 1819, been an open question. McCulloch v. Maryland, 4 Wheat. 316. If a purchase of stocks in a national bank by a married woman without the written consent of her husband gives her the ownership of such stock, judgment must be given against the femme defendant. If she owned the stock at the failure of the bank, she is liable to the assessment; if she did not, she is not liable. While the Federal Government exclusively controls the question of the liabilities of stockholders in national banks, it is not doubted but that a State has power to say that, for reasons seeming good to its Legislature, and not in conflict with organic law, a particular class of persons shall not be permitted to own particular classes of property. It may lawfully be provided that a guardian or other trustee may not invest in securities other than those specified by statute. Probably it might be held that a statute might constitutionally provide that purchases by guardians of, say, railroad stock, in the name of their trust, should be absolutely void. In such case it might be held that an attempted transfer of such stock so purchased passed no title; that the stock still remained, although duly assigned and transferred on the corporation books, the property of the vendor; and that the guardian could recover the money paid from the vendor. It would, I think, require strong and plain words to induce courts to give such a construction to an act of the Legislature."

The court holds that the Legislature of a State cannot enact a law in conflict with a statute of the United States.

§ 51. Enforcement of subscription.

A subscription to the capital stock of a proposed corporation, for the purpose of forming it, made by several signers, is valid. The corresponding promise of the other signers, and the common object sought to be accomplished, constitute a sufficient consideration for the promise of each signer, and upon the formation of the corporation and its acceptance, each subscriber becomes liable.

An action against the subscriber to stock upon his subscription according to its terms, is not an action under the statute to recover assessments upon the subscribed capital stock.3

3 The Marysville Electric Light & Power Co., appellant, v. F. W. Johnson, respondent, 93 Cal. 538.

A contract in writing, by which the subscribers agree to associate themselves into a corporation for a specific purpose, and to pay to the treasurer of said corporation the amount set against their respective names, is a valid subscription; and an action may be maintained in the name of the corporation, after it is organized, against a subscriber.*

The court, in discussing this question, says:

"In agreements of this nature, entered into before the organization is formed, or the agent constituted to receive the amounts subscribed, the difficulty is to ascertain the promisee, in whose name alone suit can be brought. The promise of each subscriber, to and with each other,' is not a contract capable of being enforced, or intended to operate as a contract to be enforced between each subscriber and each other who may have signed previously, or who should sign afterward, nor between each subscriber and all the others collectively as individuals. The undertaking is inchoate and incomplete as a contract until the contemplated organization is effected, or the mutual agent constituted to represent the association of individual rights in accepting and acting upon the propositions offered by the several subscriptions. When thus accepted, the promise may be construed to have legal effect according to its purpose and intent, and the practical necessity of the case; to wit, as a contract with the common representative of the several associations."

The question of liability of a subscriber is again presented in the case of The International Fair & Exposition Association of Detroit v. Hiram Walker, 83 Mich. 386; and a subscriber who signed a subscription paper (but not the articles of association), which subscription paper was in the following form:

"For the purpose of purchasing suitable grounds, erecting suitable buildings thereon of a permanent character for fair and exposition purposes, to be upon a plan similar to the Buffalo Exposition, and believing that a corporation, with a capital stock of at least $250,000, should be organized for such purpose, the undersigned agree to subscribe for and take stock in such a corporation for such purposes to the amounts

4 Athol Music Hall Co. v. Carey, 116 Mass. 471.

set opposite our respective names: Provided, that at least the sum of $100,000 shall be subscribed within sixty days from the date hereof, in order to render our agreement hereto binding. "Dated Detroit, January 9, 1889."

Was held liable.

The court says:

"The agreement sets out fully the purposes and objects for which the moneys were to be raised. It was to purchase grounds, erect suitable permanent buildings thereon for fair and exposition purposes, and to be on a plan similar to the Buffalo Exposition. Two hundred and fifty thousand dollars, at least, was to be the amount of the capital stock; and the only limitation or condition under which the amount subscribed by each should not be paid was that $100,000 should be subscribed within sixty days. This amount was subscribed within the time. The other parties who subscribed went forward in good faith to carry out the plan named in the agreement, and in reliance that the defendant would pay in the amount of his subscription. He stood by and saw the moneys being expended, the ground purchased, and buildings erected. He attended a meeting, and voted, not only the stock of his two sons, but voted his own, upon the question of the site. This subscription was accepted by the plaintiff, and it has the power to give the stock subscribed for, and has offered to do so. I think this case falls so squarely within the case of Peninsular Ry. Co. v. Duncan, supra, that the first proposition of defendant's counsel needs no discussion. It is true that the statute under which the plaintiff in that case organized did require preliminary subscriptions, while the statute in the present case does not; but here, as in that case, the promises to pay the amount subscribed are mutual, and the agreement by the defendant to pay the $5,000 was relied upon by the other subscribers, and between them it was a valid contract, upon which, after organization, the corporation could maintain an action."

Where the purposes of the corporation are defined in the preliminary subscription paper, which paper sets out the purposes of the corporation, and after being signed the articles of incorporation, are changed, by additional or new busi

ness, the subscriber will be released. The corporation cannot recover against him.5

A subscriber to the stock of a corporation may, by the terms of his subscription, vary his liability to calls or assessments from that imposed by the statute. The liability of a subscriber, in such a case, is measured by the terms of his agreement.

6

A subscription cannot be avoided where the subscriber has partially paid for his stock, upon the ground that the purposes of the corporation have been changed, and differ from those stated in the subscription agreement."

The question whether an action can be brought to enforce a subscription to stock in a corporation, before the corporation is organized, is not presented by the cases; but if an agent is named in the subscription paper to receive the amount from each subscriber, for the benefit of the corporation, the assumption is, that a suit may be instituted before the organization of the corporation in the name of the agent.

$ 52. What constitutes a stockholder.

8

The issuing of the stock, coupled with delivery, and acceptance, and entry of the name of the owner on the stock books of the corporation, is proof conclusive of ownership.

A subscription to stock of a national bank, and payment in full on the subscription and the entry of the subscriber's name on the books as a stockholder, constitutes the subscriber a stockholder; though the certificate is not issued or taken out.

The Supreme Court, in the case of The Pacific National Bank v. Eaton, 141 U. S. 227, holds, that where a party who agrees to take the new shares of stock being his proportional share, to the doubling of the capital stock of the banking corporation, and paying for it in cash, and receiving a receipt for the same, are acts which are fully equivalent to a subscription to the stock in writing.

He would then become a stockholder, and be properly entered as such on the stock book of the company, and his certifi

5 Marysville Electric Light & Power Co. v. Johnson, 109 Cal. 192. 6 Ventura and Ojai Valley Ry. Co., respondent, r. Hartman, appellant, 116 Cal. 260.

7 Walter v. Merced Academy Association, 126 Cal. 582.

8 Athol Music Hall Co. v. Carey, 116 Mass. 471.

cate of stock being made out ready for him when he should call for it, would hold: It is his certificate.

A stockholder is one who is (in fact) the real owner of the shares and is liable as such, though, when he purchased the stock, he had it transferred upon the stock books to another.

A purchaser of stock in a national bank cannot escape individual responsibility by having his stock transferred to a person pecuniarily irresponsible."

Where stock is transferred and placed upon the stock books in the name of a person who has no knowledge of such transaction, which has been done without his authority or consent, this does not constitute him an owner or establish liability; but where a person is elected a director, and vice-president, of a banking corporation, assuming the active management of the bank, being bound by a statute to own a certain number of shares, and presumed to know the condition of the books of the bank, not only as to whether the required number of shares are held by him, but whether there are the required number of stockholders, and who they are, and does not return a dividend paid him by the bank, at a time when it was insolvent, upon stock transferred to him without his knowledge prior to his election as director, and vice-president, and does not repudiate the transfer except by a return of the dividend to the supposed owner of the shares, he must be held the owner of the stock thus transferred to him on the books, 10

The general rule is, that, unless the statute otherwise provides in expressed terms, "It is not essential that a certificate should have issued in order to create the relation of shareholder, provided a contract to take stock had been duly made, or provided the rights, privileges, and emoluments of a shareholder had been enjoyed with the consent of the corporation."

The authorities supporting this rule are sufficiently numerous to establish it as the law.11

It is held in Chaffin v. Cummings, 37 Me. 76, that, in order to constitute a stockholder, it is not necessary that

9 Davis v. Stevens, 17 Blatchford, 259.

10 Brown v. Finn, 34 Fed. Rep. 124.

11 Butler's University v. Scoon

over, 114 Ind. 381, 16 N. E. 642; Chase v. Merrimac Bank, 19 Pick. (Mass.) 264, 31 Am. Dec. 163; Chaffin r. Cummings, 37 Me. 76; Farrar v. Walker, 8 Fed. Cas. No. 4679.