The fee of land being in the corporation, vests no interest of the nature of real estate in the separate shareholders.9

v. Walker, 4 Mass. 595, 596, opinion of Parsons, Ch. J. Speaking of a turnpike company, he says: "When the road is made, the corporation is entitled to demand and receive a toll of travellers for the use of it, in trust for the members of the corporation, in proportion to their respective shares. The property of every member is the right to receive a proportional part of the tolls, which is considered as personal estate."

In Howe v. Starkweather, 17 Mass. 240, 243, Parker, Ch. J. says: "Shares in a turnpike or other incorporated company, are not chattels. They have more resemblance to choses in action, being merely evidence of property.”

In 1 Greenleaf's Cruise, 39, 40, the subject is very fully and fairly presented, and the following conclusion arrived at, in regard to the state of the law in the United States: "Latterly it has been thought that railway shares were more properly to be regarded as personal estate."

The same view is held in Bank of Waltham v. Waltham, 10 Met. 334; Hutchins' Adm'r v. The State Bank, 12 Met. 421; Denton v. Livingston, 9 Johns. 96, 100; Planters' & Merchants' Bank v. Leavens, 4 Alabama 753; Union Bank of Tennessee v. The State, 9 Yerger, 490; Brightwell v. Mallory, 10 id. 196; Heart v. State Bank, 2 Dev. Ch. 111; State v. Franklin Bank, 10 Ohio, 91, 97; Slaymaker v. Gettysburg Bank, 10 Penn. St. 373; Gilpin v. Howell, 5 Penn. St., 41, 57; Johns v. Johns, 1 Ohio N. S. 350; Arnold v. Ruggles, 1 Rhode Island 165.

A distinction has sometimes been attempted between the shares of a bank or manufacturing corporation, and a turnpike or railway, in regard to their partaking of the realty. But the slightest examination will satisfy us that there is no substantial ground for any such distinction. The one may be more intimately connected, in its existence or operation, with real estate, but both must have some connection, more or less intimate, and in both the shareholders have no title to the land, that residing altogether in the corporation, while the shares are merely a right to the ultimate profits of the company, and are as really and unquestionably choses in action as promissory notes, bills of exchange, or bonds and mortgages, of natural or corporate persons. Wheelock v. Moulton, 15 Vt. 519; Isham v. Ben. Iron Co. 19 Vt. 230. See also Johns v. Johns, supra. 9 Ackland v. Lewis, 1 K. & G. 334, Registration cases.

*CHAPTER VIII.

TRANSFER OF SHARES.

SECTION I.

Restrictions upon Transfer.

1. Express provisions of charter to be ob- 4. Lien upon stock for the indebtedness of the

§ 32. 1. WE cannot here attempt to show in detail all the incidents of the transfer of stock in railway companies. It is transferable much the same as other personal property, excepting only that any express provision of the charter upon that subject must be regarded as of paramount obligation.1

1 1 Strictly speaking, perhaps no shares in any joint enterprise are transferable so as to introduce the assignee into the association, as a member, unless it be joint-stock companies and corporations, formed in pursuance of legislative authority. And in the case of legislative incorporations, the shares are transferable only under the charter, and according to its terms. Duvergier v. Fellows, 5 Bing. 248, 267, opinion of Best, Ch. J. A mere partnership cannot be so constituted, as to release the assignor of a share from all liability to third persons, and introduce the assignee at once, and completely, into his place. Blundell v. Winsor, 8 Simons, 601, opinion of Shadwell, V. C.; Jackson v. Cocker, 4 Beavan, 59, 63.

In the English courts it has been held, that where the charter of a corporation or the deed of settlement required the assent of the directors to complete the title of the purchaser of shares, it was the duty of the seller to procure this assent, in order to comply with his contract to convey. Wilkinson v. Lloyd, 7 Q. B. 27; Bosanquet v. Shortridge, 4 Exch. 699.

And all corporations may, in self-defence, require all calls made upon their stock to be paid, before they will substitute the name of the purchaser of shares upon their books, for the original subscriber, as after this substitution they have no longer any claim upon such subscriber, and it would be liable to defeat many public enterprises of moment, and after large expenditures have been incurred, if the subscribers could, at will, relieve themselves from all liability to pay calls, by transferring their shares to irresponsible persons. Hall v. Norfolk Estuary

* 2. In many cases, however, where the charter only provides a mode of transfer, and does not declare this mode exclusive of * all Co., 7 Railw. Cas. 503; s. c. 8 Eng. L. & Eq. 351. But the assignee of a share may always insist upon becoming a member upon paying all calls.

Questions of some difficulty often arise between shareholders and the company, in regard to an informal transfer having been confirmed by acquiescence. In Shortridge v. Bosanquet, 16 Beav. 84; s. c. 17 Eng. L. & Eq. 331, and in ex parte Bagge, 13 Beav. 162; s. c. 4 Eng. L. & Eq. 72, it is held that if the entry of the transfer is made upon the books of the company, and especially where the company have dealt with the shareholder claiming under the transfer, they cannot treat the transaction as void, for any want of form in the transfer, though in a matter specially required by the charter and not immaterial, but which their own irregularities had rendered it impossible to observe. And where the secretary of a joint-stock company fraudulently transferred shares, and the proprietor of the shares treated the transaction as being valid against the transferee, but filed a bill against the company for damages, it was held he was not entitled to relief. Duncan v. Luntley, 2 McN. & Gord. 30; s. c. 2 Hall & Twells, 78.

In ex parte Straffon's Executors, 4 De G. & S. 256; s. c. 10 Eng. L. & Eq. 275, the lord chancellor, St. Leonards, thus characterizes these transactions, which, although informal in some respects, are constantly acquiesced in by both parties, until there comes some crisis in the affairs of the company, perhaps, or the transferee becomes insolvent. "There would be no safety for mankind in dealings of this kind, extensive as they are, with so much money embarked in them, if the courts had ever held, as they never have held, that every minute circumstance must be obeyed, which the directors themselves ought to have obeyed; but if they disregard them, if the shareholders do not call them to account for doing so, if a course of action has been adopted in the particular company, without complaint, although they may have arrived at making a man a shareholder, by what I should call a short cut, instead of going through all the necessary formalities, they may be perfectly good as between parties thus dealing with the directors, and the directors themselves, so as to bind them."

And in Bargate v. Shortridge, 5 Ho. Lds. 297; s. c. 31 Eng. L. & Eq. 44, in the House of Lords, upon elaborate argument and great consideration, it seems to have been definitively settled in England, that where the deed of a joint-stock company required the certificate of consent of three directors to the transfer of the shares of the company, and in practice this had never been given, but, for ten years, transfers had continually been made upon the verbal assent of the managing director upon the spot, and about nine-tenths of the original shares had been transferred in this manner, and S. having transferred his shares in the same mode to T., and his name having been entered upon the books of the company, they could not afterwards refuse to regard T. as a member.

And in such case, where the directors afterwards cancelled the name of T. in their share register-book, on the ground that the consent of the directors was wanting, it was held that S. had ceased to be a member of the company, and was entitled to an injunction against a scire facias prayed out against him by a creditor of the company, as a shareholder.

It was said by Lord St. Leonards, who delivered the leading opinion: "Where

others, the provision has been regarded as merely directory, and not indispensable to the vesting of title in the assignee. And this has generally been so regarded, where the express provisions, in relation to the transfer of shares, exist only in the by-laws of the corporation.

3. And any unusual restriction in the by-laws of a corporation upon the transfer of stock, as that it shall be made only upon the books of the corporation, in person, or by attorney, and with the consent of the president, or other officers of the corporation, has been regarded as void, as an unreasonable restraint upon trade,2

the directors of a company do acts in a matter in which they have no authority, such acts are altogether null and void. But where the acts are within their power and duty, and are either omitted or improperly done, and thereby third parties are damaged, neither a court of law nor of equity will allow the company to take advantage of their neglect."

This, it seems to us, is a sound distinction, and one which will have an important bearing upon the fraudulent over-issue of stock by the directors of a company whose capital is limited, and all issued and in the hands of bonâ fide owners. This is the same case in 4 Exch. 699. See also Taylor v. Hughes, 2 Jones & La Touche, 24; Humble v. Langston, 7 M. & W. 517; s. c. 2 Railw. C. 533; Ex parte Cockburn, 4 De G. & Sm. 177; s. c. 1 Eng. L. & Eq. 139.

But where the charter, or the general law, requires all debts of the owner to be paid the company before transfer of shares, the company are not bound to accept a transfer otherwise made. Reg. v. Wing. 33 Eng. L. & Eq. 80.

2

Sargeant v. Franklin Ins. Co., 8 Pick. 90; Quiner v. Marblehead Ins. Co., 10 Mass. 476; Noyes v. Spalding, 27 Vt. 421; Bates v. New York Ins. Co., 3 Johns. Cas. 238; Chouteau Spring Co. v. Harris, 20 Missouri, 382. In this last case the charter of the company provided that the stock might be "transferred on the books of the company," and the company were authorized "to regulate the transfer of stock," by by-laws. And a provision in the charter authorized the company, in certain cases, to make assessments of stockholders beyond their shares of stock.

It was held that no such assessment could be made on a party, after he had ceased to be a member, by a transfer of his stock; that the power "to regulate the transfer" did not include the power to restrain transfers, or to prescribe to whom they might be made, but merely to prescribe the formalities to be observed in making them, and that the company could not prevent a party from selling his stock, even to an insolvent person; that an assignment "upon the books of the company" was sufficient to effect a change of ownership, without taking out a new certificate in the name of the assignee; and that any transfer in writing was valid against the company, if, being notified, they refused to allow it to be made according to their by-laws.

And in Dauchy v. Brown, 24 Vt. 197, which was an action against stockholders, upon the proper debt of the corporation, where the charter provided, that the persons and property of the corporators shall be holden to pay its debts,

* unless as a provision to secure the indebtedness of shareholders. In such case it is sometimes said the assignee need only make his right known to the company, and require the transfer entered upon the books, and his title becomes perfected.3

4. But if the former owner was indebted to the corporation, and the charter required all such indebtedness to be liquidated, before transfer of stock, such indebtedness will remain a lien upon the stock, in the hands of the assignee. And where the charter of

and that any execution, which should issue against the corporation, might be levied upon the person or property of any individual thereof, it was held, that the stockholders were only liable, in default of the corporation, and that judgment should first be recovered against the corporation, and the statute remedy strictly pursued. See, also, in regard to the remedy against stockholders, who are by statute made personally liable, Southmayd v. Russ, 3 Conn. 52; Middletown Bank v. Magill, 5 Conn. 28; Child v. Coffin, 17 Mass. 64; Roman v. Fry, 5 J. J. Marshall, 634. And in a late English case, Robinson v. Chartered Bank, Law Rep. 1 Eq. 32, where the charter required that no one should become a transferee of shares unless with the approval of the directors, it was held that the directors must use this power reasonably and would be controlled in equity. But where the charter of a corporation required all transfers to be executed by both parties and approved by the directors, and the transferror's name had been entered upon the registry upon his own execution merely, and the company was being wound up, the court refused an application to remove his name from the registry. Walker's case, Law Rep. 2 Eq. 554.

3

Sargent v. Franklin Ins. Co., 8 Pick. 90; United States v. Vaughan, 3 Binney, 394; Ellis v. Essex Bridge Co., 2 Pick. 243; Chester Glass Co. v. Dewey, 16 Mass. 94; Agricultural Bank v. Burr, 11 Shepley, 256; Same v. Wilson, id. 273.

Union Bank v. Laird, 2 Wheaton, 390; Bank of Utica v. Smalley, 2 Cowen, 770; Rogers v. Huntingdon Bank, 12 Serg. & R. 77; Downer v. Bank of Zanesville, Wright, 477; Farmers' Bank of Maryland v. Iglehart, 6 Gill, 50; Hall v. U. S. Insurance Co., 5 Gill, 484. See Angell & Ames, § 355 and note. In Marlborough M. Co. v. Smith, 2 Conn. 579, it was said the transfer of shares to constitute the assignee a stockholder must be in strict conformity to the charter and by-laws. And in the recent case of Pittsburg & Connellsville Railw. v. Clark, 29 Penn. St. 146, Ch. J. Lewis goes into an elaborate review of the cases to show, that under the Pennsylvania statutes, which provide, that no transfer of shares shall be made while the holder remains indebted to the company, except by consent of the board of directors, and no transfer shall discharge any liabilities before incurred; that both the stock and the holder remain liable for all calls due before the transfer, and that the original subscriber, who promised to pay fifty dollars on a share, is indebted to the company, before calls made, within the meaning of the statute; and even where the transfer is made with the consent of the directors, will remain liable until all calls are paid, notwithstanding the statute subjects the transferee also to a like liability. The following extract from the opinion of the learned judge places the points