A Treatise on the Law of Private Corporations: Divided with Respect to Rights Pertaining to the Corporate Entity as Well as Those of the Corporate Interests of Members, Remedies for the Enforcement and Protection of These Rights and Interests, and Legislation Amending and Repealing Charters, Regulating Rates and Conduct of Business, and Taxing Stock Franchises, and Other Corporate Property. Containing a Full and Complete Exposition of Principles Both Ancient and Recently Developed, with References to Authorities in England and All the States Down to Date of Publication, Volume 2

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L. K. Strouse & Company, 1892 - Corporation law - 1378 pages
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Contents

Unauthorized issue of preferred stock 025
625
Calls what are 020
626
By whom made 028
628
Compliance with statutory requirements
629
CHAPTER XXIII
664
TAGE
668
Discriminations in collecting subscriptions
670
Action to prevent wrongful issue of preferred stock
675
Actions to compel payment of preferred dividends
676
Collusive agreements to escape liability
678
Complicity of part no bar to others 079
679
A case properly before the court will be fully disposed of W0 607 Parties 081
680
CHAPTER XXIV
683
Motives for bringing the suit generally immaterial r
697
The exercise of discretionary powers cannot be interfered with 098
698
Further limitations of the right 7U1
700
Cases in which there should be no delay
701
No delay where remedy would be thereby lost
703
The right to defend for the corporation
704
When election will be set aside
705
Parties defendant
706
Equitable owner may sue
708
Summary of principles governing the suit of shareholder
709
DefencesAcquiescence by the corporation
710
Ratification must not have been induced by fraud
711
Protection from anterior acts of promoters
712
Acquiescence of complaining shareholder
713
Not barred by acquiescence in other acts of wrongdoing
714
The immediate plaintiff must not be personally disqualified
715
Amount of interest immaterial
716
The rule in federal courts
717
PracticeTrial
718
Expense of suit
719
CHAPTER XXV
736
Personal liability of promoters
743
Disability meaning of 768
747
Manner of suingStatutory provisions
749
Against voluntary association
755
67S Payment of advance fee
761
Fraud of certificate holder
764
Various defensive matters
765
EstoppelNew agreement etc
767
Expulsion of insane member
768
Release 76
769
Ultra vires
770
PracticeChange from legal to equitable action
771
SameParties
772
SameEnforcing the judgment
773
Pleading
774
Answers 77
778
EvidenceGeneral rules applicable
780
Statements excluded
781
Payment of assessmentsGood standing etc
782
Books as evidence
783
Demand and notice
784
CHAPTER XXVII
786
General rule with respect to dealings with outside parties 847
787
Scope of the subject
788
Cannot interfere with the management
789
Cannot prevent a dissolution or alteration of charter
790
Lien of creditor attaches to capital after its withdrawal
791
The form of the unauthorized withdrawal immaterial
792
Rights of creditors in case of insolvency
793
Rights altered by formal insolvency of corporation
794
Rights of director who is also a creditor
795
Creditors after insolvency entitled to equal treatment
796
The right to follow funds further considered
797
Remedies of creditors in case of withdrawal
798
Devices for absorption of corporate funds
799
A court of equity furnishes the remedy
801
When creditor entitled to an injunction
802
A new contract necessary 8U 723 What constitutes novation
804
Rights of creditors may be nominally altered
805
What amounts to the formation of a new corporation
806
How usually accomplished
810
Substitution of new corporation as debtor by statute
811
Alterations authorized by charter
812
The state cannot deprive creditors of the benefits of their contracts
813
Bight of the corporation to use and dispose of its assets
814
Liability on written contracts of agents
815
When name of principal must appear
816
Admissibility of parol evidence
817
Liability of banks for collections through correspondents
818
Authority presumed from use of seal by officer authorized to affix it
820
Subsequent ratification
822
Liability of corporation on simple contracts of agents
823
Where principal will not be bound
824
Board of directors
825
Fraudulent disposal of cancelled and unissued corporate secu rities and obligations
826
A difforent rule where actually signed
827
Reason of the rule of liability
829
Evidenco of ratification
830
Distinction between executory and executed contracts
832
Ground of principals liability on partly executed contracts
833
Protection from wrongs of promoters
834
Notice to agent
835
Must be received officially
837
t8
838
Statements and admisssions of officers and agents
839
Representations of agents
840
THIBD OF THE DEFENCE OF A LACK OR EXCESS OF CORPORATE AUTHORITY 758 Matters which enter into a consideration of the subject
841
Not favored as a defence
842
The term ultra vires used in differeut senses
843
Meaning when applied to acts of corporations
844
Common law prohibition
845
Statutory declarations of the common prohibition
846
Contracts executed by one of the parties
853
7fM A strong case required to defeat a recovery of borrowed money
854
An extreme case
855
Illegal increase of capital stock and issue of stock thereon
856
Illegal and irregular exercise of the power
858
Illegal issue of preferred stock
859
Executory ultra cirex contracts not enforceable
862
Executory contracts void for excess of power but not expressly
863
prohibited
864
Commercial paper
866
Summary of principles
867
CHAPTER XXVIII
869
Relative rights of creditors and shareholders
870
Creditors have no direct remedy at law against shareholders
871
Subscriptions treated in equity as assets
872
Remedies for unpaid capital and under statutes are concurrent
873
Right of action not dependent upon the making of calls
875
Illegal conditions not binding
876
Creditors may rely upon appearances
877
Stock books as evidence against creditors
879
What amounts to payment by and discharge of shareholders
880
79 Shareholders assume a continuing liability 88M 7M Rights of the parties may be altered by special agreement
883
Customs of particular corporations
885
Time to which liability relates
886
Creditors not prejudiced without reduction of security
888
When voidable subscriptions are binding as to creditors
889
Collusive cancellation of subscriptions
890
Agreements not to enforce
891
Release by forfeiture of shares
892
The right must be exercised fairly and regularly
893
May become bound by ratification
894
Mere irregularities no defence
895
Where issued without authority of directors
896
Stock issued gratuitously
897
Proof of ratification
898
09 Liability when shareholder is a corporation
899
Part payment and stock dividends
902
S12 Stock in itself owned by corporation
903
Bona fide purchasers not liable
904
S14 When held in trust for the corporation trustee not liable
905
Secret trusts and collateral agreements do not bind creditors
906
Notice of facts renders defence available
907
S17 Interest of creditors in transfers attaches upon insolvency
908
81S Right of stockholder who is also a creditor
909
Statutory requirements as to cash payments
910
Rights of prior lien holders in case of insolvency
912
When the right to proceed against the stockholders accrues
913
Pleadings
915
Evidence of creditors claim
916
Parties to creditors bill
918
When stockholders not necessary parties
921
Adjustment of mutual claims between shareholders
923
Liabilities of members of de facto corporations to third parties
924
CHAPTER XXIX
927
Forms of individual liability distinguished
929
The true test of the doctrine of estoppel 629
931
Fraud usually the basis of liability
933
Knowledge of real relation immaterial
935
Whether intention of incorporators can be inquired into collaterally
937
Summary
939
CHAPTER XXX
940
What facts will authorize appointment
942
In tbe nature of an equitable execution
945
statute
946
Jurisdiction under statutes 4T
947
The principle practically disregarded in railroad cases
949
Further considered
950
The power to appoint upon forfeiture not absolute
952
Common law jurisdiction where corporate managers l1ave ceased or refused to act
953
Receiver not appointed where adequate legal remedy 9Tt 850 Appointment under New York statute
954
An auxiliary not a principal remedy 95
955
Receiver may be appointed of a particular fund upon vhich creditors have a charge 930
956
Of foreign corporations under special statute 95s 855 Magnitude of interests involved important
958
Appointment not usually made without notice to the oppos1te party
959
Appointment cannot be collaterally attacked
960
When want of notice excused 862
962
The fiduciary relation of receivers 863
963
Parties and interests represented by receivers of insolvent cor porations
964
He acquires rights of action
965
Title to property in foreign jurisdictions
966
Cannot affect title to real estate
968
Where powers are defined by statute
969
As a general rule not personally liable
982
His title to possession of property
985
Recetvers debentures
990
Compensation
992
Counsel fees
993
Removal and discharge
995
CHAPTER XXXI
998
To enforce performance of specific duties
999
How far the writ will control discretion
1000
Writ lies to correct abuse of discretion
1001
Inspection of books by creditors
1002
Construction of bridges and approaches to crossings
1005
To compel operation of road
1006
Other cases
1007
Cases where it is not the proper remedy
1008
The pleadings
1009
CHAPTER XXXII
1011
Whether contractual or penal
1013
Whether primary or secondary
1014
The remedy
1016
Demand upon corporation
1018
The statutory remedy cumulative
1019
Benefits purely personal to creditors
1020
Meaning of debts and liabilities as used in the statute
1022
Judgment against corporation as evidence
1024
Where the shareholder is also a creditor
1025
Parties at law
1026
Parties to proceeding in equity
1028
Defences limitation setoff etc
1030
Advantages and disadvantages or proceeding in equity
1031
On claims given a statutory preference
1032
Constitutionality of laws imposing individual liability
1033
Special statutory liability
1035
22 Purely local in their application
1037
23 Contracting indebtedness in excess of capital
1038
What constitutes assent
1039
That they acted in good faith a valid defense
1040
Form of the illegal payment immaterial
1041
50 The accrued liability is a debt
1043
Parties to suit
1044
Failure to make reports 104
1045
Effect of repeal of statute
1047
CHAPTER XXXIV
1048
Fraud of agents
1050
Liability for false representations of agents
1051
When intent will be Immaterial
1053
False statements in prospectuses
1055
Liability for torts generally
1057
Character of corporation sometimes important
1059
Negligence of agent
1062
Liability for torts and neglects of subagents
1064
Injury to employe through negligence of coemploye
1065
When superior employe stands in place of principal
1066
94S Defective machinery material etc
1067
Servants knowledge of dangers of employment
1068
Remedy by action for damages against shareholders
1069
Debts ex contractu and liabilities founded on torts given an equal footing
1070
CHAPTER XXXV
1072
Meaning and object
1073
How regarded and employed at the present day
1075
157 When the exercise of a right becomes a franchise without a legisla tive declaration
1076
Franchises created by statute
1077
Life insurance by beneficial societies
1078
Statutory authority to exercise corporate powers and exemption from common law prohibition
1079
Not every privilege a franchise
1081
Remedies cannot be given effect of an injunction 108
1084
9G5 Questions involved in forfeitures
1087
Nonperformance of conditions as a cause of forfeiture l0S9 967 Whether noncompliance ever lapses charter ipso facto
1091
Will lie for usurpation of corporate office
1093
Not a remedy for private wrongs
1095
What must appear to authorize the writ
1096
Entering into a trust as partners
1097
Employment of the writ to protect the state from monopolies
1098
Traffic arrangements between railroads
1103
For entering into arrangements delegating special powers and corpo rate control
1104
Contemplated acts no ground for this remedy
1107
Parties to suitPlaintiff
1108
Suit how brought
1109
Peculiar methods of individual states
1110
Partiesdefendant
1111
A case of misjoinder
1113
Where defendant fails to appear
1117
Interference with federal authority no defence
1120
Public injury presumed
1122
9S7 Changes in the pleadings under codes
1123
The trial
1124
The judgment
1125
CHAPTER XXXVI
1130
Not entitled to preference as creditor
1132
Preferred shareholders possess no superior claim upon assets
1133
Analogy to winding up copartnership
1134
Rule only applies to windingup proceeding 113S 998 Whether forfeiture destroys delinquent shareholders liability to prior creditors
1136
37
1137
Priority of liens
1141
Duties of receivers in case of insolvency 114
1142
Jurisdiction to wind up affairs of corporation
1145
Where corporate enterprise has been abandoned 1145
1146
CHAPTER XXXVII
1148
Statutory dissolution
1153
Voluntary dissolution
1154
Practice Parties
1155
Dissolution by consolidation with another corporation
1157
Recognition of the fact of dissolution by the state
1159
Property rights preserved in equity
1162
Property acquired by eminent domain
1163
Where there are no shareholders or creditors 1104
1164
A court of equity will preserve rights of parties 1 Ki t 1020 Suits may be revived after dissolution
1166
Directors as trustees upon dissolution 1107
1168
LEGISLATION SPECIALLY AFFECTING CORPORA PAPT TIL ?ECTALLYAFFECr TIONS CHAPTER XXXVIII
1170
Questions which may arise in a given case
1172
5
1173
The contractual relation between a state and a corporation
1174
No consideration required to support the grant 117 1
1175
The rule applies to charitable and benevolent corporations 117ft 1032 Diversion of funds and change of corporate management within the prohibition
1176
The alteration cannot be accomplished indirectly
1178
Character of membership in corporations formed under general laws considered
1180
Changes beneficial to the corporation 11S1
1181
58 Alterations by consent of members
1182
Contracts granting exclusive monopolies
1183
Must be based upon consideration
1185
Grant of exclusive right to control rates never implied
1187
General laws contained in charters subject to repeal
1189
Construction of authority to consolidate mortgage etc
1190
Protection from recklessness and dishonesty
1191
Number affected unimportant
1192
Origin of practice of making reservation in charters
1193
Distinction between franchi se and iower connected with it
1194
Constitutional protection of franchises in the hands of transferee
1195
Of the relation created by a grant of franchises in connection With the reservation
1197
To what extent franchise is property
1199
1055 Manner of reservation
1200
Reservation becomes a condition of the grant
1201
105S When consolidation effects a repeal
1203
Effect of a reservation of power to alter 120
1205
lu matters of public concern
1207
Alterations for public convenience and safety
1210
Alterations with respect to capital stock
1212
The tendency of judicial decision
1213
Effect of repeal upon the property rights of the corporation
1214
AVhen the right to repeal will depend upon a judicial ascertainment of facts
1215
CHAPTER XXXIX
1217
General view of the subject
1219
The legislature a state agency
1220
The number of individuals affected by a regulation immaterial
1221
Legislative powers extend indiscriminately to individuals co partnerships and corporations
1222
The legislature cannot bind the state by granting away the power to make police regulations
1223
Mndn v Illinois
1224
The power not to be ubused
1226
General right of state control of the exercise of public fran chises
1228
Police regulations have no extraterritorial force
1229
Police control not evaded by becoming incorporated
1231
Laws regulating rates labor wages etc
1233
Parties interested in the fixing of rates entitled to a hearing
1234
Interference by courts
1235
Police regulation does not authorize confiscation
1237
The legitimate exercise of police power unlimited
1238
lnHfi Regulation by municipalities
1239
What police regulations are not an interference
1240
CHAPTER XL
1244
Taxation of foreign corporations 124S
1247
The situs of the property controls
1248
Taxation of shares of capital stock and of property of corpora tion distinguished
1249
The policy of certain states
1250
The situs of shares and corporate bonds for taxing purposes
1252
109C Shares in national banks
1255
The proper method of taxing the property of banking corpora tions
1257
Banks may be required to furnish lists for taxing purposes
1258
Requirements of national bank act
1259
Subject to state methods
1260
Must not conflict with the exercise of federal agencies
1263
Obligations of the federal government are agencies
1264
Municipal bonds are governmental agencies
1266
Distinction between federal agency and property of agent
1267
The form which tho tax assumes immaterial
1268
Property stored at place of shipment
1270
Franchises granted by the states subject to taxation
1271
Taxation of land grants
1272
Double taxation
1274
Various methods of taxing corporate property
1275
Overvaluation not alone a ground of objection
1277
The Connecticut scheme of railroad taxation
1279
Railroads in more than one state
1280
Exemptions not favored
1281
Effect of consolidation upon exemptionSubsequent laws
1282
Construction of exemption as affecting shares
1283
Presumptions in case of false publications 720
1348
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Page 1226 - Property does become clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest, he in effect grants to the public an interest in that use, and must submit to be controlled by the public for the common good to the extent of the interest he has thus created.
Page 1155 - There may, however, be a division and distribution of the capital stock of any corporation which remains after the payment of all its debts, upon its dissolution or the expiration of its term of existence.
Page 1034 - The shareholders of every national banking association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts and engagements of such association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares...
Page 1237 - In other words, although the railroad company is forbidden to establish rates that are not equal and reasonable, there is no power in the courts to stay the hands of the commission, if it chooses to establish rates that are unequal and unreasonable.
Page 717 - ... that the plaintiff was a shareholder at the time of the transaction of which he complains, or that his share had devolved on him since by operation of law...
Page 718 - States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant; nor shall any Circuit or District Court have cognizance of any suit except upon foreign bills of exchange, to recover the contents of any promissory note or other chose in action...
Page 1052 - State that where the principal has clothed his agent with power to do an act upon the existence of some extrinsic fact necessarily and peculiarly within the knowledge of the agent, and of the existence of which the act of executing the power is itself a representation, a third person dealing with such agent in entire good faith pursuant to the apparent power, may rely upon the representation, and the principal is estopped from denying its truth to his prejudice.
Page 1061 - But we need not pursue the subject. For, however that may be in general, there can be no doubt of it in those employments in which the agent performs a duty of the principal to third persons, as between such third persons and the principal. Because the principal is responsible for the duty, and if he delegate it to an agent, and the agent fail to perform it, it is immaterial whether the failure be accidental or...
Page 1012 - Each stockholder of a corporation, or joint-stock association, shall be individually and personally liable for such proportion of all its debts and liabilities contracted or incurred, during the time he was a stockholder, as the amount of stock or shares owned by him bears to the whole of the subscribed capital stock, or shares of the corporation or association.
Page 1225 - No legislature can bargain away the public health or the public morals. The people themselves cannot do it, much less their servants.