The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1854-09-22

Wifb the s1sspon 81 the frsuusnt isos Of stooA al
fssAy nestiopsd the De,ss have eos been sss, upon
y ssnS on III. u.s NJ Ssys &
fairs Of ths company With the exseption Al two 20
s.p,.sss. q sssh pu.pSs.s 70 have "a s. :.
copied by ssbayl~r a. PrssiSsnt These were not
spss etons Of the company, and the avas Of hs drafts
were never realised BY II AID a. the tsAAsactson Was
cut Of the courss and he had no authority TO
accept for the company or - pleire rs credit Is seen
ry ior sis ern the directors have o.ss.sd snsE mst
ipvovsi and Il tie prnS.bls Suspended
S%ss.rs sss s.rs 70 are. urn every one s.tis:d to
tai part In s prcsesdpss to present in order that
tho course which wisdom snd justice shAn require, may
By order ef the Board Of ni,ectors,
WIN B0.RDAsN, President pro- t~-
New YoYh, Sept -, 1854
OPINION or COUNSEL.
Our opinion has been requested by the New York and
New Haven Railroad Company as TO their liaely for
York
The facts "a detailed to rs are substantially these:
The company vas incorporated BY stegi.a tore Of
the State Of Connecticut in May, 1t2t The charter
contains this clanse =
"ssc That the capital stock Of said Company shall
b two millions Of dollars with the privilege Of ncrsas-
irg the same tn three mlions Of dollars and to be di
vsed into shares 81 one hundred dollars each which
shares shall Be deemed personal propery and be trans
fer,ed IN inch anner and &C such places a. the By laws
of ssd company shall direct !"
v,
the following rules adopted by the Board OF Di
rscors uncer this section, regulating the transfer Of
"The principal transfer ONCE thali be in the city Of
New Haven hut transfer agencies may b established In
the cite, # New York and Boston by resolution Of the
Board ofDbector and All transfers Of stock at Office
sbah be made under and In compliance with such rules
and regulations and by such nstrnmcn Of assignment
and transfer, (Which need not be- under ssll may
from time to time be made ordered and appontei the
Bosrd Of directors. Certificates Of stock al all b. in uch
form and Issued under snch rules and regulations the
nNo vAAfn xnfaw
rect but when OF stock has suei tn any
stakeholder duplcsts tica- shall be ssu
I'd and transfer Of the stock shall be made
permitted without tse surrender Of raid oertia ats
less the shall be lost mislsd and then only
special resolution If the B. ard Of ectors and the
plarce with the ruks and regulations, millions and
srulstiops tho renewal Of icates lost mis-
laid which be adopted imposed and required from
time to time by the Board of Directors
schuyler, being the President Of the company, was
appointed The transfer Agent in New York; similar
agencies being estsb shed in Now Haven and Boston
soon aftersards the capital was increased to three mil
lors autbos lied by the section already quoted the
whole Of which paid in and scrip ss1ed
thus .tood st three millions beyond which could not be
increased without act OF the Legislature Of Connect
cnt, for pesry ten years In thu autumn Of 1853 and
subsequently,, SCHUYLER ac:iEg as Tansfer Agent hav
iIg ark certificates Of stock IN his possession for
the purpose q transferring existing shares, when
the cld certificates should be surrcn made an
Illegal issue Of certificates, purporting to represent
sbars IL tho company, without the knowledge or
authority Of the Board Of Directors, any member
surrendered 1hese Illegal certificates were in the
same form, and signed IA the manner the valid
fer AGENT h.vns Sssn tn. Uniform usage Of IN.
company to x TO their stock certificates other
than that Of their transfer agent at the where the
nearly two millions Of dollars, issued to r. g. L.
Schuyler, q firm In which he was . membsr,) and TO
other persons whom they hi assigned them ana were
Of the nrro chiefly by Borrowing money upon them and
pedgiDE them collateral None Of the ne in
fhAsn ahavAs Me aA-A ~-~
Of the company; in passipg them did Schuyler pro
fees 10 set the president transfer agent Of the
ibsTes Each certificate was for : large number Of
stsres ani those issued to the firm generally deli
vered With blank powers OF attorney 70 transfer the
STOCK sisnsd by schuyler in the Of his Arm with
out being actually transerrd on the books
Upon these facts. We are Of opinion,
and that they confer upon the holders no rights a
holders. the Board Of Directors had originally issued
he excessive number Of shares, their act in doirg
would have been illegal and void; and these stand
upon NO better ground Indees the holders Of them
In g much worse condition ,han the holders Of such
H. That the comrsny Ia not bound TO- and that can
lot lawfully recognize or adopt t,em repre- eatng
Of Of Is III. OF
could not by any vote resolution whatever. increase
the stock hey.nd the three millions their power upon
that subject exhausted when they brought ND
that sum- and Effort - 60 IT., would not only
have been Invalid, but NO ion OF the eharec
Isrting forfeiture. II follows q necessary conse
qutrcs that sNbodnat. SCENT Of the company c,ui
&C what The Board OF Directors aef could and tina
the Board Of or have no powe- 70 raty or confirm
any act which they Gould not originally perform
1he power TO admit the holders Of these Illegal
owners Of stock, requires not simply their admission
sicck hoctrs but The power to reject and exclude an
equsl numner CT hsful shsrshoe from their rights
sucl. If the holders OF the Illegal sba entitled
stock Of THREE millions; they eived the shares ~
such and not shares capital Of Eve millions and
their just rights in thst event require the custer OF
equal number ~ lawful shares to keep the Capital
within three ilons 1t Ia qnite obvious that the COM
parry have no powsr TO do either Of thase things.
III. That the unauthorized aud s gal act of the trans
fer mt In issuing tbese cert Gcats 10 his own drm
snd Isitng money upon them for hia and ther
does NOT create debt legal oga loo az .nst
the company He ONLY this sgent of tue company to
fsue new certificates " stock for three millions OF ts
lawful capital Whenever certificates previously issued
we're suI,erdersd III. agency did not extend nor could
II lawfully extend to the creation Of new shares No
fuch power had been conferred upon the com
papy, and Of course II could be conferred upon
him BE wss not empowered 10 esi or transfer new
shares but simply to transfer the cid ones and all be-
yoDd this was plain Of power, snd obvious
Lg their corporate powers though done cooye Q6icii
1e az the liability, must appear that the on co.'s
done bona de in pursuance Of gems al authority re.
stion TO the subject Of H. tba II has bsen adopted u
IsGed BY The corporation, wh1re 1t meter within
In the Of general agent his acts viii be binding
on the PRINCIPAL though be violates his psrtlcuiar in,
strucfoIs provided the acts done In violation thereof
e me within the general scope Of his authority But Il
cannot be said that act extending beyond subject
and Of course beyond the limits OF authority
can b valid vixen also rapsceDds the power and au
therity Of the principe mis and especially wheu
IN thus trsnfcendng the authority Of the principal it is
A. the same time Illegal and ainst the po:J Of the
law -
w. 1t follows from these views that ths Bard o. d.
sectors has authority 10 recognize the holders Of
ese Dcgal certificates creditors of the company for
the amount advanced upon them than IL has to admit
tbs m TO the rights Of stcckholders
The drec ors Of corporate have power to sppro
n Ia
claim which Ia sde against ~ This settled by the
CUIt Of Nppesls In tho Of Hdl,iead The Mayor
Of Nee York, "a Comst $50 where he corporation
Of this city gave its crafts 20 the c. ration Counsel TO
roy no csts Of defending soit against Of the Al
atinen who had done act Ia rhish tho ity wss
Interested in violation Of Law the ceeDce having been
assumed by resolution Of the Common Coapcl Itwas
he,d tfstthe oyAfJ were void In TIE hands Of
ftro party ~ therefore, the directors should apply
tbe funds Of ibe company to pay these without
the cement 81 the lawful stockhol'ers they wou. DO
peJs'ntIy liable for nfsappropriatipg the compsny's