The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1855-08-04


Issued By either OF The transfer agents, had pecu-
nisry and valid claim agAtDa the coY9s-ssi IN,
either 90 b admitted ~ oorpOsstor, -, II thas
Was hmpraC&icahle, mon the excessive issus OF
stock 60 be compensated Dy the hank for The fraud
p2actlsed uron them.
cannot discern . reason 10 doubt that, frresysc-
tive OF ststutoty. prohibitions or provisdbs such
contract could have been made BY tia body OF the
stockholders, Of the import and extent thus defined
and would have been enforced against them.
avn. The next point in this part Of the case
LIB as % The effect VI such al acs or contract
made by the body OF the stockholders in cen
ncctior with tie chatter aud the State. The mora
deliberate examination which have given 10 this
point c0nrmsiR conviction the vie ~ expressed in
q. =, case q the Bank Of Commerce, which wers as
Legislature has pres :ibed limit to the capital Of
corporation, direct Increase OF the am ,unt would
be violation Of the compact and ground offorfeis
Ofthe capita! is governed by two consderstons the
necessity OF RAISING 81 amount suf cte1s to ac,om-
pisa the public object, and tue forb.ddng larger
accommodation Of money or property in sss hands Of
one body than is essential for that purpose. For
company then 70 transcend tins fxed amcnnt, is to
muTp right to increase the great ale nsas OF cor
p0rste power, contrary to fundamental policy Of
the State. But Il is not reen how this lime Of rea
eoniEg applies With the hSe or with aug forcs, TO
the Increase by company OF the number OF It's
shares in any manner which Leaves the capital pre-
ciseIy it was b:foye. IT the charter OF company
had fixed capital, bat wss silent as TO the numbsr
sseAtg, If entrusted with the pc Ver,) might adjust
and re.a6just such number Or value. II again,
whore the charter rs in this case, directs that there
shail be . defined number Of shares Of 500 eicA,
The associates agree to increass the saares
by reducing the par value OF what they hold by
given per centage, would that be violation OF tbs
charter such as 10 work forfeiture, or wo1d it bs
matter only affecting the individual me mbers rs TO
their pcc0niaYy interests IN the stock? We iod cha.
ender thu present charter there might have been
thirty THOUSAND members Ct tie company. It is NOT
vsded II This number was voluntarily increased TO
iorty-fiye thousand tins limited capital remaining
the same. Tie effect in tia case suggested would
be that each gtockhodar would reduce his share, for
which he hea paid 800 to $50 and receive his part
Of future profits uoon toe later sum.
BE- ii is here Necessary to examiae With cara de.
cisi,n OF tho Supreme Court Of Msssachu aests pro-
nCopcsd by h late dis 5.ugnished Chief Justice, bsar
Min Dam W.. Ropes (6 Pickering 52). reahirmsd ia
Pickering le7, and confirmsd ia another In 10
Pickering l. " must es noticed tcat the first sse
arose upor an action snst Subscriber for payne ut
Of a call which WIS reGiEted on the ground thai bis
Subscription WIS con iislonal, aad ina. ouch coadi
ton mad no. bseu fulfilled. The charter was, that
the capital should be $500 0o0 and the shares 5000
of SlC0 each. The directors had ATTEMPTED 10 90
1851 shar~s hai been subscribed. TDe Court hold
the defen3sc. not Responsible Tor the cal.
Now II appears TO me Inaccurate TO say that taese
Case1 prove u So reduction Of the nber Of shsrel
expressed ia the chs.ser il volstion 81 tast char
ter. Ii is correct TO say that they prove IL to bs
violation u Lontalhsrnent OF contract tne tefcls
of which are found IN the charter. II SO, the
condsion Of the contract may BIO waived, moiifed,
or insisted ION as the viii o. toe subscriber, with
tie assent Of the company. Aud hence, we are, in
each prti:ulsr case 70 ascertain whether sGca way
ss sa S vi s II d yss i
tion was regarded by the court in the Of the ,x
irgtoE and West Cambridge Company w. CDamoe.s,
(l3 Mescslf, BIZ sod in the kannebsc Railroad
thn Il ~
the count ray tsa. /" the contract thers calid not
nave had reference 70 any certain rauosr OF saares,
cerSiu amount Of capit,. as fixed by Che Charter,
and there il 10 language used in the c2n'r Cd pre-
scribiu the number OF tho Shares tha lult
tie capital.' It may be adtaitted that a. " .eass
OF the number Of shares by a reau ION of
the value Of tlose already isaued, by sfscing
s9 as wa 81 ts SUM sas
stands upon 0 uimilsr footing az reduction Of
shares, which tendy to increase his liability
danger his advance BIt'taa question STILL ia easn
instance, is one Of contrac and authorization and
sgs s.s'''" '''"''A -'''' -'0 VIZ" p- ~ W
Upon the question Of forfeiture Of the charter,
result in my Judgment is TIA. i. il at least doubtful
| whether the tribunals OF Connecticut woa,d deter
mine ths charter 70 BE- forfeited oy the adoption OF
this stock IS part o. the stock o. the company by
reducing tie value Of the genuine shares IN tn nan
| ner poiGted out. (kellcgg vs. the UnioI Comp =
| ny, IL Conn. Hep- z; the State vs.. toe Essex
Bark, Verm Rep. 4S9; anters' Bank W. the Back
tornsy Gensra ". the ps1 nS S1 Rsosa Com
pany, 6 Ireden 45G; the People va. tn, Oakland
County Bank, Douglass 2s2; STATE of Missas;p oi
vs. the Commercial Bank Of Manchester, smedes
& Marshall, 233, and other cases cite In Angell
Amek, sec. 100.
cannot therefore, conclude that tbs Increase
OF the number Of votes would be violAsion
Of the charter. ] consider tsat the reducdon
Of the nominal value OF tie old shares. and
admitting the pex ones, leaving the aggregate
Of capital identic&1y the same, could not wosk q
forfeiture, and that either or both OF these could
have that effect, It is o question for the courts or
state Of Connecticut alone 70 determine. This let
ter repeal The charter, could ratfy the a:t OF
the company adopting the stock. The former aoae
- aajudge a forfeiture. II tais court snou,d de-
eide the case upon such ground, it would BE- an
intrunion upon the province OF the only com'
Ectent payer tSee Hamilton Va. Annapolis, r. r.
Co., Maryland ch., Dec. 1919 lily conclusion is that
the majority Of the stockholders could have legally
sanctioned The issue Of this stock, 10 entitis
the holders TO be admitted as members in tn, msn
nef before h.ishy noticed Ard hereafter more par
ticularly stated
r6e .gsamen. which Is presented saj s3csded 70
by one or two Of my brothren is, that the company
could not f1lfi the compscs I, could say, and had
right 10 sSy:--"The stock is fall and the holder
cannot be admitted. We have no stock 10 give You
without violating the limit Of oar charter; perhaps
mourning forfeiture" Bat the question is, where
Is the prohibition legal disability which prevents
TIE compi1y lrS saying, eve eau fulfil tie agree
meht asoonJ.ag TO its true Import, aud of.ring 70
do no. present very simp'e case which involves
the question, aud think the ans ger. Suppose
charter, Sxug capital al $40 900, OF 100 shares ct
500 eacl; suppoae they were held by ten perIo rs
ten shares each-should there be zen shares frau
dulently issred, shy could not the stockholders
snrretder esch one share and perform the
eneagement1 They would retaia nine shares
srleso. ID what way this would be idsssl, I ana
unable tc comprehend. II tasy could yoluuta
rily do This, the question IL, have they not right
10 say, this "a all we were bound to 10, and this
when ycu demand more, We ask may be adjudged
70 you as the extent end limit Of your right Ny
brother Campbell admits that II he couid agree tn It
this action was on contract VIII IN tbs con- oary
could perform, his difficulties would be removed.
lie conterJs That the action is not brought uooa the
certificate, nor hence upon any contract. Ny
brother Slosson admits tia: the sat Is yrt Tally up
on the certificate which created an obligation up3a
the company. His difficulty appears 70 be that Is
cannot be performed il the msnner have attempt